Attached files

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EX-32.2 - EXHIBIT 32.2 - Full Circle Capital Corp	v409996_exhx32x2.htm
EX-32.1 - EXHIBIT 32.1 - Full Circle Capital Corp	v409996_exhx32x1.htm
EX-31.1 - EXHIBIT 31.1 - Full Circle Capital Corp	v409996_exhx31x1.htm
EX-31.2 - EXHIBIT 31.2 - Full Circle Capital Corp	v409996_exhx31x2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


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

FOR THE QUARTERLY PERIOD ENDED March 31, 2015


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

COMMISSION FILE NUMBER: 814-00809

FULL CIRCLE CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)


MARYLAND		27-2411476
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

102 Greenwich Avenue, 2^nd Floor
Greenwich, CT 06830

(Address of principal executive office)

(203) 900-2100

(Registrant’s telephone number, including area code)

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

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

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


Large accelerated filer o		Accelerated filer o
Non-accelerated filer x (do not check if a smaller reporting company)		Smaller reporting company o

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

The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of May 11, 2015 was 23,235,430.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION


	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		1
Consolidated Statements of Assets and Liabilities as of March 31, 2015 (unaudited) and June 30, 2014		1
Consolidated Statements of Operations (unaudited) for the three and nine months ended March 31, 2015 and March 31, 2014		2
Consolidated Statements of Changes in Net Assets (unaudited) for the nine months ended March 31, 2015 and March 31, 2014		3
Consolidated Statements of Cash Flows (unaudited) for the nine months ended March 31, 2015 and March 31, 2014		4
Consolidated Schedule of Investments (unaudited) as of March 31, 2015		5
Consolidated Schedule of Investments as of June 30, 2014		11
Notes to Consolidated Financial Statements (unaudited) as of March 31, 2015		17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		43
Forward-Looking Statements		43
Overview		44
Critical Accounting Policies		46
Current Market Conditions and Market Opportunity		49
Operating Expense Reimbursement		50
Management Fee and Incentive Fee Waiver		50
Portfolio Composition and Investment Activity		51
Results of Operations		56
Liquidity and Capital Resources		61
Recent Developments		66
Item 3. Quantitative and Qualitative Disclosures About Market Risk		67
Item 4. Controls and Procedures		67
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		68
Item 1A. Risk Factors		68
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		69
Item 3. Defaults Upon Senior Securities		69
Item 4. Mine Safety Disclosures		69
Item 5. Other Information		69
Item 6. Exhibits		70
SIGNATURES		72

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


			March 31, 2015			June 30, 2014
			Unaudited
Assets
Control Investments at Fair Value (Cost of $19,288,955 and $20,253,149, respectively)	(NOTE 9	)	$	8,746,959		$	17,539,057
Affiliate Investments at Fair Value (Cost of $24,237,661 and $20,177,115, respectively)	(NOTE 9	)		17,258,161			14,588,417
Non-Control/Non-Affiliate Investments at Fair Value (Cost of $97,774,155 and $123,605,311, respectively)	(NOTE 9	)		94,976,588			118,063,285
Total Investments at Fair Value (Cost of $141,300,771 and $164,035,575, respectively)				120,981,708			150,190,759
Cash				2,187,047			—
Deposit with Broker				—			2,525,000
Interest Receivable				1,595,553			1,016,726
Principal Receivable				102,800			207,233
Due from Affiliates				349,623			4,273
Due from Portfolio Investments				151,911			135,288
Stock Subscriptions Receivable				39,220,724			—
Prepaid Expenses				135,703			57,470
Other Assets				1,320,968			750,326
Deferred Offering Expenses				189,324			—
Deferred Debt Issuance Costs	(NOTE 8	)		872,948			947,937
Deferred Credit Facility Fees	(NOTE 8	)		339,753			449,350
Total Assets				167,448,062			156,284,362
Liabilities
Due to Affiliates	(NOTE 5	)		983,634			891,966
Bank Overdraft				—			821,316
Accrued Liabilities				50,001			184,857
Due to Broker				—			25,000,221
Payable for Investments Acquired				—			24,900,172
Distributions Payable				800,585			766,683
Interest Payable				91,524			45,254
Other Liabilities				655,766			1,076,800
Accrued Offering Expenses				1,201,303			35,828
Line of Credit	(NOTE 8	)		27,207,560			8,435,463
Notes Payable 8.25% due June 30, 2020	(NOTE 8	)		33,809,749			21,145,525
Total Liabilities				64,800,122			83,304,085
Commitments and contingencies	(NOTE 13	)		—			—
Net Assets			$	102,647,940		$	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; 11,205,921 and 0 subscribed, respectively)			$	119,490		$	114,430
Paid-in Capital in Excess of Par				133,657,741			92,103,666
Distributions in Excess of Net Investment Income				(1,163,168	)		(131,251	)
Accumulated Net Realized Losses				(9,647,060	)		(5,261,752	)
Accumulated Net Unrealized Losses				(20,319,063	)		(13,844,816	)
Net Assets			$	102,647,940		$	72,980,277
Net Asset Value Per Share			$	4.43		$	6.38

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


		Three Months Ended March 31,						Nine Months Ended March 31,
		2015			2014			2015			2014
Investment Income
Interest Income from Non-Control/Non-Affiliate Investments		$	3,310,605		$	1,308,432		$	9,486,149		$	4,839,103
Interest Income from Affiliate Investments			629,108			673,896			1,835,289			1,984,549
Interest Income from Control Investments			317,431			510,038			1,280,177			1,452,149
Dividend Income from Control Investments			—			80,293			—			114,704
Other Income from Non-Control/Non-Affiliate Investments			38,256			603,190			573,587			1,966,552
Other Income from Affiliate Investments			625			3,275			94,667			12,156
Other Income from Control Investments			12,500			12,500			37,500			37,500
Total Investment Income			4,308,525			3,191,624			13,307,369			10,406,713
Operating Expenses
Management Fee			545,564			364,352			1,699,451			1,156,099
Incentive Fee			419,559			351,594			1,335,651			1,141,230
Total Advisory Fees	(NOTE 5)		965,123			715,946			3,035,102			2,297,329
Allocation of Overhead Expenses			53,511			43,604			127,028			142,315
Sub-Administration Fees			65,195			50,000			194,999			150,000
Officers’ Compensation			75,913			75,529			227,739			226,396
Total Costs Incurred Under Administration Agreement	(NOTE 5)		194,619			169,133			549,766			518,711
Directors’ Fees			49,750			26,125			138,446			86,375
Interest Expenses	(NOTE 8)		1,119,639			623,091			3,299,116			2,062,570
Professional Services Expense			149,698			112,629			509,292			467,110
Bank Fees			8,910			9,941			30,099			45,409
Other			142,326			128,380			402,720			379,015
Total Gross Operating Expenses			2,630,065			1,785,245			7,964,541			5,856,519
Expense Reimbursement	(NOTE 5)		(299,476	)		—			(830,523	)		—
Total Net Operating Expenses			2,330,589			1,785,245			7,134,018			5,856,519
Net Investment Income			1,977,936			1,406,379			6,173,351			4,550,194
Net Change in Unrealized Gain (Loss) on Investments			3,165,547			1,751,729			(6,474,247	)		(3,698,474	)
Net Realized Gain (Loss) on:
Non-Control/Non-Affiliate Investments			(3,458,023	)		224,320			(4,186,132	)		(946,449	)
Affiliate Investments			44,461			—			44,461			—
Control Investments			(71,953	)		—			(242,389	)		—
Foreign Currency Transactions			—			(906	)		(1,248	)		(838	)
Net Realized Gain (Loss)			(3,485,515	)		223,414			(4,385,308	)		(947,287	)
Net Increase (Decrease) in Net Assets Resulting from Operations		$	1,657,968		$	3,381,522		$	(4,686,204	)	$	(95,567	)
Earnings (Loss) per Common Share Basic and Diluted	(NOTE 4)	$	0.14		$	0.36		$	(0.39	)	$	(0.01	)
Net Investment Income per Common Share Basic and Diluted		$	0.17		$	0.15		$	0.52		$	0.56
Weighted Average Shares of Common Stock Outstanding Basic			11,949,034			9,419,350			11,925,027			8,177,036
Weighted Average Shares of Common Stock Outstanding Diluted			11,990,011			9,419,350			11,925,027			8,177,036

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)


	Nine Months Ended March 31, 2015			Nine Months Ended March 31, 2014
Increase (Decrease) in Net Assets Resulting from Operations:
Net Investment Income	$	6,173,351		$	4,550,194
Net Change in Unrealized Gain (Loss) on Investments		(6,474,247	)		(3,698,474	)
Net Realized Gain (Loss) on:
Investments		(4,384,060	)		(946,449	)
Foreign Currency Transactions		(1,248	)		(838	)
Net Realized Gain (Loss)		(4,385,308	)		(947,287	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(4,686,204	)		(95,567	)
Dividends from Net Investment Income		(6,173,351	)		(4,550,194	)
Distributions from Other Sources⁽¹⁾		(1,031,917	)		(890,869	)
Net Decrease in Net Assets Resulting from Distributions		(7,205,268	)		(5,441,063	)
Capital Share Transactions:
Issuance of Common Stock		42,965,123			18,412,399
Less Offering Costs and Underwriting Fees		(1,405,988	)		(818,783	)
Net Increase in Net Assets Resulting from Capital Share Transactions		41,559,135			17,593,616
Total Increase (Decrease) in Net Assets		29,667,663			12,056,986
Net Assets at Beginning of Period		72,980,277			60,644,039
Net Assets at End of Period	$	102,647,940		$	72,701,025
Capital Share Activity:
Shares Issued		506,000			2,522,300
Shares Subscribed		11,205,921			—
Shares Outstanding at Beginning of Period		11,443,034			7,569,382
Shares Outstanding and Subscribed at End of Period		23,154,955			10,091,682

(1)

To the extent our taxable earnings fall below the total amount of our distributions for a fiscal year, a portion of those distributions may be deemed a tax return of capital to our stockholders. Such amounts are determined at the end of each fiscal year.

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended March 31, 2015			Nine Months Ended March 31, 2014
Cash Flows from Operating Activities:
Net Increase (Decrease) in Net Assets Resulting from Operations	$	(4,686,204	)	$	(95,567	)
Adjustments to Reconcile Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities
Purchases of Investments		(89,325,596	)		(121,370,307	)
Increase in investments due to PIK		(302,030	)		(21,526	)
Proceeds from Sale or Refinancing of Investments		108,972,116			105,129,987
Net Realized (Gain) Loss on:
Investments		4,384,060			946,449
Foreign Currency Transactions		1,248			838
Net Change in Unrealized (Gain) Loss on Investments		6,474,247			3,698,474
Amortization and Accretion of Fixed Income Premiums and Discounts		(994,995	)		(332,615	)
Amortization and Accretion of Deferred Debt Issuance Premiums and Costs		95,379			118,653
Amortization of Deferred Credit Facility Fees		202,719			208,028
Change in Operating Assets and Liabilities
Deposit with Broker		2,525,000			(1,050,000	)
Interest Receivable		(578,827	)		124,376
Principal Receivable		104,433			(315,952	)
Distributions Receivable					(43,588	)
Due from Affiliates		(345,350	)		(1,332	)
Due from Portfolio Investment		(16,623	)		(32,307	)
Prepaid Expenses		(78,233	)		(46,261	)
Other Assets		(570,642	)		736,563
Due to Affiliates		91,668			8,526
Accrued Liabilities		(134,856	)		18,795
Due to Broker		(25,000,221	)		10,000,073
Payable for Investments Acquired		(24,900,172	)		5,940,000
Interest Payable		46,270			(103,152	)
Other Liabilities		(421,034	)		(149,112	)
Net Cash Provided by (Used in) Operating Activities		(24,457,643	)		3,369,043
Cash Flows from Financing Activities:
Bank Overdraft		(821,316	)		—
Borrowings Under Credit Facility		164,454,636			95,980,120
Payments Under Credit Facility		(145,682,539	)		(121,564,267	)
Distributions Paid to Shareholders		(7,171,366	)		(5,347,762	)
Deferred Credit Facility Fees		(93,122	)		(171,732	)
Deferred Debt Issuance Costs		(43,665	)		(19,102	)
Payment of Offering Expenses and Underwriting Fees		(429,837	)		(720,949	)
Payment of Distribution Notes		—			(3,404,583	)
Proceeds from Notes Payable		12,687,500			2,299,704
Proceeds from Issuance of Common Stock		3,744,399			18,412,399
Net Cash Provided by (Used in) Financing Activities		26,644,690			(14,536,172	)
Total Increase (Decrease) in Cash		2,187,047			(11,167,129	)
Cash Balance at Beginning of Period		—			18,029,115
Cash Balance at End of Period	$	2,187,047		$	6,861,986
Supplemental Disclosure of Non-Cash Operating Activities:
Exercise of Advanced Cannabis Solutions, Inc. warrant into common stock	$	433,929		$	—
Supplemental Disclosures of Non-Cash Financing Activities:
Distributions Declared, Not Yet Paid	$	800,585		$	676,143
Accrued Offering Expenses	$	1,201,303		$	11,000
Stock Subscriptions Receivable	$	39,220,724		$	—
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for Interest	$	2,954,748		$	1,839,041

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited)
March 31, 2015



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Control Investments⁽³⁾
New Media West, LLC		Cable TV/ Broadband Services		Senior Secured Term Loan, 9.00%, 12/31/2017⁽¹¹⁾	$	3,811,681	$	3,811,681	$	2,104,938		2.05	%
				Limited Liability Company Interests^ˆ,(5)		720		3,600,000		—		0.00	%
New Media West, LLC Total								7,411,681		2,104,938		2.05	%
Takoda Resources Inc.*		Geophysical Surveying and Mapping Services		Senior Secured Term Loan, 16.00%, 4/1/2016⁽¹⁰⁾	$	3,146,100		3,146,100		576,680		0.56	%
				Common Stock^ˆ,(6)		749		—		—		0.00	%
Takoda Resources Inc. Total								3,146,100		576,680		0.56	%
Texas Westchester Financial, LLC		Consumer Financing		Limited Liability Company Interests^ˆ		9,278		491,713		177,500		0.17	%
The Finance Company, LLC		Consumer Financing		Senior Secured Term Loan, 15.00% (one month LIBOR plus 14.25%, 15.00% floor), 9/30/2015	$	4,679,731		4,660,512		4,692,834		4.58	%
				Limited Liability Company Interests^ˆ		50		140,414		749,313		0.73	%
The Finance Company, LLC Total								4,800,926		5,442,147		5.31	%
TransAmerican Asset Servicing Group, LLC		Asset Recovery Services		Senior Secured Revolving Loan, 12.00%, 7/25/2016⁽¹⁰⁾	$	3,469,735		3,438,535		445,694		0.43	%
				Limited Liability Company Interests^ˆ,(7)		75		—		—		0.00	%
TransAmerican Asset Servicing Group, LLC Total								3,438,535		445,694		0.43	%
Total Control Investments								19,288,955		8,746,959		8.52	%
Affiliate Investments⁽⁴⁾
Advanced Cannabis Solutions, Inc.		Non-Residential Property Owner		Common Stock		641,189		421,393		1,570,913		1.53	%
				Warrant for 185,000 shares (at a $4.00 strike price), expires 1/21/2017^ˆ,(12)		1		66,071		—		0.00	%
Advanced Cannabis Solutions, Inc. Total								487,464		1,570,913		1.53	%
Modular Process Control, LLC		Energy Efficiency Services		Senior Secured Revolving Loan, 14.50% (one month LIBOR plus 13.50%, 14.50% floor), 3/28/2017	$	1,184,598		1,179,603		1,067,994		1.04	%
				Senior Secured Term Loan, 15.50% (one month LIBOR plus 14.50%, 15.50% floor), 3/28/2017	$	4,900,000		4,725,342		2,424,030		2.36	%
				Senior Secured Term Loan – Tranche 2, 18.00% (one month LIBOR plus 17.00%, 18.00% floor), 3/28/2017**	$	910,610		910,610		191,349		0.19	%
				Warrant for 14.50% of the outstanding Class B LLC Interests (at a $0.01 strike price), expires 3/28/2023^ˆ		1		288,000		—		0.00	%
Modular Process Control, LLC Total								7,103,555		3,683,373		3.59	%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Affiliate Investments (continued)
ProGrade Ammo Group, LLC		Munitions		Senior Secured Revolving Loan, 9.19% (one month LIBOR plus 9.00%, 9.19% floor), 3/30/2016⁽¹⁰⁾	$	1,719,736	$	1,719,736	$	1,719,736		1.68	%
				Senior Secured Term Loan, 16.19% (one month LIBOR plus 16.00%, 16.19% floor), 3/30/2016⁽¹⁰⁾	$	4,843,750		4,843,750		1,023,485		1.00	%
				Warrants for 19.9% of the outstanding LLC interests (at a $10.00 strike price), expire 8/2/2018^ˆ		181,240		176,770		—		0.00	%
ProGrade Ammo Group, LLC Total								6,740,256		2,743,221		2.68	%
SOLEX Fine Foods, LLC; Catsmo, LLC		Food Distributors & Wholesalers		Senior Secured Term Loan, 12.32% (one month LIBOR plus 12.14%), 12/28/2016	$	3,861,696		3,808,320		3,794,889		3.70	%
				Limited Liability Company Interests^ˆ,(8)		1		290,284		—		0.00	%
				Warrants for 1.6% of the outstanding LLC interests (strike price $0.01), expire 12/31/2022^ˆ,(8)		1		58,055		—		0.00	%
SOLEX Fine Foods, LLC; Catsmo, LLC Total								4,156,659		3,794,889		3.70	%
US Oilfield Company, LLC		Oil and Gas Field Services		Senior Secured Revolving Loan, 12.68% (one month LIBOR plus 12.50%), 8/13/2017	$	333,197		333,197		333,197		0.32	%
				Senior Secured Term Loan A, 12.68% (one month LIBOR plus 12.50%), 8/13/2017	$	875,000		867,087		836,617		0.82	%
				Senior Secured Term Loan B, 12.68% (one month LIBOR plus 12.50%), 8/13/2017	$	4,156,250		4,118,943		4,057,054		3.95	%
				Warrant for 7.625% of the outstanding LLC interests (strike price $0.01), expires 8/13/2024^ˆ		1		—		—		0.00	%
US Oilfield Company, LLC Total								5,319,227		5,226,868		5.09	%
West World Media, LLC		Information and Data Services		Limited Liability Company Interests^ˆ,(9)		85,210		430,500		238,897		0.23	%
Total Affiliate Investments								24,237,661		17,258,161		16.82	%
Other Investments
Ads Direct Media, Inc.		Internet Advertising		Senior Secured Term Loan, 13.50% (one month LIBOR plus 13.00%, 13.50% floor) 10/9/2017	$	2,612,500		2,590,440		2,605,881		2.54	%
				Warrant for 3.25% of outstanding LLC interests (strike price $0.01) expires 10/9/2024^ˆ		1		—		—		0.00	%
Ads Direct Media, Inc. Total								2,590,440		2,605,881		2.54	%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
Attention Transit Advertising Systems, LLC		Outdoor Advertising Services		Senior Secured Term Loan, 11.50%, 9/30/2016	$	1,973,382	$	1,973,382	$	2,045,015		1.99	%
Background Images, Inc.		Equipment Rental Services		Senior Secured Term Loan – Term A, 14.68% (one month LIBOR plus 14.50%), 7/31/2015	$	143,371		143,371		157,350		0.15	%
				Senior Secured Term Loan – Term B, 16.43% (one month LIBOR plus 16.25%), 7/31/2015	$	524,129		524,129		532,044		0.52	%
Background Images, Inc. Total								667,500		689,394		0.67	%
Bioventus, LLC		Specialty Pharmaceuticals		Subordinated Secured Term Loan, 11.00% (one month LIBOR plus 10.00%, 11.00% floor), 4/10/2020	$	6,000,000		5,942,306		5,898,200		5.75	%
Butler Burgher Group, LLC		Real Estate Management Services		Senior Secured Revolving Loan, 13.50% (one month LIBOR plus 13.25%, 13.50% floor), 6/30/2017	$	750,000		744,659		749,250		0.73	%
				Senior Secured Term Loan, 13.50% (one month LIBOR plus 13.25%, 13.50% floor), 6/30/2017	$	7,499,264		7,445,773		7,525,012		7.33	%
Butler Burgher Group, LLC Total								8,190,432		8,274,262		8.06	%
Davidzon Radio, Inc.		Radio Broadcasting		Senior Secured Term Loan, 11.00% (one month LIBOR plus 10.00%, 11.00% floor), 3/31/2020	$	11,474,473		9,403,164		9,551,734		9.31	%
GK Holdings Inc.		IT and Business Skill Training		Subordinated Secured Term Loan, 10.50% (one month LIBOR plus 9.50%, 10.50% floor), 1/30/2022	$	2,000,000		1,960,259		1,960,259		1.91	%
Good Technology Corporation		Mobile Device Management		Senior Secured Note, 5.00%, 10/1/2017	$	10,000,000		8,033,488		8,928,000		8.70	%
				Warrants for 203.252 shares (at a $4.92 strike price), expire 9/30/2018^ˆ		10,000		2,289,400		2,289,400		2.23	%
Good Technology Corporation Total								10,322,888		11,217,400		10.93	%
GW Power, LLC and Greenwood Fuels WI, LLC		Electric Services		Senior Secured Term Loan, 12.18% (one month LIBOR plus 12.00%, 12.16% floor), 3/31/2016	$	5,320,388		5,292,623		5,306,555		5.17	%
Infinite Aegis Group, LLC		Healthcare Billing and Collections		Warrant for 2.0% of the outstanding LLC interests (at a $0.01 strike price), expires 8/1/2023^ˆ		1		107,349		15,845		0.02	%
JN Medical Corporation		Biological Products		Senior Secured Term Loan, 11.25%, (one month LIBOR plus 11.00%, 11.25% floor, 12.00% cap), 6/30/2016	$	3,500,000		3,477,136		3,466,400		3.38	%
Luling Lodging, LLC		Real Estate – Hotel		Senior Secured Term Loan, 12.25% (one month LIBOR plus 12.00%, 12.25% floor), 12/17/2017	$	4,500,000		4,460,047		4,465,800		4.35	%
Medinet Investments, LLC		Medical Liability Claims Factoring		Senior Secured Revolving Loan, 13.50%, (one month LIBOR plus 13.00%, 13.50% floor), 7/23/2017	$	388,313		376,771		348,317		0.34	%
OPS Acquisitions Limited and Ocean Protection Services Limited*		Maritime Security Services		Senior Secured Term Loan, 12.50%, (one month LIBOR plus 12.00%, 12.50% floor), 3/4/2017	$	6,212,500		6,168,878		6,293,884		6.13	%
PEAKS Trust 2009-1*		Consumer Financing		Senior Secured Term Loan, 7.50%, (one month LIBOR plus 5.50%, 7.50% floor), 1/27/2020	$	3,901,082		3,308,874		2,945,317		2.87	%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
PR Wireless, Inc.		Wireless Communications		Senior Secured Term Loan, 10.00%, (one month LIBOR plus 9.00%, 10.00% floor), 6/27/2020	$	8,436,250	$	7,638,136	$	7,526,260		7.33	%
				Warrant for 101 shares (at a $0.01 strike price), expires 6/27/2024^ˆ		1		634,145		284,396		0.28	%
PR Wireless, Inc. Total								8,272,281		7,810,656		7.61	%
Pristine Environments, Inc.		Building Cleaning and Maintenance Services		Senior Secured Revolving Loan, 11.70% (one month LIBOR plus 11.50%, 11.70% floor), 3/31/2017	$	5,848,204		5,848,205		5,979,789		5.83	%
				Senior Secured Term Loan A, 12.70% (one month LIBOR plus 12.50%, 12.70% floor), 3/31/2017	$	1,628,938		1,623,101		1,671,398		1.63	%
				Senior Secured Term Loan B, 12.70% (one month LIBOR plus 12.50%, 12.70% floor), 3/31/2017	$	3,087,500		3,032,962		3,166,849		3.09	%
Pristine Environments, Inc. Total								10,504,268		10,818,036		10.55	%
SiTV, LLC		Television Programming		Senior Secured Note, 10.375%, 7/1/2019	$	7,000,000		7,043,660		6,282,500		6.12	%
The Selling Source, LLC		Information and Data Services		Senior Secured Term Loan, 15.00%, 12/31/2017**	$	3,784,725		3,767,520		2,671,133		2.60	%
US Shale Solutions, Inc.		Oil and Gas Field Services		Senior Secured Note, 12.50%, 9/1/2017	$	4,000,000		3,944,313		2,309,960		2.25	%
				Warrants for 2.78 shares (at a $0.01 strike price), expire 9/1/2024		4,000		64		40		0.00	%
US Shale Solutions, Inc. Total								3,944,377		2,310,000		2.25	%
Total Other Investments								97,774,155		94,976,588		92.53	%
Total Investments							$	141,300,771	$	120,981,708		117.86	%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

The following tables show the fair value of our portfolio of investments by geography and industry as of March 31, 2015.


	March 31, 2015
Geography	Investment at Fair Value (in millions)		Percentage of Net Assets
United States	$	114.1		111.17	%
United Kingdom		6.3		6.13
Canada		0.6		0.56
Total	$	121.0		117.86	%


	March 31, 2015
Industry	Investment at Fair Value (in millions)		Percentage of Net Assets
Mobile Device Management	$	11.2		10.93	%
Building Cleaning and Maintenance Services		10.8		10.54
Radio Broadcasting		9.6		9.31
Consumer Financing		8.6		8.34
Real Estate Management Services		8.3		8.06
Wireless Communications		7.8		7.61
Oil and Gas Field Services		7.5		7.34
Maritime Security Services		6.3		6.13
Television Programming		6.3		6.12
Specialty Pharmaceuticals		5.9		5.75
Electric Services		5.3		5.17
Real Estate – Hotel		4.5		4.35
Food Distributors and Wholesalers		3.8		3.70
Energy Efficiency Services		3.7		3.59
Biological Products		3.5		3.38
Information and Data Services		2.9		2.83
Munitions		2.7		2.67
Internet Advertising		2.6		2.54
CableTV/Broadband Services		2.1		2.05
Outdoor Advertising Services		2.0		1.99
IT and Business Skill Training		2.0		1.91
Non-Residential Property Owner		1.6		1.53
Equipment Rental Services		0.7		0.67
Geophysical Surveying and Mapping Services		0.6		0.56
Asset Recovery Services		0.4		0.43
Medical Liability Claims Factoring		0.3		0.34
Healthcare Billing and Collections		0.0		0.02
Total	$	121.0		117.86	%

(1)

The Company’s investments are acquired in private transactions exempt from registration under the Securities Act of 1933, therefore are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act of 1933.

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

(2)

A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (“London Interbank Offered Rate”) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semi-annually. For each debt investment, the Company has provided the interest rate in effect as of March 31, 2015. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate.

(3)

“Control Investments” are investments in those companies that are “Control Investments” of the Company, as defined in the Investment Company Act of 1940. A company is deemed to be a “Control Investment” of Full Circle Capital Corporation if Full Circle Capital Corporation owns more than 25% of the voting securities of such company.

(4)

“Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the Investment Company Act of 1940, which are not “Control Investments.” A company is deemed to be an “Affiliate” of Full Circle Capital Corporation if Full Circle Capital Corporation owns 5% or more, but less than 25%, of the voting securities of such company.

(5)

Full Circle Capital Corporation’s equity investment in New Media West, LLC is held through its wholly owned subsidiary FC New Media, Inc. The company has written a warrant on 360 of the Company’s 720 limited liability company interests in New Media West, LLC, which has a strike price of $3,250,000, which increases over time to $3,500,000. This warrant expires on December 18, 2019. See Note 10.

(6)

Full Circle Capital Corporation’s equity investment in Takoda Resources Inc. is held through its wholly owned subsidiary FC Takoda Holdings, LLC.

(7)

Full Circle Capital Corporation’s equity investment in TransAmerican Asset Servicing Group, LLC is held through its wholly owned subsidiary TransAmerican Asset Servicing Group, Inc.

(8)

Full Circle Capital Corporation’s equity investments in SOLEX Fine Foods, LLC; Catsmo, LLC are held through its wholly owned subsidiary FC New Specialty Foods, Inc.

(9)

A portion of Full Circle Capital Corporation’s investment in West World Media, LLC is held through its wholly owned subsidiary Full Circle West, Inc. The remainder of the LLC interests are held directly by Full Circle Capital Corporation.

(10)

Investments were on non-accrual status as of March 31, 2015.

(11)

Investment was placed on non-accrual status as of April 10, 2015.

(12)

Full Circle Capital Corporation’s warrant agreement contains a blocker provision whereby Full Circle Capital Corporation is limited to holding less than 5% of the shares then outstanding subsequent to any exercise under the warrant agreement.

Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets.

Security pays all or a portion of its interest in kind.

Security is a non-income producing security.

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2014



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Control Investments⁽³⁾
New Media West, LLC		Cable TV/ Broadband Services		Senior Secured Term Loan, 9.00%, 12/31/2017	$	4,826,711	$	4,826,711	$	4,605,326		6.31	%
				Limited Liability Company Interests^ˆ,(5)		720		3,600,000		1,061,353		1.45	%
New Media West, LLC Total								8,426,711		5,666,679		7.76	%
Takoda Resources Inc.*		Geophysical Surveying and Mapping Services		Senior Secured Term Loan, 16.00%, 4/1/2016	$	2,692,828		2,692,828		2,557,379		3.50	%
				Common Stock^ˆ,(6)		749		—		—		—	%
Takoda Resources Inc. Total								2,692,828		2,557,379		3.50	%
Texas Westchester Financial, LLC		Consumer Financing		Limited Liability Company Interests^ˆ		9,278		905,819		540,037		0.74	%
The Finance Company, LLC		Consumer Financing		Senior Secured Term Loan, 15.00% (LIBOR plus 14.25%, 15.00% floor), 9/30/2015	$	5,163,547		5,117,223		5,258,384		7.21	%
				Limited Liability Company Interests		50		140,414		1,956,521		2.68	%
The Finance Company, LLC Total								5,257,637		7,214,905		9.89	%
TransAmerican Asset Servicing Group, LLC		Asset Recovery Services		Senior Secured Revolving Loan, 12.00%, 7/25/2016	$	3,008,154		2,970,154		1,560,057		2.14	%
				Limited Liability Company Interests^ˆ,(7)		75		—		—		—	%
TransAmerican Asset Servicing Group, LLC Total								2,970,154		1,560,057		2.14	%
Total Control Investments								20,253,149		17,539,057		24.03	%
Affiliate Investments⁽⁴⁾
Advanced Cannabis Solutions, Inc.		Non-Residential Property Owner		Warrant for 1,000,000 shares (at a $5.50 strike price), 1/21/2017^ˆ		1		500,000		2,356,212		3.23	%
Modular Process Control, LLC		Energy Efficiency Services		Senior Secured Revolving Loan, 14.50% (LIBOR plus 13.50%, 14.50% floor), 3/28/2017	$	984,569		956,401		984,569		1.35	%
				Senior Secured Term Loan, 15.50% (LIBOR plus 14.50%, 15.50% floor), 3/28/2017	$	5,000,000		4,768,199		2,845,333		3.90	%
				Senior Secured Term Loan – Tranche 2, 18.00%, (LIBOR plus 17.00%, 18.00% floor), 3/28/2017***	$	795,237		795,237		141,208		0.19	%
				Modular Process Control, LLC – Warrant for 14.50% of the outstanding Class B LLC Interests (at a $0.01 strike price), expire 3/28/2023^ˆ		1		288,000		—		—	%
Modular Process Control, LLC Total								6,807,837		3,971,110		5.44	%

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Affiliate Investments (continued)
ProGrade Ammo Group, LLC		Munitions		Senior Secured Revolving Loan, 9.19% (LIBOR plus 9.00%, 9.19% floor), 3/30/2016	$	3,249,300	$	3,249,300	$	3,249,300		4.45	%
				Senior Secured Term Loan, 16.19% (LIBOR plus 16.00%, 16.19% floor), 3/30/2016	$	4,843,750		4,839,156		883,984		1.21	%
				Warrants for 9.5% of the outstanding LLC interests (at a $10.00 strike price), expire 8/2/2018^ˆ		181,240		176,770		—		—	%
ProGrade Ammo Group, LLC Total								8,265,226		4,133,284		5.66	%
SOLEX Fine Foods, LLC; Catsmo, LLC		Food Distributors & Wholesalers		Senior Secured Term Loan, 12.30% (LIBOR plus 12.14%), 12/28/2016	$	3,900,000		3,825,213		3,792,490		5.20	%
				Limited Liability Company Interests^ˆ,(8)		1		290,284		78,775		0.11	%
				Warrants for 1.6% of the outstanding LLC interests (strike price $0.01), expire 12/31/2022^ˆ,(8)		1		58,055		17,649		0.02	%
SOLEX Fine Foods, LLC; Catsmo, LLC Total								4,173,552		3,888,914		5.33	%
West World Media, LLC		Information and Data Services		Limited Liability Company Interests^ˆ,(9)		85,210		430,500		238,897		0.33	%
Total Affiliate Investments								20,177,115		14,588,417		19.99	%
Other Investments
Attention Transit Advertising Systems, LLC		Outdoor Advertising Services		Senior Secured Term Loan, 11.50%, 9/30/2016	$	2,147,504		2,147,504		2,174,419		2.98	%
Background Images, Inc.		Equipment Rental Services		Senior Secured Term Loan – Term A, 14.66% (LIBOR plus 14.50%), 6/28/2015	$	1,109,750		1,109,750		1,136,939		1.56	%
				Senior Secured Term Loan – Term B, 16.41% (LIBOR plus 16.25%), 6/28/2015	$	627,250		627,250		641,321		0.88	%
Background Images, Inc. Total								1,737,000		1,778,260		2.44	%
Blackstrap Broadcasting, LLC		Radio Broadcasting		Senior Secured Term Loan, 6.16% (LIBOR plus 6.00%), 7/31/2014⁽¹⁰⁾	$	3,095,547		3,095,547		2,466,841		3.38	%
				Subordinated Secured Term Loan, 16.00% (PRIME plus 7.75%, 16.00% floor), 7/31/2014⁽¹⁰⁾	$	3,500,000		3,500,000		—		—	%
Blackstrap Broadcasting, LLC Total								6,595,547		2,466,841		3.38	%
Butler Burgher Group, LLC		Real Estate Management Services		Senior Secured Revolving Loan, 12.00% (LIBOR plus 11.75%, 12.00% floor), 6/30/2017	$	750,000		743,250		743,250		1.02	%
				Senior Secured Term Loan, 12.00% (LIBOR plus 11.75%, 12.00% floor), 6/30/2017	$	8,000,000		7,928,006		7,928,006		10.86	%
Butler Burgher Group, LLC Total								8,671,256		8,671,256		11.88	%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
CPX, Inc.		Industrial Molded Products		Senior Secured Revolving Loan, 14.19% (LIBOR plus 14.00%, 14.19% floor), 9/30/2016	$	2,000,000	$	1,984,726	$	2,000,000		2.74	%
				Senior Secured Term Loan, 14.69% (LIBOR plus 14.50%, 14.69% floor), 9/30/2016	$	950,000		938,103		953,040		1.31	%
CPX, Inc. Total								2,922,829		2,953,040		4.05	%
Dynamic Energy Services International, LLC		Oil and Gas Field Services		Senior Secured Term Loan, 9.50%, (LIBOR plus 8.50%, 9.50% floor), 3/12/2018	$	4,937,500		4,845,331		4,845,331		6.64	%
Esselte Holdings Inc., Esselte AB*		Stationery, Tablets, and Related Products		Senior Secured Term Loan, 10.75% (LIBOR plus 8.75%, 10.75% floor), 2/29/2016	$	1,779,931		1,780,317		1,794,764		2.46	%
GW Power, LLC and Greenwood Fuels WI, LLC		Electric Services		Senior Secured Term Loan, 12.16% (LIBOR plus 12.00%, 12.16% floor), 3/31/2016	$	6,000,000		5,947,109		5,947,109		8.15	%
Infinite Aegis Group, LLC		Healthcare Billing and Collections		Senior Secured Revolving Loan, 12.19% (LIBOR plus 12.00%, 12.19% floor), 7/31/2017	$	1,550,000		1,536,485		1,550,000		2.12	%
				Senior Secured Term Loan, 15.19% (LIBOR plus 15.00%, 15.19% floor), 7/31/2017***	$	3,950,458		3,842,232		3,846,957		5.27	%
				Warrants for 2.0% of the outstanding LLC interests (at a $0.01 strike price), expire 8/1/2023^ˆ		1		107,349		52,415		0.07	%
Infinite Aegis Group, LLC Total								5,486,066		5,449,372		7.46	%
JN Medical Corporation		Biological Products		Senior Secured Term Loan, 11.25%, (LIBOR plus 11.00%, 11.25% floor, 12.00% cap), 6/30/2016	$	3,500,000		3,465,000		3,465,000		4.75	%
MDU Communications (USA) Inc.		Cable TV/ Broadband Services		Senior Secured Term Loan – Tranche A, 2.00%, 10/3/2014⁽¹⁰⁾	$	1,755,111		1,755,111		451,766		0.62	%
Ocean Protection Services*		Maritime Security Services		Senior Secured Term Loan, 12.50%, (LIBOR plus 12.00%, 12.50% floor), 3/4/2017	$	7,000,000		6,935,624		7,136,267		9.78	%
PEAKS Trust 2009-1*		Consumer Financing		Senior Secured Term Loan, 7.50%, (LIBOR plus 5.50%, 7.50% floor), 1/27/2020	$	10,296,774		8,560,025		8,803,741		12.06	%
PR Wireless, Inc.		Wireless Communications		Senior Secured Term Loan, 10.00%, (LIBOR plus 9.00%, 10.00% floor), 6/27/2020	$	8,500,000		7,695,855		7,695,855		10.54	%
				Warrant for 101 shares (at a $0.01 strike price), 6/27/2024^ˆ		1		634,145		634,145		0.87	%
PR Wireless, Inc. Total								8,330,000		8,330,000		11.41	%
Pristine Environments, Inc.		Building Cleaning and Maintenance Services		Senior Secured Revolving Loan, 11.70% (LIBOR plus 11.50%, 11.70% floor), 3/31/2017	$	3,378,379		3,378,379		3,519,370		4.82	%
				Senior Secured Term Loan A, 12.70% (LIBOR plus 12.50%, 12.70% floor), 3/31/2017	$	1,049,875		1,041,852		1,079,097		1.48	%
				Senior Secured Term Loan B, 12.70% (LIBOR plus 12.50%, 12.70% floor), 3/31/2017	$	3,250,000		3,175,000		3,336,125		4.57	%
Pristine Environments, Inc. Total								7,595,231		7,934,592		10.87%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014



Description⁽¹⁾	Industry		Type of Investment⁽²⁾		Par Amount/ Quantity		Cost		Fair Value		% of Net Asset Value
Other Investments (continued)
RCS Capital Corp.*		Financial Services		Subordinated Secured Term Loan, 10.50%, (LIBOR plus 9.50%, 10.50% floor), 4/29/2021	$	7,500,000	$	7,628,939	$	7,743,750		10.61	%
SiTV, LLC****		Television Programming		Senior Secured Note, 10.375%, 7/1/2019	$	7,000,000		7,050,000		7,175,000		9.83	%
The Selling Source, LLC		Information and Data Services		Senior Secured Term Loan, 12.54%, 1/31/2017	$	3,637,572		3,613,822		2,442,630		3.35	%
US Path Labs, LLC		Healthcare Services		Senior Secured Term Loan, 14.00% (LIBOR plus 13.25%, 14.00% floor), 8/31/2014	$	3,500,000		3,482,306		3,500,000		4.80	%
VaultLogix, LLC		Information Retrieval Services		Warrants for Variable % Ownership, (at a $307.855 strike price), expire 1/14/2019^ˆ		3,349		56,147		—		—	%
United States Treasury				United States Treasury Bill** (0.11)%, 7/3/2014	$	25,000,000		25,000,147		25,000,147		34.26	%
Total Other Investments								123,605,311		118,063,285		161.78	%
Total Investments							$	164,035,575	$	150,190,759		205.80	%

See notes to consolidated financial statements.

TABLE OF CONTENTS

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

The following tables show the fair value of our portfolio of investments by geography and industry as of June 30, 2014, excluding United States Treasury Bills.


	June 30, 2014
Geography	Investment at Fair Value (in millions)		Percentage of Net Assets
United States	$	115.5		158.26	%
United Kingdom		7.1		9.78
Canada		2.6		3.50
Total	$	125.2		171.54	%


	June 30, 2014
Industry	Investment at Fair Value (in millions)		Percentage of Net Assets
Consumer Financing	$	16.5		22.69	%
Real Estate Management Services		8.7		11.88
Wireless Communications		8.3		11.41
Building Cleaning and Maintenance Services		7.9		10.87
Financial Services		7.7		10.61
Television Programming		7.2		9.83
Maritime Security Services		7.1		9.78
CableTV/Broadband Services		6.1		8.38
Electric Services		5.9		8.15
Healthcare Billing and Collections		5.4		7.47
Oil and Gas Field Services		4.8		6.64
Munitions		4.1		5.66
Energy Efficiency Services		4.0		5.44
Food Distributors and Wholesalers		3.9		5.33
Healthcare Services		3.5		4.80
Biological Products		3.5		4.75
Industrial Molded Products		3.0		4.05
Information and Data Services		2.7		3.67
Geophysical Surveying and Mapping Services		2.6		3.50
Radio Broadcasting		2.5		3.38
Non-Residential Property Owner		2.4		3.23
Outdoor Advertising Services		2.2		2.98
Stationery, Tablets, and Related Products		1.8		2.46
Equipment Rental Services		1.8		2.44
Asset Recovery Services		1.6		2.14
Total	$	125.2		171.54	%

(1)

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

(2)

A majority of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to LIBOR (“London Interbank Offered Rate”) or the U.S. prime rate, and which is reset daily, monthly, quarterly or semi-annually. For each debt investment, the Company has provided the interest rate in effect as of June 30, 2014. If no reference to LIBOR or the U.S. prime rate is made, the rate is fixed.

(3)

(4)

(5)

Full Circle Capital Corporation’s equity investment in New Media West, LLC is held through its wholly owned subsidiary FC New Media, Inc.

(6)

Full Circle Capital Corporation’s equity investment in Takoda Resources Inc. is held through its wholly owned subsidiary FC Takoda Holdings, LLC.

(7)

Full Circle Capital Corporation’s equity investment in TransAmerican Asset Servicing Group, LLC is held through its wholly owned subsidiary TransAmerican Asset Servicing Group, Inc.

(8)

Full Circle Capital Corporation’s equity investments in SOLEX Fine Foods, LLC; Catsmo, LLC are held through its wholly owned subsidiary FC New Specialty Foods, Inc.

(9)

(10)

Investments were on non-accrual status as of June 30, 2014.

Investment is not a qualifying asset under Section 55(a) of the 1940 Act.

Interest rate shown reflects yield to maturity at time of purchase.

***

Security pays all or a portion of its interest in kind.

****

Security is a “when issued” security.

Security is a non-income producing security.

See notes to consolidated financial statements.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 1. Organization

References herein to “we”, “us” or “our” refer to Full Circle Capital Corporation and Subsidiaries (“Full Circle Capital” or the “Company”) unless the context specifically requires otherwise.

We were formed as Full Circle Capital Corporation, a Maryland corporation, on April 16, 2010 and were funded in an initial public offering, or IPO, completed on August 31, 2010. We are a non-diversified, closed-end investment company that has filed an election to be treated as a business development company, or BDC, under the Investment Company Act of 1940 (the “1940 Act”). As a BDC, we expect to qualify annually as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code. We invest primarily in senior secured term debt issued by middle-market companies. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. Financial information for the year ended June 30, 2014 is derived from the Company’s audited financial statements.

Note 2. Significant Accounting Policies

Use of Estimates and Basis of Presentation

The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Changes in the economic environment, financial markets, creditworthiness of our portfolio companies and any other parameters used in determining these estimates could cause actual results to differ materially.

Interim financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending June 30, 2015.

The June 30, 2014 and March 31, 2014 Consolidated Financial Statements were reclassified in order to be consistent with the new format used for the March 31, 2015 Consolidated Financial Statements.

Investment Classification

We are a non-diversified company within the meaning of the 1940 Act. We classify our investments by level of control. As defined in the 1940 Act, control investments are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses or has the right to acquire within 60 days or less, a beneficial ownership of 25% or more of the voting securities of an investee company. Affiliated Investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist through the possession outright or via the right to acquire within 60 days or less, beneficial ownership of 5% or more of the outstanding voting securities owned by another company or person.

Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Investments in other, non-security financial instruments, such as limited partnerships or private companies, are recorded on the basis of subscription date or redemption date, as applicable. Amounts for investments recognized or derecognized but not yet settled are reported as receivables for investments sold and payables for investments acquired, respectively, in the Consolidated Statements of Assets and Liabilities.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 2. Significant Accounting Policies – (continued)

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 generally 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 wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Valuation of Investments

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.

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 (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.

In determining fair value, Full Circle Capital’s Board 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. Unobservable inputs reflect the Board’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Board or the Audit Committee of the Board (the “Audit Committee”), does not represent fair value, are valued as follows:

The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment;

Preliminary valuation conclusions are then documented and discussed with the Company’s senior management. Independent third-party valuation firms are engaged by, or on behalf of, the Audit Committee to conduct independent appraisals or review management’s preliminary valuations or make their own independent assessment, for certain assets;

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 2. Significant Accounting Policies – (continued)

The Audit Committee discusses valuations and recommends the fair value of each investment in the portfolio in good faith based on the input of the Company and, where appropriate, the independent valuation firms; and

The Board then discusses the valuations and determines in good faith the fair value of each investment in the portfolio based upon input from the Company, estimates from the independent valuation firms and the recommendations of the Audit Committee.

GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are 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 investment to investment and is affected by a wide variety of factors including, the type of investment, whether the investment 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 in determining fair value is greatest for investments 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 an investment to be reclassified to a lower level within the fair value hierarchy.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 2. Significant Accounting Policies – (continued)

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 generally 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 Board considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, 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 Board may 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 that are not performing, 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, third-party valuation agents and other data as may be acquired and analyzed by management and the Board.

Investments in Private Companies

The Board 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 Board will ascribe value to warrants based on fair value analyses that can include discounted cash flow analyses, option pricing models, comparable analyses and other techniques as deemed appropriate.

Common Stock

Publicly traded common stock in an active market (‘Level 1 common stock’) is valued based on unadjusted quoted prices in active markets for identical Level 1 common stock that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 common stock.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash, accounts payable and accrued expenses, approximate fair value due to their short-term nature. The carrying amounts and fair values of the Company’s long-term obligations are disclosed in Note 8.

Cash

The Company places its cash with Santander Bank, N.A. f/k/a Sovereign Bank. N.A. (“Santander Bank”), and at times, cash held in such accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Company may invest a portion of its cash in money market funds, within the limitations of the 1940 Act.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Revenue Recognition

Realized gain (loss) on the sale of investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs. 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 received. Other fee income, including administrative and unused line fees, is included in Other Income. Income from such sources was $51,381 and $618,965 for the three months ended March 31, 2015 and 2014, respectively, and $705,754 and $2,016,208 for the nine months ended March 31, 2015, and 2014, respectively.

Change in unrealized gain (loss) on investments

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 Consolidated Statements of Operations as an increase in the Net Change in Unrealized Gain (Loss) on Investments.

Federal and State Income Taxes

We have elected to be treated as a regulated investment company and intend to continue to comply with the requirements of the Internal Revenue Code of 1986 (the “Code”), applicable to regulated investment companies. We will be required to distribute at least 90% of our investment company taxable income and intend to distribute (or retain through a deemed distribution) all of our investment company taxable income and net capital gains to stockholders; therefore, we have made no provision for income taxes. The character of income and gains that we will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 2. Significant Accounting Policies – (continued)

If we do not distribute (or are not deemed to have distributed) each calendar year sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the “Minimum Distribution Amount”), we will generally be required to pay an excise tax equal to 4% of the amount by the which Minimum Distribution Amount exceeds the distributions for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate. The annual effective excise tax rate is determined by dividing the estimated annual excise tax by the estimated annual taxable income.

Distributions

Distributions to common stockholders are recorded on the ex-dividend date. The amounts, if any, of our monthly distributions are approved by our Board each quarter and are generally based upon our management’s estimate of our earnings for the quarter. Net realized capital gains, if any, are distributed at least annually.

Guarantees and Indemnification Agreements

We follow ASC Topic 460 — Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“ASC 460”). The application of ASC 460 elaborates on the disclosure requirements of a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires a guarantor to recognize, at the inception of a guarantee, for those guarantees that are covered by ASC 460, the fair value of the obligation undertaken in issuing certain guarantees. ASC 460 did not have a material effect on the consolidated financial statements. Refer to Note 5 for further discussion of guarantees and indemnification agreements.

Per Share Information

Basic and diluted earnings (loss) per common share is calculated using the weighted average number of common shares outstanding for the period presented. For the three and nine months ended March 31, 2015, and March 31 2014, respectively, basic and diluted earnings (loss) per share, were the same since there are no potentially dilutive securities outstanding.

Organizational Expenses and Offering Costs

The Company did not incur organizational expenses for the three or nine months ended March 31, 2015, and March 31, 2014. The Company complies with the requirements of ASC 340-10-S99-1, “Expenses of Offering”. Deferred offering costs consist principally of legal and audit costs incurred through the balance sheet date that are related to an offering of equity securities. Such costs are charged against the gross proceeds of the offering or will be charged to the Company’s operations if the offering is not completed. Offering expenses related to the Company’s July 14, 2014 and March 30, 2015 offerings were $1,405,988. Refer to Note 6.

Capital Accounts

Certain capital accounts including undistributed net investment income, accumulated net realized gain or loss, accumulated net unrealized appreciation or depreciation, and paid-in capital in excess of par, are adjusted, at least annually, for permanent differences between book and tax. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2015-03, Interest — Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires companies to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Public companies are required to apply ASU 2015-03 retrospectively for interim and annual reporting periods beginning after December 15, 2015.

The Company does not believe that the adoption of any recently issued accounting standards had or will have a material impact on its current financial position and results of operations.

Note 3. Concentration of Credit Risk and Liquidity Risk

In the normal course of business, the Company maintains its cash balances in financial institutions, which at times may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

The Company utilizes two financial institutions to provide financing, which are essential to its business. There are a number of other financial institutions available that could potentially provide the Company with financing. Management believes that such other financial institutions would likely be able to provide similar financing with generally comparable terms. However, a change in financial institutions at the present time could cause a delay in service provisioning or result in potential lost opportunities, which could adversely affect operating results.

Note 4. Earnings (Loss) per Common Share — Basic and Diluted

The following information sets forth the computation of basic and diluted earnings (loss) per common share for the three and nine months ended March 31, 2015, and March 31, 2014:


	Three months ended March 31,				Nine months ended March 31,
	2015		2014		2015			2014
	(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)
Per Share Data⁽¹⁾:
Net Increase (Decrease) in Net Assets Resulting from Operations	$	1,657,968	$	3,381,522	$	(4,686,204	)	$	(95,567	)
Weighted average shares outstanding for period basic		11,949,034		9,419,350		11,925,027			8,177,036
Weighted average shares outstanding for period diluted		11,990,011		9,419,350		11,925,027			8,177,036
Basic and diluted earnings (loss) per common share	$	0.14	$	0.36	$	(0.39	)	$	(0.01	)

(1)

Per share data based on weighted average shares outstanding.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 5. Related Party Agreements and Transactions

Investment Advisory Agreement

On June 24, 2014, the Board re-approved an investment advisory agreement (the “Investment Advisory Agreement”) with Full Circle Advisors, LLC (the “Adviser”) under which the Adviser, subject to the overall supervision of our Board, manages the day-to-day operations of, and provides investment advisory services to, us. Under the terms of the Investment Advisory Agreement, our Adviser: (i) determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes, (ii) identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and (iii) closes and monitors investments we make.

The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired. For providing these services, the Adviser receives a fee from us, consisting of two components, a base management fee and an incentive fee.

The base management fee is calculated at an annual rate of 1.75% of our gross assets, as adjusted. For services rendered under the Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets, as adjusted, at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base management fees for any partial month or quarter will be appropriately pro-rated.

The total base management fees earned by the Adviser for the three and nine months ended March 31, 2015, were $545,564 and $1,699,451, respectively. The total base management fee payable to the Adviser as of March 31, 2015 was $545,564, after reflecting payment of $1,629,482, for the nine months ended March 31, 2015, and is included in the Consolidated Statements of Assets and Liabilities in Due to Affiliates. The total base management fees earned by the Adviser for the three and nine months ended March 31, 2014, were $364,352 and $1,156,099, respectively.

The incentive fee has two parts. The first part of the incentive fee (the “Income incentive fee”) is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement to Full Circle Service Company (the “Administrator”), and any interest expenses and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include organizational costs or any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 1.75% base management fee. We pay the Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:

•

no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle of 1.75%;

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

•

100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any calendar quarter (8.75% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide our investment adviser with 20% of our pre-incentive fee net investment income as if a hurdle did not apply if this net investment income exceeds 2.1875% in any calendar quarter; and

•

20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to the Adviser (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive fee investment income thereafter is allocated to the Adviser).

These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date) and will equal 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees with respect to each of the investments in our portfolio, provided that, the incentive fee determined as of December 31, 2010 was calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation from the inception of Full Circle Capital. There were no incentive fees earned on realized capital gains for the three and nine months ended March 31, 2015 and 2014.

Income incentive fees of $419,559 and $1,335,651 were earned by the Adviser for the three and nine months ended March 31, 2015, respectively, and the total income incentive fee payable to the Adviser as of March 31, 2015 was $419,559, after reflecting payment of $1,286,224 during the nine months ended March 31, 2015, and is included in the Consolidated Statements of Assets and Liabilities in Due to Affiliates. Income incentive fees of $351,594 and $1,141,230 were earned by the Adviser for the three and nine months ended March 31, 2014, respectively.

The Adviser has agreed to reimburse the Company for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, in excess of 1.50% of our net assets, beginning with our fiscal quarter ending September 30, 2014 through the end of our fiscal year 2015. For our fiscal year 2016 and beyond, the Adviser has agreed to reimburse us for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, in excess of 1.75% of our net assets. The expense reimbursements from the Adviser for the three and nine months ended March 31, 2015 were $299,476 and $830,523, respectively, and the total expense reimbursement receivable from the Adviser as of March 31, 2015 was $299,476, after reflecting payment of $531,047 during the nine months ended March 31, 2015 and is included in Due from Affiliates on the Consolidated Statement of Assets and Liabilities.

The Adviser had agreed to reimburse the Company for any operating expenses, excluding interest expenses, investment advisory and management fees, and organizational and offering expenses, in excess of 2% of our net assets for the first twelve months following the completion of the initial public offering, which occurred on August 31, 2010.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

For the periods commencing on April 1, 2015 and ending on June 30, 2015, and commencing on July 1, 2015 and ending on June 30, 2016, Full Circle Advisors has agreed to waive the portion of the base management fees and incentive fees that Full Circle Advisors would otherwise be entitled to receive pursuant to our Investment Advisory Agreement to the extent required in order for Full Circle Capital to earn net investment income sufficient to support the distribution payment on the shares of our common stock outstanding on the relevant record date for each monthly distribution as then declared by our board of directors. The determination of the amount to be waived will be finalized as of the end of the fiscal year for each period, with such amounts being accrued on a quarterly basis. Net investment income is defined as net income before net realized gains (losses) and unrealized appreciation (depreciation), in each case, as determined in accordance with GAAP. Full Circle Advisors will not be entitled to recoup any amount of base management fees that it waives pursuant to this agreement.

Administration Agreement

On June 24, 2014, the Board re-approved an Administration Agreement with the Administrator under which the Administrator, among other things, furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, the Administrator also performs, or oversees the performance of, our required administrative services, which include, among other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders. In addition, the Administrator assists us in determining and publishing our net asset value, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of Full Circle Service Company’s overhead in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and our allocable portion of the compensation of our chief financial officer and our allocable portion of the compensation of any administrative support staff employed by the Administrator, directly or indirectly. Under the Administration Agreement, the Administrator will also provide on our behalf managerial assistance to those portfolio companies that request such assistance. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

The Administrator, and Conifer Asset Solutions LLC, f/k/a Vastardis Fund Services LLC (“Conifer” or the “Sub-Administrator”), may also provide administrative services to the Adviser. As a result, the Adviser also reimburses the Administrator and/or the Sub-Administrator for its allocable portion of the Administrator’s and/or Sub-Administrator’s overhead, including rent, the fees and expenses associated with performing compliance functions for Full Circle Advisors, and its allocable portion of the compensation of any administrative support staff. To the extent the Adviser or any of its affiliates manage other investment vehicles in the future, no portion of any administrative services provided by the Administrator to such other investment vehicles will be charged to us.

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

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

Sub-Administration Agreement

The Administrator has engaged Conifer to provide certain administrative services to us. In exchange for providing such services, the Administrator pays Conifer an asset-based fee with a $200,000 annual minimum as adjusted for any reimbursement of expenses. This asset-based fee will vary depending upon our gross assets, as adjusted, as follows:


Gross Assets		Fee
first $150 million of gross assets		20 basis points (0.20%)
next $150 million of gross assets		15 basis points (0.15%)
next $200 million of gross assets		10 basis points (0.10%)
in excess of $500 million of gross assets		5 basis points (0.05%)

Additionally, prior to September 30, 2013, we reimbursed the Administrator for the fees charged for the services of William E. Vastardis, our Chief Financial Officer, Treasurer and Secretary, at an annual rate of up to $250,000. On September 9, 2013, the Company’s Board of Directors appointed Michael J. Sell to succeed William E. Vastardis as our Chief Financial Officer, Treasurer and Secretary effective as of September 30, 2013. Mr. Vastardis is the Chairman of Conifer Asset Solutions LLC.

For the three and nine months ended March 31, 2015, the Company incurred $194,619 and $549,766, respectively, of expenses under the Administration Agreement, $65,195 and $194,999, respectively, of which were earned by the Sub-Administrator and $75,913 and $227,739, respectively, were paid for officers’ compensation. The remaining $53,511 and $127,028, respectively, were recorded as an Allocation of Overhead Expenses in the Consolidated Statements of Operations.

For the three and nine months ended March 31, 2014, the Company incurred $169,133 and $518,711, respectively, of expenses under the Administration Agreement, $50,000 and $150,000, respectively, of which were earned by the Sub-Administrator and $75,529, and $226,396, respectively, were paid for officers’ compensation. The remaining $43,604 and $142,315, respectively, was recorded as an Allocation of Overhead Expenses to the Administrator in the Consolidated Statement of Operations.

On June 4, 2014, we formed FC Capital Investment Partners (“FCCIP”), a multiple series private fund, for which we serve as the managing member and investment adviser. FCCIP was formed as a Delaware limited liability company and operates under a Limited Liability Company agreement dated June 13, 2014. FCCIP closed its first series on June 17, 2014, raising approximately $5.6 million in capital from investors. FCCIP 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 FCCIP 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. During the three and nine months ended March 31, 2015, Full Circle Capital Corporation recognized $19,108 and $48,597, respectively, in management fee income related to the services performed for FCCIP. Such amounts are included in Other Income on the Statements of Operations.

Managerial Assistance

As a business development company, we offer, and must provide upon request, managerial assistance to certain of our portfolio companies. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. With regard to the Control Investments in Texas Westchester Financial, LLC, New Media West, LLC, TransAmerican Asset Servicing Group, LLC, Takoda Resources Inc., and The Finance Company, LLC, the Company has provided managerial assistance during the period for which no fees were charged. Our Chairman, John Stuart,

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

currently serves as a director of The Finance Company, LLC, New Media West, LLC and Takoda Resources Inc. Lawrence Chua, a Senior Vice President of Full Circle Advisors, serves on the board of Takoda Resources Inc.

As of March 31, 2015, only one non-control investment, JN Medical Corporation, had accepted our offer for managerial services during the current fiscal year. No fees have been charged to JN Medical Corporation for such services.

Note 6. Equity Offerings, Related Expenses and Other Stock Issuances

Equity offerings are included in the Company’s capital accounts on the date that the Company assumes the obligation to issue the shares. For purposes of the calculation of Net Asset Value Per Share, the related shares are treated as outstanding on the same date that the equity offering is included in the Company’s capital accounts.

Offering expenses are generally charged against paid-in capital in excess of par. The proceeds raised, the related underwriting fees, the offering expenses, and the price at which common stock was issued, since inception, are detailed in the following table:


Issuances of Common Stock	Number of Shares Issued			Gross Proceeds Raised, Net Assets Acquired and Dividends Reinvested			Underwriting Fees			Offering Expenses		Gross Offering Price
April 16, 2010		100		$	1,500		$	—		$	—	$	15.00 per/share
August 31, 2010		4,191,415	⁽¹⁾	$	42,425,564		$	—		$	—	$	10.13 per/share⁽²⁾
August 31, 2010		2,000,000		$	18,000,000		$	1,350,000		$	1,052,067	$	9.00 per/share
November 27, 2012		1,350,000		$	10,665,000		$	533,250		$	153,330	$	7.90 per/share
January 14, 2014		1,892,300	⁽³⁾	$	13,492,099		$	539,684		$	261,994	$	7.13 per/share
February 27, 2014		630,000		$	4,920,300		$	—	⁽⁴⁾	$	47,236	$	7.81 per/share
June 19, 2014		1,351,352		$	10,000,005		$	—	⁽⁴⁾	$	44,826	$	7.40 per/share
July 14, 2014		506,000		$	3,744,400		$	—	⁽⁴⁾	$	37,775	$	7.40 per/share
March 30, 2015		11,205,921		$	39,220,723	⁽⁶⁾	$	952,214	⁽⁵⁾	$	415,999	$	3.50 per/share

(1)

Includes 403,662 shares that were issued on September 30, 2010 upon the expiration of the overallotment option granted to the underwriters in connection with our initial public offering. Such shares were deemed to be outstanding at August 31, 2010.

(2)

Based on weighted average price assigned to shares.

(3)

Includes 242,300 overallotment shares that were granted to the underwriters in connection with our January 14, 2014 follow-on offering. The underwriters exercised their option to purchase additional shares on January 27, 2014. Such shares were deemed to be outstanding at January 14, 2014.

(4)

This was a registered offering placed directly with investors.

(5)

Shares were issued pursuant to a rights offering. The dealer manager received $952,214 for services provided in connection with the rights offering.

(6)

The gross proceeds of $39,220,723 related to the rights offering were receivable as of March 31, 2015 and were received subsequent to quarter end on April 6, 2015.

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 7. Financial Highlights


	Three months ended March 31, 2015			Three months ended March 31, 2014
	(Unaudited)			(Unaudited)
Per Share Data⁽¹⁾:
Net asset value at beginning of period	$	5.48		$	7.09
Accretion (dilution) from offering(s)⁽³⁾		(0.96	)		0.00
Offering costs		(0.06	)		(0.03	)
Net investment income		0.17			0.15
Net change in unrealized gain (loss)		0.29			0.18
Net realized gain (loss)		(0.29	)		0.02
Dividends from net investment income		(0.17	)		(0.15	)
Return of capital		(0.03	)		(0.06	)
Net asset value at end of period	$	4.43		$	7.20
Per share market value at end of period	$	3.52		$	7.78
Total return based on market value		(17.98	)%⁽⁵⁾		13.34	%⁽⁵⁾
Total return based on net asset value		(14.86	)%⁽⁵⁾		4.15	%⁽⁵⁾
Shares outstanding at end of period		23,154,955			10,091,682
Weighted average shares outstanding for period		11,990,011			9,419,350
Ratio/Supplemental Data:
Net assets at end of period	$	102,647,940		$	72,701,025
Average net assets	$	65,373,483		$	66,426,646
Annualized ratio of gross operating expenses to average net assets⁽⁶⁾		16.32	%		10.90	%
Annualized ratio of net operating expenses to average net assets⁽⁶⁾		14.46	%		10.90	%
Annualized ratio of net investment income to average net assets⁽⁶⁾		12.27	%		8.59	%
Annualized ratio of net operating expenses excluding management fees, incentive fees, and interest expense to average net assets⁽⁶⁾		1.53	%		2.72	%
Portfolio Turnover⁽⁷⁾		20	%		25	%

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 7. Financial Highlights – (continued)


	Nine months ended March 31, 2015			Nine months ended March 31, 2014
	(Unaudited)			(Unaudited)
Per Share Data⁽¹⁾:
Net asset value at beginning of period	$	6.38		$	8.01
Accretion (dilution) from offering(s)⁽³⁾		(0.92	)		0.00
Offering costs		(0.06	)		(0.03	)
Net investment income		0.52			0.56
Net change in unrealized gain (loss)		(0.52	)		(0.53	)
Net realized gain (loss)		(0.37	)		(0.14	)
Dividends from net investment income		(0.52	)		(0.56	)
Return of capital		(0.08	)		(0.11	)
Net asset value at end of period	$	4.43		$	7.20
Per share market value at end of period	$	3.52		$	7.78
Total return based on market value		(49.04	)%⁽⁵⁾		8.27	%⁽⁵⁾
Total return based on net asset value		(21.49	)%⁽⁵⁾		(2.11	)%⁽⁵⁾
Shares outstanding at end of period		23,154,955			10,091,682
Weighted average shares outstanding for period		11,925,027			8,177,036
Ratio/Supplemental Data:
Net assets at end of period	$	102,647,940		$	72,701,025
Average net assets	$	70,335,605		$	61,217,476
Annualized ratio of gross operating expenses to average net assets⁽⁶⁾		15.08	%		12.74	%
Annualized ratio of net operating expenses to average net assets⁽⁶⁾		13.51	%		12.74	%
Annualized ratio of net investment income to average net assets⁽⁶⁾		11.69	%		9.90	%
Annualized ratio of net operating expenses excluding management fees, incentive fees, and interest expense to average net assets⁽⁶⁾		1.51	%		3.26	%
Portfolio Turnover⁽⁷⁾		67	%		80	%

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 7. Financial Highlights – (continued)


	Year Ended June 30, 2014			Year Ended June 30, 2013			Year Ended June 30, 2012			For the period from August 31, 2010 (commencement of operations) to June 30, 2011
Per Share Data⁽¹⁾⁽²⁾:
Net asset value at beginning of period	$	8.01		$	8.59		$	9.08		$	9.40
Accretion (dilution) from offering(s)⁽³⁾		0.03			(0.18	)		—			—
Offering costs		(0.04	)		(0.02	)		—			(0.04	)
Net investment income (loss)		0.71			0.77			0.78			0.70
Net change in unrealized gain (loss)		(1.36	)		0.37			(0.32	)		(0.29	)
Net realized gain (loss)		(0.11	)		(0.60	)		(0.03	)		0.06
Dividends from net investment income		(0.69	)		(0.78	)		(0.80	)		(0.75	)
Return of capital		(0.17	)		(0.14	)		(0.12	)		—
Net asset value at end of period	$	6.38		$	8.01		$	8.59		$	9.08
Per share market value at end of period	$	7.81		$	7.83		$	7.65		$	7.90
Total return based on market value		11.51	%⁽⁵⁾		15.12	%⁽⁵⁾		8.71	%⁽⁵⁾		(4.03	)%⁽⁴⁾
Total return based on net asset value		(11.00	)%⁽⁵⁾		4.94	%⁽⁵⁾		6.20	%⁽⁵⁾		5.62	%⁽⁴⁾
Shares outstanding at end of period		11,443,034			7,569,382			6,219,382			6,219,382
Weighted average shares outstanding for period		8,698,814			7,018,286			6,219,382			6,206,824
Ratio/Supplemental Data:
Net assets at end of period	$	72,980,277		$	60,644,039		$	53,442,785		$	56,474,006
Average net assets	$	64,360,541		$	57,842,601		$	55,531,518		$	57,455,987
Annualized ratio of gross operating expenses to average net assets⁽⁶⁾		12.11	%		11.52	%		9.56	%		8.49	%
Annualized ratio of net operating expenses to average net assets⁽⁶⁾		12.11	%		11.52	%		8.99	%		7.34	%
Annualized ratio of net investment income (loss) to average net assets⁽⁶⁾		9.37	%		9.30	%		8.70	%		9.29	%
Annualized ratio of net operating expenses excluding management fees, incentive fees, and interest expense to average net assets⁽⁶⁾		3.04	%		3.53	%		3.15	%		2.00	%
Portfolio Turnover⁽⁷⁾		88	%		73	%		58	%		54	%

(1)

Financial highlights are based on weighted average shares outstanding.

(2)

Financial highlights for the period from April 16, 2010 (inception) through June 30, 2010 are not presented as the Company’s operations were limited to organization and offering activities only.

(3)

Accretion and dilution from offering(s) is based on the net change in net asset value from each follow-on offering.

(4)

Total return based on market value is based on the change in market price per share assuming an investment at the initial public offering price of $9.00 per share and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in the period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. The total returns are not annualized.

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 7. Financial Highlights – (continued)

(5)

Total return based on market value is based on the change in market price per share and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in the period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. The total returns are not annualized.

(6)

Financial Highlights for periods of less than one year are annualized and the ratios of gross and net operating expenses to average net assets and net investment income (loss) to average net assets are adjusted accordingly. Non-recurring expenses were not annualized. For the period from August 31, 2010 (commencement of operations) to June 30, 2011 the Company incurred $102,609 of organizational expenses, which were deemed to be non-recurring.

(7)

Portfolio Turnover is not annualized.

Note 8. Long Term Liabilities

Line of Credit

On June 3, 2013, the Company entered into a credit facility (the “Credit Facility”) with Santander Bank. The facility size was originally $32.5 million and replaced the Company’s First Capital Credit Facility. The Credit Facility was subsequently increased to $45.0 million on November 5, 2013. On September 12, 2014, the Company entered into an amendment to our Credit Facility with Santander Bank, N.A. to increase the size of the facility from $45.0 million to $60.0 million and to provide additional criteria for eligibility of loans under the borrowing base under the credit facility. The Company has not exercised its option to expand the facility as of March 31, 2015.

The Credit Facility matures on June 3, 2016 and bears interest based on a tiered rate structure, depending upon utilization, ranging from LIBOR (one month, two month or three month, depending on the Company’s option) plus 3.25% to 4.00% per annum, or from Santander Bank’s prime rate plus 1.25% to 2.00% per annum, based on the Company’s election. As of March 31, 2015, one month LIBOR, two month LIBOR, and three month LIBOR respectively were: 0.18%, 0.22%, and 0.27%. As of March 31, 2015, the Prime Rate was 3.25%. In addition, a fee of 0.50% to 1.00% per annum, depending on utilization, is charged on unused amounts under the Credit Facility. The Credit Facility is secured by all of the Company’s assets. Under the Credit Facility, the Company has made certain customary representations and warranties, and is required to comply with various covenants, reporting requirements and other customary requirements, including a minimum balance sheet leverage ratio, for similar credit facilities. The Credit Facility includes usual and customary events of default for credit facilities of this nature.

The fees and expenses associated with opening and expanding the Credit Facility are being amortized over the term of the Credit Facility in accordance with ASC 470 — Debt. As of March 31, 2015, of the total $763,984 fees and expenses incurred, $339,753 remains to be amortized and is reflected as Deferred Credit Facility Fees on the Consolidated Statement of Assets and Liabilities.

At March 31, 2015 and June 30, 2014, the Company had outstanding borrowings of $27,207,560 and $8,435,463, respectively, under the Credit Facility, which amounts are included as Line of Credit in the Consolidated Statements of Assets and Liabilities.

Distribution Notes

On August 31, 2010, the Company entered into multiple senior unsecured notes (the “Distribution Notes”). The Distribution Notes consisted of $3,404,583 in senior unsecured notes, which bore interest at a fixed rate of 8% per annum, payable quarterly in cash, and were scheduled to mature on February 28, 2014. The Distribution Notes were paid off at par plus accrued interest on July 3, 2013. At March 31, 2015 and June 30, 2014, the Company had no Distribution Notes outstanding.

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 8. Long Term Liabilities – (continued)

Notes Payable

On June 28, 2013, the Company issued $21,145,525 in aggregate principal amount of 8.25% Notes due June 30, 2020 (the “Notes”) (including a partial exercise of the underwriters’ overallotment option in July 2013) for net proceeds of $20,038,250 after deducting underwriting commissions of approximately $860,822 and offering expenses of $246,453.

On July 14, 2014, we closed an offering of our 8.25% fixed-rate notes due 2020. 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. The sale of the notes resulted in total gross proceeds of $12,687,500. The Notes are a further issuance of, rank equally in right of payment with, and form a single series with the $21,145,525 of currently outstanding Notes.

The offering expenses and underwriting commissions are being amortized over the term of the notes in accordance with ASC 470 — Debt. As of March 31, 2015, of the total $1,338,440 issuance costs incurred, $872,948 remains to be amortized and is reflected as Deferred Debt Issuance Costs in the Consolidated Statement of Assets and Liabilities. Additionally, $164,224 of the $187,500 premium related to the July 14, 2014 issuance remains unamortized and is included in Notes Payable in the Consolidated Statement of Assets and Liabilities.

The Notes were issued pursuant to an indenture, dated June 3, 2013, as supplemented by the first supplemental indenture, dated June 28, 2013 (collectively, the “Indenture”), between the Company and U.S. Bank National Association (the “Trustee”). The Notes are unsecured obligations of the Company and rank senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that is later secured) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries or financing vehicles. Interest on the Notes is paid quarterly in arrears on March 30, June 30, September 30 and December 30, at a fixed rate of 8.25% per annum, beginning September 30, 2013. The Notes mature on June 30, 2020 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 30, 2016. The Notes are listed on the Nasdaq Global Market under the trading symbol “FULLL” with a par value of $25.00 per share.

The Indenture contains certain covenants, including covenants requiring compliance with (regardless of whether the Company is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring the Company to provide financial information to the holders of the Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the Indenture. The Company may repurchase the Notes in accordance with the 1940 Act and the rules promulgated thereunder. Any Notes repurchased by the Company may, at the Company’s option, be surrendered to the Trustee for cancellation, but may not be reissued or resold by the Company. Any Notes surrendered for cancellation will be promptly cancelled and no longer outstanding under the Indenture. As of March 31, 2015, the Company had not repurchased any of the Notes in the open market.

At March 31, 2015 and June 30, 2014, the Company had a balance of $33,809,749 and $21,145,525 on the Notes, respectively, which is included in the Consolidated Statements of Assets and Liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 8. Long Term Liabilities – (continued)

The following shows a summary of the Long Term Liabilities as of March 31, 2015 and June 30, 2014:

As of March 31, 2015 (Unaudited)


Facility	Commitments		Borrowings Outstanding		Fair Value
Credit Facility⁽¹⁾	$	45,000,000	$	27,207,560	$	27,207,560
Notes		33,645,525		33,645,525		34,251,144
Total	$	78,645,525	$	60,853,085	$	61,458,704

As of June 30, 2014


Facility	Commitments		Borrowings Outstanding		Fair Value
Credit Facility⁽¹⁾	$	45,000,000	$	8,435,463	$	8,435,463
Notes		21,145,525		21,145,525		22,304,300
Total	$	66,145,525	$	29,580,988	$	30,739,763

(1)

On September 12, 2014, the Company entered into an amendment to our Credit Facility with Santander Bank, N.A. to increase the size of the facility from $45.0 million to $60.0 million and to provide additional criteria for eligibility of loans under the borrowing base under the credit facility. The Company has not exercised its option to expand the facility as of March 31, 2015.

As of March 31, 2015 and June 30, 2014, the carrying amount of the Company’s outstanding Credit Facility approximated fair value. The fair values of the Company’s Credit Facility and Notes are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Company’s Notes is determined by utilizing market quotations from the measurement date.

Note 9. Fair Value Measurements

The Company’s assets recorded at fair value have been categorized based upon a fair value hierarchy in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”). See Note 2 for a discussion of the Company’s policies.

The following table presents information about the Company’s assets measured at fair value as of March 31, 2015 and June 30, 2014, respectively:

As of March 31, 2015 (Unaudited)


	Level 1		Level 2		Level 3		Total
Assets
Senior and Subordinated Loans, at fair value	$	—	$	8,592,460	$	107,062,944	$	115,655,404
Limited Liability Company Interests, at fair value		—		—		1,165,710		1,165,710
Investments in Warrants, at fair value		—		40		2,589,641		2,589,681
Common Stock, at fair value		1,570,913		—		—		1,570,913
	$	1,570,913	$	8,592,500	$	110,818,295	$	120,981,708

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NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 9. Fair Value Measurements – (continued)

As of June 30, 2014


	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

(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 nine months ended March 31, 2015, a portion of the Level 3 Advanced Cannabis Solutions, Inc. warrant was converted into Level 1 common stock. During the year ended June 30, 2014 and the nine months ended March 31, 2014, there were no transfers in or out of levels.

The following table presents additional information about Level 3 assets measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the net unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

The tables below reflect the changes in Level 3 assets measured at fair value for the nine months ended March 31, 2015, the nine months ended March 31, 2014 and for the year ended June 30, 2014.


	Nine months ended March 31, 2015 (Unaudited)
	Beginning Balance July 1, 2014		Amortization & Accretion of Fixed Income Premiums & Discounts		Realized & Unrealized Gains (Losses)			Transfers out of Level 3⁽¹⁾			Purchases		Sales & Settlements			Ending Balance March 31, 2015		Change in Unrealized Gains (Losses) for Investments still held at March 31, 2015
Assets
Senior and Subordinated Loans, at fair value	$	111,079,608	$	987,105	$	(4,666,251	)	$	—		$	83,405,820	$	(83,743,338	)	$	107,062,944	$	(5,774,009	)
Limited Liability Company Interests, at fair value		3,875,583		—		(2,538,155	)		—			—		(171,718	)		1,165,710		(2,295,766	)
Warrants, at fair value		3,060,421		—		(2,326,251	)		(433,929	)		2,289,400		—			2,589,641		(2,326,252	)
	$	118,015,612	$	987,105	$	(9,530,657	)	$	(433,929	)	$	85,695,220	$	(83,915,056	)	$	110,818,295	$	(10,396,027	)

(1)

Represents the transfer of a portion of the Advanced Cannabis Solutions Inc., warrant out of Level 3 into Level 1 common stock upon conversion.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 9. Fair Value Measurements – (continued)


	Nine months ended March 31, 2014 (Unaudited)
	Beginning Balance July 1, 2013		Amortization & Accretion of Fixed Income Premiums & Discounts		Realized & Unrealized Gains (Losses)			Purchases		Sales & Settlements			Ending Balance March 31, 2014		Change in Unrealized Gains (Losses) for Investments still held at March 31, 2014
Assets
Senior and Subordinated Loans, at fair value	$	81,195,958	$	333,075	$	(9,808,572	)	$	74,742,853	$	(69,129,987	)	$	77,333,327	$	(8,655,546	)
Limited Liability Company Interests, at fair value		6,784,435		—		(954,196	)		40,284		—			5,870,523		(954,195	)
Warrants, at fair value		194,108		—		6,117,845			607,349		—			6,919,302		6,117,845
	$	88,174,501	$	333,075	$	(4,644,923	)	$	75,390,486	$	(69,129,987	)	$	90,123,152	$	(3,491,896	)


	Year ended June 30, 2014
	Beginning Balance July 1, 2013		Amortization & Accretion of Fixed Income Premiums & Discounts		Realized & Unrealized Gains (Losses)			Purchases		Sales & Settlements			Ending Balance June 30, 2014		Change in Unrealized Gains (Losses) for Investments still held at June 30, 2014
Assets
Senior and Subordinated Loans, at fair value	$	81,195,958	$	466,767	$	(12,452,898	)	$	124,171,284	$	(82,301,503	)	$	111,079,608	$	(12,199,647	)
Limited Liability Company Interests, at fair value		6,784,435		—		(2,949,136	)		40,284		—			3,875,583		(2,949,136	)
Warrants, at fair value		194,108		—		1,624,819			1,241,494		—			3,060,421		1,624,819
	$	88,174,501	$	466,767	$	(13,777,215	)	$	125,453,062	$	(82,301,503	)	$	118,015,612	$	(13,523,964	)

Realized and unrealized gains and losses are included in net realized gain (loss) on investments and net change in unrealized gain (loss) on investments in the Consolidated Statement of Operations. The change in unrealized losses for Level 3 investments still held at March 31, 2015 of $10,396,027 is included in net change in unrealized gain (loss) on investments in the Consolidated Statement of Operations for the nine months ended March 31, 2015.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 9. Fair Value Measurements – (continued)

The following table provides quantitative information regarding Level 3 fair value measurements as of March 31, 2015:

Description:

Fair Value

Valuation Technique

Unobservable Inputs

Range (Average)⁽¹⁾

Senior and Subordinated Loans

100,988,773

Discounted cash flows
(income approach)

Discount Rate

8.45% – 55.00% (16.44%)

1,960,259

Precedent Transactions

Transaction Value

N/A

4,113,912

Liquidation Value

Asset Value

N/A

Total Senior and Subordinated Loans

107,062,944

Limited Liability Interests and Warrants (Private Companies)

3,577,851

Market comparable
companies
(market approach)

EBITDA multiple

4.25x – 7.19x (5.54x)

177,500

Liquidation Value

Asset Value

N/A

Total Limited Liability Interests and Warrants (Private Companies)

3,755,351

Warrant (Public Companies)

—

Option Pricing Model

Volatility

40% – 60%

Total Level 3 Investments

110,818,295

(1)

The average values were determined using the weighted average of the fair value of the investments in each investment category.

The primary significant unobservable input used in the fair value measurement of the Company’s debt securities (first lien debt, second lien debt and subordinated debt), including income-producing investments in funds, is the discount rate. Significant increases (decreases) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement. In determining the discount rate, for the income, or yield, approach, the Company considers current market yields and multiples, portfolio company performance, leverage levels and credit quality, among other factors in its analysis. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate discount rate to use in the income approach.

The primary significant unobservable input used in the fair value measurement of the Company’s private equity and warrant investments is the EBITDA multiple, which is used to determine the Enterprise Value. Significant increases (decreases) in the Enterprise Value in isolation would result in a significantly higher (lower) fair value measurement. To determine the Enterprise Value for the market approach, the Company considers current market trading and/or transaction multiples, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate multiple to use in the market approach.

The primary unobservable inputs used in the fair value measurement of the Company’s warrant investments, when using an option pricing model, are the discount rate and volatility. Significant increases (decreases) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in the volatility in isolation would result in a significantly higher (lower) fair value measurement. Changes in one or more factors can have a similar directional change on other factors in determining the appropriate discount rate or volatility to use in the valuation of a warrant using an option pricing model.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 10. Derivative Contracts

In the normal course of business, the Company may utilize derivative contracts in connection with its investment activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment. The derivative activities and exposure to derivative contracts primarily involve equity price risks. In addition to the primary underlying risk, additional counterparty risk exists due to the potential inability of counterparties to meet the terms of their contracts.

Warrants

The warrants provide exposure and potential gains upon equity appreciation of the portfolio company’s equity value.

The value of a warrant has two components: time value and intrinsic value. A warrant has a limited life and expires on a certain date. As a warrant’s expiration date approaches, the time value of the warrant will decline. In addition, if the stock underlying the warrant declines in price, the intrinsic value of an “in the money” warrant will decline. Further, if the price of the stock underlying the warrant does not exceed the strike price of the warrant on the expiration date, the warrant will expire worthless. As a result, there is the potential for the entire value of an investment in a warrant to be lost.

The Company has written a warrant to sell within a limited time, a financial instrument at a contracted price based on differentials between specified prices. Written warrants may expose the Company to market risk of an unfavorable change in the financial instrument underlying the written warrant. The written warrant is on 360 of the Company’s 720 limited liability company interests in New Media West, LLC and has a strike price of $3,250,000, which increases over time to $3,500,000. This warrant expires on December 18, 2019. At March 31, 2015, the strike price is greater than the fair market value of the limited liability company interests of $0 and therefore has no value.

Counterparty risk exists from the potential failure of an issuer of warrants to settle its exercised warrants. The maximum risk of loss from counterparty risk is the fair value of the contracts and the purchase price of the warrants. The Company’s Board of Directors considers the effects of counterparty risk when determining the fair value of its investments in warrants.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 11. Subsequent Events

As part of the rights offering, an institutional investor committed to purchase approximately 214,000 shares in open market transactions over a seven-day period following the expiration date of the rights offering. Subsequent to the seven-day period, on April 13, 2015, such investor acquired an additional 80,475 shares, fulfilling the remainder of and terminating its commitment, in a private placement at $3.50 per share directly from the Company.

Recent Portfolio Activity

On April 1, 2015, the Company purchased $3.2 million of $23.5 million in subordinated notes issued by GC Pivotal, LLC, a data connectivity service company. The notes bear interest at 11.00% and have a final maturity of December 31, 2020.

During the fourth fiscal quarter of 2015, the Company purchased an additional $5.0 million of $210 million senior secured notes to US Shale Solutions, Inc., an oil and gas field services company for approximately $2.5 million. The notes bear interest at 12.50% and have a final maturity of September 1, 2017.

On April 29, 2015, the Company purchased $8.0 million of $43.0 million in senior secured notes issued by Sundberg America, LLC et al, an appliance parts distributor. The notes bear interest at 9.5% and have a final maturity of April 29, 2020.

Distribution

On May 5, 2015, the Board of Directors declared the following monthly distributions:


Record Date	Payment Date		Per Share Amount
July 31, 2015		August 14, 2015	$	0.035
August 31, 2015		September 15, 2015	$	0.035
September 30, 2015		October 15, 2015	$	0.035

Note 12. Supplemental Financial Data

Summarized Financial Information of Our Unconsolidated Subsidiaries

The Company holds a control interest, as defined by the 1940 Act, in four majority owned portfolio companies that are not consolidated in the Company’s consolidated financial statements. Below is a brief description of one portfolio company that is required to have supplemental disclosure incorporated in our financial statements in accordance with Regulation S-X section 4-08(g), along with summarized financial information as of February 28, 2015.

New Media West, LLC

New Media West, LLC provides digital satellite television, high speed internet, voice over IP and other information and communication services, primarily to residents living in the Southwest United States. New Media West derives revenue through the sale of subscription services to owners and residents of MDUs under long-term right of entry agreements. The loss the Company generated from New Media West, LLC, which includes all interest and unrealized depreciation, was $0.7 million and $0.4 million for the two months ended February 28, 2015 and the three months ended March 31, 2014, respectively, and $2.2 million and $0.9 million for the eight months ended February 28, 2015 and the nine months ended March 31, 2014, respectively.

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Note 12. Supplemental Financial Data – (continued)

The summarized financial information of our unconsolidated subsidiary was as follows (dollars in thousands):


	As of
Balance Sheet – New Media West, LLC	February 28, 2015		June 30, 2014
Current Assets	$	774	$	1,239
Noncurrent Assets		5,584		6,809
Total assets	$	6,358	$	8,048
Current liabilities	$	1,380	$	1,174
Noncurrent liabilities		4,009		4,365
Total liabilities	$	5,389	$	5,539
Total equity	$	970	$	2,509


Statements of Operations – New Media West, LLC	Two Months Ended February 28, 2015			Three Months Ended March 31, 2014			Eight Months Ended February 28, 2015			Nine Months Ended March 31, 2014
Net Sales	$	562		$	1,033		$	2,330		$	3,241
Cost of goods sold		(403	)		(713	)		(1,653	)		(2,237	)
Gross profit	$	159		$	320		$	677		$	1,185
Other expenses	$	(563	)	$	(909	)	$	(2,279	)	$	(2,775	)
Net loss	$	(404	)	$	(589	)	$	(1,602	)	$	(1,591	)

Note 13. Commitments and contingencies

In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time. As of March 31, 2015, we had approximately $0.8 million in unfunded loan commitments, subject to our approval in certain instances, to provide debt financing to certain of our portfolio companies.

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

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Schedule 12-14

The table below represents the fair value of control and affiliate investments at June 30, 2014 and any amortization, purchases, sales and realized and net unrealized gain (loss) made to such investments as well as the ending fair value as of March 31, 2015.

Schedule of Investments in and Advances to Affiliates



Portfolio Company/Type of Investment	Par Amount/ Quantity		Amount of Interest or Dividends Credited in Income		Fair Value at June 30, 2014		Accretion/ Amortization		Purchases		Sales			Realized and Unrealized Gains/Losses			Fair Value at March 31, 2015
Control Investments
New Media West, LLC
Senior Debt/Limited Liability Company Interests	$	3,811,681/720	$	309,885	$	5,666,679	$	—	$	—	$	(1,015,030	)	$	(2,546,711	)	$	2,104,938
Takoda Resources Inc.
Senior Debt/Common Stock	$	3,146,100/749		118,703		2,557,379		—		453,272		—			(2,433,971	)		576,680
Texas Westchester Financial, LLC
Limited Liability Company Interests		9,278		—		540,037		—		—		(171,717	)		(190,820	)		177,500
The Finance Company, LLC
Senior Debt/Limited Liability Company Interests	$	4,679,731/50		671,462		7,214,905		27,105		—		(483,816	)		(1,316,047	)		5,442,147
TransAmerican Asset Servicing Group, LLC
Senior Debt/Limited Liability Company Interests	$	3,469,735/75		180,127		1,560,057		6,799		1,097,967		(636,385	)		(1,582,744	)		445,694
Total Control Investments			$	1,280,177	$	17,539,057	$	33,904	$	1,551,239	$	(2,306,948	)	$	(8,070,293	)	$	8,746,959
Affiliate Investments
Advanced Cannabis Solutions, Inc.
Common Stock/Warrant		641,190		—		2,356,212		—		—		(56,997	)		(728,302	)		1,570,913
Modular Process Control, LLC
Senior Debt/Warrant	$	6,995,208/1		904,415		3,971,110		80,316		1,852,624		(1,637,222	)		(583,455	)		3,683,373
ProGrade Ammo Group, LLC
Senior Debt/Warrants	$	6,563,486/181,240		4,594		4,133,284		4,594		759,979		(2,289,543	)		134,907			2,743,221
SOLEX Fine Foods, LLC; Catsmo, LLC
Senior Debt/Limited Liability Company Interests/Warrant	$	3,861,696/1/1		385,431		3,888,914		21,410		110,000		(148,304	)		(77,131	)		3,794,889
US Oilfield Company, LLC
Senior Debt/Warrant	$	5,364,447/1		540,849		—		33,531		15,923,018		(10,637,322	)		(92,359	)		5,226,868
West World Media, LLC
Limited Liability Company Interests		85,210		—		238,897		—		—		—			—			238,897
Total Affiliate Investments			$	1,835,289	$	14,588,417	$	139,851	$	18,645,621	$	(14,769,388	)	$	(1,346,340	)	$	17,258,161

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FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

Schedule 12-14

The table below represents the fair value of control and affiliate investments at June 30, 2013 and any amortization, purchases, sales and realized and net unrealized gain (loss) made to such investments as well as the ending fair value as of June 30, 2014.

Schedule of Investments in and Advances to Affiliates


Portfolio Company/Type of Investment	Par Amount/ Quantity		Amount of Interest or Dividends Credited in Income		Fair Value at June 30, 2013		Accretion/ Amortization		Purchases		Sales			Realized and Unrealized Gains/Losses			Fair Value at June 30, 2014
Control Investments
New Media West, LLC
Senior Debt /Limited Liability Company Interests	$	4,826,711/720	$	456,828	$	9,282,685	$	—	$	—	$	(252,968	)	$	(3,363,038	)	$	5,666,679
Takoda Resources Inc.
Senior Debt/Common Stock	$	2,692,828/749		349,777		1,469,063		—		1,223,765		—			(135,449	)		2,557,379
Texas Westchester Financial, LLC
Limited Liability Company Interests		9,278		—		602,154		—		—		—			(62,117	)		540,037
The Finance Company, LLC
Senior Debt /Limited Liability Company Interests	$	5,163,547/50		902,132		6,303,101		32,018		500,000		—			379,786			7,214,905
TransAmerican Asset Servicing Group, LLC
Senior Debt /Limited Liability Company Interests	$	3,008,154/75		369,077		1,458,437		2,636		3,494,196		(2,886,042	)		(509,170	)		1,560,057
Total Control Investments			$	2,077,814	$	19,115,440	$	34,654	$	5,217,961	$	(3,139,010	)	$	(3,689,988	)	$	17,539,057
Affiliate Investments
Advanced Cannabis Solutions, Inc.
Warrant		1		—		—		—		500,000		—			1,856,212			2,356,212
Modular Process Control, LLC
Senior Debt/Warrant	$	6,779,806/1		1,069,498		6,069,246		86,722		3,555,009		(2,775,204	)		(2,964,663	)		3,971,110
ProGrade Ammo Group, LLC
Senior Debt/Warrants	$	8,093,150/181,240		1,120,904		6,211,824		75,019		10,648,661		(9,932,096	)		(2,870,124	)		4,133,284
SOLEX Fine Foods, LLC; Catsmo, LLC
Senior Debt /Limited Liability Company Interests/Warrant	$	3,900,000/1/1		510,959		4,031,382		24,097		40,284		—			(206,849	)		3,888,914
West World Media, LLC
Limited Liability Company Interests		85,210		—		235,451		—		—		—			3,446			238,897
Total Affiliate Investments			$	2,701,361	$	16,547,903	$	185,838	$	14,743,954	$	(12,707,300	)	$	(4,181,978	)	$	14,588,417

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-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 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.

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liability company and operates under a Limited Liability Company agreement dated June 13, 2014. FCCIP closed its first series on June 17, 2014, raising approximately $5.6 million in capital from investors. FCCIP 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 FCCIP 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 FCCIP 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 nine months ended March 31, 2015, we recognized $19,108 and $48,597, respectively, in management fee income related to the services performed for FCCIP.

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.”

Our non-transferable rights offering to our stockholders of record as of 5:00 p.m., New York City time, on March 6, 2015 expired at 5:00 p.m., New York City time, on March 30, 2015. The rights entitled holders of rights to subscribe for an aggregate of up to 11,949,034 shares of our common stock. Record date stockholders received one right for each share of common stock owned on the record date. The rights entitled the holder to purchase one new share of common stock for every one right held and record date stockholders who fully exercised their rights were entitled to subscribe, subject to certain limitations and pro-rata allocation, for additional shares that remain unsubscribed as a result of any unexercised rights. The subscription price per share was $3.50. The net proceeds from this rights offering, after deducting the fee payable to the dealer managers and offering expenses, were approximately $37.9 million, which we received on April 6, 2015. In connection with this rights offering, the dealer manager received a fee for its financial advisory, marketing and soliciting services equal to a maximum of 4.0% of the subscription price per share for each share issued pursuant to the exercise of rights, including pursuant to the over-subscription privilege. We incurred offering expenses, including the dealer manager fee, of $1,368,213 in connection with this rights offering.

Upon completion of the rights offering, for the periods commencing on April 1, 2015 and ending on June 30, 2015 and commencing on July 1, 2015 and ending on June 30, 2016, Full Circle Advisors has agreed to waive the portion of the base management fees and incentive fees that Full Circle Advisors would otherwise be entitled to receive pursuant to our Investment Advisory Agreement to the extent required in order for Full Circle Capital to earn net investment income sufficient to support the distribution payment on the shares of our common stock outstanding on the relevant record date for each monthly distribution as then declared by our board of directors. The determination of the amount to be waived will be finalized as of the end of the fiscal year for each period, with such amounts being accrued on a quarterly basis. Net investment income is defined as net income before net realized gains (losses) and unrealized appreciation (depreciation), in each case, as determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Full Circle Advisors will not be entitled to recoup any amount of base management fees that it waives pursuant to this agreement. There can be no assurance that Full Circle Advisors will extend the waiver beyond June 30, 2016.

As part of the rights offering, an institutional investor committed to purchase approximately 214,000 shares in open market transactions over a seven-day period following the expiration date of the rights offering. Subsequent to the seven-day period, on April 13, 2015, such investor acquired 80,475 shares, the remainder of its initial commitment of approximately 214,000 shares, in a private placement at $3.50 per share directly from the Company.

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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 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 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.

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

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.

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.

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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.

Common Stock

Fair Value

The Company’s assets measured at fair value on a recurring basis subject to the requirements of ASC Topic 820 at March 31, 2015 and June 30, 2014, were as follows:

As of March 31, 2015 (Unaudited)


	Level 1		Level 2		Level 3		Total
Assets
Senior and Subordinated Loans, at fair value	$	—	$	8,592,460	$	107,062,944	$	115,655,404
Limited Liability Company Interests, at fair value		—		—		1,165,710		1,165,710
Investments in Warrants, at fair value		—		40		2,589,641		2,589,681
Common Stock, at fair value		1,570,913		—		—		1,570,913
	$	1,570,913	$	8,592,500	$	110,818,295	$	120,981,708

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As of June 30, 2014


	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

(1)

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

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.

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.

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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.

With the decreased availability of debt capital for smaller to lower middle-market borrowers, combined with the significant demand for refinancing, we believe there are increased lending opportunities for us. As always, we remain cautious in selecting new investment opportunities, and will only deploy capital in deals which are consistent with our disciplined philosophy of pursuing superior risk-adjusted returns.

Operating Expense Reimbursement

Our investment adviser has agreed to reimburse us for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses that exceed 1.50% of our net assets, beginning with our fiscal quarter ending September 30, 2014 through the end of our fiscal year 2015. For our fiscal year 2016 and beyond, our investment adviser has agreed to reimburse us for any operating expenses, excluding interest expenses, investment advisory and management fees, and offering expenses, that exceed 1.75% of our net assets.

Management Fee and Incentive Fee Waiver

For the periods commencing on April 1, 2015 and ending on June 30, 2015 and commencing on July 1, 2015 and ending on June 30, 2016, Full Circle Advisors has agreed to waive the portion of the base management fees and incentive fees that Full Circle Advisors would otherwise be entitled to receive pursuant to our Investment Advisory Agreement to the extent required in order for Full Circle Capital to earn net investment income sufficient to support the distribution payment on the shares of our common stock outstanding on the relevant record date for each monthly distribution as then declared by our board of directors. The determination of the amount to be waived will be finalized as of the end of the fiscal year for each period, with such amounts being accrued on a quarterly basis. Net investment income is defined as net income before net realized gains (losses) and unrealized appreciation (depreciation), in each case, as determined in accordance with GAAP. Full Circle Advisors will not be entitled to recoup any amount of base management fees that it waives pursuant to this agreement. There can be no assurance that Full Circle Advisors will extend the waiver beyond June 30, 2016.

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Portfolio Composition and Investment Activity

Our portfolio of investments consists primarily of senior secured loans and, to a lesser extent, second lien loans, mezzanine loans and equity securities issued by lower middle-market companies. Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

The following is a summary of our quarterly investment activity since the completion of our initial public offering. Such amounts are not inclusive of our holdings of United States Treasury Bills.


Time Period	Acquisitions⁽¹⁾ (dollars in millions)		Dispositions⁽²⁾ (dollars in millions)		Weighted Average Interest Rate of Portfolio at End of Period⁽³⁾
Legacy Portfolio Acquisition (August 31, 2010)	$	72.3	$	N/A		12.10	%
August 31, 2010 through September 30, 2010		0.4		1.4		12.16	%
October 1, 2010 through December 31, 2010		3.7		10.1		12.09	%
January 1, 2011 through March 31, 2011		4.0		19.9		12.39	%
April 1, 2011 through June 30, 2011		9.6		1.2		12.68	%
Fiscal 2011		90.0		32.6
July 1, 2011 through September 30, 2011		27.7		15.9		12.89	%
October 1, 2011 through December 31, 2011		5.9		9.4		13.04	%
January 1, 2012 through March 31, 2012		6.7		5.7		12.98	%
April 1, 2012 through June 30, 2012		15.0		7.1		12.93	%
Fiscal 2012		55.3		38.1
July 1, 2012 through September 30, 2012		11.4		8.1		12.84	%
October 1, 2012 through December 31, 2012		29.1		25.1		12.55	%
January 1, 2013 through March 31, 2013		22.4		12.1		12.69	%
April 1, 2013 through June 30, 2013		12.2		12.8		12.90	%
Fiscal 2013		75.1		58.1
July 1, 2013 through September 30, 2013		20.0		10.1		12.81	%
October 1, 2013 through December 31, 2013		22.4		38.1		12.48	%
January 1, 2014 through March 31, 2014		33.0		20.9		11.41	%
April 1, 2014 through June 30, 2014		57.1		13.2		11.27	%
Fiscal 2014		132.5		82.3
July 1, 2014 through September 30, 2014		36.5		28.7		10.53	%
October 1, 2014 through December 31, 2014		28.7		23.2		10.23	%
January 1, 2015 through March 31, 2015		24.4		32.1		10.53	%
Fiscal 2015 to date		89.6		84.0
Since inception	$	442.5	$	295.1		N/A

(1)

Includes new deals, additional fundings, refinancings (inclusive of those on revolving credit facilities) and payment in kind “PIK” interest.

(2)

Includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities).

(3)

For transactions in the secondary market, the interest rate used for the weighted average interest rate reflects the effective yield on the loan at the purchase price. Weighted average is based upon the stated coupon rate and face value of outstanding debt securities at the measurement date. Debt securities on non-accrual status are included in the calculation and are treated as having 0.00% as their applicable interest rate for purposes of this calculation.

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Portfolio Activity for the Nine Months ended March 31, 2015

The primary investment activities for the nine months ended March 31, 2015 were fundings and repayments under the revolving credit facilities and the funding of the following loan facilities:

On July 23, 2014, the Company closed on approximately $0.4 million of a $3.0 million senior secured revolving line of credit to Medinet Investments, LLC, a medical liability claims factoring company.

On August 13, 2014, the Company funded approximately $0.9 million of a $1.25 million revolving loan and $4.0 million of a $5.75 million senior secured term loan facility to U.S. Oilfield Company, LLC, an oil and gas field services company. The Company funded an additional $1.9 million, net, during September 2014 under the credit facility. The credit facility bears interest at one month LIBOR plus 12.50% and has a final maturity of August 13, 2017.

On August 21, 2014, the Company purchased approximately $4.0 million of a $210 million senior secured note to US Shale Solutions, Inc., an oil and gas field services company.

On September 3, 2014, the senior secured credit facility with US Path Labs, LLC, a healthcare services company, was paid off at par plus accrued interest and fees for total proceeds of $3,594,076.

On September 22, 2014, the Company sold $4,937,500 of the senior secured term loan to Dynamic Energy Services International, LLC for $4,851,094 plus accrued interest.

On September 22, 2014, the Company sold $4,000,000 of the subordinated term loan to RCS Capital Corporation, for $4,060,000 plus accrued interest. On September 24, 2014, the Company sold an additional $3,500,000 of the subordinated term loan to RCS Capital Corporation for $3,552,500 plus accrued interest.

On September 25, 2014, the Company purchased $10.0 million of an $80.0 million senior secured note to Good Technology Corporation, a mobile device management company, for $7.7 million. As part of the transaction, the Company also purchased 2,032,520 warrants for $2.3 million.

During the quarter ended September 30, 2014, the senior secured term loan with PEAKS Trust 2009-1 was partially prepaid at par plus accrued interest for total proceeds of $2,695,387.

On October 16, 2014 the Company increased the size of the revolving loan to U.S. Oilfield Company, LLC to $1.75 million. On November 6, 2014, the senior secured term loan B to U.S. Oilfield Company, LLC was increased to $7.25 million. This increase was funded by a third party.

On October 9, 2014, the Company funded a $2.75 million senior secured credit facility to Ads Direct Media, Inc., an internet advertising agency.

On October 10, 2014, the Company funded $6.0 million of a $60 million second lien secured loan to Bioventus LLC, a specialty pharmaceutical company.

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

On December 17, 2014, the Company funded $4.5 million of a senior secured mortgage term loan to Luling Lodging, LLC, a hotel operator.

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 and revolving term loan with CPX, Inc. were paid off in full at par plus accrued interest 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 prepaid at par plus accrued interest for total proceeds of $3,239,450.

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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.

On March 10, 2015, the senior secured credit facilities with Infinite Aegis Group, LLC, a healthcare billing and collections company, were paid off at par plus accrued interest and fees for total proceeds of $4,565,950.

On March 31, 2015, the revolving loans to Blackstrap Broadcasting, LLC were terminated as part of a restructuring with Davidzon Radio, Inc., who purchased Blackstrap Broadcasting, LLC’s assets. Additionally, the second lien secured credit facility to Blackstrap Broadcasting, LLC was written off.

During the quarter ended March 31, 2015, the senior secured term loan with PEAKS Trust 2009-1 was partially prepaid at par plus accrued interest for total proceeds of $750,993.

The following is a reconciliation of the investment portfolio for the nine months ended March 31, 2015, and for the year ended June 30, 2014:


	Nine Months Ended March 31, 2015 (Unaudited)			Year Ended June 30, 2014
Beginning Investment Portfolio	$	150,190,759		$	88,174,501
Portfolio Investments Acquired⁽¹⁾		89,627,625			132,503,963
Treasury Purchases⁽²⁾		—			71,000,730
Amortization and Accretion of Fixed Income Premiums and Discounts		994,995			466,184
Portfolio Investments Repaid		(83,972,116	)		(82,301,503	)
Sales and Maturities of Treasury Securities⁽²⁾		(25,000,000	)		(46,000,000	)
Net Unrealized Appreciation (Depreciation)		(6,474,247	)		(12,704,614	)
Net Realized Losses		(4,385,308	)		(948,502	)
Ending Investment Portfolio	$	120,981,708		$	150,190,759

(1)

Includes PIK interest.

(2)

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

During the nine months ended March 31, 2015, we recorded net unrealized appreciation (depreciation) of ($6,474,247). This consisted of ($3,057,872) of net unrealized depreciation on debt investments and ($3,416,375) of net unrealized depreciation on equity investments.

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Portfolio Classifications

The following table shows the fair value of our portfolio of investments by asset class as of March 31, 2015 and June 30, 2014, excluding United States Treasury Bills. At March 31, 2015, we did not hold United States Treasury Bills. At June 30, 2014, we held approximately $25.0 million in United States Treasury Bills.


	March 31, 2015 (Unaudited)					June 30, 2014
	Investments at Fair Value (dollars in millions)		Percentage of Total Portfolio			Investments at Fair Value (dollars in millions)		Percentage of Total Portfolio
Senior Secured Loans	$	107.8		89.1	%	$	110.5		88.3	%
Subordinated Secured Loans		7.9		6.5			7.7		6.2
Warrants		2.5		2.1			3.1		2.4
Limited Liability Company Interests		1.2		1.0			3.9		3.1
Common Stock		1.6		1.3			—		—
Total	$	121.0		100.0	%	$	125.2		100.0	%

At March 31, 2015, the 27 borrowers whose debt investments are included in the table above averaged a loan to value ratio of approximately 66% (i.e., each $66 of loan value outstanding is secured by $100 of collateral value). At June 30, 2014, the 26 borrowers whose debt investments are included in the table above averaged a loan to value ratio of approximately 60% (i.e., each $60 of loan value outstanding is secured by $100 of collateral value).

The following table shows the fair value of our portfolio of investments by industry, as of March 31, 2015 and June 30, 2014, excluding United States Treasury Bills. At March 31, 2015, we did not hold United States Treasury Bills. At June 30, 2014, we held approximately $25.0 million in United States Treasury Bills.


	March 31, 2015 (Unaudited)					June 30, 2014
	Investments at Fair Value (dollars in millions)		Percentage of Total Portfolio			Investments at Fair Value (dollars in millions)		Percentage of Total Portfolio
Mobile Device Management	$	11.2		9.3	%	$	—		—	%
Building Cleaning and Maintenance Services		10.8		8.9			7.9		6.3
Radio Broadcasting		9.6		7.9			2.5		2.0
Consumer Financing		8.6		7.1			16.5		13.2
Real Estate Management Services		8.3		6.7			8.7		6.9
Wireless Communications		7.8		6.5			8.3		6.7
Oil and Gas Field Services		7.5		6.2			4.8		3.9
Maritime Security Services		6.3		5.2			7.1		5.7
Television Programming		6.3		5.2			7.2		5.7
Specialty Pharmaceutical		5.9		4.9			—		—
Electric Services		5.3		4.4			5.9		4.8
Real Estate – Hotel		4.5		3.7			—		—
Food Distributors and Wholesalers		3.8		3.1			3.9		3.1
Energy Efficiency Services		3.7		3.0			4.0		3.2
Biological Products		3.5		2.9			3.5		2.8
Information and Data Services		2.9		2.4			2.7		2.1
Munitions		2.7		2.3			4.1		3.3
Internet Advertising		2.6		2.2			—		—
Cable TV/Broadband Services		2.1		1.7			6.1		4.9
Outdoor Advertising Services		2.0		1.7			2.2		1.7
IT and Business Skill Training		2.0		1.6			—		—
Non-Residential Property Owner	$	1.6		1.3	%	$	2.4		1.9%

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	March 31, 2015 (Unaudited)					June 30, 2014
	Investments at Fair Value (dollars in millions)		Percentage of Total Portfolio			Investments at Fair Value (dollars in millions)		Percentage of Total Portfolio
Equipment Rental Services		0.7		0.6			1.8		1.4
Geophysical Surveying and Mapping Services		0.6		0.5			2.6		2.0
Asset Recovery Services		0.4		0.4			1.6		1.2
Medical Liability Claims Factoring		0.3		0.3			—		—
Healthcare Billing and Collections		0.0		0.0			5.4		4.4
Industrial Molded Products		—		—			3.0		2.4
Stationery, Tablets, and Related Products		—		—			1.8		1.4
Healthcare Services		—		—			3.5		2.8
Financial Services		—		—			7.7		6.2
Total	$	121.0		100.0	%	$	125.2		100.0	%

Portfolio Grading

We have adopted a credit grading system to monitor the quality of our debt investment portfolio. As of March 31, 2015, our portfolio had a weighted average grade of 3.13, based upon the fair value of the debt investments in the portfolio. Equity securities are not graded. This was an increase of 0.06 from the weighted average grade of 3.07 at June 30, 2014.

At March 31, 2015, our debt investment portfolio was graded as follows:


	March 31, 2015 (Unaudited)
Grade	Summary Description		Fair Value		Percentage of Total Portfolio
1		Involves the least amount of risk in our portfolio, the portfolio company is performing above expectations, and the trends and risk profile are favorable (including a potential exit).	$	—		—	%
2		The portfolio company is performing above expectations and the risk profile is generally favorable.		—		—	%
3		Risk that is similar to the risk at the time of origination, the portfolio company is performing as expected, and the risk profile is generally neutral; all new investments are initially assessed a grade of 3.		103,559,818		85.60	%
4		The portfolio company is performing below expectations, requires procedures for closer monitoring, may be out of compliance with debt covenants, and the risk profile is generally unfavorable.		9,701,410		8.02	%
5		The investment is performing well below expectations and is not anticipated to be repaid in full.		2,394,176		1.98	%
			$	115,655,404		95.60	%

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At June 30, 2014, our debt investment portfolio was graded as follows:


	June 30, 2014
Grade	Summary Description		Fair Value		Percentage of Total Portfolio
1		Involves the least amount of risk in our portfolio, the portfolio company is performing above expectations, and the trends and risk profile are favorable (including a potential exit).	$	1,794,764		1.43	%
2		The portfolio company is performing above expectations and the risk profile is generally favorable.		—		—	%
3		Risk that is similar to the risk at the time of origination, the portfolio company is performing as expected, and the risk profile is generally neutral; all new investments are initially assessed a grade of 3.		105,809,233		84.52	%
4		The portfolio company is performing below expectations, requires procedures for closer monitoring, may be out of compliance with debt covenants, and the risk profile is generally unfavorable.		9,314,861		7.44	%
5		The investment is performing well below expectations and is not anticipated to be repaid in full.		1,335,750		1.07	%
			$	118,254,608		94.46	%

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

Results of Operations

Comparison of the three months ended March 31, 2015 and 2014


	Three Months Ended March 31, 2015						Three Months Ended March 31, 2014
	Total			Per Share⁽¹⁾			Total		Per Share⁽¹⁾
Total Investment Income	$	4,308,525		$	0.36		$	3,191,624	$	0.34
Interest Income⁽²⁾		4,257,144			0.36			2,492,366		0.26
Dividend Income		—			—			80,293		0.01
Other Income		51,381			0.00			618,965		0.07
Net Operating Expenses		2,330,589			0.19			1,785,245		0.19
Management Fee		545,564			0.05			364,352		0.04
Incentive Fee		419,559			0.03			351,594		0.04
Total Advisory Fees		965,123			0.08			715,946		0.08
Administrative Fees		194,619			0.02			169,133		0.02
Director’s Fees		49,750			0.00			26,125		0.00
Interest Expenses		1,119,639			0.09			623,091		0.07
Professional Services Expense		149,698			0.01			112,629		0.01
Bank Fees		8,910			0.00			9,941		0.00
Other		142,326			0.01			128,380		0.01
Expense Reimbursement		(299,476	)		(0.02	)		—		—
Net Investment Income		1,977,936			0.17			1,406,379		0.15
Net Change in Unrealized Gain (Loss)		3,165,547			0.29			1,751,729		0.19
Net Realized Gain (Loss)	$	(3,485,515	)	$	(0.29	)	$	223,414	$	0.02

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(1)

The basic per share figures noted above are based on a weighted average of 11,990,011 and 9,419,350 shares outstanding for the three months ended March 31, 2015 and March 31, 2014, respectively, except where such amounts need to be adjusted to be consistent with what is disclosed in the financial highlights of our audited financial statements.

(2)

Interest income includes PIK interest of $99,796 and $21,526 for the three months ended March 31, 2015 and March 31, 2014, respectively.

Total Investment Income

Total investment income includes interest and dividend income on our investments and other income, which is typically comprised of fee income. Fee income typically consists of administrative fees, prepayment fees, structuring fees and unused line fees.

Total investment income increased from $3,191,624 for the three months ended March 31, 2014 to $4,308,525 for the three months ended March 31, 2015. The increase in investment income was predominantly due to increased interest income. The increase in interest income for the three months ended March 31, 2015 relative to the three months ended March 31, 2014 is primarily due to a larger average investment portfolio. This increase was offset by a decline in other income, due to elevated other income for the three months ended March 31, 2014 from success and prepayment fees received as a result of the payoff of Global Energy Efficiency Holdings, Inc.

Total investment income increased on a per share basis, as interest income increased from $0.26 per share to $0.36 per share. Other income per share decreased from $0.07 per share for the three months ended March 31, 2014 to $0.00 per share for the three months ended March 31, 2015. Per share figures noted above reflect an increase in the weighted average shares outstanding from 9,419,350 to 11,990,011 for the three months ended March 31, 2014 and March 31, 2015, respectively; this increase in share count decreased the per share impact of increased interest income.

Expenses

Net operating expenses increased from $1,785,245 for the three months ended March 31, 2014 to $2,330,589 for the three months ended March 31, 2015. The increase in net operating expenses is primarily due to increased interest expense and, to a lesser extent, increased management and incentive fees. Interest expense increased due to the expansion of our credit facility and the issuance of additional Notes (as defined below). These additional borrowings enabled us to fund portfolio growth, thereby increasing management fees as a result of a larger average investment portfolio, and increasing incentive fees due to greater pre-incentive fee net investment income. The increase in net operating expenses was partially offset by the expense reimbursement provided by our investment adviser. Refer to Note 5 of our consolidated financial statements for our expense reimbursement policy.

Net operating expenses per share were $0.19 per share for the three months ended both March 31, 2015 and March 31, 2014. This is due to an increase in interest expense per share from $0.07 for the three months ended March 31, 2014 to $0.09 for the three months ended March 31, 2015, which was offset by a decline due to the Adviser’s reimbursement to the Company of operating expenses exceeding 1.50% (excluding interest expense, management and incentive fees and offering expenses) for the three months ended March 31, 2015.

Net Investment Income

Net investment income increased from $1,406,379 for the three months ended March 31, 2014, to $1,977,936 for the three months ended March 31, 2015. The increase in net investment income for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014 was primarily due to greater interest income from a larger average investment portfolio. Net investment income also increased due to our investment adviser’s reimbursement of certain operating expenses of $299,476 during the three months ended March 31, 2015 as compared to no reimbursed expenses for the quarter ended March 31, 2014. The increase in interest income was partially offset by greater interest expense from additional borrowings and greater management and incentive fees resulting from a larger portfolio and greater pre-incentive fee net investment income during the period.

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Net investment income per share increased from $0.15 per share for the three months ended March 31, 2014 to $0.17 per share for the three months ended March 31, 2015. Per share figures noted above reflect an increase in the weighted average shares outstanding from 9,419,350 to 11,990,011 for the three months ended March 31, 2014 and March 31, 2015, respectively; this increase in share count decreased the per share impact of increased net investment income.

Realized Gain (Loss) on Investments

Realized gain (loss) on the sale of investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs.

During the three months ended March 31, 2015, we recorded net realized losses of $3,485,515, primarily in connection with the write off of the second lien investment in Blackstrap Broadcasting, LLC, which resulted in a realized loss of $3,500,000.

During the three months ended March 31, 2014, we recorded a net realized gain of $223,414 primarily in connection with a partial prepayment of PEAKS Trust 2009-1.

Change in 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. See “— Critical Accounting Policies — Change in Unrealized Gain (Loss) on Investments.”

Net change in unrealized appreciation (depreciation) of investments was $3,165,547 for the three months ended March 31, 2015 compared to $1,751,729 for the three months ended March 31, 2014. The following table summarizes the significant changes in unrealized appreciation (depreciation) of the Company’s investment portfolio for the three months ended March 31, 2015 by portfolio company.



Portfolio Company	Change in Unrealized Appreciation (Depreciation)			March 31, 2015 (Unaudited)							December 31, 2014 (Unaudited)
Portfolio Company	Change in Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)
Blackstrap Broadcasting, LLC	$	3,323,222		$	—	$	—	$	—		$	12,763,462	$	9,440,240	$	(3,323,222	)
Advanced Cannabis Solutions, Inc.		1,583,449			487,464		1,570,913		1,083,449			500,000		—		(500,000	)
Good Technology Corp.		878,535			10,322,888		11,217,400		894,512			10,164,090		10,180,067		15,977
US Shale Solutions, Inc.		(855,399	)		3,944,377		2,310,000		(1,634,377	)		3,938,978		3,160,000		(778,978	)
New Media West, LLC		(752,203	)		7,411,681		2,104,938		(5,306,743	)		8,173,743		3,619,203		(4,554,540	)
Other⁽¹⁾		(1,012,057	)		119,134,361		103,778,457		(15,355,904	)		116,404,115		102,060,268		(14,343,847	)
Totals	$	3,165,547		$	141,300,771	$	120,981,708	$	(20,319,063	)	$	151,944,388	$	128,459,778	$	(23,484,610	)

(1)

Other represents all remaining investments, including U.S. Treasury Bills (if any).

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Comparison of the nine months ended March 31, 2015 and 2014


	Nine Months Ended March 31, 2015						Nine Months Ended March 31, 2014
	Total			Per Share⁽¹⁾			Total			Per Share⁽¹⁾
Total Investment Income	$	13,307,369		$	1.12		$	10,406,713		$	1.27
Interest Income⁽²⁾		12,601,615			1.06			8,275,801			1.01
Dividend Income		—			—			114,704			0.01
Other Income		705,754			0.06			2,016,208			0.25
Net Operating Expenses		7,134,018			0.60			5,856,519			0.71
Management Fee		1,699,451			0.14			1,156,099			0.14
Incentive Fee		1,335,651			0.11			1,141,230			0.13
Total Advisory Fees		3,035,102			0.25			2,297,329			0.27
Administrative Fees		549,766			0.05			518,711			0.06
Director’s Fees		138,446			0.01			86,375			0.01
Interest Expenses		3,299,116			0.28			2,062,570			0.25
Professional Services Expense		509,292			0.04			467,110			0.06
Bank Fees		30,099			0.00			45,409			0.01
Other		402,720			0.04			379,015			0.05
Expense Reimbursement		(830,523	)		(0.07	)		—			—
Net Investment Income		6,173,351			0.52			4,550,194			0.56
Net Change in Unrealized Gain (Loss)		(6,474,247	)		(0.52	)		(3,698,474	)		(0.45	)
Net Realized Gain (Loss)	$	(4,385,308	)	$	(0.37	)	$	(947,287	)	$	(0.12	)

(1)

The basic per share figures noted above are based on a weighted average of 11,925,027 and 8,177,036 shares outstanding for the nine months ended March 31, 2015 and March 31, 2014, respectively, except where such amounts need to be adjusted to be consistent with what is disclosed in the financial highlights of our audited financial statements.

(2)

Interest income includes PIK interest of $302,030 and $21,526 for the nine months ended March 31, 2015 and March 31, 2014, respectively.

Total Investment Income

Total investment income increased from $10,406,713 for the nine months ended March 31, 2014 to $13,307,369 for the nine months ended March 31, 2015. The increase in investment income was predominantly due to increased interest income. The increase in interest income for the nine months ended March 31, 2015 relative to the nine months ended March 31, 2014 is primarily due to a larger average investment portfolio. This increase was offset by a decline in other income, primarily due to elevated other income for the nine months ended March 31, 2014 from success and prepayment fees received as a result of the payoffs of iMedX Inc and Global Energy Efficiency Holdings, Inc. Dividend income for the nine months ended March 31, 2015 decreased as compared with the dividend income for the nine months ended March 31, 2014, reflecting no current period distributions related to the Company’s investment in The Finance Company, LLC.

Total investment income decreased on a per shares basis, as other income per share decreased from $0.25 per share for the nine months ended March 31, 2014 to $0.06 per share for the nine months ended March 31, 2015. Interest income per share was higher for the nine months ended March 31, 2015 as compared to the nine months ended March 31, 2014, increasing from $1.01 per share to $1.06 per share. Per share figures noted above reflect an increase in the weighted average shares outstanding from 8,177,036 to 11,925,027 for the nine months ended March 31, 2014 and March 31, 2015, respectively; this increase in share count decreased the per share impact of increased total investment income.

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Expenses

Net operating expenses increased from $5,856,519 for the nine months ended March 31, 2014 to $7,134,018 for the nine months ended March 31, 2015. The increase in net operating expenses is primarily due to increased interest expense and to a lesser extent to increased management and incentive fees. Interest expense increased due to the expansion of our credit facility and the issuance of additional Notes (as defined below). These additional borrowings enabled us to fund portfolio growth, thereby increasing management fees as a result of a larger average investment portfolio, and increasing incentive fees due to greater pre-incentive fee net investment income. This increase was partially offset by the expense reimbursement provided by our investment adviser. Refer to Note 5 for our expense reimbursement policy.

Net operating expenses per share decreased from $0.71 per share for the nine months ended March 31, 2014 to $0.60 per share for the nine months ended March 31, 2015. This decrease was predominantly related to a $0.07 per share decline which resulted from the Adviser’s reimbursement to the Company of operating expenses exceeding 1.50% (excluding interest expense, management and incentive fees and offering expenses). Additionally, there was a decrease in total advisory fees per share from $0.27 for the nine months ended March 31, 2014 to $0.25 per share for the nine months ended March 31, 2015. Such decrease was the result of declining incentive fees as pre-incentive fee net investment income per share declined for the periods being compared. Per share figures noted above reflect an increase in the weighted average shares outstanding from 8,177,036 to 11,925,027 for the nine months ended March 31, 2014 and March 31, 2015, respectively; this increase in share count decreased the per share impact of changes in expenses.

Net Investment Income

Net investment income increased from $4,550,194 for the nine months ended March 31, 2014, to $6,173,351 for the nine months ended March 31, 2015. The increase in net investment income for the nine months ended March 31, 2015 as compared to the nine months ended March 31, 2014 was primarily due to greater interest income from a larger average investment portfolio. Net investment income also increased due to our investment adviser’s reimbursement of certain operating expenses of $830,523 during the nine months ended March 31, 2015 as compared to no expense reimbursement for the nine months ended March 31, 2014. The increase in net investment income was partially offset by greater interest expense from additional borrowings and greater management and incentive fees resulting from a larger portfolio and greater pre-incentive fee net investment income during the period, as well as a decrease in other income.

Net investment income per share decreased from $0.56 per share for the nine months ended March 31, 2014, to $0.52 per share for the nine months ended March 31, 2015. Per share figures noted above reflect an increase in the weighted average shares outstanding from 8,177,036 to 11,925,027 for the nine months ended March 31, 2014 and March 31, 2015, respectively; this increase in share count decreased the per share impact of increased net investment income.

Realized Gain (Loss) on Investments

Realized gain (loss) on the sale of investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs.

During the nine months ended March 31, 2015, we recorded net realized losses of $4,385,308, primarily in connection with a loss from the write off of the second lien investment in Blackstrap Broadcasting, LLC and the final disposition of the investment in MDU Communications (USA) Inc., which resulted in realized losses of $3,500,000 and $1,701,496, respectively. These losses were partially offset by a gain on partial prepayments of PEAKS Trust 2009-1 of $1,034,292.

During the nine months ended March 31, 2014, we recorded net realized losses of $947,287 primarily in connection with the continued disposition of our investment in Ygnition Networks, Inc. and the partial disposition of our investment in MDU Communications Inc.

Change in Unrealized Gain (Loss) on Investments

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Net change in unrealized appreciation (depreciation) of investments was $(6,474,247) for the nine months ended March 31, 2015 compared to $(3,698,474) for the nine months ended March 31, 2014. The following table summarizes the significant changes in unrealized appreciation (depreciation) of the Company’s investment portfolio for the nine months ended March 31, 2015 by portfolio company.



Portfolio Company	Change in Unrealized Appreciation (Depreciation)			March 31, 2015 (Unaudited)							June 30, 2014
Portfolio Company	Change in Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)			Cost		Fair Value		Unrealized Appreciation (Depreciation)
Blackstrap Broadcasting, LLC	$	4,128,706		$	—	$	—	$	—		$	6,595,547	$	2,466,841	$	(4,128,706	)
New Media West, LLC		(2,546,711	)		7,411,681		2,104,938		(5,306,743	)		8,426,711		5,666,679		(2,760,032	)
Takoda Resources Inc.		(2,433,971	)		3,146,100		576,680		(2,569,420	)		2,692,828		2,557,379		(135,449	)
US Shale Solutions, Inc.		(1,634,377	)		3,944,377		2,310,000		(1,634,377	)		—		—		—
TransAmerican Asset Servicing Group, LLC		(1,582,744	)		3,438,535		445,694		(2,992,841	)		2,970,154		1,560,057		(1,410,097	)
Other⁽¹⁾		(2,405,150	)		123,360,078		115,544,396		(7,815,682	)		143,350,335		137,939,803		(5,410,532	)
Totals	$	(6,474,247	)	$	141,300,771	$	120,981,708	$	(20,319,063	)	$	164,035,575	$	150,190,759	$	(13,844,816	)

(1)

Other represents all remaining investments, including U.S. Treasury Bills (if any).

Liquidity and Capital Resources

At March 31, 2015, we had investments in debt securities of 27 companies, totaling approximately $115.7 million, and equity investments in 16 companies, totaling approximately $5.3 million. The debt investment amount includes approximately $217,529 in accrued “PIK” interest earned for the nine months ended March 31, 2015, which is added to the carrying value of our investments.

For the nine months ended March 31, 2015, cash used in operating activities, consisting primarily of purchases, sales and repayments of investments and the items described in “Results of Operations,” was approximately $24.5 million, reflecting the purchases and repayments of investments, income resulting from operations, offset by non-cash income related to OID income, changes in working capital and accrued interest receivable. Net cash used in purchases and sales of investments was approximately $5.6 million, reflecting additional investments in securities of $89.6 million, offset by principal repayments of $84.0 million. Such amounts are not inclusive of our purchases or sales of United States Treasury Bills.

As of March 31, 2015, we had $27.2 million outstanding under our senior secured credit facility (the “Credit Facility”) with Santander Bank, N.A. f/k/a Sovereign Bank, N.A. (“Santander Bank”), as administrative agent, and $33.8 million outstanding of aggregate principal amount of 8.25% Notes due June 30, 2020 (the “Notes”). On November 6, 2013, the Company increased the size of the Credit Facility from $32.5 million to $45.0 million. On September 12, 2014, the Company entered into an amendment to our Credit Facility with Santander Bank to increase the size of the facility from $45.0 million to $60.0 million and to provide additional criteria for eligibility of loans under the borrowing base under the credit facility. The Company has not exercised its option to expand the Credit Facility as of March 31, 2015.

As a business development company, we generally have an ongoing need to raise additional capital for investment purposes. As a result, we expect, from time to time, to access the debt and equity markets when we believe it is necessary and appropriate to do so. In this regard, we continue to explore various options for obtaining additional debt or equity capital for investments. This may include expanding or extending our Credit Facility, or the issuance of additional shares of our common stock, possibly at prices below our then current net asset value per share pursuant to a proposal, approved by our stockholders at our most recent

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Special Meeting of Stockholders, authorizing us to sell shares of our common stock below its then current net asset value per share in one or more offerings for a period of one year or, if earlier, the date of our next Annual Meeting of Shareholders. We would need similar future approval from our stockholders to issue shares below the then current net asset value per share any time after the expiration of the current approval. If we are unable to obtain leverage or raise equity capital on terms that are acceptable to us, our ability to grow our portfolio will be substantially impacted.

Capital Raises

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.

As part of the rights offering, an institutional investor committed to purchase approximately 214,000 shares in open market transactions over a seven-day period following the expiration date of the rights offering. Subsequent to the seven-day period, on April 13, 2015, such investor acquired 80,475 shares, the remainder of its commitment, in a private placement at $3.50 per share directly from the Company.

Contractual Obligations


	Payments Due By Period (dollars in millions)
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Credit Facility⁽¹⁾	$	27.2	$	—	$	27.2	$	—	$	—
Notes		33.6		—		—		—		33.6
Total	$	60.8	$	—	$	27.2	$	—	$	33.6

(1)

At March 31, 2015, $32.8 million remained unused under the Credit Facility.

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In addition to the contractual obligations set forth above, we have certain obligations with respect to the investment advisory and administration services we receive. See “Overview”. We incurred $3,035,102 for investment advisory services and $549,766 for administrative services for the nine months ended March 31, 2015.

As of March 31, 2015, we had approximately $0.8 million in unfunded loan commitments, subject to our approval in certain instances, to provide debt financing to certain of our portfolio companies.

Share Repurchase Program

On April 7, 2014, the Board of Directors authorized a share repurchase program which provides for the purchase of up to 1 million shares of outstanding common stock to be implemented at the discretion of our management team. Under the repurchase program, we may, but are not obligated to, repurchase our outstanding common stock in the open market from time to time. The timing and number of shares to be repurchased in the open market will depend on a number of factors, including market conditions and alternative investment opportunities. In addition, any repurchases will be conducted in accordance with the 1940 Act.

Off-Balance Sheet Arrangements

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

Borrowings

Secured Revolving Credit Facility. On June 3, 2013, we entered into a credit agreement with Santander Bank, as administrative agent, which provided us with our $32.5 million Credit Facility.

The Credit Facility matures on June 3, 2016 and bears interest based on a tiered rate structure, depending upon utilization, ranging from LIBOR (one month, two month or three month, depending on our option) plus 3.25% to 4.00% per annum, or from Santander Bank’s prime rate plus 1.25% to 2.00% per annum, based on our election. In addition, a fee of 0.50% per annum is charged on unused amounts under the Credit Facility. The Credit Facility is secured by all of our assets. Under the Credit Facility, we have made certain customary representations and warranties, and are required to comply with various covenants, reporting requirements and other customary requirements, including a minimum balance sheet leverage ratio, for similar credit facilities. The Credit Facility includes usual and customary events of default for credit facilities of this nature. On November 6, 2013, the Company increased the size of its Credit Facility with Santander Bank from $32.5 million to $45.0 million. On September 12, 2014, the Company entered into an amendment to our Credit Facility with Santander Bank to increase the size of the facility from $45.0 million to $60.0 million and to provide additional criteria for eligibility of loans under the borrowing base under the credit facility. The Company has not exercised its option to expand the Credit Facility as of March 31, 2015.

Notes Payable. On June 28, 2013, we issued approximately $21.1 million in aggregate principal amount of our 8.25% Notes due June 30, 2020 for net proceeds of approximately $20.2 million after deducting underwriting commissions of approximately $0.9 million. Offering expenses of approximately $0.2 million were incurred.

The Notes were issued pursuant to an indenture, dated June 3, 2013, as supplemented by the first supplemental indenture, dated June 28, 2013 (collectively, the “Indenture”), between us and U.S. Bank National Association (the “Trustee”). The Notes are our unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries or financing vehicles. Interest on the Notes is paid quarterly in arrears on March 30, June 30, September 30 and December 30, at a rate of 8.25% per annum, beginning September 30, 2013. The Notes 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 under the trading symbol “FULLL” with a par value of $25.00 per share.

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The Indenture contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the Indenture. We may repurchase the Notes in accordance with the 1940 Act and the rules promulgated thereunder. Any Notes repurchased by us may, at our option, be surrendered to the Trustee for cancellation, but may not be reissued or resold by us. Any Notes surrendered for cancellation will be promptly cancelled and no longer outstanding under the Indenture. As of March 31, 2015, we had not repurchased any of the Notes in the open market.

On July 14, 2014, we closed an offering of Notes consisting 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 $21,145,525 of 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.

Distribution Notes. On July 2, 2013, we repaid $3.4 million of Distribution Notes issued in connection with our initial public offering at par plus accrued interest. As a result, the Distribution Notes are no longer outstanding.

Distributions

In order to qualify as a regulated investment company and to avoid corporate level tax on the income we distribute to our stockholders, we are required, under Subchapter M of the Code, to distribute at least 90% of our ordinary income and short-term capital gains to our stockholders on an annual basis. To the extent our earnings fall below the total amount of our distributions for a taxable year, a portion of those distributions may be deemed a tax return of capital to our stockholders. In this regard, $1,695,841 of our distributions during the year ended June 30, 2014 constituted a return of capital to our stockholders. For tax purposes, the Company expects that distributions for the fiscal year ended June 30, 2015 will be funded primarily from net investment income. However, for the nine months ended March 31, 2015, for financial reporting purposes, the Company had net investment income of approximately $0.52 per share, compared to distributions to stockholders of $0.60 per share during the period. Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. The tax character of distributions will be determined at the end of the taxable year. However, if the character of our distributions for the fiscal year ended June 30, 2015 were determined as of March 31, 2015, a portion of the distributions for 2015 would have been characterized as a tax return of capital to the Company’s stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our taxable ordinary income or capital gains. The specific tax characteristics of our distributions will be reported to stockholders after the end of the taxable year.

The following table lists the cash distributions, including dividends and returns of capital, if any, per share that we have declared since our formation on April 16, 2010. The table is divided by fiscal year according to record date.

Date Declared

Record Date

Payment Date

Amount

Total Fiscal 2011:

0.751

Total Fiscal 2012:

0.918

Total Fiscal 2013:

0.924

Fiscal 2014:

May 3, 2013

July 31, 2013

August 15, 2013

0.077

May 3, 2013

August 30, 2013

September 13, 2013

0.077

May 3, 2013

September 30, 2013

October 15, 2013

0.077

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Date Declared

Record Date

Payment Date

Amount

September 9, 2013

October 31, 2013

November 15, 2013

0.077

September 9, 2013

November 29, 2013

December 13, 2013

0.077

September 9, 2013

December 31, 2013

January 15, 2014

0.077

November 7, 2013

January 31, 2014

February 15, 2014

0.067

November 7, 2013

February 28, 2014

March 15, 2014

0.067

November 7, 2013

March 31, 2014

April 15, 2014

0.067

February 5, 2014

April 30, 2014

May 15, 2014

0.067

February 5, 2014

May 30, 2014

June 13, 2014

0.067

February 5, 2014

June 30, 2014

July 15, 2014

0.067

Total (2014)

0.864

Fiscal 2015:

May 2, 2014

July 31, 2014

August 15, 2014

0.067

May 2, 2014

August 29, 2014

September 15, 2014

0.067

May 2, 2014

September 30, 2014

October 15, 2014

0.067

September 8, 2014

October 31, 2014

November 14, 2014

0.067

September 8, 2014

November 28, 2014

December 15, 2014

0.067

September 8, 2014

December 31, 2014

January 15, 2015

0.067

November 3, 2014

January 30, 2015

February 13, 2015

0.067

November 3, 2014

February 27, 2015

March 13, 2015

0.067

November 3, 2014

March 31, 2015

April 15, 2015

0.067

February 20, 2015

April 30, 2015

May 15, 2015

0.035

February 20, 2015

May 29, 2015

June 15, 2015

0.035

February 20, 2015

June 30, 2015

July 15, 2015

0.035

Total (2015)

0.708

Fiscal 2016:

May 5, 2015

July 31, 2015

August 14, 2015

0.035

May 5, 2015

August 31, 2015

September 15, 2015

0.035

May 5, 2015

September 30, 2015

October 15, 2015

0.035

Total 2016 to date

0.105

Related Parties

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

•

We have entered into the Investment Advisory Agreement with Full Circle Advisors. John E. Stuart, our Chairman, and Gregg J. Felton, our Chief Executive Officer and President, are both managing members of, and have financial and controlling interests in, Full Circle Advisors.

•

We have entered into the Administration Agreement with Full Circle Service Company. Pursuant to the terms of the Administration Agreement, Full Circle Service Company provides us with the office facilities and administrative services necessary to conduct our day-to-day operations. Mr. Stuart, our Chairman, and Mr. Felton, our Chief Executive Officer and President, are managing members of, and have financial and controlling interests in, Full Circle Service Company. Our Chief Financial Officer, Michael J. Sell, is the Vice President of Full Circle Service Company.

•

We have entered into a license agreement with Full Circle Advisors, pursuant to which Full Circle Advisors has agreed to grant us a non-exclusive, royalty-free license to use the name “Full Circle.”

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•

Our former Chief Financial Officer, Treasurer and Secretary, William E. Vastardis, is the Chairman of Conifer Asset Solutions LLC (“Conifer”) formerly known as Vastardis Fund Services LLC. Full Circle Service Company has engaged Conifer to provide certain administrative services to us. For the nine months ended March 31, 2015, Conifer earned $194,999 for services provided under the Sub-Administration Agreement. On September 30, 2013, Michael J. Sell succeeded Mr. Vastardis as our Chief Financial Officer, Treasurer, and Secretary.

Certain members of Full Circle Advisors’ investment committee presently manage Full Circle Funding, LP, a specialty lender serving lower middle-market companies. Although the existing investment funds managed by Full Circle Funding, LP, which currently consist of the Legacy Funds, are no longer making investments in new opportunities, any affiliated investment vehicle formed in the future and managed by our investment adviser or its affiliates may, notwithstanding different stated investment objectives, have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. Full Circle Advisors and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, Full Circle Advisors or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with Full Circle Advisors’ allocation procedures.

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

Recent Developments

Recent Portfolio Activity

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Distribution

On May 5, 2015, the Board of Directors declared the following monthly distributions:


Record Date	Payment Date		Per Share Amount
July 31, 2015		August 14, 2015	$	0.035
August 31, 2015		September 15, 2015	$	0.035
September 30, 2015		October 15, 2015	$	0.035

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in interest rates. As of March 31, 2015, 8 debt investments in our portfolio bore interest at a fixed rate, and the remaining 28 debt investments were at variable rates, representing approximately $25.4 million and $90.3 million in principal debt, respectively. The variable rates are based upon LIBOR.

To illustrate the potential impact of a change in the underlying interest rate on our net investment income, we have assumed a 1%, 2%, and 3% increase and 1%, 2%, and 3% decrease in the underlying Prime Rate or LIBOR, and no other change in our portfolio as of March 31, 2015. We have also assumed outstanding floating rate borrowings by the Company of $27.2 million. See the below table for the effect the rate changes would have on net investment income.


LIBOR or Prime Rate Increase (Decrease)	Increase (decrease) of Net Investment Income (in millions)
3.00%	$	1.5
2.00%		0.9
1.00%		0.3
(1.00)%		0.2
(2.00)%		0.3
(3.00)%		0.5

Although management believes that this analysis is indicative of our existing interest rate sensitivity at March 31, 2015, it does not adjust for changes in the credit quality, size and composition of our portfolio, and other business developments, including borrowing under a credit facility, that could affect the net increase in net assets resulting from operations. Accordingly, no assurances can be given that actual results would not differ materially from the results under this hypothetical analysis.

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

Item 4.

Controls and Procedures

As of March 31, 2015, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information about us required to be included in periodic SEC filings.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

None of us, our investment adviser or administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our investment adviser or administrator. From time to time, we, our investment adviser or administrator, may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A.

Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Except as indicated below, there have been no material changes during the nine months ended March 31, 2015 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended June 30, 2014.

Any amounts that we use to service our indebtedness will not be available for distributions to our common stockholders.

Although we have no current intention to do so, we may in the future issue debt securities and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted, as a registered closed-end management investment company, to issue senior securities representing indebtedness so long as our asset coverage ratio with respect thereto, defined under the 1940 Act as the ratio of our gross assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities representing indebtedness, is at least 200% after each issuance of such senior securities. If the value of our assets declines, we may be unable to satisfy these tests. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when doing so may be disadvantageous. Any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders.

The failure in cyber security systems, as well as the occurrence of events unanticipated in the Company’s disaster recovery systems and management continuity planning could impair the Company’s ability to conduct business effectively.

The occurrence of a disaster such as a cyber attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in the Company’s disaster recovery systems, or a support failure from external providers, could have an adverse effect on the Company’s ability to conduct business and on the Company’s results of operations and financial condition, particularly if those events affect the Company’s computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of the Company’s managers were unavailable in the event of a disaster, the Company’s ability to effectively conduct its business could be severely compromised.

We depend heavily upon computer systems to perform necessary business functions. Despite the Company’s implementation of a variety of security measures, its computer systems could be subject to cyber attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, the Company may experience threats to its data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, the Company’s computer systems and networks, or otherwise cause interruptions or malfunctions in its operations, which could result in damage to the Company’s reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

We did not engage in unregistered sales of equity securities during the nine months ended March 31, 2015.

Issuer Purchases of Equity Securities

For the quarter ended March 31, 2015, as a part of our dividend reinvestment plan for our common stockholders, we purchased 26,207 shares of our common stock for an average price of approximately $4.21 in the open market in order to satisfy the reinvestment portion of our dividends. The following chart outlines repurchases of our common stock during the quarter ended March 31, 2015.


Month	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 2015		7,751	$	4.73		—		—
February 2015		8,084	$	4.50		—		—
March 2015		10,372	$	3.60		—		—
Total		26,207	$	4.21		—		—

Item 3.

Defaults Upon Senior Securities

Not applicable.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

Not applicable.

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Item 6.

Exhibits

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


Exhibit Number		Description
3.1		Articles of Amendment and Restatement⁽²⁾
3.2		Amended and Restated Bylaws⁽⁹⁾
4.1		Form of Common Stock Certificate⁽¹⁾
4.2		Form of Note Agreement for Distribution Notes⁽¹⁾
4.3		Indenture, dated as of June 3, 2013⁽⁶⁾
4.4		Form of First Supplemental Indenture⁽⁷⁾
4.5		Form of Global Note (included as Exhibit A to the Form of First Supplemental Indenture)⁽⁷⁾
10.1		Amended and Restated Dividend Reinvestment Plan⁽¹³⁾
10.2		Investment Advisory Agreement by and between Registrant and Full Circle Advisors, LLC⁽¹⁾
10.3		Administration Agreement by and between Registrant and Full Circle Service Company, LLC⁽¹⁾
10.4		Credit Agreement by and among Registrant, Sovereign Bank, N.A., as agent, and the lenders party thereto, dated as of June 3, 2013⁽⁵⁾
10.5		First Amendment to Credit Agreement by and between Registrant and Sovereign Bank, N.A., as agent, dated as of September 25, 2013.⁽¹⁰⁾
10.6		Second Amendment to Credit Agreement by and between Registrant, Santander Bank, N.A. (formerly known as Sovereign Bank, N.A.), as agent, and the lenders party thereto, dated as of November 6, 2013⁽¹¹⁾
10.7		Third Amendment to Credit Agreement by and between Registrant, Santander Bank, N.A., (formerly known as Sovereign Bank, N.A.), as agent, and lenders’ party thereto, dated as of September 12, 2014.⁽¹⁴⁾
10.8		Pledge Agreement by Registrant in favor of Sovereign Bank, N.A., as agent, dated as of June 3, 2013⁽⁵⁾
10.9		Security Agreement by Registrant in favor of Sovereign Bank, N.A., as agent, dated as of June 3, 2013⁽⁵⁾
10.10		Form of Indemnification Agreement by and between Registrant and each of its directors⁽¹⁾
10.11		Trademark License Agreement by and between Registrant and Full Circle Advisors, LLC⁽¹⁾
10.12		Form of Purchase and Sale Agreement by and between Registrant, Full Circle Partners, LP, Full Circle Fund, Ltd., Full Circle Offshore, LLC, and FCC, LLC d/b/a First Capital⁽²⁾
14.1		Code of Ethics⁽⁸⁾
14.2		Code of Business Conduct⁽⁸⁾
15.1		Letter re change in certifying accountant⁽¹⁴⁾
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended*
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended*
32.1		Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002*
32.2		Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002*

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(1)

Incorporated by reference to Registrant’s registration statement on Form N-2 Pre-Effective Amendment No. 2 (File No. 333-166302) filed on August 5, 2010.

(2)

Incorporated by reference to Registrant’s registration statement on Form N-2 Pre-Effective Amendment No. 3 (File No. 333-166302) filed on August 26, 2010.

(3)

Incorporated by reference to Registrant’s registration statement on Form N-2 Pre-Effective Amendment No. 2 (File No. 333-180321) filed on July 13, 2012.

(4)

Incorporated by reference to the Registrant’s registration statement on Form N-2 (File No. 333-187207) filed on March 12, 2013.

(5)

Incorporated by reference to Registrant’s current report on Form 8-K (File No. 814-00809) filed on June 4, 2013.

(6)

Incorporated by reference to Registrant’s registration statement on Form N-2 Pre-Effective Amendment No. 1 (File No. 333-188280) filed on June 11, 2013.

(7)

Incorporated by reference to Registrant’s registration statement on Form N-2 Pre-Effective Amendment No. 2 (File No. 333-188280) filed on June 19, 2013.

(8)

Incorporated by reference to Registrant’s annual report on form 10-K (File No. 814-00809) filed on September 13, 2013.

(9)

Incorporated by reference to Registrant’s current report on Form 8-K (Item 5.03) (File No. 814-00809) filed on November 7, 2013.

(10)

Incorporated by reference to Registrant’s quarterly report on Form 10-Q (File No. 814-00809) filed on November 7, 2013.

(11)

Incorporated by reference to Registrant’s current report on Form 8-K (Items 1.01, 2.03 and 9.01) (File No. 814-00809) filed on November 7, 2013.

(12)

Incorporated by reference to Registrant’s current report on Form 8-K (Items 1.10, 2.03 and 9.01) (File no. 814-00809) filed on September 15, 2014.

(13)

Incorporated by reference to Registrant’s registration statement on Form N-2 (File no. 333-198737) filed on September 15, 2014.

(14)

Incorporated by reference to Registrant’s current report on Form 8-K (Items 4.01, and 9.01) (File No. 814-00809) filed on October 2, 2014.

Filed herewith.

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SIGNATURES

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


		FULL CIRCLE CAPITAL CORPORATION
Date: May 11, 2015		/s/ Gregg J. Felton Gregg J. Felton, Chief Executive Officer and President (Principal Executive Officer)
Date: May 11, 2015		/s/ Michael J. Sell Michael J. Sell, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

Full Circle Capital Corp - FORM 10-Q - May 11, 2015

Attached files

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED March 31, 2015

COMMISSION FILE NUMBER: 814-00809

FULL CIRCLE CAPITAL CORPORATION

102 Greenwich Avenue, 2nd Floor Greenwich, CT 06830

(203) 900-2100

FULL CIRCLE CAPITAL CORPORATION

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PART I — FINANCIAL INFORMATION Item 1. Financial Statements

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued) March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued) March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued) March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued) March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued) March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 1. Organization

Note 2. Significant Accounting Policies

Use of Estimates and Basis of Presentation

Investment Classification

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Basis of Consolidation

Valuation of Investments

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 2. Significant Accounting Policies – (continued)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Valuation Techniques

Senior and Subordinated Secured Loans

Investments in Private Companies

Warrants

Common Stock

Fair Value of Financial Instruments

Cash

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Revenue Recognition

Change in unrealized gain (loss) on investments

Federal and State Income Taxes

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Distributions

Guarantees and Indemnification Agreements

Per Share Information

Organizational Expenses and Offering Costs

Capital Accounts

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 2. Significant Accounting Policies – (continued)

Recent Accounting Pronouncements

Note 3. Concentration of Credit Risk and Liquidity Risk

Note 4. Earnings (Loss) per Common Share — Basic and Diluted

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 5. Related Party Agreements and Transactions

Investment Advisory Agreement

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

Administration Agreement

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

Sub-Administration Agreement

Managerial Assistance

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited) March 31, 2015

Note 5. Related Party Agreements and Transactions – (continued)

Note 6. Equity Offerings, Related Expenses and Other Stock Issuances

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

102 Greenwich Avenue, 2^nd Floor
Greenwich, CT 06830

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
June 30, 2014

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015

FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (Unaudited)
March 31, 2015