OREANDA-NEWS. May 16, 2016. Full Circle Capital Corporation (Nasdaq:FULL) (the “Company”) today announced its financial results for the fiscal third quarter ended March 31, 2016.

Financial Highlights for the Fiscal Third Quarter Ended March 31, 2016:

  • Received \\$29.3 million in repayments.
  • Total investment income of \\$3.7 million, compared with \\$4.3 million for the prior-year quarter.
  • Net investment income (“NII”) was \\$1.7 million, or \\$0.08 per share, compared with \\$2.0 million, or \\$0.17 per share, in the prior-year quarter.
  • Net unrealized losses were \\$2.8 million, consisting of net unrealized losses on investments of \\$4.5 million, partially offset by net unrealized gains on an open swap contract of \\$1.7 million. Net realized gains were \\$0.1 million.
  • Net decrease in net assets from operations was \\$1.0 million, or \\$0.04 per share.
  • Per share amounts are based on approximately 22.5 million weighted average shares outstanding for the third quarter of fiscal 2016, compared to approximately 12.0 million weighted average shares outstanding for the third quarter of fiscal 2015.  The increase in weighted average shares outstanding reflects share issuances completed during calendar 2015 offset by share repurchases during the first and second quarters of fiscal 2016.

As of March 31, 2016:

  • Net asset value was \\$3.61 per share and aggregate investment portfolio fair value was \\$91.3 million
  • Weighted average portfolio interest rate was 10.27%.
  • 89% of portfolio company investments were first lien senior secured loans.

Update on Strategic Alternatives

As noted previously, in November 2015, the Company’s Board of Directors formed a Special Committee, composed solely of independent directors Mark C. Biderman, Edward H. Cohen and Thomas A. Ortwein, Jr., to consider various strategic alternatives potentially available to the Company.  The process being conducted by the Special Committee is ongoing.

In order to maximize the types of potential strategic alternatives available to the Company, the Company has opted not to reinvest any cash proceeds received by the Company in connection with loan repayments and sales and has limited its origination activities.  As a result of this change in investment strategy, the Company’s loan assets and related investment income have declined.  Accordingly, the Board of Directors suspended the declaration of any future distributions to stockholders.  

Third Quarter Fiscal 2016 Results
The Company’s net asset value at March 31, 2016 was \\$3.61 per share. During the quarter, the Company generated \\$3.4 million of interest income compared to \\$4.3 million in the third quarter of fiscal 2015, a decrease of 19.1%. Income from fees and other sources in the quarter totaled \\$0.2 million, compared to \\$0.1 million in the prior-year quarter.

The Company produced NII of \\$1.7 million, or \\$0.08 per share, in the quarter ended March 31, 2016 compared to \\$2.0 million, or \\$0.17 per share, in the quarter ended March 31, 2015. 

Net unrealized losses of \\$2.8 million were comprised of \\$6.3 million of net unrealized depreciation on equity investments, \\$1.8 million of net unrealized appreciation on debt investments and \\$1.7 million of net unrealized appreciation on an open swap contract. Realized gains on investments were \\$0.1 million.  Net decrease in net assets resulting from operations was \\$1.0 million, or \\$0.04 per share.

Since the beginning of calendar 2016, the Company has restructured terms with respect to two of its portfolio companies and received approximately \\$37 million in repayments.

At March 31, 2016, the Company’s portfolio included debt investments in 25 companies at an average of \\$3.6 million per investment.  The weighted average interest rate on all outstanding debt investments was 10.27% at March 31, 2016, while the weighted average interest rate of the Company’s performing debt investments was 11.93%. At fair value, 88.5% of portfolio investments were first lien loans, 11.2% were second lien loans and 0.3% were equity investments. Approximately 76% of the debt investment portfolio, at fair value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 63% at March 31, 2016, compared to 66% at March 31, 2015. 

Subsequent Events

On April 6, 2016, the senior secured note to Fuse, LLC was sold for total proceeds of approximately \\$5.5 million.  At March 31, 2016 the Company had unrealized losses of approximately \\$1.7 million which were realized on April 6, 2016.

On April 11, 2016, Modular Process Control, LLC completed a restructuring whereby the loans and warrant were extinguished for consideration including \\$0.8 million in cash and \\$0.8 million of an unsecured promissory note.  At March 31, 2016, the Company had unrealized losses of approximately \\$6.4 million, of which approximately \\$5.5 million were realized as part of the restructuring on April 11, 2016.

On April 19, 2016, the senior secured revolving term loan to ProGrade Ammo Group, LLC was repaid for net proceeds of approximately \\$1.6 million.  At March 31, 2016, the Company had unrealized losses of approximately \\$5.4 million which were realized on April 19, 2016.

Conference Call Details

The Company will not be holding an earnings call for this quarter.

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
 
   March 31, 2016  June 30, 2015 
   (Unaudited)    
Assets          
Control Investments at Fair Value (Cost of \\$408,606 and \\$11,409,596, respectively)   \\$  130,000   \\$ 5,812,064  
Affiliate Investments at Fair Value (Cost of \\$20,003,978 and \\$24,434,726, respectively)      3,787,728     16,019,272  
Non-Control/Non-Affiliate Investments at Fair Value (Cost of \\$98,216,482 and \\$136,351,581, respectively)      87,357,234     130,282,423  
Total Investments at Fair Value (Cost of \\$118,629,066 and \\$172,195,903, respectively)      91,274,962     152,113,759  
           
Cash     19,778,639     3,736,563  
Interest Receivable     1,098,038     1,903,606  
Principal Receivable     27,578     23,287  
Distributions Receivable     -     15,141  
Due from Affiliates     246,929     605,749  
Due from Portfolio Investments     256,340     180,300  
Receivable on Open Swap Contract     -     1,081  
Receivable for Investments Sold     2,849,194     -  
Prepaid Expenses     148,547     66,105  
Other Assets     28,483     1,483,578  
Deferred Offering Expenses     367,807     328,168  
Deferred Credit Facility Fees     50,624     267,645  
           
Total Assets     116,127,141     160,724,982  
           
Liabilities          
Due to Affiliates     716,479     1,052,489  
Accrued Liabilities     289,282     179,378  
Deposit from Swap Counterparty     -     10,380,000  
Payable for Investments Acquired     -     15,020,000  
Distributions Payable     786,529     813,240  
Interest Payable     45,062     57,605  
Other Liabilities     187,826     305,957  
Accrued Offering Expenses     -     7,258  
Notes Payable 8.25% due June 30, 2020 (plus unamortized premium of \\$141,218 and \\$158,504 and less deferred debt issuance costs of \\$714,453 and \\$833,541, respectively)     33,072,290     32,970,488  
           
Total Liabilities     35,097,468     60,786,415  
Commitments and contingencies     -     -  
           
Net Assets   \\$ 81,029,673   \\$ 99,938,567  
           
Components of Net Assets          
Common Stock, par value \\$0.01 per share (100,000,000 authorized; 22,472,243 and 23,235,430 issued and outstanding, respectively)   \\$ 224,722   \\$ 232,354  
Paid-in Capital in Excess of Par     130,072,314     132,487,067  
Distributions in Excess of Net Investment Income     (763,276)    (119,318) 
Accumulated Net Realized Losses     (21,149,983)    (12,579,392) 
Accumulated Net Unrealized Losses     (27,354,104)    (20,082,144) 
Net Assets   \\$ 81,029,673   \\$ 99,938,567  
           
Net Asset Value Per Share   \\$ 3.61   \\$ 4.30  
FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
      
   Three Months Ended March 31, Nine Months Ended March 31,
   2016 2015 2016 2015
Investment Income             
Interest Income from Non-Control/Non-Affiliate Investments  \\$  3,164,723  \\$ 3,310,605  \\$  9,804,079  \\$  9,486,149 
Interest Income from Affiliate Investments     143,205     629,108     1,093,647     1,835,289 
Interest Income from Control Investments     134,619     317,431     464,244     1,280,177 
Dividend Income from Control Investments     13,351    -     33,998    - 
Other Income from Non-Control/Non-Affiliate Investments     119,661      19,148     1,696,484     524,990 
Other Income from Affiliate Investments     933     625     4,314     94,667 
Other Income from Control Investments     94,385     12,500     119,385     37,500 
Other Income from Non-Investment Sources     (880)   19,108     23,801    48,597 
Total Investment Income     3,669,997      4,308,525     13,239,952    13,307,369  
              
Operating Expenses             
Management Fee     451,381     545,564     1,612,167     1,699,451 
Incentive Fee     246,879     419,559     1,263,241     1,335,651 
Total Advisory Fees     698,260     965,123     2,875,408     3,035,102 
              
Allocation of Overhead Expenses     58,161     53,511     166,183     127,028 
Sub-Administration Fees     57,539     65,195     196,268     194,999 
Officers’ Compensation     76,306     75,913     228,919     227,739 
Total Costs Incurred Under Administration Agreement     192,006     194,619     591,370     549,766 
              
Directors’ Fees     34,750     49,750     119,250     138,446 
Interest Expenses     931,933     1,119,639     2,910,262     3,299,116 
Professional Services Expense     218,058     149,698     771,583     509,292 
Bank Fees     7,396     8,910     23,197     30,099 
Other    118,845    142,326    414,686    402,720 
              
Total Gross Operating Expenses    2,201,248    2,630,065    7,705,756    7,964,541 
              
Fee Waivers and Expense Reimbursement    (246,879)   (299,476)   (967,372)   (830,523)
              
Total Net Operating Expenses    1,954,369    2,330,589    6,738,384    7,134,018 
              
Net Investment Income    1,715,628    1,977,936    6,501,568    6,173,351 
Net Change in Unrealized Gain (Loss) on:             
Investments     (4,446,098)   3,165,547    (7,271,960)   (6,474,247)
Open Swap Contract     1,650,000    -    -    - 
Net Change in Unrealized Gain (Loss)     (2,796,098)   3,165,547    (7,271,960)   (6,474,247)
Net Realized Gain (Loss) on:             
Non-Control/Non-Affiliate Investments      1,851,853     (3,458,023)    (2,607,787)    (4,186,132)
Affiliate Investments     (348,339)    44,461     1,363,984     44,461 
Control Investments     661,613     (71,953)    (5,444,394)    (242,389)
Open Swap Contract     (2,085,281)   -     (1,882,293)   - 
Foreign Currency Transactions    -    -     (101)    (1,248)
Net Realized Gain (Loss)    79,846    (3,485,515)    (8,570,591)   (4,385,308)
Net Increase (Decrease) in Net Assets Resulting from Operations  \\$ (1,000,624) \\$ 1,657,968  \\$ (9,340,983) \\$ (4,686,204)
              
Earnings (Loss) per Common Share Basic and Diluted  \\$ (0.04) \\$ 0.14  \\$ (0.41) \\$ (0.39)
Net Investment Income per Common Share Basic and Diluted  \\$ 0.08  \\$ 0.17  \\$ 0.29  \\$ 0.52 
Weighted Average Shares of Common Stock Outstanding Basic    22,472,243    11,949,034    22,726,053    11,925,027 
Weighted Average Shares of Common Stock Outstanding Diluted    22,472,243    11,990,011    22,726,053    11,925,027 
FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES 
FINANCIAL HIGHLIGHTS
 
  Three months ended
March 31, 2016		  Three months ended
March 31, 2015		  Nine months ended
March 31, 2016		 Nine months ended
March 31, 2015
  (Unaudited)  (Unaudited)  (Unaudited) (Unaudited)
Per Share Data (1) :              
Net asset value at beginning of period \\$ 3.76   \\$ 5.48   \\$ 4.30  \\$ 6.38 
Accretion (dilution) from offerings (2)   -     (0.96)    -    (0.92)
Accretion from share repurchases(3)   -     -     0.03    - 
Offering costs   -     (0.06)    -    (0.06)
Net investment income (loss)(4)   0.08     0.17     0.29    0.52 
Net change in unrealized gain (loss)   (0.12)    0.29     (0.31)   (0.52)
Net realized gain (loss)   0.00     (0.29)    (0.38)   (0.37)
Dividends from net investment income   (0.08)    (0.17)    (0.29)   (0.52)
Return of capital   (0.03)    (0.03)    (0.03)   (0.08)
Net asset value at end of period \\$ 3.61   \\$ 4.43   \\$ 3.61  \\$ 4.43 
 (1)Financial highlights are based on weighted average shares outstanding.
 (2)Accretion and dilution from offering(s) is based on the net change in net asset value from each follow-on offering.
 (3)Accretion from share repurchases during the period is based on the net change in net asset value from the share repurchases.
 (4)Net investment income (loss) per share is calculated based on the beginning of year and end of year shares outstanding.