10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

OR

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

FOR THE TRANSITION PERIOD FROM                     TO                     

COMMISSION FILE NUMBER: 0-50398

TICC CAPITAL CORP.

(Exact name of registrant as specified in its charter)

Maryland	20-0188736
(State of Incorporation)	(I.R.S. Employer Identification Number)
8 Sound Shore Drive, Suite 255 Greenwich, CT	06830
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (203) 983-5275

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

Title of Each Class	Name of Each Exchange On Which Registered
Common Stock, par value $0.01 per share	NASDAQ Global Select Market

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

Common Stock, par value

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x.

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

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 definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ¨	Accelerated filer                     x
Non-accelerated filer      ¨	Smaller reporting company    ¨
(Do not check if a smaller reporting Company)

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

The aggregate market value of common stock held by non-affiliates of the Registrant on June 30, 2009, based on the closing price on that date of $4.41 on the NASDAQ Global Select Market, was $114,615,066.43. For the purposes of calculating this amount only, all directors and executive officers of the Registrant have been treated as affiliates. There were 26,813,216 shares of the Registrant’s common stock outstanding as of March 11, 2010.

Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement relating to the registrant’s 2010 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year, are incorporated by reference in Part III of this Annual Report on Form 10-K as indicated herein.

TICC CAPITAL CORP.

FORM 10-K FOR THE FISCAL YEAR

ENDED DECEMBER 31, 2009

TABLE OF CONTENTS

		Page
PART I
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	23
ITEM 1B.	UNRESOLVED STAFF COMMENTS	35
ITEM 2.	PROPERTIES	36
ITEM 3.	LEGAL PROCEEDINGS	36
ITEM 4.	RESERVED	36
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	37
ITEM 6.	SELECTED FINANCIAL DATA	40
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	41
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	65
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	67
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON ACCOUNTING AND FINANCIAL DISCLOSURE	92
ITEM 9A.	CONTROLS AND PROCEDURES	92
ITEM 9B.	OTHER INFORMATION	92
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	93
ITEM 11.	EXECUTIVE COMPENSATION	93
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	93
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	93
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	93
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	94
SIGNATURES		96

PART I

Item 1. Business

We are a specialty finance company principally providing capital to primarily non-public small- and medium-sized technology-related companies. Technology-related companies are businesses that focus on the following sectors: software, Internet, IT services, media, telecommunications, semiconductors, hardware and technology-enabled services. On December 3, 2007, we changed our name from Technology Investment Capital Corp. to TICC Capital Corp. While we continue to maintain our primary focus on the technology sector, we expect to actively seek new investment opportunities outside this sector that otherwise meet our investment criteria.

Our investment objective is to maximize our portfolio’s total return, principally by investing in the debt and/or equity securities of technology-related companies. Our primary focus is on seeking current income by investing in non-public debt securities. Our debt investments may include bilateral loans (loans where we hold the entirety of a particular loan) and syndicated loans (those where multiple investors hold portions of that loan). We may also seek to provide our stockholders with long-term capital growth through the appreciation in the value of warrants or other equity instruments that we may receive when we make debt investments or equity investments. We may also invest in publicly traded debt and/or equity securities. As a business development company, we may not acquire any asset other than “qualifying assets” unless, at the time we make the acquisition, the value of our qualifying assets represents at least 70% of the value of our total assets.

Our capital is generally used by our portfolio companies to finance organic growth, acquisitions, recapitalizations and working capital. Our investment decisions are based on extensive analysis of potential portfolio companies’ business operations supported by an in-depth understanding of the quality of their recurring revenues and cash flow, variability of costs and the inherent value of their assets, including proprietary intangible assets and intellectual property.

We currently concentrate our investments in companies having annual revenues of less than $200 million and/or an equity capitalization of less than $300 million. Historically, our investments have typically ranged from $5 million to $30 million each, 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 focus on companies that create products or provide services requiring technology and on companies that compete in industries characterized by such products or services, including companies in the following businesses: software, Internet, IT services, media, telecommunications, semiconductors, hardware and technology-enabled services.

While the structure of our investments will vary, we invest primarily 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 may also borrow funds to make investments. As a result, we may be 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 our investment adviser, TICC Management, LLC (“TICC Management”), will be borne by our common stockholders.

Our investment activities are managed by TICC Management. TICC Management is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). TICC Management is owned by BDC Partners, LLC (“BDC Partners”), its managing member, and Royce & Associates, LLC (“Royce & Associates”). Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President

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and Chief Operating Officer, are the members of BDC Partners, and Charles M. Royce, our non-executive Chairman, is the President of Royce & Associates. Under our investment advisory agreement with TICC Management (the “Investment Advisory Agreement”), we have agreed to pay TICC Management an annual base management fee based on our gross assets as well as an incentive fee based on our performance. See “Investment Advisory Agreement.”

We were founded in July 2003 and completed an initial public offering of shares of our common stock in November 2003. We are a Maryland corporation and a closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, or the “1940 Act.” As a business development company, we are required to meet certain regulatory tests, including the requirement to invest at least 70% of our total assets in eligible portfolio companies. See “—Regulation as a Business Development Company.” In addition, we have elected to be treated for federal income tax purposes as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, which we refer to as the Code.

Our headquarters are located at 8 Sound Shore Drive, Suite 255 Greenwich, Connecticut and our telephone number is (203) 983-5275.

MARKET OPPORTUNITY

Large, underserved market for product

Historically, growing technology-related companies have generally relied upon equity rather than debt financing. As a result, the market for debt financing for technology-related companies is generally less developed than the debt markets serving other industries. In spite of the large number of technology-related companies in the United States today, we believe that these companies are significantly underserved by traditional lenders such as banks, savings and loan institutions and finance companies for the following reasons:

• Non-traditional financial profile—The balance sheet of a technology-related company often includes a disproportionately large amount of intellectual property assets as compared to the balance sheets of industrial and service companies, which makes them difficult to evaluate using traditional lending criteria. Additionally, the high revenue growth rates characteristic of technology-related companies often render them difficult to evaluate from a credit perspective. Moreover, technology-related companies often incur relatively high expenditures for research and development, utilize unorthodox sales and marketing techniques and selling channels, and experience rapid shifts in technology, consumer demand and market share. These attributes can make it difficult for traditional lenders to analyze technology-related companies using conventional analytical methods.

• Industry scale, concentration and regulation—Many companies in technology-related industries lack the size, and the markets in which they operate lack the scale, necessary to service large loans by traditional lenders. In the banking industry, in particular, consolidation over the last decade has increased the size, and reduced the number, of surviving banks. The surviving institutions have sought to limit their credit exposures to, and the monitoring costs associated with loans to, smaller businesses. In addition, traditional lending institutions operate in a regulatory environment that favors lending to large, established businesses. In response to such regulation, many traditional lending institutions have developed loan approval processes which conflict with the entrepreneurial culture of smaller technology-related companies.

For the reasons outlined above, we believe that many viable technology-related companies have either not been able, or have elected not, to obtain financing from traditional lending institutions. We believe that these factors are likely to continue. Currently we are seeing dramatic dislocations across the global credit markets. Many companies that would have had ready access to debt capital at very low rates of interest are now struggling to borrow money at much higher rates. As a result, we believe that we may have the opportunity to provide debt

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capital to both technology-related and select non-technology-related companies representing strong credits on very favorable terms. Additionally, we may have the opportunity to provide that capital to larger, better capitalized and more profitable companies than we would have been able to lend to in the past. Certain of those companies, which would have more typically relied on a commercial bank or a syndicate of lenders for debt capital, now find those markets to be largely inaccessible. We believe the reasons for that closure relate more to the state of the overall credit markets than to the quality of certain individual credits. As such, we view the current market environment as potentially favorable for debt investors with our mandate. However, in view of the current economic environment, we cannot assure you whether we will be able to obtain additional debt or equity capital on terms that are acceptable to us. If we are unable to obtain such additional financing, our ability to benefit from the current dislocations within the global credit markets may be limited.

Complementing private equity and venture capital funds

Our investment approach has the ability to complement other sources of capital available to certain companies. For example, although we may compete with private equity and venture capital funds as sources of capital for such businesses, those types of investors typically invest primarily in equity-based securities. We believe that the nature of our investments in debt securities is often viewed by such entities as an attractive alternative source of capital. Private equity and venture capital funds often base their investments on anticipated annual internal rates of return that are substantially higher than the annual internal rates of return that we set as our operating target. Moreover, private equity and venture capital funds generally require a significantly greater percentage of equity ownership interests than we generally seek. However, private equity and venture capital investments may entail considerably more risk than the debt investments that we make, as they are usually uncollateralized and rank lower in priority in the capital structure of specific portfolio companies. We believe the prospect of obtaining additional capital without incurring substantial incremental dilution makes us attractive to owner-managers as a prospective source of capital.

In addition, in many cases, we expect that private equity and venture capital funds will generally welcome an investment by us in their portfolio companies. After making an initial investment, these funds often seek to stabilize or reduce their financial exposure to their portfolio companies, a goal that financing from us could accomplish by providing non-equity capital. In the current investment climate, it is possible that we may offer one of the few viable alternative sources of capital for a technology-related company other than incremental equity investments by the company’s existing financial sponsors. As such, we provide technology-related companies and their financial sponsors with an opportunity to diversify the company’s capital sources. In addition to enabling incremental growth, this can facilitate access to other alternative sources of capital in the future.

COMPETITIVE ADVANTAGES

We believe that we are well positioned to provide financing to technology-related companies for the following reasons:

• Focus on technology;

• Expertise in originating, structuring and monitoring investments;

• Flexible investment approach; and

• Established deal sourcing network.

Focus on technology

We focus our investments in companies in technology-related industries although we have invested, and will likely continue to invest, in non-technology-related companies. We believe that this focus, together with our experience in analyzing and financing such companies, affords us a sustainable competitive advantage. In particular, we have expertise in assessing the value of intellectual property assets, and in evaluating the operating

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characteristics of technology-related companies. As a result, we believe that we have a competitive advantage over less specialized lenders, particularly over lenders with limited experience in lending to technology-related companies. In addition, we believe that our specialization in financing companies within the technology sector enables us to advise portfolio companies on consolidation and exit financing opportunities more rapidly and effectively than less specialized lenders.

Expertise in originating, structuring and monitoring investments

We believe that our strong combination of experience and contacts in the technology sector has attracted well-positioned prospective portfolio companies.

• Jonathan H. Cohen, our Chief Executive Officer, has more than 19 years of experience in technology-related equity research and investment. He was named to Institutional Investor’s “All-American” research team in 1996, 1997 and 1998. During his career, Mr. Cohen has managed technology research groups covering computer software and hardware companies, telecommunication companies and semiconductor companies at several firms, including Wit SoundView, Merrill Lynch & Co., UBS Securities and Salomon Smith Barney. Mr. Cohen was also the owner and a principal of JHC Capital Management, LLC, a registered investment adviser that served as the sub-adviser to the Royce Technology Value Fund, a technology-focused mutual fund.

• Saul B. Rosenthal, our President and Chief Operating Officer, has 11 years of experience in the capital markets, with a focus on small to middle-market transactions in the technology sector. Mr. Rosenthal previously served as President of Privet Financial Securities, LLC, a broker-dealer providing advisory services to technology companies, and previously led the private financing/public company effort at SoundView Technology Group, where he co-founded SoundView’s Private Equity Group. He was a Vice-President and co-founder of the Private Equity Group at Wit Capital from 1998 to 2000. Prior to joining Wit Capital, Mr. Rosenthal was an attorney at the law firm of Shearman & Sterling LLP.

We believe that our extensive experience in researching, analyzing and investing in technology companies and structuring debt investments affords us a competitive advantage in providing financing to technology-related companies.

Flexible investment approach

We have significant flexibility in selecting and structuring our investments. While we must comply with the 1940 Act, we are not subject to many of the regulatory limitations that govern traditional lending institutions such as banks. Also, we have fairly broad latitude as to the term and nature of our investments. We recognize that technology-related companies regularly make corporate development decisions that impact their financial performance, valuation and risk profile. In some cases, these decisions can favorably impact long-term enterprise value at the expense of short-term financial performance. We seek to structure our investments so as to take into account the uncertain and potentially variable financial performance of our portfolio companies. This enables our portfolio companies to retain access to committed capital at different stages in their development and eliminate some of the uncertainty surrounding their capital allocation decisions. We calculate rates of return on invested capital based on a combination of up-front commitment fees, current and deferred interest rates and exit values, which may take the form of common stock, warrants, or other equity-linked instruments. We believe that this flexible approach to structuring investments will facilitate positive, long-term relationships with our portfolio companies and their equity sponsors and enable us to become a preferred source of capital to them. We also believe our approach should enable debt financing to develop into a viable alternative capital source for funding the growth of technology-related companies that wish to avoid the dilutive effects of equity financings for existing equity holders.

We are not subject to periodic capital return requirements. Such requirements, which are standard for most private funds, typically require that such funds return to investors the initial capital investment after a pre-agreed time, together with any capital gains on such investment. These provisions often force such funds to seek the return

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of their investments in portfolio companies through mergers, public equity offerings or other liquidity events more quickly than they otherwise might, which can result in a lower overall return to investors and adversely affect the ultimate viability of the affected portfolio companies. We believe that our flexibility to take a longer-term view should help us to maximize returns on our invested capital while still meeting the needs of our portfolio companies.

Established deal sourcing network

Through the senior investment professionals of TICC Management and our directors, we have extensive contacts and sources from which to generate investment opportunities. These contacts and sources include private equity and venture capital funds, public and private companies, investment bankers, attorneys, accountants and commercial bankers. We believe that senior professionals of TICC Management have developed strong reputations within the investment community over their years in the investment banking, investment management and equity research businesses.

INVESTMENT PROCESS

Identification of prospective portfolio companies

We identify and source new prospective portfolio companies through a network of venture capital and private equity funds, investment banks, accounting and law firms and direct company relationships. We have identified several criteria that we believe are important in seeking our investment objective. These criteria provide general guidelines for our investment decisions; however, we do not require each prospective portfolio company in which we choose to invest to meet all of these criteria.

• Experienced management—We generally require that our portfolio companies have an experienced management team. We also require the portfolio companies to have in place proper incentives to induce management to succeed and to act in concert with our interests as investors, including having significant equity interests.

• Significant financial or strategic sponsor and / or strategic partner—We prefer to invest in companies in which established private equity or venture capital funds or other financial or strategic sponsors have previously invested and are willing to make an ongoing contribution to the management of the business, including participation as board members or as business advisers.

• Strong competitive position in industry—We seek to invest in companies that have developed a strong competitive position within their respective sector or niche of a specific industry.

• Profitable on a cash flow basis—We focus on companies that are profitable or nearly profitable on an operating cash flow basis. Typically, we would not expect to invest in start-up companies.

• Clearly defined exit strategy—Prior to making an investment in a debt security that is accompanied by an equity-based security in a portfolio company, we analyze the potential for that company to increase the liquidity of its common equity through a future event that would enable us to realize appreciation, if any, in the value of our equity interest. Liquidity events may include an initial public offering, a merger or an acquisition of the company, a private sale of our equity interest to a third party, or a purchase of our equity position by the company or one of its stockholders.

• Liquidation value of assets—Although we do not operate as an asset-based lender, the prospective liquidation value of the assets, if any, collateralizing the debt securities that we hold is an important factor in our credit analysis. We emphasize both tangible assets, such as accounts receivable, inventory and equipment, and intangible assets, such as intellectual property, software code, customer lists, networks and databases.

Due diligence

If a company meets some of the characteristics described above, we perform a preliminary due diligence review including company and technology assessments, market analysis, competitive analysis, evaluation of

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management, risk analysis and transaction size, pricing and structure analysis. The criteria delineated below provide general parameters for our investment decisions, although not all of such criteria will be followed in each instance. Upon successful completion of this preliminary evaluation process, we will decide whether to deliver a non-binding letter of intent, after which our administrator, BDC Partners, generally receives an upfront advance to cover our due diligence-related expenses, begin the due diligence process and move forward towards the completion of a transaction.

Our due diligence process generally includes the following elements:

Management team and financial sponsor

• management assessment including a review of management’s track record with respect to product development, sales and marketing, mergers and acquisitions, alliances, collaborations, research and development outsourcing and other strategic activities, reference and background checks; and

• financial sponsor reputation, track record, experience and knowledge (where a financial sponsor is present in a transaction).

Business

• industry and competitive analysis;

• customer and vendor interviews to assess both business prospects and standard practices of the company;

• assessment of likely exit strategies; and

• potential regulatory / legal issues.

Financial condition

• detailed review of the historical financial performance and the quality of earnings;

• development of detailed pro forma financial projections;

• review of internal controls and accounting systems;

• review of assets and liabilities, including contingent liabilities; and

Technology assessment

• evaluation of intellectual property position;

• review of research and development milestones;

• analysis of core technology under development;

• assessment of collaborations and other technology validations; and

• assessment of market and growth potential.

Contemporaneous with our due diligence process, the investment team prepares a detailed credit memorandum for presentation to our Investment Committee, which currently consists of Messrs. Cohen and Rosenthal. Our Investment Committee reviews and approves each of our portfolio investments.

Investment structuring

We seek to achieve a high level of current income by investing in debt securities, consisting primarily of senior debt, senior subordinated debt and junior subordinated debt, of technology-related companies. We may also seek to provide our stockholders with long-term capital growth through the appreciation in the value of warrants or other equity instruments that we may receive when we make loans.

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In structuring our investments, we seek to ascertain the asset quality as well as the earnings quality of our prospective portfolio companies. Frequently, we obtain a senior secured position and thus receive a perfected, first priority security interest in substantially all of our portfolio companies’ assets, which entitles us to a preferred position on payments in the event of liquidation, and in many cases a pledge of the equity by the equity owners. It should be noted, however, that because we are not primarily an asset-based lender, in the current economic environment, the value of collateral and security interests may dissipate rapidly. In addition, we seek to structure loan covenants to assist in the management of risk. Our loan documents ordinarily include affirmative covenants that require the portfolio company to take specific actions such as periodic financial reporting, notification of material events and compliance with laws, restrictive covenants that prevent portfolio companies from taking a range of significant actions such as incurring additional indebtedness or making acquisitions without our consent, covenants requiring the portfolio company to maintain or achieve specified financial ratios such as debt to cash flow and interest coverage, and operating covenants requiring them to maintain certain operational benchmarks such as minimum revenue or minimum cash flow. Our loan documents also provide protection against customary events of default such as non-payment, breach of covenant, insolvency and change of control.

Senior Debt

The senior debt in which we invest generally holds a senior position in the capital structure of a portfolio company. Such debt may include loans that hold the most senior position, loans that hold an equal ranking with other senior debt, or loans that are, in the judgment of our investment adviser, in the category of senior debt. A senior position in the borrower’s capital structure generally gives the holder of the senior debt a claim on some or all of the borrower’s assets that is senior to that of subordinated debt, preferred stock and common stock in the event the borrower defaults or becomes bankrupt. The senior debt in which we invest may be wholly or partially secured by collateral, or may be unsecured. However, there may be instances in which senior debt held by other investors is in a superior position in the borrower’s capital structure.

Senior Subordinated Debt

Senior subordinated debt is subordinated in its rights to receive its principal and interest payments from the borrower to the rights of the holders of senior debt. As a result, senior subordinated debt is riskier than senior debt. Although such loans are sometimes secured by significant collateral, we principally rely on the borrower’s cash flow for repayment. Additionally, we often receive warrants to acquire shares of stock in borrowers in connection with these loans.

Junior Subordinated Debt

Structurally, junior subordinated debt is subordinate in priority of payment to senior debt (and is often unsecured), but is senior in priority to equity. Junior subordinated debt often has elements of both debt and equity instruments, having the fixed returns associated with senior debt while also providing the opportunity to participate in the future growth potential of a company through an equity component, typically in the form of warrants. Due to its higher risk profile and less restrictive covenants, loans associated with junior subordinated debt financing generally earn a higher return than senior debt or senior subordinated debt instruments.

ONGOING RELATIONSHIPS WITH PORTFOLIO COMPANIES

Monitoring

We monitor the financial trends of each portfolio company to assess the appropriate course of action for each company and to evaluate overall portfolio quality. We closely monitor the status and performance of each individual company on at least a quarterly and, in most cases, a monthly basis.

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We have several methods of evaluating and monitoring the performance of our bilateral debt and equity positions, including but not limited to the following:

• assessment of business development success, including product development, profitability and the portfolio company’s overall adherence to its business plan;

• periodic and regular contact with portfolio company management to discuss financial position, requirements and accomplishments;

• periodic formal update interviews with portfolio company management and, if appropriate, the financial or strategic sponsor;

• board observation rights; and

• review of monthly and quarterly financial statements and financial projections for portfolio companies.

In addition, we may from time to time identify investments that require closer monitoring or become workout assets. In such cases, we will develop a strategy for workout assets and periodically gauge our progress against that strategy. As a private equity holder, we may incur losses from our investing activities from time to time, however we attempt where possible to work with troubled portfolio companies in order to recover as much of our investments as is practicable.

Portfolio Grading

We have developed a credit grading system to monitor the quality of our debt investment portfolio. We use an investment rating scale of 1 to 5. The following table provides a description of the conditions associated with each debt investment. Equity securities are not graded.

Grade	Summary Description
1	Company is ahead of expectations and/or outperforming financial covenant requirements and such trend is expected to continue.
2	Full repayment of principal and interest is expected.
3	Closer monitoring is required. Full repayment of principal and interest is expected.
4	A reduction of interest income has occurred or is expected to occur. No loss of principal is expected.
5	A loss of some portion of principal is expected.

Managerial assistance

As a business development company, we are required to offer managerial assistance to portfolio companies. This assistance typically involves monitoring the operations of portfolio companies, participating in their board and management meetings, consulting with and advising their officers and providing other organizational and financial guidance.

PORTFOLIO OVERVIEW

We seek to create a portfolio that includes primarily senior secured loans, senior subordinated and junior subordinated debt investments, as well as warrants and other equity instruments we may receive in connection with such debt investments. We historically have invested between $5 million and $30 million in each of our portfolio companies with a goal of maintaining a diversified portfolio.

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The following is a representative list of the industries in which we have invested:

•   Software	•   Enterprise software
•   IT value-added reseller	•   IT consulting
•   Web-based services	•   Healthcare
•   Printing & document management	•   Securitization
•   Digital imaging	•   Grocery
•   Semiconductor capital equipment	•   Telecommunication services
•   Digital media	•   Interactive voice messaging
•   Consumer electronics	•   Telecommunication software
•   Advertising	•   Retail food products
•   Real estate development	•   Computer hardware
•   Business services	•   Shipping & transportation

During the fourth quarter of 2009, we invested approximately $7.3 million in the junior capital of four different collateralized loan obligation (“CLO”) vehicles. Due to the dramatic events in the credit markets over the past two years, we have identified what we believe are compelling investment opportunities in the CLO sector. The investments included three subordinated debt and one residual value investment in CLO tranches bought in the secondary market at substantial discounts to their par values, which may provide an attractive risk-adjusted return. We believe that this asset class continues to present investment opportunities for attractive risk-adjusted returns and we continue to review other CLO tranches. At December 31, 2009, this asset class represented approximately 3.6% of our total portfolio on a fair value basis.

At December 31, 2009, our portfolio was invested approximately 92% in senior secured notes and bonds, 3% in CLO subordinated secured notes, 1% in senior subordinated unsecured notes, 1% in CLO preference shares and 3% in equity.

TEN LARGEST PORTFOLIO INVESTMENTS AS OF DECEMBER 31, 2009

Our ten largest portfolio company investments at December 31, 2009, based on the combined fair value of the debt and equity securities we hold in each portfolio company, were as follows:

		At December 31, 2009
		($ in millions)
Portfolio Company	Industry	Cost		Fair Value		Fair Value Percentage of Total Portfolio
NetQuote, Inc.	Web-based services	$	21.0	$	20.8	10.4	%
Algorithmic Implementations, Inc.	Software		19.6		20.0	10.0	%
Questia Media Inc.	Digital media		14.4		13.8	6.9	%
Palm Inc.	Consumer electronics		13.6		12.5	6.2	%
SCS Holdings II, Inc.	IT value-added reseller		14.5		11.9	5.9	%
Hyland Software, Inc.	Enterprise software		10.9		10.5	5.2	%
American Integration Technologies, LLC	Semiconductor capital equipment		20.9		8.4	4.2	%
AKQA, Inc.	Advertising		8.5		8.1	4.1	%
Power Tools, Inc.	Software		10.2		8.0	4.0	%
GXS Worldwide, Inc.	Software		7.9		7.9	3.9	%
Total		$	141.5	$	121.9	60.8	%

For a description of the factors relevant to the changes in the value of the above portfolio investments for the year ended December 31, 2009, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio Grading.”

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Set forth below are descriptions of the ten largest portfolio investments:

NetQuote, Inc.

NetQuote Inc. (“Netquote”) operates a web-based business through which local insurance agents and national insurance companies acquire leads on consumers seeking to purchase competitively-priced insurance policies.

Our original investment in NetQuote, which closed in September 2005, consisted of $15.0 million in senior secured notes. During 2008, we made an additional investment of $10.5 million in senior secured notes issued by NetQuote. As a result of regular amortization payments, approximately $21.0 million remains outstanding as of December 31, 2009.

Algorithmic Implementations, Inc. (d/b/a “Ai Squared”)

Algorithmic Implementations, Inc. (“Ai Squared”) has been providing assistive technology for more than 15 years to computer users with low vision. The Company’s flagship product is ZoomText, a screen magnification and reading software application for the visually impaired.

Our investment in Ai Squared, which closed in September 2006, consisted of $22.0 million in senior secured notes and common stock. TICC and an individual investor each acquired 50% of the outstanding equity of Ai Squared in connection with our investment in the company.

Questia Media, Inc.

Questia Media, Inc. (“Questia”) provides one of the largest online libraries of reference books and textbooks.

Our original investment in Questia, which closed in January 2004, consisted of approximately $10.4 million in senior secured notes with a provision for payment-in-kind interest. During 2005 through 2007, we made additional investments in senior secured notes issued by Questia totaling approximately $2.7 million. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments” for additional information.

Palm, Inc.

Palm, Inc. (“Palm”) is a provider of mobile computing solutions that enable consumers and professionals to communicate with each other and to access and share information through a single, converged device.

In November 2007, we acquired $20.0 million in first lien senior secured notes issued by Palm. During 2009, we sold approximately $5.0 million of our investment.

SCS Holdings II, Inc.

SCS Holdings, II, Inc. (“Sirius Computer Solutions”) is a value added IT reseller that provides solutions for storage, servers and software with a focus on IBM products.

In December 2006, we acquired $14.5 million in second lien senior secured notes issued by Sirius Computer Solutions. There is no regular amortization payment for these notes which are due in full in 2013.

Hyland Software, Inc.

Hyland Software, Inc. (“Hyland”) operates in the mid-tier segment of the Enterprise Content Management (“ECM”) software market. Hyland’s fully integrated ECM software suite is used to capture, route, manage, share and archive high volumes of corporate information critical to business operations, audits and customer services.

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Our original investment in Hyland, which closed on August 9, 2007, consisted of $8.0 million in second lien senior secured notes. During 2008, we made an additional investment of $3.0 million in second lien senior secured notes.

American Integration Technologies, LLC

American Integration Technologies, LLC (“AIT”) is a semiconductor capital equipment contract manufacturer. AIT specializes in precision sheet metal fabrication, tubular frame welding, integration of components and assembly of complex equipment, primarily used for the semiconductor industry.

Our investment in AIT, which closed in May 2006, consisted of $12.0 million in senior secured notes. During April 2007, we invested an additional $15.0 million in senior secured notes issued by AIT. Also in 2007, AIT paid down approximately $3.0 million on the senior secured notes.

AKQA, Inc.

AKQA, Inc. (“AKQA”) is a digital interactive advertising company that delivers marketing solutions to blue chip clients. AKQA focuses on creating and delivering marketing solutions in digital media such as the Internet, mobile products, digital outdoor signage, gaming consoles and kiosks.

In March 2007, we acquired $25.0 million in senior secured notes issued by AKQA. During 2008 and 2009, we sold approximately $15.0 million of the senior secured notes issued by AKQA.

Power Tools, Inc. (d/b/a “Axceler”)

Power Tools, Inc. (“Power Tools”) provides software for content and data integration, workflow and automated administration for IBM Lotus Notes and Domino.

In May 2006, we acquired $12.0 million in senior secured notes issued by Power Tools and, also at the time of closing, we acquired $350,000 in warrants to purchase common stock issued by Power Tools.

GXS Worldwide, Inc.

GXS Worldwide, Inc. (“GXS”) is a business-to-business service provider whose product solutions enable customers to exchange trade related information electronically. GXS’s customers include small and medium businesses as well as large enterprise companies.

In December 2009, we acquired $8.0 million in high yield senior secured notes issued by GXS.

INVESTMENT ADVISORY AGREEMENT

Management Services

TICC Management serves as our investment adviser. TICC Management is registered as our investment adviser under the Advisers Act. Subject to the overall supervision of our Board of Directors, TICC Management manages our day-to-day operations of, and provides investment advisory services to us. Under the terms of our investment advisory agreement with TICC Management (the “Investment Advisory Agreement”), TICC Management:

• determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

• identifies, evaluates and negotiates the structure of the investments we make;

• closes, monitors and services the investments we make; and

• determines what securities we will purchase, retain or sell.

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TICC Management’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired. TICC Management has agreed that, during the term of its Investment Advisory Agreement with us, it will not serve as investment adviser to any other public or private entity that utilizes a principal investment strategy of providing debt financing to technology-related companies similar to those we target.

Management Fee

We pay TICC Management a fee for its services under the Investment Advisory Agreement consisting of two components—a base management fee and an incentive fee. The cost of both the base management fee payable to TICC Management and any incentive fees earned by TICC Management are ultimately borne by our common stockholders.

The base management fee (the “Base Fee”) is calculated at an annual rate of 2.00% of our gross assets. For services rendered under the Investment Advisory Agreement, the Base Fee is payable quarterly in arrears, and is calculated based on the average value of our 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. The Base Fee for any partial quarter will be appropriately pro rated.

The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on our “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 we receive from portfolio companies) accrued during the calendar quarter minus our operating expenses for the quarter (including the Base Fee, expenses payable under our 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 we have 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 our net assets at the end of the immediately preceding calendar quarter, is compared to one-fourth of an annual “hurdle rate.”

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 2008 calendar year was 8.45% and the annual hurdle rate for the 2009 calendar year was 6.55%. The current hurdle rate for the 2010 calendar year, calculated as of December 31, 2009, is 7.69%. Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 2% base management fee. In addition, in the event we recognize PIK loan interest in excess of our available capital, 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 fees attributable to accrued deferred loan interest in the event of a default by the obligor. The operation of the incentive fee with respect to our Pre-Incentive Fee Net Investment Income for each quarter is as follows:

• no incentive fee is payable to TICC Management in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed one fourth of the annual hurdle rate (currently 1.9225% for the 2010 calendar year).

• 20% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds one-fourth of the annual hurdle rate in any calendar quarter (currently 1.9225% for the 2010 calendar year) is payable to TICC Management (i.e., once the hurdle rate is reached, 20% of all Pre-Incentive Fee Net Investment Income thereafter is allocated to TICC Management).

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For example, for the quarter ended December 31, 2009, pre-incentive fee net investment income of $3,557,664 exceeded the hurdle of $3,533,801 (based upon net assets of $215,804,649 at September 30, 2009 and the quarterly hurdle rate of 1.6375%). The incentive fee rate of 20% resulted in an incentive of $4,773 for the quarter.

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 our “Incentive Fee Capital Gains,” which consist of our realized capital gains for each calendar year, computed net of all realized capital losses and unrealized capital depreciation for that calendar year.

Example 1: Income Related Portion of Incentive Fee for Each Calendar Quarter (*)

Alternative 1

Assumptions

Investment income (including interest, dividends, fees, etc.) = 1.25%

Quarterly Hurdle rate⁽¹⁾ = 1.9225%

Management fee⁽²⁾ = 0.5%

Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%

Pre-Incentive Fee Net Investment Income

(investment income – (management fee + other expenses)) = 0.55%

Pre-Incentive Fee Net Investment Income does not exceed hurdle rate, therefore there is no income-related incentive fee.

Alternative 2

Assumptions

Investment income (including interest, dividends, fees, etc.) = 4.0%

Quarterly Hurdle rate⁽¹⁾ = 1.9225%

Management fee⁽²⁾ = 0.5%

Other expenses (legal, accounting, custodian, transfer agent, etc.) = 0.2%

Pre-Incentive Fee Net Investment Income

(investment income – (management fee + other expenses)) = 3.3%

Incentive fee = 20% x Pre-Incentive Fee Net Investment Income in excess of the hurdle rate

= 20% x (3.3% – 1.9225%)

= 20% x 1.3775%

= 0.2755%

Pre-Incentive Fee Net Investment Income exceeds hurdle rate, therefore the income-related incentive fee is 0.2755%

(1) Represents 7.69% annualized hurdle rate for 2010 calendar year.

(2) Represents 2% annualized management fee.

Example 2: Capital Gains Portion of Incentive Fee (*)

Capital Gains Incentive Fee = 20% x Incentive Fee Capital Gains (i.e., our realized capital gains for each calendar year, computed net of all realized capital losses and unrealized capital depreciation for that calendar year)

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Assumptions:

Year 1 = no realized capital gains or losses

Year 2 = 9% realized capital gains, 0% realized capital losses, 1% unrealized depreciation and 0% unrealized appreciation

Year 3 = 12% realized capital gains, 0% realized capital losses, 2% unrealized depreciation and 2% unrealized appreciation

Year 1 incentive fee • Total Incentive Fee Capital Gains = 0

• No capital gains incentive fee paid to TICC Management in Year 1

Year 2 incentive fee • Total Incentive Fee Capital Gains = 8%

(9% realized capital gains less 1% unrealized depreciation)

• Total capital gains incentive fee paid to TICC Management in Year 2

= 20% x 8%

= 1.6%

Year 3 incentive fee • Total Incentive Fee Capital Gains = 10%

(12% realized capital gains less 2% unrealized depreciation; unrealized appreciation has no effect)

• Total capital gains incentive fee paid to TICC Management in Year 3

= 20% x 10%

= 2%

(*) The hypothetical amount of returns shown are based on a percentage of our total net assets and assumes no leverage. There is no guarantee that positive returns will be realized and actual returns may vary from those shown in this example.

Payment of our Expenses

All personnel of our investment adviser when and to the extent engaged in providing investment advisory services, and the compensation and expenses of such personnel allocable to such services, will be provided and paid for by BDC Partners, the investment adviser’s managing member. We are responsible for all other costs and expenses of our operations and transactions, including, without limitation, the cost of calculating our net asset value; the cost of effecting sales and repurchases of shares of our common stock and other securities; investment advisory fees; fees payable to third parties relating to, or associated with, making investments; transfer agent and custodial fees; federal and state registration fees; any exchange listing fees; federal, state and local taxes; independent directors’ fees and expenses; brokerage commissions; costs of proxy statements, stockholders’ reports and notices; fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums; direct costs such as printing, mailing, long distance telephone, staff, independent audits and outside legal costs and all other expenses incurred by either BDC Partners or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our 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 our Chief Financial Officer, Chief Compliance Officer, Controller and other administrative support personnel. All of these expenses are ultimately borne by our common stockholders.

Duration and Termination

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect if approved annually by our Board of Directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not

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interested persons. The Investment Advisory Agreement will automatically terminate in the event of its assignment. The Investment Advisory Agreement may be terminated by either party without penalty upon not more than 60 days’ written notice to the other. See “Risk Factors—Risks relating to our business and structure—We are dependent upon TICC Management’s key management personnel for our future success, particularly Jonathan H. Cohen and Saul B. Rosenthal.”

Indemnification

The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, TICC Management and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it, including without limitation BDC Partners, are entitled to indemnification from TICC for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of TICC Management’s services under the Investment Advisory Agreement or otherwise as an investment adviser of TICC.

Organization of the Investment Adviser

TICC Management is a Delaware limited liability company that is registered as an investment adviser under the Advisers Act. BDC Partners, a Delaware limited liability company, is its managing member and provides the investment adviser with all personnel necessary to manage our day-to-day operations and provide the services under the Investment Advisory Agreement. The principal address of TICC Management and of BDC Partners is 8 Sound Shore Drive, Suite 255, Greenwich, Connecticut 06830.

Royce & Associates, a Delaware limited liability company, is the investment adviser’s non-managing member. Royce & Associates has agreed to make Mr. Royce or certain other portfolio managers available to the investment adviser to provide certain consulting services without compensation. Royce & Associates is a wholly owned subsidiary of Legg Mason, Inc.

ADMINISTRATION AGREEMENT

Pursuant to a separate Administration Agreement, BDC Partners furnishes us with office facilities, together with equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, BDC Partners also performs, or oversees the performance of our required administrative services, which includes being responsible for the financial records which we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, BDC Partners assists us in determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others. Payments under the Administration Agreement are based upon our 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 our Chief Financial Officer, Chief Compliance Officer, Controller, and other administrative support personnel. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

The Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, BDC Partners and its officers, manager, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from TICC for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of BDC Partners’ services under the Administration Agreement or otherwise as administrator for TICC.

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COMPETITION

Our primary competitors to provide financing to technology-related companies include private equity and venture capital funds, other equity and non-equity based investment funds, including other business development companies, and investment banks and other sources of financing, including traditional financial services companies such as commercial banks and specialty finance companies. Many of these entities have greater financial and managerial resources than we will have. For additional information concerning the competitive risks we face, see “Risk Factors—We operate in a highly competitive market for investment opportunities.”

EMPLOYEES

We have no employees. Our day-to-day investment operations are managed by our investment adviser. In addition, we reimburse BDC Partners for an allocable portion of expenses incurred by it in performing its obligations under the Administration Agreement, including a portion of the rent and the compensation of our Chief Financial Officer, Chief Compliance Officer, Controller and other administrative support personnel.

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

As a business development company, we have elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code, beginning with our 2003 taxable year. As a RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. To continue to qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, to qualify for RIC tax treatment we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the “Annual Distribution Requirement”).

Taxation as a Regulated Investment Company

If we:

• qualify as a RIC; and

• satisfy the Annual Distribution Requirement;

then we will not be subject to federal income tax on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) we distribute to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed distributed) to our stockholders.

We will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in preceding years (the “Excise Tax Avoidance Requirement”). We currently intend to make sufficient distributions each taxable year to satisfy the Excise Tax Avoidance Requirement.

In order to qualify as a RIC for federal income tax purposes, we must, among other things:

• at all times during each taxable year, have in effect an election to be treated as a business development company under the 1940 Act;

• derive in each taxable year at least 90% of our gross income from (1) 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 and (2) net income derived from an interest in a “qualified publicly traded partnership;” and

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• diversify our holdings so that at the end of each quarter of the taxable year:

• at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and

• no more than 25% of the value of our assets is invested in the (1) securities, other than U.S. government securities or securities of other RICs, of one issuer, (2) securities of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (3) securities of one or more “qualified publicly traded partnerships.”

We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind interest or, in certain cases, increasing interest rates or issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any original issue discount accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.

Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss. The treatment of such gain or loss as long-term or short-term will depend on how long we held a particular warrant. Upon the exercise of a warrant acquired by us, our tax basis in the stock purchased under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant.

Failure to Qualify as a Regulated Investment Company

If we were unable to qualify for treatment as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. Such distributions (if made in a taxable year beginning on or before December 31, 2011) would be taxable to our stockholders and, provided certain holding period and other requirements were met, could qualify for treatment as “qualified dividend income” in the hands of stockholders taxed as individuals eligible for the 15% maximum rate to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the distributions-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the non-qualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 10 years, unless we made a special election to pay corporate-level tax on such built-in gain at the time of our requalification as a RIC.

REGULATION AS A BUSINESS DEVELOPMENT COMPANY

General

A business development company is regulated by the 1940 Act. A business development company must be organized in the United States for the purpose of investing in or lending to primarily private companies and making managerial assistance available to them. A business development company may use capital provided by

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public stockholders and from other sources to invest in long-term, private investments in businesses. A business development company provides stockholders the ability to retain the liquidity of a publicly traded stock, while sharing in the possible benefits, if any, of investing in primarily privately owned companies.

We may not change the nature of our business so as to cease to be, or withdraw our election as, a business development company unless authorized by vote of a majority of the outstanding voting securities, as required by the 1940 Act. A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (i) 67% or more of such company’s voting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (ii) more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of our business.

As with other companies regulated by the 1940 Act, a business development company must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the business development company. Furthermore, as a business development company, we are prohibited from protecting any director or officer against any liability to the company or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.

As a business development company, we are required to meet a coverage ratio of the value of total assets to total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 200%. We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the SEC.

We are not generally able to sell our common stock at a price below net asset value per share. See “Risk Factors—Risks Relating to our Business and Structure—Regulations governing our operation as a business development company 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.” We may, however, sell our common stock at a price below net asset value per share (i) in connection with a rights offering to our existing stockholders, (ii) with the consent of the majority of our common stockholders, or (iii) under such other circumstances as the SEC may permit. For example, we may 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 our best interests and the best interests of our stockholders, and our stockholders approve our policy and practice of making such sales. In any such case, under such circumstances, the price at which our common stock to be issued and sold may not be less than a price which, in the determination of our Board of Directors, closely approximates the market value of such common stock. In addition, we may generally issue new shares of our common stock at a price below net asset value in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.

We may be examined by the SEC for compliance with the 1940 Act.

As a business development company, we are subject to certain risks and uncertainties. See “Risk Factors—Risks Relating to our Business and Structure.”

Qualifying Assets

As a business development company, we may not acquire any asset other than “qualifying assets” unless, at the time we make the acquisition, the value of our qualifying assets represent at least 70% of the value of our total assets. The principal categories of qualifying assets relevant to our business are:

• Securities purchased in transactions not involving any public offering, the issuer of which is an eligible portfolio company;

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• Securities received in exchange for or distributed with respect to securities described in the bullet above or pursuant to the exercise of options, warrants or rights relating to such securities; and

• Cash, cash items, government securities or high quality debt securities (within the meaning of the 1940 Act), maturing in one year or less from the time of investment.

An eligible portfolio company is generally a domestic company that is not an investment company (other than a small business investment company wholly owned by a business development company) and that:

• does not have a class of securities with respect to which a broker may extend margin credit at the time the acquisition is made;

• is controlled by the business development company and has an affiliate of the business development company on its board of directors;

• does not have any class of securities listed on a national securities exchange;

• is a public company that lists its securities on a national securities exchange with a market capitalization of less that $250 million; or

• meets such other criteria as may be established by the SEC.

Control, as defined by the 1940 Act, is presumed to exist where a business development company beneficially owns more than 25% of the outstanding voting securities of the portfolio company.

In addition, a business development company must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in eligible portfolio companies, or in other securities that are consistent with its purpose as a business development company.

Significant Managerial Assistance

To include certain securities described above as qualifying assets for the purpose of the 70% test, a business development company must offer to the issuer of those securities managerial assistance such as providing guidance and counsel concerning the management, operations, or business objectives and policies of a portfolio company. We offer to provide managerial assistance to our portfolio companies.

Investment Concentration

Our investment objective is to maximize our portfolio’s total return, principally by investing in the debt and/or equity securities of technology-related companies. On December 3, 2007, we changed our name from Technology Investment Capital Corp. to TICC Capital Corp. While we continue to maintain our primary focus on the technology sector, we expect to actively seek new investment opportunities outside this sector that otherwise meet our investment criteria. See “Risk Factors—Risks Related to our Investments—Our portfolio may be concentrated in a limited number of portfolio companies.”

Code of Ethics

As required by the 1940 Act, we maintain a Code of Ethics that establishes procedures for personal investments and restricts certain transactions by our personnel. See “Risk Factors—Risks Relating to our Business and Structure—There are significant potential conflicts of interest.” Our Code of Ethics generally does not permit investments by our employees in securities that may be purchased or held by us. You may read and copy the Code of Ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-202-551-8090. In addition, the Code of Ethics is available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may obtain copies of the Code of Ethics, after paying a duplicating fee, by electronic request at the following Email address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

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Compliance Policies and Procedures

We and our investment adviser have adopted and implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws, and are required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a Chief Compliance Officer to be responsible for administering the policies and procedures.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 imposes a wide variety of new regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. For example:

• Pursuant to Rule 13a-14 of the 1934 Act, our Chief Executive Officer and Chief Financial Officer must certify the accuracy of the financial statements contained in our periodic reports;

• Pursuant to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;

• Pursuant to Rule 13a-15 of the 1934 Act, our management must prepare a report regarding its assessment of our internal control over financial reporting; and

• Pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.

Fundamental Investment Policies

The restrictions identified as fundamental below, along with our investment objective of seeking to maximize total return, are our only fundamental policies. Fundamental policies may not be changed without the approval of the holders of a majority of our outstanding voting securities, as defined in the 1940 Act. The percentage restrictions set forth below, apply at the time a transaction is effected, and a subsequent change in a percentage resulting from market fluctuations or any cause will not require us to dispose of portfolio securities or to take other action to satisfy the percentage restriction.

As a matter of fundamental policy, we will not: (1) act as an underwriter of securities of other issuers (except to the extent that we may be deemed an “underwriter” of securities we purchase that must be registered under the 1933 Act before they may be offered or sold to the public); (2) purchase or sell real estate or interests in real estate or real estate investment trusts (except that we may (A) purchase and sell real estate or interests in real estate in connection with the orderly liquidation of investments, or in connection with foreclosure on collateral, (B) own the securities of companies that are in the business of buying, selling or developing real estate or (C) finance the purchase of real estate by our portfolio companies); (3) sell securities short (except with regard to managing the risks associated with publicly-traded securities issued by our portfolio companies); (4) purchase securities on margin (except to the extent that we may purchase securities with borrowed money); or (5) engage in the purchase or sale of commodities or commodity contracts, including futures contracts (except where necessary in working out distressed loan or investment situations or in hedging the risks associated with interest rate fluctuations), and, in such cases, only after all necessary registrations (or exemptions from registration) with the Commodity Futures Trading Commission have been obtained.

We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions. With respect to such securities, we may, for the purpose of public resale, be deemed an

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“underwriter” as that term is defined in the 1933 Act. Our intention is to not write (sell) or buy put or call options to manage risks associated with the publicly-traded securities of our portfolio companies, except that we may enter into hedging transactions to manage the risks associated with interest rate fluctuations, and, in such cases, only after all necessary registrations (or exemptions from registration) with the Commodity Futures Trading Commission have been obtained. However, we may purchase or otherwise receive warrants to purchase the common stock or other equity securities of our portfolio companies in connection with acquisition financing or other investment. Similarly, in connection with an acquisition, we may acquire rights to require the issuers of acquired securities or their affiliates to repurchase them under certain circumstances. We also do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, unless otherwise permitted by the 1940 Act, we currently cannot acquire more than 3% of the voting securities of any registered investment company, invest more than 5% of the value of our total assets in the securities of one investment company or invest, in the aggregate, in excess of 10% of the value of our total assets in the securities of one or more investment companies. With regard to that portion of our portfolio invested in securities issued by investment companies, it should be noted that such investments might subject our stockholders to additional expenses.

Proxy Voting Policies and Procedures

We have delegated our proxy voting responsibility to our investment adviser, TICC Management. The Proxy Voting Policies and Procedures of TICC Management are set forth below. The guidelines are reviewed periodically by TICC Management and our non-interested directors, and, accordingly, are subject to change. For purposes of these Proxy Voting Policies and Procedures described below, “we” “our” and “us” refers to TICC Management.

Introduction

As an investment adviser registered under the Advisers Act, we have a fiduciary duty to act solely in the best interests of our clients. As part of this duty, we recognize that we must vote client securities in a timely manner free of conflicts of interest and in the best interests of our clients.

These policies and procedures for voting proxies for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Proxy Policies

We vote proxies relating to our portfolio securities in the best interests of our clients’ shareholders. We review on a case-by-case basis each proposal submitted to a shareholder vote to determine its impact on the portfolio securities held by our clients. Although we generally vote against proposals that may have a negative impact on our clients’ portfolio securities, we may vote for such a proposal if there exist compelling long-term reasons to do so.

Our proxy voting decisions are made by the senior officers who are responsible for monitoring each of our clients’ investments. To ensure that our vote is not the product of a conflict of interest, we require that: (i) anyone involved in the decision making process disclose to our Chief Compliance Officer any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.

Proxy Voting Records

You may obtain information about how we voted proxies by making a written request for proxy voting information to: Chief Compliance Officer, TICC Management, LLC, 8 Sound Shore Drive, Suite 255, Greenwich, CT 06830.

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Periodic Reporting and Audited Financial Statements

We have registered our common stock under the Securities Exchange Act of 1934, and have reporting obligations thereunder, including the requirement that we file annual and quarterly reports with the SEC. In accordance with the requirements of the Securities Exchange Act of 1934, this annual report contains financial statements audited and reported on by our independent registered public accounting firm. You may obtain our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K on our website at http://www.ticc.com free of charge as soon as reasonably practicable after we file such reports electronically with the SEC.

NASDAQ Global Select Market Requirements

We have adopted certain policies and procedures intended to comply with the NASDAQ Global Select Market’s corporate governance rules. We will continue to monitor our compliance with all future listing standards that are approved by the SEC and will take actions necessary to ensure that we are in compliance therewith.

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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 in technology-related companies. We compete with a large number of private equity and venture capital funds, 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

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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 book 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 book 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. The 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 the 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.

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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.

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.

We are currently in a period of capital markets disruption and we do not expect these conditions to improve in the near future.

The U.S. capital markets have been experiencing extreme volatility and disruption for almost two years, and the U.S. economy may still be in a period of recession. Disruptions in the capital markets have increased the spreads between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. We believe these conditions may continue for a prolonged period of time or worsen in the future. A prolonged period of market illiquidity may have an adverse effect on our business, financial condition and results of operations. Unfavorable economic conditions could also 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 limit our investment originations, limit our ability to grow and negatively impact our operating results.

The current adverse economic conditions could impair our portfolio companies and harm our operating results.

Many of the companies in which we have made or will make investments may be susceptible to the current adverse economic conditions, which may affect the ability of a company to repay our loans or engage in a liquidity event such as a sale, recapitalization, or initial public offering. Therefore, our nonperforming assets are likely to increase, and the value of our portfolio is likely to decrease during this period. Adverse economic conditions also may decrease the value of any collateral securing some of our loans and the value of our equity investments. The current adverse economic conditions could lead to financial losses in our portfolio and a decrease in our revenues, net income, and the value of our assets. During 2008 and 2009, we experienced significant losses on our portfolio investments, which was in part attributable to the current adverse economic conditions in the industries in which those portfolio companies operate. For example, during the year ended December 31, 2009, we experienced significant losses on several of our portfolio investments including a realized loss on Falcon Communications, Inc and unrealized depreciation on WAICCS Las Vegas, LLC and Box Services, LLC.

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 the portfolio company’s loans 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 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

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addition, if a portfolio company goes bankrupt, even though we may have structured our investment as senior debt or secured debt, depending on the facts and circumstances, including the extent to which we actually provided significant “managerial assistance,” if any, to that portfolio company, a bankruptcy court might re-characterize 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.

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 business development company, 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. The continuing unprecedented declines in prices and liquidity in the corporate debt markets have resulted in significant net unrealized depreciation in our portfolio, reducing our net asset value. Depending on market conditions, we could continue to 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 may borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.

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 shareholders. 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.

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Our portfolio is currently, and may continue to be, unlevered.

Since mid-2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These events have significantly diminished overall confidence in the debt and equity markets and caused increasing economic uncertainty. A further deterioration in the credit markets or a prolonged period of illiquidity without improvement could materially impair the availability of credit on commercially reasonable terms.

In view of tightened credit markets, since the end of the first quarter of 2008, and in the absence of having received a written offer for extension of our credit facility from our existing lenders, we took steps to reduce our borrowings under our credit facility and, effective December 30, 2008, we had fully repaid any amounts borrowed and terminated our credit facility. On a risk-adjusted basis, we believe that, until leverage can be obtained at appropriate pricing and terms with a longer maturity that more closely matches the maturity of our investments, we are better served by having an unlevered portfolio. However, as a result of de-levering our portfolio, our net investment income is now and will continue to be less than it might otherwise be on a more fully levered portfolio.

An extended continuation of the disruption in the capital markets and the credit markets could negatively affect our business.

As a business development company, 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. Ongoing 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. Reflecting concern about the stability of the financial markets, many lenders and institutional investors have reduced or ceased providing funding to borrowers. This market turmoil and tightening of credit have 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. Moreover, we are unable to predict when economic and market conditions may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our business.

Regulations governing our operation as a business development company 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

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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 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.

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 shareholders; (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 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 26,813,216 shares are issued and outstanding as of December 31, 2009. 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 the 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

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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.

Currently, we do not have a credit facility in place and do not have any other outstanding borrowings. However, to the extent we employ leverage in the future, a portion of our income will depend upon the difference between the rate at which we borrow funds and the interest rate on the debt securities in which we invest.

Currently, only two of our debt investments 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.

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 may use debt financing in the future, we may be 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. 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 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. 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

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or equity capital or reduce new investments to meet these distribution requirements. 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.

There are significant potential conflicts of interest, which could impact our investment returns.

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, is the President and Chief Investment Officer of Royce & Associates, the non-managing member of 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, an 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, Patrick F. Conroy, the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary of TICC Management, BDC Partners and TICC, 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.

Both we and GLIF have adopted a policy with respect to the allocation of investment opportunities in view of these potential conflicts of interest. Bilateral investment opportunities are those negotiated directly between us or GLIF and a prospective portfolio company. Our general policy is to allocate bilateral U.S.-based opportunities to us and bilateral non-U.S.-based opportunities to GLIF; provided, that in instances involving bilateral investment opportunities where there is significant question as to a prospective portfolio company’s primary base of operation (by virtue, for instance, of it conducting business in many countries, including the United States, with no clear principal center of operation or legal domicile), and where that question leads to doubt with regard to an investment in that company representing a “qualified asset” for the purpose of compliance with the “70% test” for qualifying assets for BDCs under Section 55(a) of the 1940 Act, that bilateral investment opportunity will be allocated to GLIF.

Either we or GLIF may also purchase syndicated loans (i.e., those transactions in which an agent bank syndicates loans to four or more investors) of issuers in which the other fund holds no position, or has held a position (and has made no further investment) for a period greater than 30 calendar days and the purchases are

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not made directly from the other fund or the issuer of the acquired syndicated loans. In instances where both we and GLIF desire to either purchase or sell the same position at the same time, such purchases or sales will generally be allocated on a pro rata basis between us and GLIF based on order size as determined by each fund’s investment adviser in good faith.

Notwithstanding the foregoing policy with respect to the allocation of investment opportunities, any opportunity to invest a sum of less than or equal to $500,000 (an amount generally considered below our or GLIF’s minimum investment threshold) will be allocated to Oxford Gate Capital, LLC.

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).

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. See “Business—Regulation as a Business Development Company.”

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 business development company, 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.

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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 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 continue to maintain our primary focus 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 technology-related sector, could materially adversely affect us.

The sectors in which we invest are subject to many risks, including volatility, intense competition, decreasing life cycles and periodic downturns.

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, in particular, is generally characterized by abrupt business cycles and intense competition. The 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 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 are targeting 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.

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

• 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;

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

• because they 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;

• they 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;

• they generally 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

• these companies may be more susceptible to the current adverse economic conditions 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 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.

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

The incentive fee payable by us to TICC Management may create an incentive for TICC Management 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 payable to TICC Management 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 will receive the 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 the current 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 collateralized loan obligation vehicles may be riskier and less transparent than direct investments in portfolio companies.

From time to time we have and may invest in debt and residual value interests of collateralized loan obligation, or “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

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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 in such CLOs senior to us.

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:

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

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

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

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

• general economic conditions and trends;

• loss of a major funding source; or

• 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 currently trade at a substantial discount from net asset value and may continue to do so over the long term.

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 the current 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 has remained below our net asset value per share through the first two months of 2010. We cannot assure you when or if this trend will change. The possibility that our shares of common stock will continue to trade at a substantial 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.

There is a risk that you may not receive dividends or that our dividends may decline or that our dividends 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 addition, as a result of de-levering our portfolio, our net investment income is now and will continue to be less than it might otherwise be on a more fully levered portfolio.

Item 1B. Unresolved Staff Comments

Not applicable.

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Item 2. Properties

We do not own any real estate or other physical properties materially important to our operation. Our headquarters are located at 8 Sound Shore Drive, Suite 255, Greenwich, Connecticut, where we occupy our office space pursuant to our Administration Agreement with BDC Partners. We believe that our office facilities are suitable and adequate for our business as it is presently conducted.

Item 3. 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 in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 4. Reserved

Intentionally left blank

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the NASDAQ Global Select Market under the symbol “TICC.” The following table sets forth the range of high and low sales prices of our common stock as reported on the NASDAQ Global Select Market and our net asset value per share as determined as of the last day of each quarter over the last two years:

	NAV(a)		Price Range
			High		Low
Fiscal 2009
Fourth quarter	$	8.36	$	6.21	$	4.83
Third quarter		8.07		5.51		4.27
Second quarter		7.66		4.67		3.30
First quarter		7.46		4.50		2.70
Fiscal 2008
Fourth quarter	$	7.68	$	5.10	$	2.21
Third quarter		9.38		6.32		4.05
Second quarter		9.75		8.75		4.89
First quarter		10.81		11.78		6.95

^(a) Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period.

The last reported sale price for our common stock on the NASDAQ Global Select Market on March 11, 2010 was $6.90 per share. As of March 11, 2010, we had 155 shareholders of record.

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Dividends

We currently intend to distribute a minimum of 90% of our ordinary income and short-term capital gains, if any, on a quarterly basis to our stockholders, in accordance with our election to be treated, and intention to qualify annually, as a RIC under Subchapter M of the Code. For a more detailed discussion of the requirements under Subchapter M, please refer to the discussion in “Business—Material U.S. Federal Income Tax Considerations” set forth above. 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 since 2008:

Date Declared	Record Date	Payment Date	Amount
Fiscal 2010
March 4, 2010	March 24, 2010	March 31, 2010	$	0.15
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
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

In order to qualify as a RIC 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 realized net short-term capital gains in excess of realized net long-term capital losses to our stockholders on an annual basis.

To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to our stockholders. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our taxable ordinary income or capital gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our taxable ordinary income or capital gains.

During the year ended December 31, 2009, our distributions were made from undistributed net investment income. A written statement identifying the source of dividends for the year was posted on our website. We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of favorable regulated investment company tax treatment. We cannot assure shareholders that they will receive any distributions.

Recent Sales of Unregistered Securities

While we did not engage in any sales of unregistered securities during the fiscal year ended December 31, 2009, we issued a total of 329,670 shares of common stock under our dividend reinvestment plan. This issuance

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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 $1.5 million.

Performance Graph

This graph compares the return on our common stock with that of the NASDAQ Composite Index and the NASDAQ Financial 100, for the period from December 31, 2004 through December 31, 2009. The graph assumes that, on December 31, 2004, a person invested $100 in each of our common stock, the NASDAQ Composite Index and the NASDAQ Financial 100, which includes the 100 largest domestic and international financial organizations listed on the NASDAQ Stock Market based on market capitalization. The NASDAQ Financial 100 contains banks and savings institutions and related holding companies, insurance companies, broker-dealers, investment companies and financial services organizations.

The graph measures total shareholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are reinvested in like securities.

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Item 6. Selected Financial Data

The following selected financial data for the years ended December 31, 2009, 2008, 2007, 2006 and 2005 is derived from our financial statements which have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm. The data should be read in conjunction with our financial statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.

	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007			Year Ended December 31, 2006			Year Ended December 31, 2005
Total Investment Income	$	20,507,792		$	37,305,635		$	43,841,813		$	35,947,227		$	21,800,537
Total Expenses	$	7,015,808		$	15,114,472		$	16,648,194		$	10,546,409		$	7,415,415
Net Investment Income	$	13,491,984		$	22,191,163		$	27,193,619		$	25,400,818		$	14,385,122
Net Increase (Decrease) in Net Assets Resulting from Operations	$	35,182,458		$	(53,266,154	)	$	(11,648,832	)	$	26,331,172		$	16,304,137
Per Share Data:
Net Increase in Net Assets Resulting from Net Investment Income per common share (Basic and Diluted)(1)	$	0.51		$	0.91		$	1.30		$	1.28		$	1.05
Net (Decrease) Increase in Net Assets Resulting from Operations per common share (Basic and Diluted)(1)	$	1.32		$	(2.19	)	$	(0.56	)	$	1.32		$	1.19
Distributions Declared per Share	$	0.60		$	1.06		$	1.44		$	1.38		$	1.01
Balance Sheet Data:
Total Assets	$	225,340,291		$	204,962,887		$	396,390,153		$	334,819,746		$	270,107,818
Total Net Assets	$	224,091,995		$	203,366,750		$	257,369,503		$	271,335,345		$	265,905,476
Other Data:
Number of Portfolio Companies at Period End		35			23			33			28			19
Purchases of Loan Originations	$	65,700,000		$	18,300,000		$	188,000,000		$	191,000,000		$	159,500,000
Loan Repayments	$	65,600,000		$	90,500,000		$	87,300,000		$	76,600,000		$	29,500,000
Proceeds from Loan Sales	$	14,000,000		$	50,200,000		$	4,500,000		$	4,300,000		$	6,100,000
Total Return(2)		81.15	%		(50.23	)%		(36.26	)%		17.02	%		7.47	%
Weighted Average Yield on Debt Investments at Period End(3)		9.0	%		8.9	%		11.3	%		12.8	%		10.9	%

⁽¹⁾ In accordance with ASC 260-10, the weighted-average shares of common stock outstanding used in computing basic and diluted earnings per share for the years ended December 31, 2008, December 31, 2007 and December 31, 2006 were increased retroactively by a factor of 1.021 to recognize the bonus element associated with rights to acquire shares of common stock that were issued to shareholders on May 23, 2008. See Note 4—Earnings Per Share, included in the financial statements, for additional information about the rights offering and the calculation of the associated bonus element.

⁽²⁾ 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 at prices obtained under our dividend reinvestment plan.

⁽³⁾ Weighted average yield calculation includes the input of any loans on non-accrual status as of the year end.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K 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 our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. 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:

• the current adverse economic conditions could impair our customers’ ability to repay our loans and increase our non-performing assets,

• the current adverse economic conditions could disproportionately impact the technology-related industry in which we concentrate causing us to suffer losses in our portfolio and experience diminished demand for capital in this industry sector,

• the current 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, and

• the risks, uncertainties and other factors we identify in “Risk Factors” and elsewhere in this Form 10-K 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 annual report 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 annual report. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report.

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 Form 10-K.

OVERVIEW

Our investment objective is to maximize our portfolio’s total return, principally by investing in the debt and/or equity securities of technology-related companies. Our primary focus is to seek current income by investing in non-public debt securities. We also seek to provide our stockholders with long-term capital growth through appreciation in the value of warrants or other equity instruments that we may receive when we make debt or equity investments in technology-related companies. 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 1940 Act. We have elected to be treated for tax purposes as a RIC under the Code, beginning with our 2003 taxable year.

Our investment activities are managed by TICC Management, a registered investment adviser under the Advisers Act. TICC Management is owned by BDC Partners, its managing member, and Royce & Associates. Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President and Chief Operating Officer, are the members of BDC Partners, and Charles M. Royce, our non-executive chairman, is the President of Royce & Associates. Under the Investment Advisory Agreement, we have agreed to pay TICC Management

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an annual base fee calculated on gross assets, and an incentive fee based upon our performance. Under an Administration Agreement, we have agreed to pay or reimburse BDC Partners, as administrator, for certain expenses incurred in operating the Company. 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.”

We currently concentrate our investments in companies having annual revenues of less than $200 million and/or an equity capitalization of less than $300 million. We focus on companies that create products or provide services requiring technology and on companies that compete in industries characterized by such products or services, including companies in the following businesses: Internet, IT services, media, telecommunications, semiconductors, hardware, software and technology-enabled services.

On December 3, 2007, we changed our name from Technology Investment Capital Corp. to TICC Capital Corp. While we continue to maintain our primary focus on the technology sector, we expect to actively seek new investment opportunities outside this sector that otherwise meet our investment criteria.

While the structure of our investments will vary, we invest primarily 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 expect that our investments will generally range between $5 million and $30 million each, 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. As of December 31, 2009, our debt investments had stated interest rates of between 3.00% and 13.75% (excluding our investment in GenuTec Business Solutions, Inc. which carries a zero interest rate through October 30, 2014 and Punch Software, LLC, which carries a zero interest rate through October 31, 2012) and maturity dates of between 1 and 150 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 9.0%, including GenuTec Business Solutions, Inc. and Punch Software, LLC, and all investments on non-accrual status.

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 year ended December 31, 2009, we recognized approximately $162,000 of interest income attributable to PIK associated with our investments in Cavtel Holdings, LLC and Allen Systems Group, Inc., compared to PIK interest of approximately $235,000 for the year ended December 31, 2008.

We have historically and may continue to borrow funds to make investments. As a result, we may be 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 business development company 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.

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Prior to making an investment, we typically 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 year ended December 31, 2009, we closed approximately $68.9 million in portfolio investments, including additional investments of approximately $10.1 million in existing portfolio companies and approximately $58.8 million of investments in new portfolio companies. During the year ended December 31, 2009 we recognized a total of $68.9 million from principal repayments on debt investments, and we recognized approximately $14.0 million from the sale of portfolio investments. We realized net losses on investments during the year ended December 31, 2009 in the amount of approximately $10.5 million.

Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2009, we had net unrealized gains of approximately $32.2 million, comprised of $43.9 million in gross unrealized appreciation, $22.5 million in gross unrealized depreciation and approximately $10.8 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2009 were as follows (in millions):

Portfolio Company	Changes in Unrealized Appreciation (Depreciation)
Falcon Communications, Inc.	$	9.5
Questia Media, Inc.		5.9
Palm, Inc.		4.1
AKQA, Inc.		3.3
Punch Software LLC		3.1
Power Tools, Inc.		2.9
Hyland Software, Inc.		2.7
Cavtel Holdings, LLC		2.2
American Integration Technologies, LLC		2.1
Integra Telecom, Inc.		2.1
Netquote, Inc.		2.0
GXS Worldwide Inc.		1.7
TrueYou.com Inc.		1.3
Workflow Management, Inc.		1.0
SCS Holdings II, Inc.		1.0
Prodigy Health Group		0.8
Fusionstorm, Inc.		0.7
Stratus Technologies, Inc.		0.7
First Data Corporation		0.7
Algorithmic Implementations, Inc.		(0.7	)
The CAPS Group		(1.4	)
Segovia, Inc.		(1.6	)
Box Services, LLC		(5.9	)
WAICCS Las Vegas, LLC		(7.5	)
Other		1.5
Total	$	32.2

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Current Market and Economic Conditions

Since mid-2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These developments caused a series of failures among a large number of financial institutions, which participated in the origination or underwriting of structured products or that invested in them. The debt and equity capital markets in the United States have been severely impacted by significant write-offs in the financial services sector relating to structured products and the re-pricing of credit risk in the syndicated loan market, among other things.

These events, along with the deterioration of the housing market, have significantly diminished overall confidence in the debt and equity markets and constrained the availability of debt and equity capital for the market as a whole, and the financial services sector in particular. Further, these and other events have also led to rising unemployment, deteriorating consumer confidence and a general reduction in spending by both consumers and businesses, all of which we believe reflects an ongoing recession.

During 2009 the syndicated corporate loans market experienced both unprecedented price declines and unprecedented volatility. While prices remain depressed across most sectors and ratings categories, we witnessed a strong upward move during the second half of 2009, which has now continued into 2010. Despite continued discounts from par values, and largely as a result of the recent increase in loan prices combined with broadly worrisome macroeconomic fundamentals, our view is that certain larger-issuer broadly syndicated corporate loans do not adequately reflect the spreads necessary to compensate investors for the risks involved. As such, we continue to focus more heavily on middle-market issues, where we believe greater opportunity currently resides. We have and continue to track a large number of loans, and note that the overall health of the middle-market sector seems to have improved meaningfully over the past year. We have recently made a number of selective purchases and continue to favor those lower-leveraged companies which stand to benefit from long-tailed revenue streams attached to lower-risk counterparties. We believe that, especially in the case of less-liquid middle-market loans, supply and demand issues will likely continue to outweigh issuer operating fundamentals creating opportunities to acquire certain middle-market loans at attractive prices. In view of the more permanent nature of our asset base (relative to many other investors active in the syndicated corporate loan market), and given our strong current cash position, we regard that as a potentially beneficial dynamic.

PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY

The total value of our investments was approximately $200.3 million and $189.6 million at December 31, 2009 and December 31, 2008, respectively. The increase in investments during the year ended December 31, 2009 was due to new portfolio investments of approximately $68.9 million and net unrealized appreciation of approximately $32.2 million. The ability to add new portfolio investments was made possible by debt repayments and sales of securities totaling approximately $82.9 million. Our gross originations and advances totaled approximately $18.3 million during the year ended December 31, 2008.

In certain instances we receive payments in our loan portfolio based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our loans prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. For the years ended December 31, 2009 and December 31, 2008, we had $68.9 million and $90.5 million, respectively, of loan repayments. Portfolio activity also reflects sales of securities in the amounts of $14.0 million and $50.2 million for 2009 and 2008, respectively. During 2009, the repayments on our debt investments largely consisted of repayment of our original investment in senior secured notes issued by Segovia, Inc. of approximately $19.5 million, repayment of our notes issued by Arise Virtual Solutions, Inc. of approximately $10.5 million as well as our receipt of proceeds of approximately $7.0 million as partial repayment of our investment in notes issued by Fusionstorm, Inc. Additionally, during the year ended December 31, 2009, we recognized proceeds of approximately $3.6 million from the partial sale of our investment in AKQA, Inc., approximately $4.2 million from the partial sale of our investment in Palm, Inc., approximately $9.7 million from

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the redemption of notes previously held in GXS Worldwide, Inc. due to their merger (partially offset by our subsequent $8.0 million investment in newly issued senior secured notes of the same company) and approximately $6.0 million from the sale of our equity in Segovia, Inc.

For the year ended December 31, 2009, we had a net realized loss on investments of approximately $10.5 million, which is primarily comprised of the loss associated with the realization of our debt investment in Falcon Communications, Inc. of approximately $9.5 million, the loss on the partial sale of our debt investment in AKQA, Inc. of approximately $1.4 million, the write off of preferred stock of TrueYou.com Inc. of approximately $1.3 million, as well as a loss of approximately $2.5 million resulting from the restructuring of notes held in, and the sale of warrants issued by, Punch Software, LLC (new notes were subsequently issued by Punch Software, LLC with an amended interest rate and maturity date). These realized losses were partially offset by the realized gain associated with sale of warrants issued by Segovia, Inc. of approximately $5.4 million.

Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2009, we had net unrealized gains of approximately $32.2 million, comprised of $43.9 million in gross unrealized appreciation, $22.5 million in gross unrealized depreciation and approximately $10.8 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2009 were as follows (in millions):

Portfolio Company	Changes in Unrealized Appreciation (Depreciation)
Falcon Communications, Inc.	$	9.5
Questia Media, Inc.		5.9
Palm, Inc.		4.1
AKQA, Inc.		3.3
Punch Software LLC		3.1
Power Tools, Inc.		2.9
Hyland Software, Inc.		2.7
Cavtel Holdings, LLC		2.2
American Integration Technologies, LLC		2.1
Integra Telecom, Inc.		2.1
Netquote, Inc.		2.0
GXS Worldwide Inc.		1.7
TrueYou.com Inc.		1.3
Workflow Management, Inc.		1.0
SCS Holdings II, Inc.		1.0
Prodigy Health Group		0.8
Fusionstorm, Inc.		0.7
Stratus Technologies, Inc.		0.7
First Data Corporation		0.7
Algorithmic Implementations, Inc.		(0.7	)
The CAPS Group		(1.4	)
Segovia, Inc.		(1.6	)
Box Services, LLC		(5.9	)
WAICCS Las Vegas, LLC		(7.5	)
Other		1.5
Total	$	32.2

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At December 31, 2008, we had investments in debt securities of, or loans to, 20 portfolio companies, with a fair value totaling approximately $183.4 million, and equity investments of approximately $6.2 million. The debt investments include approximately $0.5 million in accrued PIK interest which, as described in “—Overview” above, is added to the carrying value of our investments, reduced by repayments of principal.

A reconciliation of the investment portfolio for the years ended December 31, 2009 and 2008 follows:

	December 31, 2009			December 31, 2008
	(dollars in millions)			(dollars in millions)
Beginning Investment Portfolio	$	189.6		$	385.4
Portfolio Investments Acquired		68.9			18.3
Debt repayments		(68.9	)		(90.5	)
Sales of securities		(14.0	)		(50.2	)
Payment in Kind		0.2			0.2
Original Issue Discount		2.8			1.8
Net Unrealized (Depreciation) Appreciation		32.2			(66.9	)
Net Realized (Losses) Gains		(10.5	)		(8.5	)
Ending Investment Portfolio	$	200.3		$	189.6

The following table indicates the quarterly portfolio investment activity for the years ended December 31, 2009 and 2008:

	New Investments		Debt Repayments		Sales of Securities
	(dollars in millions)		(dollars in millions)		(dollars in millions)
Quarter ended
December 31, 2009	$	33.0	$	23.3	$	6.0
September 30, 2009		24.5		23.2		4.2
June 30, 2009		11.4		18.9		3.8
March 31, 2009		0.0		3.5		0.0
Total	$	68.9	$	68.9	$	14.0
December 31, 2008	$	0.0	$	31.3	$	1.7
September 30, 2008		0.0		21.3		16.1
June 30, 2008		1.0		20.4		30.5
March 31, 2008		17.3		17.5		1.9
Total	$	18.3	$	90.5	$	50.2

The following table shows the fair value of our portfolio of investments by asset class as of December 31, 2009 and 2008:

	2009				2008
	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	$	184.6	92.1	%	$	172.0	90.7	%
Senior Unsecured Notes		0.0	0.0	%		1.0	0.5	%
CLO Subordinated Secured Notes		4.9	2.5	%		0.0	0.0	%
Senior Subordinated Unsecured Notes		2.7	1.4	%		10.4	5.5	%
CLO Preference Shares		2.2	1.1	%		0.0	0.0	%
Common Stock		5.4	2.7	%		3.0	1.6	%
Warrants		0.5	0.2	%		3.2	1.7	%
Total	$	200.3	100.0	%	$	189.6	100.0	%

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The following table shows our portfolio of investments by industry at fair value, as of December 31, 2009 and 2008:

	December 31, 2009				December 31, 2008
	Investments at Fair Value		Percentage of Fair Value		Investments at Fair Value		Percentage of Fair Value
	(dollars in millions)				(dollars in millions)
Software	$	44.8	22.4	%	$	36.9	19.5	%
Web-based services		20.8	10.4	%		21.8	11.5	%
IT value-added reseller		14.8	7.4	%		21.7	11.4	%
Digital media		13.8	6.9	%		7.9	4.2	%
Consumer electronics		12.5	6.2	%		12.8	6.7	%
Enterprise software		12.1	6.0	%		7.7	4.1	%
Telecommunications services		10.9	5.5	%		1.5	0.8	%
Semiconductor capital equipment		8.4	4.2	%		6.3	3.3	%
Advertising		8.2	4.1	%		11.0	5.8	%
Securitization vehicle		7.1	3.5	%		0.0	0.0	%
Printing and document management		6.3	3.1	%		0.0	0.0	%
Grocery		4.9	2.4	%		0.0	0.0	%
Shipping and transportation		4.8	2.4	%		0.0	0.0	%
Retail food		4.7	2.4	%		0.0	0.0	%
Computer hardware		4.5	2.2	%		0.0	0.0	%
Business services		4.4	2.2	%		0.0	0.0	%
Digital imaging		4.1	2.1	%		11.9	6.3	%
Healthcare		3.4	1.7	%		0.0	0.0	%
Printing and publication		3.2	1.6	%		0.0	0.0	%
IT consulting		3.1	1.6	%		4.7	2.5	%
Interactive voice messaging service		2.0	1.0	%		2.0	1.0	%
Real estate development		1.5	0.7	%		9.0	4.7	%
Satellite communications		0.0	0.0	%		24.2	12.8	%
Virtual workforce services		0.0	0.0	%		10.2	5.4	%
	$	200.3	100.0	%	$	189.6	100.0	%

Since our inception in 2003, our portfolio has consisted primarily of senior loans to companies operating in the technology-related sector. We may also invest in publicly traded debt and/or equity securities or take controlling interests in portfolio companies in certain limited circumstances. On December 3, 2007, we changed our name from Technology Investment Capital Corp. to TICC Capital Corp. While we continue to maintain our primary focus on the technology sector, we expect to actively seek new investment opportunities outside this sector that otherwise meet our investment criteria.

Since mid-2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These events have significantly diminished overall confidence in the debt and equity markets and caused increasing economic uncertainty. However, we believe that we may begin to see opportunities to generate higher returns on individual investments than we have historically, given the changes in the credit environment during 2008 and 2009. At the same time, we recognize that it may be difficult to raise capital in the near future in light of our stock price and the current state of the debt and equity markets. We are also sensitive to the negative implications of maintaining a larger, fully-drawn credit facility given the uncertainty currently existing in the credit markets. In view of these developments, since the end of the first quarter of 2008, and in the absence of having received a written offer for extension of our previously existing credit facility from our prior lenders thereunder, we took steps to reduce our level of borrowings under our revolving credit facility and, effective December 30, 2008, we had fully repaid all outstanding obligations under the credit facility and the facility was terminated. As a result, on a risk-adjusted basis, we believe that, until

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leverage can be obtained at appropriate pricing and on terms with a longer maturity that more closely matches the maturity of our investments, we are better served by remaining fully unlevered. However, as a result of de-levering our portfolio, our net investment income is now and will continue to be less than it might otherwise be on a more fully levered portfolio.

PORTFOLIO GRADING

We have developed a credit grading system to monitor the quality of our debt investment portfolio. Equity securities are not graded. As of December 31, 2009 and 2008 our portfolio had a weighted average grade of 2.5 and 2.3, respectively, based upon the fair value of the debt investments in the portfolio.

At December 31, 2009 and 2008, our debt investment portfolio was graded as follows:

		December 31, 2009
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.	$	26.0	9.7	%	$	25.5	13.3	%
2	Full repayment of principal and interest is expected.		94.3	35.1	%		84.9	44.2	%
3	Closer monitoring is required. Full repayment of principal and interest is expected.		73.9	27.5	%		65.7	34.2	%
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.		74.3	27.7	%		16.0	8.3	%
		$	268.5	100.0	%	$	192.1	100.0	%

		December 31, 2008
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.	$	55.5	19.9	%	$	52.4	28.6	%
2	Full repayment of principal and interest is expected		54.9	19.7	%		47.6	25.9	%
3	Closer monitoring is required. Full repayment of principal and interest is expected.		103.8	37.2	%		68.8	37.5	%
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.		64.8	23.2	%		14.6	8.0	%
		$	279.0	100.0	%	$	183.4	100.0	%

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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 Grade 3, 4 or 5 may fluctuate from year to year.

During the quarter ending December 31, 2008, we determined that the liquidity of American Integration Technologies, LLC (“AIT”) had severely deteriorated. As a result, we downgraded our investment in AIT to a 5 rating. During the year ending December 31, 2009, business conditions improved, and the fair value of the investment was written-up to approximately $8.4 million at December 31, 2009 from approximately $6.3 million at December 31, 2008. However, business conditions did not improve sufficiently to warrant a change in the investment rating of AIT, which was maintained as a grade 5. AIT was placed on non-accrual status as of January 1, 2009.

During the first quarter of 2009 we recorded unrealized depreciation on our debt investment in The CAPS Group of approximately $1.4 million, effectively reducing the fair value of the notes to zero. This write-down was due primarily to the continued deterioration in this company’s operations and the investment rating was maintained as a grade 5 during 2009.

As of the quarter ending June 30, 2009, we downgraded our investment in WAICCS Las Vegas, LLC to a grade 5 as a result of the failure of this company’s equity sponsor to pre-fund interest reserves as required to extend the maturity beyond July 31, 2009. This investment rating was maintained through December 31, 2009.

As of the quarter ended September 30, 2009, we downgraded our investment held in senior secured notes issued by Box Services, LLC from a grade 3 to a grade 5 as a result of continued deterioration of Box Services, LLC’s financial profile during the quarter. Our investment in Box Services, LLC remained on accrual status because it has continued to remit its interest payments due to us since the downgrade.

RESULTS OF OPERATIONS

Set forth below is a comparison of our results of operations for the years ended December 31, 2009, 2008 and 2007.

Comparison of the years ended December 31, 2009 and December 31, 2008

Investment Income

As of December 31, 2009, our debt investments had stated interest rates of between 3.00% and 13.75% (excluding our investment in GenuTec Business Solutions, Inc. which carries a zero interest rate through October 30, 2014 and Punch Software, LLC, which carries a zero interest rate through October 31, 2012) and maturity dates of between 1 and 150 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 9.0%, including GenuTec Business Solutions, Inc. and Punch Software, LLC, and all investments on non-accrual status, compared to 8.9% as of December 31, 2008.

Investment income for year ended December 31, 2009 was approximately $20.5 million compared to approximately $37.3 million for period ended December 31, 2008. This decrease resulted primarily from a lower return on investments and a decrease of the size of our debt investment portfolio over the past year, as the average outstanding principal value declined. The total principal value of income producing investments for the period ended December 31, 2009 and 2008 was approximately $204.0 million and $242.1 million, respectively. For the year ended December 31, 2009, investment income consisted of approximately $17.2 million in cash interest from portfolio investments, approximately $2.8 million in amortization of original issue discount and approximately $162,000 in PIK interest income primarily from our investments in Cavtel Holdings, LLC and Allen Systems Group, Inc.

For the year ended December 31, 2009, other income of approximately $129,000 was recorded, compared to other income of approximately $831,000, in 2008. Other income consists primarily of non-recurring amendment

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fees earned in conjunction with existing portfolio investments. The decline in other income during 2009 compared with 2008 was due primarily to fewer closed deals and fewer amendments associated with our investment portfolio.

Operating Expenses

Operating expenses for the year ended December 31, 2009, were approximately $7.0 million. This amount consisted primarily of investment advisory fees, professional fees, compensation expenses, directors’ fees and general and administrative expenses. This was a decrease of approximately $8.1 million from the period ended December 31, 2008, which was primarily attributable to a decrease in interest expense of approximately $4.8 million related to our de-levering activity during 2008 and a decrease in investment advisory fees of approximately $2.9 million resulting from the decrease in gross assets during the year ended December 31, 2009. Our operating expenses for the period ended December 31, 2008 were approximately $15.1 million.

The investment advisory fee for fiscal 2009 was approximately $4.1 million, representing primarily the base fee as provided for in the Investment Advisory Agreement, as well as an investment income incentive fee of approximately $52,000. The investment advisory fee in 2008 was approximately $7.0 million, which consisted of the base fee as well as an income incentive fee of approximately $485,000.

Compensation expenses were approximately $971,000 for the year ended December 31, 2009, compared to approximately $906,000 for the period ending December 31, 2008, reflecting primarily the allocation of compensation expenses for the services of our Chief Financial Officer, Chief Compliance Officer, Controller, and other administrative support personnel. At December 31, 2009 and 2008, respectively, no compensation expenses remained payable to BDC Partners.

Professional fees, consisting of legal, valuation, audit and consulting fees, were approximately $1.3 million for the year ended December 31, 2009, compared to approximately $1.6 million for the year ended December 31, 2008. This was primarily the result of decreases in fees for valuation services of approximately $249,000 and legal costs of approximately $73,000, incurred during the twelve months ended December 31, 2009.

No interest expense was incurred during the period ended December 31, 2009. During the same period in the prior year, however, interest expense was approximately $4.8 million as a result of the average level of borrowings outstanding under our credit facility during that period. At December 31, 2009 and December 31, 2008, respectively, there was no outstanding accrued interest expense.

General and administrative expenses, consisting primarily of printing expenses, listing fees, facilities costs and other expenses, were approximately $250,000 in 2009 compared to approximately $401,000 in 2008. This decrease was due primarily to lower listing costs of approximately $43,000 and decreased miscellaneous expenses of approximately $112,000 as a result of proxy solicitation and rights offering costs incurred during 2008. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.

Realized Losses on Investments

For the year ended December 31, 2009, we had a net realized loss on investments of approximately $10.5 million, which is primarily comprised of the loss on our debt investment in Falcon Communications, Inc. of approximately $9.5 million, the loss on the partial sale of our debt investment in AKQA, Inc. of approximately $1.4 million, the write off of preferred stock of TrueYou.com Inc. of approximately $1.3 million, as well as a loss of approximately $2.5 million resulting from the restructuring of notes held in, and the sale of warrants issued by, Punch Software, LLC (new notes were subsequently issued by Punch Software, LLC with an amended interest rate and maturity date). These losses were partially offset by the realized gain associated with sale of warrants issued by Segovia, Inc. of approximately $5.4 million. For the year ended December 31, 2008, we had net realized losses on our investments of approximately $8.5 million.

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Unrealized Appreciation (Depreciation) on Investments

Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2009, we had net unrealized gains of approximately $32.2 million, comprised of $43.9 million in gross unrealized appreciation, $22.5 million in gross unrealized depreciation and approximately $10.8 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2009 were as follows (in millions):

Portfolio Company	Changes in Unrealized Appreciation (Depreciation)
Falcon Communications, Inc.	$	9.5
Questia Media, Inc.		5.9
Palm, Inc.		4.1
AKQA, Inc.		3.3
Punch Software LLC		3.1
Power Tools, Inc.		2.9
Hyland Software, Inc.		2.7
Cavtel Holdings, LLC		2.2
American Integration Technologies, LLC		2.1
Integra Telecom, Inc.		2.1
Netquote, Inc.		2.0
GXS Worldwide Inc.		1.7
TrueYou.com Inc.		1.3
Workflow Management, Inc.		1.0
SCS Holdings II, Inc.		1.0
Prodigy Health Group		0.8
Fusionstorm, Inc.		0.7
Stratus Technologies, Inc.		0.7
First Data Corporation		0.7
Algorithmic Implementations, Inc.		(0.7	)
The CAPS Group		(1.4	)
Segovia, Inc.		(1.6	)
Box Services, LLC		(5.9	)
WAICCS Las Vegas, LLC		(7.5	)
Other		1.5
Total	$	32.2

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Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2008, we had net unrealized losses of approximately $66.9 million, comprised of $13.5 million in gross unrealized appreciation, $93.2 million in gross unrealized depreciation and approximately $12.8 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2008 were as follows (in millions):

Portfolio Company	Changes in Unrealized Appreciation (Depreciation)
Pulvermedia, LLC	$	10.6
GenuTec Business Solutions, Inc.		(0.7	)
Aviel Services, Inc.		(0.9	)
GXS Worldwide Inc.		(1.2	)
Fusionstorm, Inc.		(1.4	)
Algorithmic Implementations, Inc.		(1.7	)
Integra Telecom, Inc.		(1.7	)
Box Services, LLC		(1.9	)
Netquote, Inc.		(2.1	)
SCS Holdings II, Inc.		(2.8	)
Punch Software, LLC		(2.9	)
Power Tools, Inc.		(3.0	)
Hyland Software, Inc.		(3.1	)
AKQA, Inc.		(3.6	)
Palm, Inc.		(4.3	)
WAICCS Las Vegas, LLC		(5.7	)
Questia Media, Inc.		(6.2	)
American Integration Technologies, LLC		(14.7	)
The CAPS Group		(18.9	)
Other		(0.7	)
Total	$	(66.9	)

See “—Portfolio Grading” above for more information.

Net Increase in Net Assets from Operations

We had a net increase in net assets resulting from operations of approximately $35.2 million for the year ended December 31, 2009, compared to a net decrease in net assets of approximately $53.3 million in 2008. Based on a weighted-average of 26,624,217 shares outstanding (basic and diluted), our net increase in net assets from operations per common share for the year ended December 31, 2009, was approximately $1.32 for basic and diluted earnings, compared to a decrease of $2.19 per share in 2008.

Comparison of the years ended December 31, 2008 and December 31, 2007

Investment Income

As of December 31, 2008, our debt investments had stated interest rates between 3.97% and 14.46% (excluding GenuTec which carries a zero interest rate) and maturity dates of between 1 and 70 months. In addition, as of December 31, 2008, our total portfolio had a weighted average yield, which includes GenuTec and all investments on non-accrual status, on debt investments of approximately 8.9% compared to 11.3% as of December 31, 2007.

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Investment income for the year ended December 31, 2008, was approximately $37.3 million compared to approximately $43.8 million for the period ended December 31, 2007. The decrease resulted primarily from our portfolio de-levering actions throughout 2008, as our debt investment portfolio decreased in principal value from $409.3 million to $279.0 million, as well as the lower yield on investments. For the year ended December 31, 2008, investment income consisted of approximately $34.4 million in cash interest from portfolio investments, approximately $1.9 million in amortization of original issue discount and approximately $198,000 in interest from our cash and cash equivalents.

For the year ended December 31, 2008, other income of approximately $831,000 was recorded, consisting primarily of non-recurring amendment fees earned in conjunction with existing portfolio investments, compared to other income of approximately $2.0 million, in 2007. This decrease resulted partially from our lack of originations in new portfolio companies during 2008 as we focused on the repayment of outstanding amounts under our revolving credit facility, which was fully repaid and terminated effective December 30, 2008.

Operating Expenses

Operating expenses for the year ended December 31, 2008, were approximately $15.1 million. This amount consisted primarily of investment advisory fees, interest expense, professional fees, compensation expenses, directors’ fees and general and administrative expenses. This was a decrease of approximately $1.5 million from the period ended December 31, 2007, which was primarily attributable to a decrease in interest expense of approximately $1.8 million related to our de-levering activity during 2008 and a decrease in investment advisory fees of approximately $461,000 resulting from the decrease in gross assets during the year ended December 31, 2008. These decreases were partially offset by an increase in professional fees of approximately $616,000 during the year ended December 31, 2008 over the year ended December 31, 2007. Our operating expenses for the period ended December 31, 2007 were approximately $16.6 million.

The investment advisory fee for fiscal 2008 was approximately $7.0 million, representing primarily the base fee as provided for in the Investment Advisory Agreement, as well as an investment income incentive fee of approximately $485,000. The investment advisory fee in 2007 was approximately $7.5 million, which consisted of the base fee as well as an income incentive fee of approximately $255,000.

Compensation expenses were approximately $906,000 for the year ended December 31, 2008, compared to approximately $898,000 for the period ending December 31, 2007, reflecting primarily the allocation of compensation expenses for the services of our Chief Financial Officer, Controller, and other administrative support personnel. At December 31, 2008 and 2007, respectively, no compensation expenses remained payable to BDC Partners.

Professional fees, consisting of legal, valuation, audit and consulting fees, were approximately $1.6 million for the year ended December 31, 2008, compared to approximately $1.0 million for the year ended December 31, 2007. The increase is attributable to greater fees of approximately $401,000 associated with the number of quarterly reviews performed by third party valuation firms during 2008, higher legal fees of approximately $120,000, and greater audit fees of approximately $93,000.

Interest expense for the year ended December 31, 2008, was approximately $4.8 million, compared to approximately $6.6 million for the year ended December 31, 2007. This decrease of approximately $1.8 million was attributable to delivering activities associated with the repayment of our credit facility throughout the year ended December 31, 2008.

General and administrative expenses, consisting primarily of printing expenses, listing fees, facilities costs and other expenses, were approximately $401,000 in 2008 compared to approximately $310,000 in 2007. The increase is primarily due to greater costs associated with listing fees, printing expenses and proxy related costs incurred during 2008. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement with BDC Partners.

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Realized Losses on Investments

For the year ended December 31, 2008, we had net realized losses on investments of approximately $8.5 million due primarily to the realized capital loss of approximately $8.3 million associated with the write-off of our debt and equity investments in Pulvermedia, as well as net realized capital losses of approximately $3.0 million associated with the sale of several of our syndicated loans. The losses were partially offset by realized gains of approximately $1.6 million associated with the repayment of our investment in Aviel Services, Inc. as well as approximately $1.2 million associated with the sale of our warrants held in The Endurance International Group, Inc. For the year ended December 31, 2007, we had net realized losses on our investments of approximately $12.6 million.

Unrealized Appreciation (Depreciation) on Investments

Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2008, we had net unrealized losses of approximately $66.9 million, comprised of $13.5 million in gross unrealized appreciation, $93.2 million in gross unrealized depreciation and approximately $12.8 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2008 were as follows (in millions):

Portfolio Company	Changes in Unrealized Appreciation (Depreciation)
Pulvermedia, LLC	$	10.6
GenuTec Business Solutions, Inc.		(0.7	)
Aviel Services, Inc.		(0.9	)
GXS Worldwide Inc.		(1.2	)
Fusionstorm, Inc.		(1.4	)
Algorithmic Implementations, Inc.		(1.7	)
Integra Telecom, Inc.		(1.7	)
Box Services, LLC		(1.9	)
Netquote, Inc.		(2.1	)
SCS Holdings II, Inc.		(2.8	)
Punch Software, LLC		(2.9	)
Power Tools, Inc.		(3.0	)
Hyland Software, Inc.		(3.1	)
AKQA, Inc.		(3.6	)
Palm, Inc.		(4.3	)
WAICCS Las Vegas, LLC		(5.7	)
Questia Media, Inc.		(6.2	)
American Integration Technologies, LLC		(14.7	)
The CAPS Group		(18.9	)
Other		(0.7	)
Total	$	(66.9	)

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Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2007, we had net unrealized gains of approximately $26.3 million, comprised of $5.7 million in gross unrealized appreciation, $45.6 gross million in unrealized depreciation and approximately $13.6 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2007 were as follows:

Portfolio Company	Changes in Unrealized Appreciation (Depreciation)
Algorithmic Implementations, Inc.	$	3.0
Segovia, Inc.		1.1
Fusionstorm, Inc.		(0.5	)
SCS Holdings II, Inc.		(0.8	)
Palm, Inc.		(1.0	)
TrueYou.com Inc.		(1.3	)
GenuTec Business Solutions, Inc.		(1.4	)
Power Tools, Inc.		(2.1	)
The CAPS Group		(2.4	)
Falcon Communications, Inc.		(9.5	)
Pulvermedia, LLC		(10.6	)
All other		(1.2	)
Total	$	(26.7	)

Net Decrease in Net Assets from Operations

We had a net decrease in net assets resulting from operations of approximately $53.3 million for the year ended December 31, 2008, compared to a net decrease in net assets of approximately $11.6 million in 2007. Based on a weighted-average of 24,314,512 shares outstanding (basic and diluted), our net decrease in net assets from operations per common share for the year ended December 31, 2008, was approximately $2.19 for basic and diluted earnings, compared to a decrease of $0.56 per share in 2007.

LIQUIDITY AND CAPITAL RESOURCES

On November 26, 2003, we closed our initial public offering and sold 8,695,653 shares of common stock at a price to the public of $15.00 per share, less an underwriting discount of $1.05 per share and offering expenses of approximately $954,000. On December 10, 2003, we issued an additional 1,304,347 shares of our common stock at the same price pursuant to the underwriters’ over-allotment. The total net proceeds to us from the initial public offering, including the exercise of the over-allotment, were approximately $138.5 million.

We raised net proceeds of approximately $41.5 million from a rights offering which closed in January 2005. Under the terms of the offering, each stockholder of record on December 29, 2004 was entitled to purchase an additional share of stock for each three shares of stock owned on that date. Pursuant to the rights offering, we issued 3,115,666 shares at a price of $14.029 per share.

In December 2005, we raised $78.8 million, net of underwriting commission and expenses, in a follow-on stock offering, in which we sold 5,750,000 shares (including the underwriters’ over-allotment) at $14.50 per share. Net proceeds from the follow-on offering were used to repay the credit facility drawdowns, and provide additional funds for investment purposes.

On July 13, 2007, we closed a follow-on public offering of our common stock. In connection with the closing, the underwriters exercised their over-allotment option and purchased an additional 187,500 shares,

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resulting in a total sale of 1,437,500 shares of our common stock. We raised approximately $21.6 million in net proceeds in this offering, after deducting underwriting discounts and offering expenses. Subsequently, we used the net proceeds received in this offering to repay indebtedness owed under our then existing revolving credit facility.

On May 23, 2008 we issued to our shareholders of record as of May 23, 2008 transferable rights to subscribe for up to 4,339,226 shares of our common stock. Record date stockholders received one right for each outstanding share of common stock owned on the record date. The rights, which entitled holders to purchase one new share of common stock for every five rights held, were listed for trading on the NASDAQ Global Select Market under the symbol “TICCR.” The rights offering, which was oversubscribed, resulted in the issuance of approximately 4.3 million shares of TICC common stock on June 18, 2008. The net proceeds after payment of dealer-manager fees and after other offering-related expenses were approximately $20.9 million. Subsequently, we used the net proceeds received in this offering to repay indebtedness owed under our then existing revolving credit facility.

During the year ended December 31, 2009, cash and cash equivalents increased from approximately $14.1 million at the beginning of the period to approximately $24.0 million at the end of the period. Net cash provided by operating activities for the period, consisting primarily of the items described in “—Results of Operations,” was approximately $24.4 million, largely reflecting principal repayments and proceeds from the sale of investments of approximately $79.6 million and net investment income, partially offset by purchases of investments of approximately $65.7 million. During the period, net cash used in financing activities was approximately $14.5 million, reflecting the distribution of dividends.

Share Repurchase Program

On July 30, 2009, the Board of Directors authorized a share repurchase program which provides for the purchase of up to $10 million worth of shares to be implemented at the discretion of our management team. Under the repurchase program, we may, but are not obligated to, repurchase our outstanding common stock in the open market from time to time. The timing and number of shares to be repurchased in the open market will depend on a number of factors, including market conditions and alternative investment opportunities. In addition, any repurchases will be conducted in accordance with the 1940 Act.

Contractual Obligations

We have certain obligations with respect to the investment advisory and administration services we receive. See “–Overview”. We incurred approximately $4.1 million for investment advisory services and $617,000 for administrative services for the year ended December 31, 2009.

Off-Balance Sheet Arrangements

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

Borrowings

For the year ended December 31, 2009, we did not have a revolving credit facility agreement. However, during 2008, we had a credit facility (the “Credit Facility”) with the Royal Bank of Canada (“RBC”) as an agent and a lender, and Branch Banking and Trust Company (“BB&T”) as an additional lender. We amended the Credit Facility during the year ended December 31, 2008, whereby the total commitment of $150 million (which was a reduction from $180 million as a result of the removal of Commerzbank AG as a lender) was reduced periodically and, effective December 30, 2008, we had fully repaid all amounts under the Credit Facility and reduced the commitment amount thereunder to zero, effectively terminating the Credit Facility.

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As a business development company, we generally have an ongoing need to raise additional capital for investment purposes. As a result, we expect, from time to time, to access the debt and equity markets when we believe it is necessary and appropriate to do so. In the future, if we are unable to obtain leverage or raise equity capital on terms that are acceptable to us, our ability to grow our portfolio will be substantially impacted.

Distributions

In order to qualify as a RIC 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 realized net short-term capital gains in excess of realized net long-term capital losses to our stockholders on an annual basis.

For the year ended December 31, 2008, management determined that a tax return of capital occurred of approximately $0.08 per share. A written statement identifying the source of dividends for the year was posted on our website.

During the year ended December 31, 2009 we did not have distributions in excess of our earnings. For tax purposes, distributions for 2009 were funded from current net investment income. A written statement identifying the source of the dividend accompanied our fourth quarter dividend payment to our shareholders and was posted on our website. We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of favorable regulated investment company tax treatment. We cannot assure shareholders that they will receive any distributions.

To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to our stockholders. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our taxable ordinary income or capital gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our taxable ordinary income or capital gains.

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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 2010
March 4, 2010	March 24, 2010	March 31, 2010	$	0.15
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)
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:			$	6.07	(5)

⁽¹⁾ Distributions for the fiscal year ended December 31, 2009 were funded from undistributed net investment income.

⁽²⁾ Includes a return of capital of approximately $0.08 per share for tax purposes.

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⁽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. In addition to BDC Partners, TICC Management is owned by Royce & Associates as the non-managing member. 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, an 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.

• 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.

Both we and GLIF have adopted a policy with respect to the allocation of investment opportunities in view of these potential conflicts of interest. Bilateral investment opportunities are those negotiated directly between us or GLIF and a prospective portfolio company. Our general policy is to allocate bilateral U.S.-based opportunities to us and bilateral non-U.S.-based opportunities to GLIF; provided, that in instances involving bilateral investment opportunities where there is significant question as to a prospective portfolio company’s primary base of operation (by virtue, for instance, of it conducting business in many countries, including the United States, with no clear principal center of operation or legal domicile), and where that question leads to doubt with regard to an investment in that company representing a “qualified asset” for the purpose of compliance with the “70% test” for qualifying assets for BDCs under Section 55(a) of the 1940 Act, that bilateral investment opportunity will be allocated to GLIF.

Either we or GLIF may also purchase syndicated loans (i.e., those transactions in which an agent bank syndicates loans to four or more investors) of issuers in which the other fund holds no position, or has held a position (and has made no further investment) for a period greater than 30 calendar days and the purchases are not made directly from the other fund or the issuer of the acquired syndicated loans. In instances where both we and GLIF desire to either purchase or sell the same position at the same time, such purchases or sales will generally be allocated on a pro rata basis between us and GLIF based on order size as determined by each fund’s investment adviser in good faith.

Notwithstanding the foregoing policy with respect to the allocation of investment opportunities, any opportunity to invest a sum of less than or equal to $500,000 (an amount generally considered below our or GLIF’s minimum investment threshold) will be allocated to Oxford Gate Capital, LLC.

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

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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).

Information concerning related party transactions is included in the financial statements and related notes, appearing elsewhere in this annual report on Form 10-K.

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.

Our financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”). In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” (“SFAS 168”). The FASB Accounting Standards Codification (“ASC”) organizes nongovernmental U.S. GAAP using a topic-based model consisting of 90 individual topics. Each topic contains at least one subtopic. Subtopics contain sections, which include the actual accounting guidance. Any new authoritative U.S. GAAP will be issued under a new FASB document called an Accounting Standards Update (“ASU”). Once the new guidance becomes effective it will be referred to under the relevant ASC. ASC is effective for financial statements that cover interim and annual periods ending after September 15, 2009. Due to our adoption of SFAS 168 for the three month period ended September 30, 2009, hereinafter, we reference our relevant accounting guidance based on the standards as organized under ASC.

Investment Valuation

The most significant estimate inherent in the preparation of our 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.

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

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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, substantially all of our investments are based upon “Level 3” inputs. Only approximately $4.4 million of our investments are based upon “Level 2” inputs as of December 31, 2009.

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 our syndicated loans, although the 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 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 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. 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 are recorded in the statement of operations as net change in unrealized appreciation or depreciation.

Under the valuation procedures approved by the Board of Directors, upon the recommendation of the Valuation Committee, a third-party valuation firm will prepare valuations for each of our bilateral investments

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for which market quotations are not readily available that, when combined with all other investments in the same portfolio company, (i) have a book 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 book 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. The Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment.

Given the continued economic downturn, the market for syndicated loans has become increasingly illiquid with limited or no transactions for many of those securities which we hold. 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 the market illiquidity and the lack of transactions during 2008 and 2009, we determined that the current agent bank non-binding indicative bids for the substantial majority of our syndicated investments were unreliable, and alternative valuation procedures would need to be performed until liquidity returns to the marketplace. As such, we have engaged third-party valuation firms to provide assistance in valuing certain of our syndicated investments. 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 considered reliable, 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.

In addition, FASB issued ASC 825, “Interim Disclosures About Fair Value of Financial Instruments,” which requires additional disclosures related to inputs and valuation techniques for interim and annual periods. We adopted the provisions of ASC 820-10-35 and ASC 825 as of the quarter ended March 31, 2009.

Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at December 31, 2009, 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	$	23.8	$	0.0	$	0.0	$	23.8
Bilateral investments		0.0		0.0		84.8		84.8
Syndicated investments		0.0		4.4		104.0		108.4
Collateralized loan obligation investments		0.0		0.0		7.1		7.1
Total	$	23.8	$	4.4	$	195.9	$	224.1

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A reconciliation of the fair value of investments for the year ended December 31, 2009, utilizing significant unobservable inputs, is as follows:

($ in millions)	Bilateral Investments			Syndicated Investments			Collateralized Loan Obligation Investments			Total
Balance at December 31, 2008	$	130.6		$	59.0		$	0.0		$	189.6
Realized losses included in earnings		(7.8	)		(2.7	)		0.0			(10.5	)
Unrealized appreciation (depreciation) included in earnings		18.5			13.9			(0.1	)		32.3
Accretion of discount		1.2			1.5			0.0			2.7
Purchases, issuances and settlements(1)		(57.7	)		36.7			7.2			(13.8	)
Transfers in and/or out of level 3		0.0			(4.4	)		0.0			(4.4	)
Balance at December 31, 2009	$	84.8		$	104.0		$	7.1		$	195.9

The change in unrealized appreciation for level 3 investments still held as of December 31, 2009 is approximately $20.3 million.

⁽¹⁾ Includes amortization of discounts of approximately $2.8 million and PIK interest of approximately $162,000.

Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10 at December 31, 2008, were as follows:

			Fair Value Measurements at Reporting Date Using
($ in millions)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments, at fair value	$	189.6	$	0.0	$	0.0	$	189.6

($ in millions)	Bilateral Investments			Other Investments			Total
Beginning balance	$	257.7		$	127.7		$	385.4
Total losses (realized/unrealized) included in earnings		(49.7	)		(25.7	)		(75.4	)
Purchases, issuances and settlements(1)		(77.4	)		(43.0	)		(120.4	)
Transfers in and/or out of Level 3		0.0			0.0			0.0
Ending balance	$	130.6		$	59.0		$	189.6
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	(54.3	)	$	(23.1	)	$	(77.4	)

⁽¹⁾ Includes amortization of discounts of approximately $1.9 million and PIK interest of approximately $235,000.

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The following table shows the fair value of our portfolio of investments by asset class as of December 31, 2009 and 2008:

	2009				2008
	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	$	184.6	92.1	%	$	172.0	90.7	%
Senior Unsecured Notes		0.0	0.0	%		1.0	0.5	%
CLO Subordinated Secured Notes		4.9	2.5	%		0.0	0.0	%
Senior Subordinated Unsecured Notes		2.7	1.4	%		10.4	5.5	%
CLO Preference Shares		2.2	1.1	%		0.0	0.0	%
Common Stock		5.4	2.7	%		3.0	1.6	%
Warrants		0.5	0.2	%		3.2	1.7	%
Total	$	200.3	100.0	%	$	189.6	100.0	%

OTHER ACCOUNTING POLICIES

Interest Income Recognition

Interest income is recorded on the accrual basis to the extent that such amounts are expected to be collected.

Payment in Kind Interest

We have investments in our portfolio which contain a PIK provision. The PIK income is added to the principal balance of the investment and is recorded as income. To maintain our status as a RIC, this income must be paid out to stockholders in the form of dividends, even though we have not collected any cash. For the year ended December 31, 2009 we recorded PIK interest income of approximately $162,000. For the years ended December 31, 2008 and 2007, we recorded approximately $235,000 and $531,000 in PIK interest income, respectively.

In addition, we recorded original issue discount income of approximately $2,783,000, $1,881,000 and $1,629,000 for the years ended December 31, 2009, 2008 and 2007, respectively, representing the amortization of the discounted cost attributed to certain debt securities purchased by us in connection with the issuance of warrants.

Other Income

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

Managerial Assistance Fees

The 1940 Act requires that a business development company offer managerial assistance to its portfolio companies. We offer to provide managerial assistance to our portfolio companies in connection with our investments and may receive fees for our services. We have not received any fees for such services since inception.

Federal Income Taxes

We intend to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, to not be subject to federal income tax on the portion of our taxable income and gains distributed to stockholders.

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To qualify for RIC tax treatment, we are required to distribute at least 90% of our investment company taxable income, as defined by the Code.

Because federal income tax regulations differ from accounting principles generally accepted in the United States, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statement to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

For tax purposes, the cost basis of the portfolio investments at December 31, 2009 and December 31, 2008 was approximately $260,645,369 and $282,191,897, respectively.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU No. 2010-6 Fair Value Measurements and Disclosures related to Fair Value Measurements and Disclosures—(Topic 820), Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosures for transfers in and out of Levels 1 and 2, reporting gross activity in Level 3 fair value measurements, and clarifications to the level of detail of existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, with the exception of reporting gross activity in Level 3 fair value measurements which is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We do not expect the adoption of ASU 2010-6 to have a material impact on our financial statements.

RECENT DEVELOPMENTS

On January 28, 2010, our investment in senior secured notes issued by Questia Media, Inc. was repaid at par.

We declared, on March 4, 2010, a cash dividend of $0.15 per share payable March 31, 2010 to holders of record on March 24, 2010.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. As of December 31, 2009, two debt investments in our portfolio were at a fixed rate, and the remaining thirty-one debt investments were at variable rates, representing approximately $22.4 million and $246.1 million in principal debt, respectively. At December 31, 2009, $181.7 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.

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 in the underlying five-year Treasury note, the Prime rate or LIBOR, and no other change in our portfolio as of December 31, 2009. We have also assumed no outstanding borrowings. Under this analysis, net investment income would increase by approximately $1.8 million annually. If we had instead assumed a 1% decrease in the underlying five-year Treasury note, the Prime rate or LIBOR, net investment income would decrease correspondingly by approximately $1.8 million annually. 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,

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including borrowing under a credit facility, 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.

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Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

	Page
Management’s Report on Internal Control Over Financial Reporting	68
Report of Independent Registered Public Accounting Firm	69
Statements of Assets and Liabilities as of December 31, 2009 and December 31, 2008	70
Schedule of Investments as of December 31, 2009	71
Schedule of Investments as of December 31, 2008	74
Statements of Operations for the years ended December 31, 2009, December  31, 2008 and December 31, 2007	76
Statements of Changes in Net Assets for the years ended December 31, 2009, December  31, 2008 and December 31, 2007	77
Statements of Cash Flows for the years ended December 31, 2009, December  31, 2008 and December 31, 2007	78
Notes to Financial Statements	79

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2009. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 based upon criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, management determined that the Company’s internal control over financial reporting was effective as of December 31, 2009 based on the criteria in Internal Control—Integrated Framework issued by COSO. PricewaterhouseCoopers LLP, our independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, as stated in its report, which is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

of TICC Capital Corp.:

In our opinion, the accompanying statements of assets and liabilities including the schedules of investments, and the related statements of operations, changes in net assets and cash flows present fairly, in all material respects, the financial position of TICC Capital Corp. (“the Company”) at December 31, 2009 and December 31, 2008, and the results of its operations, the changes in net assets, and its cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing on page 68 of the 2009 Annual Report on Form 10-K. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 12, 2010

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TICC CAPITAL CORP.

STATEMENTS OF ASSETS AND LIABILITIES

	December 31, 2009			December 31, 2008
ASSETS
Investments, at fair value (cost: $260,752,699 @ 12/31/09; $282,299,228 @ 12/31/08)
Non-affiliated/non-control investments (cost: $241,169,345 @ 12/31/09; $261,923,603 @ 12/31/08)	$	180,226,123		$	168,094,127
Control investments (cost: $19,583,354 @ 12/31/09; $20,375,625 @ 12/31/08)		20,025,000			21,500,000
Total investments at fair value		200,251,123			189,594,127
Cash and cash equivalents		23,972,885			14,069,251
Interest receivable		860,271			1,151,703
Prepaid expenses and other assets		256,012			147,806
Total assets	$	225,340,291		$	204,962,887
LIABILITIES
Investment advisory fee payable to affiliate	$	1,119,544		$	1,287,451
Accrued expenses		128,752			308,686
Total liabilities		1,248,296			1,596,137
NET ASSETS
Common stock, $0.01 par value, 100,000,000 shares authorized, and 26,813,216 and 26,483,546 issued and outstanding, respectively		268,132			264,835
Capital in excess of par value		320,175,874			318,662,914
Net unrealized depreciation on investments		(60,501,576	)		(92,705,101	)
Accumulated net realized losses on investments		(32,412,374	)		(21,899,323	)
Distributions in excess of investment income		(3,438,061	)		(956,575	)
Total net assets		224,091,995			203,366,750
Total liabilities and net assets	$	225,340,291		$	204,962,887
Net asset value per common share	$	8.36		$	7.68

See Accompanying Notes.

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TICC CAPITAL CORP.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2009

COMPANY(1)	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT		COST		FAIR VALUE(2)
Questia Media, Inc.	digital media	senior secured notes(3)	$	14,358,128	$	14,358,128	$	13,767,127
		(11.00%, due Jan. 29, 2010)
WHITTMANHART, Inc.	IT consulting	senior secured notes(4)(6)		3,125,000		3,125,000		3,125,000
		(13.58%, due December 31, 2010)
		warrants to purchase common stock(7)				0		0
NetQuote, Inc.	web-based services	senior secured notes(4)(6)		21,000,000		21,000,000		20,790,000
		(9.50%, due May 1, 2011)
GenuTec Business Solutions, Inc.	interactive voice messaging	senior secured notes(4)(5)(7)		3,476,000		2,906,779		2,000,000
	services	(0.0%, due October 30, 2014)
		convertible preferred stock(7)				1,500,000		0
Group 329, LLC (d/b/a “The CAPS Group”)	digital imaging	senior secured term A notes(4)(5)(7)(10)		5,467,804		5,406,561		0
		(11.89%, due February 28, 2012)
		warrants to purchase common stock(7)				110,000		0
		senior secured term B notes(4)(5)(7)(10)		17,485,000		17,250,655		0
		(12.39%, due February 28, 2013)
		warrants to purchase common stock(7)				90,000		0
American Integration Technologies, LLC	semiconductor capital equipment	senior secured notes(4)(6)(7)(10)		20,950,000		20,950,000		8,380,000
		(13.75%, due April 29, 2011)
Power Tools, Inc.	software	senior secured notes(4)(5)(6)		10,000,000		9,872,792		7,825,000
		(12.00%, due May 16, 2014)
		warrants to purchase common stock(7)				350,000		220,000
Algorithmic Implementations, Inc.	software	senior secured notes(4)(5)(6)		17,025,000		16,583,354		17,025,000
(d/b/a “Ai Squared”)		(9.84%, due September 11, 2013)
		common stock				3,000,000		3,000,000
Fusionstorm, Inc.	IT value-added reseller	senior subordinated unsecured notes(4)(5)(6)		3,550,000		3,483,268		2,680,250
		(11.74%, due October 2, 2011)
		warrants to purchase common stock(7)				725,000		250,000
Punch Software LLC	software	senior secured notes(4)(7)		2,100,000		1,595,643		1,625,400
		(0.00%, due October 31, 2012)
SCS Holdings II, Inc.	IT value-added reseller	second lien senior secured notes(4)		14,500,000		14,510,534		11,890,000
		(6.25%, due May 30, 2013)
AKQA, Inc.	advertising	senior secured notes(4)(6)		8,491,848		8,491,848		8,143,682
		(4.75%, due March 20, 2013)
Box Services, LLC	digital imaging	senior secured notes(4)(6)		11,915,170		11,915,170		4,106,563
		(9.50%, due April 30, 2012)
Hyland Software, Inc.	enterprise software	second lien senior secured notes(4)(5)		11,000,000		10,936,317		10,461,000
		(6.77%, due July 31, 2014)
WAICCS Las Vegas, LLC	real estate development	second lien senior secured notes(4)(7)(10)(11)		15,000,000		15,000,000		1,500,000
		(9.31%, due July 31, 2009)

(Continued on next page)

See Accompanying Notes.

71

TICC CAPITAL CORP.

SCHEDULE OF INVESTMENTS—(Continued)

DECEMBER 31, 2009

COMPANY(1)	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT	COST	FAIR VALUE(2)
Integra Telecom, Inc.	telecommunications services	common stock(7)		1,712,397	2,454,450
GXS Worldwide Inc.	software	senior secured notes(5)	8,000,000	7,865,888	7,870,000
		(9.75%, due June 15, 2015)
Palm, Inc.	consumer electronics	first lien senior secured notes(4)(5)(6)	14,575,446	13,609,015	12,462,006
		(3.76%, due April 24, 2014)
Krispy Kreme Doughnut Corporation	retail food products	first lien senior secured notes(4)(5)(6)	4,980,973	4,534,476	4,738,151
		(10.75% , due February 16, 2014)
Stratus Technologies, Inc.	computer hardware	first lien senior secured notes(4)(5)(6)	4,721,536	3,767,988	4,459,491
		(4.01%, due March 29, 2011)
Cavtel Holdings, LLC	telecommunication services	first lien senior secured notes(3)(4)(5)(6)	6,438,805	4,208,627	6,390,515
		(10.50%, due December 31, 2012)
First Data Corporation	business services	first lien senior secured notes(4)(5)(6)	4,961,929	3,725,801	4,398,899
		(3.00%, due September 24, 2014)
Drew Marine Partners, L.P.	shipping & transportation	first lien senior secured notes(4)(5)(6)	4,906,250	4,769,087	4,832,656
		(9.50%, due August 31, 2014)
X-Rite Incorporated	software	first lien senior secured notes(4)(5)(6)	3,994,865	3,470,463	3,823,086
		(7.47%, due October 24, 2012)
Workflow Management, Inc.	printing & document management	first lien senior secured notes(3)(4)(5)(6)	6,626,109	5,263,940	6,311,369
		(9.50%, due November 30, 2011)
Attachmate Corporation	enterprise software	second lien senior secured notes(4)(5)	2,000,000	1,396,221	1,615,000
		(7.00%, due October 13, 2013)
Prodigy Health Group	healthcare	second lien senior secured notes(4)(5)	4,000,000	2,546,288	3,386,000
		(8.24%, due November 29, 2013)
Allen Systems Group, Inc.	software	second lien senior secured notes(3)(4)(5)	3,514,000	3,361,190	3,393,927
		(13.00%, due April 19, 2014)
ACA CLO 2006-2, Limited	securitization vehicle	CLO preference shares		2,200,000	2,200,000
Ocean Trails CLO II 2007-2a-d	securitization vehicle	CLO subordinated secured notes(4)(5)	2,838,656	1,490,894	1,447,714
		(4.78%, due June 27, 2022)
Springboard Finance (aka “Skype”)	telecommunication services	first lien senior secured notes(4)(5)	2,000,000	1,950,873	2,080,000
		(9.00%, due November 19, 2014)
Lightpoint CLO 2007-8a	securitization vehicle	CLO secured notes(4)(5)	5,000,000	2,621,122	2,575,000
		(6.78%, due July 25, 2018)
Fairway Group Acquisition Company	grocery	first lien senior secured notes(4)(5)	5,000,000	4,851,296	4,900,000
		(12.00%, due October 1, 2014)
Del Mar CLO I Ltd. 2006-1	securitization vehicle	CLO secured notes(4)(5)	1,876,262	903,895	891,224
		(4.28%, due July 25, 2018)

(Continued on next page)

See Accompanying Notes.

72

TICC CAPITAL CORP.

SCHEDULE OF INVESTMENTS—(Continued)

DECEMBER 31, 2009

COMPANY(1)	INDUSTRY	INVESTMENT	PRINCIPAL AMOUNT	COST		FAIR VALUE(2)
QA Direct Holdings, LLC	printing and publishing	first lien senior secured notes(4)(5)(6)	3,632,149		3,342,189		3,232,613
		(8.00%, due August 10, 2014)
Total Investments				$	260,752,699	$	200,251,123

⁽¹⁾ Other than Algorithmic Implementation, Inc. (d/b/a Ai Squared), which TICC may be deemed to control, TICC does not “control” and is not an “affiliate” of any of its portfolio companies, each as defined in the Investment Company Act of 1940 (the “1940 Act”). In general, under the 1940 Act, TICC would be presumed to “control” a portfolio company if TICC owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if TICC 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⁾ Investment includes payment-in-kind interest.

⁽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⁾ As a percentage of net assets at December 31, 2009, investments at fair value are categorized as follows: senior secured notes (82.38%), CLO subordinated secured notes (2.2%), senior subordinated unsecured notes (1.2%), CLO preference shares (1.0%), common stock (2.4%), and warrants to purchase equity securities (0.2%).

⁽⁹⁾ Aggregate gross unrealized appreciation for federal income tax purposes is $7,807,742; aggregate gross unrealized depreciation for federal income tax purposes is $68,201,988. Net unrealized depreciation is $60,394,246 based upon a tax cost basis of $260,645,369.

⁽¹⁰⁾ Debt investment on non-accrual status at the relevant period end.

⁽¹¹⁾ During the quarter ended June 30, 2009, the maturity date on TICC’s investment in WAICCS Las Vegas, LLC was set to July 31, 2009 as a result of the failure of the company’s equity sponsor to pre-fund interest reserves as required to extend the maturity beyond July 31, 2009. During July 2009, this investment was placed on non-accrual status and, as of December 31, 2009, the maturity date has not been revised as the interest reserves have not yet been pre-funded.

See Accompanying Notes.

73

TICC CAPITAL CORP.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2008

Company(1)	Industry	Investment	Principal Amount		Cost		Fair Value(2)
Questia Media, Inc.	digital media	senior secured notes(3)	$	14,358,128	$	14,358,128	$	7,896,970
		(11.00%, due Jan. 28, 2009)
TrueYou.com Inc.	medical services	preferred stock series E(7)				1,297,115		0
Avue Technologies Corp.	software	warrants to purchase common units(7)				13,000		25,000
Segovia, Inc.	satellite communications	senior secured notes(4)(5)(6)		21,000,000		20,942,204		20,475,000
		(9.32%, due Feb. 8, 2010)
		warrants to purchase common stock(7)				600,000		2,700,000
WHITTMANHART, Inc.	IT consulting	senior secured notes(4)(6)		5,125,000		5,125,000		4,715,000
		(11.58%, due March 23, 2010)
		warrants to purchase common stock(7)				0		0
Falcon Communications, Inc.	satellite communications	senior unsecured notes(4)(7)(10)		10,500,000		10,500,000		1,000,000
		(10.96%, due March 31, 2011)
Arise Virtual Solutions, Inc. (f/k/a “Willow CSN Incorporated”)	virtual workforce services	senior secured notes(4)(5)		10,500,000		10,440,452		10,132,500
		(10.25%, due June 30, 2010)
		warrants to purchase
		convertible preferred stock(7)				200,000		115,000
NetQuote, Inc.	web-based services	senior secured notes(4)(6)		24,000,000		24,000,000		21,780,000
		(9.50%, due May 1, 2011)
GenuTec Business Solutions, Inc.	interactive voice	senior secured notes(4)(5)		3,480,000		2,703,391		2,000,000
	messaging services	(0.0%, due October 30, 2014)
		convertible preferred stock(7)				1,500,000		0
Group 329, LLC (d/b/a “The CAPS Group”)	digital imaging	senior secured term A notes(4)(5)(10)		5,467,804		5,400,407		1,366,951
		(11.89%, due February 28, 2012)
		warrants to purchase common stock(7)				110,000		0
		senior secured term B notes(4)(5)(10)		17,485,000		17,236,514		0
		(12.39%, due February 28, 2013)
		warrants to purchase common stock(7)				90,000		0
American Integration Technologies, LLC.	semiconductor capital equipment	senior secured notes(4)(6) (10.75%, due October 31, 2010)		20,950,000		20,950,000		6,285,000
Power Tools, Inc.	software	senior secured notes(4)(5)(6)		10,250,000		10,080,911		5,304,375
		(12.00%, due May 16, 2014)
		warrants to purchase common stock(7)				350,000		0
Algorithmic Implementations, Inc. (d/b/a “Ai Squared”)	software	senior secured notes(4)(5)(6)		18,500,000		17,375,625		18,500,000
		(9.84%, due September 11, 2010)
		common stock				3,000,000		3,000,000
Fusionstorm, Inc.	IT value-added reseller	senior subordinated unsecured notes(4)(5)(6)		12,375,000		12,034,357		10,395,000
		(14.46%, due October 2, 2011)
		warrants to purchase common stock(7)				725,000		400,000

(Continued on next page)

See Accompanying Notes.

74

TICC CAPITAL CORP.

SCHEDULE OF INVESTMENTS—(Continued)

DECEMBER 31, 2008

Company(1)	Industry	Investment	Principal Amount	Cost		Fair Value(2)
Punch Software, LLC	software	senior secured notes(4)(5)	6,900,000		6,809,180		3,967,500
		(10.42%, due October 30, 2011)
		warrants to purchase Class A-1 units(7)			200,000		0
SCS Holdings II, Inc.	IT value-added reseller	second lien senior secured notes(4) (7.46%, due May 30, 2013)	14,500,000		14,513,622		10,875,000
AKQA, Inc.	advertising	senior secured notes(4)(6)	14,613,133		14,613,133		10,959,850
		(6.00%, due March 20, 2013)
Box Services, LLC	digital imaging	senior secured notes(4)(6)	12,427,833		12,427,833		10,532,588
		(7.13%, due April 30, 2012)
Hyland Software, Inc.	enterprise software	second lien senior secured notes(4)(5)	11,000,000		10,922,605		7,700,000
		(9.31%, due July 31, 2014)
WAICCS Las Vegas, LLC	real estate development	second lien senior secured notes(4)	15,000,000		15,000,000		9,000,000
		(10.44%, due August 1, 2009)
Integra Telecom, Inc.	telecommunications services	second lien senior secured notes(4)(5) (9.97%, due February 28, 2014)	3,000,000		2,903,122		1,545,000
GXS Worldwide Inc.	software	first lien senior secured notes(4)(5)(6)	7,852,765		7,752,446		6,085,893
		(8.06%, due March 31, 2013)
Palm, Inc.	consumer electronics	first lien senior secured notes(4)(5)(6) (3.97%, due April 24, 2014)	19,750,000		18,125,183		12,837,500
Total Investments				$	282,299,228	$	189,594,127

⁽¹⁾ Other than Algorithmic Implementation, Inc. (d/b/a Ai Squared), which TICC may be deemed to control, TICC does not “control” and is not an “affiliate” of any of its portfolio companies, each as defined in the Investment Company Act of 1940 (the “1940 Act”). In general, under the 1940 Act, TICC would be presumed to “control” a portfolio company if TICC owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if TICC 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⁾ Investment includes payment-in-kind interest.

⁽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⁾ As a percentage of net assets at December 31, 2008, investments at fair value are categorized as follows: senior secured notes (84.6%), senior unsecured notes (0.5%), senior subordinated unsecured notes (5.1%), preferred stock (0.0%), common stock (1.5%), and warrants to purchase equity securities (1.6%).

⁽⁹⁾ Aggregate gross unrealized appreciation for federal income tax purposes is $3,343,705; aggregate gross unrealized depreciation for federal income tax purposes is $95,941,476. Net unrealized depreciation is $92,597,771 based upon a tax cost basis of $282,191,897.

⁽¹⁰⁾ Debt investment on non-accrual status at the relevant period end.

See Accompanying Notes.

75

TICC CAPITAL CORP.

STATEMENTS OF OPERATIONS

	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
INVESTMENT INCOME
From non-affiliated/non-control investments:
Interest income—debt investments	$	17,907,924		$	33,355,098		$	37,913,611
Interest income—cash and cash equivalents		—			198,445			655,859
Other income		129,265			705,918			1,956,141
Total investment income from non-affiliated/non-control investments		18,037,189			34,259,461			40,525,611
From control investments:
Interest income—debt investments		2,470,603			2,921,174			3,316,202
Other income		—			125,000			—
Total investment income from control investments		2,470,603			3,046,174			3,316,202
Total investment income		20,507,792			37,305,635			43,841,813
EXPENSES
Compensation expense		971,356			906,109			897,740
Investment advisory fees		4,122,005			7,001,236			7,461,735
Professional fees		1,305,894			1,626,028			1,010,140
Interest expense		—			4,814,408			6,618,176
Insurance		75,974			76,734			79,858
Directors’ fees		193,000			184,750			165,250
Transfer agent and custodian fees		98,012			104,572			105,785
General and administrative		249,567			400,635			309,510
Total expenses		7,015,808			15,114,472			16,648,194
Net investment income		13,491,984			22,191,163			27,193,619
Net change in unrealized appreciation or depreciation on investments		32,203,525			(66,947,503	)		(26,281,461	)
Net realized losses on investments		(10,513,051	)		(8,509,814	)		(12,560,990	)
Net increase (decrease) in net assets resulting from operations	$	35,182,458		$	(53,266,154	)	$	(11,648,832	)
Net increase in net assets resulting from net investment income per common share:
Basic and diluted(1)	$	0.51		$	0.91		$	1.30
Net increase (decrease) in net assets resulting from operations per common share:
Basic and diluted(1)	$	1.32		$	(2.19	)	$	(0.56	)
Weighted average shares of common stock outstanding:
Basic and diluted(1)		26,624,217			24,314,512			20,977,779

⁽¹⁾ In accordance with ASC 260-10, the weighted-average shares of common stock outstanding used in computing basic and diluted earnings per share for the years ended December 31, 2008 and December 31, 2007 were increased retroactively by a factor of 1.021 to recognize the bonus element associated with rights to acquire shares of common stock that were issued to shareholders on May 23, 2008. See Note 4—Earnings Per Share for additional information about the rights offering and the calculation of the associated bonus element.

See Accompanying Notes.

76

TICC CAPITAL CORP.

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
Increase (decrease) in net assets from operations:
Net investment income	$	13,491,984		$	22,191,163		$	27,193,619
Net realized losses on investments		(10,513,051	)		(8,509,814	)		(12,560,990	)
Net change in unrealized appreciation (depreciation) on investments		32,203,525			(66,947,503	)		(26,281,461	)
Net increase (decrease) in net assets resulting from operations		35,182,458			(53,266,154	)		(11,648,832	)
Dividends from net investment income		(15,973,470	)		(22,870,147	)		(27,855,763	)
Distributions from net realized capital gains		—			—			(1,148,636	)
Tax return of capital distributions		—			(1,898,860	)		(639,411	)
Distributions to shareholders		(15,973,470	)		(24,769,007	)		(29,643,810	)
Capital share transactions:
Issuance of common stock (net of offering costs of $0, $1,629,542 and $558,729, respectively)		—			20,934,434			21,578,771
Reinvestment of dividends		1,516,257			3,097,974			5,748,027
Net increase in net assets from capital share transactions		1,516,257			24,032,408			27,326,798
Total increase (decrease) in net assets		20,725,245			(54,002,753	)		(13,965,842	)
Net assets at beginning of period		203,366,750			257,369,503			271,335,345
Net assets at end of period (including over distributed net investment income of $3,438,061, $956,575 and $277,570, respectively)	$	224,091,995		$	203,366,750		$	257,369,503
Capital share activity:
Shares sold		0			4,339,226			1,437,500
Shares issued from reinvestment of dividends		329,670			580,603			420,393
Net increase in capital share activity		329,670			4,919,829			1,857,893

See Accompanying Notes.

77

TICC CAPITAL CORP.

STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations	$	35,182,458		$	(53,266,154	)	$	(11,648,832	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
Purchases of investments		(65,671,220	)		(18,290,000	)		(187,997,425	)
Repayments of principal and reductions to investment cost value		65,639,714			90,543,884			87,613,809
Proceeds from the sale of investments		14,010,037			50,178,603			4,518,697
Increase in investments due to PIK		(162,055	)		(235,000	)		(531,144	)
Net realized losses on investments		10,513,051			8,509,814			12,560,990
Net change in unrealized appreciation or depreciation on investments		(32,203,525	)		66,947,503			26,281,461
Decrease in interest receivable		291,432			1,724,721			339,881
(Increase) decrease in prepaid expenses and other assets		(108,206	)		53,566			35,697
Amortization of discounts		(2,782,998	)		(1,881,183	)		(1,629,275	)
Increase (decrease) in investment advisory fee payable		(167,907	)		(835,717	)		127,651
Decrease in accrued interest payable		—			(310,312	)		(148,195	)
(Decrease) increase in accrued expenses		(179,934	)		221,516			(78,508	)
Net cash provided (used) by operating activities		24,360,847			143,361,241			(70,555,193	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock		—			22,563,976			22,137,500
Offering expenses from the issuance of common stock		—			(1,629,542	)		(558,729	)
Amounts borrowed under revolving credit facility		—			10,500,000			156,500,000
Amounts paid back under revolving credit facility		—			(147,000,000	)		(78,500,000	)
Distributions paid (net of stock issued under dividend reinvestment plan of $1,516,257, $3,097,975 and $5,748,027, respectively)		(14,457,213	)		(21,671,032	)		(26,260,482	)
Net cash used (provided) by financing activities		(14,457,213	)		(137,236,598	)		73,318,289
Net increase in cash and cash equivalents		9,903,634			6,124,643			2,763,096
Cash and cash equivalents, beginning of year		14,069,251			7,944,608			5,181,512
Cash and cash equivalents, end of year	$	23,972,885		$	14,069,251		$	7,944,608
NON-CASH FINANCING ACTIVITIES
Value of Shares issued in connection with dividend reinvestment plan	$	1,516,257		$	3,097,974		$	5,748,027
SUPPLEMENTAL DISCLOSURES
Cash paid for interest	$	—		$	4,297,974		$	6,462,054

See Accompanying Notes.

78

TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 1. ORGANIZATION

TICC Capital Corp. (“TICC” or “the Company”) 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. The Company has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company, or 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, principally by investing in the debt and/or equity securities of technology-related companies.

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.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements include the accounts of the Company. There are no related companies and no intercompany accounts to be eliminated.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” (“SFAS 168”). The FASB Accounting Standards Codification (“ASC”) organizes nongovernmental U.S. GAAP using a topic-based model consisting of 90 individual topics. Each topic contains at least one subtopic. Subtopics contain sections, which include the actual accounting guidance. Any new authoritative U.S. GAAP will be issued under a new FASB document called an Accounting Standards Update (“ASU”). Once the new guidance becomes effective it will be referred to under the relevant ASC. ASC is effective for financial statements that cover interim and annual periods ending after September 15, 2009. Due to the Company’s adoption of SFAS 168 for the year ended December 31, 2009, hereinafter, the Company references its relevant accounting guidance based on the standards as organized under ASC.

USE OF ESTIMATES

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America that require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

In the normal course of business, the Company may enter into contracts that contain a variety of representations and provide indemnifications. The Company’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based upon experience, the Company expects the risk of loss to be remote.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of demand deposits and highly liquid investments with original maturities of three months or less. Cash and cash equivalents are carried at cost or amortized cost which approximates fair value.

79

TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

INVESTMENT VALUATION

The most significant estimate inherent in the preparation of the Company’s 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. The Company is required to specifically fair value each individual investment on a quarterly basis.

The Company 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. The Company has determined that due to the general illiquidity of the market for the Company’s investment portfolio, whereby little or no market data exists, substantially all of the Company’s investments are based upon “Level 3” inputs. Only approximately $4.4 million of the Company’s investments are based upon “Level 2” inputs as of December 31, 2009.

The Company’s Board of Directors determines the value of TICC’s 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, the Company has engaged third-party valuation firms to provide assistance in valuing its bilateral investments and, more recently, for its syndicated loans, although the Board of Directors ultimately determines the appropriate valuation of each such investment.

The Company’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 the Company’s investment is based 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 the Company 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. The Company also uses industry valuation benchmarks and public market comparables. The Company also considers other events, including private mergers and acquisitions, a purchase transaction, public offering or subsequent debt or equity sale or restructuring, and includes these events in the enterprise valuation process. The Company generally requires portfolio companies to provide annual audited and quarterly unaudited financial statements, as well as annual projections for the upcoming fiscal year.

80

TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Typically, the Company’s 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 the Company 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 the Company 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.

The Company will record unrealized depreciation on bilateral investments when it believes that an investment has become impaired, including where collection of a loan or realization of an equity security is doubtful. The Company will record unrealized appreciation if it believes that the underlying portfolio company has appreciated in value and the Company’s equity security has also appreciated in value. Changes in fair value are recorded in the statement of operations as net change in unrealized appreciation or depreciation.

Under the valuation procedures approved by the Board of Directors, upon the recommendation of the Valuation Committee, a third-party valuation firm will prepare valuations for each of the Company’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 book value as of the previous quarter of greater than or equal to 2.5% of TICC’s total assets as of the previous quarter, and (ii) have a book value as of the current quarter of greater than or equal to 2.5% of TICC’s 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 TICC’s 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 the Company’s behalf, additional third party valuations with respect to both the Company’s bilateral portfolio securities and the Company’s syndicated loan investments. The Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment.

Given the continued economic downturn, the market for syndicated loans has become increasingly illiquid with limited or no transactions for many of those securities which the Company holds. 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, the Company’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 the Company 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 the market illiquidity and the lack of transactions during 2008 and 2009, the Company has determined that the current agent bank non-binding indicative bids for the substantial majority of its syndicated investments were unreliable, and alternative valuation procedures would need to be performed until liquidity returns to the marketplace. As such, the Company has engaged third-party valuation firms to provide assistance in valuing certain of its syndicated investments. In addition, TICC Management prepares an analysis of each syndicated loan, including a financial

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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 considered reliable, 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. The Company has considered the factors described in ASC 820-10 and have determined that it is properly valuing the securities in its portfolio.

In addition, FASB issued ASC 825, “Interim Disclosures About Fair Value of Financial Instruments,” which requires additional disclosures related to inputs and valuation techniques for interim and annual periods. The Company has adopted the provisions of ASC 820-10-35 and ASC 825 as of the quarter ended March 31, 2009.

The Company’s assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at December 31, 2009, 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	$	23.8	$	0.0	$	0.0	$	23.8
Bilateral investments		0.0		0.0		84.8		84.8
Syndicated investments		0.0		4.4		104.0		108.4
Collateralized loan obligation investments		0.0		0.0		7.1		7.1
Total	$	23.8	$	4.4	$	195.9	$	224.1

A reconciliation of the fair value of investments for the year ended December 31, 2009, utilizing significant unobservable inputs, is as follows:

($ in millions)	Bilateral Investments			Syndicated Investments			Collateralized Loan Obligation Investments			Total
Balance at December 31, 2008	$	130.6		$	59.0		$	0.0		$	189.6
Realized losses included in earnings		(7.8	)		(2.7	)		0.0			(10.5	)
Unrealized appreciation (depreciation) included in earnings		18.5			13.9			(0.1	)		32.3
Accretion of discount		1.2			1.5			0.0			2.7
Purchases, issuances and settlements(1)		(57.7	)		36.7			7.2			(13.8	)
Transfers in and/or out of level 3		0.0			(4.4	)		0.0			(4.4	)
Balance at December 31, 2009	$	84.8		$	104.0		$	7.1		$	195.9

The change in unrealized appreciation for level 3 investments still held as of December 31, 2009 is approximately $20.3 million.

⁽¹⁾ Includes amortization of discounts of approximately $2.8 million and PIK interest of approximately $162,000.

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NOTES TO FINANCIAL STATEMENTS—(Continued)

The Company’s assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10 at December 31, 2008, were as follows:

			Fair Value Measurements at Reporting Date Using
($ in millions)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments, at fair value	$	189.6	$	0.0	$	0.0	$	189.6

($ in millions)	Bilateral   Investments			Other   Investments			Total
Beginning balance	$	257.7		$	127.7		$	385.4
Total losses (realized/unrealized) included in earnings		(49.7	)		(25.7	)		(75.4	)
Purchases, issuances and settlements(1)		(77.4	)		(43.0	)		(120.4	)
Transfers in and/or out of Level 3		0.0			0.0			0.0
Ending balance	$	130.6		$	59.0		$	189.6
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	(54.3	)	$	(23.1	)	$	(77.4	)

⁽¹⁾ Includes amortization of discounts of approximately $1.9 million and PIK interest of approximately $235,000.

The following table shows the fair value of TICC’s portfolio of investments by asset class as of December 31, 2009 and 2008:

	2009				2008
	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	$	184.6	92.1	%	$	172.0	90.7	%
Senior Unsecured Notes		0.0	0.0	%		1.0	0.5	%
CLO Subordinated Secured Notes		4.9	2.5	%		0.0	0.0	%
Senior Subordinated Unsecured Notes		2.7	1.4	%		10.4	5.5	%
CLO Preference Shares		2.2	1.1	%		0.0	0.0	%
Common Stock		5.4	2.7	%		3.0	1.6	%
Warrants		0.5	0.2	%		3.2	1.7	%
Total	$	200.3	100.0	%	$	189.6	100.0	%

OTHER ASSETS

Other assets consists of prepaid expenses associated primarily with insurance costs.

INTEREST INCOME RECOGNITION

Interest income is recorded on the accrual basis to the extent that such amounts are expected to be collected.

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

PAYMENT-IN-KIND

The Company has investments in its portfolio which contain a PIK provision. The PIK income is added to the principal balance of the investment and is recorded as income. To maintain the Company’s status as a RIC, this income must be paid out to stockholders in the form of dividends, even though the Company has not collected any cash. For the year ended December 31, 2009 TICC recorded PIK interest income of approximately $162,000. For the years ended December 31, 2008 and 2007, TICC recorded approximately $235,000 and $531,000 in PIK interest income, respectively.

In addition, TICC recorded original issue discount income of approximately $2,783,000, $1,881,000 and $1,629,000 for the years ended December 31, 2009, 2008 and 2007, respectively, representing the amortization of the discounted cost attributed to certain debt securities purchased by TICC in connection with the issuance of warrants.

OTHER INCOME

Other income includes 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.

MANAGERIAL ASSISTANCE FEES

The 1940 Act requires that a business development company offer managerial assistance to its portfolio companies. The Company offers to provide managerial assistance to its portfolio companies in connection with the Company’s investments and may receive fees for its services. The Company has not received any fees for such services since inception.

FEDERAL INCOME TAXES

TICC intends to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, to not be subject to federal income tax on the portion of its taxable income and gains distributed to stockholders. To qualify for RIC tax treatment, TICC is required to distribute at least 90% of its investment company taxable income, as defined by the Code.

Because federal income tax regulations differ from accounting principles generally accepted in the United States, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statement to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

For tax purposes, the cost basis of the portfolio investments at December 31, 2009 and December 31, 2008 was approximately $260,645,369 and $282,191,897, respectively.

CONCENTRATION OF CREDIT RISK

The Company places its cash and cash equivalents with financial institutions and, at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit. In addition, the

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Company’s portfolio may be concentrated in a limited number of portfolio companies in the technology-related sector, which will subject the Company to a risk of significant loss if any of these companies defaults on its obligations under any of its debt securities that the Company holds or if the technology-related sector experiences a market downturn.

NOTE 3. CASH AND CASH EQUIVALENTS

At December 31, 2009 and December 31, 2008, respectively, cash and cash equivalents consisted of:

	December 31, 2009		December 31, 2008
Eurodollar Time Deposit (due 1/4/10)	$	23,759,409	$	—
Total Cash Equivalents		23,759,409		—
Cash		213,476		14,069,251
Cash and Cash Equivalents	$	23,972,885	$	14,069,251

NOTE 4. 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 years ended December 31, 2009, 2008 and 2007:

	Year ended December 31, 2009		Year ended December 31, 2008			Year ended December 31, 2007
Numerator for basic and diluted income per share—net increase in net assets resulting from net investment income	$	13,491,984	$	22,191,163		$	27,193,619
Numerator for basic and diluted income per share—net increase (decrease) in net assets resulting from operations	$	35,182,458	$	(53,266,154	)	$	(11,648,832	)
Denominator for basic and diluted income per share -weighted average shares(1)		26,624,217		24,314,512			20,977,779
Basic and diluted net investment income per common share(1)	$	0.51	$	0.91		$	1.30
Basic and diluted net increase (decrease) in net assets resulting from operations per common share(1)	$	1.32	$	(2.19	)	$	(0.56	)

⁽¹⁾ TICC issued transferable rights to stockholders of record on May 23, 2008. The rights entitled rights holders to subscribe for an aggregate of 4,339,226 shares of the Company’s common stock. Record date stockholders received one right for every outstanding share of common stock owned on the record date. The rights entitled the holders to purchase one new share of common stock for every five rights held. The subscription price equaled 88% of the volume-weighted average of the sales price of TICC’s common stock on the NASDAQ Global Select Market on the five trading days that ended on the expiration date, which was June 13, 2008. On June 18, 2008 all 4,339,226 shares of common stock were issued. Accordingly, as required by ASC 260-10, the number of weighted average shares of common stock outstanding for basic and diluted earnings per share have been increased retroactively by a factor of 1.021 for all periods presented before June 18, 2008. This factor represents the impact of the bonus element of the rights offering on the Company’s common stock, based upon the closing price of the stock immediately prior to the rights trading separately from the stock on May 20, 2008 ($6.76 per share), and the expected proceeds from the rights offering (assuming an exercise price of 88% of the closing price).

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 5. 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 2009, 2008 and 2007 calendar year was 6.55%, 8.45% and 9.70%, respectively. The current hurdle rate for the 2010 calendar year, calculated as of December 31, 2009, is 7.69%.

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.

Incentive fees, based upon pre-incentive fee net investment income, were approximately $51,800, $485,000 and $255,000 for the years ended December 31, 2009, 2008 and 2007, respectively. There were no capital gains incentive fees earned for any year in this three-year period.

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.

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

TICC has also entered into an Administration Agreement with BDC Partners under which BDC Partners provides administrative services for TICC. For providing these services, facilities and personnel, TICC reimburses BDC Partners for TICC’s allocable portion of overhead and other expenses incurred by BDC Partners in performing its obligations under the Administration Agreement, including rent.

The Company’s investment activities are managed by its investment adviser, TICC Management, pursuant to the investment advisory agreement described above. TICC Management is owned by BDC Partners, its managing member, and Royce & Associates, LLC (“Royce & Associates”). Jonathan Cohen, TICC’s Chief Executive Officer, and Saul Rosenthal, TICC’s President and Chief Operating Officer, are the members of BDC Partners, and Charles Royce, TICC’s non-executive chairman, is the President of Royce & Associates. For the periods ended December 31, 2009, 2008 and 2007, respectively, TICC incurred investment advisory fees of $4,122,005, $7,001,236 and $7,461,735 in accordance with the terms of the Investment Advisory Agreement, and incurred $971,356, $906,109 and $897,740 in compensation expenses for the services of employees allocated to the administrative activities of TICC, pursuant to the Administration Agreement with BDC Partners. In addition, TICC incurred $76,501, $74,392 and $61,382 for facility costs allocated under the agreement for the years ended December 31, 2009, 2008 and 2007, respectively. At December 31, 2009, 2008 and 2007, respectively $1,119,544, $1,287,451 and $2,123,168 of investment advisory fees remained payable to TICC Management, and no compensation expense remained payable to BDC Partners at the end of any year in the three-year period.

NOTE 6. OTHER INCOME

Other income includes primarily closing fees, or origination fees, associated with investments in portfolio companies as well as dividends. Fees are normally paid at closing of the Company’s investments, are fully earned and non-refundable, and are generally non-recurring. For the years ended December 31, 2009, 2008 and 2007, respectively, TICC earned approximately $0.1 million, $0.8 million and $1.9 million, in other income.

The 1940 Act requires that a business development company offer 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 years ended December 31, 2009, 2008 and 2007, the Company received no fee income for managerial assistance.

NOTE 7. COMMITMENTS

In the normal course of business, the Company enters into a variety of undertakings containing a variety of warranties and indemnifications that may expose the Company to some risk of loss. The risk of future loss arising from such undertakings, while not quantifiable, is expected to be remote.

As of December 31, 2009, the Company had not issued any commitments to purchase additional debt investments and/or warrants from any portfolio companies.

NOTE 8. REVOLVING CREDIT AGREEMENT

During the year ending December 31, 2009, the Company did not have a revolving credit facility agreement. However, during 2008, the Company had a credit facility (the “Credit Facility”) with the Royal Bank of Canada (“RBC”), as an agent and a lender, and Branch Banking and Trust Company (“BB&T”) as an additional lender. The Company amended the Credit Facility during the year ended December 31, 2008, whereby, the total commitment of $150 million (which was a reduction from $180 million as a result of the removal of Commerzbank AG as a lender) was reduced periodically and effective December 30, 2008, the Company had fully repaid all amounts under the Credit Facility and reduced the commitment amount thereunder to zero, effectively terminating the Credit Facility.

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 9. SUBSEQUENT EVENTS

On January 28, 2010, the Company’s investment in senior secured notes issued by Questia Media, Inc. was repaid at par.

The Company declared, on March 4, 2010, a cash dividend of $0.15 per share payable March 31, 2010 to holders of record on March 24, 2010.

NOTE 10. FINANCIAL HIGHLIGHTS

	Year ended December 31, 2009			Year ended December 31, 2008			Year ended December 31, 2007			Year ended December 31, 2006			Year ended December 31, 2005
Per Share Data
Net asset value at beginning of period	$	7.68		$	11.94		$	13.77		$	13.77		$	13.71
Net investment income(1)		0.51			0.91			1.32			1.30			1.07
Net realized and unrealized capital gains (losses)(2)		0.81			(2.94	)		(1.79	)		0.05			0.14
Total from investment operations		1.32			(2.03	)		(0.47	)		1.35			1.21
Dividends from net investment income		(0.60	)		(0.98	)		(1.37	)		(1.28	)		(1.01	)
Distributions from net realized capital gains		(0.00	)		(0.00	)		(0.05	)		(0.10	)		(0.00	)
Tax return of capital distributions		(0.00	)		(0.08	)		(0.02	)		(0.00	)		(0.00	)
Total distributions(3)		(0.60	)		(1.06	)		(1.44	)		(1.38	)		(1.01	)
Effect of shares issued, net of offering expenses		(0.04	)		(1.17	)		0.08			0.03			(0.14	)
Net asset value at end of period	$	8.36		$	7.68		$	11.94		$	13.77		$	13.77
Per share market value at beginning of period	$	3.80		$	9.23		$	16.14		$	15.10		$	15.01
Per share market value at end of period	$	6.05		$	3.80		$	9.23		$	16.14		$	15.10
Total return(4)		81.15	%		(50.23	)%		(36.26	)%		17.02	%		7.47	%
Shares outstanding at end of period		26,813,216			26,483,546			21,563,717			19,705,824			19,304,401
Ratios/Supplemental Data
Net assets at end of period (000’s)	$	224,092		$	203,367		$	257,370		$	271,335		$	265,905
Average net assets (000’s)	$	206,183		$	251,320		$	277,994		$	270,309		$	184,715
Ratio of expenses to average net assets		3.40	%		6.01	%		5.99	%		3.90	%		4.00	%
Ratio of expenses, excluding interest expense, to average net assets		3.40	%		4.10	%		3.72	%		3.20	%		3.72	%
Ratio of net investment income to average net assets		6.54	%		8.83	%		9.78	%		9.40	%		7.80	%

⁽¹⁾ Represents per share net investment income for the period, based upon average shares outstanding.

⁽²⁾ Net realized and unrealized capital gain (losses) includes rounding adjustment to reconcile change in net asset value per share. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description of realized and unrealized capital gains (losses).

⁽³⁾ For the years ending December 31, 2008 and 2007, approximately $0.08 per share and $0.02 per share of the Company’s distributions were characterized as a tax return of capital to the Company’s stockholders, respectively.

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

⁽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.

NOTE 11. DIVIDENDS

The following table represents the cash distributions, including dividends and returns of capital, if any, declared per share:

Date Declared	Record Date	Payment Date	Amount
Fiscal 2010
March 4, 2010	March 24, 2010	March 31, 2010	$	0.15
Fiscal 2009
October 29, 2009	December 10, 2009	December 31, 2008		0.15
July 30, 2009	September 10, 2009	September 30, 2008		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
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

The tax character of distributions declared and paid in 2009 represented $15,973,470 from ordinary income, and $0 from tax return of capital. Generally accepted accounting principles require adjustments to certain components of net assets to reflect permanent differences between financial and tax reporting. These reclassifications have no affect on net asset value per share.

The Company has available $30,276,751 of capital losses which can be used to offset future capital gains. If these losses are not utilized, $21,899,301 will expire in 2016 and $8,377,450 will expire in 2017. Under the current law, capital losses related to securities realized after October 31 and prior to the Company’s fiscal year end may be deferred as occurring the first day of the following year. For the fiscal year ended December 31, 2009, the Company elected to defer capital losses of $2,135,599.

As of December 31, 2009, the components of accumulated earnings on a tax basis were as follow:

Distributable ordinary income	$	23,864
Distributable long-term capital gains (capital loss carry forward)		(30,276,751	)
Unrealized depreciation on investments		(60,394,246	)

As of December 31, 2008, the components of accumulated earnings on a tax basis were as follow:

Distributable ordinary income	$	—
Distributable long-term capital gains (capital loss carry forward)		(21,899,323	)
Unrealized depreciation on investments		(92,597,771	)

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 12. SELECTED QUARTERLY DATA (UNAUDITED)

	Year Ended December 31, 2009
	Quarter Ended December 31,			Quarter Ended September 30,			Quarter Ended June 30,		Quarter Ended March 31,
Total Investment Income	$	5,515,343		$	4,948,942		$	4,920,199	$	5,123,308
Net Investment Income		3,552,891			3,178,063			3,242,794		3,518,236
Net Increase (Decrease) in Net Assets resulting from Operations		11,902,261			15,023,970			9,699,198		(1,442,971	)
Net Increase in Net Assets resulting from Net Investment Income, per common share, basic and diluted(1)(2)	$	0.13		$	0.12		$	0.12	$	0.13
Net Increase (Decrease) in Net Assets resulting from Operations, per common share, basic and diluted(1)(2)	$	0.45		$	0.56		$	0.36	$	(0.05	)
	Year Ended December 31, 2008
	Quarter Ended December 31,			Quarter Ended September 30,			Quarter Ended June 30,		Quarter Ended March 31,
Total Investment Income	$	6,953,709		$	8,797,683		$	10,074,420	$	11,479,823
Net Investment Income		4,442,712			5,705,621			5,772,174		6,270,656
Net (Decrease) Increase in Net Assets resulting from Operations		(38,710,677	)		(4,142,705	)		5,749,787		(16,162,559	)
Net Increase in Net Assets resulting from Net Investment Income, per common share, basic and diluted(1)(2)	$	0.17		$	0.22		$	0.25	$	0.28
Net (Decrease) Increase in Net Assets resulting from Operations, per common share, basic and diluted(1)(2)	$	(1 .47	)	$	(0.16	)	$	0.25	$	(0.73	)

⁽¹⁾ In accordance with ASC 260-10, the weighted-average shares of common stock outstanding used in computing basic and diluted earnings per share for the quarters ending March 31, 2008 and June 30, 2008, respectively, were increased retroactively by a factor of 1.021 to recognize the bonus element associated with rights to acquire shares of common stock that were issued to stockholders on May 23, 2008. See Note 4—Earnings Per Share for additional information about the rights offering and the calculation of the associated bonus element.

⁽²⁾ Aggregate of quarterly earnings per share differs from calculation of annual earnings per share for the years ending December 31, 2009 and 2008 due to rounding.

NOTE 13. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued ASU No. 2010-6 Fair Value Measurements and Disclosures related to Fair Value Measurements and Disclosures—(Topic 820), Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosures for transfers in and out of Levels 1 and 2, reporting gross activity in Level 3 fair value measurements, and clarifications to the level of detail of existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, with the exception of reporting gross activity in Level 3 fair value measurements which is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company does not expect the adoption of ASU 2010-6 to have a material impact on the Company’s financial statements.

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TICC CAPITAL CORP.

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 14. RISK DISCLOSURES

The U.S. capital markets have been experiencing extreme volatility and disruption for almost two years, and the Company believes that the U.S. economy may still be in a period of recession. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. The Company believes these conditions may continue for a prolonged period of time or worsen in the future. A prolonged period of market illiquidity may have an adverse effect on the Company’s business, financial condition and results of operations. Adverse economic conditions could also increase the Company’s funding costs, limit the Company’s access to the capital markets or result in a decision by lenders not to extend credit to the Company. These events could limit the Company’s investment originations, limit the Company’s ability to grow and negatively impact the Company’s operating results.

Many of the companies in which the Company has made or will make investments may be susceptible to the current recession, which may affect the ability of a company to repay TICC’s loans or engage in a liquidity event such as a sale, recapitalization, or initial public offering. Therefore, the Company’s nonperforming assets are likely to increase, and the value of the Company’s portfolio is likely to decrease during this period. Adverse economic conditions also may decrease the value of any collateral securing some of the Company’s loans and the value of its equity investments. The current adverse economic conditions could lead to financial losses in the Company’s portfolio and a decrease in its revenues, net income, and the value of the Company’s assets. For example, during 2009 the Company had experienced significant losses on several of its portfolio investments, including a realized loss on Falcon Communications, Inc and unrealized depreciation on WAICCS Las Vegas, LLC and Box Services, LLC, each of which was in part attributable to the current adverse economic conditions in the industries in which those portfolio companies operate.

A portfolio company’s failure to satisfy financial or operating covenants imposed by the Company or other lenders could lead to defaults and, potentially, termination of the portfolio company’s loans 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 securities that the Company holds. The Company 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 the Company may have structured its investment as senior debt or secured debt, depending on the facts and circumstances, including the extent to which the Company actually provided significant “managerial assistance,” if any, to that portfolio company, a bankruptcy court might re-characterize the Company’s debt holding and subordinate all or a portion of the Company’s claim to that of other creditors. These events could harm the Company’s financial condition and operating results.

As a business development company, the Company is required to carry its 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 its Board of Directors. Decreases in the market values or fair values of the Company’s investments are recorded as unrealized depreciation. The continuing unprecedented declines in prices and liquidity in the corporate debt markets have resulted in significant net unrealized depreciation in the Company’s portfolio, reducing its net asset value. Depending on market conditions, the Company could continue to incur substantial losses in future periods, which could have a material adverse impact on its business, financial condition and results of operations.

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Item 9. Changes in and Disagreements with Independent Registered Public Accounting Firm on Accounting and Financial Disclosure

There were no changes in or disagreements on accounting or financial disclosure with PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, during the fiscal year ended December 31, 2009.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

As of December 31, 2009 (the end of the period covered by this report), 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) of the 1934 Act). Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 and for the assessment of the effectiveness of internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting, which appears on page 68 of this Form 10-K, is incorporated by reference herein.

(c) Attestation Report of the Registered Public Accounting Firm

PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting, which appears on page 69 of this Form 10-K.

(d) Changes in Internal Control Over Financial Reporting

Management did not identify any change in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

Not applicable.

PART III

We will file a definitive Proxy Statement for our 2010 Annual Meeting of Stockholders with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of our definitive Proxy Statement that specifically address the items set forth herein are incorporated by reference.

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Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2010 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 11. Executive Compensation

The information required by Item 11 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2010 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2010 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2010 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2010 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

a. Documents Filed as Part of this Report

The following financial statements are set forth in Item 8:

	Page
Management’s Report on Internal Control Over Financial Reporting	68
Report of Independent Registered Public Accounting Firm	69
Statements of Assets and Liabilities as of December 31, 2009 and December 31, 2008	70
Schedule of Investments as of December 31, 2009	71
Schedule of Investments as of December 31, 2008	74
Statements of Operations for the years ended December 31, 2009, December  31, 2008 and December 31, 2007	76
Statements of Changes in Net Assets for the years ended December 31, 2009, December  31, 2008 and December 31, 2007	77
Statements of Cash Flows for the years ended December 31, 2009, December  31, 2008 and December 31, 2007	78
Notes to Financial Statements	79

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b. 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	Form of Amended and Restated Investment Advisory Agreement between Registrant and Technology Investment Management, LLC (Incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Materials on Schedule 14A (File No. 000-50398) filed on May 18, 2004).
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	Administration Agreement between Registrant and BDC Partners, LLC (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).
10.4	Dividend Reinvestment Plan (Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 (File No. 333-109055), filed on November 6, 2003).
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.

* Filed herewith.

c. Financial statement schedules

No financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements.

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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: March 12, 2010	/s/    JONATHAN H. COHEN
	Jonathan H. Cohen Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Date: March 12, 2010	/s/    CHARLES M. ROYCE
	Charles M. Royce Chairman of the Board of Directors
Date: March 12, 2010	/s/    JONATHAN H. COHEN
	Jonathan H. Cohen Chief Executive Officer and Director (Principal Executive Officer)
Date: March 12, 2010	/s/    PATRICK F. CONROY
	Patrick F. Conroy Chief Financial Officer, Chief Compliance Officer and Secretary (Principal Accounting and Financial Officer)
Date: March 12, 2010	/s/    STEVEN P. NOVAK
	Steven P. Novak Director
Date: March 12, 2010	/s/    G. PETER O’BRIEN
	G. Peter O’Brien Director
Date: March 12, 2010	/s/    TONIA L. PANKOPF
	Tonia L. Pankopf Director

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Jonathan H. Cohen, Chief Executive Officer of TICC Capital Corp. certify that:

1. I have reviewed this annual report on Form 10-K of TICC Capital Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 12th day of March 2010.

By:	/s/    Jonathan H. Cohen
	Jonathan H. Cohen Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Patrick F. Conroy, Chief Financial Officer of TICC Capital Corp. certify that:

1. I have reviewed this annual report on Form 10-K of TICC Capital Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 12th day of March 2010.

By:	/s/    Patrick F. Conroy
	Patrick F. Conroy Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the Annual Report on Form 10-K for the year ended December 31, 2009 (the “Report”) of TICC Capital Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Jonathan H. Cohen, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	/s/    Jonathan H. Cohen
Name:	Jonathan H. Cohen
Date:	March 12, 2010

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the Annual Report on Form 10-K for the year ended December 31, 2009 (the “Report”) of TICC Capital Corp. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Patrick F. Conroy, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	/s/    Patrick F. Conroy
Name:	Patrick F. Conroy
Date:	March 12, 2010