UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,
D.C. 20549 FORM10-Q [x]
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedMarch 31, 2014 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 May 8, 2014 was 28,211,914.


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CĪON
INVESTMENT CORPORATION TABLE OF CONTENTS FORM 10-Q PagePART I – FINANCIAL INFORMATIONItem
  1. Financial StatementsConsolidated Balance Sheets
 1Consolidated Statements of Operations
 2Consolidated Statements of Changes in Net Assets
 3Consolidated Statements of Cash Flows
 4Consolidated Schedule of Investments
 5Notes to Consolidated Financial Statements
 9Item
  2. Management’s Discussion and Analysis of Financial Condition and Results of
  Operations
 35Item
  3. Quantitative and Qualitative Disclosures About Market Risk
 51Item
  4. Controls and Procedures
 52PART II – OTHER INFORMATIONItem 1. Legal Proceedings
 53Item
  1A. Risk Factors
 53Item
  2. Unregistered Sales of Equity Securities and Use of Proceeds
 53Item
  3. Defaults Upon Senior Securities
 53Item
  4. Mine Safety Disclosures
 53Item 5.
  Other Information
 53Item 6.
  Exhibits
 54Signatures
 56


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PART I –
FINANCIAL INFORMATION  Item 1. Financial Statements  CĪON Investment Corporation Consolidated Balance Sheets March 31,
 
 December 31,2014
 
 2013(unaudited)AssetsInvestments, at
  fair value (amortized cost of $151,796,526and
  $103,414,685, respectively)
 $
 153,511,647
 
 $
 104,518,913Cash
 
 515,066
 
 
 449,912Due from
  counterparty(1)
 
 68,368,923
 
 
 40,703,777Reimbursement
  from IIG, net(2)
 
 -
 
 
 545,593Prepaid expenses
 
 45,520
 
 
 98,990Interest
  receivable on investments
 
 690,552
 
 
 415,416Receivable due
  on investments sold
 
 6,892,579
 
 
 535,513Unrealized
  appreciation on total return swap(1)
 
 2,756,542
 
 
 1,548,617Receivable due
  on total return swap(1)
 
 2,809,575
 
 
 1,801,665Total assets
 $
 235,590,404
 
 $
 150,618,396Liabilities and Shareholders' EquityLiabilitiesPayable for
  investments purchased
 $
 7,567,520
 
 $
 3,462,700Shareholders'
  distributions payable(3)
 
 -
 
 
 895,704Accounts payable
  and accrued expenses
 
 665,319
 
 
 608,938Due to IIG -
  other(2)
 
 378,803
 
 
 -Due to IIG -
  offering expenses(2)
 
 591,475
 
 
 550,000Accrued capital
  gains incentive fee on unrealized appreciation(4)
 
 917,225
 
 
 530,569Total
  liabilities
 
 10,120,342
 
 
 6,047,911Commitments and
  contingencies (Note 4 and Note 10)Shareholders'
  EquityCommon stock,
  $0.001 par value; 500,000,000 shares authorized;23,991,865 and
  15,510,178 shares issued and outstanding, respectively(2)
 
 23,992
 
 
 15,510Capital in
  excess of par value
 
 221,901,275
 
 
 142,402,255Accumulated
  distributions in excess of net investment income
 
 (926,868)
 
 
 (500,125)Accumulated net
  unrealized appreciation on investments
 
 1,715,121
 
 
 1,104,228Accumulated net
  unrealized appreciation on total return swap(1)
 
 2,756,542
 
 
 1,548,617Total
  shareholders' equity
 
 225,470,062
 
 
 144,570,485Total
  liabilities and shareholders' equity
 $
 235,590,404
 
 $
 150,618,396Net asset value
  per share of common stock at end of period
 $
 9.40
 
 $
 9.32Shares of common
  stock outstanding
 
 23,991,865
 
 
 15,510,178(1)See Note 7 for a discussion of the
  Company’s total return swap agreement.(2)See Note 4 for a discussion of expense
  reimbursements from ICON Investment Group, LLC, or IIG.(3)See Note 5 for a discussion of the
  source of distributions paid by the Company.(4)See Note 2 and Note 4 for a discussion
  of the methodology employed by the Company in calculating the capital gains
  incentive fee.See accompanying notes to consolidated
  financial statements.
 1


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CĪON Investment
Corporation Consolidated Statements of Operations (unaudited)  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Investment
  incomeInterest income
 $
 2,200,781
 
 $
 68,126Operating
  expensesManagement fees
 
 908,807
 
 
 44,742Administrative
  services expense
 
 415,395
 
 
 263,555Capital gains
  incentive fee(1)
 
 525,326
 
 
 117,023Offering expense
  - IIG
 
 591,475
 
 
 -General and
  administrative(2)
 
 1,058,128
 
 
 508,863Total expenses
 
 3,499,131
 
 
 934,183Less: expense
  reimbursement from IIG(3)
 
 (1,048,858)
 
 
 (819,373)Net operating
  expenses
 
 2,450,273
 
 
 114,810Net investment
  loss
 
 (249,492)
 
 
 (46,684)Realized and
  unrealized gainsNet realized
  gain on investments
 
 173,714
 
 
 4,533Net change in
  unrealized appreciation on investments
 
 610,893
 
 
 124,282Net realized
  gain on total return swap(4)
 
 2,963,479
 
 
 286,337Net change in unrealized
  appreciation on total return swap(4)
 
 1,207,925
 
 
 250,676Total net
  realized and unrealized gains
 
 4,956,011
 
 
 665,828Net increase in
  net assets resulting from operations
 $
 4,706,519
 
 $
 619,144Per share
  information—basic and dilutedNet increase in
  net assets per share resulting from operations
 $
 0.24
 
 $
 0.53Weighted average
  shares of common stock outstanding
 
 19,995,555
 
 
 1,164,423(1)
 See Note 2 and Note 4 for a discussion of the methodology
  employed by the Company in calculating the capital gains incentive fee.(2)
 See Note 9 for details of the Company's general and
  administrative expense. See Note 2 for details of the Company's organization
  costs and offering expenses included in general and administrative expense.(3)
 See Note 4 for a discussion of expense reimbursements from IIG.(4)
 See Note 7 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)  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Changes in
  net assets from operations:Net investment
  loss
 $
 (249,492)
 
 $
 (46,684)Net realized
  gain on investments
 
 173,714
 
 
 4,533Net change in
  unrealized appreciation on investments
 
 610,893
 
 
 124,282Net realized
  gain on total return swap(1)
 
 2,963,479
 
 
 286,337Net change in
  unrealized appreciation on total return swap(1)
 
 1,207,925
 
 
 250,676Net increase in
  net assets resulting from operations
 
 4,706,519
 
 
 619,144Shareholder
  distributions:(2)Net realized
  gain on total return swapNet interest and
  other income from TRS portfolio
 
 (2,360,371)
 
 
 (80,614)Net gain on TRS
  loan sales
 
 (603,108)
 
 
 (123,575)Net realized
  gain on investments
 
 (173,714)
 
 
 (4,577)Other sources
 
 (177,251)
 
 
 -Net decrease in
  net assets from shareholder distributions
 
 (3,314,444)
 
 
 (208,766)Changes in
  net assets from capital share transactions:Issuance of
  common stock, net of issuance costs of $7,750,349 and $1,127,904, respectively
 
 77,173,549
 
 
 11,007,314Reinvestment of
  shareholder distributions
 
 2,333,953
 
 
 31,413Amortization of
  deferred offering expenses
 
 -
 
 
 (246,575)Net increase in
  net assets resulting from capital share transactions
 
 79,507,502
 
 
 10,792,152Total increase
  in net assets
 
 80,899,577
 
 
 11,202,530Net assets at
  beginning of period
 
 144,570,485
 
 
 4,487,115Net assets at
  end of period
 $
 225,470,062
 
 $
 15,689,645Net asset value
  per share of common stock at end of period
 $
 9.40
 
 $
 9.16Shares of common
  stock outstanding at end of period
 
 23,991,865
 
 
 1,712,123(1)See Note 7 for a discussion of the
  Company’s total return swap agreement.(2)See Note 5 for a discussion of the
  source of distributions paid by the Company.See accompanying notes to consolidated
  financial statements.
  3


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CĪON Investment Corporation Consolidated Statements of Cash Flows (unaudited)  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Operating
  activities:Net increase in
  net assets resulting from operations
 $
 4,706,519
 
 $
 619,144Adjustments to
  reconcile net increase in net assets resulting fromoperations to
  net cash used in operating activities:Net accretion of
  discount on investments
 
 (46,476)
 
 
 (2,151)Proceeds from
  principal repayment of investments
 
 5,289,381
 
 
 15,000Purchase of
  investments
 
 (66,996,829)
 
 
 (6,653,990)Decrease
  (increase) in short term investments
 
 379,952
 
 
 (2,802,013)Proceeds from
  sale of investments
 
 13,165,845
 
 
 504,375Net realized
  gain on investments
 
 (173,714)
 
 
 (4,533)Net unrealized
  appreciation on investments
 
 (610,893)
 
 
 (124,282)Net unrealized
  appreciation on total return swap(1)
 
 (1,207,925)
 
 
 (250,676)Increase in due
  from counterparty
 
 (27,665,146)
 
 
 (2,761,406)Decrease
  (increase) in reimbursement from IIG, net(2)
 
 545,593
 
 
 (310,500)Decrease in
  prepaid expenses
 
 53,470
 
 
 44,432Increase in
  interest receivable on investments
 
 (275,136)
 
 
 (40,550)Increase in
  receivable due on investments sold
 
 (6,357,066)
 
 
 (519,375)Increase in
  receivable due on total return swap(1)
 
 (1,007,910)
 
 
 (414,694)Increase in
  payable for investments purchased
 
 4,104,820
 
 
 1,497,500Increase in
  accrued capital gains incentive fee on unrealized appreciation
 
 386,656
 
 
 -Increase in
  accounts payable and accrued expenses
 
 56,381
 
 
 369,518Increase in due
  to IIG - other
 
 378,803
 
 
 -Increase in due
  to IIG - offering expenses
 
 41,475
 
 
 -Net cash used in
  operating activities
 
 (75,232,200)
 
 
 (10,834,201)Financing
  activities:Gross proceeds
  from issuance of common stock
 
 84,923,898
 
 
 12,135,218Commissions and
  dealer manager fees paid
 
 (7,750,349)
 
 
 (1,150,853)Reinvestment of
  shareholder distributions
 
 2,333,953
 
 
 31,413Shareholder
  distributions paid(3)
 
 (4,210,148)
 
 
 (117,605)Repayment of
  financing arrangement
 
 -
 
 
 (54,422)Net cash
  provided by financing activities
 
 75,297,354
 
 
 10,843,751Net increase in
  cash
 
 65,154
 
 
 9,550Cash, beginning
  of period
 
 449,912
 
 
 -Cash, end of
  period
 $
 515,066
 
 $
 9,550Supplemental
  non-cash financing activities:Deferred
  offering expenses charged to shareholders' equity
 $
 -
 
 $
 246,575Shareholders'
  distributions payable
 $
 -
 
 $
 91,161(1)See Note 7 for a discussion of the
  Company’s total return swap agreement.(2)See Note 4 for a discussion of expense
  reimbursements from IIG.(3)See Note 5 for a discussion of the
  source of distributions paid by the Company.See accompanying notes to consolidated
  financial statements.
  4


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CĪON Investment Corporation Consolidated Schedule of Investments March 31, 2014 (unaudited)  Portfolio
  Company(a)
 
 Index Rate(b)
 
 Industry
 
 Principal/Par
  Amount
 
 Amortized
  Cost
 
 Fair
  Value(c)Senior
  Secured First Lien Term Loans - 37.4%5.11, Inc.,
  L+500, 1.00% LIBOR Floor, 2/28/2020
 
 2 Month LIBOR
 
 Retail
 
 $
 5,625,000
 
 $
 5,597,175
 
 $
 5,667,188ABRA, Inc.,
  L+600, 1.25% LIBOR Floor, 5/10/2018(d)
 
 3 Month LIBOR
 
 Automotive
 
 
 7,100,823
 
 
 7,041,570
 
 
 7,029,815Accruent, LLC,
  P+350, 2.25% Base Rate Floor, 11/25/2019
 
 Prime
 
 High Tech
  Industries
 
 
 4,488,750
 
 
 4,477,528
 
 
 4,477,528Collision
  Holding Company, LLC, L+775, 1.25% LIBOR Floor, 5/10/2018
 
 3 Month LIBOR
 
 Automotive
 
 
 1,568,127
 
 
 1,552,568
 
 
 1,552,445Custom Ecology,
  Inc., L+550, 1.25% LIBOR Floor, 6/26/2019
 
 3 Month LIBOR
 
 Environmental
  Industries
 
 
 1,895,675
 
 
 1,878,576
 
 
 1,902,784Distribution International,
  Inc., L+650, 1.00% LIBOR Floor, 7/16/2019
 
 3 Month LIBOR
 
 Construction
  & Building
 
 
 2,481,250
 
 
 2,463,256
 
 
 2,487,453ECI Acquisition
  Holdings, Inc., L+625, 1.00% LIBOR Floor, 3/11/2019(e)
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 8,267,337
 
 
 8,226,854
 
 
 8,226,000F+W Media, Inc.,
  L+650, 1.25% LIBOR Floor, 6/30/2019(f)
 
 3 Month LIBOR
 
 Media:
  Diversified & Production
 
 
 9,633,864
 
 
 9,273,754
 
 
 9,513,441H.D. Vest, Inc.,
  L+450, 1.25% LIBOR Floor, 12/18/2018
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 593,656
 
 
 589,789
 
 
 590,688ILC Industries,
  LLC, L+650, 1.50% LIBOR Floor, 7/11/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 4,314,432
 
 
 4,330,191
 
 
 4,319,825Merrill Corp.,
  L+475, 1.00% LIBOR Floor, 3/8/2018
 
 1 Month LIBOR
 
 Services: Business
 
 
 625,217
 
 
 619,946
 
 
 630,949National
  Surgical Hospitals, Inc., L+450, 1.25% LIBOR Floor, 8/1/2019
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,482,500
 
 
 3,447,675
 
 
 3,512,972Packaging
  Coordinators, Inc., L+425, 1.25% LIBOR Floor, 5/10/2020
 
 6 Month LIBOR
 
 Containers,
  Packaging & Glass
 
 
 1,500,000
 
 
 1,496,250
 
 
 1,492,500Plano Molding
  Co., Inc., L+425, 1.00% LIBOR Floor, 10/11/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,484,375
 
 
 2,470,064
 
 
 2,484,375Royall &
  Company, L+425, 1.00% LIBOR Floor, 3/5/2018
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 5,000,000
 
 
 4,987,500
 
 
 5,037,500SK Spice
  S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(g)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 1,771,100
 
 
 1,736,564
 
 
 1,771,100Smile Brands
  Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019
 
 12 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 4,975,000
 
 
 4,881,114
 
 
 4,998,631Sprint
  Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019
 
 3 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 1,191,000
 
 
 1,180,322
 
 
 1,199,933Survey Sampling
  International, LLC, L+450, 1.00% LIBOR Floor, 12/12/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 3,250,000
 
 
 3,218,843
 
 
 3,233,750Tectum Holdings,
  Inc., L+425, 1.25% LIBOR Floor, 9/12/2018
 
 3 Month LIBOR
 
 Automotive
 
 
 2,250,000
 
 
 2,244,375
 
 
 2,250,000The TOPPS
  Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,104,725
 
 
 2,065,190
 
 
 2,104,725Travel Leaders
  Group, LLC, L+600, 1.00% LIBOR Floor, 12/5/2018
 
 3 Month LIBOR
 
 Services:
  Consumer
 
 
 4,838,750
 
 
 4,562,894
 
 
 4,778,266Trimark USA,
  LLC, L+625, 1.00% LIBOR Floor, 5/11/2019
 
 3 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 5,000,000
 
 
 4,952,305
 
 
 5,037,500Total Senior
  Secured First Lien Term Loans
 
 
 
 
 
 
 
 
 
 83,294,303
 
 
 84,299,368Senior
  Secured Second Lien Term Loans - 20.9%The Active
  Network, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 2,820,000
 
 
 2,806,419
 
 
 2,890,500Camp
  International Holding Company, L+725, 1.00% LIBOR Floor, 11/30/2019
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 2,029,000
 
 
 2,029,000
 
 
 2,073,384Drew Marine
  Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(g)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 5,000,000
 
 
 5,003,270
 
 
 5,050,000Elements
  Behavioral Health, Inc., L+825, 1.00% LIBOR Floor, 2/11/2020
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 5,000,000
 
 
 4,950,761
 
 
 4,950,000GCA Services
  Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020
 
 6 Month LIBOR
 
 Services:
  Consumer
 
 
 800,000
 
 
 796,435
 
 
 814,500H.D. Vest, Inc.,
  L+800, 1.25% LIBOR Floor, 6/18/2019
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 854,000
 
 
 844,663
 
 
 849,730Healogics, Inc.,
  L+800, 1.25% LIBOR Floor, 2/5/2020
 
 6 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 500,000
 
 
 495,711
 
 
 512,085Landslide
  Holdings, Inc., L+725, 1.00% LIBOR Floor, 2/25/2021
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 4,810,000
 
 
 4,809,092
 
 
 4,864,113Learfield
  Communications, Inc., L+775, 1.00% LIBOR Floor, 10/9/2021
 
 3 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 1,417,333
 
 
 1,403,550
 
 
 1,452,766Securus
  Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021
 
 3 Month LIBOR
 
 Telecommunications
 
 
 3,500,000
 
 
 3,461,450
 
 
 3,500,000SESAC Holdco II,
  LLC, L+875, 1.25% LIBOR Floor, 8/8/2019
 
 1 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 1,500,000
 
 
 1,521,274
 
 
 1,530,000SMG, L+825,
  1.00% LIBOR Floor, 2/27/2021
 
 2 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 6,220,000
 
 
 6,220,000
 
 
 6,359,950Sprint
  Industrial Holdings, LLC, L+1,000, 1.25% LIBOR Floor, 11/14/2019
 
 3 Month LIBOR
 
 Energy: Oil &
  Gas
 
 
 500,000
 
 
 490,858
 
 
 505,000Tectum Holdings,
  Inc., P+700, 2.00% Base Rate Floor, 3/12/2019
 
 Prime
 
 Automotive
 
 
 4,650,000
 
 
 4,626,750
 
 
 4,638,375Telecommunications
  Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020(f)
 
 3 Month LIBOR
 
 Media: Broadcasting
  & Subscription
 
 
 675,178
 
 
 670,131
 
 
 683,618Trimark USA,
  LLC, L+900, 1.00% LIBOR Floor, 8/12/2019
 
 3 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 5,000,000
 
 
 4,901,879
 
 
 5,031,250WP CPP Holdings,
  LLC, L+775, 1.00% LIBOR Floor, 4/30/2021
 
 3 Month LIBOR
 
 Aerospace &
  Defense
 
 
 1,435,000
 
 
 1,427,825
 
 
 1,458,319Total Senior
  Secured Second Lien Term Loans
 
 
 
 
 
 
 
 
 
 46,459,068
 
 
 47,163,590See accompanying notes to consolidated
  financial statements.
  5


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CĪON
Investment Corporation Consolidated Schedule of Investments March 31, 2014 (unaudited)  Portfolio
  Company(a)
 
 Index Rate(b)
 
 Industry
 
 Principal/Par
  Amount
 
 Amortized
  Cost
 
 Fair
  Value(c)Collateralized
  Securities - 4.9%Ivy Hill Middle
  Market Credit Fund VII, Ltd. Class E Notes, L+565, 1.00% LIBOR Floor,
  10/20/2025(g)
 
 3 Month LIBOR
 
 Diversified
  Financials
 
 
 2,000,000
 
 
 1,850,000
 
 
 1,876,020Ivy Hill Middle
  Market Credit Fund VII, Ltd. Subordinated Notes, Residual, 10/20/2025(g)
 
 N/A
 
 Diversified
  Financials
 
 
 2,000,000
 
 
 1,896,000
 
 
 1,892,300JFIN CLO 2014,
  Ltd. Class E Notes, L+500, 4/20/2025(g)
 
 3 Month LIBOR
 
 Diversified
  Financials
 
 
 2,500,000
 
 
 2,293,438
 
 
 2,297,152JPMorgan Chase
  Bank, N.A. Credit Link Note, L+1,225, 12/20/2021(g)
 
 3 Month LIBOR
 
 Diversified
  Financials
 
 
 5,000,000
 
 
 5,000,000
 
 
 4,979,500Total
  Collateralized Securities
 
 
 
 
 
 
 
 
 
 11,039,438
 
 
 11,044,972Short Term
  Investments - 4.9%(h)First American
  Treasury Obligations Fund, Class Z Shares(i)
 
 
 
 
 
 
 11,003,717
 
 
 11,003,717
 
 
 11,003,717Total Short
  Term Investments
 
 
 
 
 
 
 
 
 
 11,003,717
 
 
 11,003,717TOTAL
  INVESTMENTS - 68.1%
 
 
 
 
 
 
 
 
 $
 151,796,526
 
 $
 153,511,647OTHER ASSETS
  IN EXCESS OF LIABILITIES - 31.9%
 
 
 
 
 
 
 
 
 
 
 
 $
 71,958,415NET ASSETS -
  100%
 
 
 
 
 
 
 
 
 
 
 
 $
 225,470,062TOTAL RETURN
  SWAP - 1.2%
 
 
 
 
 
 Notional
  Amount
 
 
 
 
 Unrealized AppreciationCitibank TRS
  Facility (see Note 6)
 
 
 
 
 
 $
 230,257,406
 
 
 
 
 $
 2,756,542(a)
 All of the
  Company's debt investments are issued by eligible U.S. portfolio companies,
  as defined in the Investment Company Act of 1940, as amended, or the 1940
  Act, except for investments specifically identified as non-qualifying per
  note (g) below. The Company does not control and is not an affiliate of any
  of the portfolio companies in its investment portfolio.(b)
 The 1, 2, 3, 6
  and 12 month London Interbank Offered Rate, or LIBOR, rates were 0.15%,
  0.19%, 0.23%, 0.33% and 0.56%, respectively, as of March 31, 2014. The prime
  rate was 3.25% as of March 31, 2014. The applicable LIBOR rate as of March
  31, 2014 for the loan listed may not be the applicable LIBOR rate, as the loan
  may have been priced or repriced based on a LIBOR rate prior to March 31,
  2014.(c)
 Fair value
  determined by the Company’s board of directors (see Note 8).(d)
 The Company is
  committed to fund an additional $1,330,668 as of March 31, 2014 (see Note 6 and
  Note 10). The Company is committed to fund an additional $188,175 as of May
  8, 2014.(e)
 The Company is
  committed to fund an additional $1,724,000 as of March 31 and May 8, 2014
  (see Note 6 and Note 10).(f)
 Position or
  portion thereof unsettled as of March 31, 2014.(g)
 The investment
  is not a qualifying asset under the 1940 Act. A business development company
  may not acquire any asset other than qualifying assets, unless, at the time
  the acquisition is made, qualifying assets represent at least 70% of that
  company’s total assets as defined under Section 55 of the 1940 Act. As of
  March 31, 2014, 92.1% of the Company’s total assets represented qualifying
  assets. In addition, as described in Note 7, the Company calculates its
  compliance with the qualifying asset test on a “look through” basis by
  treating each loan underlying the total return swap as either a qualifying
  asset or non-qualifying asset based on whether the obligor is an eligible
  portfolio company. On this basis, 79.6% of the Company’s total assets
  represented qualifying assets as of March 31, 2014.(h)
 Short term
  investments represent an investment in a fund that invests in highly liquid
  investments with original maturity dates of three months or less.(i)
 Effective yield
  as of March 31, 2014 is <0.01%.See accompanying notes to consolidated
  financial statements.
  6


---



CĪON
Investment Corporation Consolidated Schedule of Investments December 31, 2013  Portfolio
  Company(a)
 
 Index Rate(b)
 
 Industry
 
 Principal/Par
  Amount
 
 Amortized
  Cost
 
 Fair
  Value(c)Senior
  Secured First Lien Term Loans - 42.7%ABRA, Inc.,
  L+600, 1.25% LIBOR Floor, 5/10/2018(d)
 
 3 Month LIBOR
 
 Automotive
 
 $
 5,980,924
 
 $
 5,921,292
 
 $
 5,921,115Captive
  Resources Midco, LLC, L+550, 1.25% LIBOR Floor, 10/31/2018
 
 3 Month LIBOR
 
 Banking, Finance,
  Insurance & Real Estate
 
 
 987,500
 
 
 972,809
 
 
 987,500CHI Overhead
  Doors, L+425, 1.25% LIBOR Floor, 3/18/2019
 
 3 Month LIBOR
 
 Construction
  & Building
 
 
 936,944
 
 
 932,772
 
 
 938,701Collision
  Holding Company, LLC, L+775, 1.25% LIBOR Floor, 5/10/2018
 
 3 Month LIBOR
 
 Automotive
 
 
 1,568,127
 
 
 1,552,492
 
 
 1,552,445Custom Ecology,
  Inc., L+550, 1.25% LIBOR Floor, 6/26/2019
 
 3 Month LIBOR
 
 Environmental
  Industries
 
 
 1,900,450
 
 
 1,882,554
 
 
 1,909,952Distribution
  International, Inc., L+650, 1.00% LIBOR Floor, 7/16/2019
 
 3 Month LIBOR
 
 Construction
  & Building
 
 
 2,487,500
 
 
 2,468,327
 
 
 2,476,555F+W Media, Inc.,
  L+650, 1.25% LIBOR Floor, 6/30/2019
 
 3 Month LIBOR
 
 Media:
  Diversified & Production
 
 
 1,990,000
 
 
 1,839,629
 
 
 1,920,350Fender Musical
  Instruments Corp., L+450, 1.25% LIBOR Floor, 4/3/2019
 
 6 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 447,500
 
 
 443,456
 
 
 455,193H.D. Vest, Inc.,
  L+450, 1.25% LIBOR Floor, 12/18/2018
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 597,438
 
 
 593,254
 
 
 594,450ILC Industries,
  LLC, L+650, 1.50% LIBOR Floor, 7/11/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 4,456,187
 
 
 4,471,616
 
 
 4,467,327Landslide
  Holdings, Inc., L+425, 1.00% LIBOR Floor, 8/9/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 2,449,690
 
 
 2,426,101
 
 
 2,469,594Merrill Corp.,
  L+625, 1.00% LIBOR Floor, 3/8/2018
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 649,021
 
 
 643,301
 
 
 661,729National
  Surgical Hospitals, Inc., L+450, 1.25% LIBOR Floor, 8/1/2019
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,491,250
 
 
 3,456,338
 
 
 3,526,163Packaging
  Coordinators, Inc., L+425, 1.25% LIBOR Floor, 5/10/2020
 
 6 Month LIBOR
 
 Containers,
  Packaging & Glass
 
 
 1,500,000
 
 
 1,492,500
 
 
 1,500,000Plano Molding
  Co., Inc., L+425, 1.00% LIBOR Floor, 10/11/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,500,000
 
 
 2,484,517
 
 
 2,500,000Prowler
  Acquisition Corp., L+475, 1.25% LIBOR Floor, 3/19/2019
 
 3 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 1,925,000
 
 
 1,905,750
 
 
 1,915,375SK Spice
  S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 1,775,550
 
 
 1,740,993
 
 
 1,760,014Smile Brands
  Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019
 
 12 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 4,987,500
 
 
 4,892,609
 
 
 4,931,391Sprint
  Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019
 
 3 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 1,194,000
 
 
 1,182,670
 
 
 1,208,925Survey Sampling
  International, LLC, L+450, 1.00% LIBOR Floor, 12/12/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 9,250,000
 
 
 9,158,059
 
 
 9,157,500The TOPPS
  Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,110,000
 
 
 2,068,064
 
 
 2,104,725Travel Leaders
  Group, LLC, L+600, 1.00% LIBOR Floor, 12/5/2018
 
 3 Month LIBOR
 
 Services:
  Consumer
 
 
 4,900,000
 
 
 4,607,683
 
 
 4,814,250Wastequip, LLC,
  L+450, 1.00% LIBOR Floor, 8/9/2019
 
 6 Month LIBOR
 
 Capital
  Equipment
 
 
 2,985,000
 
 
 2,970,869
 
 
 3,014,850Westway Group,
  L+400, 1.00% LIBOR Floor, 2/27/2020
 
 6 Month LIBOR
 
 Services:
  Business
 
 
 992,500
 
 
 988,030
 
 
 999,326Total Senior
  Secured First Lien Term Loans
 
 
 
 
 
 
 
 
 
 61,095,685
 
 
 61,787,430Senior
  Secured Second Lien Term Loans - 15.6%The Active
  Network, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 2,820,000
 
 
 2,805,900
 
 
 2,876,400Camp
  International Holding Company, L+725, 1.00% LIBOR Floor, 11/30/2019
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 2,029,000
 
 
 2,029,000
 
 
 2,073,384Centaur Gaming,
  L+750, 1.25% LIBOR Floor, 2/20/2020
 
 6 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 500,000
 
 
 495,297
 
 
 515,000Digital Insight
  Corporation, L+775, 1.00% LIBOR Floor, 10/16/2020
 
 3 Month LIBOR
 
 Services: Business
 
 
 385,000
 
 
 381,237
 
 
 393,181Drew Marine
  Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 5,000,000
 
 
 5,003,467
 
 
 5,037,500GCA Services
  Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020
 
 6 Month LIBOR
 
 Services:
  Consumer
 
 
 800,000
 
 
 796,341
 
 
 813,876H.D. Vest, Inc.,
  L+800, 1.25% LIBOR Floor, 6/18/2019
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 854,000
 
 
 844,079
 
 
 845,460Healogics, Inc.,
  L+800, 1.25% LIBOR Floor, 2/5/2020
 
 6 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 500,000
 
 
 495,426
 
 
 511,250Learfield
  Communications, Inc., L+775, 1.00% LIBOR Floor, 10/9/2021
 
 3 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 1,417,333
 
 
 1,403,174
 
 
 1,452,766LTS Buyer, LLC,
  L+675, 1.25% LIBOR Floor, 4/12/2021
 
 6 Month LIBOR
 
 Telecommunications
 
 
 500,000
 
 
 495,233
 
 
 505,835Securus
  Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021(f)
 
 3 Month LIBOR
 
 Telecommunications
 
 
 3,500,000
 
 
 3,461,450
 
 
 3,467,205SESAC Holdco II,
  LLC, L+875, 1.25% LIBOR Floor, 8/8/2019
 
 1 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 1,500,000
 
 
 1,522,110
 
 
 1,537,500Sprint
  Industrial Holdings, LLC, L+1,000, 1.25% LIBOR Floor, 11/14/2019
 
 3 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 500,000
 
 
 490,421
 
 
 505,000Telecommunications
  Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020
 
 3 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 543,290
 
 
 538,266
 
 
 554,156WP CPP Holdings,
  LLC, L+775, 1.00% LIBOR Floor, 4/30/2021
 
 3 Month LIBOR
 
 Aerospace &
  Defense
 
 
 1,435,000
 
 
 1,427,930
 
 
 1,463,701Total Senior
  Secured Second Lien Term Loans
 
 
 
 
 
 
 
 
 
 22,189,331
 
 
 22,552,214See accompanying notes to consolidated
  financial statements.
  7


---



CĪON
Investment Corporation Consolidated Schedule of Investments December 31, 2013  Portfolio
  Company(a)
 
 Index Rate(b)
 
 Industry
 
 Principal/Par
  Amount
 
 Amortized
  Cost
 
 Fair
  Value(c)Collateralized
  Securities - 6.1%Ivy Hill Middle
  Market Credit Fund VII, Ltd. Class E Notes, L+565, 10/20/2025(e)
 
 3 Month LIBOR
 
 Diversified
  Financials
 
 
 2,000,000
 
 
 1,850,000
 
 
 1,850,000Ivy Hill Middle
  Market Credit Fund VII, Ltd. Subordinated Notes, Residual, 10/20/2025(e)
 
 N/A
 
 Diversified
  Financials
 
 
 2,000,000
 
 
 1,896,000
 
 
 1,945,600JPMorgan Chase
  Bank, N.A. Credit Link Note, L+1,225, 12/20/2021(e)
 
 3 Month LIBOR
 
 Diversified
  Financials
 
 
 5,000,000
 
 
 5,000,000
 
 
 5,000,000Total
  Collateralized Securities
 
 
 
 
 
 
 
 
 
 8,746,000
 
 
 8,795,600Short Term
  Investments - 7.9%(g)First American
  Treasury Obligations Fund, Class Z Shares(h)
 
 
 
 
 
 
 11,383,669
 
 
 11,383,669
 
 
 11,383,669Total Short
  Term Investments
 
 
 
 
 
 
 
 
 
 11,383,669
 
 
 11,383,669TOTAL
  INVESTMENTS - 72.3%
 
 
 
 
 
 
 
 
 $
 103,414,685
 
 $
 104,518,913OTHER ASSETS
  IN EXCESS OF LIABILITIES - 27.7%
 
 
 
 
 
 
 
 
 
 
 
 $
 40,051,572NET ASSETS -
  100%
 
 
 
 
 
 
 
 
 
 
 
 $
 144,570,485TOTAL RETURN
  SWAP - 1.1%
 
 
 
 
 
 Notional
  Amount
 
 
 
 
 Unrealized AppreciationCitibank TRS
  Facility (see Note 6)
 
 
 
 
 
 $
 148,199,937
 
 
 
 
 $
 1,548,617(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 per note (d) below. The Company
  does not control and is not an affiliate of any of the portfolio companies in
  its investment portfolio.(b)
 The 1, 2, 3, 6 and 12 month LIBOR rates were 0.17%, 0.21%,
  0.25%, 0.35% and 0.58%, respectively, as of December 31, 2013. The applicable
  LIBOR rate as of December 31, 2013 for the loan listed may not be the
  applicable LIBOR rate, as the loan may have been priced or repriced based on
  a LIBOR rate prior to December 31, 2013.(c)
 Fair value determined by the Company’s board of directors (see
  Note 8).(d)
 The Company is
  committed to fund an additional $2,450,758 as of December 31, 2013 (see Note
  6 and Note 10). The Company is committed to fund an additional $1,330,667 as
  of March 7, 2014.(e)
 The investment is not a qualifying asset under the 1940 Act. A
  business development company may not acquire any asset other than qualifying
  assets, unless, at the time the acquisition is made, qualifying assets
  represent at least 70% of that company’s total assets as defined under
  Section 55 of the 1940 Act. As of December 31, 2013, 88.2% of the Company’s
  total assets represented qualifying assets. In addition, as described in Note
  7, the Company calculates its compliance with the qualifying asset test on a
  “look through” basis by treating each loan underlying the total return swap
  as either a qualifying asset or non-qualifying asset based on whether the
  obligor is an eligible portfolio company. On this basis, 76.1% of the
  Company’s total assets represented qualifying assets as of December 31, 2013.(f)
 Position or portion thereof unsettled as of December 31, 2013.(g)
 Short term investments represent an investment in a fund that
  invests in highly liquid investments with original maturity dates of three
  months or less.(h)
 Effective yield as of December 31, 2013 is <0.01%.See accompanying notes to consolidated
  financial statements.
  8


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (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 elected to be
treated for federal income tax purposes as a regulated investment company, or
RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as
amended, or the Code. The Company’s investment objective is to
generate current income and, to a lesser extent, capital appreciation for
investors. The Company’s portfolio is comprised primarily of investments in
senior secured loans and, to a lesser extent, second lien loans, collateralized
loan obligations 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. 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, 2013 and for the year then ended
included in the Company’s Annual Report on Form 10-K. Operating results for the
three months ended March 31, 2014 are not necessarily indicative of the results
that may be expected for the full year ending December 31, 2014. The
December 31, 2013 consolidated balance sheet and the consolidated schedule
of investments are derived from the 2013 audited consolidated financial
statements. The Company
evaluates subsequent events through the date that the consolidated financial
statements are issued. 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 $11,003,717 and $11,383,669 of such investments at
March 31, 2014 and December 31, 2013, respectively, which are included in
investments, at fair value on the accompanying consolidated balance sheets and
on the consolidated schedule of investments. 9


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Organization Costs and Offering Expenses 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. 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 4). These expenses were
fully amortized over a twelve month period as an adjustment to capital in
excess of par value. 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. The
following table summarizes organization costs and offering expenses incurred by
IIG and by the Company from January 31, 2012 (Inception) through March 31,
2014: Organization Costs and Offering Expenses
  Incurred by IIGPeriod
 
 Organization Costs
 
 Offering Expenses
 
 TotalYear EndedDecember 31,
  2012(1)
 
 $
 191,717
 
 $
 1,820,128
 
 $
 2,011,845December 31,
  2013
 
 
 -
 
 
 -
 
 
 -Three Months
  EndedMarch 31, 2014
 
 
 -
 
 
 -
 
 
 -Total
 
 
 191,717
 
 
 1,820,128
 
 
 2,011,845Expenses submitted
  for reimbursement by IIG(2)
 
 
 -
 
 
 (1,591,475)
 
 
 (1,591,475)Total
  Unreimbursed Expenses Incurred by IIG
 
 $
 191,717
 
 $
 228,653
 
 $
 420,370Organization Costs and Offering Expenses
  Incurred by the Company(3)Period
 
 Organization Costs
 
 Offering Expenses
 
 TotalYear EndedDecember 31,
  2012(1)
 
 $
 -
 
 $
 29,652
 
 $
 29,652December 31,
  2013
 
 
 -
 
 
 1,786,978
 
 
 1,786,978Three Months
  EndedMarch 31, 2014
 
 
 -
 
 
 539,720
 
 
 539,720Total
 
 
 -
 
 
 2,356,350
 
 
 2,356,350Expenses
  reimbursed by the Company(2)
 
 
 -
 
 
 1,591,475
 
 
 1,591,475Total
  Expenses Incurred by the Company
 
 $
 -
 
 $
 3,947,825
 
 $
 3,947,825Expenses paid as
  of March 31, 2014
 
 $
 -
 
 $
 3,061,183
 
 $
 3,061,183Expenses accrued
  as of March 31, 2014(4)
 
 
 -
 
 
 886,642
 
 
 886,642Total
  Expenses Incurred by the Company
 
 $
 -
 
 $
 3,947,825
 
 $
 3,947,825(1)
 Organization costs and offering expenses were incurred from
  January 31, 2012 (Inception) through December 31, 2012.(2)
 Of this amount, $1,000,000 of expenses charged directly to
  equity were submitted for reimbursement by IIG on December 17, 2012, and
  $591,475 of expenses charged directly to general and administrative expense
  were submitted for reimbursement by IIG during the three months ended March
  31, 2014.(3)
 Offering expenses incurred directly by the Company are included
  in general and administrative expense on the consolidated statements of
  operations.(4)
 Of this amount, $591,475 of offering expenses accrued by the
  Company are included in due to IIG - offering expenses on the consolidated
  balance sheets. The remainder is included in accounts payable and accrued
  expenses on the consolidated balance sheets.
 No
material organization costs or offering expenses have been incurred subsequent
to March 31, 2014. 10


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Income Taxes The Company elected
to be treated for federal income tax purposes as a RIC under Subchapter M of
the Code. To qualify and maintain qualification as a RIC, the Company must,
among other things, meet certain source of income and asset diversification
requirements and distribute to shareholders, for each taxable year, at least
90% of the Company’s “investment company taxable income”, which is generally
the Company’s net ordinary income plus the excess, if any, of realized net
short-term capital gains over realized net long-term capital losses. If the
Company continues to qualify as a RIC and continues to satisfy the annual
distribution requirement, the Company will not have to pay corporate level
federal income taxes on any income that the Company distributes to its
shareholders. The Company intends to make distributions in an amount sufficient
to maintain RIC status each year and to avoid any federal income taxes on
income. The Company will also be subject to nondeductible federal excise taxes
if the Company does not distribute at least 98.0% of net ordinary income, 98.2%
of 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
differences relating to permanent differences are reclassified among the
Company’s capital accounts, as appropriate. Additionally, the tax character of
distributions is determined in accordance with income tax regulations that may differ
from GAAP (see Note 5). During the three months ended March 31, 2014 and 2013,
the Company declared distributions of $3,314,444 and $208,766, respectively. Uncertainty in Income Taxes The Company
evaluates its tax positions to determine if the tax positions taken meet the
minimum recognition threshold for the purposes of measuring and recognizing tax
liabilities in the consolidated financial statements. Recognition of a tax
benefit or liability with respect to an uncertain tax position is required only
when the position is “more likely than not” to be sustained assuming
examination by the taxing authorities. The Company recognizes interest and
penalties, if any, related to unrecognized tax benefits as income tax expense
in the consolidated statements of operations. As of and during the three months
ended March 31, 2014 and 2013, the Company did not have any uncertain tax
positions. The Company is subject to examination by U.S. federal, New
York State, New York City and Maryland income tax jurisdictions for 2012. Use of Estimates The preparation of
the consolidated financial statements in conformity with GAAP requires the
Company to makeestimates 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, defined as observable inputs such as quoted prices for
similar securities in active markets and quoted prices for identical securities
where there is 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. The Company’s
investments as of March 31, 2014, excluding short term investments,consisted primarily of debt securities that
are traded on a private over-the-counter market for institutional investments.
Except as described below, 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. 11


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The Company valued its total return
swap, or TRS, in accordance with the agreements between Flatiron and Citibank,
N.A., or Citibank, which collectively establish the TRS, or 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. 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
Agreement. 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. If the Company owns identical investments in its investment
portfolio and through the TRS, the Company utilizes the TRS pricing for
consistency. For additional information on the TRS, see Note 7. 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 its 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. The
Company periodically benchmarks the “bid” and “ask” prices it receives from the
third-party pricing services against the actual prices at which the Company
purchases and sells its investments. Based on the results of the benchmark
analysis and the experience of the Company’s management in purchasing and
selling these investments, the Company believes that these 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 2 or Level
3 within the fair value hierarchy. 12


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 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. Loan origination fees, original issue discounts, and
market discounts/premiums are recorded and such amounts are amortized as
adjustments to interest income over the respective term of the loan using the
effective interest method. Upon the prepayment of a loan or debt security, any
unamortized loan origination fees are recorded as interest income. The Company
records prepayment premiums on loans and debt securities as interest income
when it receives such amounts. The Company may
have investments in its investment portfolio that contain a paid-in-kind, or
PIK, interest provision. Any PIK interest will be added to the principal
balance of such investments and is recorded as income, if the portfolio company
valuation indicates that such PIK interest is collectible. In order to maintain
RIC status, substantially all of this income must be paid out to shareholders
in the form of distributions, even if the Company has not collected any cash. Loans and debt securities, including those that are
individually identified as being impaired under Accounting Standards
Codification 310, or ASC 310,Receivables,
are generally placed on nonaccrual status immediately if, in the opinion of
management, principal or interest is not likely to be paid in accordance with
the terms of the debt agreement, or when principal or interest is past due 90
days or more. Interest accrued but not collected at the date a loan or security
is placed on nonaccrual status is reversedagainst
interest income. Interest income is recognized on nonaccrual loans or debt
securities only to the extent received in cash. How­ever, where there is doubt
regarding the ultimate collectibility ofprincipal,
cash receipts, whether designated as principal or interest, are thereafter
applied to reduce the carrying value of the loan or debt security. Loans or
securities are restored to accrual status only when interest and principal
payments are brought current and future payments are reasonably assured. Net Realized
Gains or Losses and Net Change in Unrealized Appreciation or Depreciation Gains
or losses on the sale of investments are calculated by using the
weighted-average method. The Company measures realized gains or losses by the
difference between the net proceeds from the repayment or sale and the weighted-average
amortized cost of the investment, without regard to unrealized appreciation or
depreciation previously recognized, but considering unamortized upfront fees
and prepayment penalties. Net change in unrealized appreciation or depreciation
reflects the change in portfolio investment values during the reporting period,
including any reversal of previously recorded unrealized appreciation or
depreciation when gains or losses are realized. Derivative Instrument The Company’s only
derivative instrument is the TRS. The Company marks its derivative to market
through net change in unrealized appreciation on total return swap in the
consolidated statements of operations. For additional information on the TRS,
see Note 7. Capital Gains
Incentive Fee Pursuant
to the terms of the investment advisory agreement the Company entered into with
CIM, the incentive fee on capital gains earned on liquidated investments of the
Company’s investment portfolio during operations is determined and payable in
arrears as of the end of each calendar year. Such fee equals 20% of the
Company’s incentive fee capital gains (i.e., the Company’s realized capital
gains on a cumulative basis from inception, calculated as of the end of each
calendar year, computed net of all realized capital losses and unrealized
capital depreciation on a cumulative basis), less the aggregate amount of any
previously paid capital gains incentive fees. On a cumulative basis and to the
extent that all realized capital losses and unrealized capital depreciation
exceed realized capital gains as well as the aggregate realized net capital
gains for which a fee has previously been paid, the Company would not be
required to pay CIM a capital gains incentive fee. On a quarterly basis, the
Company accrues for the capital gains incentive fee by calculating such fee as
if it were due and payable as of the end of such period. CIM has not taken
any incentive fees with respect to the Company’s TRS to date. For purposes of
computing the capital gains incentive fee, CIM will become entitled to a
capital gains incentive fee only upon the termination or disposition of the
TRS, at which point all net gains and losses of the underlying loans
constituting the reference assets of the TRS will be realized. For purposes of
computing the subordinated incentive fee on income, CIM is not entitled to a
subordinated incentive fee on income with respect to the TRS. Any unrealized
gains on the TRS are reflected in total assets on the Company’s consolidated
balance sheets and included in the computation of the base management fee. 13


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 While the investment advisory agreement with CIM neither includes
nor contemplates the inclusion of unrealized gains in the calculation of the
capital gains incentive fee, pursuant to an interpretation of the American
Institute for Certified Public Accountants, or AICPA, Technical Practice Aid
for investment companies, the Company accrues capital gains incentive fees on
unrealized gains. This accrual reflects the incentive fees that would be
payable to CIM if the Company’s entire investment portfolio was liquidated at
its fair value as of the balance sheet date even though CIM is not entitled to
an incentive fee with respect to unrealized gains unless and until such gains
are actually realized. Net Increase in Net Assets per Share Net increase in net
assets per share is calculated based upon the daily weighted average number of
shares of common stock outstanding during the reporting period. Distributions Distributions to
shareholders are recorded as of the record date. The amount to be paid as a
distribution is determined by the board of directors on a monthly basis. Net
realized capital gains, if any, are distributed at least annually.  Note 3.
Share Transactions The following tablesummarizes transactions with respect to
shares of the Company’s common stock during the three months ended March 31,
2014 and 2013: Three Months EndedMarch 31, 2014
 
 March 31, 2013Shares
 
 Amount
 
 Shares
 
 AmountGross proceeds
  from the offering
 
 
 8,232,851
 
 $
 84,923,898
 
 
 1,208,522
 
 $
 12,135,218Reinvestment of
  distributions
 
 
 248,836
 
 
 2,333,953
 
 
 3,263
 
 
 31,413Total gross
  proceeds
 
 
 8,481,687
 
 
 87,257,851
 
 
 1,211,785
 
 
 12,166,631Sales
  commissions and dealer manager fees
 
 
 -
 
 
 (7,750,349)
 
 
 -
 
 
 (1,127,904)Net proceeds
  from share transactions
 
 
 8,481,687
 
 $
 79,507,502
 
 
 1,211,785
 
 $
 11,038,727
  During the three months ended March 31,
2014 and 2013, the Company sold 8,481,687 and 1,211,785 shares, respectively,
at an average price per share of $10.29 and $10.04, respectively.  The proceeds from the reinvestment of
shareholder distributions are included in the gross proceeds from the Company’s
offering for purposes of determining the total amount of organization costs and
offering expenses that can be paid by the Company (see Note 4).  As of March 31, 2014, the Company sold
23,991,865 shares for gross proceeds of $244,390,076 at an average price per
share of $10.19. The gross proceeds received include reinvested shareholder
distributions of $3,876,967, for which the Company issued 411,716 shares of
common stock. Since commencing its continuous public offering on July 2, 2012
and through May 8, 2014, the Company sold 28,211,914 shares of common stock for
net proceeds of $287,721,756 at an average price per share of $10.20. The net
proceeds include gross proceeds received from reinvested shareholder distributions
of $4,847,114, for which the Company issued 514,868 shares of common stock and
gross proceeds paid for shares of common stock tendered for repurchase of
$45,905, for which the Company repurchased 4,881 shares of common stock.  During the period from April 1, 2014 to
May 8, 2014, the Company sold 4,220,049 shares of common stock for net proceeds
of $43,331,680 at an average price per share of $10.27. The net proceeds
include gross proceeds received from reinvested shareholder distributions of $970,147,
for which the Company issued 103,152 shares of common stock and gross proceeds
paid for shares of common stock tendered for repurchase of $45,905, for which
the Company repurchased 4,881 shares of common stock.  On December 28, 2012, January 31, 2013,
March 14, 2013, May 15, 2013, August 15, 2013, and February 4, 2014, the
Company’s board of directors increased the public offering price per share of
common stock under the Company’s offering to $10.04, $10.13, $10.19, $10.24,
$10.32 and $10.45 per share, respectively, to ensure that the associated
offering price per share, net of sales commissions and dealer manager fees,
equaled or exceeded the net asset value per share on each subsequent
subscription closing date and distribution reinvestment date.  Share Repurchase Program  Beginning in the first quarter of 2014 the
Company began offering, and on a quarterly basis thereafter it intends to
continue offering, to repurchase shares on such terms as may be determined by
the Company’s board of directors in its complete and absolute discretion
unless, in the judgment of the independent directors of the Company’s board of
directors, such repurchases would not be in the best interests of the Company’s
shareholders or would violate applicable law. 14


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The Company currently limits the number of shares to be
repurchased during any calendar year to the number of shares it can repurchase
with the proceeds it receives from the issuance of shares pursuant to its
second amended and restated distribution reinvestment plan. At the discretion
of the Company’s board of directors, it may also use cash on hand, cash
available from borrowings and cash from liquidation of investments as of the
end of the applicable period to repurchase shares. In addition, the Company
limits the number of shares to be repurchased in any calendar year to 15% of
the weighted average number of shares outstanding in the prior calendar year,
or 3.75% in each quarter, though the actual number of shares that it offers to
repurchase may be less in light of the limitations noted above. The Company
offers to repurchase such shares at a price equal to 90% of the offering price
in effect on each date of repurchase.  On April 2, 2014, the Company completed its
first tender offer in connection with its share repurchase program and
repurchased 4,880.906 shares (representing 100% of the shares of common stock
tendered for repurchase) at $9.405 per share for aggregate consideration
totaling $45,905.  Any periodic repurchase offers are subject
in part to the Company’s available cash and compliance with the BDC and RIC
qualification and diversification rules promulgated under the Code and the 1940
Act. While the Company conducts quarterly tender offers as described above, it
is not required to do so and may suspend or terminate the share repurchase program
at any time, upon 30 days’ notice.  Note 4. Transactions with Related Parties  The Company has entered
into an investment advisory agreement with CIM. Pursuant to the investment
advisory agreement, CIM is paid an annual base management fee equal to 2.0% of
the average value of the Company’s gross assets, less cash and cash
equivalents, and an incentive fee based on the Company’s performance, as
described below. The incentive fee consists of two parts. The first part, which
is referred to as the subordinated incentive fee on income, is calculated and
payable quarterly in arrears based on “pre-incentive fee net investment income”
for the immediately preceding quarter and is subject to a hurdle rate, measured
quarterly and expressed as a rate of return on adjusted capital, as defined in
the investment advisory agreement, equal to 1.875% per quarter, or an
annualized rate of 7.5%. The second part of the incentive fee, which is
referred to as the incentive fee on capital gains, is described in Note 2. Refer
to Note 7 for a discussion of CIM’s entitlement to receive incentive fees and
accrual of the incentive fee on capital gains with respect to the TRS.  The Company began accruing fees under the
investment advisory agreement on December 17, 2012, upon the commencement of
the Company’s operations. For the three months ended March 31, 2014 and 2013,
CIM earned $908,807 and $44,742 in management fees, respectively. During these
periods, 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 March 31,
2014 and 2013, the Company recorded capital gains incentive fees of $525,326
and $117,023, respectively, based on the performance of its investment
portfolio, of which $386,656 and $74,992, respectively, were based on net
unrealized gains and $138,670 and $42,031, respectively, were based on realized
gains. During these periods, all incentive fees generated from realized gains were
reimbursed to the Company by IIG in accordance with the expense support and
conditional reimbursement agreement. In addition, see Note 7 for a discussion
of CIM’s entitlement to receive incentive fees and accrual of the incentive fee
on capital gains with respect to the TRS.  On January 30, 2013, the Company entered
into the expense support and conditional reimbursement agreement with IIG,
whereby IIG agreed to reimburse the Company for expenses in an amount that is
sufficient to: (1) ensure that no portion of the Company’s distributions to
shareholders will be paid from its offering proceeds or borrowings, and/or (2)
reduce the Company’s operating expenses until it has achieved economies of
scale sufficient to ensure that it bears a reasonable level of expense in
relation to its investment income. Pursuant to the expense support and
conditional reimbursement agreement, the Company has a conditional obligation
to reimburse IIG for any amounts funded by IIG under such agreement if, during
any fiscal quarter occurring within three years of the date on which IIG funded
such amount, the sum of the Company’s net investment income for tax purposes,
net capital gains and the amount of any dividends and other distributions paid
to the Company on account of investments in portfolio companies exceeds the
distributions paid by the Company to its shareholders. For the three months
ended March 31, 2014 and 2013, the total expense reimbursement from IIG was $1,048,858
and $819,373, respectively, relating to certain operating expenses.  On December 13,
2013, the Company and IIG amended and restated the expense support and
conditional reimbursement agreement to extend the termination date of such
agreement from January 30, 2014 to January 30, 2015. 15


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The Company may fund its cash distributions to shareholders from
any sources of funds available to the Company, including offering proceeds,
borrowings, net investment income from operations, capital gains proceeds from
the sale of assets, non-capital gains proceeds from the sale of assets, dividends
or other distributions paid to it on account of preferred and common equity
investments in portfolio companies and expense reimbursements from IIG, which
are subject to recoupment. The Company has not established limits on the amount
of funds it may use from available sources to make distributions. A
substantial portion of the Company’s distributions have resulted, and future
distributions may result, from expense reimbursements from IIG, which are
subject to repayment by the Company within three years. The purpose of
this arrangement is to avoid such distributions being characterized as a return
of capital for tax purposes. Shareholders should understand that any such
distributions are not based on the Company’s investment performance, and can only
be sustained if the Company achieves positive investment performance in future
periods and/or IIG continues to make such expense reimbursements. Shareholders
should also understand that the Company’s future repayments will reduce the
distributions that they would otherwise receive.  There can be no
assurance that the Company will achieve such performance in order to sustain
these distributions, or be able to pay distributions at all.  IIG has no
obligation to provide expense reimbursements to the Company in future periods.
For the three months ended March 31, 2014 and 2013, if expense reimbursements
from IIG were not supported, some or all of the distributions may have been a
return of capital for tax purposes.  The table below presents a summary of all expenses
supported by IIG and the associated dates through which such expenses are
eligible for reimbursement by the Company for each of the following three month
periods. Three Months
  Ended
 
 
 Expense Support Received from IIG
 
 Expense Support Reimbursed to IIG
 
 Unreimbursed Expense Support
 
 Ratio of Operating Expense to Average Net
  Assets for the Period(1)
 
 Annualized Distribution Rate for the
  Period(3)
 
 Eligible for Reimbursement 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, 2016September 30,
  2013
 
 
 1,296,834
 
 
 -
 
 
 1,296,834
 
 0.49%
 
 7.00%
 
 September 30, 2016December 31,
  2013
 
 
 695,160
 
 
 -
 
 
 695,160
 
 0.31%
 
 7.00%
 
 December 31, 2016March 31, 2014
 
 
 1,048,858
 
 
 -
 
 
 1,048,858
 
 0.52%
 
 7.00%
 
 March 31, 2017Total
 
 $
 5,124,467
 
 $
 -
 
 $
 5,124,467
 (1)
 Operating expenses include all expenses borne by the Company,
  except for organization costs 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
  distributions paid immediately prior to the date the expense support payment
  obligation was incurred by CIM. Annualized Distribution Rate does not include
  special cash or stock distributions paid to shareholders.
  Pursuant to the expense support and
conditional reimbursement agreement, the Company will have a conditional
obligation to reimburse IIG for any amounts funded by IIG under such agreement
(i) if expense reimbursement amounts funded by IIG exceed operating expenses
incurred during any fiscal quarter, (ii) if the sum of the Company’s net
investment income for tax purposes, net capital gains and the amount of any
dividends and other distributions paid to the Company on account of investments
in portfolio companies (to the extent not included in net investment income or
net capital gains for tax purposes) exceeds the distributions paid by the
Company to shareholders, and (iii) during any fiscal quarter occurring within
three years of the date on which IIG funded such amount.  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 March 31, 2014, the
total net payable due to IIG was $970,278, of which $591,475 was related to
organization costs and offering expenses submitted for reimbursement and
$378,803 was related to fees earned and expense reimbursement support provided
by IIG during the three months ended March 31, 2014. As of December 31, 2013,
the net reimbursement due from IIG was $545,593. 16


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The
Company or IIG may terminate the expense support and conditional reimbursement
agreement at any time. IIG has indicated that it expects to continue such
reimbursements until it deems that the Company has achieved economies of scale
sufficient to ensure that it bears a reasonable level of expenses in relation
to its income. If the Company terminates the investment advisory agreement with
CIM, the Company may be required to repay IIG all reimbursements funded by IIG
within three years of the date of termination. The specific amount of expenses
reimbursed by IIG, if any, will be determined at the end of each quarter. There
can be no assurance that the expense support and conditional reimbursement
agreement will remain in effect or that IIG will reimburse any portion of the
Company’s expenses in future quarters.  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 months ended
March 31, 2014 and 2013, the Company incurred administrative services expenses
to ICON Capital of $415,395 and $263,555, respectively, the majority of which
related to the allocation of costs of administrative personnel for services
rendered to the Company and the remainder related to other reimbursable
expenses. During these periods, all or a portion of 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 will not exceed 1.5% of the actual
gross proceeds raised from the offering (without giving effect to any potential
reimbursements from IIG and its affiliates). If the Company sells the maximum
number of shares at its latest public offering price of $10.45 per share, the
Company estimates that it may incur up to approximately $15,675,000 of expenses.
Under the terms of the investment advisory agreement, CIM and certain of its
affiliates, which includes IIG, are entitled to receive reimbursement of up to
1.5% of the gross proceeds raised until all 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, which could be late as December 31,
2015, rather than actual gross proceeds raised through the date of
reimbursement. Consistent with such application and since the Company believed
it would raise at least $100 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 costs and offering expenses
submitted for reimbursement. The transactions 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 costs and offering expenses, the Company will interpret the
1.5% limit based on actual gross proceeds raised at the time of such
reimbursement.  In addition, the Company will not issue any of its
shares or other securities for services or for property other than cash or
securities except as a dividend or distribution to its security holders or in
connection with a reorganization.  Consistent with this
interpretation, on May 30, 2013, IIG paid the Company $1,000,000, plus interest
accrued at a rate of 7% per year.  From inception through March 31, 2014, IIG
and its affiliates incurred organization costs and offering expenses of approximately
$2,012,000, of which $1,591,475 has been submitted to the Company for
reimbursement, and of which the Company paid $450,000 in October 2013 and
$550,000 in March 2014. No additional material organization costs or offering
expenses have been incurred by IIG or its affiliates subsequent to March 31,
2014. 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 remaining costs funded by IIG and its affiliates.  As of March 31, 2014, the Company raised
gross proceeds of $244,390,076, of which it can pay up to $3,665,851 in
organization costs and offering expenses (which represents 1.5% of the actual gross
proceeds raised). Through March 31, 2014, the Company paid $3,061,183 of such
costs and expenses, leaving an additional $604,668 that can be paid, of which
$591,475 was submitted for reimbursement by IIG during the quarter. As of May
8, 2014, the Company raised gross proceeds of $287,721,756, of which it can pay
up to $4,315,826 in organization costs and offering expenses (which represents
1.5% of the actual gross proceeds raised). Through May 8, 2014, the Company
paid $3,410,105 of such costs and expenses, leaving an additional $905,721 that
can be paid.  The Company has entered into certain
agreements with CIM’s affiliate, 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 gross offering proceeds from the sale of the Company’s shares. The selling
dealers are entitled to receive a sales commission of up to 7% of gross
offering proceeds. Such costs are charged against capital in excess of par
value when incurred. For the three months ended March 31, 2014, the Company
incurred sales commissions of $5,237,154 to the selling dealers and dealer
manager fees of $2,513,195 to ICON Securities. Since commencing its continuous
public offering on July 2, 2012 and through May 8, 2014, the Company paid or
accrued sales commissions of $16,934,881 to the selling dealers and dealer
manager fees of $8,177,216 to ICON Securities. 17


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Fees
and other expenses incurred by the Company related to CIM and its affiliates
were as follows:  Three Months
 
 Three MonthsEnded
 
 EndedEntity
 
 Capacity
 
 Description
 
 March 31, 2014
 
 March 31, 2013ICON Securities
 
 Dealer manager
 
 Dealer manager fees(1)
 
 $
 2,513,195
 
 $
 358,269CIM
 
 Investment
  adviser
 
 Management fees(2)(3)
 
 
 908,807
 
 
 44,742CIM
 
 Investment
  adviser
 
 Incentive fees(2)(3)
 
 
 525,326
 
 
 117,023ICON Capital
 
 Administrative
  services provider
 
 Administrative
  services expense(2)(3)
 
 
 415,395
 
 
 263,555IIG
 
 Sponsor
 
 Organization
  costs and offering expenses reimbursement(2)
 
 
 591,475
 
 
 -$
 4,954,198
 
 $
 783,589(1)Amount charged directly to equity.(2)Amount charged directly to operations.(3)All or a portion of the expense has
  been supported in connection with the expense support and conditional
  reimbursement agreement.
  Because CIM’s senior management team is
comprised of substantially the same personnel as the senior management team of
the Company’s affiliate, ICON Capital, which is the investment manager to certain
equipment finance funds, or equipment funds, such members of senior management
provide investment advisory and management services to the equipment funds in
addition to the Company. In the event that CIM undertakes to provide investment
advisory services to other clients in the future, it will strive to allocate
investment opportunities in a fair and equitable manner consistent with the
Company’s investment objective and strategies so that the Company will not be
disadvantaged in relation to any other client of the investment adviser or its
senior management team. However, it is currently possible that some investment
opportunities will be provided to the equipment funds or other clients of CIM
rather than to the Company.  Indemnifications  The investment advisory agreement, the
investment sub-advisory agreement, the administration agreement and the dealer manager
agreement each provide certain indemnifications from the Company to the other
relevant parties to such agreements.  The Company’s maximum exposure under
these agreements is unknown. However, the Company has not experienced claims or
losses pursuant to these agreements and believes the risk of loss related to
such indemnifications to be remote.  Note 5. Distributions  The Company’s board of directors declared
distributions for twenty four and nine record dates during the year ended
December 31, 2013 and three months ended March 31, 2014, respectively. Declared
distributions are paid monthly.  The following table presents cash
distributions per share that were declared during the year ended December 31,
2013 and three months ended March 31, 2014:  DistributionsThree Months
  Ended
 
 Per Share
 
 AmountFiscal 2013March 31, 2013
  (six record dates)
 
 $
 0.1769
 
 $
 208,766June 30, 2013
  (six record dates)
 
 
 0.1788
 
 
 518,630September 30,
  2013 (six record dates)
 
 
 0.1799
 
 
 1,089,797December 31,
  2013 (six record dates)
 
 
 0.1806
 
 
 2,157,124Fiscal 2014March 31, 2014
  (nine record dates)
 
 $
 0.1679
 
 $
 3,314,444
  On February 1, 2014, the
Company changed from semi-monthly closings to weekly closings for the sale of the
Company’s shares pursuant to its continuous public offering. As result, the Company’s board of
directors authorizes and declares on a monthly basis a weekly distribution amount per share of
common stock. 18


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 On March 14, 2014, the Company’s board
of directors declared five weekly cash distributions of $0.014067 per share,
which were paid on April 30, 2014 to shareholders of record on April 1, April
8, April 15, April 22 and April 29, 2014. On April 15, 2014, the board of
directors declared four weekly cash distributions of $0.014067 per share,
payable on May 28, 2014 to shareholders of record on May 6, May 13, May 20 and
May 27, 2014.  The Company has adopted an “opt in”
distribution reinvestment plan for shareholders. As a result, if the Company
makes a distribution, shareholders will receive distributions in cash unless
they specifically “opt in” to the second amended and restated distribution
reinvestment plan so as to have their cash distributions reinvested in
additional shares of the Company’s common stock.  The Company may fund cash distributions to
shareholders in the future from any sources of funds available, including
offering proceeds, borrowings, net investment income from operations, capital
gains proceeds from the sale of assets, non-capital gains proceeds from the
sale of assets, dividends or other distributions paid to the Company on account
of preferred and common equity investments in portfolio companies and expense
reimbursements from IIG. A substantial portion of the Company’s distributions
have resulted, and future distributions may result, from expense reimbursements
from IIG, which are subject to repayment by the Company. The Company has not
established limits on the amount of funds it may use from available sources to
make distributions.  The following table reflects the sources of
cash distributions that the Company has declared on its shares of common stock
during the three months ended March 31, 2014 and 2013:  Three Months EndedMarch 31, 2014
 
 March 31, 2013Source of
  Distribution
 
 Per Share
 
 Amount
 
 Percentage
 
 Per Share
 
 Amount
 
 PercentageNet realized
  gain on total return swapNet interest and
  other income from TRS portfolio
 
 $
 0.1197
 
 $
 2,360,371
 
 71.3%
 
 $
 0.0683
 
 $
 80,614
 
 38.6%Net gain on TRS
  loan sales
 
 
 0.0306
 
 
 603,108
 
 18.2%
 
 
 0.1047
 
 
 123,575
 
 59.2%Net realized
  gain on investments
 
 
 0.0087
 
 
 173,714
 
 5.2%
 
 
 0.0039
 
 
 4,577
 
 2.2%From other
  sources(1)
 
 
 0.0089
 
 
 177,251
 
 5.3%
 
 
 -
 
 
 -
 
 -Total
  distributions
 
 $
 0.1679
 
 $
 3,314,444
 
 100.0%
 
 $
 0.1769
 
 $
 208,766
 
 100.0%
 (1)Includes adjustments made to net
  investment income to arrive at taxable income available for distributions.
  It is the Company's
policy to comply with all requirements of the Code applicable to regulated
investment companies and to distribute substantially all of its taxable income
to its shareholders. In addition, by distributing during each calendar year substantially
all of its net investment income, net realized capital gains and certain other
amounts, if any, the Company intends not to be subject to a federal excise tax.
Accordingly, no federal income tax provision was required.  Income and
capital gain distributions are determined in accordance with the Code and
federal tax regulations, which may differ from amounts determined in accordance
with GAAP. These book/tax differences, which could be material, are primarily
due to differing treatments of income and gains on various investments held by
the Company. Permanent book/tax differences result in reclassifications to
capital in excess of par value, accumulated undistributed net investment
income, accumulated undistributed realized gain on investments, and accumulated
undistributed realized gain on total return swap. During 2013, the Company did
not have any reclassifications as a result of permanent book/tax differences.  The determination of the tax attributes of
the Company’s distributions is made annually as of the end of the Company’s
fiscal year based upon the Company’s taxable income for the full year and
distributions paid for the full year. The tax characteristics of distributions
to shareholders are reported to shareholders annually on Form 1099-DIV. All
distributions for 2013 are characterized as ordinary income distributions for
federal income tax purposes.  The tax components of accumulated earnings
for the current year will be determined at year end. As of December 31, 2013,
the components of accumulated earnings on a tax basis were as follows:  December 31, 2013Undistributed
  net investment income
 $
 80,044Performance-based
  incentive fee on unrealized gains
 
 (530,569)Net unrealized
  appreciation on investments and total return swap
 
 2,603,245$
 2,152,720
 19


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 As of March 31, 2014, the aggregate gross unrealized appreciation
for all securities in which there was an excess of value over tax cost was
$4,528,973; the aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value was $62,844; the net
unrealized appreciation was $4,466,129; the aggregate cost of securities for
Federal income tax purposes was $151,802,060.  As of December 31, 2013, the aggregate
gross unrealized appreciation for all securities in which there was an excess
of value over tax cost was $2,726,569; the aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
value was $123,324; the net unrealized appreciation was $2,603,245; the
aggregate cost of securities for Federal income tax purposes was $103,464,285.  Note 6. Investments  The composition of the Company’s investment
portfolio as of March 31, 2014 and December 31, 2013 at amortized cost and fair
value was as follows:  March 31, 2014
 
 December 31, 2013Amortized
  Cost(1)
 
 Fair
  Value
 
 Percentage of
  Investment
  Portfolio
 
 Amortized
  Cost(1)
 
 Fair
  Value
 
 Percentage of
  Investment
  PortfolioSenior secured
  term loans - first lien
 
 $
 83,294,303
 
 $
 84,299,368
 
 54.9%
 
 $
 61,095,685
 
 $
 61,787,430
 
 59.1%Senior secured
  term loans - second lien
 
 
 46,459,068
 
 
 47,163,590
 
 30.7%
 
 
 22,189,331
 
 
 22,552,214
 
 21.6%Collateralized
  securities
 
 
 11,039,438
 
 
 11,044,972
 
 7.2%
 
 
 8,746,000
 
 
 8,795,600
 
 8.4%Short term
  investments(2)
 
 
 11,003,717
 
 
 11,003,717
 
 7.2%
 
 
 11,383,669
 
 
 11,383,669
 
 10.9%Total
  investments
 
 $
 151,796,526
 
 $
 153,511,647
 
 100.0%
 
 $
 103,414,685
 
 $
 104,518,913
 
 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)Short term investments represent an investment in a fund that invests in
  highly liquid investments with original maturity dates of three months or
  less.
 20


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The following tables show the composition of the Company’s
investment portfolio by industry classification and geographic dispersion, and
the percentage, by fair value, of the total investment portfolio assets in such
industries and geographies as of March 31, 2014 and December 31, 2013:  March 31, 2014
 
 December 31, 2013Industry
  Classification
 
 Investments at
  Fair Value
 
 Percentage of
  Investment Portfolio
 
 Investments at
  Fair Value
 
 Percentage of
  Investment PortfolioServices:
  Business
 
 $
 15,839,696
 
 10.3%
 
 $
 15,754,714
 
 15.1%High Tech
  Industries
 
 
 15,594,028
 
 10.2%
 
 
 2,876,400
 
 2.8%Automotive
 
 
 15,470,635
 
 10.1%
 
 
 7,473,560
 
 7.2%Healthcare &
  Pharmaceuticals
 
 
 13,973,688
 
 9.1%
 
 
 8,968,804
 
 8.6%Diversified
  Financials
 
 
 11,044,972
 
 7.2%
 
 
 8,795,600
 
 8.4%Beverage, Food
  & Tobacco
 
 
 10,068,750
 
 6.6%
 
 
 -
 
 -Media:
  Diversified & Production
 
 
 9,513,441
 
 6.2%
 
 
 1,920,350
 
 1.8%Consumer Goods:
  Non-Durable
 
 
 8,908,925
 
 5.9%
 
 
 9,527,245
 
 9.1%Chemicals,
  Plastics & Rubber
 
 
 6,821,100
 
 4.4%
 
 
 6,797,514
 
 6.5%Hotel, Gaming
  & Leisure
 
 
 6,359,950
 
 4.1%
 
 
 515,000
 
 0.5%Retail
 
 
 5,667,188
 
 3.7%
 
 
 -
 
 -Services:
  Consumer
 
 
 5,592,766
 
 3.6%
 
 
 5,628,126
 
 5.3%Media:
  Broadcasting & Subscription
 
 
 3,666,384
 
 2.4%
 
 
 3,544,422
 
 3.4%Telecommunications
 
 
 3,500,000
 
 2.3%
 
 
 3,973,040
 
 3.8%Construction
  & Building
 
 
 2,487,453
 
 1.6%
 
 
 3,415,256
 
 3.3%Environmental
  Industries
 
 
 1,902,784
 
 1.2%
 
 
 1,909,952
 
 1.8%Energy: Oil
  & Gas
 
 
 1,704,933
 
 1.1%
 
 
 3,629,300
 
 3.5%Containers,
  Packaging & Glass
 
 
 1,492,500
 
 1.0%
 
 
 1,500,000
 
 1.4%Aerospace &
  Defense
 
 
 1,458,319
 
 0.9%
 
 
 1,463,701
 
 1.4%Banking,
  Finance, Insurance & Real Estate
 
 
 1,440,418
 
 0.9%
 
 
 2,427,410
 
 2.3%Capital
  Equipment
 
 
 -
 
 -
 
 
 3,014,850
 
 2.9%U.S. Treasury
  Securities
 
 
 11,003,717
 
 7.2%
 
 
 11,383,669
 
 10.9%Total
 
 $
 153,511,647
 
 100.0%
 
 $
 104,518,913
 
 100.0%
  March 31, 2014
 
 December 31, 2013Geographic
  Dispersion(1)
 
 Investments at
  Fair Value
 
 Percentage of
  Investment Portfolio
 
 Investments at
  Fair Value
 
 Percentage of
  Investment PortfolioUnited States
 
 $
 135,686,830
 
 88.4%
 
 $
 86,337,730
 
 82.6%Netherlands
 
 
 5,050,000
 
 3.3%
 
 
 5,037,500
 
 4.8%Switzerland
 
 
 1,771,100
 
 1.1%
 
 
 1,760,014
 
 1.7%U.S. Treasury Securities
 
 
 11,003,717
 
 7.2%
 
 
 11,383,669
 
 10.9%Total
 
 $
 153,511,647
 
 100.0%
 
 $
 104,518,913
 
 100.0%
 (1)The geographic dispersion is determined
  by the portfolio company's country of domicile.
 As of March 31,
2014 and December 31, 2013, there were no delinquent or non-accrual debt
investments. The Company does
not “control” and is not an “affiliate” of any of the Company’s portfolio
companies, each as defined in the 1940 Act. In general, under the 1940 Act, the
Company would be presumed to “control” a portfolio company or issuer if the
Company owned 25% or more of its voting securities and would be an “affiliate”
of a portfolio company or issuer if the Company owned 5% or more of its voting
securities. The
Company’s investment portfolio may contain senior secured investments that are
in the form of lines of credit, unfunded delayed drawdown loan commitments, or
revolving credit facilities, which require the Company to provide funding when
requested by portfolio companies in accordance with the terms of the underlying
loan agreements. As of March 31, 2014 andDecember 31, 2013, the Company’s
unfunded loan commitments amounted to $3,054,668 and $2,450,758, respectively.For
the specific portfolio companies which the Company is committed to fund
additional amounts as ofMarch 31, 2014 andDecember
31, 2013,refer to the consolidated schedule
of investments. 21


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Note 7. Total Return Swap  On December 17, 2012, the Company, through
its wholly-owned subsidiary, Flatiron, entered into a TRS with Citibank. Effective
December 9, 2013, Flatiron and Citibank amended the TRS to, among other things,
extend the termination or call date from December 17, 2013 to December 17,
2014, increase the maximum aggregate market value of the portfolio of loans
subject to the TRS (determined at the time each such loan becomes subject to
the TRS) from $150 million to $225 million, and increase the interest rate payable
by Flatiron to Citibank with respect to each loan included in the TRS by
increasing the spread over the floating rate index specified for each such loan
from 1.25% to 1.35% per year. Flatiron and Citibank further amended the TRS to
increase the maximum aggregate market value of the portfolio of loans subject
to the TRS to $275 million effective February 18, 2014 and to $325 million
effective April 30, 2014.  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 $325,000,000. Flatiron is required to initially cash
collateralize a specified percentage of each loan (generally 25% of the market
value of such loan) included under the TRS in accordance with margin
requirements described in the TRS Agreement. Under the terms of the TRS,
Flatiron agreed not to draw upon, or post as collateral, such cash collateral
in respect of other financings or operating requirements prior to the
termination of the TRS. Neither the cash collateral required to be posted with
Citibank nor any other assets of Flatiron are available to pay the debts of the
Company.  Each individual loan must meet criteria
described in the TRS Agreement, including a requirement that substantially all
of the loans be rated by Moody’s and S&P, be part of a loan facility of at
least $125 million and have at least two bid quotations from a
nationally-recognized pricing service. Under the terms of the TRS, Citibank, as
calculation agent, determines whether there has been a failure to satisfy the
portfolio criteria in the TRS. If such failure continues for 30 days following
the delivery of notice thereof, then Citibank has the right, but not the
obligation, to terminate the TRS. Flatiron receives from Citibank all interest and
fees payable in respect of the loans included in the TRS. Flatiron pays to
Citibank interest at a rate equal to, in respect of each loan included in the
TRS, the floating rate index specified for such loan plus 1.35% per year. In
addition, upon the termination or repayment of any loan subject to the TRS,
Flatiron will either receive from Citibank the appreciation in the value of
such loan or pay to Citibank any depreciation in the value of such loan.  Under the terms of the TRS, Flatiron may be
required to post additional cash collateral, on a dollar-for-dollar basis, in
the event of depreciation in the value of the underlying loans after such value
decreases below a specified amount. The limit on the additional collateral that
Flatiron may be required to post pursuant to the TRS is equal to the difference
between the full notional amount of the loans underlying the TRS and the amount
of cash collateral already posted by Flatiron. The amount of collateral
required to be posted by Flatiron is determined primarily on the basis of the
aggregate value of the underlying loans.  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. 22


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Citibank may terminate the TRS on or after December 17, 2014, or
the call date. Flatiron may terminate the TRS at any time upon providing no
more than 30 days prior notice to Citibank. Any termination prior to the call
date will result in payment of an early termination fee to Citibank based on
the maximum portfolio amount of the TRS. Under the terms of the TRS, the early
termination fee will equal the present value of a stream of monthly payments
that would be owed by Flatiron to Citibank for the period from the termination
date through and including the call date. Such monthly payments will equal the
product of 80% of the maximum portfolio amount, multiplied by 1.35% per year.
The Company estimates the early termination fee would have been approximately $2,111,285
at March 31, 2014. 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 March 31, 2014, Flatiron was not subject to a
minimum usage fee.  The value of the TRS is based 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 such loan in the open market. As of March
31, 2014 and December 31, 2013, the fair value of the TRS was $2,756,542 and
$1,548,617, respectively. 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 March 31, 2014 and December 31, 2013, Flatiron had selected
76 and 63 underlying loans with a total notional amount of $230,257,406 and
$148,199,937, respectively. For the same periods, Flatiron posted $68,368,923
and $40,703,777 in cash collateral held by Citibank (of which only $66,536,931
and $39,285,408 was required to be posted), which is reflected in due from
counterparty on the Company’s consolidated balance sheets.  Realized gains and losses on the TRS are
composed of any gains or losses on loans underlying the TRS as well as net
interest earned during the period. Receivable due on the TRS is composed of any
amounts due from Citibank that consist of earned but not yet collected net
interest and net gains on sales and principal repayments of underlying loans of
the TRS. As of and for the three months ended March 31, 2014, the net
receivable and net realized gain on the TRS consisted of the following:  March 31, 2014Net Receivable(1)
 
 Net Realized Gain(2)Interest and
  other income from TRS portfolio
 
 $
 2,947,336
 
 $
 3,073,966Interest and
  other expense from TRS portfolio
 
 
 (693,294)
 
 
 (713,595)Net gain on TRS
  loan sales
 
 
 555,533
 
 
 603,108Total
 
 $
 2,809,575
 
 $
 2,963,479
  (1)
 Net receivable
  is reflected in receivable due on total return swap on the Company's
  consolidated balance sheets.(2)
 Net realized
  gain is reflected in net realized gain on total return swap on the Company's
  consolidated statements of operations.
 23


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 In connection with the TRS, Flatiron is required to comply with
various covenants and reporting requirements as defined in the TRS Agreement.
As of March 31, 2014, Flatiron was in compliance with all covenants and
reporting requirements.  CIM has not taken any incentive fees with
respect to the Company’s TRS to date. For purposes of computing the capital
gains incentive fee, CIM will become entitled to a capital gains incentive fee
only upon the termination or disposition of the TRS, at which point all net
gains and losses of the underlying loans constituting the reference assets of
the TRS will be realized. For purposes of computing the subordinated incentive
fee on income, CIM is not entitled to a subordinated incentive fee on income
with respect to the TRS. Any unrealized gains 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. While the
investment advisory agreement with CIM neither includes nor contemplates the
inclusion of unrealized gains in the calculation of the capital gains incentive
fee, pursuant to an interpretation of the AICPA Technical Practice Aid for
investment companies, the Company accrues capital gains incentive fees on
unrealized gains. This accrual reflects the incentive fees that would be
payable to CIM if the Company’s entire investment portfolio was liquidated at
its fair value as of the balance sheet date even though CIM is not entitled to
an incentive fee with respect to unrealized gains unless and until such gains
are actually realized.  For purposes of the asset coverage ratio
test applicable to the Company as a BDC, the Company treats the outstanding
notional amount of the TRS, less the total amount of cash collateral posted by
Flatiron under the TRS, as a senior security for the life of that instrument.
The Company may, however, accord different treatment to the TRS in the future
in accordance with any applicable new rules or interpretations adopted by the
staff of the Securities and Exchange Commission, or SEC.  Further, for purposes of Section 55(a)
under the 1940 Act, the Company treats each loan underlying the TRS as a
qualifying asset if the obligor on such loan is an eligible portfolio company
and as a non-qualifying asset if the obligor is not an eligible portfolio
company. The Company may, however, accord different treatment to the TRS in the
future in accordance with any applicable new rules or interpretations adopted
by the staff of the SEC. 24


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The
following is a summary of the underlying loans subject to the TRS as of March
31, 2014:  Underlying
  Loans(a)
 
 Index Rate(b)
 
 Industry
 
 Notional
  Amount
 
 Fair
  Value(c)
 
 Unrealized
  Appreciation /
  (Depreciation)Senior
  Secured First Lien Term LoansThe Active
  Network, Inc., L+450, 1.00% LIBOR Floor, 11/13/2020
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 $
 1,942,347
 
 $
 1,967,978
 
 $
 25,631American Tire
  Distributors, Inc., L+475, 1.00% LIBOR Floor, 6/1/2018(d)
 
 1 Month LIBOR
 
 Automotive
 
 
 3,160,875
 
 
 3,161,813
 
 
 938Amneal
  Pharmaceuticals, LLC, L+475, 1.00% LIBOR Floor, 11/1/2019
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,339,315
 
 
 3,385,695
 
 
 46,380Aptean, Inc.,
  L+425, 1.00% LIBOR Floor, 2/26/2020(e)
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 3,767,100
 
 
 3,787,650
 
 
 20,550Aquilex, LLC,
  L+400, 1.00% LIBOR Floor, 12/31/2020
 
 1 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 4,987,500
 
 
 5,014,600
 
 
 27,100Arc Document
  Solutions, Inc., L+525, 1.00% LIBOR Floor, 12/20/2018(e)
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 4,748,835
 
 
 4,894,208
 
 
 145,373ARG IH
  Corporation, L+400, 1.00% LIBOR Floor, 11/15/2020
 
 3 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 2,388,015
 
 
 2,406,712
 
 
 18,697Ascensus, Inc.,
  L+400, 1.00% LIBOR Floor, 12/2/2019
 
 1 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 4,962,563
 
 
 5,031,141
 
 
 68,578ATI Holdings,
  Inc., L+400, 1.00% LIBOR Floor, 12/21/2019
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 488,813
 
 
 499,097
 
 
 10,284Azure Midstream
  Energy, LLC, L+550, 1.00% LIBOR Floor, 11/15/2018
 
 1 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 4,325,457
 
 
 4,363,659
 
 
 38,202BBTS Borrower,
  LP, L+650, 1.25% LIBOR Floor, 6/4/2019
 
 3 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 1,849,498
 
 
 1,880,156
 
 
 30,658Bluestem Brands,
  Inc., L+650, 1.00% LIBOR Floor, 12/6/2018
 
 3 Month LIBOR
 
 Retail
 
 
 4,322,311
 
 
 4,366,680
 
 
 44,369Camp
  International Holding Company, L+375, 1.00% LIBOR Floor, 5/31/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 1,216,926
 
 
 1,229,096
 
 
 12,170Caraustar
  Industries, Inc., L+625, 1.25% LIBOR Floor, 5/1/2019
 
 3 Month LIBOR
 
 Forest Products
  & Paper
 
 
 924,028
 
 
 946,111
 
 
 22,083Charming
  Charlie, LLC, L+800, 1.00% LIBOR Floor, 12/18/2019
 
 3 Month LIBOR
 
 Retail
 
 
 7,796,565
 
 
 7,845,181
 
 
 48,616CHI Overhead
  Doors, Inc., L+425, 1.25% LIBOR Floor, 3/18/2019
 
 1 Month LIBOR
 
 Construction
  & Building
 
 
 5,983,701
 
 
 5,993,693
 
 
 9,992Consolidated
  Aerospace Manufacturing, LLC, P+300, 1.00% Base Rate Floor, 2/28/2020(d)
 
 Prime
 
 Aerospace &
  Defense
 
 
 7,236,635
 
 
 7,291,183
 
 
 54,548Cyanco
  Intermediate Corp., L+450, 1.00% LIBOR Floor, 5/1/2020
 
 1 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 1,251,232
 
 
 1,268,931
 
 
 17,699Deluxe
  Entertainment Services Group, Inc., L+550, 1.00% LIBOR Floor, 2/28/2020(e)
 
 6 Month LIBOR
 
 Media:
  Diversified & Production
 
 
 1,160,170
 
 
 1,167,947
 
 
 7,777Flexera
  Software, LLC, L+350, 1.00% LIBOR Floor, 4/2/2020(d)
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 1,731,300
 
 
 1,740,000
 
 
 8,700Hemisphere Media
  Holdings, LLC, L+500, 1.25% LIBOR Floor, 7/30/2020(e)
 
 1 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 6,321,394
 
 
 6,333,118
 
 
 11,724Herff Jones,
  Inc., L+450, 1.00% LIBOR Floor, 6/25/2019
 
 1 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 1,910,355
 
 
 1,982,574
 
 
 72,219Hyperion Finance
  S.à r.l., L+475, 1.00% LIBOR Floor, 10/17/2019(e)
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 4,421,419
 
 
 4,503,698
 
 
 82,279Insight
  Pharmaceuticals, LLC, L+500, 1.25% LIBOR Floor, 8/25/2016
 
 2 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 5,979,893
 
 
 5,974,924
 
 
 (4,969)inVentiv Health,
  Inc., L+600, 1.50% LIBOR Floor, 8/4/2016
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 6,258,942
 
 
 6,288,609
 
 
 29,667Kronos
  Worldwide, Inc., L+350, 1.00% LIBOR Floor, 10/30/2019(d)
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 4,646,650
 
 
 4,701,523
 
 
 54,873Landslide
  Holdings, Inc., L+400, 1.00% LIBOR Floor, 2/25/2020
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 2,882,874
 
 
 2,885,946
 
 
 3,072Learfield
  Communications, Inc., L+400, 1.00% LIBOR Floor, 10/9/2020
 
 3 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 744,384
 
 
 749,995
 
 
 5,611Lineage
  Logistics, LLC, L+350, 1.00% LIBOR Floor, 4/26/2019
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 2,495,304
 
 
 2,501,602
 
 
 6,298Marine
  Acquisition Corp., L+425, 1.00% LIBOR Floor, 1/30/2021
 
 3 Month LIBOR
 
 Capital
  Equipment
 
 
 7,960,000
 
 
 8,030,000
 
 
 70,000Merrill Corp.,
  L+475, 1.00% LIBOR Floor, 3/8/2018
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 618,624
 
 
 618,882
 
 
 258Mohegan Tribal
  Gaming Authority, L+450, 1.00% LIBOR Floor, 11/19/2019
 
 3 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 1,639,292
 
 
 1,687,940
 
 
 48,648National
  Financial Partners Corp., L+425, 1.00% LIBOR Floor, 7/1/2020
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 4,219,425
 
 
 4,239,214
 
 
 19,789Nord Anglia
  Education Finance, LLC, L+350, 1.00% LIBOR Floor, 3/31/2021(d)(e)
 
 2 Month LIBOR
 
 Services:
  Business
 
 
 2,139,250
 
 
 2,147,313
 
 
 8,063OCI Beaumont,
  LLC, L+500, 1.25% LIBOR Floor, 8/20/2019(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 2,280,075
 
 
 2,327,436
 
 
 47,361Opal
  Acquisition, Inc., L+400, 1.00% LIBOR Floor, 11/27/2020
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 4,569,426
 
 
 4,619,971
 
 
 50,545Packaging
  Coordinators, Inc., L+425, 1.25% LIBOR Floor, 5/10/2020
 
 3 Month LIBOR
 
 Containers,
  Packaging & Glass
 
 
 1,980,050
 
 
 1,980,050
 
 
 -Peppermill
  Casinos, Inc., L+600, 1.25% LIBOR Floor, 11/9/2018
 
 1 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 975,175
 
 
 1,012,188
 
 
 37,013Photonis
  Technologies SAS, L+750, 1.00% LIBOR Floor, 9/18/2019(e)
 
 3 Month LIBOR
 
 Aerospace &
  Defense
 
 
 5,749,949
 
 
 5,927,709
 
 
 177,760Planet Fitness
  Holdings, LLC, L+375, 1.00% LIBOR Floor, 3/31/2021(d)
 
 3 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 2,208,900
 
 
 2,220,000
 
 
 11,100Polyconcept
  Finance B.V., L+475, 1.25% LIBOR Floor, 6/28/2019(e)
 
 1 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,464,643
 
 
 2,502,367
 
 
 37,724Safe-Guard
  Products International, LLC, L+600, 1.25% LIBOR Floor, 12/21/2018
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 2,216,396
 
 
 2,259,953
 
 
 43,557SESAC Holdco II,
  LLC, L+400, 1.00% LIBOR Floor, 2/8/2019
 
 1 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 488,813
 
 
 497,453
 
 
 8,640SK Spice
  S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 2,965,100
 
 
 2,985,000
 
 
 19,900SRA
  International, L+525, 1.25% LIBOR Floor, 7/20/2018
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 2,351,305
 
 
 2,399,444
 
 
 48,139Steward Health
  Care System, LLC, L+550, 1.25% LIBOR Floor, 4/10/2020
 
 12 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,427,866
 
 
 3,482,434
 
 
 54,568STS Operating,
  Inc., L+375, 1.00% LIBOR Floor, 2/12/2021
 
 3 Month LIBOR
 
 Consumer Goods:
  Durable
 
 
 2,985,000
 
 
 3,022,500
 
 
 37,500Sutherland
  Global Services, L+600, 1.25% LIBOR Floor, 3/6/2019(e)
 
 6 Month LIBOR
 
 Services:
  Business
 
 
 1,889,088
 
 
 1,906,636
 
 
 17,548Tech Finance
  & Co. S.C.A., L+600, 1.25% LIBOR Floor, 7/11/2020(e)
 
 6 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 1,918,313
 
 
 1,979,250
 
 
 60,937Tervita, L+500,
  1.25% LIBOR Floor, 5/15/2018(e)
 
 3 Month LIBOR
 
 Environmental
  Industries
 
 
 1,751,978
 
 
 1,740,483
 
 
 (11,495)The TOPPS
  Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,002,481
 
 
 1,995,000
 
 
 (7,481)Travel Leaders
  Group, LLC, L+600, 1.00% LIBOR Floor, 12/5/2018
 
 3 Month LIBOR
 
 Services:
  Consumer
 
 
 1,950,313
 
 
 1,950,313
 
 
 -Travelport, LLC,
  L+500, 1.25% LIBOR Floor, 6/26/2019(e)
 
 3 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 1,581,400
 
 
 1,629,884
 
 
 48,484TriNet HR Corp.,
  L+400, 1.00% LIBOR Floor, 8/20/2020
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 1,645,034
 
 
 1,680,344
 
 
 35,310Vince, LLC,
  L+500, 1.00% LIBOR Floor, 11/27/2019(e)
 
 6 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 1,652,169
 
 
 1,685,546
 
 
 33,377VFH Parent, LLC,
  L+450, 1.25% LIBOR Floor, 11/8/2016
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 2,591,067
 
 
 2,628,914
 
 
 37,847W/S Packaging
  Group, Inc., L+400, 1.00% LIBOR Floor, 8/9/2019
 
 3 Month LIBOR
 
 Containers,
  Packaging & Glass
 
 
 2,475,063
 
 
 2,481,281
 
 
 6,218Washington
  Inventory Services, L+450, 1.25% LIBOR Floor, 12/20/2018
 
 3 Month LIBOR
 
 Retail
 
 
 264,702
 
 
 264,037
 
 
 (665)Western Dental
  Services, Inc., L+500, 1.00% LIBOR Floor, 11/1/2018
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 2,942,823
 
 
 2,976,265
 
 
 33,442William Morris Endeavor Entertainment, LLC, L+425, 1.00% LIBOR
  Floor, 5/1/2021(d)
 
 N/A(f)
 
 Hotel, Gaming
  & Leisure
 
 
 8,325,900
 
 
 8,352,223
 
 
 26,323Total Senior
  Secured First Lien Term Loans
 
 
 
 
 
 
 185,474,021
 
 
 187,393,550
 
 
 1,919,529
 25


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
  Underlying
  Loans(a)
 
 Index Rate(b)
 
 Industry
 
 Notional
  Amount
 
 Fair
  Value(c)
 
 Unrealized
  Appreciation /
  (Depreciation)Senior
  Secured Second Lien Term LoansAcquisition
  Glacier, Inc., L+675, 1.00% LIBOR Floor, 8/13/2021(e)
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,316,335
 
 
 3,378,829
 
 
 62,494Applied Systems,
  Inc., L+650, 1.00% LIBOR Floor, 1/24/2022
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 3,622,625
 
 
 3,704,750
 
 
 82,125Aptean, Inc.,
  L+750, 1.00% LIBOR Floor, 2/26/2021(e)
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 2,235,950
 
 
 2,298,375
 
 
 62,425Arysta
  LifeScience SPC, LLC, L+700, 1.25% LIBOR Floor, 11/30/2020(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 1,160,540
 
 
 1,187,101
 
 
 26,561Asurion, LLC,
  L+750, 1.00% LIBOR Floor, 3/3/2021
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 5,949,400
 
 
 6,228,750
 
 
 279,350Carestream
  Health, Inc., L+850, 1.00% LIBOR Floor, 12/7/2019(e)
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 953,190
 
 
 991,288
 
 
 38,098Del Monte Foods,
  Inc., L+725, 1.00% LIBOR Floor, 7/26/2021
 
 6 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 1,811,700
 
 
 1,818,563
 
 
 6,863Deltek, Inc.,
  L+875, 1.25% LIBOR Floor, 10/10/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 1,619,640
 
 
 1,664,630
 
 
 44,990Ion Trading
  Technologies S.Á R.L., L+700, 1.25% LIBOR Floor, 5/22/2021(e)
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 993,125
 
 
 1,010,000
 
 
 16,875Mergermarket
  USA, Inc., L+650, 1.00% LIBOR Floor, 2/4/2022(e)
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 6,965,000
 
 
 6,956,250
 
 
 (8,750)Performance Food
  Group, Inc., L+525, 1.00% LIBOR Floor, 11/14/2019
 
 3 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 3,839,915
 
 
 3,911,297
 
 
 71,382PFS Holding
  Corporation, L+725, 1.00% LIBOR Floor, 1/31/2022
 
 3 Month LIBOR
 
 Retail
 
 
 7,104,300
 
 
 7,148,925
 
 
 44,625Securus
  Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021
 
 3 Month LIBOR
 
 Telecommunications
 
 
 1,001,875
 
 
 1,000,000
 
 
 (1,875)Sheridan
  Holdings, Inc., L+725, 1.00% LIBOR Floor, 12/20/2021
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 2,736,250
 
 
 2,811,875
 
 
 75,625U.S. Renal Care,
  Inc., L+750, 1.00% LIBOR Floor, 1/3/2020(d)
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 814,200
 
 
 838,350
 
 
 24,150William Morris
  Endeavor Entertainment, LLC, L+725, 1.00% LIBOR Floor, 5/1/2022(d)
 
 N/A(f)
 
 Hotel, Gaming
  & Leisure
 
 
 659,340
 
 
 671,415
 
 
 12,075Total Senior
  Secured Second Lien Term Loans
 
 
 
 
 
 
 44,783,385
 
 
 45,620,398
 
 
 837,013Total
 
 
 
 
 
 $
 230,257,406
 
 $
 233,013,948
 
 $
 2,756,542
 (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 per note (e) below. The Company
  does not control and is not an affiliate of any of the companies that are
  issuers of the underlying loans subject to the TRS.(b)
 The 1, 2, 3, 6 and 12 month LIBOR rates were 0.15%, 0.19%,
  0.23%, 0.33% and 0.56%, respectively, as of March 31, 2014. The prime rate
  was 3.25% as of March 31, 2014. The applicable LIBOR rate as of March 31,
  2014 for the loan listed may not be the applicable LIBOR rate, as the loan
  may have been priced or repriced based on a LIBOR rate prior to March 31,
  2014.(c)
 Fair value determined by the Company’s board of directors (see
  Note 8).(d)
 Position or portion thereof unsettled as of March 31, 2014.(e)
 The investment is not a qualifying asset under the 1940 Act. A
  business development company may not acquire any asset other than qualifying
  assets, unless, at the time the acquisition is made, qualifying assets
  represent at least 70% of that company’s total assets as defined under
  Section 55 of the 1940 Act. As of March 31, 2014, 92.1% of the Company’s
  total assets represented qualifying assets. In addition, as described in this
  note, the Company calculates its compliance with the qualifying asset test on
  a “look through” basis by treating each loan underlying the TRS as either a
  qualifying asset or non-qualifying asset based on whether the obligor is an
  eligible portfolio company. On this basis, 79.6% of the Company’s total
  assets represented qualifying assets as of March 31, 2014.(f)
 No interest rate option has yet to be elected, as the entire
  position remains unsettled as of May 8, 2014.
 26


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The following is a summary of the underlying loans subject to the
TRS as of December 31, 2013:  Underlying
  Loans(a)
 
 Index Rate(b)
 
 Industry
 
 Notional
  Amount
 
 Fair
  Value(c)
 
 Unrealized
  Appreciation /
  (Depreciation)Senior
  Secured First Lien Term LoansThe Active
  Network, Inc., L+450, 1.00% LIBOR Floor, 11/13/2020
 
 1 Month LIBOR
 
 High Tech
  Industries
 
 $
 1,947,215
 
 $
 1,964,339
 
 $
 17,124Amneal
  Pharmaceuticals, LLC, L+475, 1.00% LIBOR Floor, 11/1/2019
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,347,710
 
 
 3,398,433
 
 
 50,723Aquilex, LLC,
  L+400, 1.00% LIBOR Floor, 12/31/2020(d)
 
 1 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 4,987,500
 
 
 5,012,500
 
 
 25,000ARG IH
  Corporation, L+400, 1.00% LIBOR Floor, 11/15/2020
 
 1 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 2,394,000
 
 
 2,410,512
 
 
 16,512Arc Document
  Solutions, Inc., L+525, 1.00% LIBOR Floor, 12/20/2018(d)(e)
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 4,870,600
 
 
 4,932,725
 
 
 62,125Ascensus, Inc.,
  L+400, 1.00% LIBOR Floor, 12/2/2019
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 4,975,000
 
 
 5,018,750
 
 
 43,750ATI Holdings,
  Inc., L+400, 1.25% LIBOR Floor, 12/21/2019
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 490,050
 
 
 495,931
 
 
 5,881Avaya, Inc.,
  L+675, 1.25% LIBOR Floor, 3/31/2018
 
 3 Month LIBOR
 
 Telecommunications
 
 
 1,993,401
 
 
 2,014,431
 
 
 21,030Azure Midstream
  Energy, LLC, L+550, 1.00% LIBOR Floor, 11/15/2018
 
 1 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 4,380,210
 
 
 4,407,930
 
 
 27,720BBTS Borrower,
  LP, L+650, 1.25% LIBOR Floor, 6/4/2019
 
 3 Month LIBOR
 
 Energy: Oil
  & Gas
 
 
 1,854,169
 
 
 1,878,474
 
 
 24,305Bluestem Brands,
  Inc., L+650, 1.00% LIBOR Floor, 12/6/2018
 
 1 Month LIBOR
 
 Retail
 
 
 1,832,600
 
 
 1,832,600
 
 
 -Camp
  International Holding Company, L+375, 1.00% LIBOR Floor, 5/31/2019
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 1,220,000
 
 
 1,230,163
 
 
 10,163Caraustar
  Industries, Inc., L+625, 1.25% LIBOR Floor, 5/1/2019
 
 6 Month LIBOR
 
 Forest Products
  & Paper
 
 
 713,584
 
 
 738,748
 
 
 25,164Charming
  Charlie, LLC, L+800, 1.00% LIBOR Floor, 12/18/2019(d)
 
 3 Month LIBOR
 
 Retail
 
 
 4,289,675
 
 
 4,333,225
 
 
 43,550Cyanco
  Intermediate Corp., L+450, 1.00% LIBOR Floor, 5/1/2020
 
 1 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 1,254,383
 
 
 1,265,813
 
 
 11,430Digital Insight
  Corporation, L+375, 1.00% LIBOR Floor, 10/16/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 775,105
 
 
 779,000
 
 
 3,895Global Tel*Link
  Corporation, L+375, 1.25% LIBOR Floor, 5/23/2020
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 2,940,113
 
 
 2,915,814
 
 
 (24,299)Grande
  Communications Networks, LLC, L+350, 1.00% LIBOR Floor, 5/31/2020
 
 3 Month LIBOR
 
 Telecommunications
 
 
 2,486,435
 
 
 2,497,471
 
 
 11,036Hemisphere Media
  Holdings, LLC, L+500, 1.25% LIBOR Floor, 7/30/2020(e)
 
 1 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 4,324,817
 
 
 4,349,487
 
 
 24,670Herff Jones,
  Inc., L+450, 1.00% LIBOR Floor, 6/25/2019
 
 1 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 1,973,732
 
 
 2,054,268
 
 
 80,536Hyperion Finance
  S.à r.l., L+475, 1.00% LIBOR Floor, 10/17/2019(e)
 
 2 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 4,432,500
 
 
 4,471,875
 
 
 39,375Information
  Resources, Inc., L+375, 1.00% LIBOR Floor, 9/30/2020
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 892,269
 
 
 900,492
 
 
 8,223Insight
  Pharmaceuticals, LLC, L+500, 1.25% LIBOR Floor, 8/25/2016
 
 6 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 4,002,500
 
 
 3,980,000
 
 
 (22,500)inVentiv Health,
  Inc., L+600, 1.50% LIBOR Floor, 8/4/2016
 
 6 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 5,260,192
 
 
 5,228,718
 
 
 (31,474)Learfield
  Communications, Inc., L+400, 1.00% LIBOR Floor, 10/9/2020
 
 3 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 746,250
 
 
 757,500
 
 
 11,250Lineage
  Logistics, LLC, L+350, 1.00% LIBOR Floor, 4/26/2019
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 2,501,589
 
 
 2,504,769
 
 
 3,180Merrill Corp.,
  L+625, 1.00% LIBOR Floor, 3/8/2018(d)
 
 1 Month LIBOR
 
 Services:
  Business
 
 
 671,827
 
 
 679,040
 
 
 7,213Mohegan Tribal
  Gaming Authority, L+450, 1.00% LIBOR Floor, 11/19/2019
 
 2 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 1,643,400
 
 
 1,683,871
 
 
 40,471OCI Beaumont,
  LLC, L+500, 1.25% LIBOR Floor, 8/20/2019 (B2 Term Loan)(e)
 
 6 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 2,285,804
 
 
 2,333,284
 
 
 47,480Opal
  Acquisition, Inc., L+400, 1.00% LIBOR Floor, 11/27/2020(d)
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 4,580,879
 
 
 4,617,136
 
 
 36,257Packaging
  Coordinators, Inc., L+425, 1.25% LIBOR Floor, 5/10/2020
 
 3 Month LIBOR
 
 Containers,
  Packaging & Glass
 
 
 1,985,025
 
 
 1,995,000
 
 
 9,975Peppermill
  Casinos, Inc., L+600, 1.25% LIBOR Floor, 11/9/2018
 
 1 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 977,637
 
 
 1,012,275
 
 
 34,638Photonis
  Technologies SAS, L+750, 1.00% LIBOR Floor, 9/18/2019(e)
 
 3 Month LIBOR
 
 Aerospace &
  Defense
 
 
 5,764,360
 
 
 5,853,870
 
 
 89,510Polyconcept
  Finance B.V., L+475, 1.25% LIBOR Floor, 6/28/2019(e)
 
 1 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,470,979
 
 
 2,521,407
 
 
 50,428Safe-Guard
  Products International, LLC, L+600, 1.25% LIBOR Floor, 12/21/2018
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 2,222,426
 
 
 2,266,102
 
 
 43,676Salix
  Pharmaceuticals, Ltd., L+325, 1.00% LIBOR Floor, 1/2/2020(d)(e)
 
 1 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 2,815,850
 
 
 2,857,423
 
 
 41,573SESAC Holdco II,
  LLC, L+400, 1.00% LIBOR Floor, 2/8/2019
 
 1 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 490,050
 
 
 496,856
 
 
 6,806SK Spice
  S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 2,972,550
 
 
 2,966,316
 
 
 (6,234)SRA
  International, L+525, 1.25% LIBOR Floor, 7/20/2018
 
 3 Month LIBOR
 
 High Tech
  Industries
 
 
 2,351,305
 
 
 2,388,954
 
 
 37,649Steward Health
  Care System, LLC, L+550, 1.25% LIBOR Floor, 4/10/2020
 
 12 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 3,436,500
 
 
 3,478,147
 
 
 41,647Sutherland
  Global Services, L+600, 1.25% LIBOR Floor, 3/6/2019(e)
 
 6 Month LIBOR
 
 Services:
  Business
 
 
 1,913,941
 
 
 1,917,307
 
 
 3,366Tech Finance
  & Co. S.C.A., L+600, 1.25% LIBOR Floor, 7/11/2020(e)
 
 3 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 1,942,906
 
 
 1,994,750
 
 
 51,844Tervita, L+500,
  1.25% LIBOR Floor, 5/15/2018(d)(e)
 
 3 Month LIBOR
 
 Environmental
  Industries
 
 
 3,533,364
 
 
 3,554,920
 
 
 21,556The TOPPS
  Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018
 
 3 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 2,007,500
 
 
 1,995,000
 
 
 (12,500)Travel Leaders
  Group, LLC, P+500, 2.00% Base Rate Floor, 12/5/2018
 
 Prime
 
 Services:
  Consumer
 
 
 1,975,000
 
 
 1,965,000
 
 
 (10,000)Travelport, LLC,
  L+500, 1.25% LIBOR Floor, 6/26/2019(e)
 
 3 Month LIBOR
 
 Hotel, Gaming
  & Leisure
 
 
 1,585,383
 
 
 1,640,669
 
 
 55,286TriNet HR Corp.,
  L+400, 1.00% LIBOR Floor, 8/20/2020
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 1,649,167
 
 
 1,678,319
 
 
 29,152Vince, LLC,
  L+500, 1.00% LIBOR Floor, 11/27/2019(e)
 
 1 Month LIBOR
 
 Consumer Goods:
  Non-Durable
 
 
 1,752,300
 
 
 1,783,275
 
 
 30,975VFH Parent, LLC,
  L+450, 1.25% LIBOR Floor, 11/8/2019
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 2,597,561
 
 
 2,624,622
 
 
 27,061W/S Packaging
  Group, Inc., L+400, 1.00% LIBOR Floor, 8/9/2019
 
 4 Month LIBOR
 
 Containers,
  Packaging & Glass
 
 
 2,481,284
 
 
 2,493,750
 
 
 12,466Washington
  Inventory Services, L+450, 1.25% LIBOR Floor, 12/20/2018
 
 3 Month LIBOR
 
 Retail
 
 
 492,525
 
 
 495,931
 
 
 3,406WP CPP Holdings,
  LLC, L+375, 1.00% LIBOR Floor, 12/28/2019
 
 3 Month LIBOR
 
 Aerospace &
  Defense
 
 
 935,288
 
 
 942,320
 
 
 7,032Total Senior
  Secured First Lien Term Loans
 
 
 
 
 
 
 128,420,410
 
 
 129,609,512
 
 
 1,189,102
 27


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
  Underlying Loans(a)
 
 Index Rate(b)
 
 Industry
 
 Notional
  Amount
 
 Fair
  Value(c)
 
 Unrealized
  Appreciation /
  (Depreciation)Senior Secured
  Second Lien Term LoansArysta
  LifeScience SPC, LLC, L+700, 1.25% LIBOR Floor, 11/30/2020(e)
 
 3 Month LIBOR
 
 Chemicals,
  Plastics & Rubber
 
 
 1,160,540
 
 
 1,190,029
 
 
 29,489Carestream
  Health, Inc., L+850, 1.00% LIBOR Floor, 12/7/2019(e)
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 980,000
 
 
 1,017,500
 
 
 37,500Del Monte Foods,
  Inc., L+725, 1.00% LIBOR Floor, 7/26/2021(d)
 
 6 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 2,257,200
 
 
 2,299,950
 
 
 42,750Deltek, Inc.,
  L+875, 1.25% LIBOR Floor, 10/10/2019
 
 3 Month LIBOR
 
 Services:
  Business
 
 
 1,619,640
 
 
 1,660,540
 
 
 40,900Ion Trading
  Technologies S.Á R.L., L+700, 1.25% LIBOR Floor, 5/22/2021(e)
 
 3 Month LIBOR
 
 Banking,
  Finance, Insurance & Real Estate
 
 
 993,125
 
 
 1,018,130
 
 
 25,005Performance Food
  Group, Inc., L+525, 1.00% LIBOR Floor, 11/14/2019
 
 3 Month LIBOR
 
 Beverage, Food
  & Tobacco
 
 
 3,849,587
 
 
 3,887,290
 
 
 37,703Securus
  Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021
 
 3 Month LIBOR
 
 Telecommunications
 
 
 1,002,075
 
 
 990,830
 
 
 (11,245)Sheridan
  Holdings, Inc., L+725, 1.00% LIBOR Floor, 12/20/2021
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 2,736,250
 
 
 2,750,000
 
 
 13,750TriNet HR Corp.,
  L+775, 1.00% LIBOR Floor, 2/20/2021
 
 2 Month LIBOR
 
 Services:
  Business
 
 
 2,465,510
 
 
 2,512,500
 
 
 46,990U.S. Renal Care,
  Inc., L+750, 1.00% LIBOR Floor, 1/3/2020
 
 3 Month LIBOR
 
 Healthcare &
  Pharmaceuticals
 
 
 676,200
 
 
 696,900
 
 
 20,700TWCC Holding
  Corp., L+600, 1.00% LIBOR Floor, 6/26/2020
 
 6 Month LIBOR
 
 Media:
  Broadcasting & Subscription
 
 
 2,039,400
 
 
 2,115,373
 
 
 75,973Total Senior
  Secured Second Lien Term Loans
 
 
 
 
 
 
 19,779,527
 
 
 20,139,042
 
 
 359,515Total
 
 
 
 
 
 $
 148,199,937
 
 $
 149,748,554
 
 $
 1,548,617
 (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 per note (d) below. The Company
  does not control and is not an affiliate of any of the companies that are
  issuers of the underlying loans subject to the TRS.(b)
 The 1, 2, 3, 4, 6 and 12 month LIBOR rates were 0.17%, 0.21%,
  0.25%, 0.32%, 0.35% and 0.58%, respectively, as of December 31, 2013. The
  prime rate was 3.25% as of December 31, 2013. The applicable LIBOR rate as of
  December 31, 2013 for the loan listed may not be the applicable LIBOR rate,
  as the loan may have been priced or repriced based on a LIBOR rate prior to
  December 31, 2013.(c)
 Fair value determined by the Company’s board of directors (see
  Note 8).(d)
 Position or portion thereof unsettled as of December 31, 2013.(e)
 The investment is not a qualifying asset under the 1940 Act. A
  business development company may not acquire any asset other than qualifying
  assets, unless, at the time the acquisition is made, qualifying assets
  represent at least 70% of that company’s total assets as defined under
  Section 55 of the 1940 Act. As of December 31, 2013, 88.2% of the Company’s
  total assets represented qualifying assets. In addition, as described in this
  note, the Company calculates its compliance with the qualifying asset test on
  a “look through” basis by treating each loan underlying the TRS as either a
  qualifying asset or non-qualifying asset based on whether the obligor is an
  eligible portfolio company. On this basis, 76.1% of the Company’s total
  assets represented qualifying assets as of December 31, 2013.
 28


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Note 8. 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 March 31,
2014 and December 31, 2013, according to the fair value hierarchy:  March 31, 2014Valuation
  Inputs
 
 First Lien Senior
  Secured Term Loans
 
 Second Lien Senior
  Secured Term Loans
 
 Collateralized Securities
 
 Short Term
  Investments
 
 Total Return SwapLevel 1—Price
  quotations in active markets
 
 $
 -
 
 $
 -
 
 $
 -
 
 $
 11,003,717
 
 $
 -Level
  2—Significant other observable inputs
 
 
 -
 
 
 -
 
 
 -
 
 
 -
 
 
 -Level
  3—Significant unobservable inputs
 
 
 84,299,368
 
 
 47,163,590
 
 
 11,044,972
 
 
 -
 
 
 2,756,542$
 84,299,368
 
 $
 47,163,590
 
 $
 11,044,972
 
 $
 11,003,717
 
 $
 2,756,542
  December 31, 2013Valuation
  Inputs
 
 First Lien Senior
  Secured Term Loans
 
 Second Lien Senior
  Secured Term Loans
 
 Collateralized Securities
 
 Short Term
  Investments
 
 Total Return SwapLevel 1—Price
  quotations in active markets
 
 $
 -
 
 $
 -
 
 $
 -
 
 $
 11,383,669
 
 $
 -Level
  2—Significant other observable inputs
 
 
 -
 
 
 -
 
 
 -
 
 
 -
 
 
 -Level
  3—Significant unobservable inputs
 
 
 61,787,430
 
 
 22,552,214
 
 
 8,795,600
 
 
 -
 
 
 1,548,617$
 61,787,430
 
 $
 22,552,214
 
 $
 8,795,600
 
 $
 11,383,669
 
 $
 1,548,617
 29


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The Company’s investments as of March 31, 2014 and December 31,
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. Three and four
senior secured loans that were purchased near March 31, 2014 and December 31,
2013, respectively, and one collateralized security as of March 31, 2014, were
valued using cost at acquisition, as the Company determined that the cost of
the investments was the best indication of their current 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 consisting of senior management. Such models
are prepared at least quarterly or on an as needed basis. The model uses the
estimated cash flow projections for the underlying investments and an
appropriate discount rate is determined based on the latest financial
information available for the borrower, prevailing market trends, comparable
analysis and other inputs. The model, key assumptions, inputs, and results are
reviewed by the Company’s valuation committee with final approval from the
board of directors.  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 periodically benchmarks
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 review and approve the valuation
determinations made with respect to these investments in a manner consistent
with the Company’s valuation process.  Three of the Company’s collateralized
security investments as of March 31, 2014 and December 31, 2013, for which
broker quotes were not available, were valued by an independent valuation firm,
which determined the fair value of such investments by considering, among other
factors, each borrower’s ability to adequately service its debt, prevailing
interest rates for like investments, call features and other relevant terms of
the debt.  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. 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 Agreement. 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 during the
three months ended March 31, 2014 and 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. 30


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 The following tables provide a reconciliation of the beginning and
ending balances for investments that use Level 3 inputs for the three months
ended March 31, 2014 and 2013:  Three Months Ended March 31, 2014First Lien Senior
  Secured Term Loans
 
 Second Lien Senior
  Secured Term Loans
 
 Collateralized Securities
 
 Total Return
  Swap
 
 TotalBeginning
  balance, December 31, 2013
 $
 61,787,430
 
 $
 22,552,214
 
 $
 8,795,600
 
 $
 1,548,617
 
 $
 94,683,861Investments
  purchased
 39,066,873
 
 25,637,234
 
 2,292,722
 
 -
 
 66,996,829Net realized
  gain
 144,342
 
 29,372
 
 -
 
 -
 
 173,714Net change in
  unrealized appreciation(1)
 313,320
 
 341,639
 
 (44,066)
 
 1,207,925
 
 1,818,818Accretion of
  discount
 41,304
 
 
 4,456
 
 716
 
 
 -
 
 
 46,476Sales and
  principal repayments
 (17,053,901)
 
 (1,401,325)
 
 -
 
 -
 
 (18,455,226)Ending
  balance, March 31, 2014
 $
 84,299,368
 
 $
 47,163,590
 
 $
 11,044,972
 
 $
 2,756,542
 
 $
 145,264,472Change in
  unrealized gains or losses for the period included in changes in net assets
  for assets held at the end of the reporting period
 $
 454,072
 
 $
 383,889
 
 $
 (44,066)
 
 $
 1,354,753
 
 $
 2,148,648
 (1)
 Represents the amount of total gains/losses for the period
  included in the change in unrealized appreciation (depreciation) on
  investments and change in unrealized appreciation (depreciation) on total
  return swap still held at the reporting date.
  Three Months Ended March 31, 2013First Lien Senior
  Secured Term Loans
 
 Second Lien Senior
  Secured Term Loans
 
 Collateralized Securities
 
 Total Return
  Swap
 
 TotalBeginning
  balance, December 31, 2012
 $
 1,980,044
 
 $
 -
 
 $
 -
 
 $
 12,395
 
 $
 1,992,439Investments
  purchased
 4,176,490
 
 2,477,500
 
 -
 
 -
 
 6,653,990Net realized
  gain
 4,533
 
 -
 
 -
 
 -
 
 4,533Net change in
  unrealized appreciation(1)
 59,185
 
 65,097
 
 -
 
 250,676
 
 374,958Accretion of
  discount
 
 1,623
 
 
 528
 
 
 -
 
 
 -
 
 
 2,151Sales and
  principal repayments
 (519,375)
 
 -
 
 -
 
 -
 
 (519,375)Ending
  balance, March 31, 2013
 $
 5,702,500
 
 $
 2,543,125
 
 $
 -
 
 $
 263,071
 
 $
 8,508,696Change in
  unrealized gains or losses for the period included in changes in net assets
  for assets held at the end of the reporting period
 $
 59,185
 
 $
 65,097
 
 $
 -
 
 $
 255,831
 
 $
 380,113
 (1)
 Represents the amount of total gains/losses for the period
  included in the change in unrealized appreciation (depreciation) on
  investments and change in unrealized appreciation (depreciation) on total
  return swap still held at the reporting date.
  Significant Unobservable Inputs  The valuation techniques and significant
unobservable inputs used in recurring Level 3 fair value measurements of investments
as of  March 31, 2014 and December 31, 2013 were as follows:  March 31, 2014Fair Value
 
 Valuation Technique
 
 Unobservable
  Inputs
 
 Range
  (Weighted Average)Senior secured
  term loans - first lien
 $
 84,299,368
 
 Discounted cash flow
 
 Discount rates
 
 4.8% - 10.0%
  (7.0%)Senior secured
  term loans - second lien
 
 47,163,590
 
 Discounted cash flow
 
 Discount rates
 
 7.5% - 13.0%
  (8.9%)Collateralized
  securities
 
 11,044,972
 
 Discounted cash flow
 
 Discount rate
 
 8.7% - 13.0%
  (11.3%)
 31


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
  December 31, 2013Fair Value
 
 Valuation Technique
 
 Unobservable
  Inputs
 
 Range
  (Weighted Average)Senior secured
  term loans - first lien
 $
 61,787,430
 
 Discounted cash flow
 
 Discount rates
 
 4.8% - 9.7%
  (6.7%)Senior secured
  term loans - second lien
 $
 22,552,214
 
 Discounted cash flow
 
 Discount rates
 
 7.5% - 11.8%
  (8.8%)Collateralized
  securities
 $
 8,795,600
 
 Discounted cash flow
 
 Discount rate
 
 10.0% - 13.0%
  (11.8%)
  The significant unobservable inputs used in
the fair value measurement of the Company’s senior secured first lien and second
lien term loans, and collateralized securities are discount rates. A
significant increase or decrease in discount rates would result in a
significantly lower or higher fair value measurement, respectively.  Note 9. General and Administrative Expense  General and administrative expense consisted
of the following items for the three months ended March 31, 2014 and 2013:  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Due diligence
  fees
 $
 322,987
 
 $
 39,018Professional
  fees expense
 
 287,007
 
 
 240,569Transfer agent
  expense
 116,345
 
 13,602Marketing
  expense
 87,760
 
 86,640Insurance
  expense
 51,858
 
 52,901Printing and
  mailing expense
 33,138
 
 24,888Director fees
  and expenses
 32,289
 
 7,839Dues and
  subscriptions
 21,410
 
 10,933Filing fees
 5,651
 
 6,100Other expenses
 99,683
 
 26,373Total general
  and administrative expense
 $
 1,058,128
 
 $
 508,863
  Note 10. Commitments and Contingencies  The Company entered into certain contracts
with other parties that contain a variety of indemnifications. The Company’s
maximum exposure under these arrangements is unknown. However, the Company has
not experienced claims or losses pursuant to these contracts and believes the
risk of loss related to such indemnifications to be remote.  As of March 31, 2014 and
December 31, 2013, the Company’s unfunded loan commitments amounted to $3,054,668
and $2,450,758, respectively.For
the specific portfolio companies which the Company is committed to fund
additional amounts as ofMarch 31, 2014 andDecember
31, 2013,refer to the consolidated schedule
of investments. 32


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
 Note 11.
Financial Highlights  The following is a schedule of financial highlights as of
and for the three months ended March 31, 2014 and 2013:  As of and for the
 
 As of and for theThree Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Per share
  data:(1)Net asset value
  at beginning of period
 $
 9.32
 
 $
 8.97Results of
  operations:Net investment
  loss(2)
 
 (0.01)
 
 
 (0.04)Net realized
  gain and net change in unrealized appreciation on investments
 
 0.04
 
 
 0.11Net realized
  gain and net change in unrealized appreciation on total return swap
 
 0.21
 
 
 0.46Net increase in
  net assets resulting from operations
 
 0.24
 
 
 0.53Shareholder
  distributions:Distributions
  from net realized gains
 
 (0.16)
 
 
 (0.18)Distributions
  from other sources
 
 (0.01)
 
 
 -Net decrease in
  net assets from shareholder distributions
 
 (0.17)
 
 
 (0.18)Capital share
  transactions:Issuance of
  common stock above net asset value(3)
 
 0.01
 
 
 0.05Amortization of
  deferred offering expenses
 
 -
 
 
 (0.21)Net increase
  (decrease) in net assets resulting from capital share transactions
 
 0.01
 
 
 (0.16)Net asset value
  at end of period
 $
 9.40
 
 $
 9.16Shares of common
  stock outstanding at end of period
 
 23,991,865
 
 
 1,712,123Total investment
  return-net asset value(4)
 
 2.63%
 
 
 4.04%Net assets at
  beginning of period
 $
 144,570,485
 
 $
 4,487,115Net assets at
  end of period
 $
 225,470,062
 
 $
 15,689,645Average net
  assets
 $
 195,360,862
 
 $
 10,088,380Ratio/Supplemental
  data:Ratio of net
  investment loss to average net assets(5)
 
 (0.13%)
 
 
 (0.46%)Ratio of net
  operating expenses to average net assets(5)
 
 1.25%
 
 
 1.14%Ratio of gross
  operating expenses to average net assets(6)
 
 0.52%
 
 
 2.75%Ratio of total
  expenses (before expenses reimbursed) to average net assets
 
 1.79%
 
 
 9.26%Ratio of
  expenses reimbursed from IIG to average net assets
 
 0.54%
 
 
 8.12%Portfolio
  turnover rate(7)
 
 16.17%
 
 
 10.80%Asset coverage
  ratio(8)
 
 2.39
 
 
 2.50
  33


---



CĪON Investment Corporation Notes to Consolidated

Financial Statements March

31, 2014 (unaudited)
  (1)
 The per share data for the three months ended March 31, 2014 and
  2013 was derived by using the weighted average shares of common stock
  outstanding during each period.(2)
 Net investment loss per share includes the expense reimbursement
  from IIG of $0.05 and $0.70 per share for the three months ended March 31,
  2014 and 2013, 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 second amended and restated distribution reinvestment
  plan and (ii) the fractional shares issued pursuant to the distribution
  reinvestment plan and second amended and restated distribution reinvestment
  plan are issued at 95% (from January 1, 2013 through September 30, 2013) and
  90% (from October 1, 2013 through March 31, 2014) of the then public offering
  price on the date of purchase, respectively. The total investment return-net
  asset value does not consider the effect of the sales load from the sale of
  the Company’s common stock. The total investment return-net asset value
  includes the effect of the issuance of shares at a net offering price that is
  greater than net asset value per share, which causes an increase in net asset
  value per share. Total returns covering less than a full period are not annualized.(5)
 Excluding the expense reimbursement from IIG during the period,
  the ratio of net investment loss to average net assets would have been
  (0.66%) and (8.58%) for the three months ended March 31, 2014 and 2013,
  respectively.(6)
 Operating expenses include all expenses borne by the Company,
  except for organization costs 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.(7)
 Portfolio turnover rate is calculated using the lesser of
  year-to-date sales or purchases over the average of the invested assets at
  fair value, excluding short term investments, and is not annualized.(8)
 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.
 34


---



Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations  As used in this Quarterly Report on Form 10-Q, “we,”
“us,” “our” or similar terms include CĪON Investment Corporation and its
consolidated subsidiaries.  The following discussion should be read in conjunction
with our unaudited consolidated financial statements and related notes
appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated
financial statements and related notes included in our Annual Report on Form
10-K for the year ended December 31, 2013. 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 our portfolio companies;•
 the impact of the investments
  that we expect to make;•
 the ability of our portfolio
  companies to achieve their objectives;•
 our current and expected
  financings and investments;•
 the adequacy of our cash
  resources, financing sources and working capital;•
 the use of borrowed money to
  finance a portion of our investments;•
 the timing of cash flows, if
  any, from the operations of our portfolio companies;•
 our contractual arrangements
  and relationships with third parties;•
 the actual and potential
  conflicts of interest with CIM and Apollo and their respective affiliates;•
 the ability of CIM and AIM to
  locate suitable investments for us and the ability of CIM to monitor and
  administer our investments;•
 the ability of CIM and AIM and
  their respective affiliates to attract and retain highly talented
  professionals;•
 the dependence of our future
  success on the general economy and its impact on the industries in which we
  invest;•
 our ability to source favorable
  private investments;•
 our tax status;•
 the effect of changes to tax
  legislation and our tax position;•
 the tax status of the
  companies in which we invest; and•
 the timing and amount of
  distributions and dividends from the companies in which we invest.
  In addition, words such
as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking
statement, although not all forward-looking statements include these words. The
forward-looking statements contained in this Quarterly Report on Form 10-Q
involve risks and uncertainties. Our actual results could differ materially
from those implied or expressed in the forward-looking statements for any
reason, including the factors set forth in “Risk Factors” in Item 1A of Part II
of this Quarterly Report on Form 10-Q. Other factors that could cause actual
results to differ materially include:  •
 changes in the economy;•
 risks associated with possible
  disruption in our operations or the economy generally due to terrorism or
  natural disasters; and•
 future changes in laws or
  regulations and conditions in our operating areas.
  35


---



We have based the forward-looking statements on
information available to us on the date of this Quarterly Report on Form 10-Q.
Except as required by the federal securities laws, we undertake no obligation
to revise or update any forward-looking statements, whether as a result of new
information, future events or otherwise. You are advised to review any
additional disclosures that we may make directly to you or through reports that
we in the future may file with the SEC, including annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K. The
forward-looking statements contained in this Quarterly Report on Form 10-Q are
excluded from the safe harbor protection provided by Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended.  Overview  We were incorporated under the general corporation laws
of the State of Maryland on August 9, 2011 and commenced operations on December
17, 2012 upon raising proceeds of $2,500,000 from persons not affiliated with
us, CIM or Apollo. We are an externally managed, non-diversified closed-end
management investment company that has elected to be regulated as a BDC under
the 1940 Act. We elected to be treated for federal income tax purposes as a
RIC, as defined under Subchapter M of the Code.  Our investment objective is to generate current income
and, to a lesser extent, capital appreciation for investors. 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 oversees the management of our activities and is
responsible for making investment decisions for our portfolio. We and CIM have
engaged AIM to act as our investment sub-adviser.  We seek to meet our investment objective by utilizing
the experienced management teams of both CIM and AIM, which includes their
access to the relationships and human capital of Apollo, IIG and ICON Capital,
in sourcing, evaluating and structuring transactions. We focus primarily on the
senior secured debt of private and thinly traded U.S. middle-market companies,
which we define as companies that generally possess annual EBITDA of $50
million or less, with experienced management teams, significant free cash flow,
strong competitive positions and potential for growth.  Revenue  We primarily generate revenue in the form of interest
income on the debt securities that we hold and capital gains on debt or other
equity interests that we acquire in portfolio companies. Our senior debt
investments bear interest at a floating rate. Interest on debt securities is
generally payable quarterly or semiannually. In some cases, some of our
investments may provide for deferred interest payments or PIK interest. The
principal amount of the debt securities and any accrued, but unpaid, interest
generally will become due at the maturity date. In addition, we may generate
revenue in the form of commitment, 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; 36


---



·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.  Portfolio Investment Activity for the Three Months
Ended March 31, 2014  The following table summarizes our investment activity,
excluding short term investments, for the three months ended March 31, 2014:  Three Months Ended March 31, 2014Net Investment Activity
 
 Investment Portfolio
 
 Total Return Swap
 
 TotalPurchases and
  drawdowns
 
 $
 66,996,829
 
 $
 152,955,367
 
 $
 219,952,196Sales and
  principal repayments
 
 
 (18,455,226)
 
 
 (67,710,268)
 
 
 (86,165,494)Net portfolio
  activity
 
 $
 48,541,603
 
 $
 85,245,099
 
 $
 133,786,702
  Three Months Ended March 31, 2014Investment Portfolio
 
 Total Return Swap
 
 TotalNew Investment Activity by Asset Class
 
 Purchases
 
 Percentage
 
 Purchases
 
 Percentage
 
 Purchases
 
 PercentageSenior secured
  term loans - first lien
 
 $
 39,066,873
 
 58.3%
 
 $
 135,071,119
 
 88.3%
 
 $
 174,137,992
 
 79.2%Senior secured
  term loans - second lien
 
 
 25,637,234
 
 38.3%
 
 
 17,884,248
 
 11.7%
 
 
 43,521,482
 
 19.8%Collateralized
  securities
 
 
 2,292,722
 
 3.4%
 
 
 -
 
 -
 
 
 2,292,722
 
 1.0%Total
  purchases
 
 $
 66,996,829
 
 100.0%
 
 $
 152,955,367
 
 100.0%
 
 $
 219,952,196
 
 100.0%
 37


---



The following table summarizes the composition of our investment
portfolio at amortized cost and fair value and our underlying TRS loans
portfolio at notional amount and fair value as of March 31, 2014 and December
31, 2013:  March 31, 2014Investment Portfolio
 
 Total Return Swap
 
 TotalInvestments Amortized
  Cost(1)
 
 Investments Fair
  Value
 
 Percentage of
  Investment
  Portfolio
 
 Notional Amount of Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Amortized Cost/
  Notional Amount
 
 Fair Value
 
 PercentageSenior secured
  term loans - first lien
 
 $
 83,294,303
 
 $
 84,299,368
 
 54.9%
 
 $
 185,474,021
 
 $
 187,393,550
 
 80.4%
 
 $
 268,768,324
 
 $
 271,692,918
 
 70.3%Senior secured
  term loans - second lien
 
 
 46,459,068
 
 
 47,163,590
 
 30.7%
 
 
 44,783,385
 
 
 45,620,398
 
 19.6%
 
 
 91,242,453
 
 
 92,783,988
 
 24.0%Collateralized
  securities
 
 
 11,039,438
 
 
 11,044,972
 
 7.2%
 
 
 -
 
 
 -
 
 -
 
 
 11,039,438
 
 
 11,044,972
 
 2.9%Short term
  investments(2)
 
 
 11,003,717
 
 
 11,003,717
 
 7.2%
 
 
 -
 
 
 -
 
 -
 
 
 11,003,717
 
 
 11,003,717
 
 2.8%Total
  investments
 
 $
 151,796,526
 
 $
 153,511,647
 
 100.0%
 
 $
 230,257,406
 
 $
 233,013,948
 
 100.0%
 
 $
 382,053,932
 
 $
 386,525,595
 
 100.0%Number of
  portfolio companies
 
 
 
 
 39
 
 
 
 
 
 
 
 74
 
 
 
 
 
 
 
 102(3)Average annual
  EBITDA of portfolio companies
 
 
 $50.7 million
 
 
 
 
 
 $156.3 million
 
 
 
 
 
 $118.5 millionMedian annual
  EBITDA of portfolio companies
 
 
 $47.7 million
 
 
 
 
 
 $75.0 million
 
 
 
 
 
 $65.7 millionPurchased at a
  weighted average price of par
 
 
 
 
 98.65%
 
 
 
 
 
 
 
 99.26%
 
 
 
 
 
 
 
 99.03%Gross annual
  portfolio yield based upon the purchase price(4)
 
 
 
 
 8.11%
 
 
 
 
 
 
 
 6.61%
 
 
 
 
 
 
 
 7.17%
 (1)Amortized cost represents the original cost adjusted for the amortization of
  premiums and/or accretion of discounts, as applicable, on our investments.(2)Short term investments represent an investment in a fund that invests in
  highly liquid investments with original maturity dates of three months or
  less.(3)The sum of investment portfolio and TRS portfolio companies does not equal
  the total number of portfolio companies. This is due to eleven portfolio
  companies being in both the investment and TRS portfolios.(4)The portfolio yield does not represent an actual investment return to
  shareholders.(5)The portfolio yield for underlying TRS loans is determined without giving
  consideration to leverage.
  December 31, 2013Investment Portfolio
 
 Total Return Swap
 
 TotalInvestments Amortized
  Cost(1)
 
 Investments Fair
  Value
 
 Percentage of
  Investment
  Portfolio
 
 Notional Amount of Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Amortized Cost/
  Notional Amount(1)
 
 Fair Value
 
 PercentageSenior secured
  term loans - first lien
 
 $
 61,095,685
 
 $
 61,787,430
 
 59.1%
 
 $
 128,420,410
 
 $
 129,609,512
 
 86.6%
 
 $
 189,516,095
 
 $
 191,396,942
 
 75.3%Senior secured
  term loans - second lien
 
 
 22,189,331
 
 
 22,552,214
 
 21.6%
 
 
 19,779,527
 
 
 20,139,042
 
 13.4%
 
 
 41,968,858
 
 
 42,691,256
 
 16.8%Collateralized
  securities
 
 
 8,746,000
 
 
 8,795,600
 
 8.4%
 
 
 -
 
 
 -
 
 -
 
 
 8,746,000
 
 
 8,795,600
 
 3.4%Short term
  investments(2)
 
 
 11,383,669
 
 
 11,383,669
 
 10.9%
 
 
 -
 
 
 -
 
 -
 
 
 11,383,669
 
 
 11,383,669
 
 4.5%Total
  investments
 
 $
 103,414,685
 
 $
 104,518,913
 
 100.0%
 
 $
 148,199,937
 
 $
 149,748,554
 
 100.0%
 
 $
 251,614,622
 
 $
 254,267,467
 
 100.0%Number of
  portfolio companies
 
 
 
 
 39
 
 
 
 
 
 
 
 62
 
 
 
 
 
 
 
 91(3)Average annual
  EBITDA of portfolio companies
 
 
 $50.8 million
 
 
 
 
 
 $157.0 million
 
 
 
 
 
 $120.2 millionMedian annual
  EBITDA of portfolio companies
 
 
 $47.7 million
 
 
 
 
 
 $102.7 million
 
 
 
 
 
 $72.9 millionPurchased at a
  weighted average price of par
 
 
 
 
 98.57%
 
 
 
 
 
 
 
 99.09%
 
 
 
 
 
 
 
 98.89%Gross annual
  portfolio yield based upon the purchase price(4)
 
 
 
 
 7.86%
 
 
 
 
 
 
 
 6.71%(5)
 
 
 
 
 
 
 
 7.15%
 (1)Amortized cost represents the original
  cost adjusted for the amortization of premiums and/or accretion of discounts,
  as applicable, on our investments.(2)Short term investments represent an
  investment in a fund that invests in highly liquid investments with original
  maturity dates of three months or less.(3)The sum of investment portfolio and TRS companies does not equal the total
  number of portfolio companies. This is due to ten portfolio companies being
  in both the investment and TRS portfolios.(4)The portfolio yield does not represent
  an actual investment return to shareholders.(5)The portfolio yield for underlying TRS loans is determined without giving
  consideration to leverage.
 38


---



The
following table summarizes the composition of our investment portfolio and our
underlying TRS loans portfolio by the type of interest rate as of March 31,
2014 and December 31, 2013, excluding short term investments of $11,003,717 and
$11,383,669, respectively: March 31, 2014Investment Portfolio
 
 Total Return Swap
 
 TotalInterest Rate
  Allocation
 
 
 Investments Amortized
  Cost
 
 Investments Fair
  Value
 
 Percentage of
  Investment
  Portfolio
 
 Notional Amount of Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Amortized Cost/
  Notional Amount
 
 Fair Value
 
 PercentageFloating
  interest rate investments
 
 $
 140,792,809
 
 $
 142,507,930
 
 100.0%
 
 $
 230,257,406
 
 $
 233,013,948
 
 100.0%
 
 $
 371,050,215
 
 $
 375,521,878
 
 100.0%Fixed interest
  rate investments
 
 
 -
 
 
 -
 
 -
 
 
 -
 
 
 -
 
 -
 
 
 -
 
 
 -
 
 -Total
  investments
 
 $
 140,792,809
 
 $
 142,507,930
 
 100.0%
 
 $
 230,257,406
 
 $
 233,013,948
 
 100.0%
 
 $
 371,050,215
 
 $
 375,521,878
 
 100.0%
  December 31, 2013Investment Portfolio
 
 Total Return Swap
 
 TotalInterest Rate
  Allocation
 
 
 Investments Amortized
  Cost
 
 Investments Fair
  Value
 
 Percentage of
  Investment
  Portfolio
 
 Notional Amount of Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Amortized Cost/
  Notional Amount
 
 Fair Value
 
 PercentageFloating
  interest rate investments
 
 $
 92,031,016
 
 $
 93,135,244
 
 100.0%
 
 $
 148,199,937
 
 $
 149,748,554
 
 100.0%
 
 $
 240,230,953
 
 $
 242,883,798
 
 100.0%Fixed interest
  rate investments
 
 
 -
 
 
 -
 
 -
 
 
 -
 
 
 -
 
 -
 
 
 -
 
 
 -
 
 -Total
  investments
 
 $
 92,031,016
 
 $
 93,135,244
 
 100.0%
 
 $
 148,199,937
 
 $
 149,748,554
 
 100.0%
 
 $
 240,230,953
 
 $
 242,883,798
 
 100.0%
 39


---



The following
table shows the composition of our investment portfolio and our underlying TRS
loans portfolio by industry classification and the percentage, by fair value,
of the total assets in such industries as of March 31, 2014 and December 31, 2013: March 31, 2014Investment Portfolio
 
 Total Return Swap
 
 TotalIndustry
  Classification
 
 Investments Fair Value
 
 Percentage of
  Investment Portfolio
 
 Fair Value of
  Underlying
  TRS Loans
 
 Percentage of
  Underlying
  TRS Loans
 
 Fair Value
 
 PercentageServices:
  Business
 
 $
 15,839,696
 
 10.3%
 
 $
 34,891,180
 
 15.0%
 
 $
 50,730,876
 
 13.1%Healthcare &
  Pharmaceuticals
 
 
 13,973,688
 
 9.1%
 
 
 35,247,337
 
 15.1%
 
 
 49,221,025
 
 12.7%High Tech
  Industries
 
 
 15,594,028
 
 10.2%
 
 
 12,193,447
 
 5.2%
 
 
 27,787,475
 
 7.2%Banking,
  Finance, Insurance & Real Estate
 
 
 1,440,418
 
 0.9%
 
 
 25,901,670
 
 11.1%
 
 
 27,342,088
 
 7.1%Retail
 
 
 5,667,188
 
 3.7%
 
 
 19,624,823
 
 8.4%
 
 
 25,292,011
 
 6.5%Hotel, Gaming
  & Leisure
 
 
 6,359,950
 
 4.1%
 
 
 15,573,650
 
 6.7%
 
 
 21,933,600
 
 5.7%Chemicals,
  Plastics & Rubber
 
 
 6,821,100
 
 4.4%
 
 
 12,783,068
 
 5.5%
 
 
 19,604,168
 
 5.1%Automotive
 
 
 15,470,635
 
 10.1%
 
 
 3,161,813
 
 1.4%
 
 
 18,632,448
 
 4.8%Beverage, Food
  & Tobacco
 
 
 10,068,750
 
 6.6%
 
 
 8,136,572
 
 3.5%
 
 
 18,205,322
 
 4.7%Consumer Goods:
  Non-Durable
 
 
 8,908,925
 
 5.9%
 
 
 8,165,487
 
 3.5%
 
 
 17,074,412
 
 4.4%Aerospace &
  Defense
 
 
 1,458,319
 
 0.9%
 
 
 13,218,892
 
 5.7%
 
 
 14,677,211
 
 3.8%Media:
  Broadcasting & Subscription
 
 
 3,666,384
 
 2.4%
 
 
 9,559,816
 
 4.1%
 
 
 13,226,200
 
 3.4%Diversified
  Financials
 
 
 11,044,972
 
 7.2%
 
 
 -
 
 -
 
 
 11,044,972
 
 2.9%Media:
  Diversified & Production
 
 
 9,513,441
 
 6.2%
 
 
 1,167,947
 
 0.5%
 
 
 10,681,388
 
 2.8%Construction
  & Building
 
 
 2,487,453
 
 1.6%
 
 
 5,993,693
 
 2.6%
 
 
 8,481,146
 
 2.2%Capital Equipment
 
 
 -
 
 -
 
 
 8,030,000
 
 3.4%
 
 
 8,030,000
 
 2.1%Energy: Oil
  & Gas
 
 
 1,704,933
 
 1.1%
 
 
 6,243,815
 
 2.7%
 
 
 7,948,748
 
 2.1%Services:
  Consumer
 
 
 5,592,766
 
 3.6%
 
 
 1,950,313
 
 0.8%
 
 
 7,543,079
 
 2.0%Containers,
  Packaging & Glass
 
 
 1,492,500
 
 1.0%
 
 
 4,461,331
 
 1.9%
 
 
 5,953,831
 
 1.5%Telecommunications
 
 
 3,500,000
 
 2.3%
 
 
 1,000,000
 
 0.4%
 
 
 4,500,000
 
 1.2%Environmental
  Industries
 
 
 1,902,784
 
 1.2%
 
 
 1,740,483
 
 0.8%
 
 
 3,643,267
 
 0.9%Consumer Goods: Durable
 
 
 -
 
 -
 
 
 3,022,500
 
 1.3%
 
 
 3,022,500
 
 0.8%Forest Products
  & Paper
 
 
 -
 
 -
 
 
 946,111
 
 0.4%
 
 
 946,111
 
 0.2%U.S. Treasury
  Securities
 
 
 11,003,717
 
 7.2%
 
 
 -
 
 -
 
 
 11,003,717
 
 2.8%Total
 
 $
 153,511,647
 
 100.0%
 
 $
 233,013,948
 
 100.0%
 
 $
 386,525,595
 
 100.0%
 40


---



December 31, 2013Investment Portfolio
 
 Total Return Swap
 
 TotalIndustry
  Classification
 
 Investments Fair Value
 
 Percentage of
  Investment Portfolio
 
 Fair Value of
  Underlying
  TRS Loans
 
 Percentage of
  Underlying
  TRS Loans
 
 Fair Value
 
 PercentageHealthcare &
  Pharmaceuticals
 
 $
 8,968,804
 
 8.6%
 
 $
 28,520,188
 
 19.0%
 
 $
 37,488,992
 
 14.7%Services:
  Business
 
 
 15,754,714
 
 15.1%
 
 
 21,710,669
 
 14.5%
 
 
 37,465,383
 
 14.7%Chemicals,
  Plastics & Rubber
 
 
 6,797,514
 
 6.5%
 
 
 12,767,942
 
 8.5%
 
 
 19,565,456
 
 7.7%Consumer Goods:
  Non-Durable
 
 
 9,527,245
 
 9.1%
 
 
 8,353,950
 
 5.7%
 
 
 17,881,195
 
 7.1%Banking,
  Finance, Insurance & Real Estate
 
 
 2,427,410
 
 2.3%
 
 
 15,399,479
 
 10.3%
 
 
 17,826,889
 
 7.0%Media:
  Broadcasting & Subscription
 
 
 3,544,422
 
 3.4%
 
 
 9,713,966
 
 6.5%
 
 
 13,258,388
 
 5.2%Energy: Oil
  & Gas
 
 
 3,629,300
 
 3.5%
 
 
 6,286,404
 
 4.2%
 
 
 9,915,704
 
 3.9%Telecommunications
 
 
 3,973,040
 
 3.8%
 
 
 5,502,732
 
 3.7%
 
 
 9,475,772
 
 3.7%Diversified
  Financials
 
 
 8,795,600
 
 8.4%
 
 
 -
 
 -
 
 
 8,795,600
 
 3.5%Beverage, Food
  & Tobacco
 
 
 -
 
 -
 
 
 8,597,752
 
 5.7%
 
 
 8,597,752
 
 3.4%Aerospace &
  Defense
 
 
 1,463,701
 
 1.4%
 
 
 6,796,190
 
 4.5%
 
 
 8,259,891
 
 3.2%Services:
  Consumer
 
 
 5,628,126
 
 5.3%
 
 
 1,965,000
 
 1.3%
 
 
 7,593,126
 
 3.1%Automotive
 
 
 7,473,560
 
 7.2%
 
 
 -
 
 -
 
 
 7,473,560
 
 2.9%High Tech
  Industries
 
 
 2,876,400
 
 2.8%
 
 
 4,353,293
 
 2.9%
 
 
 7,229,693
 
 2.8%Retail
 
 
 -
 
 -
 
 
 6,661,756
 
 4.4%
 
 
 6,661,756
 
 2.6%Containers,
  Packaging & Glass
 
 
 1,500,000
 
 1.4%
 
 
 4,488,750
 
 3.0%
 
 
 5,988,750
 
 2.4%Environmental
  Industries
 
 
 1,909,952
 
 1.8%
 
 
 3,554,920
 
 2.4%
 
 
 5,464,872
 
 2.1%Hotel, Gaming
  & Leisure
 
 
 515,000
 
 0.5%
 
 
 4,336,815
 
 2.9%
 
 
 4,851,815
 
 1.9%Construction
  & Building
 
 
 3,415,256
 
 3.3%
 
 
 -
 
 -
 
 
 3,415,256
 
 1.3%Capital Equipment
 
 
 3,014,850
 
 2.9%
 
 
 -
 
 -
 
 
 3,014,850
 
 1.2%Media:
  Diversified & Production
 
 
 1,920,350
 
 1.8%
 
 
 -
 
 -
 
 
 1,920,350
 
 0.8%Forest Products
  & Paper
 
 
 -
 
 -
 
 
 738,748
 
 0.5%
 
 
 738,748
 
 0.3%U.S. Treasury
  Securities
 
 
 11,383,669
 
 10.9%
 
 
 -
 
 -
 
 
 11,383,669
 
 4.5%Total
 
 $
 104,518,913
 
 100.0%
 
 $
 149,748,554
 
 100.0%
 
 $
 254,267,467
 
 100.0%
  We do not “control” and are not an
“affiliate” of any of our portfolio companies or any of the companies of the
loans underlying the TRS, each as defined in the 1940 Act. In general, under
the 1940 Act, we would be presumed to “control” a portfolio company or issuer
if we owned 25% or more of its voting securities and would be an “affiliate” of
a portfolio company or issuer if we owned 5% or more of its voting securities.  Our
investment portfolio may contain senior secured investments that are in the
form of lines of credit, unfunded delayed drawdown loan commitments, or
revolving credit facilities, which require us to provide funding when requested
by portfolio companies in accordance with the terms of the underlying loan
agreements. As of March 31, 2014 and December 31, 2013, our unfunded loan
commitments amounted to $3,054,668 and $2,450,758, respectively. 41


---



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.
 For investments graded 3, 4, or 5, CIM
enhances its level of scrutiny over the monitoring of such portfolio company. 42


---



The following table summarizes the
composition of our investment portfolio and our underlying TRS loans portfolio
based on the 1 to 5 investment rating scale at fair value as of March 31, 2014
and December 31, 2013, excluding short term investments of $11,003,717 and
$11,383,669, respectively:  March 31, 2014Investment Portfolio
 
 Total Return Swap
 
 TotalInvestment Rating
 
 Investments
  Fair Value
 
 Percentage of
  Investment Portfolio
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Fair Value
 
 Percentage1
 
 $
 -
 
 -
 
 $
 -
 
 -
 
 $
 -
 
 -2
 
 
 142,507,930
 
 100.0%
 
 
 231,273,465
 
 99.3%
 
 
 373,781,395
 
 99.5%3
 
 
 -
 
 -
 
 
 1,740,483
 
 0.7%
 
 
 1,740,483
 
 0.5%4
 
 
 -
 
 -
 
 
 -
 
 -
 
 
 -
 
 -5
 
 
 -
 
 -
 
 
 -
 
 -
 
 
 -
 
 -$
 142,507,930
 
 100.0%
 
 $
 233,013,948
 
 100.0%
 
 $
 375,521,878
 
 100.0%
  December 31, 2013Investment Portfolio
 
 Total Return Swap
 
 TotalInvestment Rating
 
 Investments 
  Fair Value
 
 Percentage of
  Investment Portfolio
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Fair Value
 
 Percentage1
 
 $
 -
 
 -
 
 $
 -
 
 -
 
 $
 -
 
 -2
 
 
 93,135,244
 
 100.0%
 
 
 149,748,554
 
 100.0%
 
 
 242,883,798
 
 100.0%3
 
 
 -
 
 -
 
 
 -
 
 -
 
 
 -
 
 -4
 
 
 -
 
 -
 
 
 -
 
 -
 
 
 -
 
 -5
 
 
 -
 
 -
 
 
 -
 
 -
 
 
 -
 
 -$
 93,135,244
 
 100.0%
 
 $
 149,748,554
 
 100.0%
 
 $
 242,883,798
 
 100.0%
  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 portfolio as a
result of new investment, repayment and exit activities. In addition, changes
in the grade of investments may be made to reflect our expectation of
performance and changes in investment values. 43


---



Current Investment Portfolio  As of May 8, 2014, our investment
portfolio, excluding our short term investments and TRS, consisted of interests
in 41 portfolio companies (46% in first lien senior secured term loans, 37% in
second lien senior secured term loans and 17% in collateralized securities)
with a total fair value of $171,378,547 with an average and median portfolio
company annual EBITDA of $52.9 million and $49.0 million, respectively, at
initial investment. As of May 8, 2014, investments in our portfolio were
purchased at a weighted average price of 98.20% of par value. Our estimated
gross annual portfolio yield was 8.41% based upon the purchase price of our
investments. The portfolio yield does not represent an actual investment return
to shareholders.  As of May 8, 2014, our short term
investments included an investment in a U.S. Treasury Obligations Fund of
$19,178,770.  Further, as of May 8, 2014, through a
TRS (described further in Note 7 of our consolidated financial statements), we
obtained the economic benefit of owning investments in first lien senior
secured and second lien senior secured floating-rate loans of 70 portfolio
companies.  Results of Operations for the Three Months
Ended March 31, 2014 and 2013  Our results of operations for
the three months ended March 31, 2014 and 2013 were as follows:  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Investment income
 $
 2,200,781
 
 $
 68,126Net operating expenses
 
 2,450,273
 
 
 114,810Net investment loss
 (249,492)
 
 
 (46,684)Net realized gain on investments
 173,714
 
 
 4,533Net change in unrealized appreciation on investments
 610,893
 
 
 124,282Net realized gain on total return swap
 2,963,479
 
 
 286,337Net change in unrealized appreciation on total return swap
 1,207,925
 
 
 250,676Net increase in net assets resulting from operations
 $
 4,706,519
 
 $
 619,144
  Investment Income  For the three months ended March 31, 2014
and 2013, we generated investment income of $2,200,781 and $68,126, respectively,
consisting primarily of interest income on investments in senior secured loans
of 48 and 11 portfolio companies held during each respective period. During the
three months ended March 31, 2014 and 2013, our investment portfolio, excluding
short term investments and the TRS, increased approximately $49,373,000 and
$6,266,000, respectively, as we continued to deploy the net proceeds from our
continuous offering. We expect our investment portfolio to continue to grow due
to the anticipated increase in equity available to us for investment from our
continuous offering. As a result, we believe that reported investment income
for the three months ended March 31, 2014 and 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 recorded as part of net realized gain on total
return swap.  Operating Expenses  The composition of our operating expenses
for the three months ended March 31, 2014 and 2013 was as follows:  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Management fees
 $
 908,807
 
 $
 44,742Administrative services expense
 
 415,395
 
 
 263,555Capital gains incentive fee
 525,326
 
 
 117,023Offering expense - IIG
 
 591,475
 
 
 -General and administrative
 
 1,058,128
 
 
 508,863Total expenses
 3,499,131
 
 
 934,183Less: expense reimbursement from IIG
 (1,048,858)
 
 
 (819,373)Net operating expenses
 $
 2,450,273
 
 $
 114,810
 44


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The composition of our general and administrative expenses for the
three months ended March 31, 2014 and 2013 was as follows:  Three Months
 
 Three MonthsEnded
 
 EndedMarch 31, 2014
 
 March 31, 2013Due diligence
  fees
 $
 322,987
 
 $
 39,018Professional
  fees expense
 
 287,007
 
 
 240,569Transfer agent
  expense
 116,345
 
 13,602Marketing
  expense
 87,760
 
 86,640Insurance
  expense
 51,858
 
 52,901Printing and
  mailing expense
 33,138
 
 24,888Director fees
  and expenses
 32,289
 
 7,839Dues and
  subscriptions
 21,410
 
 10,933Filing fees
 5,651
 
 6,100Other expenses
 99,683
 
 26,373Total general
  and administrative expense
 $
 1,058,128
 
 $
 508,863
  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. Refer
to the discussion under “Related Party Transactions” below for further details
about the expense support and conditional reimbursement agreement. Also, see
Note 4 to our consolidated financial statements for additional disclosure
regarding the expense reimbursements from IIG.  For the three months ended March 31, 2014
and 2013, we recorded $1,048,858 and $819,373 of expense reimbursement from IIG
in connection with the expense support and conditional reimbursement agreement,
respectively. As of March 31, 2014 and 2013, all expense reimbursements made by
IIG are eligible to be reimbursed by us through March 31, 2017 and 2016,
respectively.  Reimbursement of such costs will be
determined as appropriate to meet the objectives of the expense support and
conditional reimbursement agreement. As a result, we may or may not be
requested to reimburse any further costs by IIG.  The table below presents a summary of all
expenses supported by IIG and the associated dates through which such expenses
are eligible for reimbursement by us for the following three month periods. Three Months
  Ended
 
 
 Expense Support Received from IIG
 
 Expense Support Reimbursed to IIG
 
 Unreimbursed Expense Support
 
 Ratio of Operating Expense to Average Net
  Assets for the Period(1)
 
 Annualized Distribution Rate for the
  Period(3)
 
 Eligible for Reimbursement 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, 2016September 30,
  2013
 
 
 1,296,834
 
 
 -
 
 
 1,296,834
 
 0.49%
 
 7.00%
 
 September 30, 2016December 31,
  2013
 
 
 695,160
 
 
 -
 
 
 695,160
 
 0.31%
 
 7.00%
 
 December 31, 2016March 31, 2014
 
 
 1,048,858
 
 
 -
 
 
 1,048,858
 
 0.52%
 
 7.00%
 
 March 31, 2017Total
 
 $
 5,124,467
 
 $
 -
 
 $
 5,124,467
  (1)
 Operating expenses include all expenses borne by us, except for
  organization costs 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
  distributions paid immediately prior to the date the expense support payment
  obligation was incurred by CIM. Annualized Distribution Rate does not include
  special cash or stock distributions paid to shareholders.
 45


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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 (i) if expense reimbursement amounts
funded by IIG exceed operating expenses incurred during any fiscal quarter,
(ii) if 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, and (iii) during any fiscal quarter
occurring within three years of the date on which IIG funded such amount.  Net Investment Loss  Our net investment loss totaled ($249,492)
and ($46,684) for the three months ended March 31, 2014 and 2013, respectively.
The increase in net investment loss during the first quarter of 2014, compared
to the corresponding 2013 period, was primarily due to an increase in higher
operating expenses due to our accelerated growth, partially offset by an
increase in investment income and expense support from IIG.  Net Realized Gain on Investments  Our net realized gain on investments
totaled $173,714 and $4,533 for the three months ended March 31, 2014 and 2013,
respectively. During the first quarter of 2014, we received sale proceeds and
principal repayments of $13,165,845 and $5,289,381, respectively, for gains of
$123,423 and $50,291, respectively. For the corresponding 2013 period, net
realized gain on investments was primarily due to the sale of one investment,
from which we received sale proceeds of $504,375, for a gain of $4,375.  Net Change in Unrealized Appreciation on
Investments  The net change in unrealized appreciation
on our investments totaled $610,893 and $124,282 for the three months ended
March 31, 2014 and 2013, respectively. This change was predominantly driven by
primary investments, sourced with the assistance of AIM, made available to us
at advantageous purchase prices, as well as the growth and increase in fair
value of the investments in our investment portfolio.  Net Realized Gain on TRS  Our net realized gain on the TRS totaled $2,963,479
and $286,337 for the three months ended March 31, 2014 and 2013, respectively. The
realized gain was due to interest income and fees, net of expenses, of
$2,360,371 and $80,612, respectively, as well as realized gain on sales and
principal repayments of $603,108 and $205,725, respectively, for the same
comparative periods. The components of net realized gain on TRS are summarized
below for the three months ended March 31, 2014 and 2013:  March 31, 2014
 
 
 March 31, 2013Interest and
  other income from TRS portfolio
 
 $
 3,073,966
 
 
 $
 105,447Interest and
  other expense from TRS portfolio
 
 
 (713,595)
 
 
 
 (24,835)Net gain on TRS
  loan sales
 
 
 603,108
 
 
 
 205,725Total
 
 $
 2,963,479
 
 
 $
 286,337
  Net Change in Unrealized Appreciation on
TRS  The net change in
unrealized appreciation on the TRS totaled $1,207,925 and $250,676 for the three
months ended March 31, 2014 and 2013, respectively. This change was primarily
due to the growth and increase in fair value of the underlying loans subject to
the TRS.  Net Increase in Net Assets Resulting from
Operations  For the three months ended
March 31, 2014 and 2013, we recorded a net increase in net assets resulting
from operations of $4,706,519 and $619,144,
respectively. 46


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Net Asset Value per Share, Annual Investment Return and Total
Return Since Inception  Our net asset value per share was $9.40 and
$9.32 on March 31, 2014 and December 31, 2013, respectively. After considering
(i) the overall changes in net asset value per share, (ii) paid distributions
of approximately $0.1679 per share during the three months ended March 31,
2014, and (iii) the assumed reinvestment of those distributions at 90% of the
prevailing offering price per share, the total investment return was 2.63% for
shareholders who held our shares over the entire three-month period ending
March 31, 2014.  Initial shareholders who subscribed to the
offering in December 2012 with an initial investment of $10,000 and an initial
purchase price equal to $9.00 per share (public offering price net of sales
load) have seen an annualized return of 11.12% and the value of their
investment grow by 14.54% (see chart below). Initial shareholders who
subscribed to the offering in December 2012 with an initial investment of
$10,000 and an initial purchase price equal to $10.00 per share (the initial
public offering price) have seen an annualized return of 2.39% and the value of
their investment grow by 3.08%. Over the same time period the S&P/LSTA Leverage
Loan Index, a primary measure of senior debt covering the U.S. leveraged loan
market, which currently consists of approximately 1,000 credit facilities
throughout numerous industries, had an annualized return of approximately 5.69%
and a total return of approximately 7.39%.    The calculations for the Growth of $10,000
Initial Investment are based upon (i) an initial investment of $10,000 in our
common stock at the beginning of the period, at a share price of $10.00 per
share (including sales load) and $9.00 per share (excluding sales load), (ii)
assumes reinvestment of monthly distributions in accordance with our second
amended and restated distribution reinvestment plan, (iii) the sale of the
entire investment position at the net asset value per share on the last day of
the period, and (iv) the cash payment for distributions payable to
shareholders, if any, on the last day of the period. 47


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Financial Condition, Liquidity and Capital Resources  We generate cash primarily from the net
proceeds of our continuous public offering and from cash flows from fees,
interest and dividends earned from our investments as well as principal
repayments and proceeds from sales of our investments. We are engaged in a
continuous offering of shares of our common stock. We accept subscriptions on a
continuous basis and, as of February 1, 2014, issue shares at weekly closings
at prices that, after deducting selling commissions and dealer manager fees,
are at or above our net asset value per share.  We will sell our shares on a continuous
basis at our latest public offering price of $10.45 per share; however, to the
extent that our net asset value increases, we will sell at a price necessary to
ensure that shares are not sold at a price, after deduction of selling
commissions and dealer manager fees, that is below net asset value. In the
event of a material decline in our net asset value per share, which we consider
to be a 2.5% decrease below our current net offering price, and subject to
certain conditions, we will reduce our offering price accordingly. Therefore,
persons who tender subscriptions for shares of our common stock in the offering
must submit subscriptions for a certain dollar amount, rather than a number of
shares of common stock and, as a result, may receive fractional shares of our
common stock. In connection with each weekly closing on the sale of shares of
our common stock, our board of directors has delegated to management the
authority to conduct such closings so long as there is no change to our public
offering price. In the event of a change to our public offering price in
connection with any weekly closing, our board of directors will approve the
change prior to management conducting such closing. In connection with each weekly
closing, we will, in each case if necessary, update the information contained
in our prospectus by filing a prospectus supplement with the SEC, and we will
also post any updated information to our website. As of March 31,
2014, we sold 23,991,865 shares for gross proceeds of $244,390,076 at an
average price per share of $10.19. The gross proceeds received include
reinvested shareholder distributions of $3,876,967, for which we issued 411,716
shares of common stock. Since commencing our continuous public offering on July
2, 2012 and through March 31, 2014, sales commissions and dealer manager fees
related to the sale of our common stock were $14,522,659 and $6,942,150,
respectively. As of May 8, 2014,
we sold 28,211,914 shares of common stock for net proceeds of $287,721,756 at
an average price per share of $10.20. The net proceeds include gross proceeds
received from reinvested shareholder distributions of $4,847,114, for which we
issued 514,868 shares of common stock and gross proceeds paid for shares of
common stock tendered for repurchase of $45,905, for which we repurchased 4,881
shares of common stock. Since commencing our continuous public offering on July
2, 2012 and through May 8, 2014, sales commissions and dealer manager fees
related to the sale of our common stock were $16,934,881 and $8,177,216,
respectively. On April 2, 2014, we completed our first tender offer in
connection with our share repurchase program and repurchased 4,880.906 shares
(representing 100% of the shares of common stock tendered for repurchase) at
$9.405 per share for aggregate consideration totaling $45,906.  The net proceeds from our continuous
offering will be invested primarily in cash, cash equivalents, U.S. government
securities, repurchase agreements and high-quality debt instruments maturing in
one year or less prior to being invested in debt securities of private U.S.
companies. As of March 31,
2014 and December 31, 2013, we had $11,003,717 and $11,383,669 in short term
investments, respectively, invested in a fund that primarily invested in U.S.
government securities.  Total Return Swap  For a detailed discussion of our TRS, refer
to Note 7 of our consolidated financial statements included in this report.  RIC Status and Distributions For a detailed
discussion of our RIC status and distributions, refer to Note 2 and Note 5,
respectively, of our consolidated financial statements included in this report.  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 for the year ended
December 31, 2013.  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. 48


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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 are 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 is, 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, is calculated and payable quarterly in arrears based
upon our “pre-incentive fee net investment income” for the immediately
preceding quarter and is subject to a hurdle rate, measured quarterly and
expressed as a rate of return on adjusted capital, as defined in 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 exceeds 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 only assists CIM with identifying
investment opportunities and making investment recommendations for approval by
CIM according to pre-established investment guidelines. On an annualized basis,
AIM receives 50% of the fees payable to CIM under the investment advisory
agreement with respect to each year, which fees are paid to AIM quarterly in
arrears by CIM. 49


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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. For
the three months ended March 31, 2014 and 2013, we incurred administrative
services expenses to ICON Capital of $415,395 and $263,555, respectively, the
majority of which related to the allocation of costs of administrative
personnel for services rendered to us and the remainder related to other
reimbursable expenses. During these periods, all or a portion of administrative
expenses were reimbursed by IIG in accordance with the expense support and
conditional reimbursement agreement.  Our payment of organization
costs and offering expenses will not exceed 1.5% of the actual gross proceeds
raised from our offering (without giving effect to any potential reimbursements
from IIG and its affiliates). If we sell the maximum number of shares at $10.45
per share, we estimate that we may incur up to approximately $15,675,000 of
expenses. Under the terms of the investment advisory agreement, CIM and certain
of its affiliates, which includes IIG, are entitled to receive reimbursement of
up to 1.5% of the gross proceeds raised until all 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, which could be as late as December 31, 2015, rather
than actual gross proceeds raised through the date of reimbursement. Consistent
with such application and since 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 111,111 shares of our common
stock at $9.00 per share to IIG in lieu of payment of $1,000,000 for
organization costs and offering expenses submitted for reimbursement. The
transactions 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.  As of March 31, 2014, we raised gross
proceeds of $244,390,076, of which we can pay up to $3,665,851 in organization
costs and offering expenses (which represents 1.5% of the actual gross proceeds
raised). Through March 31, 2014, we paid $3,061,183 of such costs and expenses,
leaving an additional $604,668 that can be paid, of which $591,475 was
submitted for reimbursement by IIG during the quarter. As of May 8, 2014, we
raised gross proceeds of $287,721,756, of which we can pay up to $4,315,826 in
organization costs and offering expenses (which represents 1.5% of the actual
gross proceeds raised). Through May 8, 2014, we paid $3,410,105 of such costs
and expenses, leaving an additional $905,721 that can be paid.  With respect to any
future reimbursements for organization costs and offering expenses, we will
interpret the 1.5% limit 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.  From inception
throughMarch 31, 2014, IIG and its affiliates incurred
organization costs and offering expenses of approximately $2,012,000, of which
$1,591,475 has been submitted to us for reimbursement, and of which we paid
$450,000 in October 2013 and $550,000 in March 2014. No additional material
organization costs or offering expenses have been incurred by IIG or its
affiliates subsequent toMarch
31, 2014. 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 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 months ended March 31, 2014, we recorded $1,048,858
of expense reimbursement from IIG in connection with the expense support and
conditional reimbursement agreement.  On December 13,
2013, we and IIG amended and restated the expense support and conditional
reimbursement agreement to extend the termination date of such agreement from
January 30, 2014 to January 30, 2015.  During the three
months ended March 31, 2014, net expense reimbursements of $1,284,068 due from
IIG were offset on our consolidated balance sheets against amounts due to
affiliates of IIG for management fees, a portion of administrative services
expense, a portion of incentive fees, and certain general and administrative
expenses paid by IIG on our behalf.As of March 31, 2014, the net payable due to IIG for such fees and
expenses was $378,803.  Refer to the table
under “Results of Operations for the Three Months Ended March 31, 2014 and
2013—Expense Reimbursements” above for a summary of all expenses supported by
IIG and the associated dates through which such expenses are eligible for
reimbursement by us.  50


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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 (i) if expense reimbursement amounts funded by IIG exceed
operating expenses incurred during any fiscal quarter, (ii) if 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, and (iii) during any fiscal quarter occurring within three years
of the date on which IIG funded such amount.  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 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  On December 17, 2012, Flatiron entered into
a TRS with Citibank. Flatiron and Citibank amended the TRS, effective December
9, 2013, February 18, 2014 and April 30, 2014. See Note 7 to our consolidated
financial statements for a more detailed description of the TRS.  Commitments and Contingencies and Off-Balance Sheet Arrangements  Commitments and Contingencies  We have entered into certain contracts with
other parties that contain a variety of indemnifications. Our maximum exposure
under these arrangements is unknown. However, we have not experienced claims or
losses pursuant to these contracts and believe the risk of loss related to such
indemnifications to be remote.  Our investment portfolio may
contain debt investments that are in the form of lines of credit, unfunded
delayed drawdown loan commitments, or revolving credit facilities, which
requires us to provide funding when requested by portfolio companies in
accordance with the terms of the underlying loan agreements. As of March 31,
2014 and December 31, 2013, unfunded loan commitments amounted to $3,054,668
and $2,450,758, respectively.For
the specific portfolio companies which we are committed to fund additional
amounts as ofMarch 31, 2014 andDecember 31,
2013,refer to the consolidated schedule of
investments included in this report.  Off-Balance Sheet Arrangements  We currently have no off-balance sheet arrangements.  Item 3. Quantitative and Qualitative
Disclosures About Market Risk  We are subject to financial market risks,
including changes in interest rates. As of March 31, 2014, 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. 51


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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 March 31, 2014:  Change in
  Interest Rates
 
 
 Increase (Decrease) in Net Interest
  Income(1)
 
 Percentage Change in Net Interest IncomeDown 32 basis
  points
 
 $
 741,693
 3.4%Current base
  interest rate
 
 
 -
 -Up 100 basis
  points
 
 
 (1,358,998)
 (6.1%)Up 200 basis
  points
 
 
 (123,462)
 (0.6%)Up 300 basis
  points
 
 
 1,142,827
 5.2%(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 1.35% per year on the
  full notional amount of the loans subject to the TRS. As of March 31, 2014,
  all of the loans subject to the TRS paid variable interest rates. This table
  assumes no change in defaults or prepayments by portfolio companies over the
  next twelve months.
  In addition, we may have risk regarding portfolio valuation
as discussed in Note 2 to our consolidated financial statements included in
this 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-Qfor the three
months ended March 31, 2014, we
carried out an evaluation, under the supervision and with the participation of
our management, including our Co-Chief Executive Officers and our Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this report
pursuant to Rule 13a-15(b) and Rule 15d-15(b) of the Securities Exchange Act of
1934, as amended. Based on the foregoing evaluation, the Co-Chief Executive
Officers and the Chief Financial Officer concluded that our disclosure controls
and procedures were effective. In designing and evaluating our
disclosure controls and procedures, we recognized that disclosure controls and
procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met.  Our disclosure controls and
procedures have been designed to meet reasonable assurance standards.
Disclosure controls and procedures cannot detect or prevent all error and
fraud. Some inherent limitations in disclosure controls and procedures include
costs of implementation, faulty decision-making, simple error and mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
controls. The design of any system of controls is based, in part, upon certain
assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
anticipated and unanticipated future conditions. Over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with
established policies or procedures. Evaluation of internal control over
financial reporting  There have been no changes in our internal
control over financial reporting during the three months ended March 31, 2014
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting. 52


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PART II - OTHER
INFORMATION Item 1. Legal Proceedings We are not currently subject to any
material legal proceedings, nor, to our knowledge, is any material legal
proceeding threatened against us. From time to time, we may be party to certain
legal proceedings in the ordinary course of business, including proceedings
relating to the enforcement of our rights under contracts with our portfolio
companies and other third parties. While the outcome of these legal proceedings
cannot be predicted with certainty, we do not expect that any such proceedings
will have a material effect upon our financial condition or results of
operations.  Item 1A. Risk Factors  There have been no material changes from the risk factors
disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the
year ended December 31, 2013. Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds Our registration statement on Form N-2, as
amended, was declared effective by the SEC on July 2, 2012 (SEC File No. 333-178646).
Our offering period commenced on July 2, 2012. We did not engage in any unregistered sales
of equity securities during the three months ended March 31, 2014. We did not
repurchase any shares of our common stock pursuant to our share repurchase
program during the three months ended March 31, 2014. Item 3. Defaults Upon
Senior Securities Not
applicable. Item 4. Mine Safety
Disclosures Not
applicable. Item 5. Other Information Not
applicable.    53


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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 Exhibit (D) to
  Post-Effective Amendment No. 7 to Registrant’s Registration Statement on Form
  N-2 filed with the SEC on April 28, 2014 (File No. 333-178646)).4.2
 
 Second Amended
  and Restated Distribution Reinvestment Plan (Incorporated by reference to
  Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the SEC on
  December 16, 2013 (File No. 814-00941)).10.1
 
 Investment
  Advisory Agreement by and between CĪON Investment Corporation and
  CĪON Investment Management, LLC (Incorporated by reference to Exhibit
  (G)(1) to Pre-Effective Amendment No. 4 to Registrant’s Registration
  Statement on Form N-2 filed with the SEC on June 29, 2012 (File No.
  333-178646)).10.2
 
 Investment
  Sub-Advisory Agreement by and among CĪON Investment Management, LLC,
  CĪON Investment Corporation and Apollo Investment Management, L.P.
  (Incorporated by reference to Exhibit (G)(2) to Pre-Effective Amendment No. 4
  to Registrant’s Registration Statement on Form N-2 filed with the SEC on June
  29, 2012 (File No. 333-178646)).10.3
 
 Administration
  Agreement by and between CĪON Investment Corporation and ICON Capital
  Corp. (Incorporated by reference to Exhibit (K)(2) to Pre-Effective Amendment
  No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC
  on June 29, 2012 (File No. 333-178646)).10.4
 
 Custody
  Agreement by and between CĪON Investment Corporation and U.S. Bank
  National Association (Incorporated by reference to Exhibit (J) to
  Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form
  N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).10.5
 
 Escrow
  Agreement by and among CĪON Investment Corporation, UMB Bank, N.A., and
  ICON Securities Corp. (Incorporated by reference to Exhibit (K)(1) to
  Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form
  N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).10.6
 
 Dealer Manager
  Agreement by and among CĪON Investment Corporation, CĪON Investment
  Management, LLC, and ICON Securities Corp. (Incorporated by reference to
  Exhibit (H)(1) to Pre-Effective Amendment No. 4 to Registrant’s Registration
  Statement on Form N-2 filed with the SEC on June 29, 2012 (File No.
  333-178646)).10.7
 
 ISDA 2002
  Master Agreement, together with the Schedule thereto and Credit Support Annex
  to such Schedule, each dated as of December 17, 2012, by and between Flatiron
  Funding, LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to
  the Registrant’s Current Report on Form 8-K filed with the SEC on December
  19, 2012).10.8
 
 Third Amended
  and Restated Confirmation Letter Agreement, dated as of April 30, 2014, 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 May 5, 2014).10.9
 
 Amended and
  Restated Expense Support and Conditional Reimbursement Agreement dated as of
  December 13, 2013, by and between CĪON Investment Corporation and ICON
  Investment Group, LLC (Incorporated by reference to Exhibit (K)(5) to
  Post-Effective Amendment No. 5 to Registrant’s Registration Statement on Form
  N-2 filed with the SEC on December 20, 2013 (File No. 333-178646)).
  54


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Exhibit
  Number
 
 Description of Document31.1
 
 Rule
  13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.31.2
 
 Rule
  13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.31.3
 
 Rule 13a-14(a)/15d-14(a)
  Certification of Chief Financial Officer.32.1
 
 Certification
  of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
 
 Certification
  of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.3
 
 Certification
  of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant
  to Section 906 of the Sarbanes-Oxley Act of 2002.
  55


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SIGNATURES Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. Date: May 13, 2014 CĪON
Investment Corporation
(Registrant) By:/s/ Michael A. ReisnerMichael A. Reisner
        Co-Chief Executive Officer and Co-President(Principal Executive Officer) By:/s/ Mark GattoMark Gatto
        Co-Chief Executive Officer and Co-President(Principal Executive Officer) By:/s/ Keith S. FranzKeith S. Franz
        Chief Financial Officer(Principal Financial and Accounting Officer) 56


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