Garrett Edson – Investor Relations-ICR Gregg Felton – Chief Executive Officer and President Mike Sell – Chief Financial Officer, Treasurer and Secretary John Stuart – Chairman.

Mickey Schleien – Ladenburg Christopher Testa – National Securities Corporation David Chiaverini – Cantor Fitzgerald.

Good day, and welcome to the Full Circle Capital Corporation Fourth Quarter Fiscal 2015 Earnings Conference Call. Today’s conference is being recorded. At this time I would like to turn the conference over to Garrett Edson. Please go ahead, sir..

Thank you Orlando and good morning everyone. Thank you for joining us for Full Circle Capital Corp’s fourth quarter fiscal 2015 earnings conference call for the quarter ended June 30, 2015. If you’d like to be added to the Company’s distribution list, please send an e-mail to info@fccapital.com.

Alternatively, you can sign up under the Investor Relations tab on the Company’s website. A slide presentation accompanying this morning’s conference call can also be found on Full Circle’s website under the Investor Relations tab at www.fccapital.com.

Before I turn the call over to management, I’d like to call your attention to the customary Safe Harbor statement regarding forward-looking information.

Today’s conference call includes forward-looking statements and projections, and we ask that you refer to Full Circle’s most recent filings with the SEC for important factors that could cause actual results to differ materially from these projections. Full Circle does not undertake to update its forward-looking statement unless required by law.

To obtain copies of the latest SEC filings, please visit Full Circle’s website under the Investor Relations tab. On the [ph] call this morning are Gregg Felton, Full Circle Capital’s President and Chief Executive Officer; Michael Sell, Chief Financial Officer; and John Stuart, Chairman. And with that, I’d now like to turn the call over to Mr.

Gregg Felton.

Gregg?.

Thank you, Garrett. Good morning, and welcome everyone to this morning’s call. During our fiscal fourth quarter, we increased our investment activity relative to the prior quarter as we began deploying the capital that we received from our capital raised at the end of March, further increasing the size and diversity of our loan portfolio.

The new investments we have sourced since the start of the fiscal fourth quarter represent the types of investments Full Circle is focused on from a risk-reward standpoint as we strive to offer improved performance and more stable returns for our stock holders.

As we progress over the next few quarters, we believe these new investments will contribute to the sustainability of our current monthly distribution and our book value per share.

As noted previously, while new investments begin to generate investment income for the Company, we wanted to ensure stockholders that the current level of distribution would be maintained and covered for the foreseeable future.

And to that end, our management company further aligned itself with stockholders by agreeing to waive its base management and incentive fees to the extent necessary in order for the Company to earn net investment income sufficient to fully support each monthly distribution through the end of fiscal 2016.

We are also maintaining our existing expense cap limitation for fiscal 2016 and subsequent years, whereby Full Circle Advisors has agreed to provide reimbursement to Full Circle Capital for any annual operating expenses exceeding 1.75% of net asset value.

Yesterday, in response to the depressed valuation environment across the BDC sector, including with respect to our own equity, we announced an increase of our share repurchase program from one million shares to two million shares.

While we plan to be in the market during normal trading windows, we also intend to enter into a 10b5-1 plan shortly, which will allow us to execute on the plan during trading blackout windows.

Since we currently have significant investment capacity, we believe the stock repurchase program is a prudent use of our capital that will be immediately accretive to stockholders while we maintain the large majority of our capacity to deploy into additional investments and further grow and diversify the Company.

We ended the fiscal fourth quarter with approximately $35 million to $40 million of investment capacity, from which we made $10 million in new investments in July.

In terms of our financial results for the fourth quarter, we recorded net investment income per share of $0.11, which includes the waiver of a portion of our investment advisors' base management incentive fees that I just discussed.

As our new and future investments generate investment income, we expect to graduate toward and eventually fully cover our monthly distributions without the necessity of a waiver. Our net asset value is $4.30 per share as of June 30 with the reduction primarily due to the write-off of our New Media West position, one of our legacy investments.

As presented on Slides 6 through Slide 8, we funded over $26 million to six new portfolio companies and two of our existing portfolio companies in the quarter.

On our last call, we noted our new investments in GC Pivotal, a data connectivity service company, as well as Sundberg America, an appliance parts distributor, as well as our investment in U.S. Shale Solutions.

Beyond those investments in May, we funded a $3.5 million investment in RiceBran Technologies, a grain mill products company, through a revolving credit facility and a senior secured term loan as well as the receipt of warrants to purchase 300,000 shares of this public company at a strike of – excuse me $5.25 per share.

In June, we invested $4 million in a funded secured term loan and $2 million in an unfunded revolver in American Gaming, a gaming machine manufacturer, as well as $2 million of senior secured notes issued by Lee Enterprises, a newspaper publisher; and finally, a $2.6 million Granite Ridge Synthetics secured loan in the form of a total return swap.

Overall, our investment activity in the quarter shows that we will continue to identify opportunistic transactions and investment structures in various industries that can provide us with a diversified portfolio of assets.

Our activity subsequent to the June quarter-end is summarized on Slide 9, as we've closed on an additional $10 million in investments and received realizations of $12.8 million. At the beginning of July, we issued a $6 million mortgage note by 310E53RD Street, a real estate holding company.

Later in the month, we purchased $3 million of a $175 million senior secured loan to Liquidnet Holdings, an equity tradings platform, at a price of 96.375% as a percentage at par.

This is another example of us looking for opportunistic investments, and in this case participating in an existing facility with a lower coupon, but at a discount that provides an attractive total return of more than 9.5%.

Finally, at the end of July, we added to our investment in Lee Enterprises with an additional $1 million investment in senior secured notes.

Also, subsequent to quarter-end, we received the full payment at par plus accrued interest and fees of our senior secured credit facility and revolving commitment with Butler Burgher providing us with total proceeds of $8.6 million.

We also received partial repayment of our senior secured credit facility with GW Power and Greenwood Fuels for total proceeds of $2.2 million, and we sold the second lien term loan with GK Holdings for total proceeds of $1.96 million plus accrued interest.

Our activity over the last few months is a positive step toward further diversifying our portfolio of investments sourced from our origination pipeline. We expect to continue to grow our portfolio in a diversified fashion across a variety of industries as we move ahead, but we expect to remain disciplined in our approach.

Slide 11 details the metrics of our investment portfolio as of June 30. Our portfolio contains 32 discrete debt investments as compared with 26 a year ago.

Although we continue to identify a few attractive second lien investments for larger corporate borrowers, we expect to continue to favor first lien investments, and first lien loans represented 81% of our portfolio as of June 30.

First lien loans would have actually represented 87% of our loan portfolio if the Granite Ridge position were to be included in the calculation net of the collateral posted by the company – by the counterparty, excuse me.

As of June 30, our portfolio totaled $152 million, up from $121 million in our third fiscal quarter of 2015 and up 21% year-over-year from $125 million. The average size of our debt investments is $4.2 million, and the weighted average interest rate at June 30 was 9.99%.

This average interest rate does not reflect the average borrower coupon in the portfolio as it includes the effect of non-accruals at a rate of 0%. The weighted average interest rate of our performing debt investments was approximately 11.6%.

I’d now like to pass the call over Mike Sell our CFO for more detail discussion of our financial performance in the fourth quarter. Mike..

Thanks Gregg. Please turn to Slide 12, which provides an overview of the fourth-quarter financial highlights. For the fourth quarter of fiscal 2015, investment income of $4.4 million, an increase of 30% compared to $3.4 million in the fourth quarter of fiscal 2014.

Net investment income was $2.4 million compared to $1.5 million for the quarter ended June 30, 2014, a 65% increase.

On a per-share basis net investment income was a $0.11 per share versus $0.15 per share in the prior year period, the per share amounts based on approximately 23.2 million weighted average shares outstanding in the fourth quarter of fiscal 2015, compared to 10.3 million shares for the prior year period.

Net realized and unrealized losses were $3.million or $0.13 per share. Net unrealized depreciation was $0.2 million comprised of $3.4 million of net unrealized appreciation on equity investment and $3.2 million of net unrealized depreciation on debt investment. Realized losses on investments were $3.2 million or $0.14 per share.

We reported a decrease in net assets from operations of $0.5 million or $0.02 per share. Net asset value was $4.30 per shares in June 30, compared to $4.43 per share at March 31, 2015, with the decrease primarily resulting from the write-off in New Media West. Slide 13, illustrates the composition of the portfolio.

In the fourth quarter, 73% of our loans carried a floating rate. As we've noted previously, a benefit of our portfolio consisting of a majority of floating rate loans is that, in a rising interest rate environment, we would expect our portfolio and net investment income to increase.

Please turn to Slide 14, which highlights the important balance sheet items. On June 30, our total assets were approximately $161 million.

At the end of the quarter, the investment portfolio at fair value totaled approximately $152 million, reflecting the net impact of new investments, and net unrealized and net realized losses that occurred during fiscal fourth quarter. Total liabilities were approximately $61 million.

This includes approximately $34 million outstanding on our 8.25% notes. I will now turn the call back over to Gregg..

Thanks, Mike. To conclude, we are pleased that we've been able to deploy additional capital into what we believe are sound investments from a risk/reward standpoint.

As those investments bring additional investment income for the Company, we should be positioned to generate sufficient income that will cover our distributions to stockholders without the necessity of a waiver.

But for all of fiscal 2016, which is through June, our stockholders can rest assured that the management fee waiver will allow us to fully support our monthly distribution during the investment ramp period.

Along with the fee waiver, we believe the increased size of our stock repurchase program and our plan to implement it shortly demonstrates our commitment to deliver long-term value to our stockholders in the form of increased returns and sustainable stockholder distributions. And now we would like to open up the call for questions.

Operator?.

Thank you. [Operator Instructions] We will take our first question from Mickey Schleien with Ladenburg..

Good morning. Gregg, a question for you.

With all the volatility we've seen in both the credit markets and the equity markets the last few weeks, could you just comment on the trends you are seeing in terms of spreads in the middle market, the multiples that you are seeing, the outlook for your investment opportunity for the balance of this year and going into next year?.

Sure. Thanks, Mickey, for the question. I think the volatility of the market is something we all have been waiting for, looking for, and I say that because the volatility has been so low for so long that the opportunity set has been more constrained.

Not surprisingly, it will probably take some time for normalization to see a pipeline of opportunity that reflects the more robust risk/reward that we are all looking for. So what I mean by that is that we absolutely think that we have to be selective. We've talked about that in prior calls.

We think that the current environment continues to be one where selectivity of investments is important. We are hopeful that the volatility creates a broader set of opportunity. We believe it will. We still see a pipeline of good opportunity, but the reality is that the pricing environment has been, as you know pretty competitive for quite some time.

So we think the volatility is a good trend. We certainly think it will persist and we are hopeful that that will lead to a broader set of opportunities..

And Gregg, can you give us some color on how your borrowers are doing in general? We are getting just such mixed messages about the health of the U.S. economy.

I am curious how their revenues are holding up, how their margins are holding up and how are they doing relative to their budgets?.

Right. It's a good question. I think it's very much a mixed bag. We see not surprisingly certain segments of the economy have been severely hurt, particularly in the oil and gas sector whether you are an E&P company or a service provider. That's not a surprising statement, but the impact has been severe on a number of companies in that sector.

In the broader set of industries that we cover, we see that it's been a pretty interesting mix of some companies outperforming and some companies underperforming.

One thing that has probably been less talked about versus the commodity price move is the currency move, so companies with significant overseas or non-dollar exposure have seen some pretty material impacts on their revenue or cost structure, or the net margin associated with the currency moves.

So that's something that we are certainly focused on, but nothing beyond the very significant commodity move and currency move. Those would be the two headlines. From a thematic point of view, I would say that's probably it.

I don't know, John or Mike, if you have anything to add to that? From our perspective, again, it's very much mixed across industries and across issuers. There is no direct themes beyond the two that I just referenced..

In the consumer discretionary area, I don't recall off the top of my head how much exposure you have to that, but in terms of existing borrowers or potential borrowers that you are talking to, how do they feel about the impact of what looks to be a pretty sharp decline in the price of gasoline as we finish the summer months and get into the winter? We are talking about perhaps $2 a gallon gasoline.

Are they excited about that or do they think it's a non-event? Leading into Christmas, what are the thoughts on that area?.

It's a great question which we've thought a bunch about, and the reality is our portfolio doesn't have much of that direct or even indirect exposure that we see the consumer implication. So we don't really have much good commentary to offer in response to that question, but those are trends that we are certainly focused on as well..

Okay. Thanks for your time this morning..

Sure, thank you..

Thank you..

And we will take our next question from Christopher Testa with National Securities Corporation..

Hi, guys. Thanks for taking my questions this morning. I was just wondering if you could go through the current non-accruals. I know you have written off New Media West.

The four that are remaining, if there's been any new progress made or discussions, anything new that you are seeing there?.

I think for the most part, we are working towards monetizing those positions to the degree possible. Obviously, some of them are very small; therefore, it's a little bit more of a take as you see it kind of approach.

We are making progress on all of the positions currently on non-accrual, whether it's a larger one like US Shale, or it's part of the broad syndication or whether it's a direct placement where we're a point on the workout and trying to place the assets..

Okay..

Chris, as we've referenced, specifically the ProGrade process in the past, and that's a process that has taken a bit longer than we would have hoped, but we would tell you that we are pretty far along through the disposition of that and we are optimistic that that's going to happen relatively soon, but it's not done yet..

You know ProGrade, it’s John speaking. ProGrade and TransAmerican are in discussions with buyers and it has taken longer, but it is active and ongoing and we hope to conclude soon..

Okay, great.

And just given that sponsor finance volume has been extremely muted this year and M&A has slowed, what are your thoughts on sponsor finance volume for your fiscal 2016? What do you see as being a catalyst that's going to make that market pick up?.

I think, as to Mickey's prior question about volatility, I think the reality is the sponsor market, as you know, is one of the more competitive segments of the market and as a consequence, we've talked in the past about it being important that we have a pretty broad origination approach.

And so from our perspective, we are not – we are pleased that we have a waiver in place, which doesn’t put pressure on the Company to make investments for the sake of making investments. We think that's important.

We are kind of hopeful that the activity volumes will increase, but the volatility, as you know, tends to reduce the level of M&A activity and sponsor activity certainly in the short term.

So when the dust settles and there's a little bit more stability in perhaps repricing, both including equity, as well as cost of debt, we think that will lead to a more robust environment. But, for the short term, we are certainly not anticipating a lot of activity in the sponsor segment..

Okay, great. And just with your new originations subsequent to the end of the quarter, the Liquidnet Holdings is L plus 6.75%, it just seems a little low yielding.

Is that sort of a placeholder as you are generating more direct investments, or was that just something you found a really good risk-adjusted return on?.

Yes, I think it's the latter. What Liquidnet represents is a pretty interesting, we think, financing in the market that, at par for sure, represents too low a yield for us to make sense for a portfolio investment.

What happened in that particular case and certainly in the context of volatility, there was a seller looking for an exit and we were able to, as I mentioned, to pick it up at a [indiscernible] price.

And given the relatively short duration of that instrument, you are talking about certainly between 9.5% and 10% type of yield – that's the discount which we bought the paper – and so we thought risk/reward combined with the yield at the discount made it work from a buy and hold perspective. So clearly we look at the market for situations like that.

They are very opportunistic. They don't come along on a predictable basis, but I would say Liquidnet represents something at the right price that was a good investment..

Great. And just for the repurchases, I appreciate you guys doubling the authorized shares to be repurchased.

Is that something that you are looking to more I guess front-load as a stock is very depressed right now, or is this going to be something that's more measured over the next fiscal year or so?.

No, we want to be very clear that we think the equity is trading at levels that represent attractive value for the Company to be buying back stock.

So as you know, the rules with respect to 10b-18 limit the volume that we can buy on any given day, but we absolutely think it's something that makes sense at the current pricing and we should be pursuing at the current pricing in the market.

So if market conditions persist and our stock based year, as we’ve indicated in the press release and on this call, we’ve expect to be in the market shortly..

Okay, great and the last one for me, it's just your floating-rate composition has just stepped down just slightly from over 80% about a year ago or so and has that just been because of competition and pricing, the clients want a lot of fixed rate? Just what are your thoughts on that going forward?.

Yes, we favor floating-rate. We've actually always had a portfolio that's positively exposed to rates rising and that continues to be the case….

Right, right..

What has caused a slight shift there is there were a couple of opportunities that – we are a small portfolio, so a couple of opportunities can move the needle a little bit, but a couple fixed-rate opportunities that – one example that we mentioned on the last call and again on this is a company called Sundberg America, which we think is a great piece of paper, a first out.

We are the top 8 million of 43 million. The structure of that deal is fixed rate, so found an attractive risk/reward. It was structured in a fixed-rate format and so we participated at a fixed rate, but it's not as if we seek out those investments per se.

We are very mindful of the aggregate portfolio floating-rate profile and we still remain predominantly floating-rate, but we are not passing up on attractive fixed rate to the extent that they represent good investments..

Okay, great. That's all from me. Thanks for taking my questions, guys..

Sure, thank you..

And next we will hear from David Chiaverini with Cantor Fitzgerald..

Thanks. Good morning, guys. A couple questions for you. Could you comment on your appetite for energy investments? I see how you made additional funding in US Shale and that's going to be going through restructuring and also a U.S. oilfields company.

Could you just talk about your additional appetite for funding existing portfolio companies in the energy space, as well as any new investments in companies not in the portfolio?.

Yes, sure. Without question, I think lower energy exposure is the call of the day and I think we have our existing positions in that sector. We don't expect to increase materially our portfolio exposure to that sector.

As it relates to existing portfolio companies, naturally to the extent there are reasons that it makes sense to provide additional funding, that's something we will do, we evaluate each additional funding on its own merit and we would never make that investment unless it were a sensible incremental investment.

But I would say we are pretty mindful of and focused on minimizing the aggregate portfolio exposure to that sector today.

Today, it's about 7%, Mike?.

Yes, we are about 7% energy in the book right now..

Okay….

So we would not expect that number to move materially up..

Got it. Thanks for that.

And what's the timing on the restructuring for US Shale? Is that a fourth-quarter event or when do you expect that to come to fruition?.

I would say relatively quickly as in fourth-quarter event. That's something that is an ongoing process and something that is anticipated to happen on an accelerated timeline. There's a pretty coordinated holder group there that represents the interests of the creditors and our perspective and expectation at this point would be, yes, Q4..

Okay. And then I was curious about your investment in Lee Enterprises. You made a new origination during the quarter and then an additional funding post quarter-end.

With the pressure on media companies lately, can you just talk about the merits of this transaction and what you saw that was attractive there?.

Sure. In that particular case, the Company has done a very good job of managing its costs relative to the compression that's existed in that industry.

As you know, there's a huge trend towards digital, but if you looked at the cash flows of that Company, they've actually maintained attractive cash flow, notwithstanding the compression in revenues, meaning that cost-cutting has been material.

We've done a lot of sensitivity analysis about the degree to which they can support declines on the top line. And we think that, on a first lien basis, which is what we represent, where by the way all of the cash flow that's generated goes to deleveraging so there's no excess cash flow being paid out, it's a deleveraging story.

And from our perspective, the risk/reward made sense with the deleveraging that's contemplated. So yes, challenging trends from an industry point of view, but the pricing relative to the cash flow generation and what management has been able to do and expect it to continue to be able to continue to do, we think makes sense..

Thanks very much..

Thank you..

There are no additional questions at this time. I’ll turn the conference back over to Gregg Felton for any additional or closing remarks..

Thank you, operator. In closing, we thank you for attending the call this morning and we look forward to speaking with you on our first quarter fiscal earnings call in November. Until then, please don't hesitate to reach out to John, Mike or myself to the extent that there's anything you might want to ask as it relates to additional questions.

Thank you..

Ladies and gentlemen, again that concludes our conference for today. We thank you for your participation..