What changed in this filing

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Item 1. Business

2022-03-10 compared with 2021-03-16 · 177 added, 115 removed, 547 unchanged (35% of the section changed)

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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.

We elected to be treated for U.S.

federal income tax purposes as a RIC, as defined under Subchapter M of the Code.

We are managed by CIM, our affiliate and a registered investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act.

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.

CIM is a joint venture between CION Investment Group, LLC, or CIG, and AIM.

Pursuant to the joint venture between CIG and AIM, CIG’s investment professionals provide investment advisory services, including advice, evaluation and recommendations with respect to our investments, and 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;

CIM is a controlled and consolidated subsidiary of CION Investment Group, LLC, or CIG, our affiliate.

As a member of CIM, CIG’s investment professionals provide investment advisory services, including advice, evaluation and recommendations with respect to our investments.

Additionally, Apollo Investment Management, L.P., or AIM, a subsidiary of Apollo Global Management, Inc.

APO), or Apollo, also a member of CIM and a registered investment adviser under the Advisers Act, performs certain services for CIM, which include, among other services, providing (a) trade and settlement support;

(b) portfolio and cash reconciliation;

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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.

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.

Our investment objective is to generate current income and, to a lesser extent, capital appreciation for investors.

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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.

In 2021, we intend to seek the approval of our shareholders to reduce our minimum "asset coverage" ratio from 200% to 150% in accordance with the 1940 Act.

For purposes of the asset coverage ratio test applicable to us as a BDC, we treated the outstanding notional amount of the total return swap, or TRS, with Citibank, N.A., or Citibank, less the total amount of cash collateral posted by Flatiron Funding, LLC, or Flatiron, under the TRS, as a senior security for the life of that instrument.

On April 18, 2017, the TRS expired in accordance with its terms subsequent to the consummation of the Citibank Credit Facility (as described in Note 8 to our consolidated financial statements contained in this report).

At our Special Meeting of Shareholders on December 30, 2021, shareholders approved a proposal to reduce our asset coverage ratio to 150%, which allows us to increase the maximum amount of leverage that we are permitted to incur.

Such asset coverage ratio became effective on December 31, 2021.

We are required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage.

As a BDC, we are subject to certain regulatory restrictions in negotiating or investing in certain investments with entities with which we may be prohibited from doing so under the 1940 Act, such as CIM and its affiliates, unless we obtain an exemptive order from the SEC.

Furthermore, we are subject to certain regulatory restrictions on investing with AIM and its affiliates in transactions where AIM or its affiliates negotiate terms other than price on our behalf.

We are limited in our ability to engage in co-investment transactions with AIM and its affiliates and CIM and its affiliates without exemptive relief from the SEC.

We have filed an application with the SEC seeking an exemptive order from such restrictions, but there can be no assurances the SEC will ultimately grant the relief sought in the exemptive application.

Co-investments made under the exemptive relief, if granted, would be subject to compliance with the conditions and other requirements contained in the exemptive relief provided by the SEC.

We are limited in our ability to engage in co-investment transactions with CIM and its affiliates without exemptive relief from the SEC.

Even if we receive exemptive relief, CIM’s investment committee may determine that we should not participate in a co-investment transaction.

Portfolio and Investment Activity

As of December 31, 2020, we engaged in the direct purchase of debt securities primarily issued by portfolio companies and lend directly to portfolio companies.

As of December 31, 2021, we engaged in the direct purchase of debt and equity securities primarily issued by portfolio companies and lend directly to portfolio companies.

The following table summarizes the composition of our investment portfolio at amortized cost and fair value as of December 31, 2021:

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(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.

Status of Our Continuous Public Offerings

Status of Our Continuous Public Offerings and the NYSE Listing

On December 17, 2012, we met our minimum offering requirement of $2,500 in capital raised from persons not affiliated with us, admitted our initial public investors as shareholders and officially commenced operations.

Our initial continuous public offering ended on December 31, 2015, and our follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019, the date on which we closed the public offering of our shares.

Since commencing our initial continuous public offering on July 2, 2012 and through March 11, 2021, we sold 113,753,484 shares of common stock for corresponding net proceeds of $1,158,842 at an average price per share of $10.19, including shares purchased by our affiliates.

The net proceeds received include gross proceeds received from reinvested shareholder distributions of $225,531 pursuant to our distribution reinvestment plan, as amended and restated, for which we issued 25,568,259 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $221,978 pursuant to our share repurchase program, for which we repurchased 25,306,521 shares of common stock.

On October 5, 2021, our shares of common stock commenced trading on the NYSE under the ticker symbol “CION”, or the Listing.

Since commencing our initial continuous public offering on July 2, 2012 and through such initial Listing date, we sold 56,958,440 shares of common stock for corresponding net proceeds of $1,160,307 at an average price per share of $20.37, including shares purchased by our affiliates.

The net proceeds received include gross proceeds received from reinvested shareholder distributions of $237,451 pursuant to our pre-Listing distribution reinvestment plan, for which we issued 13,523,489 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $232,430 pursuant to our pre-Listing share repurchase program, for which we repurchased 13,310,927 shares of common stock.

For a complete description of our pre-Listing distribution reinvestment plan and pre-Listing share repurchase program, refer to Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities in this report.

Distributions

In January 2013, we began authorizing monthly distributions to our shareholders.

On February 1, 2014, we changed from semi-monthly closings to weekly closings for the sale of our shares.

As a result, from February 1, 2014 through July 17, 2017, our board of directors authorized and declared on a monthly basis a weekly distribution amount per share of our common stock.

From February 1, 2014 through July 17, 2017, our board of directors authorized and declared on a monthly basis a weekly distribution amount per share of our common stock.

On July 18, 2017, our board of directors authorized and declared on a quarterly basis a weekly distribution amount per share of our common stock.

Effective September 28, 2017, our 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 our board of directors, each on a quarterly basis.

Beginning on March 19, 2020, we changed the timing of declaring distributions from quarterly to monthly and temporarily suspended 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.

Effective September 28, 2017, our board of directors delegated to management the authority to determine the amount, record dates, payment dates and other terms of distributions to shareholders, which are ratified by our board of directors, each on a quarterly basis.

On July 15, 2020, our board of directors determined to recommence the payment of distributions to shareholders in August 2020.

Distributions in respect of future months will be evaluated by management and the board of directors based on circumstances and expectations existing at the time of consideration.

Declared distributions are paid monthly.

On September 15, 2021, we changed the timing of declaring and paying regular distributions to shareholders from monthly to quarterly commencing with the fourth quarter of 2021.

Distributions in respect of future quarters will be evaluated by management and the board of directors based on circumstances and expectations existing at the time of consideration.

Declared distributions are paid quarterly.

Our board of directors declared or ratified distributions for 11, 19 and 53 record dates during the years ended December 31, 2021, 2020 and 2019, respectively.

The following table presents cash distributions per share that were declared during the years ended December 31, 2020, 2019 and 2018:

The following table presents distributions per share that were declared during the years ended December 31, 2021, 2020 and 2019:

Distributions

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September 30, 2019 (thirteen record dates) 0.3657 20,798

December 31, 2018 (thirteen record dates) 0.1829 20,701

Total distributions for the year ended December 31, 2018 $ 0.7316 $ 83,483

March 31, 2019 (thirteen record dates) $ 0.1829 $ 20,772

June 30, 2019 (thirteen record dates) 0.1829 20,801

September 30, 2019 (thirteen record dates) 0.1829 20,798

December 31, 2019 (fourteen record dates) 0.3939 22,401

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Total distributions for the year ended December 31, 2020 $ 1.1106 $ 63,283

On December 17, 2020, our co-chief executive officers declared special cash distributions of $0.15180 per share for the year ended December 31, 2020.

The one-time special distributions were in addition to our regular monthly cash distributions that were paid on December 29, 2020.

The special distributions were paid on December 22, 2020 to shareholders of record as of December 21, 2020.

Shareholders who previously elected to receive distributions in additional shares our common stock pursuant to our distribution reinvestment plan were issued additional shares for the special distributions on December 22, 2020.

On December 17, 2020, our co-chief executive officers also declared regular monthly cash distributions of $0.04413 per share for January 2021.

The distributions were paid on January 27, 2021 to shareholders of record as of January 26, 2021.

Shareholders who previously elected to receive distributions in additional shares of our common stock pursuant to our distribution reinvestment plan were issued additional shares for the January 2021 distributions on January 27, 2021.

On January 15, 2021, our co-chief executive officers declared regular monthly cash distributions of $0.04413 per share for February 2021.

The distributions were paid on February 24, 2021 to shareholders of record as of February 23, 2021.

On February 16, 2021, our co-chief executive officers declared regular monthly cash distributions of $0.04413 per share for March 2021.

The distributions will be paid on March 24, 2021 to shareholders of record as of March 23, 2021.

Shareholders who previously elected to receive distributions in additional shares of our common stock pursuant to our distribution reinvestment plan will be issued additional shares for the March 2021 distributions on March 24, 2021.

March 31, 2021 (three record dates) $ 0.2648 $ 15,029

June 30, 2021 (three record dates) 0.2648 15,000

September 30, 2021 (three record dates) 0.2648 15,027

December 31, 2021 (two record dates) 0.4648 26,474

Total distributions for the year ended December 31, 2021 $ 1.2592 $ 71,530

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.

CIM is a registered investment adviser and our affiliate.

CIM is a joint venture between CIG and AIM and part of the CION Investments group of companies, or CION Investments.

CIM is a controlled and consolidated subsidiary of CIG and part of the CION Investments group of companies, or CION Investments.

We believe that CION Investments is a leading manager of alternative investment solutions that focuses on alternative credit strategies for individual investors.

CION Investments is headquartered in New York, with an office in Boston.

CION Investments is headquartered in New York, with offices in Los Angeles and Boston.

Mark Gatto and Michael A.

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Franz, Gregg A.

Bresner and Stephen Roman, form the senior management team of CIM.

Bresner, Stephen Roman and Eric A.

Pinero, form the senior management team of CIM.

Gatto and Reisner have significant managerial and investing experience and serve as our co-chairmen and co-chief executive officers.

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middle-market companies and has developed an expertise in using all levels of a firm’s capital structure to produce income-generating investments, focusing on risk management and delivering risk-adjusted returns that typically are collateralized by a company’s business-essential equipment or corporate infrastructure.

Pursuant to an administration agreement, CIM furnishes us with office facilities and equipment, and clerical, bookkeeping and record keeping services.

CIM also oversees our financial records and prepares our reports to shareholders and reports filed with the SEC.

CIM also performs the calculation and publication of our NAV, and oversees the preparation and filing of our tax returns, the payment of our expenses and the performance of various third party service providers.

Furthermore, CIM provides on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance.

On November 11, 2021, our board of directors, including a majority of the board of directors who are not interested persons, approved the renewal of the administration agreement with CIM for a period of twelve months commencing December 17, 2021.

About CION Investments

With more than 30 years of experience in the alternative asset management industry, CION Investments, through its managed funds, provides direct secured financing to private and public companies worldwide primarily in industries such as marine, manufacturing, transportation, automotive, energy and power, telecommunications, industrial and mining.

CION Investments is a leading manager of investment solutions designed to redefine the way individual investors can build their portfolios and help meet their long-term investment goals.

With more than 30 years of experience in the alternative asset management industry, CION Investments strives to level the playing field by giving investors direct access to asset management historically only available to the largest institutions.

CION Investments provides distribution services as well through CION Securities, LLC, or CION Securities, one of our affiliates.

Pursuant to an administration agreement, through March 31, 2018, ICON Capital, LLC, or ICON Capital, furnished us with office facilities and equipment, and clerical, bookkeeping and record keeping services.

ICON Capital also oversaw our financial records and prepared our reports to shareholders and reports filed with the SEC.

ICON Capital also performed the calculation and publication of our net asset value, and oversaw the preparation and filing of our tax returns, the payment of our expenses and the performance of various third party service providers.

Furthermore, ICON Capital provided on our behalf managerial assistance to those portfolio companies to which we were required to provide such assistance.

On April 1, 2018, we entered into an administration agreement with CIM for the purpose of replacing ICON Capital with CIM as our 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 13, 2020, our board of directors, including a majority of the board of directors who are not interested persons, approved the renewal of the administration agreement with CIM for a period of twelve months commencing December 17, 2020.

We believe that AIM possesses skills that will aid us in achieving our investment objective.

AIM is a subsidiary of Apollo (NYSE:

APO) and is the investment adviser to Apollo Investment Corporation (NASDAQ:

AINV), or AINV.

AINV is a publicly traded BDC that invests primarily in various forms of debt investments, including secured and unsecured loan investments and/or equity in private U.S.

middle-market companies.

Pursuant to the joint venture between CIG and AIM, 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;

and (d) monthly valuation reports and support for all broker-quoted investments.

Market Opportunity

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• The middle-market is a large addressable market.

According to GE Capital’s National Center for the Middle Market 4th Quarter 2020 Middle Market Indicator, there are approximately 200,000 U.S.

According to GE Capital’s National Center for the Middle Market 2nd Quarter 2021 Middle Market Indicator, there are approximately 200,000 U.S.

middle-market companies employing approximately 48 million people.

middle-market accounts for approximately one-third of private sector gross domestic product, or GDP, which, measured on a global scale, would be the third largest global economy.

middle-market accounts for approximately one-third of private sector gross domestic product, or GDP, which, measured on a global scale, would be the fifth largest global economy.

Collectively, the U.S.

middle market generates more than $10 trillion in annual revenue.

GE defines middle-market companies as those with $10 million to $1 billion in annual revenue, which we believe has significant overlap with our definition of middle-market companies that generally possess EBITDA of $75 million or less.

• Greater demand for non-traditional sources of debt financing.

We believe that commercial banks in the U.S., which have traditionally been the primary source of capital to middle-market companies, have experienced consolidation, capital impairments and stricter regulatory scrutiny.

Consequently, we believe there is an increasing trend for middle-market companies to seek financing from other sources, such as us.

• Disruptions within the credit markets have reduced middle-market companies’ access to the capital markets for senior debt .

While many middle-market companies were previously able to raise senior debt financing through traditional large financial institutions, we believe this approach to financing will become more difficult as implementation of U.S.

and international financial reforms, such as Basel 3, are expected to limit the capacity of large financial institutions to hold loans of middle-market companies on their balance sheets.

• There have been secular changes in ownership structures of U.S.

middle-market companies.

We believe that there has been a transformation in the ownership structures of private and public companies.

The number of U.S.

private-equity companies is at its highest level since 2000.

Conversely, the number of listed U.S.

domestic companies has dramatically declined over the same period, yet the average market capitalization of listed U.S.

companies has grown.

As a result, we believe that there has been a shift in the ownership of U.S.

middle-market companies and thus creating a larger market opportunity for us to provide debt capital to the companies that we target.

• Changes in business strategy by banks have further reduced the supply of capital to U.S.

middle-market companies.

The trend of consolidation of regional banks into money center banks has reduced the focus of these businesses on middle-market lending.

Money center banks traditionally focus on lending and providing other services to large corporate clients to whom they can deploy larger amounts of capital more efficiently.

We believe that this has resulted in fewer bank lenders to U.S.

middle-market companies and reduced the availability of debt capital to the companies that we expect to target.

As a result, we believe there is an increasing trend for middle-market companies to seek financing from other sources, such as us.

• It is difficult for new direct lending platforms to enter the middle market and fill the capital void because it is very fragmented.

While the middle market is a very large component of the U.S.

economy, it is a highly fragmented space with thousands of companies operating in many different geographies and industries.

Typically, companies that need capital find lenders and investors based on pre-existing relationships, referrals and word of mouth.

Developing the many relationships and wide-spread recognition required to become source of capital to the middle market is a time consuming, highly resource-intensive endeavor.

As a result, we believe that it is difficult for new lending platforms to successfully enter the middle market, thereby providing insulation from rapid shifts in the supply of capital to the middle market that might otherwise disrupt pricing of capital.

• There is a large pool of uninvested private equity capital likely to seek additional senior debt capital to finance strategic transactions.

We expect that middle-market private equity firms will continue to invest the approximately $909 billion raised since 2010 in middle-market companies, as reported in Pitchbook’s 3Q 2020 U.S.

We expect that middle-market private equity firms will continue to invest the nearly $1 trillion raised since 2010 in middle-market companies, as reported in Pitchbook’s 3Q 2021 U.S.

PE Middle Market Report, and that these private equity firms will seek to support their investments with senior loans from other sources, such as us.

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Thus, we believe that significant private equity investment in middle-market firms will create substantial investment opportunities for us to fill the role of leverage provider.

We believe that the network of relationships between CIM’s senior management team, Apollo’s management team and the private equity community will be a key channel through which we will seek to access significant investment opportunities.

• Middle-market companies compared to larger companies.

We believe that middle-market companies compare favorably to larger companies with respect to our investment objective and strategy.

According to the GE Capital 2012 National Middle Market Summit Report, almost 70% of middle-market companies were in business for more than 20 years and were, on average, less financially leveraged than large companies.

During the economic downturn from 2007 to 2010, surviving middle-market companies created more than two million jobs, as compared to nearly four million jobs eliminated by larger companies.

We believe that the network of relationships between CIM’s senior management team and the private equity community will be a key channel through which we will seek to access significant investment opportunities.

• Attractive market segment.

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We must therefore rely on the ability of CIM to obtain adequate information through their due diligence efforts to evaluate the creditworthiness of, and risks involved with, investing in these companies.

These companies and their financial information will also generally not be subject to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, and other rules and regulations that govern public companies that are designed to protect investors.

These companies and their financial information will also generally not be subject to the Sarbanes-Oxley Act, and other rules and regulations that govern public companies that are designed to protect investors.

Investment Strategy

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• Broad portfolio.

We seek to create a portfolio of companies engaged in a variety of industries and located in a variety of geographic locations, thereby potentially reducing the risk of a downturn in any one industry or geographic location having a disproportionate impact on the value of our portfolio.

We seek to create a portfolio of companies engaged in a variety of industries and located in a variety of geographic locations, thereby potentially reducing the risk of a downturn in any one industry, including, without limitation, as a result of COVID-19, or geographic location having a disproportionate impact on the value of our portfolio.

We are not a “diversified company” as such term is defined under the 1940 Act.

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• Proven ability to invest in middle-market companies.

We believe that CIM has proven its ability to source, structure and manage private investments for us.

In addition to its ability to call on its resources, CIM is able to draw upon Apollo’s team of more than 550 investment professionals that have approximately $455 billion of total assets under management as of December 31, 2020.

Apollo has developed an expertise in sourcing and investing in debt issued by middle-market companies.

We leverage this expertise, which we believe enables us to make investments that offer the most favorable risk/reward characteristics.

• Global platform with seasoned investment professionals.

CIM’s senior management team believes that the breadth and depth of its experience, together with the wider resources of the Apollo investment team, who source, structure, execute, monitor and realize upon a broad range of private investments on behalf of Apollo, as well as the specific expertise of Apollo in the BDC arena, provides us with a significant competitive advantage in sourcing attractive investment opportunities worldwide.

We believe that CIM has proven its ability to source, structure and manage private investments for us since our inception in 2012.

In addition, CIM maintains a deep and diverse network of highly experienced and like-minded partners including, without limitation, public and private lenders, selected middle-market private equity sponsors, large private equity sponsors (on a limited basis), and lightly syndicated loans.

We leverage these proprietary relationships and CIM’s expertise, which we believe enables us to be highly selective with a diverse array of investment opportunities that offer the most favorable risk/reward characteristics.

• We are CIM’s only client resulting its investment professionals sourcing for and managing a single investment platform.

Since we are CIM’s only client, its investment professionals solely source for and manage our investment portfolio, which we believe results in sourcing focus and efficiencies.

CIM’s investment professionals do not source and monitor the investments of other funds within a larger platform, which we believe provides for a more efficient, focused, and responsive investment process.

This allows CIM’s investment professionals to provide timely, candid feedback to potential borrowers and deal partners, and to solely focus on one investment portfolio building the knowledge and expertise from sourcing, to monitoring, to exit.

All investment opportunities are sourced and underwritten by CIM only with our risk and return objectives in mind, which we believe mitigates the potential risk of conflict among numerous portfolio managers within a larger platform.

• First lien investment focus rather than relying on the capital structure to generate risk-adjusted returns.

Although CIM will selectively target higher return/special situation investments in the secondary loan market through the purchase of illiquid, lightly syndicated loans, CIM focuses primarily on senior secured first lien loans to private U.S.

middle-market companies rather than relying on such borrower’s capital structure to generate risk-adjusted returns from junior debt or equity investments.

In addition to providing us with favorable returns, we believe that this first lien investment focus allows us to mitigate risk in the event of a borrower’s default since we will be in a senior secured first lien position with respect to such borrower’s assets.

• Long-term investment horizon .

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• Transaction sourcing capability .

CIM seeks to identify attractive investment opportunities both through active origination channels and through its long-term relationships with Apollo, numerous corporate and fund management teams, members of the financial community and potential corporate partners.

CIM seeks to identify attractive investment opportunities both through active origination channels and through its long-term relationships with numerous corporate and fund management teams, members of the financial community and potential corporate partners.

We also have access to the experience of CIM’s officers in sourcing middle-market transactions through such persons’ network of originators and underwriters.

In addition, CIM seeks to leverage Apollo’s significant access to transaction flow.

We believe that the broad networks of CIM and its affiliates will produce a significant amount of investment opportunities for us.

We believe that the broad networks of CIM and its affiliates will continue to produce a significant amount of investment opportunities for us.

• Disciplined, income-oriented investment philosophy .

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• Ability to utilize a wide range of transaction structures .

We believe that CIM’s broad expertise and experience in transaction structuring at all levels of a company’s capital structure affords us numerous tools to manage risk while preserving the opportunity for returns on investments.

Although CIM focuses primarily on senior secured first lien debt, we believe that CIM’s broad expertise and experience in transaction structuring at all levels of a company’s capital structure affords us numerous tools to manage risk while preserving the opportunity for returns on investments.

We attempt to capitalize on this expertise in an effort to produce an investment portfolio that will perform in a broad range of economic conditions.

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The mix of investments in our portfolio and other aspects regarding the implementation of our strategy may change materially over time.

CIM seeks to tailor our investment focus as market conditions evolve.

Although CIM focuses primarily on senior secured first lien debt, CIM can tailor our investment focus as market conditions evolve.

Depending on market conditions and other factors, we may, as noted above, increase or decrease our exposure to less senior portions of the capital structure, where returns tend to be stronger in a more stable or growing economy, but less secure in weak economic environments.

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Our investment activities are managed by CIM and supervised by our board of directors, a majority of whom are independent.

Pursuant to our investment advisory agreement, we pay CIM an annual base management fee based on our gross assets as well as incentive fees based on our performance.

Pursuant to our investment advisory agreement, as amended and restated, we pay CIM an annual base management fee based on our gross assets as well as incentive fees based on our performance.

The annual base management fee is calculated at a rate of 1.5% of the average value of our gross assets (including cash pledged as collateral for our secured financing arrangements, but excluding other cash and cash equivalents so that investors do not pay the base management fee on such assets) to the extent that our asset coverage ratio is greater than or equal to 200% (i.e., $1 of debt outstanding for each $1 of equity);

provided that, the annual base management fee is reduced to 1.0% of the average value of our gross assets (including cash pledged as collateral for our secured financing arrangements, but excluding other cash and cash equivalents so that investors do not pay the base management fee on such assets) purchased with leverage resulting in our asset coverage ratio dropping below 200%.

At our Special Meeting of Shareholders on December 30, 2021, shareholders approved a proposal to reduce our asset coverage ratio to 150%.

Such asset coverage ratio became effective on December 31, 2021.

The annual base management fee is payable to CIM 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 we refer to as the subordinated incentive fee on income, is calculated and payable to CIM quarterly in arrears based upon our “pre-incentive fee net investment income” for the immediately preceding quarter and is subject to a hurdle rate, measured quarterly and expressed as a rate of return on our net assets at the beginning of the calendar quarter, equal to 1.625% per quarter, or an annualized rate of 6.5%, or the hurdle rate.

We pay to CIM (x) 100.0% of our pre-incentive fee net investment income, if any, that exceeds the hurdle rate, but is less than or equal to 1.970% in any calendar quarter (7.879% annualized) and (y) 17.5% of the amount of our pre-incentive fee net investment income, if any, that exceeds 1.970% in any calendar quarter (7.879% annualized);

• The second part of the incentive fee, which we refer to as the incentive fee on capital gains, is an incentive fee on capital gains earned on liquidated investments from our investment portfolio during operations and is determined and payable to CIM in arrears as of the end of each calendar year (or upon termination of the investment advisory agreement).

This fee equals 17.5% of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid incentive fees on capital gains.

On July 11, 2017, the members of CIM entered into the 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 CIG.

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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.

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 our company, including, without limitation, identifying investment opportunities for approval by CIM’s investment committee.

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 our company.

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 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;

On December 4, 2017, the members of CIM entered into the fourth amended and restated limited liability company agreement of CIM, or 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;

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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.

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.

Pursuant to an administration agreement, CIM provides us with general ledger accounting, fund accounting, investor relations, employee compensation and benefit-related services, and other administrative services.

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Bancorp Fund Services, LLC to provide additional accounting and administrative services.

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.

As a BDC, we are required to comply with certain regulatory requirements.

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Our Transaction Process

CIM utilizes its access to transaction flow and seeks to leverage AIM’s significant access to transaction flow as well to source transactions.

CIM utilizes its access to transaction flow to source transactions.

With respect to CIM’s origination channel, CIM seeks to leverage CION Investments' significant industry relationships and investment personnel that actively source new investments.

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When possible, our advisory team seeks to structure transactions in such a way that our target companies are required to bear the costs of due diligence, including those costs related to any outside consulting work we may require.

CIM may integrate environmental, social and governance, or ESG, risk considerations within its process for originating loans to U.S.

middle market companies.

As part of its due diligence process, CIM may consider, alongside other relevant factors, ESG risks, events or conditions that have or could have a material negative impact on the operating and performance metrics of these borrowers in the portfolio.

Depending on the circumstances, examples of ESG risks can include physical environmental risks, climate change transition risks, supply chain disruptions, improper labor practices, lack of board diversity and corruption.

CIM may utilize proprietary research to assess ESG risks that are relevant to our investment.

Recommendation .

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To seek to enhance our returns, we employ leverage 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 2-to-1, so long as certain approval and disclosure requirements are satisfied.

In 2021, we intend to seek the approval of our shareholders to reduce our minimum "asset coverage" ratio from 200% to 150% in accordance with the 1940 Act.

Our (i) $575 million senior secured credit facility, or the JPM Credit Facility, with JPMorgan Chase Bank, National Association, or JPM, (ii) $150 million repurchase agreement, or the UBS Facility, with UBS AG, or UBS, (iii) $125 million senior unsecured notes due in 2026, or the 2026 Notes, and (iv) $30 million unsecured term loan, or the More Term Loan, with More Provident Funds Ltd., or More, allow us to borrow money and lever our investment portfolio, subject to the limitations of the 1940 Act, with the objective of increasing our yield.

This is known as “leverage” and could increase or decrease returns to our shareholders.

See Note 8 to our consolidated financial statements contained in this annual report on Form 10-K for additional information regarding our financing arrangements.

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 2-to-1, so long as certain approval and disclosure requirements are satisfied.

Such asset coverage ratio became effective on December 31, 2021.

As of December 31, 2021 and 2020, our asset coverage ratio based on the aggregate amount outstanding of our senior securities was 212% and 221%, respectively.

Determination of Net Asset Value

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In addition, we may generally issue new shares of our common stock at a price below net asset value in rights offerings to existing shareholders, in payment of distributions and in certain other limited circumstances.

In 2020 we obtained, and in 2021 we intend to seek, the approval of our shareholders to issue shares of our common stock at prices below the then current NAV per share of our common stock.

At our reconvened Annual Meeting of Shareholders held on August 9, 2021, our shareholders approved our ability to sell or otherwise issue during the next year shares of our common stock at a price below our then current NAV per share in one or more public or private offerings of our common stock not exceeding 25% of such then outstanding shares.

If we issue such shares and again receive such approval from shareholders in the future, we may issue shares of our common stock at a price below the then current NAV per share of common stock.

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For example, we generally are not permitted to co-invest with certain entities affiliated with CIM in transactions originated by CIM or its affiliates unless we obtain an exemptive order from the SEC.

Furthermore, we are subject to certain regulatory restrictions on investing with AIM and its affiliates in transactions where AIM or its affiliates negotiate terms other than price on our behalf.

We are limited in our ability to engage in co-investment transactions with AIM and its affiliates and CIM and its affiliates without exemptive relief from the SEC.

Co-investments made under the exemptive relief, if granted, would be subject to compliance with the conditions and other requirements contained in the exemptive relief provided by the SEC.

We are limited in our ability to engage in co-investment transactions with CIM and its affiliates without exemptive relief from the SEC.

Even if we receive exemptive relief, CIM’s investment committee may determine that we should not participate in a co-investment transaction.

We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions.

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Senior Securities

We are permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance.

We were permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, was at least equal to 200% immediately after each such issuance.

Recent legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met.

In 2021, we intend to seek the approval of our shareholders to reduce our minimum "asset coverage" ratio from 200% to 150% in accordance with the 1940 Act.

On December 30, 2021, we received approval from our shareholders to reduce our minimum "asset coverage" ratio from 200% to 150% in accordance with the 1940 Act.

Such asset coverage ratio became effective on December 31, 2021.

In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our shareholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase.

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Chief Compliance Officer, c/o CĪON Investment Corporation, 3 Park Avenue, 36th Floor, New York, NY 10016.

The following information is provided to help investors understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

We generally will not receive any nonpublic personal information relating to shareholders who purchase our common stock.

We may collect nonpublic personal information regarding our existing investors from sources such as subscription agreements, investor questionnaires and other forms;

individual investors’ account histories;

and correspondence between us and individual investors.

We may share information that we collect regarding an investor with our affiliates and the employees of such affiliates for everyday business purposes, for example, to service the investor’s accounts and, unless an investor opts out, provide the investor with information about other products and services offered by us or our affiliates that may be of interest to the investor.

In addition, we may disclose information that we collect regarding investors to third parties who are not affiliated with us (i) as authorized by our investors in investor subscription agreements;

(ii) as required by applicable law or in connection with a properly authorized legal or regulatory investigation, subpoena or summons, or to respond to judicial process or government regulatory authorities having property jurisdiction;

(iii) as required to fulfill investor instructions;

or (iv) as otherwise permitted by applicable law to perform support services for investor accounts or process investor transactions with us or our affiliates.

Any party not affiliated with us that receives nonpublic personal information relating to investors from us is required to adhere to confidentiality agreements and to maintain appropriate safeguards to protect your information.

Additionally, for officers, employees and agents of ours and our affiliates, access to such information is restricted to those who need such access to provide services to us and investors.

We maintain physical, electronic and procedural safeguards to seek to guard investor nonpublic personal information.

For a discussion of the risks associated with cyber incidents, see “Item 1A—Risk Factors—General Risk Factors—We are subject to risks associated with cybersecurity and cyber incidents” in this report.

Election to be Taxed as a Regulated Investment Company

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We intend to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.

As a non-accelerated filer, we are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, which would require that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.

As a non-accelerated filer, we are currently exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act, which would require that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.

This may increase the risk that material weaknesses or other deficiencies in our internal control over financial reporting go undetected.

Due to our Listing, we will no longer be a “non-accelerated filer” as defined in Rule 12b-2 of the Exchange Act and as a result, commencing with our Annual Report on Form 10-K for the year ending December 31, 2022, we will be required to comply with the independent auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

Complying with Section 404(b) requires a rigorous compliance program as well as adequate time and resources.

We will be subject to significant documentation and administrative burdens as a result of being required to comply with Section 404(b), which will require us to utilize additional resources, and our internal controls may not be determined to be effective, which may adversely affect investor confidence in us and, as a result, the value of our securities.

Our primary competitors provide financing to middle-market companies and include other BDCs, commercial and investment banks, commercial financing companies, CLOs, private funds, including hedge funds, and, to the extent they provide an alternative form of financing, private equity funds.

Some of our existing and potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do.

For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us.

In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us.

Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.

We do not seek to compete primarily based on the interest rates we offer and CIM believes that some of our competitors may make loans with interest rates that are comparable to or lower than the rates we offer.

Rather, we compete with our competitors based on our reputation in the market, our existing investment platform, the seasoned investment professionals of CIM, our experience and focus on middle-market companies, our disciplined investment philosophy, our extensive industry focus and relationships and our flexible transaction structuring.

Compliance with NYSE Listing Requirements

Our common stock is listed on the NYSE under the symbol “CION”.

As a listed company on the NYSE, we are subject to various listing standards including corporate governance listing standards.

We believe we are in compliance with these rules and standards.

We are periodically examined by the SEC for compliance with the 1940 Act.

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Recent Developments

Joint Venture with EagleTree Capital, LP

On December 21, 2021, we formed CION/EagleTree Partners, LLC, or CION/EagleTree, an off-balance sheet joint venture partnership, with an affiliate of EagleTree Capital, LP, or 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.

Expense 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.

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 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 and repurchase shares from our shareholders.

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.

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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.

On February 11, 2021, we entered into a Note Purchase Agreement with certain purchasers, or the Note Purchase Agreement, in connection with our issuance of $125 million aggregate principal amount of our 4.50% senior unsecured notes due in 2026, or the 2026 Notes.

The net proceeds to us were approximately $122.3 million, after the deduction of placement agent fees and other financing expenses, which we used to repay debt under our secured financing arrangements.

The offering was conducted, and the 2026 Notes were issued, as a private placement under Section 4(a)(2) of the Securities Act, and the rules and regulations promulgated thereunder.

As a result, the 2026 Notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

See Note 16 to our consolidated financial statements contained in this annual report on Form 10-K for additional information regarding our 2026 Notes.

Available Information

Within 60 days after the end of each fiscal quarter, we distribute our quarterly report on Form 10-Q to all shareholders of record.

In addition, we distribute our annual report on Form 10-K to all shareholders within 120 days after the end of each fiscal year.

These reports are available on our website at www.cioninvestments.com and on the SEC’s website at www.sec.gov.

Information contained on our website is not incorporated by reference into this Annual Report on Form 10-K and shareholders should not consider information contained on our website to be part of this Annual Report on Form 10-K.

We file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational requirements of the Exchange Act.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC, which are available on the SEC’s website at www.sec.gov.

Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address:

We maintain a website at www.cionbdc.com and make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through our website.

You may also obtain such information by contacting us, in writing at:

3 Park Avenue, 36th Floor, New York, New York 10016, or toll free at 1-877-822-4276 or collect at (212) 418-4700.

The SEC maintains an Internet site that contains reports, proxy statements and other information filed electronically by us with the SEC which are available on the SEC’s Internet site at http://www.sec.gov.

Copies of these reports, proxy statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address:

publicinfo@sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business