Stephanie Prince John Edward Stuart - Chairman, Chief Executive Officer and President William E. Vastardis - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer

Welcome to the Full Circle Capital Third Quarter of Fiscal 2013 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 10, 2013. I would now like to turn the conference over to Stephanie Prince. Please go ahead, ma'am.

Thank you, Regina, and good morning, everyone. This is Stephanie Prince from LHA. Thank you for joining us for Full Circle Corp.'s Third Quarter Fiscal 2013 Earnings Conference Call for the quarter ended March 31, 2013. With me this morning is John Stuart, Full Circle's Chairman and Chief Executive Officer; and Bill Vastardis, Chief Financial Officer. If you'd like to be added to the company's distribution list, please send an email to info@fccapital.com. Alternatively, you can sign up under the Investor Relations tab on the company's website. The 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 John Stuart, 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. I'd now like to turn the call over to John Stuart, CEO of Full Circle Capital. John?

Thank you, Stephanie. Starting with Slide 3, for those of you who are new to Full Circle, we focus primarily on investing in senior secured loans and stretch senior secured loans to small and lower middle market companies. Stretch senior secured loans are also referred to as unitranche loans, which combine characteristics of traditional first-lien senior secured loans with second lien, or to lesser extent, subordinated loans. This structure gives us greater control and security in the primary collateral of the borrower. For our borrowers, it offers efficient, one-stop flexible debt solutions, allowing us to compete with more traditional lenders. Our investments typically range in size from $3 million to $10 million. And since our inception -- since inception of our predecessor entities in 2005, we have executed more than $290 million in secured loans to 56 smaller and lower middle market companies. As part of this call, we want to highlight some of the strategic considerations we have been pursuing as part of our overall long-term plan and objective to increase our net investment income and returns to our stockholders. These strategic considerations include increasing our portfolio and optimizing our capital structure. As an example, we have added personnel at the investment adviser to enhance origination and monitoring capabilities in order to support a larger and more diversified portfolio of investments, the result of which has been an increase in deal flow and an enhanced origination pipeline with the infrastructure to support it. I'll comment on the second strategic consideration, optimizing the balance sheet, in particular the debt side, later in our prepared remarks. Now turning to Slide 4, we provide details of our third quarter results. Our net asset value was $8 per share at March 31. We generated net investment income of $1.3 million, or $0.18 per…

Thanks, John. Please turn to Slide 7, which provides an overview of the third quarter financial highlights. Net investment income was $1.3 million, or $0.18 per share, compared with $1.5 million, or $0.22 per share, in the second quarter. Net unrealized gains in the third quarter were $0.2 million, or $0.02 per share. As a result, we recorded a net increase in net assets resulting from operations of approximately $1.5 million, or $0.20 per share. The weighted average share count in the third quarter was 7.6 million shares compared to 6.7 million weighted average shares in the second quarter, a 13% increase. Net asset value per share was $8 on March 31 compared to $8.03 on December 31. Please turn to Slide 8, which highlights the important balance sheet items. On March 31, our total assets were approximately $108 million. This includes total investments of $103.1 million at fair value. Excluding our U.S. T-bill position of $15 million, our investment portfolio totaled $88.1 million. Total liabilities were approximately $47.4 million. Liabilities included a payable of $15 million for the U.S. T-bill position, $3.4 million outstanding in senior unsecured notes and an outstanding balance of $22.8 million on our $35 million revolving line of credit. I will now turn the call back over to John. John?

Thanks, Bill. We'd now like to open the call up for any questions.

[Operator Instructions] And we do now have a question from the line of Ross Rubin [ph] with Family Office.

Can we talk about what you're seeing in your underlying companies? How strong is the economy for them? How are they doing? You guys obviously have great visibility into a lot of businesses and I'm always interested in what's happening.

I think we've seen things have been pretty stable, though in some industries, we've seen some fairly robust performance, for instance, in the aerospace industry -- underlying aerospace industry. We've seen good demand and good growth there. But generally, Ross, it's been fairly stable, reflecting sort of where we are on a nationwide level. So we haven't really seen anything, any softness. In certain cases, we've seen some -- an uptick in demand at some of our borrowers and citing one particular in the aerospace side that comes to mind just off of that question.

Can you -- do you get equity or still get equity at all the investments you make or most investments you make?

Yes, about half of our positions have warrants or outright equity and/or some of them actually have success fees that might be related to growth and equity value of the business, which will be recognized at net termination date. Yes, we do and we continue to do that. We continue to get that in our deals. And, for instance, MPC, the deal that closed last -- in the last quarter that we have a warrant position in, you'll see that on the balance sheet.

Right. I'm kind of operating on the assumption of how you're model is, is that ultimately you'll have some equity gains that will offset the inevitable loan that doesn't work out the way you'd like it to work out.

True. That -- obviously, we look at the equity positions. We don't know when they'll be monetized, and, obviously, they're not contractual in terms of contractual return like the -- like our loan positions are. But we look for the equity to provide return that could, as one way to look at it, is to offset any loan losses. That's a very good way to look at it.

[Operator Instructions] There are no further questions at this time. I will turn the conference back over to Mr. Stuart.

Once again, thank you very much for attending the call. And we're excited about the future. As we always do, we look forward to updating you on the progress that we hope to make over the next quarter. And we will -- please don't hesitate to contact any of us with any questions. And we look forward to getting back to you in 90 days. Okay, thank you.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.