CION INVESTMENT CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

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The following discussion should be read in conjunction with our consolidated
financial statements and related notes and other financial information appearing
elsewhere in this Annual Report on Form 10-K. In addition to historical
information, the following discussion and other parts of this Annual Report on
Form 10-K contain forward-looking information that involves risks and
uncertainties (see "Forward-Looking Statements" in this report). 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. In addition, all share and per share amounts
have been retroactively adjusted to reflect the Reverse Stock Split, which
became effective on September 21, 2021.

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 its affiliates.
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, unsecured debt, 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.

On October 5, 2021, shares of our common stock began trading on the NYSE under
the ticker symbol "CION". The Listing accomplished our goal of providing our
shareholders with greatly enhanced liquidity.

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 13, 2020, 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, 2020. On April 5, 2021, our board of directors,
including a majority of directors who are not interested persons, approved the
amended and restated investment advisory agreement with CIM for a period of
twenty four months, which was subsequently approved by shareholders on August 9,
2021 (as described in further detail below). 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 continues to perform certain
services for CIM and us. 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 which AIM performs certain services for CIM, which include,
among other services, 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. AIM may also, from time
to time, provide us with access to potential investment opportunities made
available on Apollo's credit platform on a similar basis as other third-party
market participants. 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 senior personnel.

The amended and restated investment advisory agreement was approved by
shareholders on August 9, 2021 at our reconvened 2021 annual meeting of
shareholders. As a result, on August 10, 2021, we and CIM entered into the
amended and restated investment advisory agreement in order to implement the
change to the calculation of the subordinated incentive fee payable from us to
CIM that expresses the hurdle rate required for CIM to earn, and be paid, the
incentive fee as a percentage of our net assets rather than adjusted capital.
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Upon the occurrence of the Listing on October 5, 2021, we and CIM entered into
the second amended and restated investment advisory agreement in order to
implement the changes to the advisory fees payable from us to CIM that (i)
reduced the annual base management fee, (ii) amended the structure of the
subordinated incentive fee on income payable from us to CIM and reduced the
hurdle and incentive fee rates, and (iii) reduced the incentive fee on capital
gains payable from us to CIM (as described in further detail in Notes 2 and 4 to
our consolidated financial statements included in this report). Also, a complete
description of the second amended and restated investment advisory agreement is
set forth in Proposal No. 3 in our definitive proxy statement filed on May 13,
2021.

On September 21, 2021, we effected a 2 to 1 reverse split of our shares of
common stock under which every two shares of our common stock issued and
outstanding were automatically combined into one share of our common stock, with
the number of issued and outstanding shares reduced from 113,916,869 to
56,958,440. The Reverse Stock Split Amendment also provided that there was no
change in the par value of $0.001 per share as a result of the Reverse Stock
Split. The Reverse Stock Split did not modify the rights or preferences of our
common stock.

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 $75 million or less,
with experienced management teams, significant free cash flow, strong
competitive positions and potential for growth.

Income


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 and capital structuring 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 management fees and
subordinated incentive fees on income 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.

RECENT DEVELOPMENTS

Joint venture with EagleTree Capital, LP


On December 21, 2021, we formed CION/EagleTree, an off-balance sheet joint
venture partnership with an affiliate of EagleTree through which EagleTree made
a Firm-level investment with proprietary capital. CION/EagleTree will jointly
pursue debt opportunities and special situation, crossover, subordinated and
other junior capital investments that leverage our and EagleTree's combined
sourcing and portfolio management capabilities. The initial holdings of
CION/EagleTree consisted of a diversified portfolio of approximately $97 million
of second lien loans and equity investments that were held by us immediately
prior to closing and approximately $15 million of proprietary Firm-level cash
contributed by an affiliate of EagleTree. The initial equity ownership of
CION/EagleTree is 85% by us and 15% by an affiliate of EagleTree. Each of us and
EagleTree will have equal voting rights on the board of directors of
CION/EagleTree.

Cost support agreement with CIM


Pursuant to an expense support and conditional reimbursement agreement entered
into on January 2, 2018 between us and CIM, CIM agreed to provide expense
support to us in an amount that was sufficient to: (i) ensure that no portion of
our distributions to shareholders was paid from our offering proceeds or
borrowings, and/or (ii) reduce our operating expenses until we achieved
economies of scale sufficient to ensure that we bore a reasonable level of
expense in relation to our investment income. Under certain conditions, CIM
would have been entitled to reimbursement of such expense support. On December
31, 2021, we and CIM allowed the expense support and conditional reimbursement
agreement to expire in accordance with its terms.
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Approval by shareholders of the increase in leverage capacity


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. At our Special Meeting of
Shareholders on December 30, 2021, shareholders approved a proposal to reduce
our asset coverage ratio to 150%. As a result, commencing on December 31, 2021,
we are required to maintain asset coverage for our senior securities of 150%
(i.e., $2 of debt outstanding for each $1 of equity) rather than 200% (i.e., $1
of debt outstanding for each $1 of equity), which allows us to increase the
maximum amount of leverage that we are permitted to incur.

COVID-19[female[feminine


The rapid spread of COVID-19, and associated impacts on the U.S. and global
economies and the financial and credit markets, initially had negatively
impacted, and may again negatively impact, our business operations and the
business operations of some of our portfolio companies. We cannot at this time
fully predict the impact of COVID-19, including new variants, such as Delta and
Omicron, on our business or the business of our portfolio companies, its
duration or magnitude or the extent to which it will negatively impact our
portfolio companies' operating results or our own results of operations or
financial condition, including, without limitation, our ability to pay
distributions to our shareholders. We expect that certain of our portfolio
companies will continue to experience economic distress for the foreseeable
future and may significantly limit business operations if subjected to prolonged
economic distress. These developments could result in a decrease in the value of
certain of our investments.

COVID-19 initially had adverse effects on our investment income and may again
have adverse effects in the future. These adverse effects may require us to
restructure certain of our investments, which could result in further reductions
to our investment income or in impairments on our investments. In addition,
disruptions in the capital markets have resulted in illiquidity in certain
market areas. These market disruptions and illiquidity initially had an adverse
effect on our business, financial condition, results of operations and cash
flows. These events initially limited our investment originations, which may
occur again in the future, and may also have a material negative impact on our
operating results.

We will continue to carefully monitor the impact of COVID-19 on our business and
the business of our portfolio companies. Because the full effects of COVID-19
are not capable of being known at this time, we cannot estimate the impacts of
COVID-19 on our future financial condition, results of operations or cash flows,
including its effects on us with respect to our compliance with covenants in our
financing arrangements with lenders.

Portfolio investment activity for the years ended December 31, 2021 and 2020


The following table summarizes our investment activity, excluding short term
investments and PIK securities, for the years ended December 31, 2021 and 2020:

                                           Years Ended December 31,
Net Investment Activity                      2021                2020
Purchases and drawdowns
Senior secured first lien debt       $     868,031           $  347,992
Senior secured second lien debt                  -                4,375

Unsecured debt                              20,000                    -
Equity                                      32,008                7,266
Sales and principal repayments            (827,958)            (543,167)
Net portfolio activity               $      92,081           $ (183,534)


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The following tables summarize the composition of our investment portfolio at amortized cost and fair value at December 31, 2021 and 2020:

                                                                                      December 31, 2021
                                                                                                                 Percentage of
                                                           Investments            Investments Fair                 Investment
                                                             Cost(1)                   Value                       Portfolio
Senior secured first lien debt                           $   1,564,891          $       1,526,989                             91.6  %
Senior secured second lien debt                                 55,455                     38,583                              2.3  %

Collateralized securities and structured products
- equity                                                         3,885                      2,998                              0.2  %
Unsecured debt                                                  26,777                     26,616                              1.6  %
Equity                                                          53,379                     70,936                              4.3  %
Subtotal/total percentage                                    1,704,387                  1,666,122                            100.0  %
Short term investments(2)                                       87,917                     87,917
Total investments                                        $   1,792,304          $       1,754,039
Number of portfolio companies                                                                                                  113
Average annual EBITDA of portfolio companies                                                                            $50.4 million
Median annual EBITDA of portfolio companies                                                                             $36.3 million
Purchased at a weighted average price of par                                                                                 98.13  %
Gross annual portfolio yield based upon the purchase price(3)                                                                 8.62  %


(1)Represents amortized cost for debt investments and cost for equity investments. Amortized cost represents the original cost adjusted for 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.

                                                                                            December 31, 2020
                                                                                                                      Percentage of
                                                                  Investments           Investments Fair               Investment
                                                                    Cost(1)                  Value                      Portfolio
Senior secured first lien debt                                   $ 1,266,564          $       1,223,268                          81.8  %
Senior secured second lien debt                                      171,480                    151,506                          10.1  %

Collateralized securities and structured products - equity            15,305                     12,131                           0.8  %
Unsecured debt                                                         5,668                      5,464                           0.4  %
Equity                                                               118,638                    103,405                           6.9  %
Subtotal/total percentage                                          1,577,655                  1,495,774                         100.0  %
Short term investments(2)                                             73,597                     73,597
Total investments                                                $ 1,651,252          $       1,569,371
Number of portfolio companies                                                                                                     119
Average annual EBITDA of portfolio companies                                                                               $67.3 million
Median annual EBITDA of portfolio companies                                                                                $53.2 million
Purchased at a weighted average price of par                                                                                    98.18  %
Gross annual portfolio yield based upon the purchase price(3)                                                                    8.28  %


(1)Represents amortized cost for debt investments and cost for equity investments. Amortized cost represents the original cost adjusted for 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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The following table summarizes the composition of our investment portfolio by
the type of interest rate as of December 31, 2021 and 2020, excluding short term
investments of $87,917 and $73,597, respectively:

                                                                                                         December 31,
                                                                      2021                                                                          2020
                                                                                          Percentage of                                                                 Percentage of
                                                                  Investments               Investment                                          Investments               Investment
Interest Rate Allocation               Investments Cost           Fair Value                Portfolio                Investments Cost           Fair Value                Portfolio
Floating interest rate
investments                          $       1,454,429          $  1,403,097                         84.2  %       $       1,347,194          $  1,284,282                         85.9  %
Fixed interest rate
investments                                    176,326               172,162                         10.3  %                 126,962               124,816                          8.3  %
Non-income producing
investments                                     49,845                67,532                          4.1  %                  66,086                52,505                          3.5  %
Other income producing
investments                                     23,787                23,331                          1.4  %                  37,413                34,171                          2.3  %
Total investments                    $       1,704,387          $  1,666,122                        100.0  %       $       1,577,655          $  1,495,774                        100.0  %

The following table shows the composition of our investment portfolio by industry category and the percentage, by fair value, of total assets in these industries at December 31, 2021 and 2020:


                                                                                               December 31,
                                                                         2021                                                 2020
                                                      Investments              Percentage of               Investments              Percentage of
Industry Classification                               Fair Value            Investment Portfolio           Fair Value            Investment Portfolio
Healthcare & Pharmaceuticals                        $    250,049                           15.0  %       $    298,944                           19.9  %
Services: Business                                       240,316                           14.4  %            211,572                           14.0  %
Media: Diversified & Production                          139,399                            8.4  %            108,078                            7.2  %
Services: Consumer                                       119,365                            7.2  %             85,254                            5.7  %
Chemicals, Plastics & Rubber                             109,860                            6.6  %            141,654                            9.5  %
Diversified Financials                                   101,032                            6.1  %             37,214                            2.5  %
Media: Advertising, Printing & Publishing                 94,610                            5.7  %            110,083                            7.4  %
Capital Equipment                                         82,795                            5.0  %             65,752                            4.4  %
High Tech Industries                                      65,544                            3.9  %             55,619                            3.7  %
Consumer Goods: Durable                                   58,124                            3.5  %              7,417                            0.5  %
Retail                                                    56,726                            3.4  %             29,312                            2.0  %
Hotel, Gaming & Leisure                                   50,855                            3.0  %             21,920                            1.5  %
Beverage, Food & Tobacco                                  49,054                            2.9  %             69,975                            4.7  %
Consumer Goods: Non-Durable                               45,682                            2.7  %             15,757                            1.1  %
Banking, Finance, Insurance & Real Estate                 40,634                            2.4  %             41,211                            2.8  %
Aerospace & Defense                                       38,279                            2.3  %             35,751                            2.4  %
Energy: Oil & Gas                                         32,164                            1.9  %             28,136                            1.9  %
Construction & Building                                   27,585                            1.7  %             34,653                            2.3  %
Telecommunications                                        24,649                            1.5  %             46,638                            3.1  %
Automotive                                                14,367                            0.9  %                  -                              -
Transportation: Cargo                                     14,106                            0.8  %             19,001                            1.3  %
Metals & Mining                                           10,927                            0.7  %             10,147                            0.7  %
Forest Products & Paper                                        -                              -                21,686                            1.4  %

Subtotal/total percentage                              1,666,122                          100.0  %          1,495,774                          100.0  %
Short term investments                                    87,917                                               73,597
Total investments                                   $  1,754,039                                         $  1,569,371


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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 December 31,
2021 and 2020, our unfunded commitments amounted to $107,247 and $43,130,
respectively. As of March 3, 2022, our unfunded commitments amounted to
$104,456. 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" for
further details on our unfunded commitments.

Quality of investment portfolio assets


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.

Here is a description of the terms associated with each investment rating used in this rating system:


   Investment Rating                                           Description
           1                   Indicates the least amount of risk to our 

original cost basis. Tendencies

                               and risk factors for this investment since 

origination or acquisition are

                               generally favorable, which may include the 

portfolio performance

                               company or a potential exit.
           2                   Indicates a level of risk to our initial 

a cost base similar to that

                               risk to our initial cost basis at the time 

of origin or acquisition.

                               This portfolio company is generally 

perform in accordance with our

                               analysis of its business and the full return 

principal and interest or

                               dividend is expected.
           3                   Indicates that the risk to our ability to 

recover the cost of such

                               investment has increased since origination 

or acquisition, but total return

                               of principal and interest or dividend is 

expected. A holding company with

                               an investment rating of 3 requires closer monitoring.
           4                   Indicates that the risk to our ability to recoup the cost of such
                               investment has increased significantly since origination or acquisition,
                               including as a result of factors such as declining performance and
                               noncompliance with debt covenants, and we

expect some loss of interest,

                               dividend or capital appreciation, but still expect an overall positive
                               internal rate of return on the investment.
           5                   Indicates that the risk to our ability to recoup the cost of such
                               investment has increased materially since

creation or acquisition and

                               the portfolio company likely has materially 

declining performance. Loss of

                               interest or dividend and some loss of 

the main investment is planned,

                               which would result in an overall negative 

internal rate of return on

                               investment.


For investments rated 3, 4 or 5, CIM increases its level of control over the monitoring of this 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 December 31, 2021 and
2020, excluding short term investments of $87,917 and $73,597, respectively:

                                                          December 31,
                                        2021                                       2020
                        Investments         Percentage of          Investments         Percentage of

Investment rating Fair value investment portfolio Fair value investment portfolio

         1             $    47,221                      2.8  %    $     2,997                      0.2  %
         2               1,373,509                     82.5  %      1,173,191                     78.5  %
         3                 233,223                     14.0  %        309,930                     20.7  %
         4                   8,201                      0.5  %          9,210                      0.6  %
         5                   3,968                      0.2  %            446                        -
                       $ 1,666,122                    100.0  %    $ 1,495,774                    100.0  %


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.
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Current investment portfolio

The following table summarizes the composition of our investment portfolio at fair value at March 3, 2022:

                                                                                                              Percentage of
                                                                                Investments Fair                Investment
                                                                                     Value                      Portfolio
Senior secured first lien debt                                                $       1,536,402                           91.8  %
Senior secured second lien debt                                                          38,658                            2.3  %

Collateralized securities and structured products -
equity                                                                                    2,998                            0.2  %
Unsecured debt                                                                           26,616                            1.6  %
Equity                                                                                   68,935                            4.1  %
Subtotal/total percentage                                                             1,673,609                          100.0  %
Short term investments(2)                                                                75,727
Total investments                                                             $       1,749,336
Number of portfolio companies                                                                                              113
Average annual EBITDA of portfolio companies                                                                        $50.3 million
Median annual EBITDA of portfolio companies                                                                         $36.3 million
Purchased at a weighted average price of par                                                                             97.87  %
Gross annual portfolio yield based upon the
purchase price(2)                                                                                                         8.74  %


(1) 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.


(2)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.

Results of operations for the years ended December 31, 2021 and 2020


Our results of operations for the years ended December 31, 2021 and 2020 were as
follows:

                                                                               Years Ended December 31,
                                                                               2021                    2020
Investment income                                                      $     157,348               $  163,842
Net operating expenses and income taxes                                       83,041                   85,114
Net investment income                                                         74,307                   78,728
Net realized gain (loss) on investments and foreign currency                     840                  (69,872)

Net change in unrealized appreciation (depreciation) of investments

   43,617                  (19,878)

Net increase (decrease) in net assets from operations $

 118,764               $  (11,022)



Investment Income

For the years ended December 31, 2021 and 2020, we generated investment income
of $157,348 and $163,842, respectively, consisting primarily of interest income
on investments in senior secured debt, collateralized securities and structured
products, and unsecured debt of 153 and 137 portfolio companies held during each
respective period. Our average investment portfolio size, excluding our short
term investments, decreased $34,712, from $1,615,660 during the year ended
December 31, 2020 to $1,580,948 during the year ended December 31, 2021.
Additionally, the higher average LIBOR during the year ended December 31, 2020
as compared to the year ended December 31, 2021 also contributed to the decrease
in interest income.
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Functionnary costs


The composition of our operating expenses for the years ended December 31, 2021
and 2020 was as follows:

                                             Years Ended December 31,
                                                2021                 2020
Management fees                        $      31,143              $ 31,828
Administrative services expense                3,069                 2,465
Subordinated incentive fee on income           6,875                 7,631

General and administrative                     9,805                 6,085
Interest expense                              31,807                36,837
Total operating expenses               $      82,699              $ 84,846


The decrease in interest expense was primarily the result of lower borrowing
costs incurred on our financing arrangements during the year ended December 31,
2021 as compared to the year ended December 31, 2020.

The composition of our general and administrative expenses for the years ended
December 31, 2021 and 2020 was as follows:

                                                  Years Ended December 31,
                                                     2021                 2020
Professional fees                          $       4,214                $ 1,490
Transfer agent expense                             1,290                  1,189
Printing and marketing expense                       990                    

378

Valuation expense                                    904                    

999

Accounting and administrative costs                  759                    680
Insurance expense                                    612                    489
Director fees and expenses                           516                    450
Dues and subscriptions                               411                    342

Other expenses                                       109                     68
Total general and administrative expense   $       9,805                $ 

6,085



The increase in general and administrative expenses was primarily the result of
higher nonrecurring professional fees incurred during the year ended December
31, 2021 associated with the Listing.

Net investment income after tax


Our net investment income after taxes totaled $74,307 and $78,728 for the years
ended December 31, 2021 and 2020, respectively. The decrease in net investment
income after taxes was primarily due to a decrease in our investment income
during the year ended December 31, 2021 as compared to the year
ended December 31, 2020, which was partially offset by a decrease in operating
expenses during the year ended December 31, 2021.

Net realized gains (losses) on investments and foreign exchange


Our net realized gains (losses) on investments and foreign currency totaled $840
and $(69,872) for the years ended December 31, 2021 and 2020, respectively. This
change was driven primarily by fewer restructurings of our investments during
the year ended December 31, 2021 as compared to the year ended December 31,
2020.

Net change in unrealized appreciation (depreciation) of investments


The net change in unrealized appreciation (depreciation) on our investments
totaled $43,617 and $(19,878) for the years ended December 31, 2021 and 2020,
respectively. This change was driven primarily by tightening credit spreads and
increased multiples in equity markets during the year ended December 31, 2021
that positively impacted the fair value of certain of our investments, as
compared to the outbreak and spread of COVID-19 around the world during the year
ended December 31, 2020, which caused significant uncertainty and volatility in
the U.S. and global economies as well as in the financial and credit markets and
negatively impacted the fair value of certain of our investments.
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Net increase (decrease) in net assets from operations


For the year ended December 31, 2021, we recorded a net increase in net assets
resulting from operations of $118,764 as compared to a net decrease in net
assets resulting from operations of $(11,022) for the year ended December 31,
2020, as a result of our operating activity for the respective periods.

Results of operations for the years ended December 31, 2020 and 2019


Our results of operations for the years ended December 31, 2020 and 2019 were as
follows:

                                                                             Years Ended December 31,
                                                                             2020                    2019
Investment income                                                    $     163,842               $  201,103
Net operating expenses and income taxes                                     85,114                  113,791
Net investment income                                                       78,728                   87,312
Net realized loss on investments and foreign currency                      (69,872)                 (24,917)
Net change in unrealized depreciation on investments                       (19,878)                 (10,551)

(Decrease) net increase in net assets from operations $(11,022)

              $   51,844


Investment Income

For the years ended December 31, 2020 and 2019, we generated investment income
of $163,842 and $201,103, respectively, consisting primarily of interest income
on investments in senior secured debt, collateralized securities and structured
products, and unsecured debt of 137 and 171 portfolio companies held during each
respective period. Our average investment portfolio size, excluding our short
term investments, decreased $178,500, from $1,794,159 during the year ended
December 31, 2019 to $1,615,660 during the year ended December 31, 2020.
Additionally, the decrease in LIBOR during the year ended December 31, 2020 from
the year ended December 31, 2019 also contributed to the decrease in interest
income.

Operating Expenses

The composition of our operating expenses for the years ended December 31, 2020
and 2019 was as follows:

                                             Years Ended December 31,
                                               2020                2019
Management fees                        $     31,828             $  36,466
Administrative services expense               2,465                 2,650
Subordinated incentive fee on income          7,631                20,087

General and administrative                    6,085                 5,045
Interest expense                             36,837                49,531
Total operating expenses               $     84,846             $ 113,779


During the year ended December 31, 2020, the decrease in interest expense was
primarily the result of lower average borrowings on our existing financing
arrangements, which resulted in a decrease in net assets and therefore a
decrease in management fees. The decrease in interest expense was also the
result of a decrease in LIBOR during the year ended December 31, 2020 as
compared to the year ended December 31, 2019. The decrease in subordinated
incentive fee on income was a result of exceeding our hurdle rate of 1.875% for
pre-incentive fee net investment income only for the three month periods ended
March 31, 2020 and December 31, 2020, whereas we exceeded such hurdle rate for
each quarter during the year ended December 31, 2019.
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The composition of our general and administrative expenses for the years ended
December 31, 2020 and 2019 was as follows:

                                                  Years Ended December 31,
                                                     2020                 2019
Professional fees                          $       1,490                $   996
Transfer agent expense                             1,189                  1,289
Valuation expense                                    999                    722
Accounting and administrative costs                  680                    567
Insurance expense                                    489                    421
Director fees and expenses                           450                    472
Printing and marketing expense                       378                    102
Dues and subscriptions                               342                    343
Other expenses                                        68                     72
Due diligence fees                                     -                     61
Total general and administrative expense   $       6,085                $ 

5,045

Net investment income after tax


Our net investment income after taxes totaled $78,728 and $87,312 for the years
ended December 31, 2020 and 2019, respectively. The decrease in net investment
income after taxes was primarily due to a decrease in our investment income
during the year ended December 31, 2020 as compared to the year ended December
31, 2019. The decrease in investment income was partially offset by a decrease
in subordinated incentive fees and interest expense during the year ended
December 31, 2020 as compared to the year ended December 31, 2019.

Net realized losses on investments and foreign exchange


Our net realized losses on investments and foreign currency totaled $(69,872)
and $(24,917) for the years ended December 31, 2020 and 2019, respectively. This
change was mainly due to an increase in realized losses on the restructure and
liquidation of certain investments during the year ended December 31, 2020 as
compared to the year ended December 31, 2019.

Net change in unrealized amortization of investments


The net change in unrealized depreciation on our investments totaled $(19,878)
and $(10,551) for the years ended December 31, 2020 and 2019, respectively. This
change was driven primarily by unrealized losses on certain underperforming
investments during the year ended December 31, 2020. This change was partially
offset by certain previously unrealized losses on certain underperforming
investments becoming realized during the year ended December 31, 2020.

(Decrease) Net increase in net assets from operations


For the year ended December 31, 2020, we recorded a net decrease in net assets
resulting from operations of $(11,022) as compared to a net increase in net
assets resulting from operations of $51,844 for the year ended December 31, 2019
as a result of our operating activity for the respective periods.

Financial position, 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 and pursuant to the
1940 Act. 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. At our Special Meeting of
Shareholders on December 30, 2021, shareholders approved a proposal to reduce
our asset coverage ratio to 150%. As a result, commencing on December 31, 2021,
we are required to maintain asset coverage for our senior securities of 150%
(i.e., $2 of debt outstanding for each $1 of equity) rather than 200% (i.e., $1
of debt outstanding for each $1 of equity), which allows us to increase the
maximum amount of leverage that we are permitted to incur.
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The outbreak and spread of COVID-19 have caused severe stress and uncertainty in
the U.S. and global economies as well as in the financial and credit markets.
Given the uncertainty as to the full severity and duration of the pandemic and
its effects on us with respect to our compliance with covenants in our loan
facilities with lenders and our borrowers' ability to timely meet their
financial obligations to us, management and our board of directors determined
that it was in the best interest of our company and all of our shareholders to
take certain steps disclosed below during the three months ended March 31, 2020
that were necessary to improve our cash position and preserve financial
flexibility in the short term. This "Financial Condition, Liquidity and Capital
Resources" discussion should also be read in conjunction with "Recent
Developments - COVID-19" above.
On March 19, 2020, our co-chief executive officers determined to (i) change the
timing of declaring distributions to shareholders from quarterly to monthly; and
(ii) temporarily suspend the payment of distributions to shareholders commencing
with the month ended April 30, 2020, whether in cash or pursuant to our
distribution reinvestment plan, as amended and restated. On July 15, 2020, our
board of directors determined to recommence the payment of distributions to
shareholders in August 2020.

On July 30, 2021, our board of directors, including the independent directors,
determined to suspend our pre-Listing share repurchase program commencing with
the third quarter of 2021 in anticipation of the Listing. The pre-Listing share
repurchase program terminated upon the Listing on October 5, 2021.

On August 9, 2021, our shareholders approved a proposal that authorizes us to
issue shares of our common stock at prices below the then current NAV per share
of our common stock in one or more offerings for a 12-month period following
such shareholder approval. As of the date of this report, we have not issued any
shares at prices below our NAV per share pursuant to this authorization.

On September 15, 2021, our co-chief executive officers changed the timing of
declaring and paying regular distributions to shareholders from monthly to
quarterly commencing with the fourth quarter of 2021. On November 12, 2021, our
co-chief executive officers declared a regular quarterly distribution of $0.28
per share for the first quarter of 2022 payable on March 30, 2022 to
shareholders of record as of March 23, 2022. On March 8, 2022, our co-chief
executive officers declared a regular quarterly distribution of $0.28 per share
for the second quarter of 2022 payable on June 8, 2022 to shareholders of record
as of June 1, 2022. We intend to make distributions in an amount sufficient to
maintain RIC status each year and to avoid any federal income taxes on income.
Therefore, subject to applicable legal restrictions and the sole discretion of
our board of directors, we intend to authorize, declare, and pay regular
distributions on a quarterly basis. Regular and special distributions in respect
of future periods will be evaluated by management and our board of directors
based on circumstances and expectations existing at the time of consideration.
For an additional discussion of our RIC status and distributions, refer to Note
2 and Note 5, respectively, of our consolidated financial statements included in
this report.

On September 15, 2021, our board of directors, including the independent
directors, approved a share repurchase policy authorizing us to repurchase up to
$50 million of our outstanding common stock after the Listing. Under the share
repurchase policy, we may purchase shares of our common stock through various
means such as open market transactions, including block purchases, and privately
negotiated transactions. The number of shares repurchased and the timing,
manner, price and amount of any repurchases will be determined at our
discretion. Factors are expected to include, but are not limited to, share
price, trading volume and general market conditions, along with our general
business conditions. The policy may be suspended or discontinued at any time and
does not obligate us to acquire any specific number of shares of our common
stock.

As part of the share repurchase policy, we intend to enter into a trading plan
in the near future adopted in accordance with Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended, based in part on historical trading data with
respect to our shares. The 10b5-1 trading plan would permit common stock to be
repurchased at a time that we might otherwise be precluded from doing so under
insider trading laws or self-imposed trading restrictions. The 10b5-1 trading
plan will be administered by an independent broker and will be subject to price,
market volume and timing restrictions. Since we have not yet entered into a
10b5-1 trading plan, during the period from September 15, 2021 to March 3, 2022,
we did not repurchase any shares of common stock pursuant to the share
repurchase policy.

As further described in Note 1 and Note 4 to our consolidated financial
statements included in this report, the second amended and restated investment
advisory agreement (i) reduced the annual base management fees payable by us to
CIM and (ii) amended the way the subordinated incentive fee on income and the
capital gains incentive fee is payable by us to CIM by reducing the hurdle and
incentive fee rates and expressing the hurdle rate as a percentage of our net
assets rather than our adjusted capital. These changes were effective upon the
Listing on October 5, 2021, except for the change to the calculation of the
subordinated incentive fee payable to CIM that expresses the hurdle rate
required for CIM to earn, and be paid, the incentive fee as a percentage of our
net assets rather than adjusted capital, which was effective on August 10, 2021.
These changes, in the aggregate, may lead to the payment of higher advisory fees
to CIM depending upon our performance.

As of December 31, 2021 and March 3, 2022, we had $87,917 and $75,727 in short
term investments, respectively, invested in a fund that primarily invests in
U.S. government securities.
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JPM Credit Facility


As of December 31, 2021 and March 3, 2022, our outstanding borrowings under the
Third Amended JPM Credit Facility were $550,000 and the aggregate unfunded
principal amount in connection with the Third Amended JPM Credit Facility was
$25,000. For a detailed discussion of our Third Amended JPM Credit Facility,
refer to Note 8 to our consolidated financial statements included in this
report.

UBS Facility


As of December 31, 2021 and March 3, 2022, our outstanding borrowings under the
Amended UBS Facility were $125,000 and the aggregate unfunded principal amount
in connection with the Amended UBS Facility was $25,000. For a detailed
discussion of our Amended UBS Facility, refer to Note 8 to our consolidated
financial statements included in this report.

Tickets 2026


As of December 31, 2021 and March 3, 2022, we had $125,000 in aggregate
principal amount of 2026 Notes outstanding. For a detailed discussion of our
2026 Notes, refer to Note 8 to our consolidated financial statements included in
this report.

More Term Loan

As of December 31, 2021 and March 3, 2022, our outstanding borrowings under the
More Term Loan were $30,000 and there was no unfunded principal amount in
connection with the More Term Loan. For a detailed discussion of our More Term
Loan, refer to Note 8 to our consolidated financial statements included in this
report.

Unfunded Commitments

As of December 31, 2021 and March 3, 2022, our unfunded commitments amounted to
$107,247 and $104,456, respectively. For a detailed discussion of our unfunded
commitments, refer to Note 11 to our consolidated financial statements included
in this report.

RIC status and distributions


To qualify for and maintain RIC tax treatment, we must, among other things,
distribute in respect of each taxable year at least 90% of our net ordinary
income and realized net short-term capital gains in excess of realized net
long-term capital losses, if any. We will incur certain excise taxes imposed on
RICs to the extent we do not distribute in respect of each calendar year an
amount at least equal to the sum of (1) 98.0% of our net ordinary income (taking
into account certain deferrals and elections) for the calendar year, (2) 98.2%
of our capital gains in excess of capital losses, or capital gain net income
(adjusted for certain ordinary losses), for the one-year period ending on
October 31 of the calendar year and (3) any net ordinary income and capital gain
net income from preceding years that were not distributed during such years and
on which we paid no federal income tax.

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

Recent accounting pronouncements


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


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

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

Assessment methods

For investments for which market quotes are not readily available, we undertake a multi-step evaluation process each quarter, as described below:

•our quarterly evaluation process begins with the initial evaluation of each portfolio company or investment by certain CIM investment professionals and certain members of its management team, this evaluation taking into account information received from various sources, including including independent valuation companies, where applicable;

•the findings of the preliminary assessment 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 appropriate, submit this preliminary valuation to an independent valuation firm for 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 to and complete the preliminary valuation to take into account any comments provided by the independent valuation firm;

•our audit committee meets with members of CIM’s management team and independent valuation firms to discuss the assistance provided and the results of the review of independent valuation firms; 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 additional discussion of our investment valuation process, see 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 titlesCIM, CIG and AIA and the amounts incurred under agreements with these related parties, see note 4 of our consolidated financial statements included in this report.

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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,
May 23, 2018, May 15, 2020 and February 26, 2021. See Note 8 to our consolidated
financial statements for a more detailed description of the JPM Credit Facility.

On May 19, 2017, Murray Hill Funding II entered into the UBS Facility with UBS,
as amended on December 1, 2017, May 19, 2020, November 12, 2020 and December 17,
2020. See Note 8 to our consolidated financial statements for a more detailed
description of the UBS Facility.

At February 11, 2021we have entered into the Note Purchase Agreement with the purchasers of the 2026 Notes. See Note 16 to our consolidated financial statements for a more detailed description of the 2026 Notes.


On April 14, 2021, we entered into the More Term Loan with More. See Note 8 to
our consolidated financial statements for a more detailed description of the
More Term Loan.

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 11 to our consolidated financial statements
included in this report.

We currently have no off-balance sheet arrangements except those discussed in Note 11 to our consolidated financial statements included in this report.

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