Oxford Square Capital Corp. - Quarter Report: 2012 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 0-50398

TICC CAPITAL CORP.

(Exact name of registrant as specified in its charter)

MARYLAND

20-0188736

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

8 SOUND SHORE DRIVE, SUITE 255 GREENWICH, CONNECTICUT 06830

(Address of principal executive office)

(203) 983-5275

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

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

Large accelerated filer	¨	Accelerated filer	x

Non-accelerated filer	¨ (do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of August 2, 2012 was 37,806,232.

TICC CAPITAL CORP.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Statements of Assets and Liabilities as of June 30, 2012 and December 31, 2011	3

	Consolidated Schedule of Investments as of June 30, 2012	4

	Consolidated Schedule of Investments as of December 31, 2011	9

	Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011	14

	Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2012 and the year ended December 31, 2011	15

	Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011	16

	Notes to Consolidated Financial Statements	17

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Cautionary Statements Regarding Forward-Looking Statements	28

	Overview	29

	Critical Accounting Policies	31

	Portfolio Composition and Investment Activity	35

	Results of Operations	39

	Liquidity and Capital Resources	48

	Recent Developments	51

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	52

PART II. OTHER INFORMATION		52

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68

Item 3.	Defaults Upon Senior Securities	68

Item 4.	Mine Safety Disclosures	68

Item 5.	Other Information	68

Item 6.	Exhibits	69

SIGNATURES		70

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

TICC CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(unaudited)

	June 30, 2012			December 31, 2011

ASSETS

Non-affiliated/non-control investments (cost: $418,687,526 @ 6/30/12; $372,091,255 @ 12/31/11)	$	422,775,500		$	375,793,839
Control investments (cost: $17,221,653 @ 6/30/12; $17,434,371 @ 12/31/11)		16,450,000			15,675,000
Total investments at fair value		439,225,500			391,468,839
Cash and cash equivalents		10,868,065			4,494,793
Restricted cash		13,790,934			23,183,698
Deferred debt issuance costs		2,745,029			2,895,873
Interest and distributions receivable		3,391,403			1,837,882
Other assets		126,627			238,485
Total assets	$	470,147,558		$	424,119,570

LIABILITIES
Notes payable, net of discount	$	99,802,771		$	99,710,826
Accrued interest payable		511,730			1,076,113
Investment advisory fee payable to affiliate		4,614,814			2,895,799
Accrued capital gains incentive fee to affiliate		1,018,892			1,108,749
Securities purchased not settled		5,542,583			13,352,500
Accrued expenses		602,118			873,592
Total liabilities		112,092,908			119,017,579

NET ASSETS
Common stock, $0.01 par value, 100,000,000 shares authorized, and 37,806,232 and 32,818,428 issued and outstanding, respectively		378,062			328,184
Capital in excess of par value		424,015,323			376,991,540
Net unrealized appreciation on investments		3,316,321			1,943,213
Accumulated net realized losses on investments		(68,529,970	)		(70,308,108	)
Distributions in excess of investment income		(1,125,086	)		(3,852,838	)
Total net assets		358,054,650			305,101,991
Total liabilities and net assets	$	470,147,558		$	424,119,570

Net asset value per common share	$	9.47		$	9.30

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

JUNE 30, 2012

(unaudited)

COMPANY⁽¹⁾	INDUSTRY		INVESTMENT		PRINCIPAL AMOUNT		COST		FAIR VALUE⁽²⁾		% of Net Assets

Senior Secured Notes

Airvana Network Solutions, Inc.		telecommunication services		senior secured notes (4)(5)(6)(9) (10.00%, due March 25, 2015)	$	2,678,571	$	2,643,605	$	2,598,214

AKQA, Inc.		advertising		senior secured notes(4)(6)(9) (4.75%, due March 20, 2013)		5,862,665		5,862,665		5,745,407

Algorithmic Implementations, Inc. (d/b/a "Ai Squared")		software		senior secured notes(4)(5)(6) (9.84%, due September 11, 2013)		14,300,000		14,221,653		14,300,000

American Integration Technologies, LLC		semiconductor capital equipment		senior secured notes(3)(4)(5) (10.75%, due December 31, 2013)		22,643,906		21,216,890		22,643,906

Anchor Glass Container Corporation		packaging and glass		senior secured notes(4)(9) (6.00%, due March 2, 2016)		4,957,465		4,957,465		4,957,465

Attachmate Corporation		enterprise software		senior secured notes(4)(5)(9) (7.25%, due April 27, 2017)		8,000,000		7,842,472		7,900,000

				second lien senior secured notes(4)(5)(9) (11.00%, due November 22, 2018)		10,000,000		9,703,320		9,737,500

Band Digital Inc. (F/K/A "WHITTMANHART, Inc.")		IT consulting		senior secured notes(4)(6) (15.58%, due December 31, 2012)		1,863,000		1,863,000		1,863,000

Blue Coat System, Inc.		software		first lien senior secured notes(4)(5)(9) (7.50%, due February 15, 2018)		6,000,000		5,939,592		5,970,000

				second lien senior secured notes(4)(5) (11.50%, due August 15, 2018)		5,214,286		5,145,553		5,214,286

BNY Convergex		financial intermediaries		second lien senior secured notes(4)(9) (8.75%, due December 17, 2017)		1,875,000		1,869,158		1,771,875

CHS/Community Health Systems, Inc.		healthcare		senior secured notes(4)(5)(6)(9)(10) (3.97%, due July 25, 2014)		3,879,093		3,669,309		3,817,454

Diversified Machine, Inc.		autoparts manufacturer		first lien senior secured notes(4)(5)(9) (9.25%, due December 1, 2016)		2,837,811		2,809,835		2,639,164

Embanet-Compass Knowledge Group, Inc.		education		senior secured notes(4)(5)(6)(9) (5.50%, due June 27, 2017)		4,654,948		4,531,170		4,608,399

Endurance International Group, Inc.		web hosting		first lien senior secured notes(4)(5)(9) (7.75%, due December 28, 2016)		10,000,000		9,902,626		9,875,000

GenuTec Business Solutions, Inc.		interactive voice messaging services		senior secured notes(4)(5)(7) (0.0%, due October 30, 2014)		3,476,000		3,175,517		-

Getty Images, Inc.		printing and publishing		senior secured notes(4)(5)(6)(9) (5.26%, due November 5, 2016)		4,832,030		4,780,553		4,836,814

Global Tel Link Corp.		telecommunication services		senior secured notes(4)(5)(6)(9) (6.00%, due December 14, 2017)		6,733,125		6,733,125		6,727,537

Goodman Global, Inc.		building and development		senior secured notes(4)(5)(6)(9) (5.75%, due October 28, 2016)		4,860,748		4,785,706		4,852,436

Grede Holdings LLC		auto parts manufacturer		senior secured notes(4)(9) (7.00%, due April 3, 2017)		5,000,000		4,918,127		4,962,500

GXS Worldwide Inc.		business services		senior secured notes(5)(9) (9.75%, due June 15, 2015)		8,000,000		7,918,364		8,000,000

(Continued on next page)

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS - (Continued)

JUNE 30, 2012

(unaudited)

COMPANY⁽¹⁾	INDUSTRY		INVESTMENT		PRINCIPAL AMOUNT		COST		FAIR VALUE⁽²⁾		% of Net Assets

Senior Secured Notes - (continued)

HHI Holdings LLC		auto parts manufacturer		senior secured notes(4)(5)(9) (7.00%, due March 21, 2017)	$	4,443,773	$	4,428,032	$	4,443,773

Hoffmaster Group, Inc.		retail		first lien senior secured notes(4)(5)(6)(9) (6.50%, due January 3, 2018)		6,982,459		6,952,862		6,965,003

Immucor, Inc.		healthcare		senior secured term B notes(4)(5)(9) (7.25% , due August 19, 2018)		4,466,250		4,319,203		4,482,998

InfoNXX Inc.		telecommunication services		second lien senior secured notes(4)(5)(9) (6.50% , due December 1, 2013)		7,000,000		6,768,457		6,475,000

Integra Telecom Holdings, Inc.		telecommunication services		first lien senior secured notes(4) (9.25%, due August 15, 2015)		7,824,025		7,447,584		7,520,844

Mercury Payment Systems, LLC		financial intermediaries		senior secured notes(4)(6)(9) (5.50%, due July 1, 2017)		3,960,000		3,960,000		3,950,100

Merrill Communications, LLC		printing and publishing		second lien senior secured notes(3)(4)(5)(9) (12.00% cash/2.77% PIK, due November 15, 2013)		6,303,281		6,273,676		3,824,011

Mirion Technologies, Inc.		utilities		senior secured notes(4)(9) (6.25%, due March 30, 2018)		2,493,750		2,445,412		2,481,281

National Healing Corp.		healthcare		senior secured notes(4)(5)(9) (8.25%, due November 30, 2017)		8,264,236		7,997,076		8,222,914

Nextag, Inc.		retail		senior secured notes(4)(5)(6)(9) (7.00%, due January 27, 2016)		10,229,077		9,733,004		9,853,977

NAB Holdings, LLC		financial intermediaries		first lien senior secured notes(4)(5)(6)(9) (7.00%, due April 24, 2018)		6,000,000		5,942,563		5,977,500

Pegasus Solutions, Inc.		enterprise software		first lien senior secured notes(3)(4)(5)(6)(9) (7.75% cash/0.75% PIK, due April 17, 2013)		2,499,552		2,419,744		2,430,814

				second lien senior secured notes(3)(5)(6) (0.00% Cash/13.00% PIK, due April 15, 2014)		6,390,892		4,943,115		5,432,258

Petco, Inc.		retail		senior secured notes(4)(9) (4.50%, due November 24, 2017)		4,949,495		4,737,270		4,904,950

Phillips Plastics Corporation		healthcare		senior secured notes(4)(5)(6)(9) (6.50%, due February 12, 2017)		2,977,500		2,954,737		2,947,725

Plato, Inc.		education		first lien senior secured notes(4)(5)(6)(9) (7.50%, due May 17, 2018)		5,000,000		4,920,000		4,968,750

Presidio IS Corp.		business services		senior secured notes(4)(6)(9) (7.25%, due March 31, 2017)		4,491,980		4,491,980		4,503,210

RBS Holding Company		printing and publishing		term B senior secured notes(4)(5)(9) (9.25%, due March 23, 2017)		4,937,500		4,906,232		2,962,500

Renaissance Learning		education		senior secured notes(4)(5)(9) (7.75%, due October 19, 2017)		3,970,000		3,824,541		3,965,038

Securus Technologies		telecommunication services		second lien senior secured notes(4)(5)(9) (10.75%, due May 18, 2018)		5,400,000		5,304,220		5,309,982

SkillSoft Corporation		business services		senior secured notes(4)(5)(6)(9) (6.50%, due May 26, 2017)		4,995,590		4,951,624		5,020,568

(Continued on next page)

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS - (Continued)

JUNE 30, 2012

(unaudited)

COMPANY⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE⁽²⁾		% of Net Assets

Senior Secured Notes - (continued)

SourceHOV, LLC	business services	second lien senior secured notes(4)(5) (10.50%, due May 19, 2018)	$	12,000,000	$	10,970,415	$	10,260,000

Sterling Infosystems, Inc.	business services	senior secured notes(4)(5)(9) (7.27%, due February 1, 2018)		2,750,000		2,697,896		2,736,250

Stratus Technologies, Inc.	computer hardware	first lien high yield notes(5)(9) (12.00%, due March 29, 2015)		9,520,000		8,962,032		8,318,100

Sunquest Information Systems, Inc.	healthcare	senior secured notes(4)(5)(6)(9) (6.25%, due December 16, 2016)		4,950,000		4,852,702		4,921,142

Teleguam Holdings, LLC	telecommunication services	second lien senior secured notes(4)(5)(9) (9.75%, due June 9, 2017)		4,687,500		4,646,991		4,476,563

Unitek Global Services, Inc.	IT consulting	tranche B term loan (4)(5)(9) (9.00%, due April 15, 2018)		7,920,451		7,716,971		7,761,600

US FT HoldCo. Inc. (A/K/A Fundtech)	financial intermediaries	senior secured notes(4)(5)(6)(9) (7.50%, due November 30, 2017)		5,970,000		5,824,491		5,945,105

Vision Solutions, Inc	software	second lien senior secured notes(4)(5)(9) (9.50%, due July 23, 2017)		10,000,000		9,915,470		9,900,000

WEB.COM Group, Inc.	web hosting	senior secured notes(4)(5)(9)(10) (7.00%, due October 27, 2017)		6,816,178		6,293,990		6,762,194

Total Senior Secured Notes					$	306,091,995	$	300,745,107		84.0	%

Subordinated Notes

Fusionstorm, Inc.	IT value-added reseller	subordinated notes(4)(5)(6) (11.74%, due February 28, 2013)	$	572,500	$	572,351	$	555,611

Shearer's Food Inc.	food products manufacturer	subordinated notes(3)(4)(5)(9) (12.00% Cash/3.75% PIK, due March 31, 2016)		4,301,599		4,229,115		3,871,439

Total Subordinated Notes					$	4,801,466	$	4,427,050		1.2	%

Collateralized Loan Obligation - Debt Investments

Avenue CLO V LTD 2007-5A, 5X D1	structured finance	CLO secured notes(4)(5)(10)(11) (3.92%, due April 25, 2019)	$	4,574,757	$	2,414,596	$	2,731,130

Canaras CLO - 2007-1A E	structured finance	CLO secured notes(4)(5)(10)(11) (4.82%, due June 19, 2021)		3,500,000		1,928,294		2,387,000

CIFC CLO - 2006-1A B2L	structured finance	CLO secured notes(4)(5)(10)(11) (4.47%, due October 20, 2020)		3,247,284		1,725,893		2,151,001

Emporia CLO 2007 3A E	structured finance	CLO secured notes(4)(5)(10)(11) (4.17%, due April 23, 2021)		5,391,000		4,187,621		3,475,039

Flagship 2005-4A D	structured finance	CLO secured notes(4)(5)(10)(11) (5.22%, due June 1, 2017)		2,612,988		1,704,495		2,025,066

Harbourview CLO VI LTD 6 6X D	structured finance	CLO secured notes(4)(5)(10)(11) (4.16%, due December 27, 2019)		5,000,000		3,254,979		3,192,000

Harch 2005-2A BB CLO	structured finance	CLO secured notes(4)(5)(10)(11) (5.47%, due October 22, 2017)		4,819,262		2,694,103		3,659,265

Hewetts Island CDO 2007 - 1RA E	structured finance	CDO secured notes(4)(5)(6)(10)(11) (7.22%, due November 12, 2019)		3,132,057		1,932,224		2,555,445

Hewetts Island CDO III 2005-1A D	structured finance	CDO secured notes(4)(5)(10)(11) (6.22%, due August 9, 2017)		6,387,367		3,665,823		5,276,604

Hewetts Island CDO IV 2006-4 E	structured finance	CDO secured notes(4)(5)(10)(11) (5.02%, due May 9, 2018)		7,897,268		5,688,321		5,934,006

( Continued on next page )

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS - (Continued)

JUNE 30, 2012

(unaudited)

COMPANY⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE⁽²⁾		% of Net Assets

Collateralized Loan Obligation - Debt Investments - (continued)

Kingsland LTD 2007 4A E	structured finance	CDO secured notes(4)(5)(10)(11) (3.82%, due April 16, 2021)		4,000,000		2,526,155		2,321,200

Landmark V CDO LTD	structured finance	CDO senior secured notes(4)(5)(6)(10)(11) (5.72%, due June 1, 2017)		3,646,669		2,324,521		2,838,567

Latitude II CLO 2006 2A D	structured finance	CDO senior secured notes(4)(5)(6)(10)(11) (4.22%, due December 15, 2018)		2,828,018		1,629,602		1,809,932

Latitude III CLO 2007-3A	structured finance	CDO secured notes(4)(5)(10)(11) (4.22%, due April 11, 2021)		4,000,000		1,990,876		2,506,800

Lightpoint CLO 2007-8A	structured finance	CDO secured notes(4)(5)(10)(11) (6.97%, due July 25, 2018)		5,000,000		2,985,924		4,030,500

Loomis Sayles CLO 2006-1AE	structured finance	CDO secured notes(4)(5)(10)(11) (4.32%, due October 26, 2020)		3,322,992		1,949,461		2,171,243

Marlborough Street CLO LTD 2007 1A E	structured finance	CDO secured notes(4)(5)(10)(11) (4.12%, due April 18, 2019)		3,000,000		2,089,029		2,037,900

Muir Grove CLO LTD 2007 1X E	structured finance	CDO secured notes(4)(5)(10)(11) (8.47%, due March 25, 2020)		7,690,915		6,787,370		6,775,696

Ocean Trails CLO II 2007-2a-d	structured finance	CLO subordinated secured notes(4)(5)(10)(11) (4.97%, due June 27, 2022)		3,649,700		2,136,672		2,320,844

Primus 2007 2X Class E CLO	structured finance	CLO notes (4)(5)(10)(11) (5.22%, due July 15, 2021)		2,834,633		2,191,451		1,870,858

Prospero CLO II BV	structured finance	CLO senior secured notes(4)(5)(10)(11) (4.42%, due October 20, 2022)		9,900,000		4,496,991		6,737,940

Total Collateralized Loan Obligation - Debt Investments					$	60,304,401	$	68,808,036		19.2	%

Collateralized Loan Obligation - Equity Investments

ACA CLO 2006-2, Limited	structured finance	CLO preferred equity(10)(11)	$	-	$	2,200,000	$	3,850,000

ACA CLO 2007-1a sub	structured finance	CLO preferred equity(10)(11)		-		10,583,500		10,248,000

Canaras CLO Equity - 2007-1A, 1X	structured finance	CLO income notes(10)(11)		-		4,355,000		4,050,000

GALE 2007-4A CLO	structured finance	CLO income notes(10)(11)		-		1,965,000		2,250,000

GSC Partners 2007-8X Sub CDO	structured finance	CLO income notes(10)(11)		-		4,110,000		5,100,000

Harbourview - 2006A CLO Equity	structured finance	CDO subordinated notes(10)(11)		-		3,639,870		3,668,600

Jersey Street 2006-1A CLO LTD	structured finance	CLO income notes(10)(11)		-		4,924,237		4,436,250

Kingsland LTD 2007-4X Sub	structured finance	CLO income notes(10)(11)		-		402,500		490,000

Lightpoint CLO 2005-3X	structured finance	CLO income notes(10)(11)		-		3,330,000		2,880,000

Lightpoint CLO VII LTD 2007-7	structured finance	CDO subordinated notes(10)(11)		-		1,562,500		1,650,000

Marlborough Street 2007-1A	structured finance	CLO income notes(10)(11)		-		1,739,000		1,715,500

OCT11 2007-1A CLO	structured finance	CLO income notes(10)(11)		-		2,434,163		2,289,375

Rampart 2007-1A CLO Equity	structured finance	CDO subordinated notes(10)(11)		-		3,412,500		2,940,000

Sargas CLO 2006 -1A	structured finance	CDO subordinated notes(10)(11)		-		4,945,500		7,373,000

Stone Tower CLO LTD 2007 7X	structured finance	CDO subordinated notes(10)(11)		-		6,265,000		5,950,000

Total Collateralized Loan Obligation - Equity Investments					$	55,868,770	$	58,890,725		16.4	%

( Continued on next page )

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS - (Continued)

JUNE 30, 2012

(unaudited)

COMPANY⁽¹⁾	INDUSTRY		INVESTMENT		PRINCIPAL AMOUNT		COST		FAIR VALUE⁽²⁾		% of Net Assets

Common Stock

Algorithmic Implementations, Inc.		software		common stock	$	-	$	3,000,000	$	2,150,000
(d/b/a "Ai Squared")

Integra Telecom Holdings, Inc.		telecommunication services		common stock(7)		-		1,712,397		1,962,890

Pegasus Solutions, Inc.		enterprise software		common equity(7)		-		62,595		118,064

Stratus Technologies, Inc.		computer hardware		common equity(7)		-		377,928		-

Total Common Stock Investments							$	5,152,920	$	4,230,954		1.2	%

Preferred Equity

GenuTec Business Solutions, Inc.		interactive voice messaging services		convertible preferred stock(7)	$	-	$	1,500,000

Pegasus Solutions, Inc.		enterprise software		preferred equity(3)		-	$	1,278,005	$	1,723,344
				(14.00% PIK dividend)

Stratus Technologies, Inc.		computer hardware		preferred equity(7)		-		186,622		63,784

Total Preferred Equity Investments							$	2,964,627	$	1,787,128		0.5	%

Warrants

Band Digital Inc.		IT consulting		warrants to purchase common stock(7)	$	-	$	-	$	-
(F/K/A "WHITTMANHART, Inc.")

Fusionstorm, Inc.		IT value-added reseller		warrants to purchase common stock(7)		-		725,000		336,500

Total Warrants							$	725,000	$	336,500		0.1	%

Total Investments							$	435,909,179	$	439,225,500		122.7	%

(1)

Other than Algorithmic Implementation, Inc. (d/b/a Ai Squared), which we may be deemed to control, we do not "control" and are not an "affiliate" of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the "1940 Act"). In general, under the 1940 Act, we would be presumed to "control" a portfolio company if we owned 25% or more of its voting securities and would be an "affiliate" of a portfolio company if we owned 5% or more of its voting securities.

(2)

Fair value is determined in good faith by the Board of Directors of the Company.

(3)

Portfolio includes $42,139,230 of principal amount of debt investments which contain a PIK provision. Portfolio also includes one preferred equity position which contains a PIK dividend provision.

(4)

Notes bear interest at variable rates.

(5)

Cost value reflects accretion of original issue discount or market discount.

(6)

Cost value reflects repayment of principal.

(7)

Non-income producing at the relevant period end.

(8)

Aggregate gross unrealized appreciation for federal income tax purposes is $21,189,106; aggregate gross unrealized depreciation for federal income tax purposes is $36,401,304. Net unrealized depreciation is $15,212,198 based upon a tax cost basis of $454,437,698.

(9)

All or a portion of this investment represents TICC CLO LLC collateral.

(10)

Indicates assets that the Company believes do not represent "qualifying assets" under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Company's total assets at the time of acquisition of any additional non-qualifying assets.

(11)

Investment not domiciled in the United States.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2011

COMPANY ⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE⁽²⁾		% of Net Assets
Senior Secured Notes

Airvana Network Solutions, Inc.	telecommunication services	senior secured notes (4)(5)(6)(9) (10.00%, due March 25, 2015)	$	5,476,190	$	5,386,864	$	5,465,950

AKQA, Inc.	advertising	senior secured notes(4)(6)(9) (5.09%, due March 20, 2013)		7,730,214		7,730,214		7,575,604

Algorithmic Implementations, Inc. (d/b/a “Ai Squared”)	software	senior secured notes(4)(5)(6) (9.84%, due September 11, 2013)		14,550,000		14,434,371		14,550,000

American Integration Technologies, LLC	semiconductor capital equipment	senior secured notes(4)(5) (11.75%, due December 31, 2013)		23,401,906		21,116,076		22,582,839

Anchor Glass Container Corporation	packaging and glass	senior secured notes(4)(9) (6.00%, due March 2, 2016)		4,957,465		4,957,465		4,932,678

Attachmate Corporation	enterprise software	senior secured notes(4)(5)(9) (6.50%, due April 27, 2017)		4,937,500		4,793,262		4,816,531

Band Digital Inc. (F/K/A “WHITTMANHART, Inc.”)	IT consulting	senior secured notes(4)(6) (15.58%, due December 31, 2012)		1,900,000		1,900,000		1,900,000

BNY Convergex	financial intermediaries	second lien senior secured notes(4)(9) (8.75%, due December 17, 2017)		1,875,000		1,858,003		1,781,250

CHS/Community Health Systems, Inc.	healthcare	senior secured notes(4)(5)(6)(9)(10) (3.96%, due July 25, 2014)		3,979,849		3,714,932		3,838,087

Decision Resources, LLC	healthcare	first lien senior secured notes(4)(5)(9) (7.00%, due December 28, 2016)		4,950,000		4,890,742		4,702,500

		second lien senior secured notes(4)(5) (9.50%, due May 13, 2018)		5,333,333		5,283,543		5,226,667

Diversified Machine, Inc.	autoparts manufacturer	first lien senior secured notes(4)(5)(9) (9.25%, due December 1, 2016)		5,000,000		4,926,898		4,987,500

Embanet-Compass Knowledge Group, Inc.	education	senior secured notes(4)(5)(6)(9) (5.50%, due June 27, 2017)		4,975,000		4,831,896		4,825,750

Emdeon, Inc.	healthcare	senior secured notes(4)(5)(6)(9) (6.75%, due November 2, 2018)		1,950,000		1,892,562		1,964,625

Endurance International Group, Inc.	web hosting	first lien senior secured notes(4)(5)(9) (7.75%, due December 28, 2016)		10,000,000		9,900,000		9,950,000

GenuTec Business Solutions, Inc.	interactive voice messaging services	senior secured notes(4)(5)(7) (0.0%, due October 30, 2014)		3,476,000		3,152,069		2,000,000

Getty Images, Inc.	printing and publishing	senior secured notes(4)(5)(6)(9) (5.25%, due November 5, 2016)		5,000,000		4,941,392		5,000,000

Global Tel Link Corp.	telecommunication services	senior secured notes(4)(5)(6)(9) (7.00%, due December 14, 2017)		5,818,182		5,717,186		5,727,302

Goodman Global, Inc.	building and development	senior secured notes(4)(5)(6)(9) (5.75%, due October 28, 2016)		4,860,748		4,778,271		4,847,916

GRD Holding III	retail	senior secured notes(4)(5)(6)(9) (8.75%, due October 5, 2017)		4,000,000		3,610,953		3,520,000

GXS Worldwide Inc.	business services	senior secured notes(5)(9) (9.75%, due June 15, 2015)		8,000,000		7,906,828		7,440,000

( Continued on next page )

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

DECEMBER 31, 2011

COMPANY ⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE ⁽²⁾		% of Net Assets
Senior Secured Notes—(continued)

HHI Holdings LLC	auto parts manufacturer	senior secured notes(4)(5)(9) (7.00%, due March 21, 2017)	$	4,466,250	$	4,448,122	$	4,393,673

Hyland Software, Inc.	enterprise software	senior secured notes(4)(5)(6)(9) (5.75%, due December 19, 2016)		2,852,555		2,798,057		2,809,767

Immucor, Inc.	healthcare	senior secured term B notes(4)(5)(9) (7.25%, due August 19, 2018)		4,488,750		4,332,486		4,508,949

InfoNXX Inc.	telecommunication services	second lien senior secured notes(4)(5)(9) (6.55%, due December 1, 2013)		7,000,000		6,693,859		6,440,000

Mercury Payment Systems, LLC	financial intermediaries	senior secured notes(4)(6)(9) (6.50%, due July 1, 2017)		3,980,000		3,980,000		3,960,100

Merrill Communications, LLC	printing and publishing	second lien senior secured notes(3)(4)(5)(9) (11.75% cash/2.62% PIK, due November 15, 2013)		6,219,910		6,180,828		5,867,428

National Healing Corp.	healthcare	senior secured notes(4)(5)(9) (8.25%, due November 30, 2017)		6,000,000		5,702,372		5,760,000

Nextag, Inc.	retail	senior secured notes(4)(5)(6)(9) (7.00%, due January 27, 2016)		10,766,667		10,153,496		10,416,750

Pegasus Solutions, Inc.	enterprise software	first lien senior secured notes(4)(5)(6)(9) (7.75%, due April 17, 2013)		2,577,942		2,448,984		2,496,299

		second lien senior secured notes(3)(5)(6) (0.00% Cash/13.00% PIK, due April 15, 2014)		6,000,838		4,283,558		5,640,788

Petco, Inc.	retail	senior secured notes(4)(9) (4.50%, due November 24, 2017)		5,000,000		4,768,740		4,865,000

Phillips Plastics Corporation	healthcare	senior secured notes(4)(5)(6)(9) (6.50%, due February 12, 2017)		2,992,500		2,967,686		2,955,094

Power Tools, Inc.	software	senior secured notes(4)(5)(6) (12.00%, due May 16, 2014)		8,000,000		7,947,337		7,200,000

Presidio IS Corp.	business services	senior secured notes(4)(6)(9) (7.25%, due March 31, 2017)		4,743,590		4,743,590		4,672,436

RBS Holding Company	printing and publishing	term B senior secured notes(4)(5)(9) (6.50%, due March 23, 2017)		4,962,500		4,917,481		3,870,750

RCN Telecom Services, LLC	cable/satellite television	senior secured notes(4)(5)(9) (6.50%, due August 26, 2016)		4,974,811		4,890,594		4,878,847

Renaissance Learning	education	senior secured notes(4)(5)(9) (7.75%, due October 19, 2017)		3,990,000		3,833,900		3,920,175

Securus Technologies	telecommunication services	second lien senior secured notes(4)(5)(9) (10.00%, due May 18, 2018)		5,400,000		5,298,371		5,319,000

Shield Finance Co.	software	first lien term notes(4)(5)(9)(10)(11) (7.75%, due June 15, 2016)		3,790,914		3,662,185		3,781,437

SkillSoft Corporation	business services	senior secured notes(4)(5)(6)(9) (6.50%, due May 26, 2017)		5,000,000		4,952,306		4,952,100

SonicWall, Inc.	software	first lien senior secured notes(4)(5)(9) (8.27%, due January 23, 2016)		1,071,774		1,043,499		1,071,774

		second lien senior secured notes(4)(5)(9) (12.00%, due January 23, 2017)		5,000,000		4,873,705		4,950,000

( Continued on next page )

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

DECEMBER 31, 2011

COMPANY ⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE ⁽²⁾		% of Net Assets
Senior Secured Notes—(continued)

SourceHOV, LLC	business services	second lien senior secured notes(4)(5) (10.50%, due May 19, 2018)	$	8,000,000	$	7,661,825	$	6,560,000

Stratus Technologies, Inc.	computer hardware	first lien high yield notes(5)(9) (12.00%, due March 29, 2015)		9,753,000		9,098,094		9,753,000

Sunquest Information Systems, Inc.	healthcare	senior secured notes(4)(5)(6)(9) (6.25%, due December 16, 2016)		4,975,000		4,868,469		4,912,813

Syniverse Holdings, Inc.	telecommunication services	senior secured notes(4)(5)(6)(9) (5.25%, due December 21, 2017)		3,979,900		3,836,252		3,971,622

Teleguam Holdings, LLC	telecommunication services	second lien senior secured notes(4)(5)(9) (9.75%, due June 9, 2017)		4,687,500		4,643,890		4,593,750

Unitek Global Services, Inc.	IT consulting	tranche B term loan(4)(5)(9) (9.00%, due April 15, 2018)		7,940,000		7,713,041		7,701,800

US FT HoldCo. Inc. (A/K/A US FT HoldCo. Inc.)	financial intermediaries	senior secured notes(4)(5)(6)(9) (7.50%, due November 30, 2017)		6,000,000		5,844,017		5,880,000

Vision Solutions, Inc.	software	second lien senior secured notes(4)(5)(9) (9.50%, due July 23, 2017)		10,000,000		9,908,753		9,600,000

WEB.COM Group, Inc.	web hosting	senior secured notes(4)(5)(9)(10) (7.00%, due October 27, 2017)		5,000,000		4,428,688		4,575,000

Total Senior Secured Notes					$	290,647,712	$	289,913,551	95.0	%

Subordinated Notes

Fusionstorm, Inc.	IT value-added reseller	subordinated notes(4)(5)(6) (11.74%, due February 28, 2013)	$	1,022,500	$	1,022,351	$	962,939

Shearer’s Food Inc.	food products manufacturer	subordinated notes(3)(4)(5)(9) (12.00% Cash/3.75% PIK, due March 31, 2016)		4,221,193		4,141,875		3,967,921

Total Subordinated Notes					$	5,164,226	$	4,930,860	1.6	%

Collateralized Loan Obligation—Debt Investments

Avenue CLO V LTD 2007-5A D1	structured finance	CLO secured notes(4)(5)(10)(11) (3.87%, due April 25, 2019)	$	4,574,756	$	2,327,337	$	2,511,999

Canaras CLO—2007-1A E	structured finance	CLO secured notes(4)(5)(10)(11) (4.91%, due June 19, 2021)		3,500,000		1,884,762		2,152,500

CIFC CLO—2006-1A B2L	structured finance	CLO secured notes(4)(5)(10)(11) (4.41%, due October 20, 2020)		3,247,284		1,679,332		2,061,863

Emporia CLO 2007 3A E	structured finance	CLO secured notes(4)(5)(10)(11) (4.12%, due April 23, 2021)		5,391,000		4,140,712		3,180,690

Flagship 2005-4A D	structured finance	CLO secured notes(4)(5)(10)(11) (5.28%, due June 1, 2017)		2,612,988		1,644,453		1,835,624

Harch 2005-2A BB CLO	structured finance	CLO secured notes(4)(5)(10)(11) (5.42%, due October 22, 2017)		4,819,262		2,580,789		3,108,424

Hewetts Island CDO 2007—1RA E	structured finance	CDO secured notes(4)(5)(10)(11) (7.20%, due November 12, 2019)		3,132,057		1,890,861		2,380,363

Hewetts Island CDO III 2005-1A D	structured finance	CDO secured notes(4)(5)(6)(10)(11) (6.19%, due August 9, 2017)		6,456,937		3,587,739		5,072,944

Hewetts Island CDO IV 2006-4 E	structured finance	CDO secured notes(4)(5)(10)(11) (4.99%, due May 9, 2018)		7,897,268		5,575,257		5,176,396

Landmark V CDO LTD.	structured finance	CDO senior secured notes(4)(5)(6)(10)(11) (5.78%, due June 1, 2017)		3,646,669		2,243,178		2,511,825

Latitude II CLO 2006 2A D	structured finance	CLO senior secured notes(4)(5)(6)(10)(11) (4.30%, due December 15, 2018)		2,828,018		1,575,173		1,753,371

( Continued on next page )

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

DECEMBER 31, 2011

COMPANY ⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE ⁽²⁾		% of Net Asset
Collateralized Loan Obligation - Debt Investments — (continued)

Latitude III CLO 2007-3A	structured finance	CLO secured notes(4)(5)(10)(11) (4.14%, due April 11, 2021)	$	4,000,000	$	1,935,665	$	2,360,000
Liberty CDO LTD 2005-1A C	structured finance	CDO secured notes(4)(5)(6)(10)(11) (2.33%, due November 1, 2017)		1,986,259		1,155,372		1,311,924
Lightpoint CLO 2007-8A	structured finance	CLO secured notes(4)(5)(10)(11) (6.90%, due July 25, 2018)		5,000,000		2,896,267		3,700,000
Loomis Sayles CLO 2006-1AE	structured finance	CLO secured notes(4)(5)(10)(11) (4.27%, due October 26, 2020)		3,322,992		1,903,601		1,993,795
Ocean Trails CLO II 2007-2a-d	structured finance	CLO subordinated secured notes(4)(5)(10)(11) (4.90%, due June 27, 2022)		3,649,700		2,079,669		2,189,820
Primus 2007 2X Class E CLO	structured finance	CLO notes (4)(5)(10)(11) (5.15%, due July 15, 2021)		2,834,633		2,168,472		1,686,607
Prospero CLO II BV	structured finance	CLO senior secured notes(4)(5)(10)(11) (4.20%, due October 20, 2022)		9,900,000		4,389,696		5,940,000

Total Collateralized Loan Obligation—Debt Investments					$	45,658,335	$	50,928,145	16.7	%

Collateralized Loan Obligation—Equity Investments

ACA CLO 2006-2, Limited	structured finance	CLO preferred equity(10)(11)	$	—	$	2,200,000	$	3,750,000

Canaras CLO Equity - 2007-1A, 1X	structured finance	CLO income notes(10)(11)		—		4,355,000		3,825,000

GALE 2007-4A CLO	structured finance	CLO income notes(10)(11)		—		1,965,000		1,950,000

GSC Partners 2007-8X Sub CDO	structured finance	CLO income notes(10)(11)		—		4,110,000		4,560,000

Harbourview - 2006A CLO Equity	structured finance	CDO subordinated notes(10)(11)		—		3,639,870		2,729,350

Jersey Street 2006-1A CLO LTD.	structured finance	CLO income notes(10)(11)		—		4,924,237		4,229,225

Kingsland LTD 2007-4X Sub.	structured finance	CLO income notes(10)(11)		—		402,500		376,250

Lightpoint CLO 2005-3X	structured finance	CLO income notes(10)(11)		—		3,330,000		3,116,250

Lightpoint CLO VII LTD 2007-7	structured finance	CLO subordinated notes(10)(11)		—		1,562,500		1,360,000

Marlborough Street 2007-1A	structured finance	CLO income notes(10)(11)		—		1,739,000		1,504,000

OCT11 2007-1A CLO	structured finance	CLO income notes(10)(11)		—		2,434,162		2,351,250

Rampart 2007-1A CLO Equity	structured finance	CLO subordinated notes(10)(11)		—		3,412,500		2,870,000

Sargas CLO 2006 -1A	structured finance	CLO subordinated notes(10)(11)		—		4,945,500		6,666,000

Total Collateralized Loan Obligation—Equity Investments					$	39,020,269	$	39,287,325	12.9	%

Common Stock

Algorithmic Implementations, Inc.	software	common stock	$	—	$	3,000,000	$	1,125,000
(d/b/a “Ai Squared”)

Integra Telecomm, Inc.	telecommunication services	common stock(7)		—		1,712,397		1,051,271

Pegasus Solutions, Inc.	enterprise software	common equity(7)		—		62,595		959,999

Stratus Technologies, Inc.	computer hardware	common equity(7)		—		377,928		—

Total Common Stock Investments					$	5,152,920	$	3,136,270	1.0	%

( Continued on next page )

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

DECEMBER 31, 2011

COMPANY ⁽¹⁾	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE ⁽²⁾		% of Net Assets
Preferred Equity

GenuTec Business Solutions, Inc.	interactive voice messaging services	convertible preferred stock(7)	$	—	$	1,500,000	$	—

Pegasus Solutions, Inc.	enterprise software	preferred equity(3) (14.00% PIK dividend)		—		1,120,542		2,176,237

Stratus Technologies, Inc.	computer hardware	preferred equity(7)		—		186,622		318,451

Total Preferred Equity Investments					$	2,807,164	$	2,494,688	0.8	%

Warrants
Band Digital Inc. (F/K/A “WHITTMANHART, Inc.”)	IT consulting	warrants to purchase common stock (7)	$	—	$	—	$	—
Fusionstorm, Inc.	IT value-added reseller	warrants to purchase common stock (7)		—		725,000		578,000
Power Tools, Inc.	software	warrants to purchase common stock(7)		—		350,000		200,000

Total Warrants					$	1,075,000	$	778,000	0.3	%

Total Investments					$	389,525,626	$	391,468,839	128.3	%

(1)

Other than Algorithmic Implementation, Inc. (d/b/a Ai Squared), which we may be deemed to control, we do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the “1940 Act”). In general, under the 1940 Act, we would be presumed to “control” a portfolio company if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if we owned 5% or more of its voting securities.

(2)

Fair value is determined in good faith by the Board of Directors of the Company.

(3)

Portfolio includes $16,441,941 of principal amount of debt investments which contain a PIK provision. Portfolio also includes one preferred equity position which contains a PIK dividend provision. For the year ending December 31, 2011, total PIK income is $1,474,475, which is derived from the following investments with a PIK provision: Merrill Communications, LLC ($150,893), Pegasus Solutions, Inc. ($710,143), Pegasus Solutions, Inc. Preferred Equity ($463,295) and Shearer’s Food Inc. ($150,144). See also Note 2 to the Consolidated Financial Statements.

(4)

Notes bear interest at variable rates.

(5)

Cost value reflects accretion of original issue discount or market discount.

(6)

Cost value reflects repayment of principal.

(7)

Non-income producing at the relevant period end.

(8)

Aggregate gross unrealized appreciation for federal income tax purposes is $18,879,992; aggregate gross unrealized depreciation for federal income tax purposes is $35,465,298. Net unrealized depreciation is $16,585,306 based upon a tax cost basis of $408,054,145.

(9)

All or a portion of this investment represents TICC CLO LLC collateral.

(10)

(11)

Investment not domiciled in the United States.

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011			Six Months Ended June 30, 2012			Six Months Ended June 30, 2011

INVESTMENT INCOME
From non-affiliated/non-control investments:
Interest income - debt investments	$	9,540,030		$	6,896,080		$	18,250,282		$	13,762,724
Distributions from securitization vehicles and equity investments		6,344,134			3,554,407			11,893,781			5,883,257
Commitment, amendment fee income and other income		4,138,857			286,918			4,246,212			446,019
Total investment income from non-affiliated/non-control investments		20,023,021			10,737,405			34,390,275			20,092,000
From control investments:
Interest income - debt investments		378,258			396,892			758,609			802,422
Distributions from equity investments		62,041			-			62,041			-
Total investment income from control investments		440,299			396,892			820,650			802,422
Total investment income		20,463,320			11,134,297			35,210,925			20,894,422
EXPENSES
Compensation expense		279,354			257,788			549,688			495,852
Investment advisory fees		2,450,664			1,661,673			4,594,021			3,276,116
Professional fees		436,210			167,942			1,227,037			461,214
Interest expense and other debt financing expenses		816,304			-			1,653,081			-
General and administrative		434,682			355,859			727,479			574,743
Total expenses before incentive fees		4,417,214			2,443,262			8,751,306			4,807,925
Net investment income incentive fees		2,164,150			610,441			3,357,480			988,551
Capital gains incentive fees		(1,155,520	)		(1,442,843	)		(89,857	)		5,026,486
Total incentive fees		1,008,630			(832,402	)		3,267,623			6,015,037
Total expenses		5,425,844			1,610,860			12,018,929			10,822,962
Net investment income		15,037,476			9,523,437			23,191,996			10,071,460
Net change in unrealized (depreciation) appreciation on investments		(7,261,959	)		(6,053,718	)		1,373,108			3,062,480
Net realized gains on investments		1,484,357			734,927			1,778,138			2,630,348
Net increase in net assets resulting from operations	$	9,259,874		$	4,204,646		$	26,343,242		$	15,764,288

Net increase in net assets resulting from net investment income per common share:
Basic and diluted	$	0.40		$	0.29		$	0.65		$	0.31
Net increase in net assets resulting from operations per common share:
Basic and diluted	$	0.25		$	0.13		$	0.74		$	0.49
Weighted average shares of common stock outstanding:
Basic and diluted		37,755,905			32,387,993			35,583,102			32,151,738

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

	Six Months Ended June 30, 2012			Year Ended December 31, 2011

Increase in net assets from operations:
Net investment income	$	23,191,996		$	30,000,141
Net realized gains on investments		1,778,138			3,600,539
Net change in unrealized appreciation (depreciation) on investments		1,373,108			(19,391,815	)

Net increase in net assets resulting from operations		26,343,242			14,208,865

Distributions to shareholders		(20,374,387	)		(32,176,536	)

Capital share transactions:
Issuance of common stock (net of offering costs of $2,645,162 and $318,630, respectively)		46,034,340			6,360,019
Reinvestment of dividends		949,464			2,592,102

Net increase in net assets from capital share transactions		46,983,804			8,952,121

Total increase (decrease) in net assets		52,952,659			(9,015,550	)
Net assets at beginning of period		305,101,991			314,117,541
Net assets at end of period (including over distributed net investment income of $1,125,086 and $3,852,838, respectively)	$	358,054,650		$	305,101,991
Capital share activity:
Shares sold		4,887,500			651,599
Shares issued from reinvestment of dividends		100,304			280,462

Net increase in capital share activity		4,987,804			932,061

See Accompanying Notes.

TICC CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	26,343,242		$	15,764,288
Adjustments to reconcile net increase in net assets resulting from operations to net cash used by operating activities:
Amortization of discounts		(2,901,560	)		(2,380,176	)
Amortization of discount on notes payable and deferred debt issuance costs		242,789			-
Increase in investments due to PIK		(4,179,470	)		(805,325	)
Purchases of investments		(127,417,499	)		(133,030,853	)
Repayments of principal and reductions to investment cost value		70,592,952			70,426,939
Proceeds from the sale of investments		11,490,245			8,407,096
Net realized gains on investments		(1,778,138	)		(2,630,348	)
Net change in unrealized appreciation on investments		(1,373,108	)		(3,062,480	)
Increase in interest and distributions receivable		(1,553,521	)		(346,335	)
Decrease in other assets		111,858			4,372
Decrease in accrued interest payable		(564,383	)		-
Increase in investment advisory fee payable		1,719,015			511,218
(Decrease) increase in accrued capital gains incentive fee		(89,857	)		5,026,486
(Decrease) increase in accrued expenses		(271,474	)		292,971
Net cash used by operating activities		(29,628,909	)		(41,822,147	)
CASH FLOWS FROM INVESTING ACTIVIES
Change in restricted cash		9,392,764			-
Net cash provided by investing activities		9,392,764			-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock	$	48,679,502		$	6,678,649
Offering expenses from the issuance of common stock		(2,645,162	)		(318,630	)
Distributions paid (net of stock issued under dividend reinvestment plan of $949,464 and $1,356,750, respectively)		(19,424,923	)		(14,465,445	)
Net cash provided (used) by financing activities		26,609,417			(8,105,426	)

Net increase (decrease) in cash and cash equivalents		6,373,272			(49,927,573	)

Cash and cash equivalents, beginning of period		4,494,793			68,780,866

Cash and cash equivalents, end of period	$	10,868,065		$	18,853,293

NON-CASH FINANCING ACTIVITIES
Value of shares issued in connection with dividend reinvestment plan	$	949,464		$	1,356,750

SUPPLEMENTAL DISCLOSURES
Securities purchased not settled	$	5,542,583		$	-
Cash paid for interest	$	1,974,676		$	-

See Accompanying Notes.

TICC CAPITAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 1. UNAUDITED INTERIM FINANCIAL STATEMENTS

Interim consolidated financial statements of TICC Capital Corp. (“TICC” and, together with its subsidiaries, the “Company”) are prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of consolidated financial results for the interim periods have been included. The current period’s consolidated results of operations are not necessarily indicative of results that may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (“SEC”).

NOTE 2. ORGANIZATION

TICC was incorporated under the General Corporation Laws of the State of Maryland on July 21, 2003 and is a non-diversified, closed-end investment company. TICC has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, TICC has elected to be treated for tax purposes as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment objective is to maximize its total return, by investing primarily in corporate debt securities.

TICC’s investment activities are managed by TICC Management, LLC, (“TICC Management”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. BDC Partners, LLC (“BDC Partners”) is the managing member of TICC Management and serves as the administrator of TICC.

On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes offered in the debt securitization were issued by TICC CLO LLC (the “Securitization Issuer” or “ TICC CLO”), a subsidiary of TICC Capital Corp. 2011-1 Holdings, LLC (“Holdings”), a direct subsidiary of TICC, and the notes are secured by the assets held by the Securitization Issuer. The securitization was executed through a private placement of $101.25 million of Aaa/AAA Class A Notes of the Securitization Issuer. Holdings retained all of the subordinated notes, which totaled $123.75 million, and retained all the membership interests in the Securitization Issuer. For further information on the securitization, see Note 4.

The Company consolidated the results of its subsidiaries, Holdings and TICC CLO, in its consolidated financial statements as the subsidiaries are operated solely for investment activities of the Company, and the Company has substantial equity at risk. The creditors of TICC CLO have received security interests in the assets owned by TICC CLO and such assets are not intended to be available to the creditors of TICC (or any other affiliate of TICC).

NOTE 3. INVESTMENT VALUATION

The most significant estimate inherent in the preparation of TICC’s consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. There is no single method 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 portfolio investment while employing a consistently applied valuation process for the types of investments TICC makes. TICC is required to specifically fair value each individual investment on a quarterly basis.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement which represents amendments to achieve common fair value measurement and disclosure requirements in US GAAP and IFRS.” The amendments are of two types: (i) those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements and (ii) those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments that change a particular principle or requirement for measuring fair value or disclosing information about fair value measurements relate to (i) measuring the fair value of the financial instruments that are managed within a portfolio; (ii) application of premium and discount in a fair value measurement; and (iii) additional disclosures about fair value measurements. The update is effective for annual periods beginning after December 15, 2011 and as such TICC has adopted this ASU beginning with the quarter ended March 31, 2012. TICC has increased its disclosures related to Level 3 fair value measurement, in addition to other required disclosures. There were no related impacts on TICC’s financial position or results of operations.

TICC adopted ASC 820-10, Fair Value Measurements and Disclosure, which establishes a three-level valuation hierarchy for disclosure of fair value measurements, on January 1, 2008. ASC 820-10 clarified the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities in markets that are not active; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. TICC has determined that due to the general illiquidity of the market for its investment portfolio, whereby little or no market data exists, almost all of TICC’s investments are based upon “Level 3” inputs.

TICC’s Board of Directors determines the value of its investment portfolio each quarter. In connection with that determination, members of TICC Management’s portfolio management team prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. Since March 2004, TICC has engaged third-party valuation firms to provide assistance in valuing its bilateral investments and, more recently, for certain of its syndicated loans, although TICC’s Board of Directors ultimately determines the appropriate valuation of each such investment.

TICC’s process for determining the fair value of a bilateral investment begins with determining the enterprise value of the portfolio company. Enterprise value means the entire value of the company to a potential buyer, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The fair value of TICC’s investment is based, in part, on the enterprise value at which the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties other than in a forced or liquidation sale. The liquidity event whereby TICC exits a private investment is generally the sale, the recapitalization or, in some cases, the initial public offering of the portfolio company.

There is no one methodology to determine enterprise value and, in fact, for any one portfolio company, enterprise value is best expressed as a range of fair values, from which TICC derives a single estimate of enterprise value. To determine the enterprise value of a portfolio company, TICC analyzes the historical and projected financial results, as well as the nature and value of any collateral. TICC also uses industry valuation benchmarks and public market comparables. TICC also considers other events, including private mergers and acquisitions, a purchase transaction, public offering or subsequent debt or equity sale or restructuring, and include these events in the enterprise valuation process. TICC generally requires portfolio companies to provide annual audited and quarterly unaudited financial statements, as well as annual projections for the upcoming fiscal year.

Typically, TICC’s bilateral debt investments are valued on the basis of a fair value determination arrived at through an analysis of the borrower’s financial and operating condition or other factors, as well as consideration of the entity’s enterprise value. The types of factors that TICC may take into account in valuing its investments include: market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, among other factors. The fair value of equity interests in portfolio companies is determined based on various factors, including the enterprise value remaining for equity holders after the repayment of the portfolio company’s debt and other preference capital, and other pertinent factors such as recent offers to purchase a portfolio company, recent transactions involving the purchase or sale of the portfolio company’s equity securities, or other liquidity events. The determined equity values are generally discounted when TICC has a minority position, restrictions on resale, specific concerns about the receptivity of the capital markets to a specific company at a certain time, or other factors.

TICC will record unrealized depreciation on bilateral investments when TICC believes that an investment has become impaired, including where collection of a loan or realization of an equity security is doubtful. To the extent that TICC believes that it has become probable that a loan is not collectible or probable that an equity investment is not realizable, TICC will classify that amount as a realized loss. TICC will record unrealized appreciation if TICC believes that the underlying portfolio company has appreciated in value and TICC’s equity security has also appreciated in value. Changes in fair value, other than such changes that are considered probable of non-collection or non-realization, as described above, are recorded in the statement of operations as net change in unrealized appreciation or depreciation.

Under the valuation procedures approved by TICC’s Board of Directors, upon the recommendation of the Valuation Committee, a third-party valuation firm will prepare valuations for each of TICC’s bilateral investments for which market quotations are not readily available that, when combined with all other investments in the same portfolio company, (i) have a value as of the previous quarter of greater than or equal to 2.5% of its total assets as of the previous quarter, and (ii) have a value as of the current quarter of greater than or equal to 2.5% of its total assets as of the previous quarter, after taking into account any repayment of principal during the current quarter. In addition, the frequency of those third-party valuations of TICC’s portfolio securities is based upon the grade assigned to each such security under its credit grading system as follows: Grade 1, at least annually; Grade 2, at least semi-annually; Grades 3, 4, and 5, at least quarterly. TICC Management also retains the authority to seek, on TICC’s behalf, additional third party valuations with respect to both TICC’s bilateral portfolio securities and TICC’s syndicated loan investments. TICC’s Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment.

On April 9, 2009, the FASB issued additional guidelines under ASC 820-10-35, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” which provides guidance on factors that should be considered in determining when a previously active market becomes inactive and whether a transaction is orderly. In accordance with ASC 820-10-35, TICC’s valuation procedures specifically provide for the review of indicative quotes supplied by the large agent banks that make a market for each security. However, the marketplace for which TICC obtains indicative bid quotes for purposes of determining the fair value of its syndicated loan investments have shown these attributes of illiquidity as described by ASC-820-10-35. Due to limited market liquidity in the syndicated loan market, TICC believes that the non-binding indicative bids received from agent banks for certain syndicated investments that TICC owns may not be determinative of their fair value and therefore alternative valuation procedures may need to be undertaken. As a result, TICC has engaged third-party valuation firms to provide assistance in valuing certain syndicated investments that TICC owns. In addition, TICC Management prepares an analysis of each syndicated loan, including a financial summary, covenant compliance review, recent trading activity in the security, if known, and other business developments related to the portfolio company. All available information, including non-binding indicative bids which may not be determinative of fair value, is presented to the Valuation Committee to consider in its determination of fair value. In some instances, there may be limited trading activity in a security even though the market for the security is considered not active. In such cases the Valuation Committee will consider the number of trades, the size and timing of each trade, and other circumstances around such trades, to the extent such information is available, in its determination of fair value. The Valuation Committee will evaluate the impact of such additional information, and factor it into its consideration of the fair value that is indicated by the analysis provided by third-party valuation firms, if any. TICC has considered the factors described in ASC 820-10 and has determined that TICC is properly valuing the securities in its portfolio.

During the past several quarters, TICC has acquired a number of debt and equity positions in collateralized loan obligation (“CLO”) investment vehicles. These investments are special purpose financing vehicles. In valuing such investments, TICC considers the operating metrics of the specific investment vehicle, including compliance with collateralization tests, defaulted and restructured securities, and payment defaults, if any. In addition, TICC considers the indicative prices provided by a recognized industry pricing service as well as the indicative prices provided by the broker who arranges transactions in such investment vehicles, as well as any available information on other relevant transactions including firm bids and offers in the market. TICC Management or the Valuation Committee may request an additional analysis by a third-party firm to assist in the valuation process of CLO investment vehicles. All information is presented to TICC’s Board of Directors for its determination of fair value of these investments.

The Company’s assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at June 30, 2012, were as follows:

($ in millions)	Fair Value Measurements at Reporting Date Using
Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents	$	0.0	$	0.0	$	0.0	$	0.0
Senior Secured Notes		0.0		8.7		292.1		300.8
CLO Debt		0.0		0.0		68.8		68.8
CLO Equity		0.0		0.0		58.9		58.9
Subordinated Notes		0.0		0.0		4.4		4.4
Common Stock		0.0		0.0		4.2		4.2
Preferred Shares		0.0		0.0		1.8		1.8
Warrants to purchase equity		0.0		0.0		0.3		0.3

Total	$	0.0	$	8.7	$	430.5	$	439.2

Significant Unobservable Inputs for Level 3 Investments

In accordance with ASU 2011-04, the following table provides quantitative information about the Company’s Level 3 fair value measurements as of June 30, 2012. The Company’s valuation policy, as described above, establishes parameters for the sources and types of valuation analysis, as well as the methodologies and inputs that the Company uses in determining fair value. If the Valuation Committee or TICC Management determines that additional techniques, sources or inputs are appropriate or necessary in a given situation, such additional work will be undertaken. The table, therefore, is not all-inclusive, but provides information on the significant Level 3 inputs that are pertinent to the Company’s fair value measurements. The weighted average calculations in the table below are based on principal balances for all debt related calculations and CLO equity.

($ in millions)	Quantitative Information about Level 3 Fair Value Measurements
			Valuation
	Fair Value as of		Techniques/	Unobservable	Range/Weighted
Assets	June 30, 2012		Methodologies	Input	Average
Corporate debt investments
syndicated	$	257.1	market quotes	NBIB⁽¹⁾	60.0%-100.5%/95.54%

bilateral		39.4	valuation analysis⁽²⁾/ enterprise value	EBITDA⁽³⁾market multiples⁽³⁾discount rates⁽⁵⁾ICG⁽⁴⁾	$3.031-$5.913/ncm⁽⁶⁾2.88x - 6.25x/ncm⁽⁶⁾ 20.05%-25.05%/ncm⁽⁶⁾ 2-5/2.6

CLO debt		68.8	market quotes	NBIB⁽¹⁾	58.03%-88.1%/71.35%

CLO equity		58.9	market quotes	NBIB⁽¹⁾	64.0%-98.0% /80.17%

Other investments		6.3	valuation analysis⁽²⁾/ enterprise value	EBITDA⁽³⁾ market multiples⁽³⁾discount rates⁽⁵⁾	$3.031-$169.492/ncm⁽⁶⁾2.88x-7.30x/ncm⁽⁶⁾ 20.0%-22.0%/ncm⁽⁶⁾
Total Fair Value for Level 3 Investments	$	430.5

(1)

The Company generally uses prices provided by an independent pricing service, or broker or agent bank non-binding indicative bid prices (NBIB) on or near the valuation date as the primary basis for the fair value determinations for syndicated notes, and CLO debt and equity investments. These bid prices are non-binding, and may not be determinative of fair value. Each bid price is evaluated by the Valuation Committee in conjunction with additional information compiled by TICC Management, including financial performance, recent business developments, and, in the case of CLO debt and equity investments, performance and covenant compliance information as provided by the independent trustee.

(2)

For the Company’s bilateral debt investments and equity investments, third-party valuation firms evaluate the financial and operational information of the portfolio companies that the Company provides to them, as well as independent market and industry information that they consider appropriate in forming an opinion as to the fair value of the Company’s securities. In those instances where the carrying value and/or internal credit rating of the investment does not require the use of a third-party valuation firm, a valuation is prepared by TICC Management, which may include liquidation analysis or which may utilize a subsequent transaction to provide an indication of fair value.

(3)

EBITDA, or earnings before interest expense, taxes, depreciation and amortization, is an unobservable input which is generally based on most recently available twelve month financial statements provided by the portfolio company. Market multiples, also an unobservable input, represent an estimation of where market participants might value an enterprise based upon information available for comparable companies in the market.

(4)	The Company has adopted a credit grading system for its debt investments as part of the valuation process. The internal credit grading (ICG), which ranges from 1 (highest) to 5 (lowest), is an unobservable input which represents a proprietary grading system developed by TICC Management.

(5)	Discount rate represents the rate at which future cash flows are discounted to calculate a present value, reflecting market assumptions for risk.

(6)

The calculation of weighted average for a range of values, for multiple investments within a given asset category, is not considered to provide a meaningful representation (“ncm”).

Significant increases or decreases in any of the unobservable inputs in isolation may result in a significantly lower or higher fair value measurement.

Financial Instruments Disclosed, But Not Carried, At Fair Value

The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of June 30, 2012 and the level of each financial liability within the fair value hierarchy:

(In thousands)		Carrying Value				Fair Value				Level 1				Level 2				Level 3
Class A Notes		$	99,803			$	100,491			$	-			$	-			$	100,491

Fair value is based upon the bid price provided by the placement agent at the measurement date.

A reconciliation of the fair value of investments for three months ended June 30, 2012, utilizing significant unobservable inputs, is as follows:

($ in millions)	Senior Secured Note Investments			Collateralized Loan Obligation Debt Investments			Collateralized Loan Obligation Equity Investments			Subordinated Note Investments			Common Stock Investments			Preferred Share Equity Investments			Warrants to Purchase Equity Investments			Total
Balance at March 31, 2012	$	291.9		$	70.5		$	59.7		$	4.9		$	5.1		$	2.3		$	1.0		$	435.4
Realized Gains included in earnings		1.3			0.0			0.0			0.0			0.0			0.0			0.1			1.4
Unrealized (depreciation) appreciation included in earnings		(1.9	)		(2.4	)		(0.8	)		(0.2	)		(0.9	)		(0.6	)		(0.3	)		(7.1	)
Accretion of discount		0.8			0.7			0.0			0.0			0.0			0.0			0.0			1.5
Purchases		62.1			0.0			0.0			0.0			0.0			0.0			0.0			62.1
Repayments and Sales		(66.0	)		0.0			0.0			(0.3	)		0.0			0.0			(0.5	)		(66.8	)
Payment in Kind income		3.9			0.0			0.0			0.0			0.0			0.1			0.0			4.0
Transfers in and/or out of level 3		0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0

Balance at June 30, 2012	$	292.1		$	68.8		$	58.9		$	4.4		$	4.2		$	1.8		$	0.3		$	430.5

The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations	$	(1.7	)	$	(2.4	)	$	(0.8	)	$	(0.2	)	$	(0.9	)	$	(0.6	)	$	(0.2	)	$	(6.8	)

A reconciliation of the fair value of investments for six months ending June 30, 2012, utilizing significant unobservable inputs, is as follows:

($ in millions)	Senior Secured Note Investments			Collateralized Loan Obligation Debt Investments			Collateralized Loan Obligation Equity Investments		Subordinated Note Investments			Common Stock Investments		Preferred Share Equity Investments			Warrants to Purchase Equity Investments			Total
Balance at December 31, 2011	$	279.2		$	51.0		$	39.3	$	4.9		$	3.1	$	2.5		$	0.8		$	380.8
Realized Gains included in earnings		1.4			0.2			0.0		0.0			0.0		0.0			0.1			1.7
Unrealized (depreciation) appreciation included in earnings		(4.6	)		3.2			2.8		(0.1	)		1.1		(0.9	)		(0.1	)		1.4
Accretion of discount		1.6			1.3			0.0		0.0			0.0		0.0			0.0			2.9
Purchases		88.2			14.6			16.8		0.0			0.0		0.0			0.0			119.6
Repayments and Sales		(77.7	)		(1.5	)		0.0		(0.4	)		0.0		0.0			(0.5	)		(80.1	)
Payment in Kind income		4.0			0.0			0.0		0.0			0.0		0.2			0.0			4.2
Transfers in and/or out of level 3		0.0			0.0			0.0		0.0			0.0		0.0			0.0			0.0

Balance at June 30, 2012	$	292.1		$	68.8		$	58.9	$	4.4		$	4.2	$	1.8		$	0.3		$	430.5

The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations	$	(5.2	)	$	3.4		$	2.7	$	(0.1	)	$	1.1	$	(0.9	)	$	(0.2	)	$	0.8

Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at December 31, 2011, were as follows:

($ in millions)	Fair Value Measurements at Reporting Date Using
Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents	$	0.0	$	0.0	$	0.0	$	0.0
Senior Secured Notes		0.0		10.7		279.2		289.9
CLO Debt		0.0		0.0		51.0		51.0
CLO Equity		0.0		0.0		39.3		39.3
Subordinated Notes		0.0		0.0		4.9		4.9
Common Stock		0.0		0.0		3.1		3.1
Preferred Shares		0.0		0.0		2.5		2.5
Warrants to purchase equity		0.0		0.0		0.8		0.8

Total	$	0.0	$	10.7	$	380.8	$	391.5

A reconciliation of the fair value of investments for the year ended December 31, 2011, utilizing significant unobservable inputs, is as follows:

($ in millions)	Senior Secured Note Investments			Collateralized Loan Obligation Debt Investments			Collateralized Loan Obligation Equity Investments			Subordinated Note Investments			Common Stock Investments			Preferred Share Equity Investments		Warrants to Purchase Equity Investments		Total
Balance at December 31, 2010	$	173.9		$	50.4		$	8.9		$	6.0		$	5.8		$	2.0	$	0.5	$	247.5
Realized Losses included in earnings		2.7			0.9			0.0			0.0			0.0			0.0		0.0		3.6
Unrealized (depreciation) appreciation included in earnings		(5.7	)		(9.5	)		(1.5	)		(0.4	)		(2.7	)		0.1		0.3		(19.4	)
Accretion of discount		2.8			2.2			0.0			0.0			0.0			0.0		0.0		5.0
Purchases		230.0			10.6			31.9			0.0			0.0			0.0		0.0		272.5
Repayments and Sales ⁽¹⁾		(113.8	)		(3.6	)		0.0			(0.7	)		0.0			0.4		0.0		(117.7	)
Transfers in and/or out of level 3		(10.7	)		0.0			0.0			0.0			0.0			0.0		0.0		(10.7	)
Balance at December 31, 2011	$	279.2		$	51.0		$	39.3		$	4.9		$	3.1		$	2.5	$	0.8	$	380.8
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations	$	(4.1	)	$	(8.8	)	$	(1.3	)	$	(0.3	)	$	(2.7	)	$	0.1	$	0.3	$	(16.8	)

⁽¹⁾	Includes PIK income of approximately $1.5 million and rounding adjustments to reconcile period balances.

NOTE 4. BORROWINGS

In accordance with the 1940 Act, with certain limited exceptions, the Company is only allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. As of June 30, 2012, the Company’s asset coverage for borrowed amounts was 452%.

On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes offered in the securitization were issued by TICC CLO, and are secured by the assets held by the trustee on behalf of the Securitization Issuer. The securitization was executed through a private placement of $101.25 million of Aaa/AAA Class A Notes which bear interest, after the effective date, at three-month London Inter Bank Offered Rate (“LIBOR”) plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The notes were sold at a discount to par, and the amount of the discount is being amortized over the term of the notes. The Class A Notes are included in the June 30, 2012 consolidated statements of assets and liabilities. On April 25, 2012, the Class A note holders were paid interest on the Class A notes of approximately $719,000 and for the six months ending June 30, 2012, the Class A note holders were paid interest on the Class A notes of approximately $2.0 million. Holdings retained all of the subordinated notes totaling $123.75 million and all of the membership interests in the Securitization Issuer. The subordinated notes do not bear interest, but are entitled to the residual economic interest in the Securitization Issuer.

During a period of up to three years from the closing date, all principal collections received on the underlying collateral may be used by the Securitization Issuer to purchase new collateral under the direction of TICC in its capacity as collateral manager of the Securitization Issuer and in accordance with the Company’s investment strategy, allowing the Company to maintain the initial leverage in the securitization for such three-year period. The Class A Notes are scheduled to mature on July 25, 2021.

The proceeds of the private placement of the Class A Notes, net of discount and debt issuance costs, were used for investment purposes. As part of the securitization, TICC entered into a master loan sale agreement with Holdings and the Securitization Issuer under which TICC agreed to sell or contribute certain senior secured and second lien loans (or participation interests therein) to Holdings, and Holdings agreed to sell or contribute such loans (or participation interests therein) to the Securitization Issuer and to purchase or otherwise acquire subordinated notes issued by the Securitization Issuer. The Class A Notes are the secured obligations of the Securitization Issuer, and an indenture governing the Notes includes customary covenants and events of default.

TICC serves as collateral manager to the Securitization Issuer under a collateral management agreement. TICC is entitled to a deferred fee for its services as collateral manager. The deferred fee is eliminated in consolidation.

As of June 30, 2012, there were 44 investments in portfolio companies with a total fair value of approximately $215.3 million, securing the Class A Notes. The pool of loans in the securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements.

Effective January 25, 2012 and through April 24, 2012, the interest rate of 2.81% charged under the securitization was based on three-month LIBOR of 0.56%. Effective April 25, 2012 and through June 30, 2012, the interest rate of 2.72% charged under the securitization was based on three-month LIBOR of 0.47%. For the three and six months ended June 30, 2012, respectively, the effective annualized average interest rate, which includes amortization of discount and debt issuance costs on the securitization, was 3.23% and 3.27%. For the three and six months ended June 30, 2012, respectively, interest expense, including the amortization of deferred debt issuance costs and the discount on the face amount of the Class A Notes, was $816,304 and $1,653,081.

The amounts, ratings and interest rates (expressed as a spread to LIBOR) of the Class A Notes are as follows:

Description	Class A Notes
Type	Senior Secured Floating Rate
Amount Outstanding	$101,250,000
Moody’s Rating	“Aaa”
Standard & Poor’s Rating	“AAA”
Interest Rate	LIBOR + 2.25%
Stated Maturity	July 25, 2021

The following are the carrying values and fair values of the Company’s debt liabilities as of June 30, 2012 and December 31, 2011. Fair value is based upon the bid price provided by the placement agent at the measurement date.

	As of June 30, 2012 (in thousands)				As of December 31, 2011 (in thousands)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Class A Notes	$	99,803	$	100,491	$	99,711	$	95,723

Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s debt securitization. As of June 30, 2012, the Company had deferred financing costs of approximately $2.7 million. Discount on the Notes at the time of issuance totaled approximately $1.6 million. These amounts are being amortized and included in interest expense in the consolidated statements of operations over the term of the debt securitization. Amortization expense for the three and six months ended June 30, 2012, was approximately $115,000 and $243,000, respectively. The amortization expense for the year ended December 31, 2011 was approximately $167,000.

NOTE 5. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net increase in net assets resulting from operations per share for the three months and six months ended June 30, 2012 and 2011, respectively:

	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Six Months Ended June 30, 2012		Six Months Ended June 30, 2011
Numerator for basic and diluted income per share–net increase in net assets resulting from investment income	$	15,037,476	$	9,523,437	$	23,191,996	$	10,071,460

Numerator for basic and diluted income per share–net increase in net assets resulting from operations	$	9,259,874	$	4,204,646	$	26,343,242	$	15,764,288

Denominator for basic and diluted income per share–weighted average shares		37,755,905		32,387,993		35,583,102		32,151,738

Basic and diluted net investment income per common share	$	0.40	$	0.29	$	0.65	$	0.31

Basic and diluted net increase in net assets resulting from operations per common share	$	0.25	$	0.13	$	0.74	$	0.49

NOTE 6. RELATED PARTY TRANSACTIONS

TICC has entered into an investment advisory agreement with TICC Management (the “Investment Advisory Agreement”) under which TICC Management, subject to the overall supervision of TICC’s Board of Directors, manages the day-to-day operations of, and provides investment advisory services to, TICC. For providing these services TICC Management receives a fee from TICC, consisting of two components: a base management fee (the “Base Fee”) and an incentive fee. The Base Fee is calculated at an annual rate of 2.00%. The Base Fee is payable quarterly in arrears, and is calculated based on the average value of TICC’s gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any equity or debt capital raises, repurchases or redemptions during the current calendar quarter. Accordingly, the Base Fee will be payable regardless of whether the value of TICC’s gross assets have decreased during the quarter.

The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that TICC receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Base Fee, expenses payable under the Company’s administration agreement with BDC Partners (the “Administration Agreement”), and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to one- fourth of an annual “hurdle rate.” Given that this portion of the incentive fee is payable without regard to any capital gain, capital loss or unrealized depreciation that may occur during the quarter, this portion of TICC Management’s incentive fee may also be payable notwithstanding a decline in net asset value that quarter.

For each year commencing on or after January 1, 2005, the annual hurdle rate has been determined as of the immediately preceding December 31^st by adding 5.0% to the interest rate then payable on the most recently issued five-year U.S. Treasury Notes, up to a maximum annual hurdle rate of 10.0%. The annual hurdle rate for the 2011, 2010 and 2009 calendar year was 7.01%, 7.69% and 6.55%, respectively. The current hurdle rate for the 2012 calendar year, calculated as of December 31, 2011, is 5.83%.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20% of the Company’s “Incentive Fee Capital Gains,” which consist of the Company’s realized capital gains for each calendar year, computed net of all realized capital losses and unrealized capital depreciation for that calendar year. For accounting purposes only, in order to reflect the theoretical capital gains incentive fee that would be payable for a given period as if all unrealized gains were realized, we will accrue a capital gains incentive fee based upon net realized capital gains and unrealized capital depreciation for that calendar year (in accordance with the terms of the Investment Advisory Agreement), plus unrealized capital appreciation on investments held at the end of the period. It should be noted that a fee so calculated and accrued would not necessarily be payable under the Investment Advisory Agreement, and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement.

Incentive fees, based upon pre-incentive fee net investment income, were approximately $2.2 million and $610,000 for the quarters ended June 30, 2012 and 2011, respectively; for the six month periods ended June 30, 2012 and 2011, TICC incurred pre-incentive fee net investment income incentive fees of approximately $3.4 million and $989,000, respectively. The net investment income incentive fee payable to TICC Management for the second quarter of 2012 and 2011, were approximately $2.2 million and $610,000, respectively.

For the quarter ended June 30, 2012, the capital gains incentive fee expense was reduced by approximately $1.2 million compared with an expense reduction of approximately $1.4 million for the quarter ended June 30, 2011. For the first two quarters of 2012, the capital gains incentive fee liability was reduced by approximately $90,000 compared with expenses incurred of approximately $5.0 million for the six months ending June 30, 2011. The amount of capital gains incentive fee expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to TICC Management in the event of a complete liquidation of TICC’s portfolio as of period end and the termination of the Investment Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee expense fluctuates with the Company’s overall investment results.

In addition, in the event the Company recognizes payment-in-kind, or “PIK,” interest income in excess of its available capital, the Company may be required to liquidate assets in order to pay a portion of the incentive fee. TICC Management, however, is not required to reimburse the Company for the portion of any incentive fees attributable to PIK loan interest income in the event of a subsequent default.

TICC Management is controlled by BDC Partners, its managing member. Charles M. Royce, as the non-managing member, holds a minority, non-controlling interest in TICC Management. BDC Partners, as the managing member of TICC Management, manages the business and internal affairs of TICC Management. In addition, BDC Partners provides TICC with office facilities and administrative services pursuant to an amended and restated administration agreement (the “Administration Agreement”). Jonathan H. Cohen, the Company’s Chief Executive Officer, as well as a Director, is the managing member of BDC Partners. Saul B. Rosenthal, the Company’s President and Chief Operating Officer, is also the President and Chief Operating Officer of TICC Management and a member of BDC Partners. Messrs. Cohen and Rosenthal have an equal equity interest in BDC Partners. Charles M. Royce, the Company’s non-executive Chairman of the Board of Directors, does not take part in the management or participate in the operations of TICC Management; however, Mr. Royce is expected to be available from time to time to TICC Management to provide certain consulting services without compensation. BDC Partners is also the managing member of Oxford Gate Capital, LLC, a private fund in which Messrs. Cohen and Rosenthal, along with certain investment and administrative personnel of TICC Management, are invested.

Under the Administration Agreement, BDC Partners provides administrative services for TICC. The Company pays BDC Partners an allocable portion of overhead and other expenses incurred by BDC Partners in performing its obligations under the Administration Agreement, including a portion of the rent and the compensation of the chief financial officer, chief compliance officer, controller and other administrative support personnel, which creates potential conflicts of interest that the Board of Directors must monitor.

For the quarters ended June 30, 2012 and 2011, respectively, TICC incurred base investment advisory fees of approximately $2.5 million and $1.7 million in accordance with the terms of the Investment Advisory Agreement; for the first two quarters ended June 30, 2012 and 2011, TICC incurred investment advisory fees of approximately $4.6 million and $3.3 million, respectively, of which amounts $2.5 million and $1.7 million remained payable to TICC Management at the end of each respective period. TICC incurred approximately $279,000 and $258,000 in compensation expenses for the services of employees allocated to the administrative activities of TICC, pursuant to the Administration Agreement with BDC Partners; for the six months ended June 30, 2012 and 2011, TICC incurred compensation expenses of approximately $550,000 and $496,000, respectively, of which amounts approximately $300,000 and $267,000 was accrued for compensation expense at the end of each respective period. In addition, TICC incurred approximately $17,400 and $17,300 for reimbursement of facility costs allocated under the agreement for the three months June 30, 2012 and 2011, respectively; for the six months ended June 30, 2012 and 2011, TICC incurred approximately $34,000 and $35,000, of which amounts $0 and $6,000 remained payable at the end of each respective period.

NOTE 7. DIVIDENDS

The Company intends to continue to operate so as to qualify to be taxed as a RIC under the Code and, as such, the Company would not be subject to federal income tax on the portion of its taxable income and gains distributed to stockholders. To qualify as a RIC, the Company is required, among other requirements, to distribute at least 90% of its annual investment company taxable income, as defined by the Code. The amount to be paid out as a dividend is determined by the Board of Directors each quarter and is based upon the annual earnings estimated by the management of the Company. To the extent that the Company’s earnings fall below the amount of dividends declared, however, a portion of the total amount of the Company’s dividends for the fiscal year may be deemed a return of capital for tax purposes to the Company’s stockholders.

The Company intends to comply with the applicable provisions of the Code pertaining to regulated investment companies to make distributions of taxable income sufficient to relieve it of substantially all Federal income taxes. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. The Company will accrue excise tax on estimated excess taxable income, if any, as required.

On June 29, 2012, the Company paid a dividend of $0.27 per share. The Company has a dividend reinvestment plan under which all distributions are paid to stockholders in the form of additional shares, unless a stockholder elects to receive cash. The plan was recently amended to provide a 5% discount for shares purchased under the dividend reinvestment plan.

NOTE 8. NET ASSET VALUE PER SHARE

The Company’s net asset value per share at June 30, 2012 was $9.47, and at December 31, 2011 was $9.30. In determining the Company’s net asset value per share, the Board of Directors determined in good faith the fair value of the Company’s portfolio investments for which reliable market quotations are not readily available.

NOTE 9. PAYMENT-IN-KIND

The Company may have investments in its portfolio which contain a payment-in-kind, or PIK, provision. The PIK interest and PIK fee is added to the cost basis of the investment and recorded as income. To maintain the Company’s status as a RIC (as discussed in Note 7 above), this non-cash source of income must be paid out to stockholders in the form of dividends, even though the Company has not yet collected the cash. Amounts necessary to pay these dividends may come from available cash or the liquidation of certain investments. For the three months ended June 30, 2012 and 2011, the Company recorded approximately $4.0 million and $733,000 in PIK income, respectively. For the six months ended June 30, 2012 and 2011, the Company recorded approximately $4.2 million and $805,000 in PIK interest, respectively.

In addition, the Company recorded original issue discount income of approximately $1.5 million and $1.2 million for the three months ended June 30, 2012 and 2011, respectively, representing the amortization of the discount attributed to certain debt securities purchased by the Company, including original issue discount (“OID”) and market discount. The Company had discount income of approximately $2.9 million and $2.4 million for the six months ended June 30, 2012 and 2011, respectively.

NOTE 10. OTHER INCOME

Other income includes primarily closing fees or origination fees associated with investments in portfolio companies. Such fees are normally paid at closing of the Company’s investments, are fully earned and non-refundable, and are generally non-recurring.

For the three months ended June 30, 2012, the Company recorded approximately $4.1 million in other income comprised of approximately $3.4 million in amendment fees in connection with its debt investment in American Integration Technologies, LLC, as well as approximately $0.7 million of additional fee income from its investments in other portfolio companies. For the three months ended June 30, 2011, the Company recorded approximately $287,000 in other income. The Company recorded other income totaling approximately $4.2 million and $446,000 for the six months ended June 30, 2012 and 2011, respectively.

The 1940 Act requires that a business development company make available managerial assistance to its portfolio companies. The Company may receive fee income for managerial assistance it renders to portfolio companies in connection with its investments. For the three months ended June 30, 2012 and 2011, respectively, the Company received no fee income for managerial assistance.

NOTE 11. DISTRIBUTIONS FROM SECURITIZATION VEHICLES AND EQUITY INVESTMENTS

The Company also receives distributions on the “equity” tranches of securitization vehicles in which it invests. These tranches represent the residual economic interests in such securitization vehicles, and those distributions are determined by the respective trustee on a quarterly basis. The distributions are recognized in the period that they are finally determined and payable. The Company earned approximately $6.3 million in such distributions during the quarter ended June 30, 2012, compared to approximately $3.6 million during the quarter ended June 30, 2011. The Company received distributions of approximately $12.0 million and $5.9 million for the six months ended June 30, 2012 and 2011, respectively.

NOTE 12. FINANCIAL HIGHLIGHTS

Financial highlights for the three and six months ending June 30, 2012 and 2011, respectively, are as follows:

	Three Months Ended June 30, 2012 (unaudited)			Three Months Ended June 30, 2011 (unaudited)			Six Months Ended June 30, 2012 (unaudited)			Six Months Ended June 30, 2011 (unaudited)

Per Share Data
Net asset value at beginning of period	$	9.50		$	9.97		$	9.30		$	9.85

Net investment income⁽¹⁾		0.40			0.29			0.65			0.31
Net realized and unrealized capital gains⁽²⁾		(0.15	)		(0.16	)		0.09			0.18

Total from net investment operations		0.25			0.13			0.74			0.49

Distributions per share from net investment income		(0.27	)		(0.25	)		(0.54	)		(0.49	)

Distributions based on weighted average share impact		(0.01	)		-			(0.03	)		-
Distributions from net realized capital gains		-			-			-			-

Tax return of capital distributions		-			-			-			-

Total distributions⁽³⁾		(0.28	)		(0.25	)		(0.57	)		(0.49	)

Effect of shares issued, net of offering expenses⁽⁶⁾		-			-			-			-

Net asset value at end of period	$	9.47		$	9.85		$	9.47		$	9.85

Per share market value at beginning of period	$	9.74		$	10.87		$	8.65		$	11.21
Per share market value at end of period	$	9.69		$	9.60		$	9.69		$	9.60
Total return⁽⁴⁾		2.26	%		(9.38	)%		18.34	%		(10.19	)%
Shares outstanding at end of period		37,806,232			32,671,485			37,806,232			32,671,485

Ratios/Supplemental Data
Net assets at end of period (000’s)		358,055			321,776			358,055			321,776
Average net assets (000’s)		356,762			321,805			336,458			318,218
Ratio of expenses to average net assets:
Expenses before incentive fees⁽⁵⁾		4.95	%		3.03	%		5.20	%		3.02	%
Net investment income incentive fees⁽⁵⁾		2.43	%		0.76	%		1.99	%		0.62	%
Capital gains incentive fees⁽⁵⁾		(1.30	)%		(1.79	)%		(0.05)	%		3.16	%

Total ratio of expenses to average net assets⁽⁵⁾		6.08	%		2.00	%		7.14	%		6.80	%

Ratio of expenses, excluding interest expense, to average net assets⁽⁵⁾		5.17	%		2.00	%		6.16	%		6.80	%

Ratio of net investment income to average net assets⁽⁵⁾		16.86	%		11.84	%		13.79	%		6.33	%

⁽¹⁾	Represents per share net investment income for the period, based upon average shares outstanding.
⁽²⁾	Net realized and unrealized capital gains include rounding adjustments to reconcile change in net asset value per share.
⁽³⁾	Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of such distributions were determined as of June 30, 2012, none of the distributions for 2012 would have been characterized as a tax return of capital to the Company’s stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes.
⁽⁴⁾	Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company’s dividend reinvestment plan. Total return is not annualized.
⁽⁵⁾	Annualized.
⁽⁶⁾	There was an accretion of approximately $0.02 per share based on the actual number of offering shares sold during the quarter ended March 31, 2012. Based on weighted average shares, the impact is less than $0.01 per share.

NOTE 13. CASH AND CASH EQUIVALENTS

At June 30, 2012 and December 31, 2011, respectively, cash and cash equivalents consisted of:

	June 30, 2012		December 31, 2011
Total Cash Equivalents	$	—	$	—

Cash		10,868,065		4,494,793
Restricted Cash		13,790,934		23,183,698

Cash and Cash Equivalents	$	24,658,999	$	27,678,491

Restricted cash represents amounts that are collected and are held by Bank of New York as trustee and custodian of the assets for the Company’s debt securitization. Restricted cash is held by the trustee for payment of interest expense and principal on the outstanding borrowings or reinvestment in new assets.

NOTE 14. COMMITMENTS

As of June 30, 2012, the Company had not made any commitments to purchase additional debt investments and/or warrants from any portfolio companies.

NOTE 15. SUBSEQUENT EVENTS

On July 26, 2012, the Board of Directors declared a distribution of $0.29 per share for the third quarter, payable on September 28, 2012 to shareholders of record as of September 14, 2012.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about TICC, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties, including statements as to:

•

our future operating results;

•

our business prospects and the prospects of our portfolio companies;

•

the impact of investments that we expect to make;

•

our contractual arrangements and relationships with third parties;

•

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

•

the ability of our portfolio companies to achieve their objectives;

•

our expected financings and investments;

•

the adequacy of our cash resources and working capital; and

•

the timing of cash flows, if any, from the operations of our portfolio companies.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

•

interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

•

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and

•

the risks, uncertainties and other factors we identify in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.

Except where the context requires otherwise, the terms “TICC,” “Company,” “we,” “us” and “our” refer to TICC Capital Corp. together with its subsidiaries, TICC Capital Corp. 2011-1 Holdings LLC (“Holdings”) and TICC CLO LLC (“Securitization Issuer” or “TICC CLO”); “TICC Management” refers to TICC Management, LLC; and “BDC Partners” refers to BDC Partners, LLC.

The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.

OVERVIEW

Our investment objective is to maximize our portfolio’s total return. Our primary focus is to seek current income by investing in corporate debt securities. We have also invested and may continue to invest in structured finance investments, including CLO vehicles, which own debt securities. We may also invest in publicly traded debt and/or equity securities. We operate as a closed-end, non-diversified management investment company and have elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). We have elected to be treated for tax purposes as a regulated investment company (“RIC”), under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our 2003 taxable year.

Our investment activities are managed by TICC Management, a registered investment adviser under the Investment Advisers Act of 1940, as amended. TICC Management is owned by BDC Partners, its managing member, and Charles M. Royce, our non-executive Chairman, who holds a minority, non-controlling interest in TICC Management. Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President and Chief Operating Officer, are the members of BDC Partners. Under an investment advisory agreement (the “Investment Advisory Agreement”), we have agreed to pay TICC Management an annual base fee calculated on gross assets, and an incentive fee based upon our performance. Under an amended and restated administration agreement (the “Administration Agreement”), we have agreed to pay or reimburse BDC Partners, as administrator, for certain expenses incurred in operating TICC. Our executive officers and directors, and the executive officers of TICC Management and BDC Partners, serve or may serve as officers and directors of entities that operate in a line of business similar to our own. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders. For more information, see “Risk Factors—Risks Relating to our Business and Structure—There are significant potential conflicts of interest, which could impact our investment returns.”

On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes offered in the debt securitization were issued by TICC CLO, a subsidiary of Holdings, a direct subsidiary of TICC, and the notes are secured by the assets held by the Securitization Issuer. The securitization was executed through a private placement of $101.25 million of Aaa/AAA Class A Notes of the Securitization Issuer. Holdings retained all of the subordinated notes, which totaled $123.75 million (the “Subordinated Notes”), and retained all the membership interests in the Securitization Issuer.

While the structure of our investments will vary, and while we invest across a wide range of different industries, we have historically overweighted our investments in the debt of technology-related companies. We seek to invest in entities that, as a general matter, have been operating for at least one year prior to the date of our investment and that will, at the time of our investment, have employees and revenues, and are cash flow positive. Many of these companies will have financial backing provided by private equity or venture capital funds or other financial or strategic sponsors at the time we make an investment.

We generally expect to invest between $5 million and $25 million in each of our portfolio companies, although this investment size may vary proportionately as the size of our capital base changes and market conditions warrant, and accrue interest at fixed or variable rates. We expect that our investment portfolio will be diversified among a large number of investments with few investments, if any, exceeding 5% of the total portfolio. As of June 30, 2012, our debt investments had stated interest rates of between 3.82% and 15.75% (excluding our investment in GenuTec Business Solutions, Inc. which carries a zero interest rate through October 30, 2014) and maturity dates of between 6 and 124 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 11.2% including GenuTec Business Solutions, Inc.

Our loans may carry a provision for deferral of some or all of the interest payments and amendment fees, which will be added to the principal amount of the loan. This form of deferred income is referred to as “payment-in-kind,” or “PIK,” interest or other income and, when earned, is recorded as interest or other income and an increase in the principal amount of the loan. For the quarter ended June 30, 2012, we recognized approximately $3.4 million of PIK fee income associated with our investment in American Integration Technologies, LLC, and approximately $600,000 from PIK interest and dividend income associated with our investments in Pegasus Solutions, Inc., Merrill Communications, LLC., and Shearers Food, Inc., compared to PIK interest of approximately $773,000 for the quarter ended June 30, 2011.

We have historically and may continue to borrow funds to make investments. As a result, we are exposed to the risks of leverage, which may be considered a speculative investment technique. Borrowings, also known as leverage, magnify the potential for gain and loss on amounts invested and therefore increase the risks associated with investing in our securities. In addition, the costs associated with our borrowings, including any increase in the management fee payable to TICC Management, will be borne by our common stockholders.

In addition, as a BDC under the 1940 Act, we are required to make available significant managerial assistance, for which we may receive fees, to our portfolio companies. These fees would be generally non-recurring, however in some instances they may have a recurring component. We have received no fee income for managerial assistance to date.

Prior to making an investment, we may enter into a non-binding term sheet with the potential portfolio company. These term sheets are generally subject to a number of conditions, including but not limited to the satisfactory completion of our due diligence investigations of the company’s business and legal documentation for the loan.

To the extent possible, our loans will be collateralized by a security interest in the borrower’s assets or guaranteed by a principal to the transaction. Interest payments, if not deferred, are normally payable quarterly with most debt investments having scheduled principal payments on a monthly or quarterly basis. When we receive a warrant to purchase stock in a portfolio company, the warrant will typically have a nominal strike price, and will entitle us to purchase a modest percentage of the borrower’s stock.

During the quarter ended June 30, 2012, we closed approximately $62.1 million in portfolio investments, including additional investments of approximately $26.2 million in existing portfolio companies and approximately $35.9 million in new portfolio companies. During the quarter ended June 30, 2012, we recognized a total of $66.2 million from principal repayments on debt investments, and we recognized approximately $2.5 million from the sale of portfolio investments. We realized net gains on investments during the quarter ended June 30, 2012 in the amount of approximately $1.5 million. For the quarter ended June 30, 2012, we had net unrealized depreciation of approximately $7.3 million.

Based upon the fair value determinations made in good faith by the Board of Directors, during the quarter ended June 30, 2012, we had net unrealized depreciation of approximately $7.3 million, comprised of $2.9 million in gross unrealized appreciation, $9.8 million in gross unrealized depreciation and approximately $0.4 million relating to the reversal of prior period net unrealized appreciation as an investment was realized. The most significant changes in net unrealized appreciation and depreciation during the quarter ended June 30, 2012 were as follows (in millions):

Portfolio Company	Unrealized appreciation (depreciation)
SourceHOV, LLC	$	0.7
Sargas CLO 2006 -1A		0.6
Power Tools, Inc.		0.4
GSC 2007-8X CLO		0.3
Lightpoint CLO 2005-3X		(0.3	)
Stone Tower CLO LTD 2007 7X		(0.3	)
ACA CLO 2006-2, Limited		(0.4	)
Integra Telecom Holdings, Inc.		(0.7	)
Pegasus Solutions, Inc.		(1.1	)
Merrill Communications, LLC		(1.8	)
Net all other		(4.7	)

Total	$	(7.3	)

For the quarter ended June 30, 2011, we recorded net realized gains on investments of approximately $0.7 million, which represents the gain realized on the repayment of our investment in Prodigy Health Group.

Based upon the fair value determinations made in good faith by the Board of Directors, during the quarter ended June 30, 2011, we had net unrealized depreciation of approximately $6.0 million, comprised of $1.9 million in gross unrealized appreciation, $7.1 million in gross unrealized depreciation and approximately $0.8 million relating to the reversal of prior period net unrealized appreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the quarter ended June 30, 2011 were as follows (in millions):

Portfolio Company	Unrealized appreciation (depreciation)
American Integration Technologies, LLC	$	0.9
Pegasus Solutions, Inc		0.4
Lightpoint CLO 2007-8a		(0.3	)
Ocean Trails CLO II 2007-2a-d		(0.3	)
Harbourview – 2006A CLO Equity		(0.4	)
Hewetts Island CDO III 2005-1A D		(0.5	)
Hewetts Island CDO IV 2006-4		(0.6	)
Sargas CLO 2006 -1A		(0.8	)
Prodigy Health Group		(0.8	)
Integra Telecom Holdings, Inc		(1.0	)
Net all other		(2.6	)

Total	$	(6.0	)

Current Market and Economic Conditions

Beginning in mid-2007, global credit and other financial markets suffered substantial stress, volatility, illiquidity and disruption. These developments caused a series of failures and restructurings among a large number of financial institutions, which either participated in the origination and distribution of structured finance or syndicated loan credit products, or invested in them. The debt and equity capital markets in the U.S. were impacted by significant write-offs in the financial services sector relating to these products and the re-pricing of credit risk in the loan market, among other things.

These events constrained the availability of capital for the market as a whole, and the financial services sector in particular. During 2009, the syndicated corporate loans market experienced both unprecedented price declines and volatility. While prices remained depressed across many sectors and ratings categories through most of 2009, we witnessed a strong upward move during the second half of 2009, which continued through 2010. During 2011 and through the quarter ended June 30, 2012, we saw ongoing price volatility for corporate loans, consistent with many other parts of the debt and equity markets. Although corporate loan prices may still be below historical averages, our view is that certain, primarily larger-issuer, broadly syndicated corporate loans still may not adequately reflect the spreads necessary to compensate investors for the risks involved. In view of the above circumstances, we continue to focus more heavily on middle-market issuers and to a limited extent larger issuers, and, opportunistically, on certain structured finance investments, including collateralized loan obligation (“CLO”) investment vehicles, and have made a number of selective purchases in these markets.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified our investment valuation policy as a critical accounting policy.

Investment Valuation

The most significant estimate inherent in the preparation of our consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. There is no single method 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 portfolio investment while employing a consistently applied valuation process for the types of investments we make. We are required to specifically fair value each individual investment on a quarterly basis.

In May 2011, the FASB issued ASU 2011-04, “ Fair Value Measurement which represents amendments to achieve common fair value measurement and disclosure requirements in US GAAP and IFRS .” The amendments are of two types: (i) those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements and (ii) those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments that change a particular principle or requirement for measuring fair value or disclosing information about fair value measurements relate to (i) measuring the fair value of the financial instruments that are managed within a portfolio; (ii) application of premium and discount in a fair value measurement; and (iii) additional disclosures about fair value measurements. The update is effective for annual periods beginning after December 15, 2011 and as such we have adopted this ASU beginning with the quarter ended March 31, 2012. We have increased our disclosures related to Level 3 fair value measurement, in addition to other required disclosures. There were no related impacts on our financial position or results of operations.

We adopted ASC 820-10, Fair Value Measurements and Disclosure, which establishes a three-level valuation hierarchy for disclosure of fair value measurements, on January 1, 2008. ASC 820-10 clarified the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities in markets that are not active; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. We have determined that due to the general illiquidity of the market for our investment portfolio, whereby little or no market data exists, almost all of our investments are based upon “Level 3” inputs.

Our Board of Directors determines the value of our investment portfolio each quarter. In connection with that determination, members of TICC Management’s portfolio management team prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. Since March 2004, we have engaged third-party valuation firms to provide assistance in valuing our bilateral investments and, more recently, for certain of our syndicated loans, although our Board of Directors ultimately determines the appropriate valuation of each such investment.

Our process for determining the fair value of a bilateral investment begins with determining the enterprise value of the portfolio company. Enterprise value means the entire value of the company to a potential buyer, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The fair value of our investment is based, in part, on the enterprise value at which the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties other than in a forced or liquidation sale. The liquidity event whereby we exit a private investment is generally the sale, the recapitalization or, in some cases, the initial public offering of the portfolio company.

There is no one methodology to determine enterprise value and, in fact, for any one portfolio company, enterprise value is best expressed as a range of fair values, from which we derive a single estimate of enterprise value. To determine the enterprise value of a portfolio company, we analyze the historical and projected financial results, as well as the nature and value of any collateral. We also use industry valuation benchmarks and public market comparables. We also consider other events, including private mergers and acquisitions, a purchase transaction, public offering or subsequent debt or equity sale or restructuring, and include these events in the enterprise valuation process. We generally require portfolio companies to provide annual audited and quarterly unaudited financial statements, as well as annual projections for the upcoming fiscal year.

Typically, our bilateral debt investments are valued on the basis of a fair value determination arrived at through an analysis of the borrower’s financial and operating condition or other factors, as well as consideration of the entity’s enterprise value. The types of factors that we may take into account in valuing our investments include: market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, among other factors. The fair value of equity interests in portfolio companies is determined based on various factors, including the enterprise value remaining for equity holders after the repayment of the portfolio company’s debt and other preference capital, and other pertinent factors such as recent offers to purchase a portfolio company, recent transactions involving the purchase or sale of the portfolio company’s equity securities, or other liquidity events. The determined equity values are generally discounted when we have a minority position, restrictions on resale, specific concerns about the receptivity of the capital markets to a specific company at a certain time, or other factors.

We will record unrealized depreciation on bilateral investments when we believe that an investment has become impaired, including where collection of a loan or realization of an equity security is doubtful. To the extent that we believe that it has become probable that a loan is not collectible or probable that an equity investment is not realizable, we will classify that amount as a realized loss. We will record unrealized appreciation if we believe that the underlying portfolio company has appreciated in value and our equity security has also appreciated in value. Changes in fair value, other than such changes that are considered probable of non-collection or non-realization, as described above, are recorded in the statement of operations as net change in unrealized appreciation or depreciation.

Under the valuation procedures approved by our Board of Directors, upon the recommendation of the Valuation Committee, a third-party valuation firm will prepare valuations for each of our bilateral investments for which market quotations are not readily available that, when combined with all other investments in the same portfolio company, (i) have a value as of the previous quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, and (ii) have a value as of the current quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, after taking into account any repayment of principal during the current quarter. In addition, the frequency of those third-party valuations of our portfolio securities is based upon the grade assigned to each such security under our credit grading system as follows: Grade 1, at least annually; Grade 2, at least semi-annually; Grades 3, 4, and 5, at least quarterly. TICC Management also retains the authority to seek, on our behalf, additional third party valuations with respect to both our bilateral portfolio securities and our syndicated loan investments. Our Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment.

On April 9, 2009, the FASB issued additional guidelines under ASC 820-10-35, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” which provides guidance on factors that should be considered in determining when a previously active market becomes inactive and whether a transaction is orderly. In accordance with ASC 820-10-35, our valuation procedures specifically provide for the review of indicative quotes supplied by the large agent banks that make a market for each security. However, the marketplace for which we obtain indicative bid quotes for purposes of determining the fair value of our syndicated loan investments have shown these attributes of illiquidity as described by ASC-820-10-35. Due to limited market liquidity in the syndicated loan market, TICC believes that the non-binding indicative bids received from agent banks for certain syndicated investments that we own may not be determinative of their fair value and therefore alternative valuation procedures may need to be undertaken. As a result, TICC may engage third-party valuation firms to provide assistance in valuing certain syndicated investments that we own. In addition, TICC Management prepares an analysis of each syndicated loan, including a financial summary, covenant compliance review, recent trading activity in the security, if known, and other business developments related to the portfolio company. All available information, including non-binding indicative bids which may not be determinative of fair value, is presented to the Valuation Committee to consider in its determination of fair value. In some instances, there may be limited trading activity in a security even though the market for the security is considered not active. In such cases the Valuation Committee will consider the number of trades, the size and timing of each trade, and other circumstances around such trades, to the extent such information is available, in its determination of fair value. The Valuation Committee will evaluate the impact of such additional information, and factor it into its consideration of the fair value that is indicated by the analysis provided by third-party valuation firms. We have considered the factors described in ASC 820-10 and have determined that we are properly valuing the securities in our portfolio.

During the past several quarters, we have acquired a number of debt and equity positions in CLO investment vehicles. These investments are special purpose financing vehicles. In valuing such investments, we consider the operating metrics of the specific investment vehicle, including compliance with collateralization tests, defaulted and restructured securities, and payment defaults, if any. In addition, we consider the indicative prices provided by the broker who arranges transactions in such investment vehicles, as well as any available information on other relevant transactions in the market. TICC Management or the Valuation Committee may request an additional analysis by a third-party firm to assist in the valuation process of CLO investment vehicles. All information is presented to our Board of Directors for its determination of fair value of these investments.

The Company’s assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at June 30, 2012, were as follows:

($ in millions)	Fair Value Measurements at Reporting Date Using
Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents	$	0.0	$	0.0	$	0.0	$	0.0
Senior Secured Notes		0.0		8.7		292.1		300.8
CLO Debt		0.0		0.0		68.8		68.8
CLO Equity		0.0		0.0		58.9		58.9
Subordinated Notes		0.0		0.0		4.4		4.4
Common Stock		0.0		0.0		4.2		4.2
Preferred Shares		0.0		0.0		1.8		1.8
Warrants to purchase equity		0.0		0.0		0.3		0.3

Total	$	0.0	$	8.7	$	430.5	$	439.2

A reconciliation of the fair value of investments for three months ended June 30, 2012, utilizing significant unobservable inputs, is as follows:

($ in millions)	Senior Secured Note Investments			Collateralized Loan Obligation Debt Investments			Collateralized Loan Obligation Equity Investments			Subordinated Note Investments			Common Stock Investments			Preferred Share Equity Investments			Warrants to Purchase Equity Investments			Total
Balance at March 31, 2012	$	291.9		$	70.5		$	59.7		$	4.9		$	5.1		$	2.3		$	1.0		$	435.4
Realized Gains included in earnings		1.3			0.0			0.0			0.0			0.0			0.0			0.1			1.4
Unrealized (depreciation) appreciation included in earnings		(1.9	)		(2.4	)		(0.8	)		(0.2	)		(0.9	)		(0.6	)		(0.3	)		(7.1	)
Accretion of discount		0.8			0.7			0.0			0.0			0.0			0.0			0.0			1.5
Purchases		62.1			0.0			0.0			0.0			0.0			0.0			0.0			62.1
Repayments and Sales		(66.0	)		0.0			0.0			(0.3	)		0.0			0.0			(0.5	)		(66.8	)
Payment in Kind income		3.9			0.0			0.0			0.0			0.0			0.1			0.0			4.0
Transfers in and/or out of level 3		0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0

Balance at June 30, 2012	$	292.1		$	68.8		$	58.9		$	4.4		$	4.2		$	1.8		$	0.3		$	430.5

The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations	$	(1.7	)	$	(2.4	)	$	(0.8	)	$	(0.2	)	$	(0.9	)	$	(0.6	)	$	(0.2	)	$	(6.8	)

A reconciliation of the fair value of investments for six months ending June 30, 2012, utilizing significant unobservable inputs, is as follows:

($ in millions)	Senior Secured Note Investments			Collateralized Loan Obligation Debt Investments			Collateralized Loan Obligation Equity Investments		Subordinated Note Investments			Common Stock Investments		Preferred Share Equity Investments			Warrants to Purchase Equity Investments			Total
Balance at December 31, 2011	$	279.2		$	51.0		$	39.3	$	4.9		$	3.1	$	2.5		$	0.8		$	380.8
Realized Gains included in earnings		1.4			0.2			0.0		0.0			0.0		0.0			0.1			1.7
Unrealized (depreciation) appreciation included in earnings		(4.6	)		3.2			2.8		(0.1	)		1.1		(0.9	)		(0.1	)		1.4
Accretion of discount		1.6			1.3			0.0		0.0			0.0		0.0			0.0			2.9
Purchases		88.2			14.6			16.8		0.0			0.0		0.0			0.0			119.6
Repayments and Sales		(77.7	)		(1.5	)		0.0		(0.4	)		0.0		0.0			(0.5	)		(80.1	)
Payment in Kind income		4.0			0.0			0.0		0.0			0.0		0.2			0.0			4.2
Transfers in and/or out of level 3		0.0			0.0			0.0		0.0			0.0		0.0			0.0			0.0

Balance at June 30, 2012	$	292.1		$	68.8		$	58.9	$	4.4		$	4.2	$	1.8		$	0.3		$	430.5

The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations	$	(5.2	)	$	3.4		$	2.7	$	(0.1	)	$	1.1	$	(0.9	)	$	(0.2	)	$	0.8

Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at December 31, 2011, were as follows:

($ in millions)	Fair Value Measurements at Reporting Date Using
Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents	$	0.0	$	0.0	$	0.0	$	0.0
Senior Secured Notes		0.0		10.7		279.2		289.9
CLO Debt		0.0		0.0		51.0		51.0
CLO Equity		0.0		0.0		39.3		39.3
Subordinated Notes		0.0		0.0		4.9		4.9
Common Stock		0.0		0.0		3.1		3.1
Preferred Shares		0.0		0.0		2.5		2.5
Warrants to purchase equity		0.0		0.0		0.8		0.8

Total	$	0.0	$	10.7	$	380.8	$	391.5

A reconciliation of the fair value of investments for the year ended December 31, 2011, utilizing significant unobservable inputs, is as follows:

($ in millions)	Senior Secured Note Investments			Collateralized Loan Obligation Debt Investments			Collateralized Loan Obligation Equity Investments			Subordinated Note Investments			Common Stock Investments			Preferred Share Equity Investments		Warrants to Purchase Equity Investments		Total
Balance at December 31, 2010	$	173.9		$	50.4		$	8.9		$	6.0		$	5.8		$	2.0	$	0.5	$	247.5
Realized Losses included in earnings		2.7			0.9			0.0			0.0			0.0			0.0		0.0		3.6
Unrealized (depreciation) appreciation included in earnings		(5.7	)		(9.5	)		(1.5	)		(0.4	)		(2.7	)		0.1		0.3		(19.4	)
Accretion of discount		2.8			2.2			0.0			0.0			0.0			0.0		0.0		5.0
Purchases		230.0			10.6			31.9			0.0			0.0			0.0		0.0		272.5
Repayments and Sales ⁽¹⁾		(113.8	)		(3.6	)		0.0			(0.7	)		0.0			0.4		0.0		(117.7	)
Transfers in and/or out of level 3		(10.7	)		0.0			0.0			0.0			0.0			0.0		0.0		(10.7	)
Balance at December 31, 2011	$	279.2		$	51.0		$	39.3		$	4.9		$	3.1		$	2.5	$	0.8	$	380.8
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations	$	(4.1	)	$	(8.8	)	$	(1.3	)	$	(0.3	)	$	(2.7	)	$	0.1	$	0.3	$	(16.8	)

⁽¹⁾	Includes PIK income of approximately $1.5 million and rounding adjustments to reconcile period balances.

PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY

The total fair value of our investment portfolio was approximately $439.2 million and $391.5 million as of June 30, 2012 and December 31, 2011, respectively. The increase in investments during the six month period was due primarily to new investments of approximately $119.6 million and net unrealized appreciation of approximately $1.3 million. These increases were partially offset by debt repayments and sales of securities totaling approximately $82.1 million.

In certain instances, we receive payments based on scheduled amortization of the outstanding balances and sales of portfolio investments. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. For the quarter ended June 30, 2012, we recognized approximately $2.5 million from the sales of our debt investment in Diversified Machine, Inc. ($2.0 million) and our equity investment in warrants issued by Power Tools, Inc. ($0.5 million), whereas for the year ended December 31, 2011, we recognized proceeds of approximately $11.3 million from the sales of securities. Also, during the quarter ended June 30, 2012, we had repayments and amortization payments of approximately $66.2 million, whereas, for the year ended December 31, 2011, we had repayments and amortization payments of approximately $107.9 million.

As of June 30, 2012, we had investments in debt securities of, or loans to, 71 portfolio companies, with a fair value of approximately $374.0 million, and equity investments in 22 portfolio companies, with a fair value of approximately $65.2 million. As of December 31, 2011, we had investments in debt securities of, or loans to, 69 portfolio companies, with a fair value of approximately $345.8 million, and equity investments in 21 portfolio companies, with a fair value of approximately $45.7 million.

A reconciliation of the investment portfolio for the six months ended June 30, 2012 and the year ended December 31, 2011 follows:

	June 30, 2012			December 31, 2011
	(dollars in millions)			(dollars in millions)

Beginning Investment Portfolio	$	391.5		$	247.5
Portfolio Investments Acquired		119.6			272.5
Debt repayments		(70.6	)		(107.9	)
Sales of securities		(11.5	)		(11.3	)
Payment in Kind		4.2			1.5
Original Issue Discount		2.9			5.0
Net Unrealized Appreciation (Depreciation)		1.3			(19.4	)
Net Realized Gains		1.8			3.6
	$	439.2		$	391.5

The following table indicates the quarterly portfolio investment activity for the past six quarters:

	New Investments		Debt Repayments		Sales of Securities
Quarter ended	(dollars in millions)		(dollars in millions)		(dollars in millions)
June 30, 2012	$	62.1	$	66.2	$	2.5
March 31, 2012		57.5		4.4		9.0
Total	$	119.6	$	70.6	$	11.5

December 31, 2011	$	60.3	$	28.5	$	2.9
September 30, 2011		81.0		9.0		-
June 30, 2011		30.6		12.6		-
March 31, 2011		100.6		57.8		8.4
Total	$	272.5	$	107.9	$	11.3

The following table shows the fair value of our portfolio of investments by asset class as of June 30, 2012 and December 31, 2011:

	June 30, 2012					December 31, 2011
	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
	(dollars in millions)					(dollars in millions)
Senior Secured Notes	$	300.8		68.5	%	$	289.9		74.1	%
CLO Debt		68.8		15.6	%		51.0		13.0	%
CLO Equity		58.9		13.4	%		39.3		10.0	%
Subordinated Notes		4.4		1.0	%		4.9		1.3	%
Common Stock		4.2		1.0	%		3.1		0.8	%
Preferred Shares		1.8		0.4	%		2.5		0.6	%
Warrants		0.3		0.1	%		0.8		0.2	%

Total	$	439.2		100.0	%	$	391.5		100.0	%

The following table shows our portfolio of investments by industry at fair value, as of June 30, 2012 and December 31, 2011:

	June 30, 2012					December 31, 2011
	Investments at Fair Value		Percentage of Fair Value			Investments at Fair Value		Percentage of Fair Value
	(dollars in millions)					(dollars in millions)
Structured finance	$	127.7		29.1	%	$	90.2		23.0	%
Software		37.5		8.6	%		42.5		10.9	%
Telecommunication services		35.1		8.0	%		32.6		8.3	%
Business services		30.5		7.0	%		29.4		7.5	%
Enterprise software		27.3		6.2	%		18.9		4.8	%
Healthcare		24.4		5.5	%		28.1		7.2	%
Semiconductor capital equipment		22.6		5.2	%		22.6		5.8	%
Retail		21.7		4.9	%		18.8		4.8	%
Financial intermediaries		17.7		4.0	%		11.6		3.0	%
Web hosting		16.6		3.8	%		14.5		3.7	%
Education		13.5		3.1	%		8.7		2.2	%
Auto parts manufacturer		12.0		2.7	%		9.4		2.4	%
Printing and publishing		11.6		2.6	%		14.7		3.8	%
IT consulting		9.6		2.2	%		9.6		2.5	%
Computer hardware		8.4		1.9	%		10.1		2.6	%
Advertising		5.8		1.3	%		7.6		1.9	%
Packaging and glass		5.0		1.1	%		4.9		1.3	%
Building and development		4.9		1.1	%		4.9		1.2	%
Food products manufacturer		3.9		0.9	%		4.0		1.0	%
Utilities		2.5		0.6	%		0.0		0.0	%
IT value-added reseller		0.9		0.2	%		1.5		0.4	%
Cable/satellite television		0.0		0.0	%		4.9		1.2	%
Interactive voice messaging services		0.0		0.0	%		2.0		0.5	%

Total	$	439.2		100.0	%	$	391.5		100.0	%

PORTFOLIO GRADING

We have adopted a credit grading system to monitor the quality of our debt investment portfolio. As of June 30, 2012 and December 31, 2011, our portfolio had a weighted average grade of 2.1 and 2.2, respectively, based upon the fair value of the debt investments in the portfolio. Equity securities are not graded.

At June 30, 2012, and December 31, 2011, our debt investment portfolio was graded as follows:

		June 30, 2012
Grade	Summary Description	Principal Value		Percentage of Total Portfolio			Portfolio at Fair Value		Percentage of Total Portfolio
		(dollars in millions)					(dollars in millions)
1	Company is ahead of expectations and/or outperforming financial covenant requirements and such trend is expected to continue	$	5.9		1.4	%	$	5.8		1.5	%
2	Full repayment of principal and interest is expected		343.6		82.4	%		311.4		83.3	%
3	Closer monitoring is required. Full repayment of principal and interest is expected		64.2		15.4	%		56.8		15.2	%
4	A reduction of interest income has occurred or is expected to occur. No loss of principal is expected		—		0.0	%		—		0.0	%
5	A loss of some portion of principal is expected		3.5		0.8	%		—		0.0	%

		$	417.2		100.0	%	$	374.0		100.0	%

		December 31, 2011
Grade	Summary Description	Principal Value		Percentage of Total Portfolio			Portfolio at Fair Value		Percentage of Total Portfolio
		(dollars in millions)					(dollars in millions)
1	Company is ahead of expectations and/or outperforming financial covenant requirements and such trend is expected to continue	$	13.2		3.4	%	$	13.1		3.8	%
2	Full repayment of principal and interest is expected		301.9		78.3	%		267.1		77.2	%
3	Closer monitoring is required. Full repayment of principal and interest is expected		67.2		17.4	%		63.6		18.4	%
4	A reduction of interest income has occurred or is expected to occur. No loss of principal is expected		—		0.0	%		—		0.0	%
5	A loss of some portion of principal is expected		3.5		0.9	%		2.0		0.6	%

		$	385.8		100.0	%	$	345.8		100.0	%

We expect that a portion of our investments will be in the grades 3, 4 or 5 categories from time to time, and, as such, we will be required to work with troubled portfolio companies to improve their business and protect our investment. The number and amount of investments included in grades 3, 4 or 5 may fluctuate from period to period.

Further discussion regarding the other investments which experienced significant unrealized depreciation is presented in “Results of Operations.”

RESULTS OF OPERATIONS

Set forth below is a comparison of our results of operations for the three months ended June 30, 2012 to the three months ended June 30, 2011.

Investment Income

As of June 30, 2012, our debt investments had stated interest rates of between 3.82% and 15.75% (excluding our investment in GenuTec Business Solutions, Inc. which carries a zero interest rate through October 30, 2014) and maturity dates of between 6 and 124 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 11.2% including GenuTec Business Solutions, Inc., compared with 12.9% as of June 30, 2011.

Investment income for the three months ended June 30, 2012 was approximately $20.5 million compared to approximately $11.1 million for the three months ended June 30, 2011. This increase was due in part to a one-time fee of approximately $3.4 million associated with our investment in American Integration Technologies, LLC (“AIT”), as well as an increase in the amount of performing assets in the portfolio and distributions from the equity interests in our CLO vehicle investments. The total principal value of income producing debt investments as of June 30, 2012 and June 30, 2011 was approximately $413.7 million and $285.9 million, respectively. For the quarter ended June 30, 2012, investment income consisted of approximately $7.5 million in cash interest from portfolio investments, approximately $1.5 million in amortization of original issue and market discount, approximately $437,000 of discount income derived from unscheduled principal cash remittances at par on discounted debt securities, approximately $6.4 million in distributions from the equity interest in securitized vehicle investments and an equity investment, as well as approximately $0.6 million in PIK interest income.

For the quarter ended June 30, 2012, fee income of approximately $4.1 million was recorded, compared to fee income of approximately $287,000 for the quarter ended June 30, 2011. Fee income consists of non-recurring fees in connection with our investments in portfolio companies, including commitment fees, origination fees and amendment fees. During the quarter ended June 30, 2012, we recorded approximately $3.4 million of PIK fee income in association with our investment in AIT.

Operating Expenses

Total expenses for the quarter ended June 30, 2012 were $5.4 million, which includes the reduction of the accrued capital gains incentive fee of approximately $1.2 million.

Expenses before incentive fees, for the quarter ended June 30, 2012, were approximately $4.4 million. This amount consisted of investment advisory fees, interest expense and other debt financing expenses, professional fees, compensation expense, and general and administrative expenses. Expenses before incentive fees increased approximately $2.0 million from the quarter ended June 30, 2011, attributable primarily to higher investment advisory fees (consisting of the base management fee), interest expense associated with the senior notes issued under our collateralized loan obligation transaction as well as increased professional fees associated with our legal and audit expenses. Expenses before incentive fees for the quarter ended June 30, 2011 were approximately $2.4 million.

The investment advisory fee for the second quarter of 2012 was approximately $2.5 million, representing the base fee as provided for in the Investment Advisory Agreement. The investment advisory fee in the comparable period in 2011 was approximately $1.7 million. The increase of approximately $789,000 is due to an increase in average gross assets. At each of June 30, 2012 and December 31, 2011, respectively, approximately $2.5 million and $2.9 million of investment advisory fees remained payable to TICC Management, including the net investment income incentive fee discussed below.

Interest expense and other debt financing expenses for the second quarter of 2012 was approximately $816,000, which was directly related to our debt securitization financing transaction. In August 2011, senior notes in the amount of $101,250,000 were issued by a newly formed special purpose vehicle in which a wholly-owned subsidiary of TICC owns all of the equity. Under this structure, the notes bear interest, after the effective date, at three-month London Inter Bank Offered Rate (“LIBOR”) plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The accrued interest payable on these notes during the second quarter of 2012 was approximately $512,000. Additionally, for the quarter ended June 30, 2012, the amortization of the discount on the issued notes was approximately $39,500 and amortization of deferred debt issuance costs was approximately $75,400.

Professional fees, consisting of legal, valuation, audit and tax fees, were approximately $436,000 for the quarter ended June 30, 2012, compared to approximately $168,000 for the quarter ended June 30, 2011. This was the result of an increase in legal services and audit fees which were approximately $211,000 and $175,000, respectively.

Compensation expenses were approximately $279,000 for the quarter ended June 30, 2012, compared to approximately $258,000 for the quarter ended June 30, 2011, reflecting the allocation of compensation expenses for the services of our chief financial officer, chief compliance officer, controller and senior accountants, and other administrative support personnel. At June 30, 2012 and December 31, 2011, respectively, approximately $300,000 and $605,000 of compensation expenses remained payable.

General and administrative expenses, consisting primarily of directors’ fees, insurance, listing fees, transfer agent and custodian fees, office supplies, facilities costs and other expenses, were approximately $435,000 for the three months ended June 30, 2012 compared to approximately $356,000 for the same period in 2011. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.

Incentive Fees

The net investment income incentive fee for the second quarter of 2012 was approximately $2.2 million compared to $610,000 in the second quarter of 2011. The net investment income incentive fee is calculated and payable quarterly in arrears based on our “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter subject to a hurdle rate which is determined as of December 31 of the preceding year. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income accrued during the calendar quarter minus our operating expenses for the quarter (including the base fee, expenses payable under the Administration Agreement with BDC Partners, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

The capital gains incentive fee expense for the second quarter ended June 30, 2012 resulted in an accrual reversal of approximately $1.2 million. The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement on such date. The $1.0 million capital gains incentive fee accrual as of June 30, 2012 relates entirely to this hypothetical liquidation calculation. For the quarter ended June 30, 2011, a reversal of approximately $1.4 million was recorded.

The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Investment Advisory Agreement and is calculated as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). The terms of the Investment Advisory Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. For the year ended December 31, 2011, such an accrual was not required under the terms of the Investment Advisory Agreement.

Realized and Unrealized Gains/Losses on Investments

For the quarter ended June 30, 2012, we recorded net realized gains on investments of approximately $1.5 million, which represents the gains on the sale and repayments of several of our investments principally in GRD Holding III ($370,000), Power Tools, Inc. ($204,000), Attachmate Corporation ($135,000), Syniverse Holdings, Inc. ($137,000), Sonic Wall, Inc. ($140,000) and Shield Finance Co. ($115,000).

Portfolio Company	Unrealized appreciation (depreciation)
SourceHOV, LLC	$	0.7
Sargas CLO 2006 -1A		0.6
Power Tools, Inc.		0.4
GSC 2007-8X CLO		0.3
Lightpoint CLO 2005-3X		(0.3	)
Stone Tower CLO LTD 2007 7X		(0.3	)
ACA CLO 2006-2, Limited		(0.4	)
Integra Telecom Holdings, Inc.		(0.7	)
Pegasus Solutions, Inc.		(1.1	)
Merrill Communications, LLC		(1.8	)
Net all other		(4.4	)

Total	$	(7.3	)

For the quarter ended June 30, 2011, we recorded net realized gains on investments of approximately $0.7 million, which represents relatively small gains on several different investments.

Portfolio Company	Unrealized appreciation (depreciation)
American Integration Technologies, LLC	$	0.9
Pegasus Solutions, Inc.		0.4
Lightpoint CLO 2007-8a		(0.3	)
Ocean Trails CLO II 2007-2a-d		(0.3	)
Harbourview – 2006A CLO Equity		(0.4	)
Hewetts Island CDO III 2005-1A D		(0.5	)
Hewetts Island CDO IV 2006-4		(0.6	)
Sargas CLO 2006 -1A		(0.8	)
Prodigy Health Group		(0.8	)
Integra Telecom Holdings, Inc.		(1.0	)
Net all other		(2.6	)

Total	$	(6.0	)

Please see “—Portfolio Grading” for more information.

Net Increase in Net Assets Resulting from Net Investment Income

Net investment income for the quarter ended June 30, 2012 and 2011 was $15.0 million and $9.5 million, respectively. This increase was due in part to a one-time fee of approximately $3.4 million associated with our investment in AIT, as well as an increase in the amount of performing assets in the portfolio and distributions from the equity interests in our CLO vehicle .

Excluding the impact of the capital gains incentive fee reversal of approximately $1,155,000, net investment income for the quarter ended June 30, 2012 was approximately $13.9 million compared to approximately $8.1 million for the same period in 2011.

Based on a weighted-average of 37,755,905 shares outstanding (basic and diluted), the net increase in net assets resulting from net investment income per common share for the quarter ended June 30, 2012 was approximately $0.40 for basic and diluted, compared to approximately $0.29 per share for the same period in 2011. Excluding the impact of the accrued capital gains incentive fee, the net increase in net assets resulting from core net investment income per common share would have been $0.37, basic and diluted, compared to $0.25 per share for the same period in 2011.

Please see “—Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations” below for more information.

Net Increase in Net Assets Resulting from Operations

We had a net increase in net assets resulting from operations of approximately $9.3 million for the quarter ended June 30, 2012, compared to a net increase of approximately $4.2 million for the comparable period in 2011. This increase was attributable to greater net investment income and greater realized gains partially offset set by increased net unrealized depreciation.

Based on a weighted-average of 37,755,905 shares outstanding (basic and diluted), the net increase in net assets resulting from operations per common share for the quarter ended June 30, 2012 was approximately $0.25 for basic and diluted, compared to a net increase in net assets resulting from operations of approximately $0.13 per share for the same period in 2011.

Excluding the impact of the accrued capital gains incentive fee, the core net increase in net assets resulting from operations per common share would have been $0.22, basic and diluted, compared to an increase of $0.09 per share for the same period in 2011.

Set forth below is a comparison of our results of operations for the six months ended June 30, 2012 to the six months ended June 30, 2011.

Investment Income

Investment income for the six months ended June 30, 2012 was approximately $35.2 million compared to approximately $20.9 million for the six months ended June 30, 2011. This increase was due in part to an increase in the amount of performing assets in the portfolio and distributions from the equity interests in our CLO vehicle investments as well as a one-time fee of approximately $3.4 million associated with our investment in American Integration Technologies, LLC. The total principal value of income producing debt investments as of June 30, 2012 and June 30, 2011 was approximately $413.7 million and $285.9 million, respectively. For the six months ended June 30, 2012, investment income consisted of approximately $14.8 million in cash interest from portfolio investments, approximately $2.9 million in amortization of original issue and market discount, approximately $0.5 million of discount income derived from unscheduled principal cash remittances at par on discounted debt securities, approximately $12.0 million in distributions from the equity interest in securitized vehicle investments and an equity investment, as well as approximately $0.8 million in PIK interest income.

For the six months ended June 30, 2012, fee income of approximately $4.2 million was recorded, compared to fee income of approximately $446,000 for the six months ended June 30, 2011. Fee income consists of non-recurring fees in connection with our investments in portfolio companies, including commitment fees, origination fees and amendment fees. During the six months ended June 30, 2012, we recorded approximately $3.4 million of PIK fee income in association with our investment in AIT.

Operating Expenses

Total expenses for the six months ended June 30, 2012 were $12.0 million, which includes the reduction of the accrued capital gains incentive fee of approximately $90,000.

Expenses before incentive fees, for the six months ended June 30, 2012, were approximately $8.8 million. This amount consisted of investment advisory fees, interest expense and other debt financing expenses, professional fees, compensation expense, and general and administrative expenses. Expenses before incentive fees increased approximately $3.9 million from the six months ended June 30, 2011, attributable primarily to higher investment advisory fees (consisting of the base management fee), interest expense associated with the senior notes issued under our collateralized loan obligation transaction as well as increased professional fees associated with our legal and audit expenses. Expenses before incentive fees for the six months ended June 30, 2011 were approximately $4.8 million.

The investment advisory fee for the first six months of 2012 was approximately $4.6 million, representing the base fee as provided for in the Investment Advisory Agreement. The investment advisory fee in the comparable period in 2011 was approximately $3.3 million. The increase of approximately $1.3 million is due to an increase in average gross assets. At each of June 30, 2012 and December 31, 2011, respectively, approximately $2.5 million and $2.9 million of investment advisory fees remained payable to TICC Management, including the net investment income incentive fee discussed below.

Interest expense and other debt financing expenses for the six months ended of 2012 was approximately $1.7 million, which was directly related to our debt securitization financing transaction. In August 2011, senior notes in the amount of $101,250,000 were issued by a newly formed special purpose vehicle in which a wholly-owned subsidiary of TICC owns all of the equity. Under this structure, the notes bear interest, after the effective date, at three-month London Inter Bank Offered Rate (“LIBOR”) plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The accrued interest payable on these notes during the second quarter of 2012 was approximately $512,000. Additionally, for the six months ended June 30, 2012, the amortization of the discount on the issued notes was approximately $92,000 and amortization of deferred debt issuance costs was approximately $151,000.

Professional fees, consisting of legal, valuation, audit and tax fees, were approximately $1.2 million for the six months ended June 30, 2012, compared to approximately $461,000 for the six months ended June 30, 2011. This was the result of an increase in legal services and audit fees which were approximately $542,000 and $582,000, respectively.

Compensation expenses were approximately $550,000 for the six months ended June 30, 2012, compared to approximately $496,000 for the six months ended June 30, 2011, reflecting the allocation of compensation expenses for the services of our chief financial officer, chief compliance officer, controller and senior accountants, and other administrative support personnel. At June 30, 2012 and December 31, 2011, respectively, approximately $300,000 and $605,000 of compensation expenses remained payable.

General and administrative expenses, consisting primarily of directors’ fees, insurance, listing fees, transfer agent and custodian fees, office supplies, facilities costs and other expenses, were approximately $727,000 for the six months ended June 30, 2012 compared to approximately $575,000 for the same period in 2011. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.

Incentive Fees

The net investment income incentive fee for the first six months of 2012 was approximately $3.4 million compared to $1.0 million for the six months ended June 30, 2011. The net investment income incentive fee is calculated and payable quarterly in arrears based on our “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter subject to a hurdle rate which is determined as of December 31 of the preceding year. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income accrued during the calendar quarter minus our operating expenses for the quarter (including the base fee, expenses payable under the Administration Agreement with BDC Partners, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

The capital gains incentive fee expense for the six months ended June 30, 2012 resulted in an accrual reversal of approximately $90,000. The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement on such date. The $1.0 million capital gains incentive fee accrual as of June 30, 2012 relates entirely to this hypothetical liquidation calculation. For the six months ended June 30, 2011, an expense of approximately $5.0 million was recorded.

Realized and Unrealized Gains/Losses on Investments

For the six months ended June 30, 2012, we recorded net realized gains on investments of approximately $1.8 million, which represents the gains on the sale and repayments of several of our investments principally in GRD Holding III ($370,000), Liberty CDO LTD 2005-1AC ($216,000), Power Tools, Inc. ($204,000), Attachmate Corporation ($135,000), Syniverse Holdings, Inc. ($137,000), Sonic Wall, Inc. ($140,000) and Shield Finance Co. ($115,000).

Based upon the fair value determinations made in good faith by the Board of Directors, during the six months ended June 30, 2012, we had net unrealized appreciation of approximately $1.4 million, comprised of $18.7 million in gross unrealized appreciation, $16.8 million in gross unrealized depreciation and approximately $0.5 million relating to the reversal of prior period net unrealized appreciation as an investment was realized. The most significant changes in net unrealized appreciation and depreciation during the quarter ended June 30, 2012 were as follows (in millions):

Portfolio Company	Unrealized appreciation (depreciation)
Algorithmic Implementations, Inc.	$	1.0
Integra Telecom Holdings, Inc.		1.0
Power Tools, Inc.		0.9
Hewetts Island CDO IV 2006-4 E		0.8
Harbourview - 2006A CLO Equity		0.8
SourceHOV, LLC		0.7
Prospero CLO II BV		0.6
Sargas CLO 2006 -1A		0.6
Harch 2005-2A BB CLO		0.5
Marlborough Street 2007-1A		0.5
Canaras CLO Equity - 2007-1A, 1X		0.5
GALE 2007-4A CLO		0.5
Emporia CLO 2007 3A E		0.4
Lightpoint CLO 2007-8A		0.4
RBS Holding Company		(0.9	)
Stratus Technologies, Inc.		(1.3	)
Merrill Communications, LLC		(1.8	)
GenuTec Business Solutions, Inc.		(2.0	)
Pegasus Solutions, Inc.		(2.4	)
Net all other		0.6

Total	$	1.4

For the six months ended June 30, 2011, we recorded net realized gains on investments of approximately $2.6 million, which largely represents relatively small gains on several different investments including the realized gains on the repayment of our investment in Prodigy Health Group ($0.7 million) and the sale of our investment in Del Mar CLO I Ltd. 2006-1 ($0.4 million).

Based upon the fair value determinations made in good faith by the Board of Directors, during the six months ended June 30, 2011, we had net unrealized gains of approximately $3.1 million, comprised of $17.9 million in gross unrealized appreciation, $12.5 million in gross unrealized depreciation and approximately $2.3 million relating to the reversal of prior period net unrealized appreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the six months ended June 30, 2011 were as follows (in millions):

Portfolio Company	Unrealized appreciation (depreciation)
American Integration Technologies, LLC	$	1.7
ACA CLO 2006–2, Limited		1.7
Pegasus Solutions, LLC		1.4
Prospero CLO II BV		0.7
Latitude III CLO 2007–3A		0.7
Harch CLO II LTD 2005–2a e		0.6
Fusionstorm, Inc		0.5
Sargas CLO 2006–1A		0.5
Avenue CLO V LTD 2007–5A D1		0.4
Latitude II CLO 2006 2A D		0.4
Landmark V CDO LTD		0.3
Lightpoint CLO 2007–8a		(0.3	)
Ocean Trails CLO II 2007–2a-d		(0.3	)
Harbourview – 2006A CLO Equity		(0.4	)
Del Mar CLO I Ltd. 2006–1		(0.4	)
Hewetts Island CDO III 2005–1A D		(0.5	)
Hewetts Island CDO IV 2006–4		(0.6	)
Prodigy Health Group		(0.8	)
Integra Telecomm, Inc		(1.0	)
Net all other		(1.5	)

Total	$	3.1

Please see “—Portfolio Grading” for more information.

Net Increase in Net Assets Resulting from Net Investment Income

Net investment income for the six months ended June 30, 2012 and 2011 was $23.2 million and $10.1 million, respectively. This increase was due in part to an increase in the amount of performing assets in the portfolio and distributions from the equity interests in our CLO vehicle, as well as a one-time fee of approximately $3.4 million associated with our investment in AIT.

Excluding the impact of the capital gains incentive fee reversal of $90,000, net investment income for the six months ended June 30, 2012 was approximately $23.1 million compared to approximately $15.1 million for the same period in 2011.

Based on a weighted-average of 35,583,102 shares outstanding (basic and diluted), the net increase in net assets resulting from net investment income per common share for the six months ended June 30, 2012 was approximately $0.65 for basic and diluted, compared to approximately $0.31 per share for the same period in 2011. Excluding the impact of the accrued capital gains incentive fee, the net increase in net assets resulting from core net investment income per common share would have remained at approximately $0.65, basic and diluted, compared to $0.47 per share for the same period in 2011.

Please see “—Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations” below for more information.

Net Increase in Net Assets Resulting from Operations

We had a net increase in net assets resulting from operations of approximately $26.3 million for the six months ended June 30, 2012, compared to a net increase of approximately $15.8 million for the comparable period in 2011. This increase was attributable to greater net investment income partially offset set by lower net unrealized appreciation and net realized gains.

Based on a weighted-average of 35,583,102 shares outstanding (basic and diluted), the net increase in net assets resulting from operations per common share for the six months ended June 30, 2012 was approximately $0.74 for basic and diluted, compared to a net increase in net assets resulting from operations of approximately $0.49 per share for the same period in 2011.

Excluding the impact of the accrued capital gains incentive fee, the core net increase in net assets resulting from operations per common share would have remained at approximately $0.74, basic and diluted, compared to an increase of $0.65 per share for the same period in 2011.

Please see “—Portfolio Grading” above for more information.

Please see “—Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations” below for more information.

On a supplemental basis, we provide information relating to core net investment income, its ratio to net assets, and core net increase in net assets resulting from operations, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, net investment income and net increase in net assets resulting from operations. The Company’s non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income excluding our capital gains incentive fee. Core net increase in net assets resulting from operations represents net increase in net assets resulting from operations excluding the capital gains incentive fee. As the capital gains incentive fee is based on a hypothetical event that did not occur, we believe that core net investment income and core net increase in net assets resulting from operations are useful indicators of performance during this period. Further, as the capital gains incentive fee is not a currently tax deductible expense and as the RIC requirements are to distribute taxable earnings, the core net investment income provides an indication of taxable income for the year to date.

The following tables provide a reconciliation of net investment income to core net investment income (for the three and six months ended June 30, 2012 and 2011, respectively):

	Three Months Ended June 30, 2012						Six Months Ended June 30, 2012
	Amount			Per Share Amounts			Amount			Per Share Amounts
Net investment income	$	15,037,476		$	0.40		$	23,191,996		$	0.65
Capital gains incentive fee		(1,155,520	)		(0.03	)		(89,857	)		-
Core net investment income	$	13,881,956		$	0.37		$	23,102,139		$	0.65

	Three Months Ended June 30, 2011						Six Months Ended June 30, 2011

		Amount			Per Share Amounts			Amount		Per Share Amounts
Net investment income	$	9,523,437		$	0.29		$	10,071,460	$	0.31
Capital gains incentive fee		(1,442,843	)		(0.04	)		5,026,486		0.16
Core net investment income	$	8,080,594		$	0.25		$	15,097,946	$	0.47

The following tables provide a reconciliation of net increase in net assets resulting from operations to core net increase in net assets resulting from operations (for the three and six months ended June 30, 2012 and 2011, respectively):

	Three Months Ended June 30, 2012						Six Months Ended June 30, 2012
	Amount			Per Share Amounts			Amount			Per Share Amounts
Net increase in net assets resulting from operations	$	9,259,874		$	0.25		$	26,343,242		$	0.74
Capital gains incentive fee		(1,155,520	)		(0.03	)		(89,857	)		-
Core net increase in net assets resulting from operations	$	8,104,354		$	0.22		$	26,253,385		$	0.74

	Three Months Ended June 30, 2011						Six Months Ended June 30, 2011

		Amount			Per Share Amounts			Amount		Per Share Amounts
Net increase in net assets resulting from operations	$	4,204,646		$	0.13		$	15,764,288	$	0.49
Capital gains incentive fee		(1,442,843	)		(0.04	)		5,026,486		0.16
Core net increase in net assets resulting
from operations	$	2,761,803		$	0.09		$	20,790,774	$	0.65

In addition, the following ratio is presented to supplement the financial highlights included in Note 10 to the financial statements:

	2012						2011
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Six Months Ended June 30, 2011

Ratio of core net investment income to average net assets, for the three and six month periods ended June 30, 2012 and 2011, respectively		3.89	%		6.86	%		10.05	%		9.49	%

The following table provides a reconciliation of the ratio of net investment income to average net assets to the ratio of core net investment income to average net assets, for the three and six month periods ended June 30, 2012 and 2011, respectively.

	2012						2011
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
Ratio of net investment income to average net assets		4.21	%		6.89	%		11.84	%		6.33	%
Ratio of capital gain incentive fee to average net assets		(0.32	)%		(0.03	)%		(1.79	)%		3.16	%
Ratio of core net investment income to average net assets		3.89	%		6.86	%		10.05	%		9.49	%

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended June 30, 2012, we issued approximately 4.9 million shares in a follow-on equity offering, raising approximately $46.0 million in net proceeds.

During the six months ended June 30, 2012, cash and cash equivalents increased from approximately $4.5 million at the beginning of the period to approximately $10.9 million at the end of the period. Net cash used by operating activities for the period, consisting primarily of the items described in “—Results of Operations,” was approximately $29.6 million, largely reflecting purchases of new investments of approximately $127.4 million offset by proceeds from principal repayments and sales of investments of approximately $82.1 million. Net cash used by investing activities reflects the change in restricted cash in the debt securitization entity. During the period, net cash provided by financing activities was approximately $26.6 million reflecting primarily the net proceeds of approximately $46.0 million resulting from the follow-on equity offering partially offset by the distribution of dividends.

Contractual Obligations

We have certain obligations with respect to the investment advisory and administration services we receive. See “–Overview”. We incurred approximately $4.6 million for investment advisory services, excluding pre-incentive net investment income incentive fees and approximately $727,000 for administrative services for the six months ended June 30, 2012.

TICC CLO is obligated to repay the notes issued in connection with the debt securitization financing. The notes mature in 2021, in the total amount of $101,250,000. There are no amortization payments due on the notes prior to maturity. See “Borrowings” below.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Borrowings

On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes offered in the securitization were issued by TICC CLO LLC, and are secured by the assets held by the trustee on behalf of the Securitization Issuer. The notes are an obligation of TICC CLO. The securitization was executed through a private placement of $101.25 million of Aaa/AAA Class A Notes which bear interest, after the effective date, at three-month LIBOR plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The notes were sold at a discount to par, and the amount of the discount is being amortized over the term of the notes. The Class A Notes are included in the June 30, 2012 consolidated statements of assets and liabilities. For the six months period ended June 30, 2012, the Class A note holders were paid interest on the Class A notes of approximately $2.0 million. Holdings retained all of the Subordinated Notes totaling $123.75 million and all of the membership interests in the Securitization Issuer. The Subordinated Notes do not bear interest, but are entitled to the residual economic interest in the Securitization Issuer.

Distributions

In order to qualify as a regulated investment company and to avoid corporate level tax on the income we distribute to our stockholders, we are required, under Subchapter M of the Code, to distribute at least 90% of our ordinary income and short-term capital gains to our stockholders on an annual basis.

The following table reflects the cash distributions, including dividends and returns of capital, if any, per share that we have declared on our common stock to date:

Date Declared	Record Date	Payment Date	Amount

Fiscal 2012
July 26, 2012	September 14, 2012	September 28, 2012	$	0.29
May 2, 2012	June 15, 2012	June 29, 2012		0.27
March 1, 2012	March 21, 2012	March 30, 2012		0.27

Total (2012)				0.83

Fiscal 2011
November 3, 2011	December 16, 2011	December 30, 2011		0.25
July 28, 2011	September 16, 2011	September 30, 2011		0.25
May 3, 2011	June 16, 2011	June 30, 2011		0.25
March 3, 2011	March 21, 2011	March 31, 2011		0.24

Total (2011)				0.99	⁽¹⁾

Fiscal 2010
November 2, 2010	December 10, 2010	December 31, 2010		0.24
July 29, 2010	September 10, 2010	September 30, 2010		0.22
April 29, 2010	June 10, 2001	June 30, 2010		0.20
March 4, 2010	March 24, 2010	March 31, 2010		0.15

Total (2010)				0.81	⁽¹⁾

Fiscal 2009
October 29, 2009	December 10, 2009	December 31, 2009		0.15
July 30, 2009	September 10, 2009	September 30, 2009		0.15
May 5, 2009	June 10, 2009	June 30, 2009		0.15
March 5, 2009	March 17, 2009	March 31, 2009		0.15

Total (2009)				0.60	⁽¹⁾

Date Declared	Record Date	Payment Date	Amount
Fiscal 2008
October 30, 2008	December 10, 2008	December 31, 2008		0.20
July 31, 2008	September 10, 2008	September 30, 2008		0.20
May 1, 2008	June 16, 2008	June 30, 2008		0.30
March 11, 2008	March 21, 2008	March 31, 2008		0.36

Total (2008)				1.06	⁽²⁾

Fiscal 2007
October 25, 2007	December 10, 2007	December 31, 2007		0.36
July 26, 2007	September 7, 2007	September 28, 2007		0.36
April 30, 2007	June 8, 2007	June 29, 2007		0.36
February 27, 2007	March 9, 2007	March 30, 2007		0.36

Total (2007)				1.44	⁽³⁾

Fiscal 2006
December 20, 2006	December 29, 2006	January 17, 2007		0.12
October 26, 2006	December 8, 2006	December 29, 2006		0.34
July 26, 2006	September 8, 2006	September 29, 2006		0.32
April 26, 2006	June 9, 2006	June 30, 2006		0.30
February 9, 2006	March 10, 2006	March 31, 2006		0.30

Total (2006)				1.38

Fiscal 2005
December 7, 2005	December 30, 2005	January 18, 2006		0.12
October 27, 2005	December 9, 2005	December 30, 2005		0.30
July 27, 2005	September 10, 2005	September 30, 2005		0.25
April 27, 2005	June 10, 2005	June 30, 2005		0.20
February 9, 2005	March 10, 2005	March 31, 2005		0.14

Total (2005)				1.01

Fiscal 2004
October 27, 2004	December 10, 2004	December 31, 2004		0.11
July 28, 2004	September 10, 2004	September 30, 2004		0.11
May 5, 2004	June 10, 2004	June 30, 2004		0.11
February 2, 2004	March 15, 2004	April 5, 2004		0.10

Total (2004)				0.43	⁽⁴⁾

Total Distributions:			$	8.55	⁽⁵⁾

(1)

Distributions for the fiscal years ended December 31, 2011, 2010 and 2009 were funded from undistributed net investment income.

(2)

Includes a return of capital of approximately $0.08 per share for tax purposes.

(3)

Includes a return of capital of approximately $0.02 per share for tax purposes.

(4)

Includes a return of capital of approximately $0.10 per share for tax purposes.

(5)

We did not declare a dividend for the period ended December 31, 2003.

Related Parties

We have a number of business relationships with affiliated or related parties, including the following:

•

We have entered into the Investment Advisory Agreement with TICC Management. TICC Management is controlled by BDC Partners, its managing member. Charles M. Royce, as the non-managing member, holds a minority, non-controlling interest in TICC Management. BDC Partners, as the managing member of TICC Management, manages the business and internal affairs of TICC Management. In addition, BDC Partners provides us with office facilities and administrative services pursuant to the Administration Agreement.

•

Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, for T2 Advisers, LLC, the investment adviser to Greenwich Loan Income Fund Limited (f/k/a T2 Income Fund Limited) (“GLIF”), a Guernsey fund established and operated for the purpose of investing in bilateral transactions and syndicated loans across a variety of industries globally. BDC Partners is the managing member of T2 Advisers, LLC. In addition, Mr. Conroy serves as the Chief Financial Officer of GLIF and the Chief Financial Officer, Chief Compliance Officer and Treasurer of T2 Advisers, LLC.

•

Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, of Oxford Lane Capital Corp., a non-diversified closed-end management investment company that invests primarily in leveraged corporate loans, and its investment adviser, Oxford Lane Management, LLC (“Oxford Lane Management”). BDC Partners provides Oxford Lane Capital Corp. with office facilities and administrative services pursuant to an administration agreement and also serves as the managing member of Oxford Lane Management. In addition, Patrick F. Conroy serves as the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary of Oxford Lane Capital Corp. and Chief Financial Officer, Chief Compliance Officer and Treasurer of Oxford Lane Management.

•

BDC Partners is the managing member of Oxford Gate Capital, LLC, a private fund in which Messrs. Cohen, Rosenthal and Conroy, along with certain investment and administrative personnel of TICC Management, are invested.

BDC Partners has adopted a written policy with respect to the allocation of investment opportunities among TICC, Oxford Lane Capital Corp., GLIF and Oxford Gate Capital, LLC in view of the potential conflicts of interest raised by the relationships described above.

In the ordinary course of business, we may enter into transactions with portfolio companies that may be considered related party transactions. In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with us, we have implemented certain policies and procedures whereby our executive officers screen each of our transactions for any possible affiliations between the proposed portfolio investment, us, companies controlled by us and our employees and directors. We will not enter into any agreements unless and until we are satisfied that doing so will not raise concerns under the 1940 Act or, if such concerns exist, we have taken appropriate actions to seek board review and approval or exemptive relief for such transaction. Our Board of Directors reviews these procedures on an annual basis.

We have also adopted a Code of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer, as well as all of our officers, directors and employees. Our Code of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests. Pursuant to our Code of Ethics, each employee and director must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to our Chief Compliance Officer. Our Audit Committee is charged with approving any waivers under our Code of Ethics. As required by the NASDAQ Global Select Market corporate governance listing standards, the Audit Committee of our Board of Directors is also required to review and approve any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).

RECENT DEVELOPMENTS

On July 26, 2012, the Board of Directors declared a distribution of $0.29 per share for the third quarter, payable on September 28, 2012 to shareholders of record as of September 14, 2012.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. As of June 30, 2012, three debt investments in our portfolio were at a fixed rate, and the remaining seventy-one debt investments were at variable rates, representing approximately $23.9 million and $393.3 million in principal debt, respectively. At June 30, 2012, $389.8 million of our variable rate investments were income producing. The variable rates are based upon the five-year Treasury note, the Prime rate or LIBOR, and, in the case of our bilateral investments, are generally reset annually, whereas our non-bilateral investments generally reset quarterly. We expect that future debt investments will generally be made at variable rates. Many of the variable rate investments contain floors.

To illustrate the potential impact of a change in the underlying interest rate on our net increase in net assets resulting from operations, we have assumed a 1% increase or decrease in the underlying five-year Treasury note, the Prime rate or LIBOR, and no other change in our portfolio as of June 30, 2012. We have also assumed outstanding borrowings of $101,250,000. Under this analysis, net investment income would be essentially unchanged on an annual basis, due to the amount of investments in our portfolio which have implied floors that would be unaffected by a 1% change in the underlying interest rate. However, if the increase in rates was more significant, such as 5%, the net effect on the net increase in net assets resulting from operations would be an increase of approximately $9.4 million. To the extent that the rate underlying certain investments, as well as our borrowings, is at an historic low, it may not be possible for the underlying rate to decrease by 1% or 5%, and the impact of that reality is reflected in this analysis. Although management believes that this analysis is indicative of our existing interest rate sensitivity, it does not adjust for changes in the credit quality, size and composition of our portfolio, and other business developments, including a change in the level of our borrowings, that could affect the net increase in net assets resulting from operations. Accordingly, no assurances can be given that actual results would not differ materially from the results under this hypothetical analysis.

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates.

ITEM 4. CONTROLS AND PROCEDURES.

As of June 30, 2012, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information about us required to be included in periodic SEC filings.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

Item 1A. Risk Factors

An investment in our securities involves certain risks relating to our structure and investment objectives. The risks set forth below are not the only risks we face, and we face other risks which we have not yet identified, which we do not currently deem material or which are not yet predictable. If any of the following risks occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS AND STRUCTURE

Any failure on our part to maintain our status as a business development company would reduce our operating flexibility.

If we do not remain a business development company, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease our operating flexibility.

We are dependent upon TICC Management’s key management personnel for our future success, particularly Jonathan H. Cohen and Saul B. Rosenthal.

We depend on the diligence, skill and network of business contacts of the senior management of TICC Management. The senior management, together with other investment professionals, will evaluate, negotiate, structure, close, monitor and service our investments. Our future success will depend to a significant extent on the continued service and coordination of the senior management team, particularly Jonathan H. Cohen, the Chief Executive Officer of TICC Management, and Saul B. Rosenthal, the President and Chief Operating Officer of TICC Management. Neither Mr. Cohen nor Mr. Rosenthal will devote all of their business time to our operations, and both will have other demands on their time as a result of their other activities. Neither Mr. Cohen nor Mr. Rosenthal is subject to an employment contract. The departure of either of these individuals could have a material adverse effect on our ability to achieve our investment objective.

Our financial condition and results of operations will depend on our ability to manage our existing portfolio and future growth effectively.

Our ability to achieve our investment objective will depend on our ability to manage our existing portfolio and to grow, which will depend, in turn, on our investment adviser’s ability to identify, analyze, invest in and finance companies that meet our investment criteria, and our ability to raise and retain debt and equity capital. Accomplishing this result on a cost-effective basis is largely a function of our investment adviser’s structuring of the investment process, its ability to provide competent, attentive and efficient services to us and our access to financing on acceptable terms.

We and TICC Management, through its managing member, BDC Partners, will need to continue to hire, train, supervise and manage new employees. Failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.

We operate in a highly competitive market for investment opportunities.

A large number of entities compete with us to make the types of investments that we make. We compete with a large number of hedge funds and CLO investment vehicles, other equity and non-equity based investment funds, including other business development companies, investment banks and other sources of financing, including traditional financial services companies such as commercial banks and specialty finance companies. Many of our competitors are substantially larger than us 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 business development company. There can be no assurance that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objective.

Our business model depends upon the development and maintenance of strong referral relationships with private equity and venture capital funds and investment banking firms.

If we fail to maintain our relationships with key firms, or if we fail to establish strong referral relationships with other firms or other sources of investment opportunities, we will not be able to grow our portfolio of loans and achieve our investment objective. In addition, persons with whom we have informal relationships are not obligated to provide us with investment opportunities, and therefore there is no assurance that such relationships will lead to the origination of debt or other investments.

We may not realize gains from our equity investments.

When we invest in debt securities, we may acquire warrants or other equity securities as well. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

Because our investments are generally not in publicly traded securities, there is uncertainty regarding the fair value of our investments, which could adversely affect the determination of our net asset value.

Our portfolio investments are generally not in publicly traded securities. As a result, the fair value of these securities is not readily determinable. We value these securities at fair value as determined in good faith by our Board of Directors based upon the recommendation of the Board’s Valuation Committee. In connection with that determination, members of TICC Management’s portfolio management team prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. We utilize the services of a third party valuation firm which prepares valuations for each of our bilateral portfolio securities that, when combined with all other investments in the same portfolio company (i) have a value as of the previous quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, and (ii) have a value as of the current quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, after taking into account any repayment of principal during the current quarter. In addition, the frequency of the third party valuations of our bilateral portfolio securities is based upon the grade assigned to each such security under our credit grading system as follows: Grade 1, at least annually; Grade 2, at least semi-annually; Grades 3, 4, and 5, at least quarterly.

TICC Management also retains the authority to seek, on our behalf, additional third party valuations with respect to both our bilateral portfolio securities and our syndicated loan investments. On April 9, 2009, the FASB issued additional guidelines under ASC 820-10-35, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” which provides guidance on factors that should be considered in determining when a previously active market becomes inactive and whether a transaction is orderly. In accordance with ASC 820-10-35, our valuation procedures specifically provide for the review of indicative quotes supplied by the large agent banks that make a market for each security. However, the marketplace for which we obtain indicative bid quotes for purposes of determining the fair value of our syndicated loan investments have shown these attributes of illiquidity as described by ASC-820-10-35. Due to limited market liquidity in the syndicated loan market, TICC believes that the non-binding indicative bids received from agent banks for certain syndicated investments that we own may not be determinative of their fair value and therefore alternative valuation procedures may need to be undertaken. As a result, TICC has engaged third-party valuation firms to provide assistance in valuing certain syndicated investments that we own. In addition, TICC Management prepares an analysis of each syndicated loan, including a financial summary, covenant compliance review, recent trading activity in the security, if known, and other business developments related to the portfolio company. All available information, including non-binding indicative bids which may not be determinative of fair value, is presented to the Valuation Committee to consider in its determination of fair value. In some instances, there may be limited trading activity in a security even though the market for the security is considered not active. In such cases the Valuation Committee will consider the number of trades, the size and timing of each trade, and other circumstances around such trades, to the extent such information is available, in its determination of fair value. The Valuation Committee will evaluate the impact of such additional information, and factor it into its consideration of the fair value that is indicated by the analysis provided by third-party valuation firms. We have considered the factors described in ASC 820-10 and have determined that we are properly valuing the securities in our portfolio.

Our Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment. The types of factors that the Valuation Committee takes into account in providing its fair value recommendation to our Board of Directors includes, as relevant, the nature and value of any collateral, the portfolio company’s ability to make payments and its earnings, the markets in which the portfolio company does business, comparison to valuations of publicly traded companies, comparisons to recent sales of comparable companies, the discounted value of the cash flows of the portfolio company and other relevant factors. Because such valuations are inherently uncertain and may be based on estimates, our determinations of fair value may differ materially from the values that would be assessed if a readily available market for these securities existed.

The lack of liquidity in our investments may adversely affect our business.

As stated above, our investments are generally not in publicly traded securities. Substantially all of these securities are subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. Also, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments.

In addition, because we generally invest in debt securities with a term of up to seven years and generally intend to hold such investments until maturity of the debt, we do not expect realization events, if any, to occur in the near-term. We expect that our holdings of equity securities may require several years to appreciate in value, and we can offer no assurance that such appreciation will occur.

We may experience fluctuations in our quarterly results, and as a result, our financial results for any period should not be relied upon as being indicative of performance of future periods.

We may experience fluctuations in our quarterly operating results due to a number of factors, including the rate at which we make new investments, the interest rates payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Capital markets have recently been in a period of disruption and instability. These market conditions have materially and adversely affected debt and equity capital markets in the United States and abroad, which had, and may in the future have, a negative impact on our business and operations.

The global capital markets have recently been in a period of disruption as evidenced by a lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of certain major financial institutions. Despite actions of the United States federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. These conditions could return in the future. Should these conditions return, we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital. Equity capital may be difficult to raise because, subject to some limited exceptions which apply to us, as a BDC we are generally not able to issue additional shares of our common stock at a price less than net asset value. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 200% immediately after each time we incur indebtedness. The debt capital that will be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.

The illiquidity of our investments may make it difficult for us to sell such investments if required. As a result, we may realize significantly less than the value at which we have recorded our investments. In addition, significant changes in the capital markets, including the recent period of extreme volatility and disruption, have had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes, could have a material adverse impact on our business, financial condition or results of operations.

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore, our non-performing assets may increase and the value of our portfolio may decrease during these periods as we are required to record the values of our investments. Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments at fair value. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize the portfolio company’s ability to meet its obligations under the debt that we hold. We may incur additional expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided significant managerial assistance to that portfolio company, a bankruptcy court might recharacterize our debt holding and subordinate all or a portion of our claim to that of other creditors. These events could harm our financial condition and operating results.

The recent downgrade of the U.S. credit rating and the economic crisis in Europe could negatively impact our business, financial condition and results of operations.

Recent U.S. debt ceiling and budget deficit concerns, together with signs of deteriorating sovereign debt conditions in Europe, have increased the possibility of additional credit-rating downgrades and economic slowdowns. Although U.S. lawmakers passed legislation to raise the federal debt ceiling, Standard & Poor’s Ratings Services lowered its long-term sovereign credit rating on the United States from “AAA” to “AA+” in August 2011. The impact of this or any further downgrades to the U.S. government’s sovereign credit rating, or its perceived creditworthiness, and the impact of the current crisis in Europe with respect to the ability of certain European Union countries to continue to service their sovereign debt obligations is inherently unpredictable and could adversely effect the U.S. and global financial markets and economic conditions. There can be no assurance that governmental or other measures to aid economic recovery will be effective. These developments, and the government’s credit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the capital markets on favorable terms. In addition, the decreased credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our stock price. Continued adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations.

The affect of global climate change may impact the operations of our portfolio companies.

There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to their business. A decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions.

The impact of recent financial reform legislation on us is uncertain.

In light of current conditions in the U.S. and global financial markets and the U.S. and global economy, legislators, the presidential administration and regulators have increased their focus on the regulation of the financial services industry. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Reform Act”) became effective on July 21, 2010, although many provisions of the Dodd-Frank Reform Act have delayed effectiveness or will not become effective until the relevant federal agencies issue new rules to implement the Dodd-Frank Reform Act. Nevertheless, the Dodd-Frank Reform Act may have a material adverse impact on the financial services industry as a whole and on our business, results of operations and financial condition. Accordingly, we cannot predict the effect the Dodd-Frank Act or its implementing regulations will have on our business, results of operations or financial condition.

A disruption in the capital markets and the credit markets could negatively affect our business.

As a BDC, we seek to maintain our ability to raise additional capital for investment purposes. Without sufficient access to the capital markets or credit markets, we may not be able to pursue new business opportunities. Disruptive conditions in the financial industry and the impact of new legislation in response to those conditions could restrict our business operations and could adversely impact our results of operations and financial condition.

Our ability to grow our business could be impaired by an inability to access the capital markets or to enter into new credit facilities. At various times over the past three years, reflecting concern about the stability of the financial markets, many lenders and institutional investors have reduced or ceased providing funding to borrowers. This market disruption and tightening of credit has led to increased market volatility and widespread reduction of business activity generally. If we are unable to raise additional equity capital or consummate new credit facilities on terms that are acceptable to us, we may not be able to initiate significant originations.

These situations may arise due to circumstances that we may be unable to control, such as access to the credit markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Even though if such conditions have improved broadly and significantly over the short-term, adverse conditions in particular sectors of the financial markets could adversely impact our business over the long-term.

Price declines and illiquidity in the corporate debt markets have adversely affected, and may continue to adversely affect, the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our Board of Directors. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. Depending on market conditions, we may incur substantial losses in future periods, which could have a material adverse impact on our business, financial condition and results of operations.

Even in the event the value of your investment declines, the management fee and, in certain circumstances, the incentive fee will still be payable.

The management fee is calculated as 2.0% of the value of our gross assets at a specific time. Accordingly, the management fee will be payable regardless of whether the value of our gross assets and/or your investment have decreased. Moreover, a portion of the incentive fee is payable if our net investment income for a calendar quarter exceeds a designated hurdle rate. This portion of the incentive fee is payable without regard to any capital gain, capital loss or unrealized depreciation that may occur during the quarter. Accordingly, this portion of our adviser’s incentive fee may also be payable notwithstanding a decline in net asset value that quarter. In addition, in the event we recognize deferred loan interest income in excess of our available capital as a result of our receipt of payment-in-kind, or “PIK” interest, we may be required to liquidate assets in order to pay a portion of the incentive fee. TICC Management, however, is not required to reimburse us for the portion of any incentive fees attributable to deferred loan interest income in the event of a subsequent default.

We are permitted to borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.

On August 10, 2011, we completed a $225,000,000 debt securitization financing transaction. The notes were issued by a newly formed special purpose vehicle in which our wholly-owned subsidiary owns all of the equity. The notes have an initial face amount of $101,250,000, are rated AAA/Aaa by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest, after the effective date, at three-month London Inter Bank Offered Rate (“LIBOR”) plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The notes have a stated maturity date of July 25, 2021 and are subject to a three year non-call period. TICC CLO has a three year reinvestment period.

Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We may borrow from and issue senior debt securities to banks, insurance companies, and other lenders. Lenders of these senior securities have fixed dollar claims on our assets that are superior to the claims of our common stockholders. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock dividend payments. Leverage is generally considered a speculative investment technique. Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to TICC Management will be payable on our gross assets, including those assets acquired through the use of leverage, TICC Management may have a financial incentive to incur leverage which may not be consistent with our stockholders’ interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to TICC Management.

Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns on the portfolio, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

	Assumed total return on our portfolio (net of expenses)
		(10.0	)%	(5.0	)%	0.0	%	5.0	%	10.0	%
Corresponding return to stockholder(1)		(14.3	)%	(7.7	)%	(1.0	)%	5.7	%	12.3	%

(1)

Assumes $404.8 million in total assets and $101.25 million in total debt outstanding, which reflects our total assets and total debt outstanding as of December 31, 2011, and a cost of funds of 3.0%. Excludes non-portfolio investment assets and non-leverage related liabilities.

We are subject to risks associated with the debt securitization financing transaction that we completed on August 10, 2011.

As a result of the debt securitization financing transaction that we completed on August 10, 2011, we are subject to a variety of risks, including those set forth below:

We are subject to certain risks as a result of our indirect interests in the subordinated notes and membership interests of the Securitization Issuer.

Under the terms of the master loan sale agreement governing the debt securitization financing transaction, (1) we sold and/or contributed to Holdings all of our ownership interest in our portfolio loans and participations for the purchase price and other consideration set forth in the master loan sale agreement and (2) Holdings, in turn, sold and/or contributed to the Securitization Issuer all of its ownership interest in such portfolio loans and participations for the purchase price and the consideration set forth in the master loan sale agreement. Following these transfers, the Securitization Issuer, and not Holdings or us, held all of the ownership interest in such portfolio loans and participations. As a result of the debt securitization financing transaction, we hold indirectly through Holdings Subordinated Notes as well as membership interests, which comprise 100% of the equity interests, in the Securitization Issuer. As a result, we consolidate the financial statements of Holdings and the Securitization Issuer in our consolidated financial statements. Because each of Holdings and the Securitization Issuer is disregarded as an entity separate from its owner for U.S. federal income tax purposes, the sale or contribution by us to Holdings, and by Holdings to the Securitization Issuer, did not constitute a taxable event for U.S. federal income tax purposes. If the U.S. Internal Revenue Service were to take a contrary position, there could be a material adverse effect on our business, financial condition, results of operations or cash flows. The securities issued by the Securitization Issuer, or by any securitization vehicle we sponsor in the future, could be acquired by another business development company or securitization vehicle subject to the satisfaction of certain conditions. We may also, from time to time, hold asset-backed securities, or the economic equivalent thereof, issued by a securitization vehicle sponsored by another business development company to the extent permitted under the 1940 Act.

The Subordinated Notes and membership interests in the Securitization Issuer are subordinated obligations of the Securitization Issuer.

The Subordinated Notes are the junior class of notes issued by the Securitization Issuer, are subordinated in priority of payment to the Class A Notes issued by the Securitization Issuer and are subject to certain payment restrictions set forth in the indenture governing the notes. Therefore, Holdings only receives cash distributions on the Subordinated Notes if the Securitization Issuer has made all cash interest payments on the Class A Notes it has issued, and we only receive cash distributions in respect of our indirect ownership of the Securitization Issuer to the extent that Holdings receives any cash distributions in respect of its direct ownership of the Securitization Issuer. The Subordinated Notes are also unsecured and rank behind all of the secured creditors, known or unknown, of the Securitization Issuer, including the holders of the Class A Notes it has issued. Consequently, to the extent that the value of the Securitization Issuer’s portfolio of loan investments has been reduced as a result of conditions in the credit markets, or as a result of defaulted loans or individual fund assets, the value of the Subordinated Notes at their redemption could be reduced. Accordingly, our investment in the Securitization Issuer may be subject to complete loss.

The membership interests in the Securitization Issuer represent all of the equity interest in the Securitization Issuer. As such, the holder of the membership interests is the residual claimant on distributions, if any, made by the Securitization Issuer after holders of all classes of notes issued by the Securitization Issuer have been paid in full on each payment date or upon maturity of such notes under the debt securitization financing transaction documents. Such payments may be made by the Securitization Issuer only to the extent permitted under such documents on any payment date or upon payment in full of the notes issued by the Securitization Issuer. We cannot assure you that distributions on the assets held by the Securitization Issuer will be sufficient to make any distributions to us or that such distributions will meet our expectations.

The interests of holders of the senior class of securities issued by the Securitization Issuer may not be aligned with our interests.

The Class A Notes are the debt obligations ranking senior in right of payment to the Subordinated Notes. As such, there are circumstances in which the interests of holders of the Class A Notes may not be aligned with the interests of holders of the Subordinated Notes and the membership interests of the Securitization Issuer. For example, under the terms of the Class A Notes, holders of the Class A Notes have the right to receive payments of principal and interest prior to holders of the Subordinated Notes and the membership interests.

For as long as the Class A Notes remain outstanding, holders of the Class A Notes have the right to act, in certain circumstances, with respect to the portfolio loans in ways that may benefit their interests but not the interests of holders of Subordinated Notes and membership interests, including by exercising remedies under the indenture in the debt securitization financing transaction.

If an event of default has occurred and acceleration occurs in accordance with the terms of the indenture, the Class A Notes then outstanding will be paid in full before any further payment or distribution on the Subordinated Notes. In addition, if an event of default occurs, holders of a majority of the Class A Notes will be entitled to determine the remedies to be exercised under the indenture, subject to the terms of the indenture. For example, upon the occurrence of an event of default with respect to the notes issued by the Securitization Issuer, the trustee or holders of a majority of the Class A Notes may declare the principal, together with any accrued interest, of all the notes of such class and any junior classes to be immediately due and payable. This would have the effect of accelerating the principal on such notes, triggering a repayment obligation on the part of the Securitization Issuer. If at such time the portfolio loans were not performing well, the Securitization Issuer may not have sufficient proceeds available to enable the trustee under the indenture to repay the obligations of holders of the Subordinated Notes, or to pay a dividend to holders of the membership interests.

Remedies pursued by the holders of Class A Notes could be adverse to the interests of the holders of the Subordinated Notes, and the holders of Class A Notes will have no obligation to consider any possible adverse effect on such other interests. Thus, any remedies pursued by the holders of Class A Notes may not be in the best interests of Holdings and that Holdings may not receive payments or distributions upon an acceleration of the Subordinated Notes. Any failure of the Securitization Issuer to make distributions on the notes we indirectly hold, whether as a result of an event of default or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result in an inability of us to make distributions sufficient to allow our qualification as a RIC.

The Securitization Issuer may fail to meet certain asset coverage tests.

Under the documents governing the debt securitization financing transaction, there are two asset coverage tests applicable to the Class A Notes. The first such test compares the amount of interest received on the portfolio loans held by the Securitization Issuer to the amount of interest payable in respect of the Class A Notes, interest received on the portfolio loans must equal at least 200% or greater (based upon a graduated scale provided for in the indenture) of the interest payable in respect of the Class A Notes. The second such test compares the principal amount of the portfolio loans to the aggregate outstanding principal amount of the Class A Notes. To meet this test at any time, the aggregate principal amount of the portfolio loans must equal at least 135% of the outstanding principal amount of the Class A Notes. If either coverage test is not satisfied, interest and principal received by the Securitization Issuer are diverted on the following payment date to pay the Class A Notes in full to the extent necessary to cause all coverage tests to be satisfied on a pro forma basis after giving effect to all payments made in respect of the notes, which we refer to as a mandatory redemption. If any asset coverage test with respect to the Class A Notes is not met or if the Securitization Issuer fails to obtain a confirmation of the initial ratings of the Class A Notes after the effective date (defined under the indenture as the earlier to occur of April 3, 2012 or the time that the Securitization Issuer has acquired (or committed to acquire) at least $224.1 million in assets), proceeds from the portfolio of loan investments that otherwise would have been distributed to the Securitization Issuer and the holders of the Subordinated Notes will instead be used to redeem first the Class A Notes, to the extent necessary to satisfy the applicable asset coverage tests or to obtain the necessary ratings confirmation.

We may not receive cash on our equity interests in the Securitization Issuer.

We receive cash from the Securitization Issuer only to the extent that Holdings receives payments on the Subordinated Notes or membership interests. The Securitization Issuer may only make payments on such securities to the extent permitted by the payment priority provisions of the indenture governing the notes, which generally provides that principal payments on the Subordinated Notes may not be made on any payment date unless all amounts owing under the Class A Notes are paid in full. In addition, if the Securitization Issuer does not meet the asset coverage tests or the interest coverage test set forth in the documents governing the debt securitization financing transaction, cash would be diverted from the Subordinated Notes to first pay the Class A Notes in amounts sufficient to cause such tests to be satisfied. In the event that we fail to indirectly receive cash from the Securitization Issuer, we could be unable to make such distributions in amounts sufficient to maintain our status as a RIC, or at all. We also could be forced to sell investments in portfolio companies at less than their fair value in order to continue making such distributions. However, the indenture places significant restrictions on the Securitization Issuer’s ability to sell investments. As a result, there may be times or circumstances during which the Securitization Issuer is unable to sell investments or take other actions that might be in our best interests.

We may be required to assume liabilities of the Securitization Issuer.

As part of the debt securitization financing transaction, we entered into a master loan sale agreement under which we would be required to repurchase any loan (or participation interest therein) which was sold to the Securitization Issuer in breach of any representation or warranty made by us with respect to such loan on the date such loan was sold. To the extent we fail to satisfy any such repurchase obligation, the trustee may, on behalf of the Securitization Issuer, bring an action against us to enforce these repurchase obligations.

The structure of the debt securitization financing transaction is intended to prevent, in the event of our bankruptcy or the bankruptcy of Holdings, the consolidation of the Securitization Issuer with our operations or those of Holdings. If the true sale of these assets were not respected in the event of our insolvency, a trustee or debtor-in-possession might reclaim the assets of the Securitization Issuer for our estate. However, in doing so, we would become directly liable for all of the indebtedness then outstanding under the debt securitization financing transaction, which would equal the full amount of debt of the Securitization Issuer reflected on our consolidated balance sheet. In addition, we cannot assure that the recovery in the event we were consolidated with the Securitization Issuer for purposes of any bankruptcy proceeding would exceed the amount to which we would otherwise be entitled as an indirect holder of the Subordinated Notes had we not been consolidated with the Securitization Issuer.

Regulations governing our operation as a BDC affect our ability to, and the way in which we raise additional capital, which may expose us to risks, including the typical risks associated with leverage.

Our ability to grow our business requires a substantial amount of capital, which we may acquire from the following sources:

Senior Securities and Other Indebtedness

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we are permitted, as a business development company, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. This requirement of sustaining a 200% asset coverage ratio limits the amount that we may borrow. Because we will continue to need capital to grow our loan and investment portfolio, this limitation may prevent us from incurring debt. Further additional debt financing may not be available on favorable terms, if at all, or may be restricted by the terms of our debt facilities. If we are unable to incur additional debt, we may be required to raise additional equity at a time when it may be disadvantageous to do so.

As a result of the issuance of senior securities, including preferred stock and debt securities, we are exposed to typical risks associated with leverage, including an increased risk of loss and an increase in expenses, which are ultimately borne by our common stockholders. Because we may incur leverage to make investments, a decrease in the value of our investments would have a greater negative impact on the value of our common stock. When we issue debt securities or preferred stock, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. In addition, such securities may be rated by rating agencies, and in obtaining a rating for such securities, we may be required to abide by operating and investment guidelines that could further restrict our operating flexibility.

On August 10, 2011, we completed a $225,000,000 debt securitization financing transaction. The notes were issued by a newly formed special purpose vehicle in which our wholly-owned subsidiary owns all of the equity. The notes have an initial face amount of $101,250,000, are rated AAA/Aaa by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest, after the effective date, at three-month LIBOR plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The notes have a stated maturity date of July 25, 2021 and are subject to a three year non-call period. TICC CLO has a three year reinvestment period.

Our ability to pay dividends or issue additional senior securities would be restricted if our asset coverage ratio was not at least 200%. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Furthermore, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders.

Common Stock

We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our Board of Directors determines that such sale is in the best interests of TICC and its stockholders, and our stockholders approve such sale. In certain limited circumstances, pursuant to an SEC staff interpretation, we may also issue shares at a price below net asset value in connection with a transferable rights offering so long as: (1) the offer does not discriminate among stockholders; (2) we use our best efforts to ensure an adequate trading market exists for the rights; and (3) the ratio of the offering does not exceed one new share for each three rights held. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.

Our Board of Directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners.

Our charter permits our Board of Directors to reclassify any authorized but unissued shares of stock into one or more classes of preferred stock. We are currently authorized to issue up to 100,000,000 shares of common stock, of which 37,806,232 shares are issued and outstanding as of August 2, 2012. In the event our Board of Directors opts to reclassify a portion of our unissued shares of common stock into a class of preferred stock, those preferred shares would have a preference over our common stock with respect to dividends and liquidation. The cost of any such reclassification would be borne by our existing common stockholders. The class voting rights of any preferred shares we may issue could make it more difficult for us to take some actions that may, in the future, be proposed by our Board of Directors and/or the holders of our common stock, such as a merger, exchange of securities, liquidation, or alteration of the rights of a class of our securities, if these actions were perceived by the holders of preferred shares as not in their best interests. The issuance of preferred shares convertible into shares of common stock might also reduce the net income and net asset value per share of our common stock upon conversion. These effects, among others, could have an adverse effect on your investment in our common stock.

A change in interest rates may adversely affect our profitability.

On August 10, 2011, we completed a $225,000,000 debt securitization financing transaction. The notes were issued by a newly formed special purpose vehicle in which our wholly-owned subsidiary owns all of the equity. The notes have an initial face amount of $101,250,000, are rated AAA/Aaa by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest, after the effective date, at three-month LIBOR plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). As a result, a portion of our income will depend upon the difference between LIBOR and the interest rate on the debt securities in which we invest.

Currently, only three of the debt investments in our investment portfolio are at a fixed rate, while the others are at variable rates. Although we have not done so in the past, we may in the future choose to hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts, subject to applicable legal requirements. These activities may limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. Also, we have limited experience in entering into hedging transactions, and we will initially have to purchase or develop such expertise if we choose to employ hedging strategies in the future.

We will be subject to corporate-level income tax if we are unable to qualify as a RIC for federal income tax purposes.

To remain entitled to the tax benefits accorded to RICs under the Code, we must meet certain income source, asset diversification and annual distribution requirements. In order to qualify as a RIC, we must derive each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities, or other income derived with respect to our business of investing in such stock or securities. The annual distribution requirement for a RIC is satisfied if we distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, to our stockholders on an annual basis. Because we use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the annual distribution requirement. If we are unable to obtain cash from other sources, we may fail to qualify for special tax treatment as a RIC and, thus, may be subject to corporate-level income tax on all of our income.

In addition, we have purchased and may in the future purchase residual or subordinated interests in CLOs that are treated for U.S. federal income tax purposes as shares in a PFIC. We may be subject to U.S. federal income tax on our allocable share of a portion of any “excess distribution” received on, or any gain from the disposition of, such shares even if our allocable share of such income is distributed as a taxable dividend to the PFIC’s stockholders. Additional charges, in the nature of interest, generally will be imposed on us in respect of deferred taxes arising from any such excess distribution or gain. If we elect to treat a PFIC as a QEF under the Code, in lieu of the foregoing requirements, we will be required to include in income each year our proportionate share of the ordinary earnings and net capital gain of the QEF, even if such income is not distributed by the QEF. Alternatively, we may elect mark-to-market treatment for a PFIC; in this case, we will recognize as ordinary income our allocable share of any increase in the value of such shares, and as ordinary loss our allocable share of any decrease in such value to the extent that any such decrease does not exceed prior increases included in our income. Under either election, we may be required to recognize in a year income in excess of distributions from PFICs and proceeds from dispositions of PFIC shares during that year, and such income will nevertheless be subject to the annual distribution requirement described above.

If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation (“CFC”) (including equity tranche investments in a CLO vehicle treated as a CFC), we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of the corporation’s income for the tax year (including both ordinary earnings and capital gains). If we are required to include such deemed distributions from a CFC in our income, we will be required to distribute such income to maintain our RIC status regardless of whether or not the CFC makes an actual distribution during such year.

Legislation enacted in 2010 imposes a withholding tax of 30% on payments of U.S. source interest and dividends paid after December 31, 2013, or gross proceeds from the disposition of an instrument that produces U.S. source interest or dividends paid after December 31, 2014, to certain non-U.S. entities, including certain non-U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its United States account holders and its United States owners. Most CLO vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.

To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. If we fail to qualify as a RIC for any reason and remain or become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders.

We may choose to pay dividends in our own common stock, in which case our stockholders may be required to pay federal income taxes in excess of the cash dividends they receive.

We may distribute taxable dividends that are payable in cash or shares of our common stock at the election of each stockholder. IRS Revenue Procedure 2010-12 temporarily allows a RIC whose stock is publicly traded on an established securities market in the U.S. to distribute its own stock as a dividend for the purpose of fulfilling its distribution requirements. Pursuant to this revenue procedure, a RIC may treat a distribution of its own stock as fulfilling its distribution requirements if (i) the distribution is declared on or before December 31, 2012, with respect to a taxable year ending on or before December 31, 2011, and (ii) each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 10% of the aggregate declared distribution. Under Revenue Procedure 2010-12, if too many stockholders elect to receive cash, each stockholder electing to receive cash will receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 10% of his or her entire distribution in cash. If the requirements of Revenue Procedure 2010-12 are met, for U.S federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.

Where Revenue Procedure 2010-12 is not currently applicable, the IRS has also issued private letter rulings on cash/stock dividends paid by RICs and real estate investment trusts using a 20% cash standard (and, more recently, the 10% cash standard of Revenue Procedure 2010-12) if certain requirements are satisfied. Stockholders receiving such dividends will be required to include the full amount of the dividend (including the portion payable in stock) as ordinary income (or, in certain circumstances, long-term capital gain) to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the common stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. It is unclear whether and to what extent we will be able to pay taxable dividends of the type described in this paragraph (whether pursuant to Revenue Procedure 2010-12, a private letter ruling or otherwise). We have no current intention to make a taxable dividend payable in our stock.

We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.

For federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise if we receive warrants in connection with the making of a loan or possibly in other circumstances, or contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. In addition, we may be required to accrue for federal income tax purposes amounts attributable to our investment in CLOs that may differ from the distributions received in respect of such investments. We also may be required to include in income certain other amounts that we will not receive in cash.

Because in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty satisfying the annual distribution requirement applicable to RICs. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital, reduce new investments or make taxable distributions of our stock or debt securities to meet that distribution requirement. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus be subject to corporate-level income tax.

In addition, original issue discount income for certain portfolio investments may or may not be included as a factor in the determination of the fair value of such investments.

There are significant potential conflicts of interest between TICC and our management team.

In the course of our investing activities, we pay management and incentive fees to TICC Management, and reimburse BDC Partners for certain expenses it incurs. As a result, investors in our common stock invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments. As a result of this arrangement, there may be times when the management team of TICC Management has interests that differ from those of our stockholders, giving rise to a conflict.

TICC Management receives a quarterly incentive fee based, in part, on our “Pre-Incentive Fee Net Investment Income,” if any, for the immediately preceding calendar quarter. This incentive fee is subject to a quarterly hurdle rate before providing an incentive fee return to TICC Management. To the extent we or TICC Management are able to exert influence over our portfolio companies, the quarterly pre-incentive fee may provide TICC Management with an incentive to induce our portfolio companies to accelerate or defer interest or other obligations owed to us from one calendar quarter to another.

In addition, our executive officers and directors, and the executive officers of TICC Management, and its managing member, BDC Partners, serve or may serve as officers and directors of entities that operate in a line of business similar to our own. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders. Charles M. Royce, the non-executive Chairman of our Board of Directors, holds a minority, non-controlling interest in our investment adviser. BDC Partners is the managing member of Oxford Gate Capital, LLC, a private fund in which Messrs. Cohen, Rosenthal and Conroy, along with certain investment and administrative personnel of TICC Management, are invested.

Messrs. Cohen and Rosenthal also currently serve as Chief Executive Officer and President, respectively, for T2 Advisers, LLC, the investment adviser to Greenwich Loan Income Fund Limited (f/k/a T2 Income Fund Limited) (“GLIF”), a Guernsey fund investing in syndicated loans across a variety of industries globally. BDC Partners is the managing member of T2 Advisers, LLC. Further, Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, of Oxford Lane Capital Corp., a non-diversified closed-end management investment company that currently invests primarily in CLO debt and equity tranches, and its investment adviser, Oxford Lane Management. BDC Partners provides Oxford Lane Capital Corp. with office facilities and administrative services pursuant to an administration agreement and also serves as the managing member of Oxford Lane Management. In addition, Patrick F. Conroy, the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary of TICC Management, BDC Partners and TICC, serves in the same capacities for Oxford Lane Capital Corp. and Oxford Lane Management and also serves as the Chief Financial Officer of GLIF and as the Chief Financial Officer, Chief Compliance Officer and Treasurer of T2 Advisers, LLC. Because of these possible conflicts of interest, these individuals may direct potential business and investment opportunities to other entities rather than to us or such individuals may undertake or otherwise engage in activities or conduct on behalf of such other entities that is not in, or which may be adverse to, our best interests.

BDC Partners has adopted a written policy with respect to the allocation of investment opportunities among TICC, Oxford Lane Capital Corp., Greenwich Loan Income Fund Limited and Oxford Gate Capital, LLC in view of the potential conflicts of interest raised by the relationships described above.

Changes in laws or regulations governing our operations may adversely affect our business.

We and our portfolio companies are subject to regulation by laws at the local, state and federal levels. These laws and regulations, as well as their interpretation, may be changed from time to time. Any change in these laws or regulations could have a material adverse effect on our business. In particular, legislative initiatives relating to climate change, healthcare reform and similar public policy matters may impact the portfolio companies in which we invest to the extent they operate in industries that may be subject to such changes.

If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a business development company or be precluded from investing according to our current business strategy.

As a business development company, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets.

We believe that most of our portfolio investments will constitute qualifying assets. However, we may be precluded from investing in what we believe are attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could lose our status as a BDC, which would have a material adverse effect on our business, financial condition and results of operations. Similarly, these rules could prevent us from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inappropriate times in order to comply with the 1940 Act. If we need to dispose of such investments quickly, it would be difficult to dispose of such investments on favorable terms. For example, we may have difficulty in finding a buyer and, even if we do find a buyer, we may have to sell the investments at a substantial loss.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

Our charter and bylaws, as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect of discouraging a third party from making an acquisition proposal for us. These anti-takeover provisions may inhibit a change of control in circumstances that could give the holders of our common stock the opportunity to realize a premium over the market price for our common stock.

RISKS RELATED TO OUR INVESTMENTS

Our investment portfolio may be concentrated in a limited number of portfolio companies, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt securities that we hold or if the sectors in which we invest experience a market downturn.

A consequence of our limited number of investments is that the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment. Beyond our income tax asset diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few issuers. On December 3, 2007, we changed our name from Technology Investment Capital Corp. to TICC Capital Corp. While we have historically focused on the technology sector, we expect to actively seek new investment opportunities outside this sector that otherwise meet our investment criteria. As a result, a market downturn, including a downturn in the sectors in which we invest, could materially adversely affect us.

Most of our debt investments will not fully amortize during their lifetime, which may subject us to the risk of loss of our principal in the event a portfolio company is unable to repay us prior to maturity.

Most of our debt investments are not structured to fully amortize during their lifetime. Accordingly, if a portfolio company has not previously pre-paid its debt investment to us, a significant portion of the principal amount due on such a debt investment may be due at maturity. In order to create liquidity to pay the final principal payment, a portfolio company typically must raise additional capital. If they are unable to raise sufficient funds to repay us, the debt investment may go into default, which may compel us to foreclose on the borrower’s assets, even if the debt investment was otherwise performing prior to maturity. This may deprive us from immediately obtaining full recovery on the debt investment and may prevent or delay the reinvestment of the investment proceeds in other, possibly more profitable investments.

The sectors in which we invest are subject to many risks, including volatility, intense competition, decreasing life cycles and periodic downturns which could result in a heightened risk of loss on your investment.

We invest in companies which may have relatively short operating histories. The revenues, income (or losses) and valuations of these companies can and often do fluctuate suddenly and dramatically. Also, the technology-related sector, on which we have historically focused, in particular, is generally characterized by abrupt business cycles and intense competition. The recent cyclical economic downturn has resulted in substantial decreases in the market capitalization of many companies. While such valuations have recovered to some extent, we can offer no assurance that such decreases in market capitalizations will not recur, or that any future decreases in valuations will be insubstantial or temporary in nature. Therefore, our portfolio companies may face considerably more risk of loss than companies in other industry sectors.

In addition, because of rapid technological change, the average selling prices of products and some services provided by the technology-related sector, on which we have historically focused, have historically decreased over their productive lives. As a result, the average selling prices of products and services offered by some of our portfolio companies may decrease over time, which could adversely affect their operating results and their ability to meet their obligations under their debt securities, as well as the value of any equity securities, that we may hold. This could, in turn, materially adversely affect our business, financial condition and results of operations.

Our investments in the companies that we target may be extremely risky and we could lose all or part of our investments.

Although a prospective portfolio company’s assets are one component of our analysis when determining whether to provide debt capital, we generally do not base an investment decision primarily on the liquidation value of a company’s balance sheet assets. Instead, given the nature of the companies that we invest in, we also review the company’s historical and projected cash flows, equity capital and “soft” assets, including intellectual property (patented and non-patented), databases, business relationships (both contractual and non-contractual) and the like. Accordingly, considerably higher levels of overall risk will likely be associated with our portfolio compared with that of a traditional asset-based lender whose security consists primarily of receivables, inventories, equipment and other tangible assets. Interest rates payable by our portfolio companies may not compensate for these additional risks, any of which could cause us to lose part or all of our investment.

Specifically, investment in certain of the companies that we are invested in involves a number of significant risks, including:

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these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any value from the liquidation of such collateral;

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they may have limited operating histories, narrower product lines and smaller market shares than larger businesses, which may tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;

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because many of them tend to be privately owned, there is generally little publicly available information about these businesses; therefore, although TICC Management’s agents will perform “due diligence” investigations on these portfolio companies, their operations and their prospects, we may not learn all of the material information we need to know regarding these businesses;

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some of these companies are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;

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some of these companies may have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; and

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many of these companies may be more susceptible to economic recessions or downturns than other better capitalized companies that operate in less capital intensive industries.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if a portfolio company goes bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, including the extent to which we actually provided significant “managerial assistance” to that portfolio company, a bankruptcy court might recharacterize our debt holding and subordinate all or a portion of our claim to that of other creditors.

Our failure to make follow-on investments in our portfolio companies could impair the value of our investment portfolio.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in order to: (i) increase or maintain in whole or in part our equity ownership percentage; (ii) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or (iii) attempt to preserve or enhance the value of our investment.

We may elect not to make follow-on investments or otherwise lack sufficient funds to make those investments. We have the discretion to make any follow-on investments, subject to the availability of capital resources. The failure to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk, because we prefer other opportunities, or because we are inhibited by compliance with business development company requirements or the desire to maintain our tax status.

Our incentive fee may induce TICC Management to use leverage and to make speculative investments.

The incentive fee payable by us to TICC Management may create an incentive for TICC Management to use leverage and to make investments on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive fee on “Pre-Incentive Fee Net Investment Income” is determined, which is calculated as a percentage of the return on invested capital, may encourage TICC Management to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor holders of our common stock. Similarly, because TICC Management may also receive an incentive fee based, in part, upon the capital gains realized on our investments, the investment adviser may invest more than would otherwise be appropriate in companies whose securities are likely to yield capital gains, as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during an economic downturn.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

We intend to invest primarily in senior debt securities, but may also invest in subordinated debt securities, issued by our portfolio companies. In some cases, portfolio companies will be permitted to have other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders thereof are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligations to us. In the case of debt ranking equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company. In addition, we will not be in a position to control any portfolio company by investing in its debt securities. As a result, we are subject to the risk that a portfolio company in which we invest may make business decisions with which we disagree and the management of such companies, as representatives of the holders of their common equity, may take risks or otherwise act in ways that do not best serve our interests as debt investors.

Because we generally do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio companies or to prevent decisions by the managements of our portfolio companies that could decrease the value of our investments.

Although we have taken and may in the future take controlling equity positions in our portfolio companies from time to time, we generally do not do so. As a result, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and the stockholders and management of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity for the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company, and may therefore suffer a decrease in the value of our investments.

Our investments in CLO vehicles may be riskier and less transparent than direct investments in portfolio companies.

From time to time we have and may in the future invest in debt and residual value interests of CLO vehicles. Generally, there may be less information available to us regarding the underlying debt investments held by such CLOs than if we had invested directly in the underlying companies. Our CLO investments will also be subject to the risk of leverage associated with the debt issued by such CLOs and the repayment priority of debt holders senior to us in such CLOs.

Some instruments issued by CLO vehicles may not be readily marketable and may be subject to restrictions on resale. Securities issued by CLO vehicles are generally not listed on any U.S. national securities exchange and no active trading market may exist for the securities of CLO vehicles in which we may invest. Although a secondary market may exist for our investments in CLO vehicles, the market for our investments in CLO vehicles may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. As a result, these types of investments may be more difficult to value.

Failure by a CLO vehicle in which we are invested to satisfy certain tests will harm our operating results.

The failure by a CLO vehicle in which we invest to satisfy financial covenants, including with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to us. In the event that a CLO vehicle fails certain tests, holders of debt senior to us may be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, with a defaulting CLO vehicle or any other investment we may make. If any of these occur, it could materially and adversely affect our operating results and cash flows.

Our financial results may be affected adversely if one or more of our significant equity or junior debt investments in a CLO vehicle defaults on its payment obligations or fails to perform as we expect or if the market price fluctuates significantly in such illiquid investments.

Up to 30% of our portfolio may consist of equity and junior debt investments in CLO vehicles, which involves a number of significant risks. CLO vehicles that we invest in are typically very highly levered (10-14 times), and therefore, the junior debt and equity tranches that we invest in are subject to a higher degree of risk of total loss. In particular, investors in CLO vehicles indirectly bear risks of the underlying debt investments held by such CLO vehicles. We will generally have the right to receive payments only from the CLO vehicles, and will generally not have direct rights against the underlying borrowers or the entity that sponsored the CLO vehicle. While the CLO vehicles we have and continue to target generally enable the investor to acquire interests in a pool of leveraged corporate loans without the expenses associated with directly holding the same investments, when we invest in an equity tranche of a CLO vehicle we will generally pay a proportionate share of the CLO vehicles’ administrative and other expenses. Although it is difficult to predict whether the prices of indices and securities underlying CLO vehicles will rise or fall, these prices (and, therefore, the prices of the CLO vehicles) will be influenced by the same types of political and economic events that affect issuers of securities and capital markets generally.

The interests we intend to acquire in CLO vehicles will likely be thinly traded or have only a limited trading market. CLO vehicles are typically privately offered and sold, even in the secondary market. As a result, investments in CLO vehicles may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLO vehicles carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the fact that our investments in CLO tranches will likely be subordinate to other senior classes of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLO vehicle or unexpected investment results.

Investments in structured vehicles, including equity and junior debt instruments issued by CLO vehicles, involve risks, including credit risk and market risk. Changes in interest rates and credit quality may cause significant price fluctuations. Additionally, changes in the underlying leveraged corporate loans held by a CLO vehicle may cause payments on the instruments we hold to be reduced, either temporarily or permanently.

Structured investments, particularly the subordinated interests in which we intend to invest, are less liquid than many other types of securities and may be more volatile than the leveraged corporate loans underlying the CLO vehicles we intend to target. Fluctuations in interest rates may also cause payments on the tranches of CLO vehicles that we hold to be reduced, either temporarily or permanently.

Investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.

Our investment strategy involves investments in securities issued by foreign entities, including foreign CLO vehicles. Investing in foreign entities may expose us to additional risks not typically associated with investing in U.S. issues. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Further, we, and the CLO vehicles in which we invest, may have difficulty enforcing creditor’s rights in foreign jurisdictions. In addition, the underlying companies of the CLO vehicles in which we invest may be foreign, which may create greater exposure for us to foreign economic developments.

Although we expect that most of our investments will be U.S. dollar-denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk, or that if we do, such strategies will be effective.

RISKS RELATED TO AN INVESTMENT IN OUR COMMON STOCK

Our common stock price may be volatile.

The trading price of our common stock may fluctuate substantially depending on many factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, but are not limited to, the following:

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price and volume fluctuations in the overall stock market from time to time;

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significant volatility in the market price and trading volume of securities of regulated investment companies, business development companies or other financial services companies;

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changes in regulatory policies or tax guidelines with respect to regulated investment companies or business development companies;

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actual or anticipated changes in our earnings or fluctuations in our operating results or changes in the expectations of securities analysts;

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general economic conditions and trends;

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departures of key personnel.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Due to the potential volatility of our stock price, we may therefore be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

Our shares of common stock have traded at a discount from net asset value and may do so in the future.

Shares of closed-end investment companies have frequently traded at a market price that is less than the net asset value that is attributable to those shares. In part as a result of adverse economic conditions and increasing pressure within the financial sector of which we are a part, our common stock consistently traded below our net asset value per share throughout 2009 and during some periods in 2010, 2011 and 2012. Our common stock could trade at a discount to net asset value at any time in the future. The possibility that our shares of common stock may trade at a discount from net asset value over the long term is separate and distinct from the risk that our net asset value will decrease. We cannot predict whether shares of our common stock will trade above, at or below our net asset value. If our common stock trades below its net asset value, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors. If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our net asset value could decrease and our level of distributions could be impacted. Our net asset value may also decline over time if our principal recovery with respect to CLO equity investments is less than the price that we paid for those investments.

You may not receive dividends or our dividends may decline or may not grow over time.

We cannot assure you that we will achieve investment results or maintain a tax status that will allow or require any specified level of cash distributions or year-to-year increases in cash distributions. In particular, our future dividends are dependent upon the investment income we receive on our portfolio investments, including our higher-yielding CLO equity investments. To the extent such investment income, including income from our CLO equity investments (which we expect to decline as those vehicles de-leverage after the end of their respective re-investment periods), declines or if we transition our portfolio into lower-yielding investments, our ability to pay future dividends may be harmed.

Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering.

In the event we issue subscription rights to purchase shares of our common stock, stockholders who do not fully exercise their rights should expect that they will, at the completion of the offer, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of the offer.

In addition, if the subscription price is less than our net asset value per share, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offer. The amount of any decrease in net asset value is not predictable because it is not known at this time what the subscription price and net asset value per share will be on the expiration date of the rights offering or what proportion of the shares will be purchased as a result of the offer. Such dilution could be substantial.

If we issue preferred stock, the net asset value and market value of our common stock will likely become more volatile.

We cannot assure you that the issuance of preferred stock would result in a higher yield or return to the holders of the common stock. The issuance of preferred stock would likely cause the net asset value and market value of the common stock to become more volatile. If the dividend rate on the preferred stock were to approach the net rate of return on our investment portfolio, the benefit of leverage to the holders of the common stock would be reduced. If the dividend rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would result in a lower rate of return to the holders of common stock than if we had not issued preferred stock. Any decline in the net asset value of our investments would be borne entirely by the holders of common stock. Therefore, if the market value of our portfolio were to decline, the leverage would result in a greater decrease in net asset value to the holders of common stock than if we were not leveraged through the issuance of preferred stock. This greater net asset value decrease would also tend to cause a greater decline in the market price for the common stock. We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings, if any, on the preferred stock or, in an extreme case, our current investment income might not be sufficient to meet the dividend requirements on the preferred stock. In order to counteract such an event, we might need to liquidate investments in order to fund a redemption of some or all of the preferred stock. In addition, we would pay (and the holders of common stock would bear) all costs and expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher advisory fees if our total return exceeds the dividend rate on the preferred stock. Holders of preferred stock may have different interests than holders of common stock and may at times have disproportionate influence over our affairs.

Holders of any preferred stock we might issue would have the right to elect members of our Board of Directors and class voting rights on certain matters.

Holders of any preferred stock we might issue, voting separately as a single class, would have the right to elect two members of our Board of Directors at all times and in the event dividends become two full years in arrears would have the right to elect a majority of the directors until such arrearage is completely eliminated. In addition, preferred stockholders have class voting rights on certain matters, including changes in fundamental investment restrictions and conversion to open-end status, and accordingly can veto any such changes. Restrictions imposed on the declarations and payment of dividends or other distributions to the holders of our common stock and preferred stock, both by the 1940 Act and by requirements imposed by rating agencies, if any, or the terms of our credit facilities, if any, might impair our ability to maintain our qualification as a RIC for federal income tax purposes. While we would intend to redeem our preferred stock to the extent necessary to enable us to distribute our income as required to maintain our qualification as a RIC, there can be no assurance that such actions could be effected in time to meet the tax requirements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

While we did not engage in unregistered sales of equity securities during the six months ended June 30, 2012, we issued a total of 100,304 shares of common stock under our dividend reinvestment plan. This issuance was not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate valuation price for the shares of common stock issued under the dividend reinvestment plan was approximately $949,464.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

3.1	Articles of Incorporation (Incorporated by reference to the Registrant’s Registration Statement on Form N-2 (File No. 333-109055), filed on September 23, 2003).

3.2	Articles of Amendment (Incorporated by reference to Current Report on Form 8-K (File No. 814-00638) filed December 3, 2007).

3.3	Amended and Restated Bylaws (Incorporated by reference to Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-109055), filed on November 19, 2003).

4.1	Form of Share Certificate (Incorporated by reference to the Registrant’s Registration Statement on Form N-2 (File No. 333-109055), filed on September 23, 2003).

10.1	Investment Advisory Agreement between Registrant and TICC Management, LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed on July 1, 2011).

10.2	Custodian Agreement between Registrant and State Street Bank and Trust Company (Incorporated by reference to Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-109055), filed on November 19, 2003).

10.3	Amended and Restated Administration Agreement between Registrant and BDC Partners, LLC. (Incorporated by reference to Exhibit 10.3 to the Registrant’s quarterly report on Form 10-Q filed on May 10, 2012).

10.4	Amended and Restated Dividend Reinvestment Plan (Incorporated by reference to Exhibit 4.1 to the Registrant’s report on Form 8-K filed on May 30, 2012).

10.5	Purchase Agreement by and among the Registrant, TICC Capital Corp. 2011-1 Holdings, LLC, TICC CLO LCC and Guggenheim Securities, LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed on August 11, 2011).

10.6	Master Loan Sale Agreement by and among the Registrant, TICC Capital Corp. 2011-1 Holdings, LLC and TICC CLO LLC (Incorporated by reference to Exhibit 10.2 to the Registrant’s report on Form 8-K filed on August 11, 2011).

10.7	Indenture by and between TICC CLO LLC and The Bank of New York Mellon Trust Company, National Association (Incorporated by reference to Exhibit 10.3 to the Registrant’s report on Form 8-K filed on August 11, 2011).

10.8	Collateral Management Agreement by and between TICC CLO LLC and the Registrant (Incorporated by reference to Exhibit 10.4 to the Registrant’s report on Form 8-K filed on August 11, 2011).

10.9	Collateral Administration Agreement by and among TICC CLO LLC, the Registrant and The Bank of New York Mellon Trust Company, National Association (Incorporated by reference to Exhibit 10.5 to the Registrant’s report on Form 8-K filed on August 11, 2011).

11	Computation of Per Share Earnings (included in the notes to the audited financial statements contained in this report).

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

32.1	Certification of Chief Executive Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.

32.2	Certification of Chief Financial Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TICC CAPITAL CORP.

Date: August 3, 2012	By:	/ s / Jonathan H. Cohen

		Jonathan H. Cohen Chief Executive Officer

Date: August 3, 2012	By:	/ s / Patrick F. Conroy

		Patrick F. Conroy Chief Financial Officer (Principal Accounting Officer)