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0 3335

Full Circle Capital Corp. to Release Fiscal Fourth Quarter 2015 Results on Monday, September 14, 2015

GREENWICH, Conn., Sept. 8, 2015 (GLOBE NEWSWIRE) — Full Circle Capital Corporation (FULL) (“Full Circle Capital”) announced today that it will report financial results for its fiscal fourth quarter 2015 ended June 30, 2015 and its annual report on Form 10-K after the market closes on Monday, September 14, 2015.

Management will also host a conference call on Tuesday, September 15, 2015 at 8:30 am ET to discuss results. A live webcast of the conference call and accompanying slide presentation will be available at http://ir.fccapital.com. Please access the website approximately 10 minutes before the conference call begins.

To participate in the call, please call (888) 737-3713 (domestic toll-free) or (913) 312-6694 (international) and reference PIN: 1555289.

A webcast replay of the call, along with an archived copy of the presentation, will be available at http://ir.fccapital.com for one year following the call.

An audio replay will also be available until September 22, 2015, by dialing (877) 870-5176 (toll-free) or (858) 384-5517 (international), PIN: 1555289.

About Full Circle Capital

Full Circle Capital Corporation (www.fccapital.com) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s website www.fccapital.com.

Contact:
Full Circle Capital Corporation
Company Contact:
John Stuart, Chairman
Gregg J. Felton, President and Chief Executive Officer
Full Circle Capital Corporation
(203) 900 – 2100
info@fccapital.com
Investor Relations Contacts:
Garrett Edson/Brad Cohen
ICR, LLC
(203) 682 – 8331

0 1157

Form 8-K for FULL CIRCLE CAPITAL CORP


9-Feb-2015

Results of Operations and Financial Condition, Financial Statements and

Item 2.02 Results of Operations and Financial Condition.On February 9, 2015, Full Circle Capital Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended December 31, 2014. The text of the press release is included as an exhibit to this Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

Exhibit No. Description

99.1 Press release dated February 9, 2015

 

0 1204

Full Circle Capital Corporation Announces Second Quarter Fiscal 2015 Earnings

- Closed $13.3 Million in New Investments in the Fiscal Second Quarter –

- Net Investment Income of $2.4 Million or $0.19 per Share –

- Streamlines Management Structure, Appoints Gregg Felton CEO, John Stuart to Remain Chairman -

GREENWICH, Conn., Feb. 9, 2015 (GLOBE NEWSWIRE) — Full Circle Capital Corporation (FULL) (the “Company”) today announced its financial results for the second quarter of fiscal 2015 ended December 31, 2014.

Financial Highlights for the Second Quarter of Fiscal 2015

  • Originations to three new portfolio companies totaled $13.3 million. Repayments or realizations from portfolio companies and sales were $8.4 million.
  • Total investment income was $4.9 million, an increase of 22.5% compared with $4.0 million for the prior year period.
  • Net investment income (“NII”) increased 23.9% to $2.4 million, or $0.19 per share, compared with $1.9 million, or $0.25 per share, for the three months ended December 31, 2013.
  • Net realized and unrealized losses were $8.9 million, or $0.75 per share. Unrealized losses on investments were $7.6 million, or $0.64 per share. Realized losses on investments were $1.3 million, or $0.11 per share.
  • Net decrease in net assets from operations was $6.6 million, or $0.55 per share.
  • Net asset value was $5.48 per share at December 31, 2014.
  • Per share amounts are based on approximately 11.9 million weighted average shares outstanding compared to 7.6 million weighted average shares outstanding for the second quarter of fiscal 2014, reflecting the capital markets activities completed during calendar 2014.
  • Total portfolio at fair value was $128.5 million at December 31, 2014.
  • Weighted average portfolio interest rate was 10.23% at December 31, 2014.
  • At December 31, 2014, 92% of portfolio company investments were first lien senior secured loans.

In addition, the Company announced today that Gregg Felton has been named Chief Executive Officer, while John Stuart will maintain his role as Chairman of the Board of Directors.

“The ongoing transformation of our investment and portfolio strategy to include Gregg’s areas of investment experience and expertise has made his appointment as CEO the logical next step in that process,” said John Stuart, Chairman of Full Circle Capital Corporation. “Gregg has played a vital role in our continuing efforts to develop a greater breadth of investment opportunities as evidenced by our portfolio growth and composition over the past year.”

“I look forward to continuing to work closely with John and our expanded investment team as we position ourselves for long-term growth,” said Gregg Felton, President and CEO of Full Circle Capital Corporation. “While our recent performance has been disappointing, we believe that our aggressive efforts to exit or restructure our legacy positions will enable us to take advantage of current market opportunities. With the recent back-up in the middle market corporate credit markets, we have seen a significant increase in transaction opportunities that fit within our return and risk parameters. We believe this market environment will allow us to continue to execute on our broadened investment strategies while providing greater portfolio diversification. These key elements are central to our efforts to improve and produce sustainable returns to our stockholders.”

Second Quarter Fiscal 2015 Results

The Company’s net asset value at December 31, 2014 was $5.48 per share. During the quarter, the Company generated $4.5 million of interest income compared to $2.8 million in the second quarter of fiscal 2014, an increase of 60.1%. Income from fees and other sources in the quarter totaled $0.5 million, compared to $1.2 million in the prior year quarter.

The Company recorded NII of $2.4 million, or $0.19 per share, in the quarter ended December 31, 2014 compared to $1.9 million, or $0.25 per share, in the quarter ended December 31, 2013. Per share amounts for the quarter ended December 31, 2014 are based on approximately 11.9 million weighted average shares outstanding compared to 7.6 million weighted average shares outstanding for the quarter ended December 31, 2013, reflecting the common equity offerings that Full Circle Capital completed in calendar 2014.

Net realized and unrealized losses in the quarter were $8.9 million, or $0.75 per share. Net unrealized depreciation of $7.6 million was comprised of $2.3 million of net unrealized depreciation on equity investments and $5.3 million of net unrealized depreciation on debt investments. Realized losses on investments were $1.3 million, or $0.11 per share. Net decrease in net assets from operations was $6.6 million, or $0.55 per share.

During the quarter ended December 31, 2014 the Company added $13.3 million in new loans to three new portfolio companies. Repayments from portfolio companies during the second quarter were $8.4 million from four portfolio companies.

At December 31, 2014, the Company’s portfolio included debt investments in 27 companies at an average of $4.6 million per investment. The weighted average interest rate on debt investments was 10.23%. At fair value, 92% of portfolio investments were first lien loans, 5% were second lien loans and 3% were equity investments. Approximately 78% of the debt investment portfolio, at fair value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 60% at December 31, 2014 compared to 71% at December 31, 2013.

Subsequent Events

On January 21, 2015, the Company partially exercised its warrant issued by Advanced Cannabis Solutions, Inc. in a cashless exercise in exchange for 660,263 shares of Advanced Cannabis Solutions Inc. The cashless exercise reduced the amount of common shares underlying the remaining warrant by 1,215,000, leaving the Company with a warrant to purchase 185,000 shares in Advanced Cannabis Solutions, Inc. with a strike price of $4.00 per share.

On January 30, 2015, the Company funded $2.0 million of a $50.0 million second lien term loan with GK Holdings, Inc., an IT and business skill training company. The credit facility bears interest at one month LIBOR plus 9.50% with a LIBOR floor of 1.00% and has a final maturity of January 30, 2022.

Conference Call Details

Management will host a conference call at 8:30 am ET on Tuesday, February 10, 2015 to discuss results. A live webcast of the conference call and accompanying slide presentation will be available at http://ir.fccapital.com. Please access the website approximately 10 minutes before the conference call begins.

To participate in the call, please call (888) 206-4916 (domestic toll-free) or (913) 312-1411 (international) and reference PIN: 6223832.

A webcast replay of the call, along with an archived copy of the presentation, will be available athttp://ir.fccapital.com for one year following the call.

An audio replay will also be available until February 17, 2015, by dialing (877) 870-5176 (toll-free) or (858) 384-5517 (international), PIN: 6223832.

About Full Circle Capital Corporation

Full Circle Capital Corporation (www.fccapital.com) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s website www.fccapital.com.

Forward-Looking Statements

This press release contains forward-looking statements which relate to future events or Full Circle’s future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,” “should,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition 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 from time to time in Full Circle’s filings with the Securities and Exchange Commission. Full Circle undertakes no duty to update any forward-looking statements made herein.

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2014 June 30, 2014
Unaudited
Assets
Control Investments at Fair Value (Cost of $20,587,987 and $20,253,149, respectively) $ 11,676,772 $ 17,539,057
Affiliate Investments at Fair Value (Cost of $25,749,265 and $20,177,115, respectively) 17,435,853 14,588,417
Non-Control/Non-Affiliate Investments at Fair Value (Cost of $105,607,136 and $123,605,311, respectively) 99,347,153 118,063,285
Total Investments at Fair Value (Cost of $151,944,388 and $164,035,575, respectively) 128,459,778 150,190,759
Cash 2,595,416
Deposit with Broker 2,525,000
Interest Receivable 2,141,949 1,016,726
Principal Receivable 34,053 207,233
Due from Affiliates 339,922 4,273
Due from Portfolio Investments 181,402 135,288
Prepaid Expenses 160,951 57,470
Other Assets 790,261 750,326
Deferred Offering Expenses 143,150
Deferred Debt Issuance Costs 911,922 947,937
Deferred Credit Facility Fees 410,767 449,350
Total Assets 136,169,571 156,284,362
Liabilities
Due to Affiliates 1,111,088 891,966
Bank Overdraft 821,316
Accrued Liabilities 142,268 184,857
Due to Broker 25,000,221
Payable for Investments Acquired 24,900,172
Distributions Payable 800,585 766,683
Interest Payable 119,064 45,254
Other Liabilities 803,421 1,076,800
Accrued Offering Expenses 20,689 35,828
Line of Credit 33,817,832 8,435,463
Notes Payable 8.25% due June 30, 2020 33,815,406 21,145,525
Total Liabilities 70,630,353 83,304,085
Commitments and contingencies
Net Assets $ 65,539,218 $ 72,980,277
Components of Net Assets
Common Stock, par value $0.01 per share (100,000,000 authorized; 11,949,034 and 11,443,034 issued and outstanding, respectively) $ 119,490 $ 114,430
Paid-in Capital in Excess of Par 95,805,231 92,103,666
Distributions in Excess of Net Investment Income (739,348) (131,251)
Accumulated Net Realized Losses (6,161,545) (5,261,752)
Accumulated Net Unrealized Losses (23,484,610) (13,844,816)
Net Assets $ 65,539,218 $ 72,980,277
Net Asset Value Per Share $ 5.48 $ 6.38
FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2014 2013 2014 2013
Investment Income
Interest Income from Non-Control/Non-Affiliate Investments $ 3,367,613 $ 1,649,533 $ 6,175,544 $ 3,530,671
Interest Income from Affiliate Investments 665,621 656,935 1,206,181 1,310,653
Interest Income from Control Investments 433,638 484,207 962,746 942,111
Dividend Income from Control Investments 34,411
Other Income from Non-Control/Non-Affiliate Investments 427,026 1,189,891 614,081 1,363,362
Other Income from Affiliate Investments 5,822 3,837 15,292 8,881
Other Income from Control Investments 12,500 12,500 25,000 25,000
Total Investment Income 4,912,220 3,996,903 8,998,844 7,215,089
Operating Expenses
Management Fee 581,329 382,489 1,153,887 791,747
Incentive Fee 526,242 474,897 916,092 789,636
Total Advisory Fees 1,107,571 857,386 2,069,979 1,581,383
Allocation of Overhead Expenses 36,962 34,881 73,517 98,711
Sub-Administration Fees 66,595 50,000 129,804 100,000
Officers’ Compensation 75,913 75,529 151,826 150,867
Total Costs Incurred Under Administration Agreement 179,470 160,410 355,147 349,578
Directors’ Fees 40,750 31,625 88,696 60,250
Interest Expenses 1,177,094 718,502 2,179,477 1,439,479
Professional Services Expense 139,926 158,620 359,594 354,481
Bank Fees 10,918 21,622 21,189 35,468
Other 151,523 149,150 260,394 250,635
Total Gross Operating Expenses 2,807,252 2,097,315 5,334,476 4,071,274
Expense Reimbursement (248,373) (531,047)
Total Net Operating Expenses 2,558,879 2,097,315 4,803,429 4,071,274
Net Investment Income 2,353,341 1,899,588 4,195,415 3,143,815
Net Change in Unrealized Gain (Loss) on Investments (7,624,759) (2,627,312) (9,639,794) (5,450,203)
Net Realized Gain (Loss) on:
Investments (1,301,452) (492,216) (898,545) (1,170,769)
Foreign Currency Transactions (1,248) 68
Net Realized Gain (Loss) (1,301,452) (492,216) (899,793) (1,170,701)
Net Increase (Decrease) in Net Assets Resulting from Operations $ (6,572,870) $ (1,219,940) $ (6,344,172) $ (3,477,089)
Earnings (Loss) per Common Share Basic and Diluted $ (0.55) $ (0.16) $ (0.53) $ (0.46)
Net Investment Income per Common Share Basic and Diluted $ 0.19 $ 0.25 $ 0.35 $ 0.42
Weighted Average Shares of Common Stock Outstanding Basic and Diluted 11,949,034 7,569,382 11,913,284 7,569,382
FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
Three months ended Three months ended Six months ended Six months ended
December 31, 2014 December 31, 2013 December 31, 2014 December 31, 2013
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Per Share Data (1) :
Net asset value at beginning of period $ 6.24 $ 7.48 $ 6.38 $ 8.01
Accretion (dilution) from offering (2) 0.04
Offering costs (0.00) 0.00
Net investment income 0.19 0.25 0.35 0.42
Net change in unrealized gain (loss) (0.64) (0.34) (0.81) (0.73)
Net realized gain (loss) (0.11) (0.07) (0.08) (0.15)
Dividends from net investment income (0.19) (0.23) (0.35) (0.42)
Return of capital (0.01) (0.05) (0.04)
Net asset value at end of period $ 5.48 $ 7.09 $ 5.48 $ 7.09
(1) Financial highlights are based on weighted average shares outstanding.
(2) Accretion and dilution from offering is based on the net change in net asset value from each follow-on offering.
Contact:
Company Contact:
John Stuart, Chairman
Gregg J. Felton, President and Chief Executive Officer
Full Circle Capital Corporation
(203) 900 - 2100
info@fccapital.com
Investor Relations Contacts:	
Garrett Edson/Brad Cohen
ICR, LLC
(203) 818 - 1089

0 1186

Form 10-Q for FULL CIRCLE CAPITAL CORP


9-Feb-2015

Quarterly Report

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking Statements

The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and schedules thereto appearing elsewhere in this quarterly report on Form 10-Q, as well as the sections entitled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes and schedules thereto included in our Annual Report on Form 10-K for the period ended June 30, 2014.

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

� our future operating results;

� our business prospects and the prospects of our portfolio companies;

� the impact of investments that we expect to make;

� our contractual arrangements and relationships with third parties;

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

� the ability of our portfolio companies to achieve their objectives;

� our expected financings and investments;

� the adequacy of our cash resources and working capital; and

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

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

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

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

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

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

� the risks, uncertainties and other factors we identify in “Risk Factors” in our Annual Report on Form 10-K for the period ended June 30, 2014 and elsewhere in this quarterly report on Form 10-Q and in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of


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additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q.

Except as otherwise specified, references to “Full Circle Capital,” “the Company,” “we,” “us” and “our” refer to Full Circle Capital Corporation. Overview

We are an externally managed non-diversified closed-end management investment company formed in April 2010, and have elected to be regulated as a business development company under the 1940 Act. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We are managed by Full Circle Advisors, and Full Circle Service Company provides the administrative services necessary for us to operate.

We invest primarily in senior secured loans and, to a lesser extent, second liens loans, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. In our lending activities, we focus primarily on portfolio companies with both (i) tangible and intangible assets available as collateral and security against our loan to help mitigate our risk of loss, and (ii) cash flow to cover debt service. We believe this provides us with a more attractive risk adjusted return profile, with greater principal protection and likelihood of repayment.

Our investments generally range in size from $3 million to $10 million; however, we may make larger or smaller investments from time to time on an opportunistic basis. We focus primarily on senior secured loans and “stretch” senior secured loans, also referred to as “unitranche” loans, which combine characteristics of traditional first-lien senior secured loans and second-lien or subordinated loans. We believe that having a first lien, senior secured position provides us with greater control and security in the primary collateral of a borrower and helps to mitigate risk against loss of principal should a borrower default. Our stretch senior secured loans typically possess a greater advance rate against the borrower’s assets and cash flow, and accordingly carry a higher interest rate and/or greater equity participation, than traditional senior secured loans. This stretch senior secured loan instrument can provide borrowers with a more efficient and desirable solution than a senior bank line combined with a separate second lien or mezzanine loan obtained from another source. We also may invest in mezzanine, subordinated or unsecured loans. In addition, we may acquire equity or equity related interests from a borrower along with our debt investment. We attempt to protect against risk of loss on our debt investments by investing in borrowers with cash flows to cover debt service, while frequently securing our loans against tangible or intangible assets of our borrowers, which may include accounts receivable and contracts for services, and obtaining a favorable loan-to-value ratio, and in many cases, securing other financial protections or credit enhancements, such as personal guarantees from the principals of our borrowers, make well agreements and other forms of collateral, rather than lending predominantly against anticipated cash flows of our borrowers. We believe this allows us more options and greater likelihood of repayment from refinancing, asset sales of our borrowers and/or amortization.

We generally seek to invest in lower middle-market companies in areas that we believe have been historically under-serviced, especially during and after the 2008/2009 credit crisis. These areas include industries that are outside the focus of mainstream institutions or investors due to required industry-specific knowledge or are too small to attract interest from larger investment funds or other financial institutions. Because we believe there are fewer banks and specialty finance companies focused on lending to these lower middle-market companies, we believe we can negotiate more favorable terms on our debt investments in these companies than those that would be available for debt investments in comparable larger, more mainstream borrowers. Such favorable terms may include higher debt yields, lower leverage levels, more significant covenant protection and/or greater equity grants than typical of other transactions. We generally seek to avoid competing directly with other capital providers with respect to specific transactions in order to avoid the less favorable terms we believe are typically associated with such competitive bidding processes.


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On June 4, 2014, we formed FC Capital Investment Partners (“FCIP”), a multiple series private fund, for which we serve as the managing member and investment adviser. FCIP was formed as a Delaware limited liability company and operates under a Limited Liability Company agreement dated June 13, 2014. FCIP closed its first series on June 17, 2014, raising approximately $5.6 million in capital from investors. FCIP closed its second series on September 25, 2014, raising approximately $10.0 million in capital from investors. We may co-invest in certain portfolio investments from time to time with one or more series issued by FCIP where we determine that the aggregate available investment opportunity exceeds what we believe would be appropriate for us to acquire directly, subject to certain conditions. In addition, we expect to receive certain fees or other distributions from FCIP in connection with the services we provide to each series it may issue. Such fees may include management fees, incentive fees and administration fees and could be offset by expense caps or waivers in the future. During the three and six months ended December 31, 2014, we recognized $18,440 and $29,490, respectively, in management fee income related to the services performed for FCIP.

On July 14, 2014, we sold 506,000 shares of our common stock at $7.40 per share in a direct registered offering to certain investors for total gross proceeds of approximately $3.7 million.

On July 14, 2014, we closed an offering of our 8.25% fixed-rate notes due 2020 (the “Notes”). The Notes offering consisted of $12,500,000 in aggregate principal amount of the Notes. The Notes were sold at price of $25.375 plus accrued interest from June 30, 2014, a premium to par value of $25.00 per Note, for total gross proceeds of approximately $12.7 million. The Notes are a further issuance of, rank equally in right of payment with, and form a single series with the $21.1 million of currently outstanding Notes that will mature on June 30, 2020, and may be redeemed in whole or in part at any time or from time to time at our option on or after June 30, 2016. The Notes are listed on the NASDAQ Global Market and trade under the trading symbol “FULLL.”

Exemptive Relief

On December 4, 2014, we filed an exemptive application with the SEC to permit us to co-invest with funds or entities managed by our investment adviser in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. Any such order will be subject to certain terms and conditions. Furthermore, there is no assurance when, or even if, this application for exemptive relief will be granted by the SEC.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States (“GAAP”) 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 the following items as critical accounting policies.

Basis of Consolidation

Under the 1940 Act rules, the regulations pursuant to Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ Audit and Accounting Guide for Investment Companies, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services and benefits to us. Our financial statements include our accounts and the accounts of Full Circle West, Inc., FC New Media Inc., TransAmerican Asset Servicing Group, Inc., FC New Specialty Foods, Inc., and FC Takoda Holdings, LLC, our only wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Valuation of Investments in Securities at Fair Value – Definition and Hierarchy

In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.


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In determining fair value, Full Circle Capital’s Board of Directors uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Board of Directors. Unobservable inputs reflect the Board of Directors’ assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are not considered to be the best estimate of fair value are valued at fair value as determined in good faith by the Board of Directors. Because the Company expects that there will not be a readily available market value for many of the investments in the Company’s portfolio, it is expected that many of the Company’s portfolio investments’ values will be determined in good faith by the Board of Directors in accordance with a documented valuation policy that has been reviewed and approved by the Board of Directors and in accordance with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Board of Directors in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls, is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.


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Net change in realized gain (loss) and net change in unrealized gain (loss) on investments

Net change in unrealized appreciation or depreciation recorded on investments is the net change in the fair value of our investment portfolio during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. Realized gain
(loss) on the sale of investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs.

From time to time, the Company may enter into a new transaction with a portfolio company as a result of the sale, merger, foreclosure, bankruptcy or other corporate event involving the portfolio company. In such cases, the Company may receive newly issued notes, securities and/or other consideration in exchange for, or resulting from, the cancellation of the instruments previously held by the Company with regard to that portfolio company. In such cases, the Company may experience a realized loss on the instrument being sold or cancelled, and, concurrently, an elimination of any previously recognized unrealized losses on the portfolio investment. Such elimination of unrealized loss is included on the Statements of Operations as an increase in the Change in Unrealized Gain (Loss) on Investments.

Valuation Techniques
Senior and Subordinated Secured Loans

The Company’s portfolio consists primarily of private debt instruments. Investments for which market quotations are readily available (“Level 2 Debt”) are valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers. For other debt investments (“Level 3 Debt”) market quotations are not available and other techniques are used to determine fair value. The Company considers its Level 3 debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, the Company’s Board of Directors considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, the financial condition of the borrower, economic conditions, success and prepayment fees, and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, the Company’s Board of Directors will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.

This evaluation will be updated no less than quarterly for Level 3 debt instruments, and more frequently for time periods where there are significant changes in the investor base or significant changes in the perceived value of the underlying collateral. The collateral value will be analyzed on an ongoing basis using internal metrics, appraisals, work performed by third-party valuation agents, if applicable, and other data as may be acquired and analyzed by Management and the Company’s Board of Directors.

Investments in Private Companies

The Company’s Board of Directors determines the fair value of its investments in private companies where no market quotations are readily available by incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, and performance multiples, among other factors, including work performed by third-party valuation agents. These nonpublic investments are included in Level 3 of the fair value hierarchy.

Warrants

The Company’s Board of Directors ascribes value to warrants based on fair value analyses that may include discounted cash flow analyses, option pricing models, comparable analyses and other techniques as deemed appropriate.


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Fair Value

The Company’s assets measured at fair value on a recurring basis subject to the requirements of ASC Topic 820 at December 31, 2014 and June 30, 2014, were as follows:

                      As of December 31, 2014 (Unaudited)

[[Image Removed]]   [[Image Removed]]     [[Image Removed]]     [[Image Removed]]      [[Image Removed]]
                          Level 1               Level 2               Level 3                 Total
Assets
Senior and
Subordinated
Loans, at fair
value               $               -     $       9,652,500     $      114,444,456     $      124,096,956
Limited Liability
Company
Interests, at
fair value                          -                     -              1,675,856              1,675,856
Investments in
Warrants, at fair
value                               -                     -              2,686,966              2,686,966
                    $               -     $       9,652,500     $      118,807,278     $      128,459,778


                              As of June 30, 2014

[[Image Removed]]   [[Image Removed]]      [[Image Removed]]     [[Image Removed]]      [[Image Removed]]
                          Level 1                Level 2               Level 3                 Total
Assets
Senior and
Subordinated
Loans, at fair
value               $                -     $       7,175,000     $      111,079,608     $      118,254,608
Limited Liability
Company
Interests, at
fair value                           -                     -              3,875,583              3,875,583
Investments in
Warrants, at fair
value                                -                     -              3,060,421              3,060,421
U.S. Treasury
Securities, at
fair value(1)               25,000,147                     -                      -             25,000,147
                    $       25,000,147     $       7,175,000     $      118,015,612     $      150,190,759

[[Image Removed]]

(1) U.S. Treasury Securities were purchased and temporarily held in connection with compliance with RIC diversification requirements under Subchapter M of the Code.

During the six months ended December 31, 2014 and the year ended June 30, 2014, there were no transfers in or out of levels.

Revenue Recognition

Realized gains or losses on the sale of investments are calculated using the specific identification method.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with senior and subordinated secured loans are accreted into interest income over the respective terms of the applicable loans. Upon the prepayment of a senior or subordinated secured loan, any unamortized loan origination, closing and/or commitment fees are recorded as interest income. Generally, when a payment default occurs on a loan in the portfolio, or if the Company otherwise believes that the issuer of the loan will not be able to make contractual interest payments, the Company may place the loan on non-accrual status and cease recognizing interest income on the loan until all principal and interest is current through payment, or until a restructuring occurs, and the interest income is deemed to be collectible. The Company may make exceptions to this policy if a loan has sufficient collateral value and is in the process of collection or is viewed to be able to pay all amounts due if the loan were to be collected on through an investment in, or sale of the business, the sale of the assets of the business, or some portion or combination thereof.

Dividend income is recorded on the ex-dividend date.

Structuring fees, excess deal deposits, prepayment fees and similar fees are recognized as Other Income as earned, usually when paid. Other fee income, including annual fees and monitoring fees are included in Other Income.


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Use of Estimates

The preparation of the financial statements of Full Circle Capital in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts disclosed in the financial statements of Full Circle Capital. Actual results could differ from those estimates.

Current Market Conditions and Market Opportunity

We believe that the current credit environment provides favorable opportunities to achieve attractive risk-adjusted returns on the types of senior secured loans and other investments we may target. In particular, we believe that, despite an overall fall off in loan demand due to the depressed economic conditions, demand for financing from smaller to lower middle-market companies is largely outpacing the availability of lenders that have traditionally served this market. We believe that bank consolidations, the failure of a number of alternative lending vehicles due to poor underwriting practices and an overall tightening of underwriting standards has significantly reduced the number and activity level of potential lenders.

We believe there has long been a combination of demand for capital and an underserved market for capital addressing lower middle-market borrowers. We believe there is robust demand for continued growth capital as well as demand from very significant refinancing requirements of many borrowers as debt facilities come due, given the lack of willing and qualified capital providers. We believe these market conditions have been further exacerbated in the current . . .

 

0 1179

Full Circle Capital Corp. to Release Fiscal Second Quarter 2015 Results on Monday, February 9, 2015

Management to Host Webcast on Tuesday, February 10, 2015 at 8:30 AM Eastern

 GREENWICH, Conn., Feb. 3, 2015 (GLOBE NEWSWIRE) — Full Circle Capital Corporation (FULL) (“Full Circle Capital”), a business development company that lends to and invests in loans to lower middle-market companies operating in a diverse range of industries, announced today that it will report its fiscal second quarter 2015 results after the market closes on Monday, February 9, 2015.

Management will host a conference call at 8:30 am ET on Tuesday, February 10, 2015 to discuss results. A live webcast of the conference call and accompanying slide presentation will be available at http://ir.fccapital.com. Please access the website approximately 10 minutes before the conference call begins.

To participate in the call, please call (888) 206-4916 (domestic toll-free) or (913) 312-1411 (international) and reference PIN: 6223832.

A webcast replay of the call, along with an archived copy of the presentation, will be available athttp://ir.fccapital.com for one year following the call.

An audio replay will also be available until February 17, 2015, by dialing (877) 870-5176 (toll-free) or (858) 384-5517 (international), PIN: 6223832.

About Full Circle Capital

Full Circle Capital Corporation (FULL) is a Greenwich, Connecticut based closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle Capital lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle Capital’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s website, www.fccapital.com.

Forward-Looking Statements

This press release contains forward-looking statements which relate to future events or Full Circle Capital’s future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition 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 from time to time in Full Circle Capital’s filings with the Securities and Exchange Commission. Full Circle Capital undertakes no duty to update any forward-looking statements made herein.

Contact:
Full Circle Capital Corporation
Gregg J. Felton, 203-900-2100
Co-Chief Executive Officer
or
John Stuart, 203-900-2100
Co-Chief Executive Officer
info@fccapital.com

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Form 8-K for FULL CIRCLE CAPITAL CORP

Submission of Matters to a Vote of Security Holders, Financial Statement

Item 5.07. Submission of Matters to a Vote of Security HoldersAnnual Meeting of Shareholders

Full Circle Capital Corporation (the “Company”) held its Annual Meeting of Shareholders on January 16, 2015 and submitted two matters to the vote of the shareholders. A summary of the matters voted upon by shareholders is set forth below.

1. Shareholders elected two nominees for director to serve for three-year terms to expire at the 2018 Annual Meeting of Shareholders based on the following votes:

      Name          Votes For   Votes Withheld   Broker Non-Votes
Edward H. Cohen     2,466,792      312,587          7,223,959
(three-year term)
Terence B. Flynn    2,472,255      307,124          7,223,959
(three-year term)

2. Shareholders ratified the appointment of McGladrey LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2015 based on the following votes:

Votes For Votes Against Abstentions
9,293,354 474,572 237,412

Special Meeting of Shareholders

The Company also held a Special Meeting of Shareholders on January 16, 2015 and submitted one matter to the vote of the shareholders. A summary of the matter voted upon by shareholders is set forth below.

1. Shareholders approved the authorization of the Company, with the approval of its Board of Directors, to sell shares of its common stock at a price or prices below the Company’s then current net asset value per share in one or more offerings on the following votes:

                     Votes For   Votes Against   Abstentions
 With Affiliates     4,825,304     1,736,634       209,982
Without Affiliates   4,394,952     1,736,634       209,982

 

Item 9.01 Financial Statements and Exhibits.(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Not applicable.

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Full Circle Capital Provides Update on Second Quarter 2015 Portfolio Activity

Second Quarter Originations total $13.25 million

GREENWICH, Conn.–(BUSINESS WIRE)–

Full Circle Capital Corporation (FULL) (“Full Circle Capital”) today released an update of its investment portfolio activity for the second quarter of fiscal 2015 ended December 31, 2014.

During the second quarter of fiscal 2015, Full Circle Capital completed portfolio investments totaling approximately $13.25 million, representing investments in three new portfolio companies, and received proceeds from full and partial realizations totaling $8.4 million. Details of specific portfolio activity are provided below:

Portfolio Investments:

On October 9, 2014, Full Circle Capital funded a $2.75 million senior secured credit facility to Ads Direct Media, Inc., an internet advertising agency. The credit facility bears interest at one month LIBOR plus 13.00% with a LIBOR floor of 0.50%, and has a final maturity of October 6, 2017. A floor is the minimum rate that will be applied in calculating an interest rate.

On October 10, 2014, Full Circle Capital funded $6.0 million of a $60.0 million second lien secured loan to Bioventus LLC, a specialty pharmaceutical company. The credit facility bears interest at one month LIBOR plus 10.00% with a LIBOR floor of 1.00%, and has a final maturity of April 10, 2020.

On December 17, 2014, Full Circle Capital funded a $4.5 million senior secured mortgage term loan to Luling Lodging, LLC, a hotel operator. The credit facility bears interest at one month LIBOR plus 12.00% with a LIBOR floor at 0.25% and has a final maturity of December 17, 2017.

Portfolio Repayments:

On October 15, 2014, the senior secured credit facility with Esselte Holdings Inc., Esselte AB was fully repaid at par plus accrued interest for total proceeds of $1,758,967.

On December 22, 2014, the senior secured credit facility with GW Power, LLC and Greenwood Fuels WI, LLC, was partially prepaid at par plus prepayment fees for total proceeds of $700,000.

On December 24, 2014, the senior secured credit facility with CPX, Inc. was fully repaid at par plus accrued interest and fees for total proceeds of $2,745,452.

During the quarter ended December 31, 2014, the senior secured term loan with PEAKS Trust 2009-1 was partially repaid at par plus accrued interest for total proceeds of $3,239,450.

Gregg J. Felton, Full Circle Capital’s President and Co-Chief Executive Officer, stated, “We are pleased with the continued growth of Full Circle Capital’s investment portfolio to record levels this past quarter. The general market volatility serves to increase our investment opportunities. Following substantial portfolio growth over the last four quarters, we believe our origination platform continues to produce an attractive investment pipeline. That said, our volume of new investments in the most recent quarter moderated versus the prior quarter as we have approached our current investment capacity.”

About Full Circle Capital

Full Circle Capital Corporation (FULL) is a Greenwich, Connecticut based closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle Capital lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by smaller and lower middle-market companies that operate in a diverse range of industries. Full Circle Capital’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s website,www.fccapital.com.

Forward-Looking Statements

This press release contains forward-looking statements which relate to future events or Full Circle Capital’s future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition 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 from time to time in Full Circle Capital’s filings with the Securities and Exchange Commission. Full Circle Capital undertakes no duty to update any forward-looking statements made herein.

Contact:
Full Circle Capital Corporation
Gregg J. Felton, 203-900-2100
Co-Chief Executive Officer
or
John Stuart, 203-900-2100
Co-Chief Executive Officer
info@fccapital.com

1 1578

Form 8-K for FULL CIRCLE CAPITAL CORP

15-Jan-2015

Results of Operations and Financial Condition, Financial Statements and

Item 2.02 Results of Operations and Financial Condition.On January 15, 2015, Full Circle Capital Corporation (the “Company”) issued a press release announcing its investment portfolio activity for the quarter ended December 31, 2014. The text of the press release is included as an exhibit to this Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

Exhibit No. Description
99.1 Press release dated January 15, 2015

 

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Form 10-Q for FULL CIRCLE CAPITAL CORP

10-Nov-2014

Quarterly Report

Item 2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking StatementsThe information contained in this section should be read in conjunction with our consolidated financial statements and related notes and schedules thereto appearing elsewhere in this quarterly report on Form 10-Q, as well as the sections entitled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes and schedules thereto included in our Annual Report on Form 10-K for the period ended June 30, 2014.

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

  • our future operating results;
  • our business prospects and the prospects of our portfolio companies;
  • the impact of investments that we expect to make;
  • our contractual arrangements and relationships with third parties;
  • the dependence of our future success on the general economy and its impact on the industries in which we invest;
  • the ability of our portfolio companies to achieve their objectives;
  • our expected financings and investments;
  • the adequacy of our cash resources and working capital; and
  • the timing of cash flows, if any, from the operations of our portfolio companies.

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

  • an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;
  • an expiration or contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;
  • interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;
  • currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and
  • the risks, uncertainties and other factors we identify in “Risk Factors” in our Annual Report on Form 10-K for the period ended June 30, 2014 and elsewhere in this quarterly report on Form 10-Q and in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking


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statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q.

Except as otherwise specified, references to “Full Circle Capital,” “the Company,” “we,” “us” and “our” refer to Full Circle Capital Corporation.

Overview

We are an externally managed non-diversified closed-end management investment company formed in April 2010, and have elected to be regulated as a business development company under the 1940 Act. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We are managed by Full Circle Advisors, and Full Circle Service Company provides the administrative services necessary for us to operate.

We invest primarily in senior secured loans and, to a lesser extent, second liens loans, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. In our lending activities, we focus primarily on portfolio companies with both (i) tangible and intangible assets available as collateral and security against our loan to help mitigate our risk of loss, and (ii) cash flow to cover debt service. We believe this provides us with a more attractive risk adjusted return profile, with greater principal protection and likelihood of repayment.

Our investments generally range in size from $3 million to $10 million; however, we may make larger or smaller investments from time to time on an opportunistic basis. We focus primarily on senior secured loans and “stretch” senior secured loans, also referred to as “unitranche” loans, which combine characteristics of traditional first-lien senior secured loans and second-lien or subordinated loans. We believe that having a first lien, senior secured position provides us with greater control and security in the primary collateral of a borrower and helps to mitigate risk against loss of principal should a borrower default. Our stretch senior secured loans typically possess a greater advance rate against the borrower’s assets and cash flow, and accordingly carry a higher interest rate and/or greater equity participation, than traditional senior secured loans. This stretch senior secured loan instrument can provide borrowers with a more efficient and desirable solution than a senior bank line combined with a separate second lien or mezzanine loan obtained from another source. We also may invest in mezzanine, subordinated or unsecured loans. In addition, we may acquire equity or equity related interests from a borrower along with our debt investment. We attempt to protect against risk of loss on our debt investments by investing in borrowers with cash flows to cover debt service, while frequently securing our loans against tangible or intangible assets of our borrowers, which may include accounts receivable and contracts for services, and obtaining a favorable loan-to-value ratio, and in many cases, securing other financial protections or credit enhancements, such as personal guarantees from the principals of our borrowers, make well agreements and other forms of collateral, rather than lending predominantly against anticipated cash flows of our borrowers. We believe this allows us more options and greater likelihood of repayment from refinancing, asset sales of our borrowers and/or amortization.

We generally seek to invest in lower middle-market companies in areas that we believe have been historically under-serviced, especially during and after the 2008/2009 credit crisis. These areas include industries that are outside the focus of mainstream institutions or investors due to required industry-specific knowledge or are too small to attract interest from larger investment funds or other financial institutions. Because we believe there are fewer banks and specialty finance companies focused on lending to these lower middle-market companies, we believe we can negotiate more favorable terms on our debt investments in these companies than those that would be available for debt investments in comparable larger, more mainstream borrowers. Such favorable terms may include higher debt yields, lower leverage levels, more significant covenant protection and/or greater equity grants than typical of other transactions. We generally seek to avoid competing directly with other capital providers with respect to specific transactions in order to avoid the less favorable terms we believe are typically associated with such competitive bidding processes.

On June 4, 2014, we formed FC Capital Investment Partners (“FCIP”), a multiple series private fund, for which we serve as the managing member and investment adviser. FCIP was formed as a Delaware limited


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liability company and operates under a Limited Liability Company agreement dated June 13, 2014. FCIP closed its first series on June 17, 2014, raising approximately $5.6 million in capital from investors. FCIP closed its second series on September 25, 2014, raising approximately $10.0 million in capital from investors. We may co-invest in certain portfolio investments from time to time with one or more series issued by FCIP where we determine that the aggregate available investment opportunity exceeds what we believe would be appropriate for us to acquire directly, subject to certain conditions.

In addition, we expect to receive certain fees or other distributions from FCIP in connection with the services we provide to each series it may issue. Such fees may include management fees, incentive fees and administration fees and could be offset by expense caps or waivers in the future. During the three months ended September 30, 2014, we recognized $10,370 in management fee income related to the services performed for FCIP.

On July 14, 2014, we sold 506,000 shares of our common stock at $7.40 per share in a direct registered offering to certain investors for total gross proceeds of approximately $3.7 million.

On July 14, 2014, we closed an offering of our 8.25% fixed-rate notes due 2020 (the “Notes”). The Notes offering consisted of $12,500,000 in aggregate principal amount of the Notes. The Notes were sold at price of $25.375 plus accrued interest from June 30, 2014, a premium to par value of $25.00 per Note, for total gross proceeds of approximately $12.7 million. The Notes are a further issuance of, rank equally in right of payment with, and form a single series with the $21.1 million of currently outstanding Notes that will mature on June 30, 2020, and may be redeemed in whole or in part at any time or from time to time at our option on or after June 30, 2016. The Notes are listed on the NASDAQ Global Market and trade under the trading symbol “FULLL.”

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States (“GAAP”) 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 the following items as critical accounting policies.

Basis of Consolidation

Under the 1940 Act rules, the regulations pursuant to Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ Audit and Accounting Guide for Investment Companies, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services and benefits to us. Our financial statements include our accounts and the accounts of Full Circle West, Inc., FC New Media Inc., TransAmerican Asset Servicing Group, Inc., FC New Specialty Foods, Inc., and FC Takoda Holdings, LLC, our only wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Valuation of Investments in Securities at Fair Value – Definition and Hierarchy

In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, Full Circle Capital’s Board of Directors uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Board of Directors. Unobservable inputs reflect the Board of Directors’ assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.


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Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are not considered to be the best estimate of fair value are valued at fair value as determined in good faith by the Board. Because the Company expects that there will not be a readily available market value for many of the investments in the Company’s portfolio, it is expected that many of the Company’s portfolio investments’ values will be determined in good faith by the Board in accordance with a documented valuation policy that has been reviewed and approved by the Board and in accordance with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Board of Directors in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls, is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.

Change in realized gain (loss) and unrealized gain (loss) on investments

Net unrealized appreciation or depreciation recorded on investments is the net change in the fair value of our investment portfolio during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. Realized gain (loss) on the sale of investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs.

From time to time, the Company may enter into a new transaction with a portfolio company as a result of the sale, merger, foreclosure, bankruptcy or other corporate event involving the portfolio company. In such cases, the Company may receive newly issued notes, securities and/or other consideration in exchange for, or resulting from, the cancellation of the instruments previously held by the Company with regard to that


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portfolio company. In such cases, the Company may experience a realized loss on the instrument being sold or cancelled, and, concurrently, an elimination of any previously recognized unrealized losses on the portfolio investment. Such elimination of unrealized loss is included on the Statements of Operations as an increase in the Change in Unrealized Gain (Loss) on Investments.

Valuation Techniques
Senior and Subordinated Secured Loans

The Company’s portfolio consists primarily of private debt instruments. Investments for which market quotations are readily available (“Level 2 Debt”) are valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers. For other debt investments (“Level 3 Debt”) market quotations are not available and other techniques are used to determine fair value. The Company considers its Level 3 debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, the Company’s Board of Directors considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, the financial condition of the borrower, economic conditions, success and prepayment fees, and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, the Company’s Board of Directors will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.

This evaluation will be updated no less than quarterly for Level 3 debt instruments, and more frequently for time periods where there are significant changes in the investor base or significant changes in the perceived value of the underlying collateral. The collateral value will be analyzed on an ongoing basis using internal metrics, appraisals, work performed by third-party valuation agents, if applicable, and other data as may be acquired and analyzed by Management and the Company’s Board of Directors.

Investments in Private Companies

The Company’s Board of Directors determines the fair value of its investments in private companies where no market quotations are readily available by incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, and performance multiples, among other factors, including work performed by third-party valuation agents. These nonpublic investments are included in Level 3 of the fair value hierarchy.

Warrants

The Company’s Board of Directors ascribes value to warrants based on fair value analyses that may include discounted cash flow analyses, option pricing models, comparable analyses and other techniques as deemed appropriate.


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Fair Value

The Company’s assets measured at fair value on a recurring basis subject to the requirements of ASC Topic 820 at September 30, 2014 and June 30, 2014, were as follows:

                      As of September 30, 2014 (Unaudited)

[[Image Removed]]   [[Image Removed]]     [[Image Removed]]      [[Image Removed]]      [[Image Removed]]
                          Level 1               Level 2                Level 3                 Total
Assets
Senior and
Subordinated
Loans, at fair
value               $               -     $       10,822,500     $      113,709,308     $      124,531,808
Limited Liability
Company
Interests, at
fair value                          -                      -              2,329,498              2,329,498
Investments in
Warrants, at fair
value                               -                      -              4,668,096              4,668,096
                    $               -     $       10,822,500     $      120,706,902     $      131,529,402


                              As of June 30, 2014

[[Image Removed]]   [[Image Removed]]      [[Image Removed]]     [[Image Removed]]      [[Image Removed]]
                          Level 1                Level 2               Level 3                 Total
Assets
Senior and
Subordinated
Loans, at fair
value               $                -     $       7,175,000     $      111,079,608     $      118,254,608
Limited Liability
Company
Interests, at
fair
value                                -                     -              3,875,583              3,875,583
Investments in
Warrants, at fair
value                                -                     -              3,060,421              3,060,421
U.S. Treasury
Securities, at
fair value(1)               25,000,147                     -                      -             25,000,147
                    $       25,000,147     $       7,175,000     $      118,015,612     $      150,190,759

[[Image Removed]]

(1) U.S. Treasury Securities were purchased and temporarily held in connection with compliance with RIC diversification requirements under Subchapter M of the Code.

During the three months ended September 30, 2014 and the year ended June 30, 2014, there were no transfers in or out of levels.

Revenue Recognition

Realized gains or losses on the sale of investments are calculated using the specific identification method.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with senior and subordinated secured loans are accreted into interest income over the respective terms of the applicable loans. Upon the prepayment of a senior or subordinated secured loan, any unamortized loan origination, closing and/or commitment fees are recorded as interest income. Generally, when a payment default occurs on a loan in the portfolio, or if the Company otherwise believes that the issuer of the loan will not be able to make contractual interest payments, the Company may place the loan on non-accrual status and cease recognizing interest income on the loan until all principal and interest is current through payment, or until a restructuring occurs, and the interest income is deemed to be collectible. The Company may make exceptions to this policy if a loan has sufficient collateral value and is in the process of collection or is viewed to be able to pay all amounts due if the loan were to be collected on through an investment in, or sale of the business, the sale of the assets of the business, or some portion or combination thereof.

Dividend income is recorded on the ex-dividend date.

Structuring fees, excess deal deposits, prepayment fees and similar fees are recognized as Other Income as earned, usually when paid. Other fee income, including annual fees and monitoring fees are included in Other Income.


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Use of Estimates

The preparation of the financial statements of Full Circle Capital in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts disclosed in the financial statements of Full Circle Capital. Actual results could differ from those estimates.

Current Market Conditions and Market Opportunity

We believe that the current credit environment provides favorable opportunities to achieve attractive risk-adjusted returns on the types of senior secured loans and other investments we may target. In particular, we believe that, despite an overall fall off in loan demand due to the depressed economic conditions, demand for financing from smaller to lower middle-market companies is largely outpacing the availability of lenders that have traditionally served this market. We believe that bank consolidations, the failure of a number of alternative lending vehicles due to poor underwriting practices and an overall tightening of underwriting standards has significantly reduced the number and activity level of potential lenders.

We believe there has long been a combination of demand for capital and an underserved market for capital addressing lower middle-market borrowers. We believe there is robust demand for continued growth capital as well as demand from very significant refinancing requirements of many borrowers as debt facilities come due, given the lack of willing and qualified capital providers. We believe these market conditions have been further exacerbated in the current environment due to:

  • larger lenders exiting this market to focus on larger investment opportunities which are more appropriate for their operating cost structures;
  • the elimination of many specialized lenders from the market due to lack of capital as a result of, for instance, the closing off of the securitization market or their own poor performance, and
  •  the need for certain capital providers to reduce lending activities due to their reduced access to capital and the overall deleveraging of the financial market.

 

 

0 1392

Full Circle Capital Corporation Schedules First Quarter Fiscal 2015 Earnings Release and Conference Call

GREENWICH, Conn.–(BUSINESS WIRE)–

Full Circle Capital Corporation (FULL) will report financial results for the first quarter of fiscal 2015 ended September 30, 2014 and its quarterly report on Form 10Q after the market closes on Monday, November 10, 2014.

Management will host a conference call to discuss these results on Tuesday, November 11, 2014 at 10:00 a.m. EST. To participate in the conference call, please call 866-305-6438 (domestic call-in) or 706-679-7161 (international call-in) and reference code # 31577094.

A live webcast of the conference call and the accompanying slide presentation will be available at http://ir.fccapital.com/CorporateProfile.aspx?iid=4151676. All participants should call or access the website approximately 10 minutes before the conference begins.

A telephone replay of the conference call will be available from 1:00 p.m. EST on November 11, 2014 until 11:59 p.m. EST on November 14, 2014 by calling 855-859-2056 (domestic) or 404-537-3406 (international) and entering confirmation # 31577094. An archived replay of the conference call and slide presentation will also be available in the investor relations section of the company’s website.

About Full Circle Capital Corporation

Full Circle Capital Corporation (www.fccapital.com) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle’s investment objective is to generate both current income and capital appreciation through debt and equity investments.

Forward-Looking Statements

This press release contains forward-looking statements which relate to future events or Full Circle’s future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition 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 from time to time in Full Circle’s filings with the Securities and Exchange Commission. Full Circle undertakes no duty to update any forward-looking statements made herein.

Contact:
Company Contacts:
Full Circle Capital Corporation
John Stuart, 203-900-2100
Co-Chief Executive Officer
or
Gregg J. Felton, 203-900-2100
Co-Chief Executive Officer
info@fccapital.com
or
Investor Relations Contacts:
LHA
Jody Burfening, 212-838-3777
or
Stephanie Prince, 212-838-3777
sprince@lhai.com

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