Update (4:45 p.m.): Updated with Full Circle Capital's statement.
NEW YORK (TheStreet) -- Investment company Full Circle Capital (FULL) plunged to a one-year low of $6.67 as of 12:30 p.m. on Thursday after the U.S. Securities and Exchange Commission froze trading on Advanced Cannabis Solutions (CANN) , an OTC Bulletin Board stock in which Full Circle has an investment.
Full Circle said in its second quarter earnings report on Feb. 10 that it invested $500,000 in warrants as part of a $30 million dollar senior secured convertible note purchase agreement with Advanced Cannabis Solutions on Jan. 21.
Full Circle released the following statement on Thursday afternoon in response to numerous investor inquiries:
"Full Circle Capital Corp. entered into a purchase agreement with Advanced Cannabis Solutions, Inc. to fund $30.0 million of senior secured convertible notes in January 2014. In conjunction with the closing of this agreement, Full Circle Capital purchased for $500,000 warrants to purchase 1.0 million shares of currently unregistered common stock of American Cannabis stock at a $5.50 per share exercise price. To date, these warrants have not been exercised, transferred or sold. Further, none of the senior secured convertible notes have been funded and Full Circle Capital retains the contractual right to fund these notes at its sole and absolute discretion."
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TheStreet Ratings team rates FULL CIRCLE CAPITAL CORP as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate FULL CIRCLE CAPITAL CORP (FULL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 1117.59% to $18.28 million when compared to the same quarter last year. In addition, FULL CIRCLE CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of 123.99%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- FULL CIRCLE CAPITAL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FULL CIRCLE CAPITAL CORP increased its bottom line by earning $0.52 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($0.73 versus $0.52).
- FULL, with its decline in revenue, underperformed when compared the industry average of 16.8%. Since the same quarter one year prior, revenues fell by 27.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market, FULL CIRCLE CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FULL Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.