LETTER TO STOCKHOLDERS AND MANAGEMENT DISCUSSION OF COMPANY PERFORMANCE

Dear Fellow Stockholders:

We are pleased to provide you with the enclosed report of Eagle Point Income Company Inc. (“we,” “us,” “our” or the “Company”) for the fiscal year ended December 31, 2021.

The Company’s primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. We seek to achieve these objectives by investing primarily in junior debt tranches of collateralized loan obligations (“CLOs”) rated “BB” (e.g., BB+, BB or BB-, or their equivalent). In addition, the Company may invest up to 35% of its total assets (at the time of investment) in CLO equity securities and other securities and instruments that are consistent with our investment objectives.

While the CLO market continues to command attention from investors worldwide, we believe the CLO market, and CLO junior debt in particular, remains inefficient and attractive. In less efficient markets, specialization matters and the Company benefits from the investment experience of Eagle Point Income Management LLC (our “Adviser”), which applies its proprietary, private equity style investment process to this fixed income market. This process seeks to maximize returns while mitigating potential risks. We believe the scale and experience of our Adviser and its affiliates in CLO investing provides the Company with meaningful advantages.

2021 was a successful and transformative year for the Company. For the year, the Company generated a GAAP return to common equity of 7.96%⁴. Shareholders benefited from three increases in our common distribution during the year. Assuming common shareholders reinvested their distributions received during the year, they enjoyed a 26.55% total return during 2021¹. Additionally, the Company declared a special distribution in December 2021. On February 14, 2022, the Company declared a further increase in our monthly common distributions beginning in the second quarter of 2022.

During 2021, we transformed the Company’s balance sheet, refinancing our revolving credit facility (at a lower cost) and issuing a new 5-year Series A Term Preferred Stock due 2026 (the “Series A Term Preferred Stock”) at a very attractive 5% fixed coupon. The Company has deployed much of the capital we raised into additional CLO debt and equity investments seeking to further increase net investment income (“NII”) on a sustainable basis moving forward. While CLO junior debt remains the significant majority of the Company’s portfolio, our Board made the decision during 2021 to increase our portfolio’s CLO equity exposure to up to 35% of total assets (measured at the time of investment), in an effort to further enhance the Company’s earning ability and benefit from the Adviser’s expertise in CLO equity investing.

Past performance is not indicative of, or a guarantee of, future performance. 

Those actions, along with our Adviser’s proactive management of the portfolio, helped allow the Company to generate stronger cash flows and consistently grow NII on a quarterly basis during the year.²

For the year ended December 31, 2021, the Company had an increase in net assets resulting from operations of $8.0 million, or $1.29 per weighted average common share³ (inclusive of unrealized gains). This represents a return on our common equity of approximately 7.96% for the year ended December 31, 2021.⁴ During the year, we paid $1.13 per share in cash distributions to our common stockholders. From December 31, 2020 through December 31, 2021, the Company’s net asset value (“NAV”) declined slightly by 0.8% from $16.89 per common share to $16.76. Our December 31, 2021 NAV includes the impact of declaring a special distribution on shares of our common stock (as described below) related to the estimated amount of remaining undistributed taxable income pertaining to the 2021 tax year. Had we not declared a special distribution, our NAV would have increased during the year.

All of our CLO equity and debt holdings continue to pay as scheduled. Despite the significant decline in LIBOR versus late 2019, our cash collections were ahead of pre-pandemic levels during 2021. With the Fed now signaling multiple rate increases during 2022 and the coupons on our CLO debt securities all being floating rate, we could see additional upside to the income they currently generate during the course of the year. For the year ended December 31, 2021, recurring cash flows were $13.4 million, or $2.16 per weighted average common share, exceeding total expenses and our regular common distributions by $0.10 per weighted average common share.

Beginning in January 2022, in lieu of LIBOR, substantially all U.S. CLO transactions will be issued using SOFR as their reference rates. SOFR is another short-term rate and is generally expected to increase as the Fed raises short-term Treasury rates. Our existing CLOs, which typically use LIBOR as their reference rate, are expected to gradually change their reference rates to SOFR once the majority of the loans in their portfolios pay interest based off of SOFR. We do not expect the transition from LIBOR to SOFR to have a material impact on the Company.

As of January 31, 2022, management’s unaudited estimate of the range of the Company’s NAV per common share was between $16.89 and $16.93. The midpoint of this range represents an increase of 0.9% compared to the NAV per common share as of December 31, 2021. As of February 11, 2022, we have $7.2 million in cash and available borrowing capacity on our balance sheet. We believe our portfolio continues to provide long-term fundamental value, and believe the rising rate envinonrment and the increased exposure to CLO equity will further enhance the portfolio’s earning ability.

Past performance is not indicative of, or a guarantee of, future performance. 

Company Overview

Common Stock

The Company’s common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “EIC.” As of December 31, 2021, the NAV per share of the Company’s common stock was $16.76. The trading price of our common stock may, and often does, differ from NAV per share.

The closing price per share of our common stock was $17.03 on December 31, 2021, representing a 1.61% premium to NAV per share as of such date.⁵

As of February 11, 2022, the closing price per share of common stock was $17.04, a premium of 0.77% compared to the midpoint of management’s unaudited and estimated NAV range of $16.89 to $16.93 as of January 31, 2022.

During the year ended December 31, 2021, the Company paid to common stockholders aggregate distributions totaling $1.13 per share of common stock. An investor who purchased common stock as part of our IPO in July 2019 has received total cash distributions of $3.31 per share through December 31, 2021. A portion of these distributions was comprised of a return of capital.⁶

For the year ended December 31, 2021, the Company recorded NII and realized capital gains of $1.05 per weighted average common share. This amount is net of non-recurring expenses of $0.21 per weighted average common share related to the Company’s Series A Term Preferred Stock issued during the fourth quarter. Excluding the non-recurring expenses, the Company’s NII and realized capital gains exceeded common distributions for 2021.

We also want to highlight the Company’s dividend reinvestment plan for common stockholders. This plan allows common stockholders to have their distributions automatically reinvested into new shares of common stock. If the prevailing market price of our common stock exceeds our NAV per share, such reinvestment is at a discount (up to five percent) to the prevailing market price. If the prevailing market price of our common stock is less than our NAV per share, such reinvestment is at the prevailing market price. We encourage all common stockholders to carefully review the terms of the plan. See “Dividend Reinvestment Plan” in the enclosed report.

Past performance is not indicative of, or a guarantee of, future performance. 

The Company took advantage of attractive market conditions during 2021, issuing its Series A Term Preferred Stock in October 2021 at a fixed coupon of 5.00%, including the full exercise of the “greenshoe,” and receiving net proceeds of approximately $33.6 million after payment of underwriting discounts, commissions, and offering expenses. The fixed rate financing provides us with added certainty in a rising rate environment.

Leverage

As of December 31, 2021, we had $19.6 million in outstanding borrowings from the Company’s $25 million revolving credit facility. This, coupled with our Series A Term Preferred Stock, represents leverage of 32.0% of total assets.

Over the long term, management expects the Company to operate under normal market conditions generally with leverage of between 25% and 35% of total assets (less current liabilities). Based on applicable market conditions at any given time, or should significant opportunities present themselves, the Company may incur leverage in excess of this amount, subject to applicable regulatory and contractual limits.

Monthly Common Distributions

The Company declared and paid three monthly distributions of $0.08 per share of common stock from January 2021 through March 2021, three monthly distributions of $0.085 per share of common stock from April 2021 through June 2021, three monthly distributions of $0.09 per share of common stock from July 2021 through September 2021, and three monthly distributions of $0.12 per share of common stock from October 2021 through December 2021. The Company paid a cumulative $1.13 per share of common stock in 2021.

We intend to continue declaring monthly distributions on shares of our common stock, although we note that the actual frequency, components and amount of such distributions are subject to variation over time.

Past performance is not indicative of, or a guarantee of, future performance. 

Special Distributions to Common Stock

In order to maintain our tax status as a regulated investment company (“RIC”), the Company is generally required to pay distributions to holders of its common stock in an amount equal to substantially all of the Company’s taxable income within one year of the end of its tax year.

For our tax year ending December 31, 2021, we estimate taxable income will exceed the aggregate amount distributed to common stockholders for the same time period. As a result, the Company declared a special distribution of $0.20 per common share that was paid on January 24, 2022 to stockholders of record as of December 23, 2021. The Company’s final taxable income and the actual amount required to be distributed in respect of the tax year ended December 31, 2021 will be finally determined when the Company files its final tax returns. As of the date of this report, the Company has incurred a 4% excise tax on the estimated amount of remaining undistributed taxable income pertaining to the 2021 tax year, which is estimated to be $0.01 per weighted average common share and which is recorded as a liability in the Company’s December 31, 2021 financial results.

Portfolio Overview

2021 Portfolio Update

For the year ended December 31, 2021, the Company generated NII and realized gains from our portfolio of $6.5 million, or approximately $1.05 per weighted average common share.

For the year ended December 31, 2021, the Company made 32 new CLO debt and equity investments with total purchase proceeds of approximately $87 million. The CLO debt purchased had a weighted average yield of 8.02% at the time of purchase. The CLO equity securities that we purchased had a weighted average effective yield (“WAEY”) of 16.32% at the time of purchase.

As of December 31, 2021, we had 61 CLO investments in our portfolio, the large majority of which are BB-rated (or the equivalent) CLO debt. The WAEY on the aggregate portfolio of CLO debt and equity investments was 10.77%, based on amortized cost, as of such date.

For the year ended December 31, 2021, the Company had an increase in net assets resulting from operations of $8.0 million, or $1.29 per weighted average common share (inclusive of unrealized gains and losses). We believe the portfolio remains positioned favorably for 2022. With the prospects of multiple interest rate increases this year, we believe our portfolio of floating rate investments has the potential to perform very well.

Past performance is not indicative of, or a guarantee of, future performance. 

Our Adviser continues to evaluate investment opportunities on our behalf both in the primary and secondary markets. Maintaining exposure to varied CLO vintage periods remains an important part of our investment approach.

Included within the enclosed report, you will find detailed portfolio information, including certain look-through information related to the underlying collateral characteristics of the investments that we held as of December 31, 2021.

Market Overview⁷

Loan Market

Senior secured loans to larger US companies comprise the vast majority of our CLOs’ underlying portfolios. The Credit Suisse Leverage Loan Index⁸ (“CSLLI”), which is a broad index followed by many tracking the corporate loan market, generated a total return of 5.40% in 2021. 2021 marked the 28^th year of positive total returns for the CSLLI in its 30 years of existence, reflecting the strength of the underlying loans that form the raw material of CLOs.

Despite the positive performance of the asset class, relative value trading opportunities presented themselves via bouts of volatility over the course of the year. The percentage of loans trading above par shifted throughout the year, hitting a low of 6% during November’s omicron-led volatility and a peak of 35% during the February 2021 loan rally. At year-end, only 15% of the loan market was priced at par or higher, well below the pre-pandemic figure of 53% in 2019. With a large number of loans trading at a discount, many CLO collateral managers saw sufficient opportunities to trade and rotate portfolios.

Loan upgrades are a meaningful metric for CLO portfolios. As of December 2021, upgrades had outpaced downgrades for 14 out of the last 15 months, and the upgrade to downgrade ratio for U.S. leveraged loans during that period was 2:1. Strong corporate fundamentals including balance sheet liquidity, positive earnings trends, de-leveraging activity and an ability to further extend debt maturities supported the improvement in credit ratings for many U.S. companies. Approximately 60% of loan issuers that were downgraded in 2020 saw a reversal in their rating in 2021. As a result, the concentration of lower-rated loans held by CLOs decreased significantly, leading to an improvement in underlying portfolio quality and an increase in many CLOs’ overcollateralization ratios.

Retail loan funds experienced regular net inflows throughout the year, a reversal from prior years of consistent net outflows. For 2021, mutual funds and ETFs investing in U.S. leveraged loans experienced net inflows of $47 billion, a stark contrast to net outflows of $27 billion in 2020.⁹ Demand for these funds from non-institutional investors was net positive for 48 out of 52 weeks during the year. The high-yield mutual fund/ETF market, by comparison, recorded $13 billion of net outflows in 2021. With anticipated interest rate hikes likely for this year, the narrative of

Past performance is not indicative of, or a guarantee of, future performance. 

investors moving from fixed to floating rate instruments is expected to make loans an attractive asset class.

Historically low yields and an anticipated rising rate environment fueled a surge in investor demand for floating rate debt. Institutional loan issuance exceeded prior annual records to finish 2021 at $613 billion. Total institutional loans outstanding stood at $1.35 trillion as of December 31, 2021.

The par-weighted default rate for U.S. leveraged loans has fallen for 14 consecutive months into October, and finished the year at 0.29%, narrowly missing the all-time historical low of 0.15% for the asset class. This compares to 3.83% in 2020 and the long-term default rate of 2.8%.¹⁰ For eight consecutive months, the combined default activity across loan and bond markets averages less than two corporate actions each month. Looking into 2022, loan default expectations remain muted. J.P. Morgan recently released loan default forecasts of 0.75% for 2022 and 1.25% for 2023.

We remain aware of greater leverage used by many borrowers in the loan the market (and in our underlying portfolios). Currently, however, the vast majority of the maturity wall is pushed out to 2025 and later. Only 12.0% of the loans in the portfolios of our underlying CLO junior debt and equity positions mature prior to 2025.

CLO Market

New issuance in the CLO market remained a headline for much of 2021, with quarterly primary CLO volumes surpassing their prior records over consecutive quarters throughout 2021. Driven by a heavy and persistent appetite for floating rate instruments paired with attractive new issue arbitrage levels, total new CLO issuance in 2021 totaled $187 billion, doubling the total from 2020 of $94 billion and easily surpassing the previous record of $129 billion set back in 2018.

Despite the strong supply, the CLO equity arbitrage remained balanced throughout the year, as most CLOs were driven by economic third party equity investors rather than return-agnostic captive funds. Favorable market conditions, plentiful loan supply and an expansion of investors interested in CLO debt supported an increase in the number of CLO collateral managers that priced multiple new CLOs during the year, as well as several new issuers in the market.

We view the growth of players in the CLO market as a net positive. Indeed, given the breadth and depth of our experience as CLO investors, part of our playbook is identifying talented collateral managers and specific drivers of performance within the asset class. CLOs are nuanced structures and the ability to navigate the many provisions and tests within a CLO requires a unique combination of credit expertise, relative trading ability and portfolio management. We believe we are partnered with CLO collateral managers that are the best at what they do.

Past performance is not indicative of, or a guarantee of, future performance. 

During the year, demand for CLO debt kept spreads at relatively low levels. Average U.S. CLO AAA debt spreads remained inside 120 basis points over LIBOR throughout the year. Similar tightening occurred at all points in the CLO debt stack. Absent a handful of spikes of short-term volatility, average AAA debt costs ranged from 115 basis points over LIBOR in the first quarter to a peak of 118 basis points in the third quarter. These tights compare to a pre-pandemic level of 134 basis points over LIBOR at the end of 2019.

Reset and refinancing transactions reached new highs in 2021. A backlog of eligible and “in-the-money” CLOs, principally those priced with higher debt costs in 2017 and 2019 as well as short-dated 2020 CLOs, encouraged managers to take advantage of the attractive economics to lock in lower go-forward debt costs. Full year 2021 reset volume of $138 billion surpassed the all time high of $122 billion set in 2018, while refinancing volume of $113 billion also topped the previous high of $102 billion set in 2017. Looking into 2022, we expect reset and refinancing activity to remain strong but moderate on a relative basis. While we expect debt spreads to be attractive over the near term, the remaining number of CLOs presently eligible to be reset or refinanced is smaller compared to 2021.

As we look forward into 2022, our Adviser expects approximately $160 billion of primary CLO issuance, along with approximately $125 billion of resets and $110 billion of refinancing transactions.

Additional Information

In addition to the Company’s regulatory requirement to file certain quarterly and annual portfolio information as described further in the enclosed report, the Company makes certain unaudited portfolio information available each month on its website in addition to making certain other unaudited financial information available on its website (www.eaglepointincome.com). This information includes (1) an estimated range of the Company’s NII and realized capital gains or losses per share of common stock for each calendar quarter end, generally made available within the first fifteen days after the applicable calendar month end, (2) an estimated range of the Company’s NAV per share of common stock for the prior month end and certain additional portfolio-level information, generally made available within the first fifteen days after the applicable calendar month end, and (3) during the latter part of each month, an updated estimate of the Company’s NAV per share of common stock, if applicable, and, with respect to each calendar quarter end, an updated estimate of the Company’s NII and realized capital gains or losses per share for the applicable quarter, if available.

Subsequent Developments

Management’s unaudited estimate of the range of the Company’s NAV per share of common stock was between $16.89 and $16.93 as of January 31, 2022. The midpoint of this range represents an increase of 0.9% compared to the NAV per common share as of December 31, 2021.

Past performance is not indicative of, or a guarantee of, future performance. 

On January 24, 2022, the Company paid a special distribution of $0.20 per common share to stockholders of record on December 23, 2021.

On January 31, 2022, the Company paid a monthly distribution of $0.12 per common share to stockholders of record on January 11, 2022. Additionally, and as previously announced, the Company declared distributions of $0.12 per share of common stock payable on each of February 28, 2022 and March 31, 2022, to holders of record on February 8, 2022 and March 11, 2022, respectively. The Company subsequently declared distributions of $0.125 per share of common stock payable on April 29, 2022, May 31, 2022 and June 30, 2022 to holders of record on April 11, 2022, May 11, 2022 and June 10, 2022, respectively.

On January 31, 2022, the Company paid a monthly distribution of $0.104167 per share of the Company’s Series A Term Preferred Stock to holders of record on January 11, 2022. Additionally, and as previously announced, the Company declared distributions of $0.104167 per share on Series A Term Preferred Stock, payable on each of February 28, 2022, March 31, 2022, April 29, 2022, May 31, 2022 and June 30, 2022 to holders of record on February 8, 2022, March 11, 2022, April 11, 2022, May 11, 2022 and June 10, 2022, respectively.

As of February 11, 2022, the Company had $7.2 million of cash available for investment, inclusive of the undrawn commitment in the revolving credit facility.

* * * * *

Management remains keenly focused on continuing to create value for our stockholders. We appreciate the trust and confidence our fellow stockholders have placed in the Company.

Thomas Majewski

Chairman and Chief Executive Officer

This letter is intended to assist stockholders in understanding the Company’s performance during the twelve months ended December 31, 2021. The views and opinions in this letter were current as of February 11, 2022. Statements other than those of historical facts included herein may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors. The Company undertakes no duty to update any forward-looking statement made herein. Information contained on our website is not incorporated by reference into this stockholder letter and you should not consider information contained on our website to be part of this stockholder letter or any other report we file with the Securities and Exchange Commission.

Past performance is not indicative of, or a guarantee of, future performance. 

ABOUT OUR ADVISER

Eagle Point Income Management LLC is a specialist asset manager focused exclusively on investing in CLO securities and other income-oriented credit. As of December 31, 2021, our Adviser had approximately $6.9 billion of assets under management (inclusive of undrawn capital commitments).¹¹

Notes

Past performance is not indicative of, or a guarantee of, future performance. 

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Important Information about this Report and Eagle Point Income Company Inc.

This report is transmitted to the stockholders of Eagle Point Income Company Inc. (“we”, “us”, “our” or the “Company”) and is furnished pursuant to certain regulatory requirements. This report and the information and views herein do not constitute investment advice, or a recommendation or an offer to enter into any transaction with the Company or any of its affiliates. This report is provided for informational purposes only, does not constitute an offer to sell securities of the Company and is not a prospectus. From time to time, the Company may have a registration statement relating to one or more of its securities on file with the US Securities and Exchange Commission (“SEC”). Any registration statement that has not yet been declared effective by the SEC, and any prospectus relating thereto, is not complete and may be changed. Any securities that are the subject of such a registration statement may not be sold until the registration statement filed with the SEC is effective.

The information and its contents are the property of Eagle Point Income Management LLC (the “Adviser”) and/or the Company. Any unauthorized dissemination, copying or use of this presentation is strictly prohibited and may be in violation of law. This presentation is being provided for informational purposes only.

Investors should read the Company’s prospectus and SEC filings (which are publicly available on the EDGAR Database on the SEC website at http://www.sec.gov) carefully and consider their investment goals, time horizons and risk tolerance before investing in the Company. Investors should consider the Company’s investment objectives and policies, risks, charges and expenses carefully before investing in securities of the Company. There is no guarantee that any of the goals, targets or objectives described in this report will be achieved.

An investment in the Company is not appropriate for all investors. The investment program of the Company is speculative, entails substantial risk and includes investment techniques not employed by traditional mutual funds. An investment in the Company is not intended to be a complete investment program. Shares of closed-end investment companies, such as the Company, frequently trade at a discount from their net asset value (“NAV”), which may increase investors’ risk of loss. Past performance is not indicative of, or a guarantee of, future performance. The performance and certain other portfolio information quoted herein represents information as of December 31, 2021. Nothing herein should be relied upon as a representation as to the future performance or portfolio holdings of the Company. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost. The Company’s performance is subject to change since the end of the period noted in this report and may be lower or higher than the performance data shown herein.

Neither the Adviser nor the Company provide legal, accounting or tax advice. Any statement regarding such matters is explanatory and may not be relied upon as definitive advice. Investors should consult with their legal, accounting and tax advisors regarding any potential investment. The information presented herein is as of the dates noted herein and is derived from financial and other information of the Company, and, in certain cases, from third party sources and reports (including reports of third party custodians, CLO managers and trustees) that have not been independently verified by the Company. As noted herein, certain of this information is estimated and unaudited, and therefore subject to change. We do not represent that such information is accurate or complete, and it should not be relied upon as such.

Eagle Point Income Company Inc.

The following information in this annual report is a summary of certain changes during the fiscal year ended December 31, 2021. This information may not reflect all of the changes that have occurred since you purchased shares of our common stock.

During the applicable period, there have been: (i) no material changes to the Company’s investment objectives and policies that have not been approved by shareholders, (ii) no material changes to the Company’s principal risks, (iii) no changes to the persons primarily responsible for day-to-day management of the Company; and (iv) no changes to the Company’s charter or bylaws that would delay or prevent a change of control of the Company, except as follows:

Investment Objectives and Strategies

We are an externally managed, non-diversified closed-end management investment company that has registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). We have elected to be treated, and intend to qualify annually, as a regulated investment company, or “RIC,” under Subchapter M of the Internal Revenue Code of 1986, as amended, or the “Code,” beginning with our tax year ended December 31, 2018. We were formed on September 28, 2018 as EP Income Company LLC, a Delaware limited liability company, and converted into a Delaware corporation on October 16, 2018.

Our primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. We seek to achieve our investment objectives by investing primarily in junior debt tranches of CLOs, that are collateralized by a portfolio consisting primarily of below investment grade U.S. senior secured loans with a large number of distinct underlying borrowers across various industry sectors. We focus on CLO debt tranches rated “BB” (e.g., BB+, BB or BB-, or their equivalent) by Moody’s, S&P, or Fitch, and/or other applicable nationally recognized statistical rating organizations. We may also invest in other junior debt tranches of CLOs, senior debt tranches of CLOs and other related securities and instruments. In addition, we may invest up to 35% of our total assets (at the time of investment) in CLO equity securities. We expect our investments in CLO equity securities to primarily reflect minority ownership positions. We may also invest in other securities and instruments that the Adviser believes are consistent with our investment objectives such as securities issued by other securitization vehicles (such as collateralized bond obligations or “CBOs”). The amount that we will invest in other securities and instruments, which may include investments in debt and other securities issued by CLOs collateralized by non-U.S. loans or securities of other collective investment vehicles, will vary from time to time and, as such, may constitute a material part of our portfolio on any given date, all as based on the Adviser’s assessment of prevailing market conditions. The CLO securities in which we primarily seek to invest are rated below investment grade or, in the case of CLO equity securities, are unrated and are considered speculative with respect to timely payment of interest and repayment of principal. Below investment grade and unrated securities are also sometimes referred to as “junk” securities.

These investment objectives are not fundamental policies of ours and may be changed by our board of directors without prior approval of our stockholders.

Investment Restrictions

Our investment objectives and our investment policies and strategies, except for the eight investment restrictions designated as fundamental policies under this caption, are not fundamental and may be changed by the board of directors without stockholder approval.

The following eight investment restrictions are designated as fundamental policies and, as such, cannot be changed without the approval of the holders of a majority of our outstanding voting securities:

The latter part of certain of our fundamental investment restrictions (i.e., the references to “except to the extent permitted by (i) the 1940 Act, or interpretations or modifications by the SEC, the SEC staff or other authority with appropriate jurisdiction, or (ii) exemptive or other relief or permission from the SEC, SEC staff or other authority with appropriate jurisdiction”) provides us with flexibility to change our limitations in connection with changes in applicable law, rules, regulations or exemptive relief. The language used in these restrictions provides the necessary flexibility to allow our board of directors to respond efficiently to these kinds of developments without the delay and expense of a stockholder meeting.

Whenever an investment policy or investment restriction set forth in this report or in our prospectus states a maximum percentage of assets that may be invested in any security or other asset, or describes a policy regarding quality standards, such percentage limitation or standard shall be determined immediately after and as a result of our acquisition of such security or asset. Accordingly, any later increase or decrease resulting from a change in values, assets or other circumstances or any subsequent rating change made by a rating agency (or as determined by the Adviser if the security is not rated by a rating agency) will not compel us to dispose of such security or other asset. Notwithstanding the foregoing, we must always be in compliance with the borrowing policies set forth above.

Risk Factors

The value of our assets, as well as the market price of our securities, will fluctuate. Our investments should be considered risky, and you may lose all or part of your investment in us. Investors should consider their financial situation and needs, other investments, investment goals, investment experience, time horizons, liquidity needs and risk tolerance before investing in our securities. An investment in our securities may be speculative in that it involves a high degree of risk and should not be considered a complete investment program. We are designed primarily as a long-term investment vehicle, and our securities are not an appropriate investment for a short-term trading strategy. We can offer no assurance that returns, if any, on our investments will be commensurate with the risk of investment in us, nor can we provide any assurance that enough appropriate investments that meet our investment criteria will be available.

The following is a summary of certain principal risks of an investment in us. See the section “Risk Factors” in our prospectus for a more complete discussion of the risks of investing in our securities, including certain risks not summarized below.

Key Personnel Risk. We are dependent upon the key personnel of the Adviser and certain of our Adviser’s affiliates for our future success.

Conflicts of Interest Risk. Our executive officers and directors, and the Adviser and certain of its affiliates and their officers and employees, including the senior investment team, have several conflicts of interest as a result of the other activities in which they engage.

Interest Rate Risk. The price of certain of our investments may be significantly affected by changes in interest rates. Interest rates in the United States are near historic lows, which increases our exposure to risks associated with rising interest rates.

Prepayment Risk. The assets underlying the CLO securities in which we invest are subject to prepayment by the underlying corporate borrowers. In addition, the CLO securities and related investments in which we invest are subject to prepayment risk. If we or a CLO collateral manager are unable to reinvest prepaid amounts in a new investment with an expected rate of return at least equal to that of the investment repaid, our investment performance will be adversely impacted.

LIBOR Risk. The CLO equity and debt securities in which we invest earn interest at, and CLOs in which we invest typically obtain financing at, a floating rate based on LIBOR. After the global financial crisis, regulators globally determined that existing interest rate benchmarks should be reformed based on concerns that LIBOR was susceptible to manipulation. In a speech on July 27, 2017, the then-Chief Executive of the Financial Conduct Authority of the UK (the “FCA”) announced the FCA’s intention to cease sustaining LIBOR. On March 5, 2021, the FCA announced that all LIBOR settings would either cease to be provided by any administrator, or no longer be representative (i) immediately after December 31, 2021, for all GBP, EUR, CHF and JPY LIBOR settings and one-week and two-month US dollar LIBOR settings, and (ii) immediately after June 30, 2023 for the remaining US dollar LIBOR settings, including three-month US dollar LIBOR. Replacement rates that have been identified include the Secured Overnight Financing Rate (SOFR, which is intended to replace U.S. dollar LIBOR and measures the cost of overnight borrowings through repurchase agreement transactions collateralized with U.S. Treasury securities) and the Sterling Overnight Index Average Rate (SONIA, which is intended to replace GBP LIBOR and measures the overnight interest rate paid by banks for unsecured transactions in the sterling market), although other replacement rates could be adopted by market participants. At this time, it is not possible to predict the effect of the establishment of SOFR, SONIA or any other replacement rates or any other reforms to LIBOR. In addition, the effect of a phase out of LIBOR on U.S. senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear. In addition, based on supervisory guidance from regulators, many banks were expected to cease issuance of new LIBOR-based instruments by January 1, 2022. To the extent that any LIBOR replacement rate utilized for senior secured loans differs from that utilized for debt of a CLO that holds those loans (including instances where the replacement rate is utilized for such loans prior to it being utilized by the CLO), for the duration of such mismatch, the CLO would experience an interest rate mismatch between its assets and liabilities, which would be expected to have an adverse impact on the cash flows distributed to CLO equity investors as well as our net investment income and portfolio returns until such mismatch is corrected or minimized, which would be expected to occur when both the underlying senior secured loans and the CLO debt securities utilize the same LIBOR replacement rate. As of the date hereof, certain senior secured loans have already transitioned to utilizing SOFR based interest rates and newly issued CLO debt securities have begun to transition to such replacement rate..

Liquidity Risk. Generally, there is no public market for the CLO investments we target. As such, we may not be able to sell such investments quickly, or at all. If we are able to sell such investments, the prices we receive may not reflect our assessment of their fair value or the amount paid for such investments by us.

Management Fee Risk. Our management fee structure may incentivize the Adviser to use leverage in a manner that adversely impacts our performance.

Subordinated Securities. CLO junior debt and equity securities that we may acquire are subordinated to more senior tranches of CLO debt. CLO junior debt and equity securities are subject to increased risks of default relative to the holders of superior priority interests in the same CLO. Though not exclusively, we will typically be in a subordinated position with respect to realized losses on the underlying assets held by the CLOs in which we are invested.

High-Yield Investment Risk. The CLO junior debt and equity securities that we acquire are typically rated below investment grade or, in the case of equity securities, unrated and are therefore considered “higher-yield” or “junk” securities and are considered speculative with respect to timely payment of interest and repayment of principal. The senior secured loans and other credit-related assets underlying CLOs are also typically higher-yield investments. Investing in CLO junior debt and equity securities and other high-yield investments involves greater credit and liquidity risk than investment grade obligations, which may adversely impact our performance.

Risks of Investing in CLOs and Other Structured Debt Securities. CLOs and other structured finance securities are generally backed by a pool of credit-related assets that serve as collateral. Accordingly, CLO and structured finance securities present risks similar to those of other types of credit investments, including default (credit), interest rate and prepayment risks. In addition, CLOs and other structured finance securities are often governed by a complex series of legal documents and contracts, which increases the risk of dispute over the interpretation and enforceability of such documents relative to other

types of investments. There is also a risk that the trustee of a CLO does not properly carry out its duties to the CLO, potentially resulting in loss to the CLO. CLOs are also inherently leveraged vehicles and are subject to leverage risk.

Leverage Risk. The use of leverage, whether directly or indirectly through borrowing from the credit facility with Société Générale (the “Credit Facility”) or investments such as CLO junior debt and equity securities that inherently involve leverage, may magnify our risk of loss. CLO junior debt and equity securities are very highly leveraged (with CLO equity securities typically being leveraged approximately ten times), and therefore the CLO securities in which we invest are subject to a higher degree of loss since the use of leverage magnifies losses.

We have incurred leverage through the use of borrowings and the issuance of our preferred stock. We may incur additional leverage, directly or indirectly, through one or more special purpose vehicles, indebtedness for borrowed money, as well as leverage in the form of derivative transactions, shares of additional preferred stock, debt securities and other structures and instruments, in significant amounts and on terms that the Adviser and our board of directors deem appropriate, subject to applicable limitations under the 1940 Act. Such leverage may be used for the acquisition and financing of our investments, to pay fees and expenses and for other purposes. Such leverage may be secured and/or unsecured. The more leverage we employ, the more likely a substantial change will occur in our NAV. Accordingly, any event that adversely affects the value of an investment would be magnified to the extent leverage is utilized. The cumulative effect of the use of leverage with respect to any investments in a market that moves adversely to such investments could result in a substantial loss that would be greater than if our investments were not leveraged.

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

Based on our assumed leverage described above, our investment portfolio would have been required to experience an annual return of at least 1.30% to cover annual interest payments on our outstanding indebtedness.

Credit Risk. If (1) a CLO in which we invest, (2) an underlying asset of any such CLO or (3) any other type of credit investment in our portfolio declines in price or fails to pay interest or principal when due because the issuer or debtor, as the case may be, experiences a decline in its financial status, our income, NAV and/or market price would be adversely impacted.

Fair Valuation of Our Portfolio Investments. Generally there is no public market for the CLO investments we target. As a result, we value these securities at least quarterly, or more frequently as may be required from time to time, at fair value. Our determinations of the fair value of our investments have a material impact on our net earnings through the recording of unrealized appreciation or depreciation of investments and may cause our NAV on a given date to understate or overstate, possibly materially, the value that we ultimately realize on one or more of our investments.

Limited Investment Opportunities Risk. The market for CLO securities is more limited than the market for other credit related investments. We can offer no assurances that sufficient investment opportunities for our capital will be available.

Non-Diversification Risk. We are a non-diversified investment company under the 1940 Act and expect to hold a narrower range of investments than a diversified fund under the 1940 Act.

Market Risk. Political, regulatory, economic and social developments, and developments that impact specific economic sectors, industries or segments of the market, can affect the value of our investments. A disruption or downturn in the capital markets and the credit markets could impair our ability to raise capital, reduce the availability of suitable investment

opportunities for us, or adversely and materially affect the value of our investments, any of which would negatively affect our business. These risks may be magnified if certain events or developments adversely interrupt the global supply chain, and could affect companies worldwide.

Currency Risk. Although we primarily make investments denominated in U.S. dollars, we may make investments denominated in other currencies. Our investments denominated in currencies other than U.S. dollars will be subject to the risk that the value of such currency will decrease in relation to the U.S. dollar.

Hedging Risk. Hedging transactions seeking to reduce risks may result in poorer overall performance than if we had not engaged in such hedging transactions, and they may also not properly hedge our risks.

Reinvestment Risk. CLOs will typically generate cash from asset repayments and sales that may be reinvested in substitute assets, subject to compliance with applicable investment tests. If the CLO collateral manager causes the CLO to purchase substitute assets at a lower yield than those initially acquired (for example, during periods of loan compression or as may be required to satisfy a CLO’s covenants) or sale proceeds are maintained temporarily in cash, it would reduce the excess interest-related cash flow, thereby having a negative effect on the fair value of our assets and the market value of our securities. In addition, the reinvestment period for a CLO may terminate early, which would cause the holders of the CLO’s securities to receive principal payments earlier than anticipated. There can be no assurance that we will be able to reinvest such amounts in an alternative investment that provides a comparable return relative to the credit risk assumed.

Refinancing Risk. If we incur debt financing and subsequently refinance such debt, the replacement debt may be at a higher cost and on less favorable terms and conditions. If we fail to extend, refinance or replace such debt financings prior to their maturity on commercially reasonable terms, our liquidity will be lower than it would have been with the benefit of such financings, which would limit our ability to grow, and holders of our common stock would not benefit from the potential for increased returns on equity that incurring leverage creates.

Tax Risk. If we fail to qualify for tax treatment as a RIC under Subchapter M of the Code for any reason, or become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distributions, and the amount of such distributions, to our common stockholders and for payments to the holders of our other obligations.

Derivatives Risk. Derivative instruments in which we may invest may be volatile and involve various risks different from, and in certain cases greater than, the risks presented by other instruments. The primary risks related to derivative transactions include counterparty, correlation, liquidity, leverage, volatility, and OTC trading risks. In addition, a small investment in derivatives could have a large potential impact on our performance, effecting a form of investment leverage on our portfolio. In certain types of derivative transactions, we could lose the entire amount of our investment; in other types of derivative transactions the potential loss is theoretically unlimited.

Counterparty Risk. We may be exposed to counterparty risk, which could make it difficult for us or the CLOs in which we invest to collect on obligations, thereby resulting in potentially significant losses.

Global Economy Risk. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market.

COVID-19 Pandemic Risk. The COVID-19 pandemic has created economic and financial disruptions and contributed to increased volatility in global financial markets. The pandemic has affected certain countries, regions, companies, industries and market sectors more dramatically than others and will likely continue to do so. It is not known how long the impact of the COVID-19 pandemic will last or the severity thereof. Federal, state and local governments, as well as foreign governments, have taken aggressive steps to address problems being experienced by the markets and by businesses and the economy in general; however, there can be no assurance that these measures will be adequate.

Additional Information

The Company makes certain unaudited portfolio information available each month on its website in addition to making certain other unaudited financial information available on its website (www.eaglepointincome.com). This information includes (1) an estimated range of the Company’s net investment income (“NII”) and realized capital gains or losses per weighted average share of common stock for each calendar quarter end, generally made available within the first fifteen days after the applicable

calendar month end, (2) an estimated range of the Company’s NAV per share of common stock for the prior month end and certain additional portfolio-level information, generally made available within the first fifteen days after the applicable calendar month end, and (3) during the latter part of each month, an updated estimate of NAV, if applicable, and, with respect to each calendar quarter end, an updated estimate of the Company’s NII and realized capital gains or losses for the applicable quarter, if available.

Information contained on our website is not incorporated by reference into this Annual Report and you should not consider information contained on our website to be part of this Annual Report or any other report we file with the SEC.

Forward-Looking Statements

This report may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this report may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the Company’s filings with the SEC. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this report.

Notes

Performance Data^1,2

The following graph shows the market price performance of a $10,000 investment in the Company’s common shares for the period from October 16, 2018 (inception) through December 31, 2021. The performance calculation assumes the purchase of Company shares at net asset value for the beginning of the period (prior to the Compay’s public listing) and the sale of Company shares at the market price at the end of the period. Ending values for each year are as of December 31 of the applicable year. As the Company’s IPO ocurred in July 2019, the value used for the Company’s performance as of December 31, 2018 reflects the Company’s then-current net asset value per share. For comparative purposes, the performance of a relevant third-party securities market index, the S&P BDC Index, is shown. Distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Company’s dividend reinvestment plan. Returns do not reflect the deduction of taxes that a shareholder would pay on Company distributions or the sale of Company shares.

Past performance is not indicative of, or a guarantee of, future performance. Future results may vary and may be higher or lower than the data shown.