UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q





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


For the quarterly period ended  March 31, 2019


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)





Maryland45-3058280(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification No.)3 Park Avenue, 36thFloorNew York, New York10016(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 every Interactive Data File required to be submitted 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 such files).


Yes [ ] No [ ]


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


Large accelerated filer [ ]Accelerated filer [ ]Non-accelerated filer [x]Smaller reporting company [ ]Emerging growth company [ ]


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


[ ]





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


Yes [ ] No [x]


Securities registered pursuant to Section 12(b) of the Act:


Title of each classTrading symbol(s)Name of each exchange on which registeredNoneNot applicableNot applicable


The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of May 9, 2019 was 113,803,885 .





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CĪON INVESTMENT CORPORATION


FORM 10-Q


TABLE OF CONTENTS


PagePART I - FINANCIAL INFORMATIONItem 1. Financial Statements1Consolidated Balance Sheets1Consolidated Statements of Operations2Consolidated Statements of Changes in Net Assets3Consolidated Statements of Cash Flows4Consolidated Schedules of Investments5Notes to Consolidated Financial Statements23Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations50Item 3. Quantitative and Qualitative Disclosures About Market Risk62Item 4. Controls and Procedures62PART II – OTHER INFORMATIONItem 1. Legal Proceedings64Item 1A. Risk Factors64Item 2. Unregistered Sales of Equity Securities and Use of Proceeds64Item 3. Defaults Upon Senior Securities64Item 4. Mine Safety Disclosures64Item 5. Other Information64Item 6. Exhibits65Signatures68








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PART I – FINANCIAL INFORMATION





Item 1. Financial Statements





CĪON Investment Corporation


Consolidated Balance Sheets


(in thousands, except share and per share amounts)


March 31,2019December 31,2018(unaudited)AssetsInvestments, at fair value:Non-controlled, non-affiliated investments (amortized cost of $1,826,565 and $1,866,316, respectively)$1,779,960$1,823,338Non-controlled, affiliated investments (amortized cost of $50,541 and $50,447, respectively)41,64341,972Total investments, at fair value (amortized cost of $1,877,106 and $1,916,763, respectively)1,821,6031,865,310Cash7,28117,579Interest receivable on investments17,12017,596Dividends receivable——Receivable due on investments sold43,3925,787Prepaid expenses and other assets88189Total assets$1,889,484$1,906,461


Liabilities and Shareholders' EquityLiabilitiesFinancing arrangements (net of unamortized debt issuance costs of $6,527 and $5,927, respectively)$876,015$892,615Payable for investments purchased12,96016,851Accounts payable and accrued expenses875939Interest payable3,6963,960Accrued management fees9,3319,308Accrued subordinated incentive fee on income5,3752,604Accrued administrative services expense97913Total liabilities908,349927,190Commitments and contingencies (Note 4 and Note 10)Shareholders' EquityCommon stock, $0.001 par value; 500,000,000 shares authorized;113,401,873 and 112,709,239 shares issued and outstanding, respectively113113Capital in excess of par value1,054,9131,048,693Accumulated losses(73,891)(69,535)Total shareholders' equity981,135979,271Total liabilities and shareholders' equity$1,889,484$1,906,461Net asset value per share of common stock at end of period$8.65$8.69


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Statements of Operations


(in thousands, except share and per share amounts)


Three Months EndedMarch 31,20192018(unaudited)(unaudited)Investment incomeInterest income:Non-controlled, non-affiliated investments$47,798$40,832Non-controlled, affiliated investments423116Total interest income48,22140,948Non-cash dividend income:Non-controlled, non-affiliated investments90—Non-controlled, affiliated investments2,562—Total non-cash dividend income2,652—Fee and other income298214Total investment income51,17141,162Operating expensesManagement fees9,3317,939Administrative services expense497461Subordinated incentive fee on income5,375—General and administrative1,3891,982Interest expense13,0408,918Total operating expenses29,63219,300Net investment income21,53921,862Realized and unrealized (losses) gainsNet realized (losses) gains on:Non-controlled, non-affiliated investments(957)(681)Non-controlled, affiliated investments——Foreign currency(3)2Net realized losses(960)(679)Net change in unrealized depreciation on:Non-controlled, non-affiliated investments(3,629)(1,333)Non-controlled, affiliated investments(421)(117)Foreign currency(113)—Net change in unrealized depreciation(4,163)(1,450)Net realized and unrealized losses(5,123)(2,129)Net increase in net assets resulting from operations$16,416$19,733Per share information—basic and dilutedNet increase in net assets per share resulting from operations$0.14$0.17Weighted average shares of common stock outstanding113,624,760114,849,958


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Statements of Changes in Net Assets


(in thousands, except share and per share amounts)


Three Months EndedMarch 31,20192018(unaudited)(unaudited)Changes in net assets from operations:Net investment income$21,539$21,862Net realized loss on investments(957)(681)Net realized (loss) gain on foreign currency(3)2Net change in unrealized depreciation on investments(4,050)(1,450)Net change in unrealized depreciation on foreign currency translation(113)—Net increase in net assets resulting from operations16,41619,733Changes in net assets from shareholders' distributions:Distributions to shareholders(20,772)(21,002)Net decrease in net assets resulting from shareholders' distributions(20,772)(21,002)Changes in net assets from capital share transactions:Issuance of common stock, net of issuance costs of $296 and $471, respectively6,22011,666Reinvestment of shareholders' distributions9,3619,844Repurchase of common stock(9,361)(18,379)Net increase in net assets resulting from capital share transactions6,2203,131Total increase in net assets1,8641,862Net assets at beginning of period979,2711,058,691Net assets at end of period$981,135$1,060,553Net asset value per share of common stock at end of period$8.65$9.13Shares of common stock outstanding at end of period113,401,873116,108,932


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Statements of Cash Flows


(in thousands)


Three Months EndedMarch 31,20192018(unaudited)(unaudited)Operating activities:Net increase in net assets resulting from operations$16,416$19,733Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by(used in) operating activities:Net accretion of discount on investments(3,017)(5,094)Proceeds from principal repayment of investments95,142192,418Purchase of investments(143,445)(322,156)Paid-in-kind interest and dividends capitalized(3,239)(665)(Increase) decrease in short term investments, net(13,631)25,452Proceeds from sale of investments106,86160,369Net realized loss on investments957681Net unrealized depreciation on investments4,0501,450Amortization of debt issuance costs828737(Increase) decrease in interest receivable on investments505334(Increase) decrease in receivable due on investments sold(37,605)3,002(Increase) decrease in prepaid expenses and other assets1015Increase (decrease) in payable for investments purchased(3,891)2,396Increase (decrease) in accounts payable and accrued expenses(71)(81)Increase (decrease) in interest payable(264)221Increase (decrease) in accrued management fees23118Increase (decrease) in accrued administrative services expense(816)(445)Increase (decrease) in due to CIG - offering costs—8Increase (decrease) in subordinated incentive fee on income payable2,771(3,222)Net cash provided by (used in) operating activities21,675(24,739)Financing activities:Gross proceeds from issuance of common stock6,51612,137Commissions and dealer manager fees paid(296)(471)Repurchase of common stock(9,361)(18,379)Shareholders' distributions paid(11,411)(11,158)Repayments under financing arrangements(73,500)—Borrowings under financing arrangements57,500—Debt issuance costs paid(1,421)(6)Net cash used in financing activities(31,973)(17,877)Net decrease in cash and restricted cash(10,298)(42,616)Cash and restricted cash, beginning of period17,57956,354Cash and restricted cash, end of period$7,281$13,738Supplemental disclosure of cash flow information:Cash paid for interest$12,472$7,976Supplemental non-cash financing activities:Reinvestment of shareholders' distributions$9,361$9,844Restructuring of portfolio investment$2,200$—


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Senior Secured First Lien Debt - 144.1%Academy, Ltd., L+400, 1.00% LIBOR Floor, 7/1/2022(q)1 Month LIBORRetail$14,368$12,223$10,411ACProducts, Inc., L+550, 0.00% LIBOR Floor, 2/15/2024(q)2 Month LIBORConstruction & Building5,0004,7534,775Adams Publishing Group, LLC, L+750, 1.00% LIBOR Floor, 7/2/2023(p)(r)3 Month LIBORMedia: Advertising, Printing & Publishing16,21616,05816,095Adams Publishing Group, LLC, 0.38% Unfunded, 7/2/2020(p)NoneMedia: Advertising, Printing & Publishing2,069—(16)Adapt Laser Acquisition, Inc., L+800, 1.00% LIBOR Floor, 12/31/2023(p)3 Month LIBORCapital Equipment12,00012,00012,000Adapt Laser Acquisition, Inc., 0.50% Unfunded, 12/31/2023NoneCapital Equipment2,000——Aegis Toxicology Sciences Corp., L+550, 1.00% LIBOR Floor, 5/9/2025(q)3 Month LIBORHealthcare & Pharmaceuticals9,9509,7639,676AIS Holdco, LLC, L+500, 0.00% LIBOR Floor, 8/15/2025(q)3 Month LIBORBanking, Finance, Insurance & Real Estate5,4865,4195,363Alchemy US Holdco 1, LLC, L+550, 10/10/2025(q)3 Month LIBORConstruction & Building7,9507,8377,950Allen Media, LLC, L+650, 1.00% LIBOR Floor, 8/30/2023(p)(r)(s)1 Month LIBORMedia: Diversified & Production79,00077,21376,729ALM Media, LLC, L+450, 1.00% LIBOR Floor, 7/31/2020(q)3 Month LIBORMedia: Advertising, Printing & Publishing13,19112,49812,399American Clinical Solutions LLC, 12.50%, 6/11/2020(u)(w)NoneHealthcare & Pharmaceuticals9,3398,9685,697American Media, LLC, L+750, 0.00% LIBOR Floor, 12/31/2023(p)3 Month LIBORMedia: Advertising, Printing & Publishing19,62519,15919,134American Media, LLC, L+750, 0.00% LIBOR Floor, 12/31/20233 Month LIBORMedia: Advertising, Printing & Publishing858683American Media, LLC, 0.50% Unfunded, 12/31/2023NoneMedia: Advertising, Printing & Publishing1,617(41)(40)American Teleconferencing Services, Ltd., L+650, 1.00% LIBOR Floor, 12/8/2021(p)(q)(r)(s)2 Month LIBORTelecommunications19,85918,60512,809Analogic Corp., L+600, 1.00% LIBOR Floor, 6/21/2024(r)(s)1 Month LIBORHealthcare & Pharmaceuticals29,85029,31429,551AP Exhaust Acquisition, LLC, L+500, 1.00% LIBOR Floor, 5/10/2024(q)(r)3 Month LIBORAutomotive10,5049,9409,585APCO Holdings, LLC, L+550, 0.00% LIBOR Floor, 6/9/2025(q)1 Month LIBORBanking, Finance, Insurance & Real Estate11,27711,17511,277Ascent Resources - Marcellus, LLC, L+650, 1.00% LIBOR Floor, 3/30/20231 Month LIBOREnergy: Oil & Gas712712713Associated Asphalt Partners, LLC, L+525, 1.00% LIBOR Floor, 4/5/2024(q)1 Month LIBORConstruction & Building10,80110,64110,686Avison Young (USA) Inc., L+500, 0.00% LIBOR Floor, 1/31/2026(i)(q)3 Month LIBORBanking, Finance, Insurance & Real Estate9,9759,7769,825Bi-Lo, LLC, L+800, 1.00% LIBOR Floor, 5/31/2024(q)(r)3 Month LIBORRetail12,99512,61712,654Cadence Aerospace, LLC, L+650, 1.00% LIBOR Floor, 11/14/2023(r)(s)2 Month LIBORAerospace & Defense25,89425,67525,376Cardinal US Holdings, Inc., L+500, 1.00% LIBOR Floor, 7/31/2023(q)2 Month LIBORServices: Business8,3737,9078,252CB URS Holdings Corp., L+525, 1.00% LIBOR Floor, 9/1/2024(q)(s)1 Month LIBORTransportation: Cargo16,80616,71316,637Central Security Group, Inc., L+563, 1.00% LIBOR Floor, 10/6/2021(q)(s)1 Month LIBORServices: Consumer24,59624,61524,350Charming Charlie LLC, L+1000, 1.00% LIBOR Floor, 4/24/2023(u)(v)(w)1 Month LIBORRetail3,4631,912554Charming Charlie LLC, L+1000, 1.00% LIBOR Floor, 4/24/2023(u)(v)(w)1 Month LIBORRetail2,8292,619453Charming Charlie LLC, 20.00%, 5/15/2019(v)NoneRetail157157157Charming Charlie LLC, 2.50% Unfunded, 5/15/2019(v)NoneRetail1,938——CHC Solutions Inc., 12.00%, 7/20/2023(w)NoneHealthcare & Pharmaceuticals7,1297,1297,129CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021(r)(s)1 Month LIBORHotel, Gaming & Leisure24,06423,79523,583CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/20211 Month LIBORHotel, Gaming & Leisure1,7701,7701,735


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands)


Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)CircusTrix Holdings, LLC, 1.00% Unfunded, 12/27/2019NoneHotel, Gaming & Leisure5,573—(111)Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 3/31/2023(s)1 Month LIBORBeverage, Food & Tobacco9,8519,7147,290Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 5/7/20191 Month LIBORBeverage, Food & Tobacco207199198Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 5/7/20191 Month LIBORBeverage, Food & Tobacco124119119Country Fresh Holdings, LLC, 0.50% Unfunded, 4/8/2019NoneBeverage, Food & Tobacco83(3)(3)Covenant Surgical Partners, Inc., L+450, 0.00% LIBOR Floor, 10/4/2024(q)3 Month LIBORHealthcare & Pharmaceuticals915913906Crown Subsea Communications Holdings, Inc., L+600, 0.00% LIBOR Floor, 11/2/2025(q)1 Month LIBORCapital Equipment7,9007,7497,821David's Bridal, Inc., L+800, 1.00% LIBOR Floor, 1/18/20243 Month LIBORRetail1,6901,6901,475David's Bridal, Inc., L+750, 1.00% LIBOR Floor, 7/18/20233 Month LIBORRetail423339431Dayton Superior Corp., L+1400, 1.00% LIBOR Floor, 11/15/2021(q)(w)3 Month LIBORConstruction & Building6,4766,0415,408DBRS, Inc., L+525, 1.00% LIBOR Floor, 3/4/2022(i)(q)3 Month LIBORServices: Business5,8315,6965,795Del Frisco's Restaurant Group, Inc., L+600, 0.00% LIBOR Floor, 6/27/2025(i)(p)(q)1 Month LIBORRetail9,9509,8889,651Deluxe Entertainment Services Group Inc., L+550, 1.00% LIBOR Floor, 2/28/2020(q)2 Month LIBORMedia: Diversified & Production15,95715,91214,032DFC Global Facility Borrower II LLC, L+1075, 1.00% LIBOR Floor, 9/27/20221 Month LIBORServices: Consumer24,68324,57824,683DFC Global Facility Borrower II LLC, 0.50% Unfunded, 9/27/2019NoneServices: Consumer5,317——DMT Solutions Global Corp., L+700, 0.00% LIBOR Floor, 7/2/2024(q)(s)3 Month LIBORServices: Business19,25018,73618,673Eagle Family Foods Group LLC, L+650, 1.00% LIBOR Floor, 6/14/2024(s)1 Month LIBORBeverage, Food & Tobacco14,88814,59114,664Eastman Kodak Company, L+625, 1.00% LIBOR Floor, 9/3/2019(i)(q)1 Month LIBORConsumer Goods: Durable1,9651,9631,935Elemica, Inc., L+700, 1.00% LIBOR Floor, 7/7/2021(p)(r)1 Month LIBORHigh Tech Industries17,01916,78816,934Elemica, Inc., L+700, 1.00% LIBOR Floor, 7/7/20211 Month LIBORHigh Tech Industries2,0002,0011,990Elemica, Inc., 0.50% Unfunded, 7/7/2021NoneHigh Tech Industries500(30)(3)Emmis Operating Company, L+800, 1.00% LIBOR Floor, 4/18/2019(q)1 Month LIBORMedia: Broadcasting & Subscription1,2181,2151,218Entertainment Studios P&A LLC, 6.22%, 5/18/2037(m)NoneMedia: Diversified & Production17,46517,31517,115Entertainment Studios P&A LLC, 5.00%, 5/18/2037(m)NoneMedia: Diversified & Production——2,782EnTrans International, LLC, L+600, 0.00% LIBOR Floor, 11/1/2024(q)(s)1 Month LIBORCapital Equipment29,43829,16629,143ES Chappaquiddick LLC, 10.00%, 5/18/2022NoneMedia: Diversified & Production1,0761,0761,125Evergreen Skills Lux S.À.R.L., L+475, 1.00% LIBOR Floor, 4/28/2021(i)(q)1 Month LIBORHigh Tech Industries10,1579,7488,557F+W Media, Inc., L+650, 1.50% LIBOR Floor, 5/24/2022(v)(w)1 Month LIBORMedia: Diversified & Production1,1421,1421,199F+W Media, Inc., L+1000, 1.50% LIBOR Floor, 5/24/2022(p)(u)(v)(w)1 Month LIBORMedia: Diversified & Production3,1852,759924F+W Media, Inc., 10.00%, 8/10/2019(v)NoneMedia: Diversified & Production271200298F+W Media, Inc., 2.00% Unfunded, 8/10/2019(v)NoneMedia: Diversified & Production503—50Flavors Holdings Inc., L+575, 1.00% LIBOR Floor, 4/3/2020(p)(r)3 Month LIBORConsumer Goods: Non-Durable11,34010,77310,603Foundation Consumer Healthcare, LLC, L+550, 1.00% LIBOR Floor, 11/2/2023(p)(r)(s)3 Month LIBORHealthcare & Pharmaceuticals40,58640,33740,586Foundation Consumer Healthcare, LLC, 0.50% Unfunded, 11/2/2023NoneHealthcare & Pharmaceuticals4,211(24)—Genesis Healthcare, Inc., L+600, 0.50% LIBOR Floor, 3/6/2023(i)(p)(s)1 Month LIBORHealthcare & Pharmaceuticals35,00034,71034,300


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Geo Parent Corp., L+550, 0.00% LIBOR Floor, 12/19/20251 Month LIBORServices: Business15,00014,85914,963Harland Clarke Holdings Corp., L+475, 1.00% LIBOR Floor, 11/3/2023(q)(s)3 Month LIBORServices: Business13,81213,75712,499Healogics, Inc., L+425, 1.00% LIBOR Floor, 7/1/2021(q)3 Month LIBORHealthcare & Pharmaceuticals4,7874,6144,167Homer City Generation, L.P., L+1100, 1.00% LIBOR Floor, 4/5/2023(p)1 Month LIBOREnergy: Oil & Gas14,59314,02213,972Hummel Station LLC, L+600, 1.00% LIBOR Floor, 10/27/2022(q)1 Month LIBOREnergy: Oil & Gas9,8359,4549,442Independent Pet Partners Intermediate Holdings, LLC, L+900, 1.00% LIBOR Floor, 11/19/20236 Month LIBORRetail9,1859,0919,013Independent Pet Partners Intermediate Holdings, LLC, 1.00% Unfunded, 11/19/2023NoneRetail10,815(108)(203)Infinity Sales Group, LLC, L+1050, 1.00% LIBOR Floor, 11/23/2020(p)1 Month LIBORServices: Business7,8737,5587,794InfoGroup Inc., L+500, 1.00% LIBOR Floor, 4/3/2023(q)(r)(s)3 Month LIBORMedia: Advertising, Printing & Publishing15,87815,86415,620Instant Web, LLC, L+650, 0.00% LIBOR Floor, 12/15/2022(p)(r)(s)1 Month LIBORMedia: Advertising, Printing & Publishing39,03738,94838,647Instant Web, LLC, 0.50% Unfunded, 12/15/2022NoneMedia: Advertising, Printing & Publishing2,704—(27)Intermedia Holdings, Inc., L+600, 1.00% LIBOR Floor, 7/21/2025(q)1 Month LIBORHigh Tech Industries12,46912,35512,492International Seaways, Inc., L+600, 1.00% LIBOR Floor, 6/22/2022(i)(q)1 Month LIBORTransportation: Cargo9,4999,3659,606Isagenix International, LLC, L+575, 1.00% LIBOR Floor, 6/14/2025(q)3 Month LIBORBeverage, Food & Tobacco14,43814,30612,922Island Medical Management Holdings, LLC, L+650, 1.00% LIBOR Floor, 9/1/2022(r)1 Month LIBORHealthcare & Pharmaceuticals11,91811,80510,488ITC Service Group Acquisition LLC, L+950, 0.50% LIBOR Floor, 5/26/2021(l)(p)1 Month LIBORHigh Tech Industries11,25011,13511,250Jab Wireless, Inc., L+800, 0.00% LIBOR Floor, 5/2/2023(s)3 Month LIBORTelecommunications19,80019,80019,800Jackson Hewitt Tax Service Inc., L+625, 0.00% LIBOR Floor, 5/30/2023(s)3 Month LIBORServices: Consumer17,77517,77517,775JP Intermediate B, LLC, L+550, 1.00% LIBOR Floor, 11/20/2025(q)3 Month LIBORBeverage, Food & Tobacco14,81314,67413,924KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(r)1 Month LIBORChemicals, Plastics & Rubber7,0747,0166,437KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(r)1 Month LIBORChemicals, Plastics & Rubber4,0954,0623,727KNB Holdings Corp., L+550, 1.00% LIBOR Floor, 4/26/2024(q)(s)3 Month LIBORConsumer Goods: Durable8,4588,3268,331Labvantage Solutions Inc., L+750, 1.00% LIBOR Floor, 12/29/2020(r)1 Month LIBORHigh Tech Industries3,9413,9223,902Labvantage Solutions Ltd., E+750, 1.00% EURIBOR Floor, 12/29/2020(i)1 Month EURIBORHigh Tech Industries€3,9624,4334,400LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/20243 Month LIBORServices: Business20,68120,37120,371LAV Gear Holdings, Inc., L+550, 1.00% LIBOR Floor, 10/31/20243 Month LIBORServices: Business216213213LAV Gear Holdings, Inc., 1.00% Unfunded, 10/31/2020NoneServices: Business4,103(62)(62)LD Intermediate Holdings, Inc., L+588, 1.00% LIBOR Floor, 12/9/2022(q)2 Month LIBORHigh Tech Industries4,8894,5764,254Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/2023(p)(r)(s)3 Month LIBORServices: Consumer44,55043,72743,882Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/20233 Month LIBORServices: Consumer1,3501,3501,330Lift Brands, Inc., 1.00% Unfunded, 4/16/2023NoneServices: Consumer3,650—(55)Longview Power, LLC, L+600, 1.00% LIBOR Floor, 4/13/2021(p)(r)2 Month LIBOREnergy: Oil & Gas14,88413,19713,061Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/2023(p)(s)3 Month LIBORServices: Business42,67842,67842,678Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/20233 Month LIBORServices: Business2,0002,0002,000Mimeo.com, Inc., 0.25% Unfunded, 12/21/2020NoneServices: Business10,000——


See accompanying notes to consolidated financial statements.





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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands)


Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Mimeo.com, Inc., 1.00% Unfunded, 12/21/2023NoneServices: Business1,000——Moss Holding Company, L+625, 1.00% LIBOR Floor, 4/17/2023(p)(r)3 Month LIBORServices: Business20,45220,17120,145Moss Holding Company, 0.50% Unfunded, 4/17/2023NoneServices: Business2,232—(33)Moxie Patriot LLC, L+575, 1.00% LIBOR Floor, 12/19/2020(q)3 Month LIBOREnergy: Oil & Gas9,8759,8629,456MRP Generation Holdings, LLC, L+700, 1.00% LIBOR Floor, 10/18/2022(q)3 Month LIBOREnergy: Oil & Gas2,2092,1762,131Murray Energy Corp., L+725, 1.00% LIBOR Floor, 10/17/2022(q)3 Month LIBORMetals & Mining3,5833,5432,979NewsCycle Solutions, Inc., L+700, 1.00% LIBOR Floor, 12/29/2022(r)(s)1 Month LIBORMedia: Advertising, Printing & Publishing20,61320,43920,407One Call Corp., L+525, 1.00% LIBOR Floor, 11/25/2022(q)1 Month LIBORHealthcare & Pharmaceuticals7,9897,5817,270Petroflow Energy Corp., L+800, 1.00% LIBOR Floor, 6/29/2019(p)(u)(v)(w)1 Month LIBOREnergy: Oil & Gas707217204PFS Holding Corp., L+350, 1.00% LIBOR Floor, 1/31/20211 Month LIBORRetail3,1212,5441,631PH Beauty Holdings III, Inc., L+500, 0.00% LIBOR Floor, 9/28/2025(q)1 Month LIBORConsumer Goods: Non-Durable9,9509,8579,888Photonis Technologies SAS, L+750, 1.00% LIBOR Floor, 9/18/2019(i)(q)3 Month LIBORAerospace & Defense6,3976,1726,397Pixelle Specialty Solutions LLC, L+600, 1.00% LIBOR Floor, 10/31/2024(q)1 Month LIBORForest Products & Paper19,95019,47919,426Plano Molding Company, LLC, L+750, 1.00% LIBOR Floor, 5/12/2021(p)1 Month LIBORConsumer Goods: Non-Durable6,0566,0105,723Polymer Additives, Inc., L+600, 0.00% LIBOR Floor, 7/31/2025(p)(q)1 Month LIBORChemicals, Plastics & Rubber19,95019,58118,304Rhino Energy LLC, L+1000, 1.00% LIBOR Floor, 12/27/2020(s)1 Month LIBORMetals & Mining7,1686,8547,096SEK Holding Co LLC, L+1150, 0.00% LIBOR Floor, 3/14/2022(w)1 Month LIBORBanking, Finance, Insurance & Real Estate15,00014,70314,700Sequoia Healthcare Management, LLC, L+1050, 1.75% LIBOR Floor, 8/21/2023(p)(r)1 Month LIBORHealthcare & Pharmaceuticals9,6329,5459,199SIMR, LLC, L+900, 2.00% LIBOR Floor, 9/7/2023(p)(v)1 Month LIBORHealthcare & Pharmaceuticals15,12114,84414,572Sorenson Communications, LLC, L+000, 0.00% LIBOR Floor, 4/30/2024(k)(q)1 Month LIBORTelecommunications13,50012,96013,382Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 9/30/2020(p)3 Month LIBORHealthcare & Pharmaceuticals12,74612,72212,618Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 12/31/2021(p)(w)3 Month LIBORHealthcare & Pharmaceuticals495494490Sprint Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 8/15/2019(p)3 Month LIBOREnergy: Oil & Gas8,0197,9917,658STG-Fairway Acquisitions, Inc., L+525, 1.00% LIBOR Floor, 6/30/2022(q)1 Month LIBORServices: Business3,9293,8513,916STL Parent Corp., L+700, 0.00% LIBOR Floor, 12/6/2022(r)(s)1 Month LIBORCapital Equipment19,87519,22719,378Teladoc, Inc., 0.50% Unfunded, 7/14/2020NoneHigh Tech Industries1,250(21)—Telestream Holdings Corp., L+645, 1.00% LIBOR Floor, 3/24/2022(l)(p)6 Month LIBORHigh Tech Industries8,4398,3118,270Tenere Inc., L+1000, 1.00% LIBOR Floor, 12/23/2021(p)(r)3 Month LIBORCapital Equipment30,08029,66729,478Tensar Corp., L+475, 1.00% LIBOR Floor, 7/9/2021(q)3 Month LIBORChemicals, Plastics & Rubber12,98012,47612,234The Pasha Group, L+750, 1.00% LIBOR Floor, 1/26/2023(r)2 Month LIBORTransportation: Cargo6,7046,5396,759The Pay-O-Matic Corp., L+900, 0.00% LIBOR Floor, 4/5/2021(h)(p)3 Month LIBORServices: Consumer22,13821,98122,137TherapeuticsMD, Inc., L+775, 1.50% LIBOR Floor, 5/1/2023(i)(s)1 Month LIBORHealthcare & Pharmaceuticals15,00014,87114,850TherapeuticsMD, Inc., 0.00% Unfunded, 12/31/2019(i)(t)NoneHealthcare & Pharmaceuticals10,000(83)(100)TherapeuticsMD, Inc., 0.00% Unfunded, 5/31/2019(i)(t)NoneHealthcare & Pharmaceuticals15,000(125)(150)Therapure Biopharma Inc., L+875, 0.50% LIBOR Floor, 12/1/2021(i)(w)1 Month LIBORHealthcare & Pharmaceuticals15,36315,31814,883


See accompanying notes to consolidated financial statements.





8


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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Wok Holdings Inc., L+650, 0.00% LIBOR Floor, 3/1/2026(q)1 Month LIBORBeverage, Food & Tobacco10,0009,9019,887Woodstream Corp., L+625, 1.00% LIBOR Floor, 5/29/2022(s)3 Month LIBORConsumer Goods: Non-Durable14,30014,30014,300Woodstream Corp., 0.50% Unfunded, 5/29/2021NoneConsumer Goods: Non-Durable559——Total Senior Secured First Lien Debt1,445,3501,413,468Senior Secured Second Lien Debt - 31.6%1A Smart Start LLC, L+825, 1.00% LIBOR Floor, 8/21/2022(p)(r)1 Month LIBORHigh Tech Industries17,80017,51217,355ABG Intermediate Holdings 2 LLC, L+775, 1.00% LIBOR Floor, 9/29/2025(p)1 Month LIBORRetail9,8979,8479,798Access CIG, LLC, L+775, 0.00% LIBOR Floor, 2/27/2026(r)1 Month LIBORServices: Business17,25017,11917,077Albany Molecular Research, Inc., L+700, 1.00% LIBOR Floor, 8/30/2025(p)1 Month LIBORHealthcare & Pharmaceuticals10,0009,8329,925ALM Media, LLC, L+800, 1.00% LIBOR Floor, 7/30/2021(p)(r)3 Month LIBORMedia: Advertising, Printing & Publishing10,34410,2898,378American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2022(p)1 Month LIBORConstruction & Building5,1805,1265,076Argon Medical Devices Holdings, Inc., L+800, 0.00% LIBOR Floor, 1/23/2026(p)1 Month LIBORHealthcare & Pharmaceuticals14,40014,32814,184Carestream Health, Inc., L+950, 1.00% LIBOR Floor, 6/7/2021(r)1 Month LIBORHealthcare & Pharmaceuticals10,66210,66210,476Drew Marine Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(i)(p)1 Month LIBORChemicals, Plastics & Rubber9,5009,4769,512EagleTree-Carbide Acquisition Corp., L+850, 1.00% LIBOR Floor, 8/28/2025(r)3 Month LIBORConsumer Goods: Durable20,00019,74120,000Emerald 3 Ltd., L+700, 1.00% LIBOR Floor, 5/16/2022(i)(p)3 Month LIBOREnvironmental Industries3,0002,9863,000Evergreen Skills Lux S.À.R.L., L+825, 1.00% LIBOR Floor, 4/28/2022(i)(r)1 Month LIBORHigh Tech Industries9,9997,8334,112Global Tel*Link Corp., L+825, 0.00% LIBOR Floor, 11/29/2026(r)1 Month LIBORTelecommunications11,50011,30411,263GOBP Holdings, Inc., L+725, 0.00% LIBOR Floor, 10/22/2026(r)3 Month LIBORRetail5,0004,9524,988LSCS Holdings, Inc., L+825, 0.00% LIBOR Floor, 3/16/2026(p)2 Month LIBORServices: Business11,89111,64611,831Mayfield Agency Borrower Inc., L+850, 0.00% LIBOR Floor, 3/2/2026(p)(r)(s)1 Month LIBORBanking, Finance, Insurance & Real Estate20,00019,71319,650Medical Solutions Holdings, Inc., L+825, 1.00% LIBOR Floor, 6/16/2025(p)1 Month LIBORHealthcare & Pharmaceuticals10,0009,8699,925MedPlast Holdings, Inc., L+775, 0.00% LIBOR Floor, 7/2/2026(s)3 Month LIBORHealthcare & Pharmaceuticals6,7506,6886,750Ministry Brands, LLC, L+925, 1.00% LIBOR Floor, 6/2/2023(p)(r)3 Month LIBORServices: Business7,0006,9217,000Niacet Corp., E+875, 1.00% EURIBOR Floor, 8/1/2024(i)1 Month EURIBORChemicals, Plastics & Rubber€7,4897,9648,317Patterson Medical Supply, Inc., L+850, 1.00% LIBOR Floor, 8/28/2023(p)3 Month LIBORHealthcare & Pharmaceuticals13,50013,40812,150PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023(p)3 Month LIBORChemicals, Plastics & Rubber15,00014,75414,738PFS Holding Corp., L+725, 1.00% LIBOR Floor, 1/31/2022(q)(u)1 Month LIBORRetail4,9984,597943Premiere Global Services, Inc., L+950, 1.00% LIBOR Floor, 6/6/20223 Month LIBORTelecommunications3,0002,9221,650PT Intermediate Holdings III, LLC, L+800, 1.00% LIBOR Floor, 12/8/2025(r)3 Month LIBORServices: Business9,3759,2989,281Securus Technologies Holdings, Inc., L+825, 1.00% LIBOR Floor, 11/1/2025(r)1 Month LIBORTelecommunications2,9422,9152,891SESAC Holdco II LLC, L+725, 1.00% LIBOR Floor, 2/23/2025(r)1 Month LIBORMedia: Broadcasting & Subscription250248248STG-Fairway Acquisitions, Inc., L+925, 1.00% LIBOR Floor, 6/30/2023(p)(r)1 Month LIBORServices: Business10,0009,9019,550TexOak Petro Holdings LLC, 8.00%, 12/29/2019(u)(v)NoneEnergy: Oil & Gas8,0672,592—TMK Hawk Parent, Corp., L+800, 1.00% LIBOR Floor, 8/28/2025(p)1 Month LIBORServices: Business13,39313,09912,991


See accompanying notes to consolidated financial statements.





9


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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)TouchTunes Interactive Networks, Inc., L+825, 1.00% LIBOR Floor, 5/29/2022(r)1 Month LIBORHotel, Gaming & Leisure6,0005,9606,000U.S. Renal Care, Inc., L+800, 1.00% LIBOR Floor, 12/29/2023(p)3 Month LIBORHealthcare & Pharmaceuticals5,0004,9335,017Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022(p)1 Month LIBORBeverage, Food & Tobacco12,82312,6497,053Zest Acquisition Corp., L+750, 1.00% LIBOR Floor, 3/13/2026(r)1 Month LIBORHealthcare & Pharmaceuticals15,00014,86414,063Zywave Inc., L+900, 1.00% LIBOR Floor, 11/17/2023(p)1 Month LIBORHigh Tech Industries5,0004,9455,000Total Senior Secured Second Lien Debt330,893310,192Collateralized Securities and Structured Products - Debt - 1.5%Deutsche Bank AG Frankfurt CRAFT 2015-2 Class Credit Linked Note, L+925, 1/16/2022(i)3 Month LIBORDiversified Financials15,14415,14415,030Total Collateralized Securities and Structured Products - Debt15,14415,030Collateralized Securities and Structured Products - Equity - 1.6%APIDOS CLO XVI Subordinated Notes, 0.02% Estimated Yield, 1/19/2025(i)(g)Diversified Financials9,0003,7582,920CENT CLO 19 Ltd. Subordinated Notes, 16.86% Estimated Yield, 10/29/2025(i)(g)Diversified Financials2,0001,1631,187Galaxy XV CLO Ltd. Class A Subordinated Notes, 9.02% Estimated Yield, 4/15/2025(i)(g)Diversified Financials4,0002,3211,944Ivy Hill Middle Market Credit Fund VIII, Ltd. Subordinated Loan, 11.84% Estimated Yield, 2/2/2026(f)(i)(g)Diversified Financials10,0009,4459,424Total Collateralized Securities and Structured Products - Equity16,68715,475Equity - 4.2%Ascent Resources - Marcellus, LLC, Common Shares(t)Energy: Oil & Gas511,255 Units1,6421,431Ascent Resources - Marcellus, LLC, Warrants(t)Energy: Oil & Gas132,367 Units134Avaya Holdings Corp., Common Stock(j)(q)(t)Telecommunications321,260 Units5,2855,407Charming Charlie LLC, Common Stock(t)Retail30,046,243 Units1,302—CHC Medical Partners, Inc., Series C Preferred Stock, 12% DividendHealthcare & Pharmaceuticals1,818,182 Units3,0003,336Conisus Holdings, Inc., Series B Preferred Stock, 12% Dividend(v)Healthcare & Pharmaceuticals12,677,833 Units11,76211,410Conisus Holdings, Inc., Common Stock(t)(v)Healthcare & Pharmaceuticals4,914,556 Units2001,474David's Bridal, Inc., Common Stock(t)Retail32,296 Units580275F+W Media, Inc., Common Stock(t)(v)Media: Diversified & Production31,211 Units——Independent Pet Partners Intermediate Holdings, LLC, Class A Preferred Units(t)Retail1,000,000 Units1,0001,000Independent Pet Partners Intermediate Holdings, LLC, Warrants(t)Retail155,880 Units—8Mooregate ITC Acquisition, LLC, Class A Units(t)High Tech Industries500 Units563185Mount Logan Capital Inc., Common Stock(i)(j)(t)(v)Banking, Finance, Insurance & Real Estate7,842,273 Units3,3352,878NS NWN Acquisition, LLC, Voting Units(t)High Tech Industries346 Units393709NS NWN Acquisition, LLC, Class A Preferred Units(t)High Tech Industries111 Units111332NSG Co-Invest (Bermuda) LP, Partnership Interests(i)(t)Consumer Goods: Durable1,575 Units1,000739Rhino Energy LLC, Warrants(t)Metals & Mining170,972 Units28097SIMR Parent, LLC, Class B Common Units(t)(v)Healthcare & Pharmaceuticals7,500,000 Units7,5007,469Spinal USA, Inc. / Precision Medical Inc., Warrants(p)(t)Healthcare & Pharmaceuticals9,317,237 Units4,7364,286Tenere Inc., Warrant(t)Capital EquipmentN/A161229


See accompanying notes to consolidated financial statements.





10


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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands)


Portfolio Company(a)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)TexOak Petro Holdings LLC, Membership Interests(t)(v)Energy: Oil & Gas60,000 Units——Total Equity42,86341,269Short Term Investments - 2.7%(n)First American Treasury Obligations Fund, Class Z Shares, 2.33%(o)26,16926,169Total Short Term Investments26,16926,169TOTAL INVESTMENTS - 185.7%$1,877,1061,821,603LIABILITIES IN EXCESS OF OTHER ASSETS - (85.7%)(840,468)NET ASSETS - 100%$981,135


|   |                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. | All of the Company’s 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 i. below. Unless specifically identified in note w. below, investments do not contain a paid-in-kind, or PIK, interest provision.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b. | The 1, 2, 3, and 6 month London Interbank Offered Rate, or LIBOR, rates were2.50%,2.55%,2.59%, and2.64%, respectively, as of March 31, 2019.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of March 31, 2019, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to March 31, 2019. The 1 month Euro Interbank Offered Rate, or EURIBOR, rate was (0.42%) as of March 31, 2019.

|   |                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------
|c. | Fair value determined in good faith by the Company’s board of directors (see Note 8) using significant unobservable inputs unless otherwise noted.

|   |                                                                               
|-- | ------------------------------------------------------------------------------
|d. | Represents amortized cost for debt securities and cost for equity investments.

|   |                                                    
|-- | ---------------------------------------------------
|e. | Denominated in U.S. dollars unless otherwise noted.

|   |                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|f. | As of March 31, 2019, the Company was committed, upon the satisfaction of certain conditions, to fund additional amounts in connection with this investment. See Note 10 for additional information.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|g. | The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

|   |                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|h. | As a result of an arrangement between the Company and the other lenders in the syndication, the Company is entitled to less interest than the stated interest rate of this loan, which is reflected in this schedule, in exchange for a higher payment priority.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|i. | The investment or a portion thereof is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets as defined under Section 55 of the 1940 Act. As of March 31, 2019, 90.6% of the Company’s total assets represented qualifying assets.

|   |                                            
|-- | -------------------------------------------
|j. | Fair value determined using level 1 inputs.

|   |                                                              
|-- | -------------------------------------------------------------
|k. | Position or a portion thereof unsettled as of March 31, 2019.

|   |                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|l. | In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional amounts as a result of an arrangement between the Company and other lenders in the syndication in exchange for lower payment priority.

|   |                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|m. | In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional residual amounts.

|   |                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|n. | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

|   |                                            
|-- | -------------------------------------------
|o. | 7-day effective yield as of March 31, 2019.

|   |                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|p. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 34th Street Funding, LLC, or 34th Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with JPMorgan Chase Bank, National Association, or JPM, as of March 31, 2019 (see Note 7).

|   |                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|q. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Flatiron Funding II, LLC, or Flatiron Funding II, and was pledged as collateral supporting the amounts outstanding under the credit facility with Citibank N.A., or Citibank, as of March 31, 2019 (see Note 7).

|   |                                                                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|r. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Murray Hill Funding II, LLC, or Murray Hill Funding II, and was pledged as collateral supporting the amounts outstanding under the repurchase agreement with UBS AG, or UBS, as of March 31, 2019 (see Note 7).

|   |                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|s. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 33rd Street Funding, LLC, or 33rd Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with Morgan Stanley N.A., or MS, as of March 31, 2019 (see Note 7).

See accompanying notes to consolidated financial statements.





11


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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands)


|   |                               
|-- | ------------------------------
|t. | Non-income producing security.

|   |                                                           
|-- | ----------------------------------------------------------
|u. | Investment was on non-accrual status as of March 31, 2019.

|   |                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|v. | Investment determined to be an affiliated investment as defined in the 1940 Act as the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities but does not control the company. Fair value as of December 31, 2018 and March 31, 2019, along with transactions during the three months ended March 31, 2019 in these affiliated investments are as follows:

Three Months Ended March 31, 2019Three Months Ended March 31, 2019Non-Controlled,Affiliated InvestmentsFair Value atDecember 31, 2018GrossAdditions(Cost)(1)GrossReductions(Cost)(2)Net Unrealized(Loss) GainFair Value at March 31, 2019Net RealizedGain (Loss)InterestIncome(3)Dividend IncomeCharming Charlie, LLCFirst Lien Term Loan B1$1,021$—$—$(568)$453$—$—$—First Lien Term Loan B21,249——(695)554———Vendor Payment Financing157———157—21—Common Stock————————Conisus Holdings, Inc.Series B Preferred Stock10,9032,562—(2,055)11,410——2,562Common Stock197——1,2781,475———F+W Media, Inc.First Lien Term Loan B-11,13724—381,199—24—First Lien Term Loan B-2161——763924———First Lien DIP Term Loan—200—148348—7—Common Stock————————Mount Logan Capital Inc.Common Stock2,645——2332,878———SIMR, LLCFirst Lien Term Loan14,75711(188)(8)14,572—462—SIMR Parent, LLCClass B Common Units7,382——877,469———Petroflow Energy Corp.First Lien Term Loan2,363—(2,517)358204—(91)—TexOak Petro Holdings LLCSecond Lien Term Loan————————Membership Interests————————Totals$41,972$2,797$(2,705)$(421)$41,643$—$423$2,562


|    |                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

|    |                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

|    |                              
|--- | -----------------------------
|(3) | Includes PIK interest income.

See accompanying notes to consolidated financial statements.





12


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CĪON Investment Corporation


Consolidated Schedule of Investments (unaudited)


March 31, 2019


(in thousands)


|   |                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|w. | For the three months ended March 31, 2019, the following investments contain a PIK interest provision whereby the issuer has either the option or the obligation to make interest payments with the issuance of additional securities:

Interest RateInterest AmountPortfolio CompanyInvestment TypeCashPIKAll-in-RateCashPIKTotalAmerican Clinical Solutions LLC(u)Senior Secured First Lien Debt10.50%2.00%12.50%$—$—$—Charming Charlie LLC(u)Senior Secured First Lien Debt7.49%5.00%12.49%$—$—$—Charming Charlie LLC(u)Senior Secured First Lien Debt3.49%9.00%12.49%$—$—$—CHC Solutions Inc.Senior Secured First Lien Debt8.00%4.00%12.00%$143$71$214Dayton Superior Corp.Senior Secured First Lien Debt10.60%6.00%16.60%$175$97$272F+W Media, Inc.(u)Senior Secured First Lien Debt—12.50%12.50%$—$—$—F+W Media, Inc.Senior Secured First Lien Debt—9.00%9.00%$—$24$24Petroflow Energy Corp.(u)Senior Secured First Lien Debt3.00%7.49%10.49%$—$—$—SEK Holding Co LLCSenior Secured First Lien Debt10.51%3.50%14.01%$79$26$105Spinal USA, Inc. / Precision Medical Inc.Senior Secured First Lien Debt—12.28%12.28%$—$15$15TexOak Petro Holdings LLC(u)Senior Secured Second Lien Debt—8.00%8.00%$—$—$—Therapure Biopharma Inc.(x)Senior Secured First Lien Debt11.24%—11.24%$430$363$793


|   |                                   
|-- | ----------------------------------
|x. | Default interest was paid-in-kind.

See accompanying notes to consolidated financial statements.





13


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Senior Secured First Lien Debt - 149.4%Academy, Ltd., L+400, 1.00% LIBOR Floor, 7/1/2022(q)3 Month LIBORRetail$14,411$12,124$9,718Achilles Acquisition LLC, L+400, 0.00% LIBOR Floor, 10/11/20251 Month LIBORHigh Tech Industries739739730Achilles Acquisition LLC, 1.00% Unfunded, 1/11/2020NoneHigh Tech Industries43—(1)Adams Publishing Group, LLC, L+750, 1.00% LIBOR Floor, 7/2/2023(p)(r)3 Month LIBORMedia: Advertising, Printing & Publishing17,03416,85416,864Adams Publishing Group, LLC, 0.38% Unfunded, 7/2/2020(p)NoneMedia: Advertising, Printing & Publishing2,069—(21)Adapt Laser Acquisition, Inc., L+800, 1.00% LIBOR Floor, 12/31/20233 Month LIBORCapital Equipment12,00012,00012,000Adapt Laser Acquisition, Inc., L+800, 1.00% LIBOR Floor, 12/31/20233 Month LIBORCapital Equipment500500500Adapt Laser Acquisition, Inc., 0.50% Unfunded, 12/31/2023NoneCapital Equipment1,500——Aegis Toxicology Sciences Corp., L+550, 1.00% LIBOR Floor, 5/9/2025(q)3 Month LIBORHealthcare & Pharmaceuticals9,9759,7809,526AIS Holdco, LLC, L+500, 0.00% LIBOR Floor, 8/15/2025(q)3 Month LIBORBanking, Finance, Insurance & Real Estate5,5215,4515,438Alchemy US Holdco 1, LLC, L+550, 10/10/2025(q)1 Month LIBORConstruction & Building8,0007,8827,680Allen Media, LLC, L+650, 1.00% LIBOR Floor, 8/30/2023(p)(r)(s)3 Month LIBORMedia: Diversified & Production80,00078,11577,700ALM Media, LLC, L+450, 1.00% LIBOR Floor, 7/31/2020(q)3 Month LIBORMedia: Advertising, Printing & Publishing13,27212,45911,912American Clinical Solutions LLC, 12.50%, 6/11/2020(u)(w)NoneHealthcare & Pharmaceuticals9,2938,9687,435American Media, Inc., L+800, 1.00% LIBOR Floor, 8/24/2020(p)3 Month LIBORMedia: Advertising, Printing & Publishing18,50318,45119,428American Media, Inc., 0.50% Unfunded, 8/24/2020NoneMedia: Advertising, Printing & Publishing1,778(22)89American Teleconferencing Services, Ltd., L+650, 1.00% LIBOR Floor, 12/8/2021(p)(q)(r)(s)3 Month LIBORTelecommunications20,15218,77915,114Analogic Corp., L+600, 1.00% LIBOR Floor, 6/21/2024(s)1 Month LIBORHealthcare & Pharmaceuticals29,92529,36829,626AP Exhaust Acquisition, LLC, L+500, 1.00% LIBOR Floor, 5/10/2024(q)(r)3 Month LIBORAutomotive10,5449,9559,595APCO Holdings, LLC, L+550, 0.00% LIBOR Floor, 6/9/2025(q)1 Month LIBORBanking, Finance, Insurance & Real Estate11,42711,31711,313Ascent Resources - Marcellus, LLC, L+650, 1.00% LIBOR Floor, 3/30/20231 Month LIBOREnergy: Oil & Gas712712714Associated Asphalt Partners, LLC, L+525, 1.00% LIBOR Floor, 4/5/2024(q)1 Month LIBORConstruction & Building10,83310,66610,494Bi-Lo, LLC, L+800, 1.00% LIBOR Floor, 5/31/2024(k)(r)3 Month LIBORRetail2,0001,9501,917Cadence Aerospace, LLC, L+650, 1.00% LIBOR Floor, 11/14/2023(r)(s)3 Month LIBORAerospace & Defense25,96025,73225,440Canam Construction Inc., L+500, 1.00% LIBOR Floor, 7/1/20241 Month LIBORConstruction & Building4,9754,9634,875Cardinal US Holdings, Inc., L+500, 1.00% LIBOR Floor, 7/31/2023(q)3 Month LIBORServices: Business8,3947,9058,268CB URS Holdings Corp., L+525, 1.00% LIBOR Floor, 9/1/2024(q)(s)1 Month LIBORTransportation: Cargo14,43714,37114,149Central Security Group, Inc., L+563, 1.00% LIBOR Floor, 10/6/2021(q)(s)1 Month LIBORServices: Consumer24,66024,68224,167Charming Charlie LLC, L+1000, 1.00% LIBOR Floor, 4/24/2023(u)(v)(w)3 Month LIBORRetail3,2881,9121,249Charming Charlie LLC, L+1000, 1.00% LIBOR Floor, 4/24/2023(u)(v)(w)3 Month LIBORRetail2,6862,6191,021Charming Charlie LLC, 20.00%, 5/15/2019(v)NoneRetail157157157Charming Charlie LLC, 2.50% Unfunded, 5/15/2019(v)NoneRetail1,938——CHC Solutions Inc., 12.00%, 7/20/2023(w)NoneHealthcare & Pharmaceuticals7,0577,0577,057CircusTrix Holdings, LLC, L+550, 1.00% LIBOR Floor, 12/16/2021(r)(s)1 Month LIBORHotel, Gaming & Leisure25,90025,60925,382CircusTrix Holdings, LLC, 1.00% Unfunded, 12/27/2019NoneHotel, Gaming & Leisure5,573—(111)


See accompanying notes to consolidated financial statements.





14


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Confie Seguros Holding II Co., L+475, 1.00% LIBOR Floor, 4/16/2022(q)3 Month LIBORBanking, Finance, Insurance & Real Estate15,37115,28515,227Country Fresh Holdings, LLC, L+500, 1.00% LIBOR Floor, 3/31/2023(s)3 Month LIBORBeverage, Food & Tobacco9,8599,7168,133Covenant Surgical Partners, Inc., L+450, 0.00% LIBOR Floor, 10/4/2024(q)3 Month LIBORHealthcare & Pharmaceuticals917915903Crown Subsea Communications Holdings, Inc., L+600, 0.00% LIBOR Floor, 11/2/2025(q)1 Month LIBORCapital Equipment8,0007,8437,720David's Bridal, Inc., L+400, 1.25% LIBOR Floor, 10/11/2019(q)(u)1 Month LIBORRetail3,4063,1371,822Dayton Superior Corp., L+1400, 1.00% LIBOR Floor, 11/15/2021(q)(w)3 Month LIBORConstruction & Building6,3985,9295,358DBRS, Inc., L+525, 1.00% LIBOR Floor, 3/4/2022(i)(q)3 Month LIBORServices: Business5,8465,7005,803Del Frisco's Restaurant Group, Inc., L+600, 0.00% LIBOR Floor, 6/27/2025(i)(p)(q)1 Month LIBORRetail9,9759,9119,227Deluxe Entertainment Services Group Inc., L+550, 1.00% LIBOR Floor, 2/28/2020(q)3 Month LIBORMedia: Diversified & Production16,07116,01414,223DFC Global Facility Borrower II LLC, L+1075, 1.00% LIBOR Floor, 9/27/20221 Month LIBORServices: Consumer24,68324,57024,683DFC Global Facility Borrower II LLC, 0.50% Unfunded, 9/27/2019NoneServices: Consumer5,317——DMT Solutions Global Corp., L+700, 0.00% LIBOR Floor, 7/2/2024(q)(s)3 Month LIBORServices: Business19,50018,95518,720Eagle Family Foods Group LLC, L+650, 1.00% LIBOR Floor, 6/14/2024(s)3 Month LIBORBeverage, Food & Tobacco14,92514,61514,776Eastman Kodak Company, L+625, 1.00% LIBOR Floor, 9/3/2019(i)(q)3 Month LIBORConsumer Goods: Durable1,9651,9631,859Elemica, Inc., L+700, 1.00% LIBOR Floor, 7/7/2021(p)(r)1 Month LIBORHigh Tech Industries17,06316,81016,892Elemica, Inc., 0.50% Unfunded, 7/7/2021NoneHigh Tech Industries2,500(32)(25)Emmis Operating Company, L+750, 1.00% LIBOR Floor, 4/18/2019(q)1 Month LIBORMedia: Broadcasting & Subscription1,3641,3391,337Entertainment Studios P&A LLC, 6.22%, 5/18/2037(m)NoneMedia: Diversified & Production17,46517,31517,115Entertainment Studios P&A LLC, 5.00%, 5/18/2037(m)NoneMedia: Diversified & Production——2,864EnTrans International, LLC, L+600, 0.00% LIBOR Floor, 11/1/2024(q)(s)1 Month LIBORCapital Equipment30,00029,70429,850Episerver Inc., E+600, 0.00% EURIBOR Floor, 10/9/20241 Month EURIBORHigh Tech Industries€13,07714,70014,661ES Chappaquiddick LLC, 10.00%, 5/18/2022NoneMedia: Diversified & Production1,0761,0761,103Evergreen Skills Lux S.À.R.L., L+475, 1.00% LIBOR Floor, 4/28/2021(i)(q)1 Month LIBORHigh Tech Industries10,1839,7298,283F+W Media, Inc., L+650, 1.50% LIBOR Floor, 5/24/2022(v)(w)1 Month LIBORMedia: Diversified & Production1,1171,1171,137F+W Media, Inc., L+1000, 1.50% LIBOR Floor, 5/24/2022(p)(u)(v)(w)1 Month LIBORMedia: Diversified & Production3,0582,759161Flavors Holdings Inc., L+575, 1.00% LIBOR Floor, 4/3/2020(p)3 Month LIBORConsumer Goods: Non-Durable7,9677,4857,410Foundation Consumer Healthcare, LLC, L+650, 1.00% LIBOR Floor, 11/2/2023(p)(r)(s)3 Month LIBORHealthcare & Pharmaceuticals41,12140,85841,121Foundation Consumer Healthcare, LLC, 0.50% Unfunded, 11/2/2023NoneHealthcare & Pharmaceuticals4,211(26)—Genesis Healthcare, Inc., L+600, 0.50% LIBOR Floor, 3/6/2023(i)(p)(s)1 Month LIBORHealthcare & Pharmaceuticals35,00034,69534,650Geo Parent Corp., L+550, 0.00% LIBOR Floor, 12/19/2025(k)2 Month LIBORServices: Business15,00014,85014,925Global Tel*Link Corp., L+425, 0.00% LIBOR Floor, 11/29/2025(q)3 Month LIBORTelecommunications4,0003,9803,895Harland Clarke Holdings Corp., L+475, 1.00% LIBOR Floor, 11/3/2023(q)(s)3 Month LIBORServices: Business14,02213,96412,602Healogics, Inc., L+425, 1.00% LIBOR Floor, 7/1/2021(q)3 Month LIBORHealthcare & Pharmaceuticals4,7994,6084,352Homer City Generation, L.P., L+1100, 1.00% LIBOR Floor, 4/5/2023(p)1 Month LIBOREnergy: Oil & Gas9,1518,7698,785Hummel Station LLC, L+600, 1.00% LIBOR Floor, 10/27/2022(q)3 Month LIBOREnergy: Oil & Gas9,8609,4579,515


See accompanying notes to consolidated financial statements.





15


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands) Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Infinity Sales Group, LLC, L+1050, 1.00% LIBOR Floor, 11/23/2020(p)3 Month LIBORServices: Business7,8737,5177,676InfoGroup Inc., L+500, 1.00% LIBOR Floor, 4/3/2023(q)(r)(s)3 Month LIBORMedia: Advertising, Printing & Publishing15,91815,90415,759Instant Web, LLC, L+650, 0.00% LIBOR Floor, 12/15/2022(p)(r)(s)1 Month LIBORMedia: Advertising, Printing & Publishing39,18939,09838,797Instant Web, LLC, 0.50% Unfunded, 12/15/2022NoneMedia: Advertising, Printing & Publishing2,704—(27)Intermedia Holdings, Inc., L+600, 1.00% LIBOR Floor, 7/21/2025(q)1 Month LIBORHigh Tech Industries12,50012,38312,344International Seaways, Inc., L+600, 1.00% LIBOR Floor, 6/22/2022(i)(q)1 Month LIBORTransportation: Cargo9,4999,3569,404Isagenix International, LLC, L+575, 1.00% LIBOR Floor, 6/14/2025(q)3 Month LIBORBeverage, Food & Tobacco14,62514,48814,040Island Medical Management Holdings, LLC, L+650, 1.00% LIBOR Floor, 9/1/2022(r)1 Month LIBORHealthcare & Pharmaceuticals11,95311,83310,996ITC Service Group Acquisition LLC, L+950, 0.50% LIBOR Floor, 5/26/2021(l)(p)1 Month LIBORHigh Tech Industries11,25011,11911,025Jab Wireless, Inc., L+800, 0.00% LIBOR Floor, 5/2/2023(s)1 Month LIBORTelecommunications19,85019,85019,850Jackson Hewitt Tax Service Inc., L+625, 0.00% LIBOR Floor, 5/30/2023(s)1 Month LIBORServices: Consumer17,88817,88817,888JP Intermediate B, LLC, L+550, 1.00% LIBOR Floor, 11/20/2025(q)3 Month LIBORBeverage, Food & Tobacco15,00014,85214,438Key Surgical LLC, L+475, 1.00% LIBOR Floor, 6/1/20233 Month LIBORHealthcare & Pharmaceuticals997979979KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(r)1 Month LIBORChemicals, Plastics & Rubber7,1227,0596,694KLO Intermediate Holdings, LLC, L+775, 1.50% LIBOR Floor, 4/7/2022(r)1 Month LIBORChemicals, Plastics & Rubber4,1234,0873,876KNB Holdings Corp., L+550, 1.00% LIBOR Floor, 4/26/2024(q)(s)3 Month LIBORConsumer Goods: Durable13,51313,29413,175Labvantage Solutions Inc., L+750, 1.00% LIBOR Floor, 12/29/2020(r)1 Month LIBORHigh Tech Industries4,0784,0564,037Labvantage Solutions Ltd., E+750, 1.00% EURIBOR Floor, 12/29/2020(i)1 Month EURIBORHigh Tech Industries€4,0654,5464,616Lannett Company, Inc., L+538, 1.00% LIBOR Floor, 11/25/2022(i)(q)1 Month LIBORHealthcare & Pharmaceuticals6,9746,8765,754LD Intermediate Holdings, Inc., L+588, 1.00% LIBOR Floor, 12/9/2022(q)3 Month LIBORHigh Tech Industries4,9544,6194,496Lift Brands, Inc., L+700, 1.00% LIBOR Floor, 4/16/2023(p)(r)(s)3 Month LIBORServices: Consumer45,51344,64144,375Lift Brands, Inc., 1.00% Unfunded, 4/16/2023NoneServices: Consumer4,150—(104)Logix Holding Company, LLC, L+575, 1.00% LIBOR Floor, 12/22/2024(q)1 Month LIBORTelecommunications4,9884,9424,950Longview Power, LLC, L+600, 1.00% LIBOR Floor, 4/13/2021(p)(r)3 Month LIBOREnergy: Oil & Gas14,92313,05712,647LTCG Holdings Corp., L+500, 1.00% LIBOR Floor, 6/6/2020(q)1 Month LIBORServices: Business5,9115,7275,837Mimeo.com, Inc., L+700, 1.00% LIBOR Floor, 12/21/2023(p)(s)3 Month LIBORServices: Business43,00043,00043,000Mimeo.com, Inc., 0.25% Unfunded, 12/21/2020NoneServices: Business10,000——Mimeo.com, Inc., 1.00% Unfunded, 12/21/2023NoneServices: Business3,000——Ministry Brands, LLC, L+400, 1.00% LIBOR Floor, 12/2/2022(r)1 Month LIBORServices: Business11,99211,93511,992Ministry Brands, LLC, L+100, 1.00% LIBOR Floor Unfunded, 10/18/20203 Month LIBORServices: Business2,924——Moss Holding Company, L+675, 1.00% LIBOR Floor, 4/17/2023(p)(r)3 Month LIBORServices: Business18,68718,42218,407Moss Holding Company, 0.50% Unfunded, 4/17/2023NoneServices: Business2,232—(33)Moxie Patriot LLC, L+575, 1.00% LIBOR Floor, 12/19/2020(q)3 Month LIBOREnergy: Oil & Gas9,9019,8869,703MRO Holdings, Inc., L+475, 1.00% LIBOR Floor, 10/25/2023(q)3 Month LIBORAerospace & Defense4,4454,4084,412MRP Generation Holdings, LLC, L+700, 1.00% LIBOR Floor, 10/18/2022(q)3 Month LIBOREnergy: Oil & Gas2,2142,1802,137Murray Energy Corp., L+725, 1.00% LIBOR Floor, 10/17/2022(q)3 Month LIBORMetals & Mining3,5923,5433,038


See accompanying notes to consolidated financial statements.





16


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands)


Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)NewsCycle Solutions, Inc., L+700, 1.00% LIBOR Floor, 12/29/2022(r)(s)1 Month LIBORMedia: Advertising, Printing & Publishing20,88420,69820,466One Call Corp., L+525, 1.00% LIBOR Floor, 11/25/2022(q)1 Month LIBORHealthcare & Pharmaceuticals8,0127,5797,151Orbcomm Inc., 8.00%, 4/1/2024(p)NoneTelecommunications9,2379,2379,557OTG Management, LLC, L+700, 1.00% LIBOR Floor, 8/26/20213 Month LIBORBeverage, Food & Tobacco267221250OTG Management, LLC, 1.00% Unfunded, 4/10/2020NoneBeverage, Food & Tobacco514—(33)P.F. Chang's China Bistro, Inc., L+500, 1.00% LIBOR Floor, 9/1/2022(q)3 Month LIBORBeverage, Food & Tobacco14,83714,54514,837PDI TA Holdings, Inc., L+450, 1.00% LIBOR Floor, 10/24/20243 Month LIBORHigh Tech Industries1,9991,9701,989PDI TA Holdings, Inc., L+450, 1.00% LIBOR Floor, 10/24/20243 Month LIBORHigh Tech Industries877878873PDI TA Holdings, Inc., 0.50% Unfunded, 10/24/2019NoneHigh Tech Industries104—(1)Petroflow Energy Corp., L+800, 1.00% LIBOR Floor, 6/29/2019(p)(u)(v)(w)1 Month LIBOREnergy: Oil & Gas3,0682,7342,363PFS Holding Corp., L+350, 1.00% LIBOR Floor, 1/31/20211 Month LIBORRetail3,1292,4861,721PH Beauty Holdings III. Inc., L+500, 0.00% LIBOR Floor, 9/28/2025(q)1 Month LIBORConsumer Goods: Non-Durable9,9759,8779,626Photonis Technologies SAS, L+750, 1.00% LIBOR Floor, 9/18/2019(i)(q)3 Month LIBORAerospace & Defense6,3976,0605,965Pixelle Specialty Solutions LLC, L+600, 1.00% LIBOR Floor, 10/31/2024(q)1 Month LIBORForest Products & Paper20,00019,51119,525Plano Molding Company, LLC, L+750, 1.00% LIBOR Floor, 5/12/2021(p)1 Month LIBORConsumer Goods: Non-Durable6,0716,0205,570Polymer Additives, Inc., L+600, 0.00% LIBOR Floor, 7/31/2025(p)(q)1 Month LIBORChemicals, Plastics & Rubber20,00019,61918,500Rhino Energy LLC, L+1000, 1.00% LIBOR Floor, 12/27/2020(s)1 Month LIBORMetals & Mining7,2626,9097,189Sequoia Healthcare Management, LLC, L+850, 1.75% LIBOR Floor, 8/21/2023(p)(r)1 Month LIBORHealthcare & Pharmaceuticals9,8519,7589,753SG Acquisition, Inc., L+500, 1.00% LIBOR Floor, 3/29/2024(q)3 Month LIBORBanking, Finance, Insurance & Real Estate3,4953,4693,482Shift PPC LLC, L+450, 1.00% LIBOR Floor, 12/22/2021(r)6 Month LIBORHigh Tech Industries4,1914,1194,191SIMR, LLC, L+900, 2.00% LIBOR Floor, 9/7/2023(p)(v)1 Month LIBORHealthcare & Pharmaceuticals15,31215,02014,757Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 9/30/2020(p)3 Month LIBORHealthcare & Pharmaceuticals12,77612,74512,648Spinal USA, Inc. / Precision Medical Inc., L+950, 1.00% LIBOR Floor, 12/31/2021(p)(w)3 Month LIBORHealthcare & Pharmaceuticals481480476Sprint Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019(p)3 Month LIBOREnergy: Oil & Gas7,9407,8537,582STG-Fairway Acquisitions, Inc., L+525, 1.00% LIBOR Floor, 6/30/2022(q)3 Month LIBORServices: Business3,9293,8453,889STL Parent Corp., L+700, 0.00% LIBOR Floor, 12/6/2022(r)(s)1 Month LIBORCapital Equipment20,00019,30619,400Studio Movie Grill Holdings, LLC, L+725, 1.00% LIBOR Floor, 9/30/2020(f)(p)3 Month LIBORHotel, Gaming & Leisure23,41823,35223,418Teladoc, Inc., 0.50% Unfunded, 7/14/2020NoneHigh Tech Industries1,250(25)—Telestream Holdings Corp., L+645, 1.00% LIBOR Floor, 3/24/2022(l)(p)3 Month LIBORHigh Tech Industries8,4608,3228,207Tenere Inc., L+1000, 1.00% LIBOR Floor, 12/23/2021(p)(r)3 Month LIBORCapital Equipment30,08029,63029,328Tensar Corp., L+475, 1.00% LIBOR Floor, 7/9/2021(q)3 Month LIBORChemicals, Plastics & Rubber12,98012,42612,753The Pasha Group, L+750, 1.00% LIBOR Floor, 1/26/2023(r)1 Month LIBORTransportation: Cargo7,0186,8367,061The Pay-O-Matic Corp., L+900, 0.00% LIBOR Floor, 4/5/2021(h)(p)3 Month LIBORServices: Consumer22,42522,24122,201TherapeuticsMD, Inc., L+775, 1.50% LIBOR Floor, 5/1/2023(i)(s)1 Month LIBORHealthcare & Pharmaceuticals15,00014,86514,850TherapeuticsMD, Inc., 0.00% Unfunded, 12/31/2019(i)(t)NoneHealthcare & Pharmaceuticals10,000(88)(100)TherapeuticsMD, Inc., 0.00% Unfunded, 5/31/2019(i)(t)NoneHealthcare & Pharmaceuticals15,000(132)(150)


See accompanying notes to consolidated financial statements.





17


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands)


Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)Therapure Biopharma Inc., L+875, 0.50% LIBOR Floor, 12/1/2021(i)1 Month LIBORHealthcare & Pharmaceuticals15,00014,95214,625Vertex Aerospace Services Corp., L+475, 0.00% LIBOR Floor, 6/29/2025(q)1 Month LIBORAerospace & Defense9,9139,8649,838Woodstream Corp., L+625, 1.00% LIBOR Floor, 5/29/2022(s)3 Month LIBORConsumer Goods: Non-Durable14,54214,54214,542Woodstream Corp., 0.50% Unfunded, 5/29/2021NoneConsumer Goods: Non-Durable559——Total Senior Secured First Lien Debt1,492,0341,462,989Senior Secured Second Lien Debt - 33.0%1A Smart Start LLC, L+825, 1.00% LIBOR Floor, 8/21/2022(p)(r)1 Month LIBORHigh Tech Industries17,80017,49417,266ABG Intermediate Holdings 2 LLC, L+775, 1.00% LIBOR Floor, 9/29/2025(p)1 Month LIBORRetail9,8979,8469,749Access CIG, LLC, L+775, 0.00% LIBOR Floor, 2/27/2026(r)3 Month LIBORServices: Business17,25017,11617,099ALM Media, LLC, L+800, 1.00% LIBOR Floor, 7/30/2021(p)(r)3 Month LIBORMedia: Advertising, Printing & Publishing10,34410,2798,353American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2022(p)1 Month LIBORConstruction & Building5,1805,1505,076Argon Medical Devices Holdings, Inc., L+800, 0.00% LIBOR Floor, 1/23/2026(p)1 Month LIBORHealthcare & Pharmaceuticals14,40014,32914,256Carestream Health, Inc., L+950, 1.00% LIBOR Floor, 6/7/2021(r)1 Month LIBORHealthcare & Pharmaceuticals10,66210,66210,502Drew Marine Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(i)(p)1 Month LIBORChemicals, Plastics & Rubber9,5009,4749,512EagleTree-Carbide Acquisition Corp., L+850, 1.00% LIBOR Floor, 8/28/2025(r)3 Month LIBORConsumer Goods: Durable20,00019,73420,000Emerald 3 Ltd., L+700, 1.00% LIBOR Floor, 5/16/2022(i)(p)3 Month LIBOREnvironmental Industries3,0002,9852,955Evergreen Skills Lux S.À.R.L., L+825, 1.00% LIBOR Floor, 4/28/2022(i)(r)1 Month LIBORHigh Tech Industries9,9997,7095,550Flexera Software LLC, L+725, 1.00% LIBOR Floor, 2/26/2026(r)1 Month LIBORHigh Tech Industries3,4623,4463,423Global Tel*Link Corp., L+825, 0.00% LIBOR Floor, 11/29/2026(r)3 Month LIBORTelecommunications11,50011,30011,270GOBP Holdings, Inc., L+725, 0.00% LIBOR Floor, 10/22/2026(r)3 Month LIBORRetail5,0004,9504,969LSCS Holdings, Inc., L+825, 0.00% LIBOR Floor, 3/16/2026(p)1 Month LIBORServices: Business11,89111,64011,831Mayfield Agency Borrower Inc., L+850, 0.00% LIBOR Floor, 3/2/2026(p)(r)(s)1 Month LIBORBanking, Finance, Insurance & Real Estate20,00019,71019,812Medical Solutions Holdings, Inc., L+825, 1.00% LIBOR Floor, 6/16/2025(p)1 Month LIBORHealthcare & Pharmaceuticals10,0009,8679,925MedPlast Holdings, Inc., L+775, 0.00% LIBOR Floor, 7/2/2026(s)3 Month LIBORHealthcare & Pharmaceuticals6,7506,6876,581Ministry Brands, LLC, L+925, 1.00% LIBOR Floor, 6/2/2023(p)(r)1 Month LIBORServices: Business7,0006,9187,000Niacet Corp., E+875, 1.00% EURIBOR Floor, 8/1/2024(i)1 Month EURIBORChemicals, Plastics & Rubber€7,4897,9558,503Patterson Medical Supply, Inc., L+850, 1.00% LIBOR Floor, 8/28/2023(p)3 Month LIBORHealthcare & Pharmaceuticals13,50013,40412,352PDI TA Holdings, Inc., L+850, 1.00% LIBOR Floor, 10/24/20253 Month LIBORHigh Tech Industries2,2672,2242,245PDI TA Holdings, Inc., 0.50% Unfunded, 10/24/2019NoneHigh Tech Industries133—(1)PetroChoice Holdings, Inc., L+875, 1.00% LIBOR Floor, 8/21/2023(p)3 Month LIBORChemicals, Plastics & Rubber15,00014,74214,737PFS Holding Corp., L+725, 1.00% LIBOR Floor, 1/31/2022(q)(u)1 Month LIBORRetail4,9984,716900Premiere Global Services, Inc., L+950, 1.00% LIBOR Floor, 6/6/2022(p)3 Month LIBORTelecommunications3,0002,9172,100PT Intermediate Holdings III, LLC, L+800, 1.00% LIBOR Floor, 12/8/2025(r)3 Month LIBORServices: Business9,3759,2959,281Securus Technologies Holdings, Inc., L+825, 1.00% LIBOR Floor, 11/1/2025(r)1 Month LIBORTelecommunications2,9422,9142,847SESAC Holdco II LLC, L+725, 1.00% LIBOR Floor, 2/23/2025(r)1 Month LIBORMedia: Broadcasting & Subscription250248241STG-Fairway Acquisitions, Inc., L+925, 1.00% LIBOR Floor, 6/30/2023(p)(r)3 Month LIBORServices: Business10,0009,8989,600


See accompanying notes to consolidated financial statements.





18


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands)


Portfolio Company(a)Index Rate(b)IndustryPrincipal/Par Amount/Units(e)Cost(d)FairValue(c)TexOak Petro Holdings LLC, 8.00%, 12/29/2019(u)(v)(w)NoneEnergy: Oil & Gas7,8042,592—TMK Hawk Parent, Corp., L+800, 1.00% LIBOR Floor, 8/28/2025(p)2 Month LIBORServices: Business13,39313,09212,991TouchTunes Interactive Networks, Inc, L+825, 1.00% LIBOR Floor, 5/29/2022(r)1 Month LIBORHotel, Gaming & Leisure6,0005,9586,000U.S. Renal Care, Inc., L+800, 1.00% LIBOR Floor, 12/29/2023(p)3 Month LIBORHealthcare & Pharmaceuticals5,0004,9314,787Wand Intermediate I LP, L+725, 1.00% LIBOR Floor, 9/19/2022(p)2 Month LIBORAutomotive15,05014,97115,050Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022(p)1 Month LIBORBeverage, Food & Tobacco12,82312,6367,053Zest Acquisition Corp., L+750, 1.00% LIBOR Floor, 3/13/2026(r)1 Month LIBORHealthcare & Pharmaceuticals15,00014,86314,550Zywave Inc., L+900, 1.00% LIBOR Floor, 11/17/2023(p)3 Month LIBORHigh Tech Industries5,0004,9435,000Total Senior Secured Second Lien Debt341,595323,365Collateralized Securities and Structured Products - Debt - 1.6%Deutsche Bank AG Frankfurt CRAFT 2015-2 Class Credit Linked Note, L+925, 1/16/2022(i)3 Month LIBORDiversified Financials15,19315,19315,193Total Collateralized Securities and Structured Products - Debt15,19315,193Collateralized Securities and Structured Products - Equity - 1.5%APIDOS CLO XVI Subordinated Notes, 0.02% Estimated Yield, 1/19/2025(i)(g)Diversified Financials9,0003,7992,488CENT CLO 19 Ltd. Subordinated Notes, 16.86% Estimated Yield, 10/29/2025(i)(g)Diversified Financials2,0001,1631,026Galaxy XV CLO Ltd. Class A Subordinated Notes, 9.02% Estimated Yield, 4/15/2025(i)(g)Diversified Financials4,0002,3341,889Ivy Hill Middle Market Credit Fund VIII, Ltd. Subordinated Loan, 11.84% Estimated Yield, 2/2/2026(f)(i)(g)Diversified Financials10,0009,4989,424Total Collateralized Securities and Structured Products - Equity16,79414,827Equity - 3.7%Ascent Resources - Marcellus, LLC, Common Shares(t)Energy: Oil & Gas511,255 Units1,6421,457Ascent Resources - Marcellus, LLC, Warrants(t)Energy: Oil & Gas132,367 Units134Avaya Holdings Corp., Common Stock(j)(q)(t)Telecommunications321,260 Units5,2854,678Charming Charlie LLC, Common Stock(t)(v)Retail30,046,243 Units1,302—CHC Medical Partners, Inc., Series C Preferred Stock, 12% DividendHealthcare & Pharmaceuticals1,818,182 Units3,0003,236Conisus Holdings, Inc., Series B Preferred Stock, 12% Dividend(u)(v)Healthcare & Pharmaceuticals12,677,833 Units9,20010,903Conisus Holdings, Inc., Common Stock(t)(v)Healthcare & Pharmaceuticals4,914,556 Units200197F+W Media, Inc., Common Stock(t)(v)Media: Diversified & Production31,211 Units——Mooregate ITC Acquisition, LLC, Class A Units(t)High Tech Industries500 Units56390Mount Logan Capital Inc., Common Stock(i)(j)(v)Banking, Finance, Insurance & Real Estate7,842,273 Units3,3352,645NS NWN Acquisition, LLC, Voting Units(t)High Tech Industries404 Units393730NSG Co-Invest (Bermuda) LP, Partnership Interests(i)(t)Consumer Goods: Durable1,575 Units1,000675Rhino Energy LLC, Warrants(t)Metals & Mining170,972 Units280106SIMR Parent, LLC, Class B Common Units(t)(v)Healthcare & Pharmaceuticals7,500,000 Units7,5007,382Spinal USA, Inc. / Precision Medical Inc., Warrants(p)(t)Healthcare & Pharmaceuticals9,317,237 Units4,7364,100Tenere Inc., Warrant(t)Capital EquipmentN/A161196TexOak Petro Holdings LLC, Membership Interests(t)(v)Energy: Oil & Gas60,000 Units——
 See accompanying notes to consolidated financial statements.





19


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands)


Portfolio Company(a)Principal/Par Amount/Units(e)Cost(d)FairValue(c)Total Equity38,61036,399Short Term Investments - 1.3%(n)First American Treasury Obligations Fund, Class Z Shares, 2.36%(o)12,53712,537Total Short Term Investments12,53712,537TOTAL INVESTMENTS - 190.5%$1,916,7631,865,310LIABILITIES IN EXCESS OF OTHER ASSETS - (90.5%)(886,039)NET ASSETS - 100%$979,271


|   |                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. | All of the Company’s 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 i. below. Unless specifically identified in note w. below, investments do not contain a PIK interest provision.

|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b. | The 1, 2, 3 and 6 month LIBOR rates were 2.52%, 2.62%, 2.80% and 2.87%, respectively, as ofDecember 31, 2018.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as ofDecember 31, 2018, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent toDecember 31, 2018. The 1 month EURIBOR rate was (0.41%) as ofDecember 31, 2018.

|   |                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------
|c. | Fair value determined in good faith by the Company’s board of directors (see Note 8) using significant unobservable inputs unless otherwise noted.

|   |                                                                               
|-- | ------------------------------------------------------------------------------
|d. | Represents amortized cost for debt securities and cost for equity investments.

|   |                                                    
|-- | ---------------------------------------------------
|e. | Denominated in U.S. dollars unless otherwise noted.

|   |                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|f. | As ofDecember 31, 2018, the Company was committed, upon the satisfaction of certain conditions, to fund additional amounts in connection with this investment. See Note 10 for additional information.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|g. | The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

|   |                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|h. | As a result of an arrangement between the Company and the other lenders in the syndication, the Company is entitled to less interest than the stated interest rate of this loan, which is reflected in this schedule, in exchange for a higher payment priority.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|i. | The investment or a portion thereof is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets as defined under Section 55 of the 1940 Act. As ofDecember 31, 2018, 90.7% of the Company’s total assets represented qualifying assets.

|   |                                            
|-- | -------------------------------------------
|j. | Fair value determined using level 1 inputs.

|   |                                                                
|-- | ---------------------------------------------------------------
|k. | Position or a portion thereof unsettled as ofDecember 31, 2018.

|   |                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|l. | In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional amounts as a result of an arrangement between the Company and other lenders in the syndication in exchange for a lower payment priority.

|   |                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|m. | In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company may be entitled to receive additional residual amounts.

|   |                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|n. | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

|   |                                              
|-- | ---------------------------------------------
|o. | 7-day effective yield as ofDecember 31, 2018.

|   |                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|p. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 34th Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with JPM as ofDecember 31, 2018(see Note 7).

|   |                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|q. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Flatiron Funding II, and was pledged as collateral supporting the amounts outstanding under the credit facility with Citibank as ofDecember 31, 2018(see Note 7).

|   |                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|r. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, Murray Hill Funding II, and was pledged as collateral supporting the amounts outstanding under the repurchase agreement with UBS as ofDecember 31, 2018(see Note 7).

See accompanying notes to consolidated financial statements.





20


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands)


|   |                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|s. | Investment or a portion thereof held within the Company’s wholly-owned consolidated subsidiary, 33rd Street, and was pledged as collateral supporting the amounts outstanding under the credit facility with MS as ofDecember 31, 2018(see Note 7).

|   |                               
|-- | ------------------------------
|t. | Non-income producing security.

|   |                                                             
|-- | ------------------------------------------------------------
|u. | Investment was on non-accrual status as ofDecember 31, 2018.

|   |                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|v. | Investment determined to be an affiliated investment as defined in the 1940 Act as the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities but does not control the company. Fair value as of December 31, 2017 and 2018, along with transactions during the year endedDecember 31, 2018in these affiliated investments are as follows:

Year Ended December 31, 2018Year Ended December 31, 2018Non-Controlled, Affiliated InvestmentsFair Value atDecember 31, 2017GrossAdditions(Cost)(1)GrossReductions(Cost)(2)NetUnrealized(Loss) GainFair Value atDecember 31, 2018Net RealizedGain (Loss)InterestIncome(3)Charming Charlie, LLCFirst Lien Term Loan B1$—$2,619$—$(1,598)$1,021$—$99First Lien Term Loan B2—1,912—(663)1,249—191Vendor Payment Financing Facility—157——157—44Common Stock—1,302—(1,302)———Conisus Holdings, Inc.Series B Preferred Stock9,300——1,60310,903——Common Stock175——22197——F+W Media, Inc.First Lien Term Loan B-11,169103(100)(35)1,137—95First Lien Term Loan B-21,49816—(1,353)161—39Common Stock———————Mount Logan Capital Inc.Common Stock—3,335—(690)2,645——SIMR, LLCFirst Lien Term Loan—15,020—(263)14,757—580SIMR Parent, LLCClass B Common Units—7,500—(118)7,382—Petroflow Energy Corp.First Lien Term Loan3,39163(902)(189)2,363—199TexOak Petro Holdings LLCSecond Lien Term Loan———————Membership Interests———————Totals$15,533$32,027$(1,002)$(4,586)$41,972$—$1,247


|    |                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

|    |                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

|    |                              
|--- | -----------------------------
|(3) | Includes PIK interest income.

See accompanying notes to consolidated financial statements.





21


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CĪON Investment Corporation


Consolidated Schedule of Investments


December 31, 2018


(in thousands)


|   |                                                                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|w. | For the year endedDecember 31, 2018, the following investments contain a PIK interest provision whereby the issuer has either the option or the obligation to make interest payments with the issuance of additional securities:

Interest RateInterest AmountPortfolio CompanyInvestment TypeCashPIKAll-in-RateCashPIKTotalAmerican Clinical Solutions LLC(u)Senior Secured First Lien Debt10.50%2.00%12.50%$326$168$494Charming Charlie LLC(u)Senior Secured First Lien Debt6.00%5.00%11.00%$98$—$98Charming Charlie LLC(u)Senior Secured First Lien Debt2.00%9.00%11.00%$54$—$54CHC Solutions Inc.Senior Secured First Lien Debt8.00%4.00%12.00%$258$129$387Dayton Superior Corp.Senior Secured First Lien Debt9.00%6.00%15.00%$578$194$772F+W Media, Inc.(u)Senior Secured First Lien Debt—11.50%11.50%$—$24$24F+W Media, Inc.Senior Secured First Lien Debt—8.00%8.00%$—$95$95Lonestar Prospects, Ltd.(x)Senior Secured First Lien Debt9.50%1.00%10.50%$190$27$217Petroflow Energy Corp.(u)Senior Secured First Lien Debt3.00%6.00%9.00%$70$—$70Rimini Street, Inc.(x)Senior Secured First Lien Debt12.00%3.00%15.00%$1,228$278$1,506Sequoia Healthcare Management, LLC(x)Senior Secured First Lien Debt12.00%4.00%16.00%$370$171$541Spinal USA, Inc. / Precision Medical Inc.Senior Secured First Lien Debt—10.50%10.50%$—$40$40TexOak Petro Holdings LLC(u)Senior Secured Second Lien Debt—8.00%8.00%$—$—$—Visual Edge Technology, Inc.(x)Subordinated Note—12.50%12.50%$—$224$224


|   |                                                              
|-- | -------------------------------------------------------------
|x. | Prior toDecember 31, 2018, the Company exited the investment.

See accompanying notes to consolidated financial statements.








22


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)











Note 1. Organization and Principal Business


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


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


The Company is managed by CION Investment Management, LLC, or CIM, a registered investment adviser and an affiliate of the Company. Pursuant to an investment advisory agreement with the Company, CIM oversees the management of the Company’s activities and is responsible for making investment decisions for the Company’s investment portfolio. On November 1, 2018, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment advisory agreement with CIM for a period of twelve months commencing December 17, 2018. The Company and CIM previously engaged Apollo Investment Management, L.P., or AIM, a subsidiary of Apollo Global Management, LLC, or, together with its subsidiaries, Apollo, a leading global alternative investment manager, to act as the Company’s investment sub-adviser.


On July 11, 2017, the members of CIM entered into a third amended and restated limited liability company agreement of CIM, or the Third Amended CIM LLC Agreement, for the purpose of creating a joint venture between AIM and CION Investment Group, LLC, or CIG, an affiliate of the Company. Under the Third Amended CIM LLC Agreement, AIM became a member of CIM and was issued a newly-created class of membership interests in CIM pursuant to which AIM, among other things, shares in the profits, losses, distributions and expenses of CIM with the other members in accordance with the terms of the Third Amended CIM LLC Agreement, which results in CIG and AIM each owning a 50% economic interest in CIM.


On July 10, 2017, the Company’s independent directors unanimously approved the termination of the investment sub-advisory agreement with AIM, effective as of July 11, 2017. Although the investment sub-advisory agreement and AIM's engagement as the Company’s investment sub-adviser were terminated, AIM's investment professionals continue to perform certain services for CIM and the Company, including, without limitation, identifying investment opportunities for approval by CIM's investment committee. AIM is not paid a separate fee in exchange for such services, but is entitled to receive distributions as a member of CIM as described above.


On December 4, 2017, the members of CIM entered into a fourth amended and restated limited liability company agreement of CIM, or the Fourth Amended CIM LLC Agreement. Under the Fourth Amended CIM LLC Agreement, AIM's investment professionals perform certain services for CIM, which include, among other services, (i) assistance with identifying and providing information about potential investment opportunities for approval by CIM’s investment committee; and (ii) providing (a) trade and settlement support; (b) portfolio and cash reconciliation; (c) market pipeline information regarding syndicated deals, in each case, as reasonably requested by CIM; and (d) monthly valuation reports and support for all broker-quoted investments. All of the Company's investment decisions are the sole responsibility of, and are made at the sole discretion of, CIM's investment committee, which consists entirely of CIG senior personnel.





Note 2. Summary of Significant Accounting Policies


Basis of Presentation and Consolidation


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 pursuant to 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, 2018 and for the year then ended included in the Company’s Annual Report on Form 10-K. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year ending December 31, 2019 . The consolidated balance sheet and the consolidated schedule of investments as of December 31, 2018 are derived from the 2018 audited consolidated financial statements and include the accounts of the Company’s wholly-owned subsidiaries.


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





23


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Reclassification


Unamortized original issue discounts, or OID, and market discounts/premiums received upon the early repayment of debt investments have been reclassified from net realized gains on investments to interest income. As a result, prior year amounts have been reclassified to conform to the current presentation.


Recently Adopted Accounting Standards


In May 2014, the Financial Accounting Standards Board, or the FASB, issued ASU 2014-09, Revenue from Contracts with Customers , or ASU 2014-09, which establishes a comprehensive and converged standard on revenue recognition to enable financial statement users to better understand and consistently analyze an entity’s revenue across industries, transactions and geographies. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As such, ASU 2014-09 could impact the timing of revenue recognition. ASU 2014-09 also requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. ASU 2014-09 applies to all entities. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarified the implementation guidance regarding performance obligations and licensing arrangements. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2017. This guidance was adopted by the Company during the three months ended March 31, 2018 and did not have a material impact on the Company’s consolidated financial statements.


In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) , or ASU 2016-15, which intends to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements and distributions from certain equity method investments. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017. This guidance was adopted by the Company during the three months ended March 31, 2018 and did not have a material impact on the Company’s consolidated financial statements.


In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force) , or ASU 2016-18, which requires an entity to include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017. This guidance was adopted by the Company during the three months ended March 31, 2018 and did not have a material impact on the Company’s consolidated financial statements.


In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business , or ASU 2017-01, which clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is expected to reduce the number of transactions that need to be further evaluated as businesses. ASU 2017-01 is effective for interim and annual periods beginning after December 15, 2017. This guidance was adopted by the Company during the three months ended March 31, 2018 and did not have a material impact on the Company’s consolidated financial statements.


Recently Announced Accounting Standards


In March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities , or ASU 2017-08, which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. ASU 2017-08 is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption during an interim period. If the Company early adopts the amendments during an interim period, any adjustments will be reflected as of the beginning of the fiscal year that includes such interim period. The Company is in the process of evaluating the impact that this guidance will have on its consolidated financial statements.


In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement , or ASU 2018-13, which modifies the disclosure requirements for fair value measurements in Topic 820 by removing, modifying, or adding certain disclosures. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is in the process of evaluating the impact that this guidance will have on its consolidated financial statements.


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.





24


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Foreign Currency Translations


The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the foreign exchange rate on the date of valuation. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.


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 $26,169  and $12,537 of such investments at March 31, 2019 and December 31, 2018 , respectively, which are included in investments, at fair value on the accompanying consolidated balance sheets and on the consolidated schedules of investments.


Offering Costs


Offering costs included, among other things, legal fees and other costs pertaining to the preparation of the Company’s registration statements in connection with the continuous public offerings of the Company’s shares. Certain initial offering costs that were funded by CIG on behalf of the Company were submitted by CIG for reimbursement upon meeting the minimum offering requirement on December 17, 2012. These costs were capitalized and amortized over a twelve month period as an adjustment to capital in excess of par value. All other offering costs were expensed as incurred by the Company. The Company's follow-on continuous public offering ended on January 25, 2019.


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 equal to the sum of 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 be subject to corporate level federal income taxes on any income that the Company distributes to its shareholders. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income. The Company will also be subject to nondeductible federal excise taxes if the Company does not distribute at least 98.0% of net ordinary income, 98.2% of capital gains, if any, and any recognized and undistributed income from prior years for which it paid no federal income taxes.


Two of the Company’s wholly-owned consolidated subsidiaries, View ITC, LLC and View Rise, LLC, or collectively the Taxable Subsidiaries, have elected to be treated as taxable entities for U.S. federal income tax purposes. As a result, the Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense or benefit, and the related tax assets and liabilities, as a result of its ownership of certain portfolio investments. The income tax expense or benefit, if any, and the related tax assets and liabilities, where material, are reflected in the Company’s consolidated financial statements. There were no deferred tax assets or liabilities as of March 31, 2019.


Book/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).


Uncertainty in Income Taxes


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


The Company is subject to examination by U.S. federal, New York State, New York City and Maryland income tax jurisdictions for 2015, 2016 , and 2017 .





25


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Use of Estimates


The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may materially differ from those estimates.


Valuation of Portfolio Investments


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


|          |                                                                                                                        
|--------- | -----------------------------------------------------------------------------------------------------------------------
|Level 1 - | Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.

|          |                                                                                                                                                                                                                        
|--------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 2 - | Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

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

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


Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The level in the fair value hierarchy for each fair value measurement has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the value that would be received upon an actual sale of such investments. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses that the Company ultimately realizes on these investments to materially differ from the valuations currently assigned.


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


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


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


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

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




26


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





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

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


|  |                                                                                     
|- | ------------------------------------------------------------------------------------
|• | the size and scope of a portfolio company and its specific strengths and weaknesses;

|  |                                               
|- | ----------------------------------------------
|• | prevailing interest rates for like securities;

|  |                                              
|- | ---------------------------------------------
|• | expected volatility in future interest rates;

|  |          
|- | ---------
|• | leverage;

|  |                                                                  
|- | -----------------------------------------------------------------
|• | call features, put features and other relevant terms of the debt;

|  |                                                       
|- | ------------------------------------------------------
|• | the borrower’s ability to adequately service its debt;

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

|  |                                                                   
|- | ------------------------------------------------------------------
|• | the quality of collateral securing the Company’s debt investments;

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

|  |                                 
|- | --------------------------------
|• | other factors deemed applicable.

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


The discounted cash flow model deemed appropriate by CIM is prepared for the applicable investments and reviewed by the designated members of CIM’s management team. 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 designated members of CIM’s management team with final approval from the board of directors.


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


The Company periodically benchmarks the broker quotes from the brokers or dealers against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management in purchasing and selling these investments, the Company believes that these quotes are reliable indicators of fair value. The Company may also use other methods to determine fair value for securities for which it cannot obtain market quotations through brokers or dealers, including the use of an independent valuation firm. Designated members of CIM’s management team and the Company's 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.


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.  For investments in equity tranches of collateralized loan obligations, the Company records income based on the effective interest rate determined using the amortized cost and estimated cash flows, which is updated periodically. Loan origination fees, OID, 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 security, prepayment premiums, any unamortized loan origination fees, OID, or market discounts are recorded as interest income. In addition, the Company may generate revenue in the form of commitment, amendment, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees generated in connection with investments are recognized when earned.





27


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The Company may have investments in its investment portfolio that contain a PIK interest provision. PIK interest is accrued as interest income if the portfolio company valuation indicates that such PIK interest is collectible and recorded as interest receivable up to the interest payment date. On the interest payment dates, the Company will capitalize the accrued interest receivable attributable to PIK as additional principal due from the borrower. Additional PIK securities typically have the same terms, including maturity dates and interest rates, as the original securities. In order to maintain RIC status, substantially all of this income must be paid out to shareholders in the form of distributions, even if the Company has not collected any cash. For additional information on investments that contain a PIK interest provision, see the consolidated schedules of investments as of March 31, 2019 and December 31, 2018 .


Loans and debt securities, including those that are individually identified as being impaired under Accounting Standards Codification 310, Receivables , or ASC 310, are generally placed on non-accrual status immediately if, in the opinion of management, principal or interest is not likely to be paid, 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 non-accrual status is reversed against interest income. Interest income is recognized on non-accrual loans or debt securities only to the extent received in cash. However, where there is doubt regarding the ultimate collectibility of principal, 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.





Dividend income on preferred equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.


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 sale and the weighted-average amortized cost of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees. 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.


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 did not take any incentive fees with respect to the Company’s TRS. For purposes of computing the capital gains incentive fee, CIM became entitled to a capital gains incentive fee upon the termination of the TRS, at which point all gains and losses of the underlying loans constituting the reference assets of the TRS were realized. However, realized losses exceeded realized gains on the underlying loans, resulting in no capital gains incentive fees on the TRS. Any net unrealized gains on the TRS were reflected in total assets on the Company’s consolidated balance sheets and included in the computation of the base management fee. Any net unrealized losses on the TRS were reflected in total liabilities on the Company’s consolidated balance sheets and excluded in the computation of the base management fee.


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


Net Increase in Net Assets per Share


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


Distributions


Distributions to shareholders are recorded as of the record date. The amount paid as a distribution is declared by the Company's co-chief executive officers and ratified by the board of directors on a quarterly basis. Net realized capital gains, if any, are distributed at least annually.





28


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Note 3. Share Transactions


The Company’s initial continuous public offering commenced on July 2, 2012 and ended on December 31, 2015. The Company’s follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019.


The following table summarizes transactions with respect to shares of the Company’s common stock during the three months ended March 31, 2019 and 2018 :


Three Months EndedMarch 31,20192018SharesAmountSharesAmountGross shares/proceeds from the offering696,264$6,5161,265,970$12,137Reinvestment of distributions1,075,2269,3611,075,7479,844Total gross shares/proceeds1,771,49015,8772,341,71721,981Sales commissions and dealer manager fees—(296)—(471)Net shares/proceeds1,771,49015,5812,341,71721,510Share repurchase program(1,078,856)(9,361)(2,014,536)(18,379)Net shares/proceeds from share transactions692,634$6,220327,181$3,131


During the three months ended March 31, 2019 and 2018 , the Company sold 1,771,490 and 2,341,717 shares, respectively, at an average price per share of $8.96 and $9.39 , respectively.


Since commencing its initial continuous public offering on July 2, 2012 and through March 31, 2019 , the Company sold 113,401,873 shares of common stock for net proceeds of $ 1,155,287 at an average price per share of $10.19 . The net proceeds include gross proceeds received from reinvested shareholder distributions of $ 172,225 , for which the Company issued 18,971,521 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $ 172,225 , for which the Company repurchased 19,061,393 shares of common stock.


During the period from April 1, 2019 to May 9, 2019 , the Company received gross proceeds of $3,485 from reinvested shareholder distributions, for which the Company issued 402,012 shares of common stock.


Since commencing its initial continuous public offering on July 2, 2012 and through May 9, 2019 , the Company sold 113,803,885 shares of common stock for net proceeds of $1,158,772 at an average price per share of $10.18 . The net proceeds include gross proceeds received from reinvested shareholder distributions of $175,710 , for which the Company issued 19,373,533 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $172,225 , for which the Company repurchased 19,061,393 shares of common stock.





To ensure that the offering price per share, net of sales commissions and dealer manager fees, equaled or exceeded the net asset value per share on each subscription closing date and distribution reinvestment date, certain of the Company’s directors increased the offering price per share of common stock on certain dates. Due to a decline in the Company’s net asset value per share to an amount more than 2.5% below the Company’s then-current net offering price, certain of the Company’s directors decreased the offering price per share of common stock effective January 2, 2019 and January 9, 2019 from $9.50 to $9.45 and from $9.45 to $9.40, respectively.


Share Repurchase Program


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


The Company currently limits the number of shares to be repurchased during any calendar year to the number of shares it can repurchase with the proceeds it receives from the issuance of shares pursuant to its fifth 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. The Company currently offers to repurchase such shares at a price equal to the estimated net asset value per share on each date of repurchase.





29


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





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


The following table summarizes the share repurchases completed during the year ended December 31, 2018 and the three months ended March 31, 2019 :


Three Months EndedRepurchase DateShares RepurchasedPercentage of Shares Tendered That Were RepurchasedRepurchase Price Per ShareAggregate Consideration for Repurchased Shares2018March 31, 2018January 3, 20182,014,536100%$9.12$18,379June 30, 2018April 4, 20182,352,580100%9.1521,525September 30, 2018July 5, 20182,507,596100%9.0622,724September 26, 20182,086,133100%9.0618,907December 31, 2018December 26, 20181,759,84563%8.8115,508Total for the year ended December 31, 201810,720,690$97,0432019March 31, 2019March 27, 20191,078,85630%$8.68$9,361Total for the three months ended March 31, 20191,078,856$9,361





Note 4. Transactions with Related Parties


For the three months ended March 31, 2019 and 2018 , fees and other expenses incurred by the Company related to CIM and its affiliates were as follows:


Three Months EndedMarch 31,EntityCapacityDescription20192018CION Securities, LLCDealer managerDealer manager fees(1)$124$218CIMInvestment adviserManagement fees(2)9,3317,939CIMInvestment adviserIncentive fees(2)5,375—CIMAdministrative services providerAdministrative services expense(2)497—ICON Capital, LLCAdministrative services providerAdministrative services expense(2)—461$15,327$8,618


|    |                                    
|--- | -----------------------------------
|(1) | Amounts charged directly to equity.

|    |                                        
|--- | ---------------------------------------
|(2) | Amounts charged directly to operations.

On December 28, 2016, the Company entered into an amended and restated follow-on dealer manager agreement with CIM and CION Securities, LLC (formerly, ICON Securities, LLC), or CION Securities, in connection with the Company's follow-on continuous public offering, which ended on January 25, 2019. Under the amended and restated dealer manager agreement, the dealer manager fee was reduced from up to 3% to up to 2% of gross offering proceeds and selling commissions to the selling dealers were reduced from up to 7% to up to 3% of gross offering proceeds. Such costs were charged against capital in excess of par value when incurred. Since commencing its initial continuous public offering on July 2, 2012 through January 25, 2019, the Company paid or accrued sales commissions of $65,275 to the selling dealers and dealer manager fees of $32,631 to CION Securities.





30


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The Company has entered into an investment advisory agreement with CIM. On November 1, 2018, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment advisory agreement for a period of twelve months commencing December 17, 2018.  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 base management fee is payable quarterly in arrears and is calculated based on the two most recently completed calendar quarters. 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%. For the three months ended March 31, 2019 and 2018, the liability recorded for subordinated incentive fees was $5,375 and $0 , respectively. The second part of the incentive fee, which is referred to as the capital gains incentive fee, is described in Note 2.





The Company accrues the capital gains incentive fee based on net realized gains and net unrealized appreciation; however, under the terms of the investment advisory agreement, the fee payable to CIM is based on net realized gains and unrealized depreciation and no such fee is payable with respect to unrealized appreciation unless and until such appreciation is actually realized. For the three months ended March 31, 2019 and 2018, the Company had no liability for and did not record any capital gains incentive fees.





With respect to the TRS, CIM became entitled to receive a capital gains incentive fee upon the termination of the TRS, at which point all net gains and losses of the underlying loans constituting the reference assets of the TRS were realized. However, CIM did not take any incentive fees with respect to the Company’s TRS as realized losses exceeded realized gains on the underlying loans upon termination. See Note 2 for an additional discussion of CIM's entitlement to receive payment of incentive fees.





The Company entered into an administration agreement with CIM’s affiliate, ICON Capital, LLC, or ICON Capital, pursuant to which ICON Capital furnished the Company with administrative services including accounting, investor relations and other administrative services necessary to conduct its day-to-day operations. ICON Capital was reimbursed for administrative expenses it incurred on the Company’s behalf in performing its obligations, provided that such reimbursement was for the lower of ICON Capital’s actual costs or the amount that the Company would have been required to pay for comparable administrative services in the same geographic location. Such costs were reasonably allocated to the Company on the basis of assets, revenues, time records or other reasonable methods. The Company did not reimburse ICON Capital for any services for which it received 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.





On April 1, 2018, the Company entered into an administration agreement with CIM for the purpose of replacing ICON Capital with CIM as the Company's administrator pursuant to the terms of the administration agreement. No other material terms of the administration agreement with ICON Capital were amended in connection with the administration agreement with CIM. On November 1, 2018, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the administration agreement for a period of twelve months commencing December 17, 2018.





Under the terms of the investment advisory agreement, CIM and certain of its affiliates, which includes CIG, are entitled to receive reimbursement of up to 1.5% of the gross proceeds raised until all offering and organizational costs have been reimbursed. The Company’s payment of offering and organizational costs will not exceed 1.5% of the actual gross proceeds raised from the offerings (without giving effect to any potential expense support from CIG and its affiliates, which includes CIM). With respect to any reimbursements for offering and organizational costs, the Company interprets 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.


Reinvestment of shareholder distributions and share repurchases are excluded from the gross proceeds from the Company’s offerings for purposes of determining the total amount of offering and organizational costs that can be paid by the Company. As of March 31, 2019 , the Company raised gross offering proceeds of $1,155,287 , of which it can pay up to $17,329 in offering and organizational costs (which represents 1.5% of the actual gross offering proceeds raised). Through March 31, 2019 , the Company paid $10,699 of such costs, leaving an additional $6,630 that can be paid.





On January 30, 2013, the Company entered into the expense support and conditional reimbursement agreement with CIG, whereby CIG agreed to provide expense support to the Company 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. On December 16, 2015 and December 14, 2016, the Company further amended and restated the expense support and conditional reimbursement agreement for purposes of including AIM as a party to the agreement and extending the termination date from December 31, 2016 to December 31, 2017, respectively. On January 2, 2018, the Company entered into an expense support and conditional reimbursement agreement with CIM for purposes of (i) replacing CIG and AIM with CIM as the expense support provider pursuant to the terms of the expense support and conditional reimbursement agreement; and (ii) extending the termination date to December 31, 2018. On December 26, 2018, the Company and CIM amended the expense support and conditional reimbursement agreement to extend the termination date of such agreement from December 31, 2018 to December 31, 2019.





31


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Pursuant to the expense support and conditional reimbursement agreement, the Company will have a conditional obligation to reimburse CIM for any amounts funded by CIM under such agreement (i) if expense support amounts funded by CIM 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 CIM funded such amount. The obligation to reimburse CIM for any expense support provided by CIM under such agreement is further conditioned by the following: (i) in the period in which reimbursement is sought, the ratio of operating expenses to average net assets, when considering the reimbursement, cannot exceed the ratio of operating expenses to average net assets, as defined, for the period when the expense support was provided; (ii) in the period when reimbursement is sought, the annualized distribution rate cannot fall below the annualized distribution rate for the period when the expense support was provided; and (iii) the expense support can only be reimbursed within three years from the date the expense support was provided.





Expense support, if any, will be determined as appropriate to meet the objectives of the expense support and conditional reimbursement agreement. For the three months ended March 31, 2019 and 2018, the Company did not receive any expense support from CIM. See Note 5 for additional information on the sources of the Company’s distributions. The Company did not record any obligation to repay expense support from CIG or CIM during the three months ended March 31, 2018 or 2019, respectively. The Company did not repay any expense support to CIG or CIM during the three months ended March 31, 2018 or 2019. The Company may or may not be requested to reimburse any expense support provided in the future.


The Company or CIM may terminate the expense support and conditional reimbursement agreement at any time. CIM has indicated that it expects to continue such expense support to ensure that the Company 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 all unreimbursed expense support funded by CIM within three years of the date of termination. There will be no acceleration or increase of such repayment obligation at termination of the investment advisory agreement with CIM. The specific amount of expense support provided by CIM, 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 CIM will support any portion of the Company’s expenses in future quarters.


As of March 31, 2019 and December 31, 2018 , the total liability payable to CIM and its affiliates was $14,803 and $12,825 , respectively, which primarily related to fees earned by CIM during the three months ended March 31, 2019 and December 31, 2018 , respectively.


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 other clients of CIM rather than to the Company.


Indemnifications


The investment 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


From February 1, 2014 through July 17, 2017, the Company’s board of directors authorized and declared on a monthly basis a weekly distribution amount per share of common stock. On July 18, 2017, the Company's board of directors authorized and declared on a quarterly basis a weekly distribution amount per share of common stock. Effective September 28, 2017, the Company's board of directors delegated to management the authority to determine the amount, record dates, payment dates and other terms of distributions to shareholders, which will be ratified by the board of directors, each on a quarterly basis. Declared distributions are paid monthly.





The Company’s board of directors declared or ratified distributions for 52 and 13 record dates during the year ended December 31, 2018 and the three months ended March 31, 2019 , respectively.





32


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The following table presents cash distributions per share that were declared during the year ended December 31, 2018 and the three months ended March 31, 2019 :


DistributionsThree Months EndedPer ShareAmount2018March 31, 2018 (thirteen record dates)$0.1829$21,002June 30, 2018 (thirteen record dates)0.182921,004September 30, 2018 (thirteen record dates)0.182920,776December 31, 2018 (thirteen record dates)0.182920,701Total distributions for the year ended December 31, 2018$0.7316$83,4832019March 31, 2019 (thirteen record dates)$0.1829$20,772Total distributions for the three months ended March 31, 2019$0.1829$20,772





On March 25, 2019, the Company's co-chief executive officers declared regular weekly cash distributions of $0.014067 per share for April 2019 through June 2019. Each distribution was or will be paid monthly to shareholders of record as of the weekly record dates set forth below.


Record DatePayment DateDistribution Amount Per ShareApril 2, 2019May 1, 2019$0.014067April 9, 2019May 1, 2019$0.014067April 16, 2019May 1, 2019$0.014067April 23, 2019May 1, 2019$0.014067April 30, 2019May 1, 2019$0.014067May 7, 2019May 29, 2019$0.014067May 14, 2019May 29, 2019$0.014067May 21, 2019May 29, 2019$0.014067May 28, 2019May 29, 2019$0.014067June 4, 2019June 26, 2019$0.014067June 11, 2019June 26, 2019$0.014067June 18, 2019June 26, 2019$0.014067June 25, 2019June 26, 2019$0.014067





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 fifth amended and restated distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of the Company’s common stock.





On December 8, 2016, the Company amended and restated its distribution reinvestment plan pursuant to the fifth amended and restated distribution reinvestment plan, or the Fifth Amended DRIP. The Fifth Amended DRIP became effective as of, and first applied to the reinvestment of cash distributions paid on, February 1, 2017.  Under the Fifth Amended DRIP, cash distributions to participating shareholders will be reinvested in additional shares of common stock at a purchase price equal to the estimated net asset value per share of common stock as of the date of issuance.





33


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The Company may fund its cash distributions to shareholders from any sources of funds available to the Company, including 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 support from CIM, which is subject to repayment by the Company within three years. The Company has not established limits on the amount of funds it may use from available sources to make distributions. For the three months ended March 31, 2019 and the year ended December 31, 2018, none of the Company's distributions resulted from expense support from CIM. The purpose of this arrangement is to avoid such distributions being characterized as a return of capital. Shareholders should understand that any such distributions are not based on the Company’s investment performance, and can only be sustained if the Company achieves positive investment performance in future periods and/or CIM provides such expense support. Shareholders should also understand that the Company’s future repayments of expense support 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. CIM has no obligation to provide expense support to the Company in future periods.





The following table reflects the sources of cash distributions on a GAAP basis that the Company has declared on its shares of common stock during the three months ended March 31, 2019 and 2018 :


Three Months EndedMarch 31,20192018Source of DistributionPer ShareAmountPercentagePer ShareAmountPercentageNet investment income$0.1829$20,772100.0%$0.1829$21,002100.0%Total distributions$0.1829$20,772100.0%$0.1829$21,002100.0%





It is the Company's policy to comply with all requirements of the Code applicable to RICs and to distribute substantially all of its taxable income to its shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, the Company intends not to be subject to corporate level federal income tax or federal excise taxes. Accordingly, no federal income tax provision was required for the year ended December 31, 2018.


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 and accumulated undistributed realized gain on investments. During 2018 , book/tax differences were primarily due to differing treatments of income and gains on various investments held by the Company.


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 2018 were 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, 2018 , the components of accumulated losses on a tax basis were as follows:


December 31, 2018Undistributed ordinary income$7,127Other accumulated losses(2,933)Net unrealized depreciation on investments and total return swap(73,729)Total accumulated losses$(69,535)


As of March 31, 2019 , the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $10,813 ; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $88,869 ; the net unrealized depreciation was $78,056 ; and the aggregate cost of securities for Federal income tax purposes was $1,899,659 .


As of December 31, 2018 , the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $11,059 ; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $84,788 ; the net unrealized depreciation was $73,729 ; and the aggregate cost of securities for Federal income tax purposes was $1,939,039 .





34


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Note 6. Investments


The composition of the Company’s investment portfolio as of March 31, 2019 and December 31, 2018 at amortized cost and fair value was as follows:


March 31, 2019December 31, 2018Cost(1)FairValuePercentage ofInvestmentPortfolioCost(1)FairValuePercentage ofInvestmentPortfolioSenior secured first lien debt$1,445,350$1,413,46878.7%$1,492,034$1,462,98979.0%Senior secured second lien debt330,893310,19217.3%341,595323,36517.4%Collateralized securities and structured products - debt15,14415,0300.8%15,19315,1930.8%Collateralized securities and structured products - equity16,68715,4750.9%16,79414,8270.8%Equity42,86341,2692.3%38,61036,3992.0%Subtotal/total percentage1,850,9371,795,434100.0%1,904,2261,852,773100.0%Short term investments(2)26,16926,16912,53712,537Total investments$1,877,106$1,821,603$1,916,763$1,865,310


|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, for debt investments and cost for equity investments.

|    |                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.




35


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The following tables show the composition of the Company’s investment portfolio by industry classification and geographic dispersion, and the percentage, by fair value, of the total investment portfolio assets in such industries and geographies as of March 31, 2019 and December 31, 2018 :


March 31, 2019December 31, 2018Industry ClassificationInvestments atFair ValuePercentage ofInvestment PortfolioInvestments atFair ValuePercentage ofInvestment PortfolioHealthcare & Pharmaceuticals$326,59718.2%$325,18017.5%Services: Business224,93412.5%218,88811.7%Services: Consumer134,1027.5%133,2107.2%Media: Advertising, Printing & Publishing130,6807.3%131,6207.1%Media: Diversified & Production114,2546.4%114,3036.2%High Tech Industries99,7395.6%126,6206.8%Capital Equipment98,0495.5%98,9945.3%Chemicals, Plastics & Rubber73,2694.1%74,5754.0%Telecommunications67,2023.7%74,2614.0%Beverage, Food & Tobacco66,0543.7%73,4944.0%Banking, Finance, Insurance & Real Estate63,6933.5%57,9173.1%Retail63,2393.4%42,4502.3%Energy: Oil & Gas58,0723.2%54,9073.0%Consumer Goods: Non-Durable40,5142.3%37,1482.0%Construction & Building33,8951.9%33,4831.8%Transportation: Cargo33,0021.8%30,6141.7%Aerospace & Defense31,7731.8%45,6552.5%Hotel, Gaming & Leisure31,2071.7%54,6893.0%Consumer Goods: Durable31,0051.7%35,7091.9%Diversified Financials30,5051.7%30,0201.6%Forest Products & Paper19,4261.1%19,5251.1%Metals & Mining10,1720.6%10,3330.6%Automotive9,5850.5%24,6451.3%Environmental Industries3,0000.2%2,9550.2%Media: Broadcasting & Subscription1,4660.1%1,5780.1%Subtotal/total percentage1,795,434100.0%1,852,773100.0%Short term investments26,16912,537Total investments$1,821,603$1,865,310





36


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





March 31, 2019December 31, 2018Geographic Dispersion(1)Investments atFair ValuePercentage ofInvestment PortfolioInvestments atFair ValuePercentage ofInvestment PortfolioUnited States$1,670,47193.0%$1,740,16893.9%Canada39,8182.2%27,1221.6%Netherlands17,8291.0%18,0151.0%Cayman Islands15,4750.9%14,8270.8%Germany15,0300.8%15,1930.8%Luxembourg12,6690.7%13,8330.7%Marshall Islands9,6060.5%9,4040.5%France6,3970.4%5,9650.3%Cyprus4,4000.3%4,6160.2%United Kingdom3,0000.2%2,9550.2%Bermuda739—675—Subtotal/total percentage1,795,434100.0%1,852,773100.0%Short term investments26,16912,537Total investments$1,821,603$1,865,310


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

As of March 31, 2019 and December 31, 2018 , investments on non-accrual status represented 0.5% and 1.4%, respectively, of the Company's investment portfolio on a fair value basis.


The Company’s investment portfolio may contain senior secured investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or unfunded commitments, which may require the Company to provide funding when requested in accordance with the terms of the underlying agreements. As of March 31, 2019 and December 31, 2018 , the Company’s unfunded commitments amounted to $86,235 and $79,078 , respectively. As of May 9, 2019 , the Company’s unfunded commitments amounted to $55,944 . Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.  Refer to Note 10 for further details on the Company’s unfunded commitments.








Note 7. Financing Arrangements





The following table presents summary information with respect to the Company’s outstanding financing arrangements as of March 31, 2019 :


Financing ArrangementType of Financing ArrangementRateAmount OutstandingAmount AvailableMaturity DateCitibank Credit FacilityRevolving Credit FacilityL+2.00%$282,542$67,458March 30, 2022JPM Credit FacilityTerm Loan Credit FacilityL+3.00%250,00025,000August 24, 2021UBS FacilityRepurchase AgreementL+3.50%200,000—May 19, 2020MS Credit FacilityRevolving Credit FacilityL+3.00%150,000—December 19, 2022$882,542$92,458





Citibank Credit Facility





On March 29, 2017, Flatiron Funding II entered into a senior secured credit facility with Citibank. The senior secured credit facility with Citibank, or the Citibank Credit Facility, provided for a revolving credit facility in an aggregate principal amount of $325,000, subject to compliance with a borrowing base. On July 11, 2017, Flatiron Funding II amended the Citibank Credit Facility, or the Amended Citibank Credit Facility, with Citibank to make certain immaterial administrative amendments as a result of the termination of AIM as the Company's investment sub-adviser as discussed in Note 1.





37


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





On March 14, 2019, Flatiron Funding II further amended the Citibank Credit Facility, or the Second Amended Citibank Credit Facility, with Citibank to (i) increase the aggregate principal amount available for borrowings from $325,000 to $350,000, subject to compliance with a borrowing base, (ii) extend the reinvestment period for two years until March 29, 2021 and (iii) extend the maturity date until March 30, 2022.





As of March 31, 2019 and December 31, 2018, the principal amount outstanding on the Amended Citibank Credit Facility was $282,542 and $298,542, respectively. As of May 9, 2019 , the principal amount outstanding on the Second Amended Citibank Credit Facility was $306,542.





Advances under the Second Amended Citibank Credit Facility bear interest at a floating rate equal to (1) the higher of (a) the Citibank prime rate, (b) the federal funds rate plus 1.5% or (c) the three-month LIBOR plus 1.0%, plus (2) a spread of (a) 2% per year during the period from and including March 29, 2017 and the earlier of March 29, 2021 and the date the Second Amended Citibank Credit Facility matures, or (b) 3% per year during the period from the date the Second Amended Citibank Credit Facility matures until all obligations under the Second Amended Citibank Credit Facility have been paid in full. Interest is payable quarterly in arrears. All advances under the Second Amended Citibank Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, by no later than March 30, 2022. Flatiron Funding II may prepay advances pursuant to the terms and conditions of the credit and security agreement. Flatiron Funding II must repay 50% of advances under the Second Amended Citibank Credit Facility outstanding on March 29, 2021 by September 15, 2021. In addition, Flatiron Funding II will be subject to a non-usage fee of 0.75% per year (subject to an increase to 2% in certain circumstances) on the amount, if any, of the aggregate principal amount available under the Second Amended Citibank Credit Facility that has not been borrowed. The non-usage fees, if any, are payable quarterly in arrears. Flatiron Funding II incurred certain customary costs and expenses in connection with obtaining and amending the Citibank Credit Facility.





The Company incurred debt issuance costs of $3,373 in connection with obtaining and amending the Citibank Credit Facility, which were recorded as a direct reduction to the outstanding balance of the Second Amended Citibank Credit Facility, which is included in the Company’s consolidated balance sheets and will amortize to interest expense over the term of the Second Amended Citibank Credit Facility. At March 31, 2019 , the unamortized portion of the debt issuance costs was $2,071.





Flatiron Funding II purchased loans and other corporate debt securities with a fair value of $354,967 on the closing date pursuant to master participation and assignment agreements between Flatiron Funding II and each of 15th Street Loan Funding LLC and 15th Street Loan Funding 2 LLC, each a special purpose subsidiary of Citibank. 15th Street Loan Funding LLC and 15th Street Loan Funding 2 LLC held loans and other corporate debt securities in connection with the total return swap agreement between Citibank and Flatiron Funding, LLC, which expired in accordance with its terms on April 18, 2017. Flatiron Funding II’s obligations to Citibank under the Second Amended Citibank Credit Facility are secured by a first priority security interest in all of the assets of Flatiron Funding II. The obligations of Flatiron Funding II under the Second Amended Citibank Credit Facility are non-recourse to the Company, and the Company’s exposure under the Second Amended Citibank Credit Facility is limited to the value of the Company’s investment in Flatiron Funding II.





In connection with the Second Amended Citibank Credit Facility, Flatiron Funding II has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. As of and for the three months ended March 31, 2019 , Flatiron Funding II was in compliance with all covenants and reporting requirements.





For the three months ended March 31, 2019 and 2018, the components of interest expense, average borrowings, and weighted average interest rate for the Second Amended Citibank Credit Facility were as follows:


Three Months Ended March 31,20192018Stated interest expense$3,184$2,907Amortization of deferred financing costs162160Non-usage fee1151Total interest expense$3,461$3,068Weighted average interest rate(1)4.92%3.58%Average borrowings$268,497$324,542


|    |                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Second Amended Citibank Credit Facility and is annualized for periods covering less than one year.




JPM Credit Facility





On August 26, 2016, 34th Street entered into a senior secured credit facility with JPM. The senior secured credit facility with JPM, or the JPM Credit Facility, provided for borrowings in an aggregate principal amount of $150,000, of which $25,000 may be funded as a revolving credit facility, each subject to conditions described in the JPM Credit Facility. On August 26, 2016, 34th Street drew down $57,000 of borrowings under the JPM Credit Facility. On August 21, 2018, 34th Street drew down $25,577 of additional borrowings under the Amended JPM Credit Facility (as defined below).





38


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





On September 30, 2016, July 11, 2017, November 28, 2017 and May 23, 2018, 34th Street amended and restated the JPM Credit Facility, or the Amended JPM Credit Facility, with JPM. Under the Amended JPM Credit Facility entered into on September 30, 2016, the aggregate principal amount available for borrowings was increased from $150,000 to $225,000, of which $25,000 may be funded as a revolving credit facility, subject to conditions described in the Amended JPM Credit Facility. On September 30, 2016, 34th Street drew down $167,423 of additional borrowings under the Amended JPM Credit Facility, a portion of which was used to purchase the portfolio of loans from Credit Suisse Park View BDC, Inc. Under the Amended JPM Credit Facility entered into on July 11, 2017 and November 28, 2017, certain immaterial administrative amendments were made as a result of the termination of AIM as the Company's investment sub-adviser as discussed in Note 1. Under the Amended JPM Credit Facility entered into on May 23, 2018, the aggregate principal amount available for borrowings was increased from $225,000 to $275,000, of which $25,000 may be funded as a revolving credit facility, subject to conditions described in the Amended JPM Credit Facility, and the maturity date was extended to August 24, 2021.





As of March 31, 2019 and 2018, the principal amount outstanding on the Amended JPM Credit Facility was $250,000 and $224,423, respectively.





Advances under the Amended JPM Credit Facility bear interest at a floating rate equal to the three-month LIBOR, plus a spread of 3.00% per year, which was reduced from 3.50% under the Amended JPM Credit Facility entered into on May 23, 2018. Interest is payable quarterly in arrears. All advances under the Amended JPM Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, by no later than August 24, 2021. 34th Street may prepay advances pursuant to the terms and conditions of the Amended JPM Credit Facility, subject to a 1% premium in certain circumstances. In addition, 34th Street will be subject to a non-usage fee of 1.0% per year on the amount, if any, of the aggregate principal amount available under the Amended JPM Credit Facility that has not been borrowed during the period from August 23, 2018, and ending on, but excluding, August 24, 2020. The non-usage fees, if any, are payable quarterly in arrears.





The Company contributed loans and other corporate debt securities to 34th Street in exchange for 100% of the membership interests of 34th Street, and may contribute additional loans and other corporate debt securities to 34th Street in the future. 34th Street’s obligations to JPM under the Amended JPM Credit Facility are secured by a first priority security interest in all of the assets of 34th Street. The obligations of 34th Street under the Amended JPM Credit Facility are non-recourse to the Company, and the Company’s exposure under the Amended JPM Credit Facility is limited to the value of the Company’s investment in 34th Street.





In connection with the Amended JPM Credit Facility, 34th Street has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. As of and for the three months ended March 31, 2019 , 34th Street was in compliance with all covenants and reporting requirements.





The Company incurred debt issuance costs of $4,052 in connection with obtaining and amending the JPM Credit Facility, which were recorded as a direct reduction to the outstanding balance of the Amended JPM Credit Facility, which is included in the Company’s consolidated balance sheet as of March 31, 2019 and will amortize to interest expense over the term of the Amended JPM Credit Facility. At March 31, 2019 , the unamortized portion of the debt issuance costs was $1,459.





For the three months ended March 31, 2019 and 2018, the components of interest expense, average borrowings, and weighted average interest rate for the Amended JPM Credit Facility were as follows:


Three Months Ended March 31,20192018Stated interest expense$3,549$2,838Amortization of deferred financing costs306217Non-usage fee621Total interest expense$3,917$3,056Weighted average interest rate(1)5.78%4.98%Average borrowings$250,000$224,423


|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Amended JPM Credit Facility and is annualized for periods covering less than one year.




UBS Facility





On May 19, 2017, the Company, through two newly-formed, wholly-owned, special-purpose financing subsidiaries, entered into a financing arrangement with UBS pursuant to which up to $125,000 was made available to the Company.





39


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Pursuant to the financing arrangement, assets in the Company's portfolio may be contributed from time to time to Murray Hill Funding II through Murray Hill Funding, LLC, or Murray Hill Funding, each a newly-formed, wholly-owned, special-purpose financing subsidiary of the Company. On May 19, 2017, the Company contributed assets to Murray Hill Funding II. The assets held by Murray Hill Funding II secure the obligations of Murray Hill Funding II under Class A Notes, or the Notes, issued by Murray Hill Funding II. Pursuant to an Indenture, dated May 19, 2017, between Murray Hill Funding II and U.S. Bank National Association, or U.S. Bank, as trustee, or the Indenture, the aggregate principal amount of Notes that may be issued by Murray Hill Funding II from time to time was $192,308. Murray Hill Funding purchased the Notes issued by Murray Hill Funding II at a purchase price equal to their par value. Murray Hill Funding makes capital contributions to Murray Hill Funding II to, among other things, maintain the value of the portfolio of assets held by Murray Hill Funding II.





Principal on the Notes will be due and payable on the stated maturity date of May 19, 2027. Pursuant to the Indenture, Murray Hill Funding II has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar transactions. The Indenture contains events of default customary for similar transactions, including, without limitation: (a) the failure to make principal payments on the Notes at their stated maturity or any earlier redemption date or to make interest payments on the Notes and such failure is not cured within three business days; (b) the failure to disburse amounts in accordance with the priority of payments and such failure is not cured within three business days; and (c) the occurrence of certain bankruptcy and insolvency events with respect to Murray Hill Funding II or Murray Hill Funding.





Murray Hill Funding, in turn, entered into a repurchase transaction with UBS, pursuant to the terms of a Global Master Repurchase Agreement and the related Annex and Master Confirmation thereto, each dated May 19, 2017, or collectively, the UBS Facility. Pursuant to the UBS Facility, on May 19, 2017 and June 19, 2017, UBS purchased Notes held by Murray Hill Funding for an aggregate purchase price equal to 65% of the principal amount of Notes purchased. Subject to certain conditions, the maximum principal amount of Notes that may be purchased under the UBS Facility was $192,308. Accordingly, the aggregate maximum amount payable to Murray Hill Funding under the UBS Facility would not exceed $125,000. Murray Hill Funding will repurchase the Notes sold to UBS under the UBS Facility by no later than May 19, 2020. The repurchase price paid by Murray Hill Funding to UBS will be equal to the purchase price paid by UBS for the repurchased Notes (giving effect to any reductions resulting from voluntary partial prepayment(s)). If the UBS Facility is accelerated prior to May 19, 2020 due to an event of default or a mandatory or voluntary full payment by Murray Hill Funding, then Murray Hill Funding must pay to UBS a fee equal to the present value of the spread portion of the financing fees that would have been payable to UBS from the date of acceleration through May 19, 2020 had the acceleration not occurred. The financing fee under the UBS Facility is equal to the three-month LIBOR plus a spread of up to 3.50% per year for the relevant period.





On December 1, 2017, Murray Hill Funding II amended and restated the Indenture, or the Amended Indenture, pursuant to which the aggregate principal amount of Notes that may be issued by Murray Hill Funding II was increased from $192,308 to $266,667. Murray Hill Funding will purchase the Notes to be issued by Murray Hill Funding II from time to time. On December 1, 2017, Murray Hill Funding entered into a First Amended and Restated Master Confirmation to the Global Master Repurchase Agreement, or the Amended Master Confirmation, which sets forth the terms of the repurchase transaction between Murray Hill Funding and UBS under the UBS Facility. As part of the Amended Master Confirmation, on December 15, 2017 and April 2, 2018, UBS purchased the increased aggregate principal amount of Notes held by Murray Hill Funding for an aggregate purchase price equal to 75% of the principal amount of Notes issued. As a result of the Amended Master Confirmation, the aggregate maximum amount payable to Murray Hill Funding and made available to the Company under the UBS Facility was increased from $125,000 to $200,000. No other material terms of the UBS Facility were revised in connection with the amended UBS Facility.





UBS may require Murray Hill Funding to post cash collateral if, without limitation, the sum of the market value of the portfolio of assets and the cash and eligible investments held by Murray Hill Funding II, together with any posted cash collateral, is less than the required margin amount under the UBS Facility; provided, however, that Murray Hill Funding will not be required to post cash collateral with UBS until such market value has declined at least 10% from the initial market value of the portfolio assets.





The Company has no contractual obligation to post any such cash collateral or to make any payments to UBS on behalf of Murray Hill Funding. The Company may, but is not obligated to, increase its investment in Murray Hill Funding for the purpose of funding any cash collateral or payment obligations for which Murray Hill Funding becomes obligated in connection with the amended UBS Facility. The Company’s exposure under the amended UBS Facility is limited to the value of the Company’s investment in Murray Hill Funding.





Pursuant to the amended UBS Facility, Murray Hill Funding has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar transactions. The amended UBS Facility contains events of default customary for similar financing transactions, including, without limitation: (a) failure to transfer the Notes to UBS on the applicable purchase date or repurchase the Notes from UBS on the applicable repurchase date; (b) failure to pay certain fees and make-whole amounts when due; (c) failure to post cash collateral as required; (d) the occurrence of insolvency events with respect to Murray Hill Funding; and (e) the admission by Murray Hill Funding of its inability to, or its intention not to, perform any of its obligations under the amended UBS Facility.





Murray Hill Funding paid an upfront fee and incurred certain other customary costs and expenses totaling $2,637 in connection with obtaining the amended UBS Facility, which were recorded as a direct reduction to the outstanding balance of the amended UBS Facility, which is included in the Company’s consolidated balance sheets and will amortize to interest expense over the term of the amended UBS Facility. At March 31, 2019, the unamortized portion of the upfront fee and other expenses was $1,068.





40


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





As of March 31, 2019, Notes in the aggregate principal amount of $266,667 had been purchased by Murray Hill Funding from Murray Hill Funding II and subsequently sold to UBS under the amended UBS Facility for aggregate proceeds of $200,000. The carrying amount outstanding under the amended UBS Facility approximates its fair value. The Company funded each purchase of Notes by Murray Hill Funding through a capital contribution to Murray Hill Funding. As of March 31, 2019, the amount due at maturity under the amended UBS Facility was $200,000. The Notes issued by Murray Hill Funding II and purchased by Murray Hill Funding eliminate in consolidation on the Company’s consolidated financial statements.





As of March 31, 2019, the fair value of assets held by Murray Hill Funding II was $332,742.





For the three months ended March 31, 2019 and 2018, the components of interest expense, average borrowings, and weighted average interest rate for the amended UBS Facility were as follows:


Three Months Ended March 31,20192018Stated interest expense$3,072$2,005Amortization of deferred financing costs232232Total interest expense$3,304$2,237Weighted average interest rate(1)6.14%4.94%Average borrowings$200,000$162,500


|    |                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the stated interest expense and non-usage fee, if any, on the unused portion of the amended UBS Facility and is annualized for periods covering less than one year.




MS Credit Facility





On December 19, 2017, 33rd Street Funding entered into a senior secured credit facility, or the MS Credit Facility, with MS. The MS Credit Facility provided for a revolving credit facility in an aggregate principal amount of up to $200,000, subject to compliance with a borrowing base.





Advances under the MS Credit Facility will be available through December 19, 2020 and will bear interest at a floating rate equal to the three-month LIBOR, plus a spread of (i) 3.0% per year through December 19, 2020 and (i) 3.5% per year thereafter through December 19, 2022. Interest is payable quarterly in arrears. All advances under the MS Credit Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, by no later than December 19, 2022. In addition, 33rd Street Funding will be subject to a non-usage fee of 0.75% per year that accrues for each day of an accrual period on the amount by which $200,000 exceeds the greater of (x) the aggregate principal amount, if any, of the advances outstanding on such day and (y) during the period from June 20, 2018 through December 19, 2020, 75% of $200,000 (or such smaller amount if the committed facility amount is reduced pursuant to the terms and conditions of the loan and servicing agreement). The non-usage fees, if any, are payable quarterly in arrears. 33rd Street Funding incurred certain customary costs and expenses in connection with obtaining the MS Credit Facility.





On July 9, 2018, 33rd Street Funding amended and restated the MS Credit Facility to make certain immaterial administrative amendments. 33rd Street Funding further amended and restated the MS Credit Facility, or the Amended MS Credit Facility, with MS on December 18, 2018. Pursuant to the amendment, 33rd Street Funding may prepay advances pursuant to the terms and conditions of the loan and servicing agreement subject to a 2% or 1% premium if the amount of the Amended MS Credit Facility is reduced or terminated on or prior to December 19, 2019 or December 19, 2020, respectively.





Pursuant to the terms of the loan and servicing agreement, on March 15, 2019, 33rd Street Funding reduced the aggregate principal amount available for borrowings under the Amended MS Credit Facility from $200,000 to $150,000.





In connection with the Amended MS Credit Facility, 33rd Street Funding has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Amended MS Credit Facility contains customary events of default for similar financing transactions, including, without limitation: (a) the failure to make any payment when due and thereafter (other than with respect to payments of principal and interest), within one business day following the earlier of (i) 33rd Street Funding becoming aware of such failure; or (ii) notice of such default is provided by MS; (b) the insolvency or bankruptcy of 33rd Street Funding, the Company or CIM; (c) a change of control of 33rd Street Funding shall have occurred or CIM ceases to be the investment advisor of the Company; (d) the failure by 33rd Street Funding to make any payment when due in connection with any of its other indebtedness having an aggregate value of at least $500, or any other default by 33rd Street Funding of any agreement related to such indebtedness; (e) any representation, warranty, condition or agreement of 33rd Street Funding, the Company or CIM under the loan and servicing agreement is incorrect or not performed, which if capable of being cured, is not cured within 30 days; and (f) the failure to satisfy certain financial covenants, which if capable of being cured, is not cured within the time period specified in the loan and servicing agreement. Upon the occurrence and during the continuation of an event of default, MS may declare the outstanding advances and all other obligations under the Amended MS Credit Facility immediately due and payable.





41


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The Company contributed loans and other corporate debt securities to 33rd Street Funding in exchange for 100% of the membership interests of 33rd Street Funding, and may contribute additional loans and other corporate debt securities to 33rd Street Funding in the future. 33rd Street Funding’s obligations to MS under the Amended MS Credit Facility are secured by a first priority security interest in all of the assets of 33rd Street Funding. The obligations of 33rd Street Funding under the Amended MS Credit Facility are non-recourse to the Company, and the Company's exposure under the Amended MS Credit Facility is limited to the value of the Company's investment in 33rd Street Funding. 33rd Street Funding has appointed CIM to manage its portfolio.





On June 5, 2018, June 12, 2018 and June 28, 2018, 33rd Street Funding drew down $25,000, $75,000 and $50,000 of borrowings under the MS Credit Facility, respectively. As of March 31, 2019 and December 31, 2018, the principal amount outstanding on the Amended MS Credit Facility was $150,000. As of May 9, 2019 , the principal amount outstanding on the Amended MS Credit Facility was $130,000.





33rd Street Funding paid an upfront fee and incurred certain other customary costs and expenses totaling $2,591 in connection with obtaining and amending the MS Credit Facility, which the Company initially recorded as prepaid expenses and other assets on the Company’s consolidated balance sheets and will amortize to interest expense over the term of the Amended MS Credit Facility. On June 5, 2018, unamortized upfront fees were recorded as a direct reduction to the outstanding balance of the Amended MS Credit Facility, which is included in the Company’s consolidated balance sheet as of March 31, 2019. At March 31, 2019, the unamortized portion of the upfront fee and other expenses was $1,929.





For the three months ended March 31, 2019 and 2018, the components of interest expense, average borrowings, and weighted average interest rate for the Amended MS Credit Facility were as follows:


Three Months Ended March 31,20192018Stated interest expense$2,154$—Non-usage fee76429Amortization of deferred financing costs128128Total interest expense$2,358$557Weighted average interest rate(1)5.95%—Average borrowings$150,000$—


|    |                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the stated interest expense and non-usage fee, if any, on the unused portion of the Amended MS Credit Facility and is annualized for periods covering less than one year.




Note 8. Fair Value of Financial Instruments





The following table presents fair value measurements of the Company’s portfolio investments as of March 31, 2019 and December 31, 2018 , according to the fair value hierarchy:


March 31, 2019December 31, 2018Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalSenior secured first lien debt$—$—$1,413,468$1,413,468$—$—$1,462,989$1,462,989Senior secured second lien debt——310,192310,192——323,365323,365Collateralized securities and structured products - debt——15,03015,030——15,19315,193Collateralized securities and structured products - equity——15,47515,475——14,82714,827Equity8,285—32,98441,2697,323—29,07636,399Short term investments26,169——26,16912,537——12,537Total Investments$34,454$—$1,787,149$1,821,603$19,860$—$1,845,450$1,865,310





42


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





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, 2019 and 2018:


Three Months EndedMarch 31, 2019Senior Secured First Lien DebtSenior Secured Second Lien DebtCollateralized Securities and Structured Products - DebtCollateralized Securities and Structured Products - EquityEquityTotalBeginning balance, December 31, 2018$1,462,989$323,365$15,193$14,827$29,076$1,845,450Investments purchased134,7779,824——4,254148,855Net realized loss(895)(13)(49)——(957)Net change in unrealized (depreciation) appreciation(2,837)(2,471)(114)755(346)(5,013)Accretion of discount2,663354———3,017Sales and principal repayments(183,229)(20,867)—(107)—(204,203)Ending balance, March 31, 2019$1,413,468$310,192$15,030$15,475$32,984$1,787,149Change in net unrealized (depreciation) appreciation on investments still held as of March 31, 2019(1)$(3,537)$(2,397)$(114)$755$(346)$(5,639)


|    |                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------
|(1) | Included in net change in unrealized (depreciation) appreciation on investments in the consolidated statements of operations.

Three Months EndedMarch 31, 2018Senior Secured First Lien DebtSenior Secured Second Lien DebtCollateralized Securities and Structured Products - DebtCollateralized Securities and Structured Products - EquityUnsecured DebtEquityTotalBeginning balance, December 31, 2017$1,100,336$333,944$25,289$18,525$7,639$16,277$1,502,010Investments purchased245,65375,008———1,936322,597Net realized (loss) gain(1,570)868——21—(681)Net change in unrealized (depreciation) appreciation(4,282)1,35245136314(906)(3,008)Accretion of discount4,72235810—4—5,094Sales and principal repayments(184,113)(57,469)(3,370)(157)(7,678)—(252,787)Ending balance, March 31, 2018$1,160,746$354,061$22,380$18,731$—$17,307$1,573,225Change in net unrealized (depreciation) appreciation on investments still held as of March 31, 2018(1)$(2,606)$1,825$451$363$—$653$686


|    |                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------
|(1) | Included in net change in unrealized (depreciation) appreciation on investments in the consolidated statements of operations.




43


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Significant Unobservable Inputs


The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of investments as of March 31, 2019 and December 31, 2018 were as follows:


March 31, 2019Fair ValueValuation Techniques/MethodologiesUnobservableInputsRangeWeighted Average(1)Senior secured first lien debt$892,280Discounted Cash FlowDiscount Rates3.0%—47.7%10.1%504,363Broker QuotesBroker QuotesN/AN/A12,986Market Comparable ApproachEBITDA Multiple5.50x—8.50x6.76x3,635Revenue Multiple0.15x—0.40x0.30x204Other(2)Other(2)N/AN/ASenior secured second lien debt185,762Discounted Cash FlowDiscount Rates9.5%—14.2%11.3%122,780Broker QuotesBroker QuotesN/AN/A1,650Market Comparable ApproachEBITDA Multiple4.50x—5.50x4.83xCollateralized securities and structured products - debt15,030Discounted Cash FlowDiscount RatesN/A11.8%Collateralized securities and structured products - equity15,475Discounted Cash FlowDiscount Rates13.3%—14.0%13.6%Equity15,161Market Comparable ApproachEBITDA Multiple4.00x—10.00x8.48x4,377Revenue Multiple0.30x—1.25x0.85x11,410Discounted Cash flowDiscount Rates17.5%—22.5%20.0%1,710Broker QuotesBroker QuotesN/AN/A326Options Pricing ModelExpected Volatility33.0%—114.3%47.6%Total$1,787,149


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

|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(2) | Fair value based on expected outcome of proposed corporate transactions and/or other factors.




44


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





December 31, 2018Fair ValueValuation Techniques/MethodologiesUnobservableInputsRangeWeighted Average(1)Senior secured first lien debt$959,417Discounted Cash FlowDiscount Rates3.0%-32.5%10.6%497,641Broker QuotesBroker QuotesN/AN/A2,270Market Comparable ApproachEBITDA Multiple4.00x-5.00x4.00x1,298Revenue Multiple0.15x-0.20x0.18x2,363Other(2)Other(2)N/AN/ASenior secured second lien debt170,578Discounted Cash FlowDiscount Rates9.6%-25.7%11.9%145,734Broker QuotesBroker QuotesN/AN/A7,053Market Comparable ApproachEBITDA Multiple8.25x-9.25x8.79xCollateralized securities and structured products - debt15,193Discounted Cash FlowDiscount RatesN/A11.0%Collateralized securities and structured products - equity14,827Discounted Cash FlowDiscount Rates13.3%-15.0%13.9%Equity24,077Market Comparable ApproachEBITDA Multiple4.00x-10.00x7.96x3,236Revenue Multiple0.15x-1.25x1.00x1,461Broker QuotesBroker QuotesN/AN/A302Options Pricing ModelExpected Volatility33.0%-110.7%56.7%Total$1,845,450


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

|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(2) | Fair value based on expected outcome of proposed corporate transactions and/or other factors.

The significant unobservable inputs used in the fair value measurement of the Company’s senior secured first lien debt, senior secured second lien debt, collateralized securities and structured products, and equity are discount rates, EBITDA multiples, revenue multiples, broker quotes and expected volatility. A significant increase or decrease in discount rates would result in a significantly lower or higher fair value measurement, respectively. A significant increase or decrease in the EBITDA multiples, revenue multiples, expected proceeds from proposed corporate transactions, broker quotes and expected volatility would result in a significantly higher or lower 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, 2019 and 2018 :


Three Months Ended March 31,20192018Professional fees$553$629Transfer agent expense265329Dues and subscriptions135244Director fees and expenses121121Valuation expense115164Insurance expense101100Due diligence fees6182Printing and marketing expense2272Accounting and administration costs15179Other expenses162Total general and administrative expense$1,389$1,982





45


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Note 10. Commitments and Contingencies


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


As of March 31, 2019 and December 31, 2018 , the Company’s unfunded commitments were as follows:


Unfunded CommitmentsMarch 31, 2019(1)December 31, 2018(1)TherapeuticsMD, Inc.$25,000$25,000Mimeo.com, Inc.11,00013,000Independent Pet Partners Intermediate Holdings, LLC10,815—CircusTrix Holdings, LLC5,5735,573DFC Global Facility Borrower II LLC5,3175,317Foundation Consumer Healthcare, LLC4,2114,211LAV Gear Holdings, Inc.4,103—Lift Brands, Inc.3,6504,150Instant Web, LLC2,7042,704Moss Holding Company2,2322,232Adams Publishing Group, LLC2,0692,069Adapt Laser Acquisition, Inc.2,0001,500Charming Charlie, LLC1,9381,938American Media, Inc.1,6171,778Teladoc, Inc.1,2501,250Ivy Hill Middle Market Credit Fund VIII, Ltd.1,1111,111Woodstream Corp.559559F+W Media, Inc.503—Elemica, Inc.5002,500Country Fresh Holdings, LLC83—Ministry Brands, LLC—2,924OTG Management, LLC—514Studio Movie Grill Holdings, LLC—468PDI TA Holdings, Inc.—237Achilles Acquisition, LLC—43Total$86,235$79,078


|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|(1) | Unless otherwise noted, the funding criteria for these unfunded commitments had not been met at the date indicated.

Unfunded commitments to provide funds to companies are not recorded on the Company’s consolidated balance sheets. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. The Company intends to use cash on hand, short-term investments, proceeds from borrowings, and other liquid assets to fund these commitments should the need arise. For information on the companies to which the Company is committed to fund additional amounts as of March 31, 2019 and December 31, 2018 , refer to the table above and the consolidated schedules of investments. As of May 9, 2019 , the Company was committed, upon the satisfaction of certain conditions, to fund an additional $55,944.





46


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





The Company will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (i.e., advances from its financing arrangements and/or cash flows from operations). The Company will not fund its unfunded commitments from future net proceeds generated by securities offerings, if any. The Company follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments. Specifically, the Company prepares detailed analyses of the level of its unfunded commitments relative to its then available liquidity on a daily basis.  These analyses are reviewed and discussed on a weekly basis by the Company's executive officers and senior members of CIM (including members of the investment committee) and are updated on a “real time” basis in order to ensure that the Company has adequate liquidity to satisfy its unfunded commitments.





Note 11. Fee Income


Fee income consists of commitment fees and amendment fees. The following table summarizes the Company’s fee income for the three months ended March 31, 2019 and 2018 :


Three Months EndedMarch 31,20192018Amendment fees$298$155Commitment fees—59Total$298$214





Income from all fees was non-recurring.





47


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





Note 12. Financial Highlights





The following is a schedule of financial highlights as of and for the three months ended March 31, 2019 and 2018 :


Three Months EndedMarch 31,20192018Per share data:(1)Net asset value at beginning of period$8.69$9.14Results of operations:Net investment income0.190.19Net realized and change in unrealized losses(2)(0.05)(0.02)Net increase in net assets resulting from operations(2)0.140.17Shareholder distributions:Distributions from net investment income(0.18)(0.18)Distributions from net realized gains——Net decrease in net assets from shareholders' distributions(0.18)(0.18)Capital share transactions:Issuance of common stock above net asset value(3)——Repurchases of common stock(4)——Net increase in net assets resulting from capital share transactions——Net asset value at end of period$8.65$9.13Shares of common stock outstanding at end of period113,401,873116,108,932Total investment return-net asset value(5)1.68%1.90%Net assets at beginning of period$979,271$1,058,691Net assets at end of period$981,135$1,060,553Average net assets$987,393$1,056,223Ratio/Supplemental data:Ratio of net investment income to average net assets(6)2.18%2.07%Ratio of gross operating expenses to average net assets(6)(7)3.00%1.83%Ratio of expenses to average net assets(6)3.00%1.83%Portfolio turnover rate(8)7.92%16.41%Asset coverage ratio(9)2.112.49


|    |                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The per share data for thethreemonths endedMarch 31, 2019and2018was derived by using the weighted average shares of common stock outstanding during each period.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The amount shown for net realized loss and net change in unrealized depreciation on investments is the balancing figure derived from the other figures in the schedule. The amount shown at this caption for a share outstanding throughout the period may not agree with the change in the aggregate gains and losses in portfolio securities for the period because of the timing of sales and repurchases of the Company’s shares in relation to fluctuating market values for the portfolio. As a result, net increase in net assets resulting from operations in this schedule may vary from the consolidated statements of operations.




48


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CĪON Investment Corporation
 Notes to Consolidated Financial Statements  (unaudited)
 March 31, 2019
 (in thousands, except share and per share amounts)





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. The per share impact of the continuous issuance of shares of common stock was an increase to net asset value of less than$0.01per share during thethreemonths endedMarch 31, 2019and 2018.

|    |                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Repurchases of common stock may cause an incremental decrease in net asset value per share due to the repurchase of shares at a price in excess of net asset value per share on each repurchase date. The per share impact of repurchases of common stock was a decrease to net asset value of less than$0.01per share during thethreemonths endedMarch 31, 2019and2018.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | 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 monthly cash distributions are reinvested in accordance with the Company's distribution reinvestment plan then in effect as described in Note 5. 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 year are not annualized.

|    |                         
|--- | ------------------------
|(6) | Ratio is not annualized.

|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(7) | Ratio of gross operating expenses to average net assets does not include expense support provided by CIG, AIM and/or CIM, if any.

|    |                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Portfolio turnover rate is calculated using the lesser of year-to-date sales or purchases over the average of the invested assets at fair value, excluding short term investments, and is not annualized.

|    |                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) | Asset coverage ratio is equal to (i) the sum of (a) net assets at the end of the period and (b) total senior securities outstanding at the end of the period (excluding unfunded commitments), divided by (ii) total senior securities outstanding at the end of the period.




49


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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, 2018. In addition to historical information, the following discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking information that involves risks and uncertainties. Amounts and percentages presented herein may have been rounded for presentation and all dollar amounts, excluding share and per share amounts, are presented in thousands unless otherwise noted.





Forward-Looking Statements


Some of the statements within this Quarterly Report on Form 10-Q 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's and AIM's investment professionals to locate suitable investments for us and the ability of CIM to monitor and administer our investments;

|  |                                                                                           
|- | ------------------------------------------------------------------------------------------
|• | the ability of CIM and its affiliates to attract and retain highly talented professionals;

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

|  |                                                     
|- | ----------------------------------------------------
|• | the effects of a changing interest rate environment;

|  |                                                     
|- | ----------------------------------------------------
|• | our ability to source favorable private investments;

|  |                
|- | ---------------
|• | our tax status;

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

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

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

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


|  |                        
|- | -----------------------
|• | changes in the economy;

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

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

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.





50


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Overview


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


Our investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. Our portfolio is comprised primarily of investments in senior secured debt, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities, and equity, 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 equity interests in the form of common or preferred stock in our target companies, either in conjunction with one of our debt investments or through a co-investment with a financial sponsor.


We are managed by CIM, our affiliate and a registered investment adviser. Pursuant to an investment advisory agreement with us, CIM oversees the management of our activities and is responsible for making investment decisions for our portfolio. On November 1, 2018, our board of directors, including a majority of directors who are not interested persons, approved the renewal of the investment advisory agreement with CIM for a period of twelve months commencing December 17, 2018. We and CIM previously engaged AIM to act as our investment sub-adviser.


On July 11, 2017, the members of CIM entered into the Third Amended CIM LLC Agreement for the purpose of creating a joint venture between AIM and CIG. Under the Third Amended CIM LLC Agreement, AIM became a member of CIM and was issued a newly-created class of membership interests in CIM pursuant to which AIM, among other things, shares in the profits, losses, distributions and expenses of CIM with the other members in accordance with the terms of the Third Amended CIM LLC Agreement, which results in CIG and AIM each owning a 50% economic interest in CIM.


On July 10, 2017, our independent directors unanimously approved the termination of the investment sub-advisory agreement with AIM, effective as of July 11, 2017, as part of the new and ongoing relationship among us, CIM and AIM. Although the investment sub-advisory agreement and AIM's engagement as our investment sub-adviser were terminated, AIM's investment professionals continue to perform certain services for CIM and us, including, without limitation, identifying investment opportunities for approval by CIM's investment committee. AIM is not paid a separate fee in exchange for such services, but is entitled to receive distributions as a member of CIM as described above.


On December 4, 2017, the members of CIM entered into the Fourth Amended CIM LLC Agreement. Under the Fourth Amended CIM LLC Agreement, AIM’s investment professionals perform sourcing services for CIM, which include, among other services, (i) assistance with identifying and providing information about potential investment opportunities for approval by CIM’s investment committee; and (ii) providing (a) trade and settlement support; (b) portfolio and cash reconciliation; (c) market pipeline information regarding syndicated deals, in each case, as reasonably requested by CIM; and (d) monthly valuation reports and support for all broker-quoted investments. All of our investment decisions are the sole responsibility of, and are made at the sole discretion of, CIM's investment committee, which consists entirely of CIG personnel.


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


Revenue


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


Operating Expenses


Our primary operating expenses are the payment of advisory fees under the investment advisory agreement and interest expense on our financing arrangements. Our investment advisory fees compensate CIM for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments. We bear all other expenses of our operations and transactions.





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Reclassification


Unamortized OID and market discounts/premiums received upon the early repayment of debt investments have been reclassified from net realized gains on investments to interest income. As a result, prior year amounts have been reclassified to conform to the current presentation.





Portfolio Investment Activity for the Three Months Ended March 31, 2019 and 2018


The following table summarizes our investment activity, excluding short term investments and PIK securities, for the three months ended March 31, 2019 and 2018 :


Three Months EndedMarch 31,Net Investment Activity20192018Purchases and drawdownsSenior secured first lien debt$134,130$245,212Senior secured second lien debt9,82475,008Equity1,6911,936Sales and principal repayments(204,203)(252,787)Net portfolio activity$(58,558)$69,369


The following tables summarize the composition of our investment portfolio at amortized cost and fair value as of March 31, 2019 and December 31, 2018:


March 31, 2019Investments Cost(1)Investments FairValuePercentage ofInvestmentPortfolioSenior secured first lien debt$1,445,350$1,413,46878.7%Senior secured second lien debt330,893310,19217.3%Collateralized securities and structured products - debt15,14415,0300.8%Collateralized securities and structured products - equity16,68715,4750.9%Equity42,86341,2692.3%Subtotal/total percentage1,850,9371,795,434100.0%Short term investments(2)26,16926,169Total investments$1,877,106$1,821,603Number of portfolio companies142Average annual EBITDA of portfolio companies$81.1 millionMedian annual EBITDA of portfolio companies$56.0 millionPurchased at a weighted average price of par97.08%Gross annual portfolio yield based upon the purchase price(3)9.98%


|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents amortized cost for debt investments and cost for equity investments. Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on our investments.

|    |                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

|    |                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.




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December 31, 2018Investments Cost(1)Investments FairValuePercentage ofInvestmentPortfolioSenior secured first lien debt$1,492,034$1,462,98979.0%Senior secured second lien debt341,595323,36517.4%Collateralized securities and structured products - debt15,19315,1930.8%Collateralized securities and structured products - equity16,79414,8270.8%Equity38,61036,3992.0%Subtotal/total percentage1,904,2261,852,773100.0%Short term investments(2)12,53712,537Total investments$1,916,763$1,865,310Number of portfolio companies153Average annual EBITDA of portfolio companies$79.0 millionMedian annual EBITDA of portfolio companies$56.0 millionPurchased at a weighted average price of par97.35%Gross annual portfolio yield based upon the purchase price(3)9.83%


|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents amortized cost for debt investments and cost for equity investments. Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on our investments.

|    |                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

|    |                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The gross annual portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees and does not consider the cost of leverage.

The following table summarizes the composition of our investment portfolio by the type of interest rate as of March 31, 2019 and December 31, 2018 , excluding short term investments of $26,169 and $12,537 , respectively:


March 31, 2019December 31, 2018Interest Rate AllocationInvestments CostInvestments Fair ValuePercentage ofInvestmentPortfolioInvestments CostInvestments Fair ValuePercentage ofInvestmentPortfolioFloating interest rate investments$1,754,447$1,705,14095.0%$1,802,745$1,756,77794.8%Other income producing investments34,00235,3722.0%41,18239,1802.1%Fixed interest rate investments34,59528,6491.6%34,10934,8061.9%Non-income producing equity27,89326,2731.4%26,19022,0101.2%Total investments$1,850,937$1,795,434100.0%$1,904,226$1,852,773100.0%








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The following table shows the composition of our investment portfolio by industry classification and the percentage, by fair value, of the total assets in such industries as of March 31, 2019 and December 31, 2018 :


March 31, 2019December 31, 2018Industry ClassificationInvestments Fair ValuePercentage ofInvestment PortfolioInvestments Fair ValuePercentage ofInvestment PortfolioHealthcare & Pharmaceuticals$326,59718.2%$325,18017.5%Services: Business224,93412.5%218,88811.7%Services: Consumer134,1027.5%133,2107.2%Media: Advertising, Printing & Publishing130,6807.3%131,6207.1%Media: Diversified & Production114,2546.4%114,3036.2%High Tech Industries99,7395.6%126,6206.8%Capital Equipment98,0495.5%98,9945.3%Chemicals, Plastics & Rubber73,2694.1%74,5754.0%Telecommunications67,2023.7%74,2614.0%Beverage, Food & Tobacco66,0543.7%73,4944.0%Banking, Finance, Insurance & Real Estate63,6933.5%57,9173.1%Retail63,2393.4%42,4502.3%Energy: Oil & Gas58,0723.2%54,9073.0%Consumer Goods: Non-Durable40,5142.3%37,1482.0%Construction & Building33,8951.9%33,4831.8%Transportation: Cargo33,0021.8%30,6141.7%Aerospace & Defense31,7731.8%45,6552.5%Hotel, Gaming & Leisure31,2071.7%54,6893.0%Consumer Goods: Durable31,0051.7%35,7091.9%Diversified Financials30,5051.7%30,0201.6%Forest Products & Paper19,4261.1%19,5251.1%Metals & Mining10,1720.6%10,3330.6%Automotive9,5850.5%24,6451.3%Environmental Industries3,0000.2%2,9550.2%Media: Broadcasting & Subscription1,4660.1%1,5780.1%Subtotal/total percentage1,795,434100.0%1,852,773100.0%Short term investments26,16912,537Total investments$1,821,603$1,865,310


Our investment portfolio may contain senior secured investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreements. As of March 31, 2019 and December 31, 2018 , our  unfunded commitments amounted to  $86,235  and  $79,078 , respectively. As of  May 9, 2019 , our unfunded commitments amounte d to $55,944 . Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for us. Refer to the section “Commitments and Contingencies and Off-Balance Sheet Arrangements” for further details on our unfunded commitments.





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 rates 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.





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


Investment RatingDescription1Indicates 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.2Indicates 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.3Indicates 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 rating of 3 requires closer monitoring.4Indicates 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.5Indicates 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 rated 3, 4, or 5, CIM enhances its level of scrutiny over the monitoring of such portfolio company.


The following table summarizes the composition of our investment portfolio based on the 1 to 5 investment rating scale at fair value as of March 31, 2019 and December 31, 2018, excluding short term investments of $26,169 and $12,537 , respectively:


March 31, 2019December 31, 2018Investment RatingInvestmentsFair ValuePercentage ofInvestment PortfolioInvestmentsFair ValuePercentage ofInvestment Portfolio1$21,6471.2%$——21,568,57287.4%1,642,27088.6%3187,57110.4%181,1189.8%49,8950.6%26,4121.4%57,7490.4%2,9730.2%$1,795,434100.0%$1,852,773100.0%


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





Current Investment Portfolio





As of May 8, 2019, our investment portfolio, excluding our short term investments, consisted of interests in 142 portfolio companies (78% in senior secured first lien debt, 17% in senior secured second lien debt, 2% in collateralized securities and structured products (comprised of 1% invested in non-rated debt and 1% invested in non-rated equity of such securities and products), and 3% in equity) with a total fair value of $1,816,733 with an average and median portfolio company annual EBITDA of $78.0 million and $55.3 million, respectively, at initial investment. As of May 8, 2019, investments in our portfolio, excluding our short term investments, were purchased at a weighted average price of 97.10% of par value. Our estimated gross annual portfolio yield was 9.87% based upon the purchase price of such investments. The estimated gross portfolio yield does not represent and may be higher than an actual investment return to shareholders because it excludes our expenses and all sales commissions and dealer manager fees. For the three months ended March 31, 2019, our total investment return-net asset value was 1.68% . Total investment return-net asset value does not represent and may be higher than an actual investment return to shareholders because it excludes all sales commissions and dealer manager fees. Total investment return-net asset value is a measure of the change in total value for shareholders who held our common stock at the beginning and end of the period, including distributions paid or payable during the period, and is described further in Note 12 of our consolidated financial statements.





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As of May 8, 2019, our only short term investment was an investment in a U.S. Treasury Obligations Fund of $54,628.





Results of Operations for the Three Months Ended March 31, 2019 and 2018


Our results of operations for the three months ended March 31, 2019 and 2018 were as follows:


Three Months EndedMarch 31,20192018Investment income$51,171$41,162Net operating expenses29,63219,300Net investment income21,53921,862Net realized loss on investments and foreign currency(960)(679)Net change in unrealized depreciation on investments(4,050)(1,450)Net change in unrealized depreciation on foreign currency translation(113)—Net increase in net assets resulting from operations$16,416$19,733


Investment Income


For the three months ended March 31, 2019 and 2018 , we generated investment income of $51,171 and $41,162 , respectively, consisting primarily of interest income on investments in senior secured debt and collateralized securities and structured products of 155 and 159 portfolio companies held during each respective period. Our average investment portfolio size, excluding our short term investments, increased $280,069, from $1,544,035 for the three months ended March 31, 2018 to $1,824,104 for the three months ended March 31, 2019 , as we deployed the net proceeds from our financing arrangements and the net proceeds from our follow-on continuous public offering, which ended on January 25, 2019. During 2018, our investment portfolio continued to grow due to equity available to us for investment from our follow-on continuous public offering and amounts borrowed under our financing arrangements. As a result, we believe that reported investment income for the three months ended March 31, 2018 is not representative of our stabilized or future performance.





Operating Expenses


The composition of our operating expenses for the three months ended March 31, 2019 and 2018 was as follows:


Three Months EndedMarch 31,20192018Management fees$9,331$7,939Administrative services expense497461Subordinated incentive fee on income5,375—General and administrative1,3891,982Interest expense13,0408,918Total operating expenses$29,632$19,300


During the three months ended March 31, 2019, the increase in interest expense was primarily the result of additional borrowings on our existing financing arrangements, which resulted in an increase in net assets and an increase in management fees. The increase in subordinated incentive fees was a result of exceeding our hurdle rate of 1.875% for pre-incentive fee net investment income for the three months ended March 31, 2019.





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The composition of our general and administrative expenses for the three months ended March 31, 2019 and 2018 was as follows:


Three Months EndedMarch 31,20192018Professional fees$553$629Transfer agent expense265329Dues and subscriptions135244Director fees and expenses121121Valuation expense115164Insurance expense101100Due diligence fees6182Printing and marketing expense2272Accounting and administration costs15179Other expenses162Total general and administrative expense$1,389$1,982





Net Investment Income





Our net investment income totaled $21,539 and $21,862 for the three months ended March 31, 2019 and 2018 , respectively. The decrease in net investment income was primarily due to an increase in management fees, subordinated incentive fees, and interest expense, which were partially offset by an increase in investment income during the three months ended March 31, 2019.


Net Realized Loss on Investments and Foreign Currency


Our net realized loss on investments and foreign currency totaled $(960) and $(679) for the three months ended March 31, 2019 and 2018, respectively. This change was driven primarily by realized losses on certain underperforming investments during the three months ended March 31, 2019 compared to the three months ended March 31, 2018 .


Net Change in Unrealized Depreciation on Investments


The net change in unrealized depreciation on our investments totaled $(4,050) and $(1,450) for the three months ended March 31, 2019 and 2018 , respectively. This change was driven primarily by unrealized losses on certain underperforming investments during the three months ended March 31, 2019 .


Net Change in Unrealized Deprecation on Foreign Currency Translation


The net change in unrealized depreciation on foreign currency translation totaled $(113) and $0 for the three months ended March 31, 2019 and 2018 , respectively. This depreciation was driven primarily by unfavorable changes in foreign currency exchange rates near March 31, 2019.


Net Increase in Net Assets Resulting from Operations


For the three months ended March 31, 2019 and 2018 , we recorded a net increase in net assets resulting from operations of $16,416 and $19,733 , respectively, as a result of our operating activity for the respective periods.





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





Our net asset value per share was $8.65 and $8.69 on March 31, 2019 and December 31, 2018, respectively. After considering (i) the overall changes in net asset value per share, (ii) paid distributions of approximately $0.1829 per share during the three months ended March 31, 2019 , and (iii) the assumed reinvestment of those distributions in accordance with our distribution reinvestment plan then in effect, the total investment return-net asset value was 1.68% for the three month period ended March 31, 2019 . Total investment return-net asset value does not represent and may be higher than an actual return to shareholders because it excludes all sales commissions and dealer manager fees. Total investment return-net asset value is a measure of the change in total value for shareholders who held our common stock at the beginning and end of the period, including distributions paid or payable during the period, and is described further in Note 12 to our consolidated financial statements included in this report.





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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 excluding sales load) have seen an annualized return of 7.54% and a cumulative total return of 57.93% through March 31, 2019 (see chart below). Initial shareholders who subscribed to the offering in December 2012 with an initial investment of $10,000 and an initial purchase price equal to $10.00 per share (the initial public offering price including sales load) have seen an annualized return of 5.75% and a cumulative total return of 42.14% through March 31, 2019 . Over the same time period, the S&P/LSTA Leveraged Loan Index, a primary measure of senior debt covering the U.S. leveraged loan market, which currently consists of approximately 1,000 credit facilities throughout numerous industries, recorded an annualized return of 4.04% and a cumulative total return of 28.27%. In addition, the BofA Merrill Lynch US High Yield Index, a primary measure of short-term US dollar denominated below investment grade corporate debt publicly issued in the US domestic market, recorded an annualized return of 5.42% and a cumulative total return of 39.42% over the same period.





(1) Cumulative performance: December 17, 2012 to March 31, 2019


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 distribution reinvestment plan then in effect, (iii) the sale of the entire investment position at the net asset value per share on the last day of the period, and (iv) the distributions declared and payable to shareholders, if any, on the last day of the period.





Financial Condition, Liquidity and Capital Resources





We generate cash primarily from cash flows from interest, fees and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. We also employ leverage to seek to enhance our returns as market conditions permit and at the discretion of CIM. On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum "asset coverage" ratio from 200% to 150% and, as a result, to potentially increase the ratio of a BDC's debt to equity from a maximum of 1-to-1 to a maximum of 2-to-1, so long as certain approval and disclosure requirements are satisfied. We currently have not determined whether to seek to utilize such additional leverage. We generated cash from the net proceeds from our continuous public offerings. Our initial continuous public offering commenced on July 2, 2012 and ended on December 31, 2015. Our follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019.





As of March 31, 2019 and December 31, 2018, we had $ 26,169 and $12,537 in short term investments, respectively, invested in a fund that primarily invests in U.S. government securities.





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Citibank Credit Facility





As of March 31, 2019 and May 9, 2019 , our outstanding borrowings under the Second Amended Citibank Credit Facility were $282,542 and $306,542, respectively, and the aggregate unfunded principal amount was $67,458 and $43,458, respectively. For a detailed discussion of our Second Amended Citibank Credit Facility, refer to Note 7 to our consolidated financial statements included in this report.





JPM Credit Facility


As of March 31, 2019 and May 9, 2019 , our outstanding borrowings under the Amended JPM Credit Facility were $250,000 and the aggregate unfunded principal amount was $25,000. For a detailed discussion of our Amended JPM Credit Facility, refer to Note 7 to our consolidated financial statements included in this report.


UBS Facility


As of March 31, 2019 and May 9, 2019 , our outstanding borrowings under the amended UBS Facility were $200,000 and no additional principal amount was available for borrowing under the amended UBS Facility. For a detailed discussion of our amended UBS Facility, refer to Note 7 to our consolidated financial statements included in this report.


MS Credit Facility


As of March 31, 2019 and May 9, 2019 , our outstanding borrowings under the Amended MS Credit Facility were $150,000 and $130,000, respectively, and the aggregate unfunded principal amount was $0 and $20,000, respectively. For a detailed discussion of our Amended MS Credit Facility, refer to Note 7 to our consolidated financial statements included in this report.


Unfunded Commitments


As of March 31, 2019 and May 9, 2019 , our unfunded commitments amounted to $86,235 and $55,944 , respectively. For a detailed discussion of our unfunded commitments, refer to Note 10 to our consolidated financial statements included in this report.





Recent Accounting Pronouncements





See Note 2 to our consolidated financial statements included in this report for a discussion of certain recent accounting pronouncements that are applicable to us.





Critical Accounting Policies


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





Valuation of Portfolio Investments


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


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





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Valuation Methods


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


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

|  |                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------
|• | preliminary valuation conclusions are then documented and discussed with members of CIM’s management team;

|  |                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | designated members of CIM’s management team review the preliminary valuation, and, if applicable, deliver such preliminary valuation to an independent valuation firm for its review;

|  |                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | designated members of CIM’s management team and, if appropriate, the relevant investment professionals meet with the independent valuation firm to discuss the preliminary valuation;

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

|  |                                                                                                                                                                                                       
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | our audit committee meets with members of CIM’s management team and the independent valuation firms to discuss the assistance provided and the results of the independent valuation firms' review; and

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




In addition to the foregoing, certain investments for which a market price is not readily available are evaluated on a quarterly basis by an independent valuation firm and certain other investments are on a rotational basis reviewed by an independent valuation firm. Finally, certain investments are not evaluated by an independent valuation firm unless certain aspects of such investments in the aggregate meet certain criteria.


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


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





Related Party Transactions





For a discussion of our relationship with related parties including CION Securities, CIM, ICON Capital, and CIG and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.





Contractual Obligations





On August 26, 2016, 34th Street entered into the JPM Credit Facility with JPM, as amended and restated on September 30, 2016, July 11, 2017, November 28, 2017 and May 23, 2018. See Note 7 to our consolidated financial statements for a more detailed description of the JPM Credit Facility.





On March 29, 2017, Flatiron Funding II entered into the Citibank Credit Facility with Citibank, as amended on July 11, 2017 and March 14, 2019. See Note 7 to our consolidated financial statements for a more detailed description of the Citibank Credit Facility.





On May 19, 2017, Murray Hill Funding II entered into the UBS Facility with UBS, as amended on December 1, 2017. See Note 7 to our consolidated financial statements for a more detailed description of the UBS Facility.





On December 19, 2017, 33rd Street entered into the MS Credit Facility with MS, as amended on July 9, 2018 and December 18, 2018. See Note 7 to our consolidated financial statements for a more detailed description of the MS Credit Facility.





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Commitments and Contingencies and Off-Balance Sheet Arrangements


Commitments and Contingencies


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


Our investment portfolio may contain debt investments that are in the form of lines of credit, delayed draw term loans, revolving credit facilities, or other unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreements. For further details on such debt investments, refer to Note 10 to our consolidated financial statements included in this report.


Off-Balance Sheet Arrangements





We currently have no off-balance sheet arrangements, except for those discussed in Note 10 to our consolidated financial statements included in this report.





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Item 3. Quantitative and Qualitative Disclosures About Market Risk


We are subject to financial market risks, including changes in interest rates. As of March 31, 2019, 95.0% of our investments paid variable interest rates. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments, especially to the extent that we hold variable rate investments, and to declines in the value of any fixed rate investments we may hold. To the extent that a majority of our investments may be in variable rate investments, an increase in interest rates could make it easier for us to meet or exceed our incentive fee hurdle rate, as defined in our investment advisory agreement, and may result in a substantial increase in our net investment income, and also to the amount of incentive fees payable to CIM with respect to our pre-incentive fee net investment income.





Under the terms of the Amended JPM Credit Facility, advances currently bear interest at a floating rate equal to the three-month LIBOR, plus a spread of 3.00% per year. Under the terms of the Second Amended Citibank Credit Facility, advances currently bear interest at a floating rate equal to the three-month LIBOR plus 2.00%. Pursuant to the terms of the amended UBS Facility, we currently pay a financing fee equal to the three-month LIBOR plus a spread of 3.50%. Under the terms of the Amended MS Credit Facility, advances currently bear interest at a floating rate equal to the three-month LIBOR plus a spread of 3.00% per year. In addition, we may seek to further borrow funds in order to make additional investments. Our net investment income will be impacted, in part, by the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we would be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we have debt outstanding, our cost of funds would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments. We expect that our long-term investments will be financed primarily with equity and long-term debt. Our interest rate risk management techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates could have a material adverse effect on our business, financial condition and results of operations.





The following table shows the effect over a twelve month period of changes in interest rates on our net interest income, excluding short term investments, assuming no changes in our investment portfolio, the Second Amended Citibank Credit Facility, the Amended JPM Credit Facility, the amended UBS Facility or the Amended MS Credit Facility in effect as of March 31, 2019 :


Basis Point Change in Interest Rates(Decrease) Increase in Net Interest Income(1)Percentage Change in Net Interest IncomeDown 200 basis points$(11,809)(9.6)%Down 100 basis points(8,532)(7.0)%Down 50 basis points(4,299)(3.5)%No change to current base rate (2.59% as of March 31, 2019)——Up 50 basis points4,2993.5%Up 100 basis points8,5987.0%Up 200 basis points17,26414.1%Up 300 basis points25,97721.2%


|    |                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------
|(1) | This table assumes no change in defaults or prepayments by portfolio companies over the next twelve months.




The interest rate sensitivity analysis presented above does not consider the potential impact of the changes in fair value of our fixed rate debt investments and the net asset value of our common stock in the event of sudden changes in interest rates. Approximately 1.6% of our investments paid fixed interest rates as of March 31, 2019 . Rising market interest rates will most likely lead to fair value declines for fixed interest rate investments and a decline in the net asset value of our common stock, while declining market interest rates will most likely lead to an increase in the fair value of fixed interest rate investments and an increase in the net asset value of our common stock.


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





Item 4. Controls and Procedures


Evaluation of disclosure controls and procedures


In connection with the preparation of this Quarterly Report on Form 10-Q for the three months ended March 31, 2019, 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.





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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, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





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PART II - OTHER INFORMATION





Item 1. Legal Proceedings


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





Item 1A. Risk Factors


There have been no material changes from the risk factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018.





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


Our registration statement on Form N-2, as amended, in connection with our follow-on continuous public offering was declared effective by the SEC on January 25, 2016 (SEC File No. 333-203683). Our follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019.


We did not engage in any unregistered sales of equity securities during the three months ended March 31, 2019.


The table below provides information concerning our repurchases of shares of our common stock during the three months ended March 31, 2019 pursuant to our share repurchase program.


PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares That May Yet Be Purchased Under the Plans or ProgramsJanuary 1 to January 31, 2019—$———February 1 to February 28, 2019————March 1 to March 31, 20191,078,8568.681,078,856(1)Total1,078,856$8.681,078,856(1)


|    |                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | A description of the maximum number of shares of our common stock that may be repurchased is set forth in a detailed discussion of the terms of our share repurchase program in Note 3 to our unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q.




Item 3. Defaults Upon Senior Securities


Not applicable.





Item 4. Mine Safety Disclosures


Not applicable.





Item 5. Other Information


Not applicable.





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Item 6. Exhibits


ExhibitNumberDescription of Document2.1Purchase and Sale Agreement, dated as of September 30, 2016, by and between Park South Funding, LLC and Credit Suisse Alternative Capital, LLC (Incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed with the SEC on October 4, 2016 (File No. 814-00941)).3.1Articles 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)).3.2Second 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)).3.3Bylaws 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)).4.1Form of Follow-On Subscription Agreement (Incorporated by reference to Appendix A to Final Prospectus on Form 497 filed with the SEC on September 25, 2018 (File No. 333-203683)).4.2Fifth Amended and Restated Distribution Reinvestment Plan of CĪON Investment Corporation (Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the SEC on December 8, 2016 (File No. 814-00941)).10.1Investment Advisory Agreement by and between CĪON Investment Corporation and CION 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)).10.2Investment Sub-Advisory Agreement by and among CION 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)).10.3Administration 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)).10.4Custody 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)).10.5Escrow 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)).10.6Dealer Manager Agreement by and among CĪON Investment Corporation, CION 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)).10.7ISDA 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 (File No. 814-00941)).10.8Thirteenth Amended and Restated Confirmation Letter Agreement, dated as of February 18, 2017, 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 February 23, 2017 (File No. 814-00941)).10.9Amended and Restated Expense Support and Conditional Reimbursement Agreement, dated as of December 26, 2018, by and between CĪON Investment Corporation and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 26, 2018 (File No. 814-00941)).10.10Amended and Restated Follow-On Dealer Manager Agreement, dated as of December 28, 2016, by and among CĪON Investment Corporation, CION Investment Management, LLC and CION Securities, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on January 4, 2017 (File No. 814-00941)).10.11Form of Follow-On Selected Dealer Agreement (Incorporated by reference to Exhibit (H)(4) to Registrant’s Registration Statement on Form N-2 filed with the SEC on April 28, 2015 (File No. 333-203683)).10.12Loan and Security Agreement, dated as of April 30, 2015, by and between CĪON Investment Corporation and East West Bank (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on May 6, 2015 (File No. 814-00941)).








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ExhibitNumberDescription of Document10.13First Amendment to Loan and Security Agreement, dated as of January 28, 2016, by and between CĪON Investment Corporation and East West Bank (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on February 3, 2016 (File No. 814-00941)).10.14Second Amendment to Loan and Security Agreement, dated as of April 21, 2016, by and between CĪON Investment Corporation and East West Bank (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on April 27, 2016 (File No. 814-00941)).10.15Custody Control Agreement, dated as of April 30, 2015, by and among CĪON Investment Corporation, East West Bank and U.S. Bank National Association (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on May 6, 2015 (File No. 814-00941)).10.16Loan and Security Agreement, dated as of August 26, 2016, by and among 34th Street Funding, LLC, JPMorgan Chase Bank, National Association, U.S. Bank National Association and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on September 1, 2016 (File No. 814-00941)).10.17Sale and Contribution Agreement, dated as of August 26, 2016, by and between 34th Street Funding, LLC and CĪON Investment Corporation (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on September 1, 2016 (File No. 814-00941)).10.18Master Participation Agreement, dated as of August 26, 2016, by and between 34th Street Funding, LLC and CĪON Investment Corporation (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the SEC on September 1, 2016 (File No. 814-00941)).10.19Portfolio Management Agreement, dated as of August 26, 2016, by and between 34th Street Funding, LLC and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the SEC on September 1, 2016 (File No. 814-00941)).10.20Guarantee of CĪON Investment Corporation dated as of August 26, 2016 (Incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed with the SEC on September 1, 2016 (File No. 814-00941)).10.21Amended and Restated Loan and Security Agreement, dated as of September 30, 2016, by and among 34th Street Funding, LLC, JPMorgan Chase Bank, National Association, U.S. Bank National Association and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on October 4, 2016 (File No. 814-00941)).10.22Release and Termination Agreement, dated as of September 30, 2016, by and among CĪON Investment Corporation, 34th Street Funding, LLC and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on October 4, 2016 (File No. 814-00941)).10.23Amended and Restated Portfolio Management Agreement, dated as of September 30, 2016, by and among 34th Street Funding, LLC, CION Investment Management, LLC and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the SEC on October 4, 2016 (File No. 814-00941)).10.24Second Amendment, dated as of March 14, 2019, to Credit and Security Agreement, dated as of March 29, 2017, by and among Flatiron Funding II, LLC, CION Investment Management, LLC, CĪON Investment Corporation, the Lenders from time to time party thereto, Citibank, N.A. and U.S. Bank National Association. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on March 18, 2019 (File No. 814-00941)).10.25Account Control Agreement, dated as of March 29, 2017, by and among Flatiron Funding II, LLC, CION Investment Management, LLC and U.S. Bank National Association (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on April 4, 2017 (File No. 814-00941)).10.26Master Participation and Assignment Agreement, dated as of March 29, 2017, by and between 15th Street Loan Funding LLC and Flatiron Funding II, LLC (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the SEC on April 4, 2017 (File No. 814-00941)).10.27Master Participation and Assignment Agreement, dated as of March 29, 2017, by and between 15th Street Loan Funding 2 LLC and Flatiron Funding II, LLC (Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the SEC on April 4, 2017 (File No. 814-00941)).10.28Contribution Agreement, dated as of May 19, 2017, by and among CĪON Investment Corporation, Murray Hill Funding, LLC and Murray Hill Funding II, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 814-00941)).








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ExhibitNumberDescription of Document10.29Amended and Restated Indenture, dated as of December 1, 2017, by and between Murray Hill Funding II, LLC and U.S. Bank National Association (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 7, 2017 (File No. 814-00941)).10.30Murray Hill Funding II, LLC Class A Notes Due 2027 (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 814-00941)).10.31Contribution Agreement, dated as of May 19, 2017, by and among UBS AG, London Branch, Murray Hill Funding II, LLC, U.S. Bank National Association, Murray Hill Funding, LLC and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 814-00941)).10.32October 2000 Version Global Master Repurchase Agreement, by and between UBS AG and Murray Hill Funding, LLC, together with the related Annex and Master Confirmation thereto, each dated as of May 19, 2017 (Incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 814-00941)).10.33Collateral Management Agreement, dated as of May 19, 2017, by and between CION Investment Management, LLC and Murray Hill Funding II, LLC (Incorporated by reference to Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 814-00941)).10.34Collateral Administration Agreement, dated as of May 19, 2017, by and among Murray Hill Funding II, LLC, CION Investment Management, LLC and U.S. Bank National Association (Incorporated by reference to Exhibit 10.7 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2017 (File No. 814-00941)).10.35Murray Hill Funding II, LLC Class A Notes Due 2027 (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 7, 2017 (File No. 814-00941)).10.36First Amended and Restated Master Confirmation, dated as of December 1, 2017, to the October 2000 Version Global Master Repurchase Agreement, dated as of May 19, 2017, by and between UBS AG, London Branch and Murray Hill Funding, LLC (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 7, 2017 (File No. 814-00941)).10.37Loan and Servicing Agreement, dated as of December 19, 2017, by and among 33rd Street Funding, LLC, CION Investment Management, LLC, Morgan Stanley Asset Funding Inc., Morgan Stanley Bank, N.A. and U.S. Bank National Association (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 22, 2017 (File No. 814-00941)).10.38Sale and Contribution Agreement, dated as of December 19, 2017, by and between 33rd Street Funding, LLC and CĪON Investment Corporation (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 22, 2017 (File No. 814-00941)).10.39Portfolio Management Agreement, dated as of December 19, 2017, by and between 33rd Street Funding, LLC and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 22, 2017 (File No. 814-00941)).10.40Administration Agreement, dated as of April 1, 2018, by and between CĪON Investment Corporation and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 3, 2018 (File No. 814-00941)).10.41Third Amendment to Amended and Restated Loan Agreement, dated as of May 23, 2018, by and among 34th Street Funding, LLC, JPMorgan Chase Bank, National Association, U.S. Bank National Association and CION Investment Management, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on May 25, 2018 (File No. 814-00941)).31.1Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.31.2Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.31.3Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.32.1Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.3Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: May 10, 2019


CĪON Investment Corporation


(Registrant)


By:/s/ Michael A. ReisnerMichael A. ReisnerCo-Chief Executive Officer(Principal Executive Officer)


By:/s/ Mark GattoMark GattoCo-Chief Executive Officer(Principal Executive Officer)


By:/s/ Keith S. FranzKeith S. FranzChief Financial Officer(Principal Financial and Accounting Officer)








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