Newtek Business Services Corp. - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - Newtek Business Services Corp.	newt-33117xexh321.htm
EX-31.2 - EXHIBIT 31.2 - Newtek Business Services Corp.	newt-33117xexh312.htm
EX-31.1 - EXHIBIT 31.1 - Newtek Business Services Corp.	newt-33117xexh311.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2017

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

For the transition period from _____to_____

Commission file number: 814-01035

NEWTEK BUSINESS SERVICES CORP.

(Exact name of registrant as specified in its charter)



Maryland		46-3755188
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1981 Marcus Avenue, Suite 130, Lake Success, New York		11042
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 356-9500

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 past 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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 ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company company (all as defined in Rule 12b-2 of the Exchange Act).



Large accelerated filer	o	Accelerated filer	x

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial or accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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

As of May 8, 2017 there were 17,292,330 shares issued and outstanding of the registrant’s Common Stock, par value $0.02 per share.

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		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Assets and Liabilities as of March 31, 2017 (Unaudited) and December 31, 2016	1

	Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2017 and 2016	2

	Condensed Consolidated Statement of Changes in Net Assets (Unaudited) for the three months ended March 31, 2017	3

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2017 and 2016	4

	Consolidated Schedule of Investments as of March 31, 2017 (Unaudited) and December 31, 2016	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	146

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	166

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	184

Item 4.	Controls and Procedures	185

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	186

Item 1A.	Risk Factors	186

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	186

Item 3.	Defaults Upon Senior Securities	186

Item 4.	Mine Safety Disclosures	186

Item 5.	Other Information	186

Item 6.	Exhibits	186

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (In Thousands, except for Per Share Data)
	March 31, 2017			December 31, 2016
ASSETS	(Unaudited)			(Note 1)
Investments, at fair value
SBA unguaranteed non-affiliate investments (cost of $228,905 and $219,784, respectively; includes $186,368 and $197,927, respectively, related to securitization trusts)	$	219,582		$	211,471
SBA guaranteed non-affiliate investments (cost of $10,734 and $10,262, respectively)	12,097			11,512
Controlled investments (cost of $46,024 and $41,001, respectively)	127,255			121,302
Non-control/non-affiliate investments (cost of $- and $904, respectively)	—			904
Investments in money market funds (cost of $35 and $35, respectively)	35			35
Total investments at fair value	358,969			345,224
Cash and cash equivalents	5,995			2,051
Restricted cash	28,963			20,845
Broker receivable	17,852			2,402
Due from related parties	4,384			3,748
Servicing assets, at fair value	17,096			16,246
Other assets	10,052			10,934
Total assets	$	443,311		$	401,450
LIABILITIES AND NET ASSETS
Liabilities:
Bank notes payable	$	18,300		$	5,100
Notes due 2022 (Note 7)	7,874			7,853
Notes due 2021 (Note 7)	38,853			38,767
Notes payable - Securitization trusts (Note 7)	109,484			118,122
Notes payable - related parties	—			1,400
Due to related parties	934			1,227
Deferred tax liabilities	6,551			5,983
Accounts payable, accrued expenses and other liabilities	14,951			13,904
Total liabilities	196,947			192,356
Commitments and contingencies (Note 8)
Net Assets:
Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding)	—			—
Common stock (par value $0.02 per share; authorized 200,000 shares, 17,220 and 14,624 issued and outstanding, respectively)	344			293
Additional paid-in capital	225,985			188,472
(Distributions in excess of)/undistributed net investment income	(198		)	8,092
Net unrealized appreciation, net of deferred taxes	12,320			13,008
Net realized gains/(losses)	7,913			(771		)
Total net assets	246,364			209,094
Total liabilities and net assets	$	443,311		$	401,450
Net asset value per common share	$	14.31		$	14.30

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In Thousands, except for Per Share Data)



	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Investment income:
From non-affiliate investments:
Interest income	$	4,235		$	2,451
Servicing income	1,646			1,371
Other income	665			597
Total investment income from non-affiliate investments	6,546			4,419
From controlled investments:
Interest income	147			82
Dividend income	2,300			2,293
Total investment income from controlled investments	2,447			2,375
Total investment income	8,993			6,794
Expenses:
Salaries and benefits	4,651			3,344
Interest	2,530			1,488
Depreciation and amortization	89			40
Other general and administrative costs	3,817			3,302
Total expenses	11,087			8,174
Net investment loss	(2,094		)	(1,380		)
Net realized and unrealized gains (losses):
Net realized gains on non-affiliate investments	8,685			6,286
Net unrealized appreciation on SBA guaranteed non-affiliate investments	113			62
Net unrealized depreciation on SBA unguaranteed non-affiliate investments	(556		)	(1,027		)
Net unrealized appreciation on controlled investments	931			3,690
Provision for deferred taxes on unrealized appreciation on controlled investments	(566		)	(1,608		)
Net unrealized depreciation on non-control/non-affiliate investments	—			(16		)
Net unrealized depreciation on servicing assets	(609		)	(403		)
Net realized and unrealized gains	7,998			6,984
Net increase in net assets	$	5,904		$	5,604
Net increase in net assets per share	$	0.36		$	0.39
Net investment loss per share	$	(0.13	)	$	(0.10	)
Dividends declared per common share	$	0.36		$	0.35
Weighted average shares outstanding	16,383			14,509

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)

(In Thousands)



	Three Months Ended March 31, 2017
Increase in net assets:
Net investment loss	$	(2,094	)
Net realized gains on investments	8,685
Net change in unrealized depreciation on investments	(78		)
Net change in unrealized depreciation on servicing assets	(609		)
Net increase in net assets	5,904
Distributions to stockholders:
Distributions to stockholders from net realized gains	(6,151		)
Capital share transactions:
Issuance of common stock under dividend reinvestment plan	91
Stock-based compensation	385
Issuance of common stock, net of offering costs	37,041
Net increase in net assets from capital share transactions	37,517
Total increase in net assets	37,270
Net assets at beginning of period	209,094
Net assets at end of period	$	246,364
Common shares outstanding at end of period	17,220
Capital share activity:
Shares issued under dividend reinvestment plan	6
Restricted shares issued under Stock Incentive Plan	3
Shares issued in connection with public offering	2,588
Net increase in capital activity	2,597

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands)
	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Cash flows from operating activities:
Net increase in net assets	$	5,904		$	5,604
Adjustments to reconcile net increase in net assets to net cash (used in) provided by operating activities:
Net unrealized appreciation on controlled investments	(931		)	(3,690		)
Net unrealized depreciation on non-affiliate investments	443			981
Net unrealized depreciation on servicing assets	609			403
Realized gains on non-affiliate investments	(8,685		)	(6,286		)
Loss on lease	101			—
Amortization of deferred financing costs	412			271
Deferred income taxes	566			1,608
Depreciation and amortization	89			40
Purchase of loan portfolio	(175		)	—
Funding of controlled investments	(5,423		)	—
Funding of SBA guaranteed non-affiliate investments	(60,046		)	(42,700		)
Principal received from controlled investments	1,254			1,300
Principal received from non-control/non-affiliate investments	—			361
Return of investment from controlled investment	50			—
Proceeds from sale of SBA guaranteed non-affiliate investments	68,471			48,769
Funding of SBA unguaranteed non-affiliate investments	(18,598		)	(13,358		)
Principal received on SBA non-affiliate investments	9,832			3,836
Other, net	483			111
Changes in operating assets and liabilities:
Broker receivable	(15,450		)	8,827
Due to/from related parties	(929		)	97
Other assets	860			(52		)
Accounts payable, accrued expenses and other liabilities	1,039			(379		)
Change in restricted cash	(6,726		)	4,016
Capitalized servicing assets	(1,459		)	(1,005		)
Other, net	(17		)	39
Net cash (used in) provided by operating activities	(28,326		)	8,793
Cash flows from investing activities:
Purchase of fixed assets	(136		)	(76		)
Cash flows from financing activities:
Net borrowings on bank notes payable	13,200			3,229
Net (repayments) borrowings on Notes payable - related parties	(1,400		)	5,170
Repurchase of common stock under share repurchase plan	—			(866		)
Proceeds from common shares sold, net of offering costs	37,042			—
Dividends paid	(6,151		)	(10,872		)
Payments on Notes payable - Securitization trusts	(8,892		)	(5,891		)
Change in restricted cash related to securitization trusts	(1,392		)	(118		)

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands)
	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Additions to deferred financing costs	—			(61		)
Other, net	(1		)	(2		)
Net cash provided by (used in) financing activities	32,406			(9,411		)
Net increase (decrease) in cash and cash equivalents	3,944			(694		)
Cash and cash equivalents—beginning of period	2,051			4,308
Cash and cash equivalents—end of period	$	5,995		$	3,614

Supplemental disclosure of cash flow activities:
Non-cash operating, investing and financing activities:
Reduction of credits in lieu of cash and notes payable in credits in lieu of cash balances due to delivery of tax credits to Certified Investors	$	—		$	217
Foreclosed real estate acquired	$	62		$	83
Issuance of common stock under dividend reinvestment plan	$	91		$	143

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal		Cost		Fair Value		% of Net Assets
Performing SBA Unguaranteed Investments ⁽¹⁾
Citizens Lanes, LLC	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	3/31/2042	$	619.4	$	619.4	$	643.0	0.26	%
Shelter Harbor Inn, Inc.	Accommodation	Term Loan	Prime plus 2.75%	3/31/2042	207.5		207.5		215.4		0.09	%
Golden Hen Inc. dba Cafe	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	3/31/2027	64.8		64.8		56.0		0.02	%
Landmark Ventures USA, Inc.	Securities, Commodity Contracts, and Other Financial Investments and Related Activities	Term Loan	Prime plus 2.75%	3/31/2027	187.5		187.5		160.2		0.07	%
MIT LLC	Publishing Industries (except Internet)	Term Loan	Prime plus 2.75%	3/31/2027	87.5		87.5		88.2		0.04	%
Applied Integrated Technologies, Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	3/31/2027	125.0		125.0		106.8		0.04	%
Bear Trail Lodge LLC	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	3/31/2042	552.5		552.5		566.4		0.23	%
Altitude Group, LLC and Core Home Security, LLC	Specialty Trade Contractors	Term Loan	Prime plus 2.75%	3/31/2027	50.0		50.0		42.7		0.02	%
KWG Industries LLC dba Peterson & Marsh Metal Industries	Fabricated Metal Product Manufacturing	Term Loan	Prime plus 2.75%	3/30/2027	30.0		30.0		29.1		0.01	%
Municipal Hydro Sevices Inc.	Rental and Leasing Services	Term Loan	Prime plus 2.75%	3/30/2027	312.5		312.5		284.4		0.12	%
Signature Rooms, Inc dba Gallery Furniture	Furniture and Home Furnishings Stores	Term Loan	Prime plus 2.75%	3/30/2042	495.8		495.8		510.5		0.21	%
Sea Smoke Barbeque, Corp and Danwen LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	3/30/2042	236.5		236.5		234.7		0.10	%
Schafer Fisheries Inc.	Food Manufacturing	Term Loan	Prime plus 2.75%	3/30/2042	258.6		258.6		260.3		0.11	%
Douglas K. Soderblom . dba Loma Linda Optometry	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	3/29/2027	100.0		100.0		89.7		0.04	%
Discount Price, LLC dba Robert's Market	Gasoline Stations	Term Loan	Prime plus 2.75%	3/29/2042	206.3		206.3		206.6		0.08	%
First Sail Group Inc. and Omen Board Industires LLC	Nonstore Retailers	Term Loan	Prime plus 2.75%	3/29/2027	20.0		20.0		18.3		0.01	%
Gauri Hospitality Group LLC dba Microtel Inns & Suites by Wyndham	Accommodation	Term Loan	Prime plus 2.75%	3/29/2042	1,056.3		1,056.3		1,086.9		0.44	%

See accompanying notes to unaudited condensed consolidated financial statements

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
H and H Hotshot Services, Inc. dba AA Hotshot & Logistics	Couriers and Messengers	Term Loan	Prime plus 2.75%	3/29/2030	97.5	97.5	84.0	0.03	%
New England Country Day School, Inc. and Thomas D. Walker	Social Assistance	Term Loan	Prime plus 2.75%	3/28/2042	362.8	362.8	359.8	0.15	%
American Pharmaceutical Innovation Company, LLC	Chemical Manufacturing	Term Loan	Prime plus 2.75%	3/28/2027	30.0	30.0	25.7	0.01	%
Pecos Entertainment LLC dba State Theater and Pecos Inn LLC	Motion Picture and Sound Recording Industries	Term Loan	Prime plus 2.75%	3/27/2042	582.9	137.2	142.4	0.06	%
Heil & Hornik LLC dba Elysium Tennis	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	3/27/2042	928.6	928.6	914.4	0.37	%
Robert Dixon PA dba Law Offices of Robert Dixon	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	3/24/2042	435.5	435.5	446.8	0.18	%
Ericon Inc. dba Quik Pik	Gasoline Stations	Term Loan	Prime plus 2.75%	3/24/2027	62.5	62.5	59.6	0.02	%
Executive Fitness & Nutrition Inc.	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	3/23/2027	20.3	20.3	19.7	0.01	%
Denton Bio Fuels LLC and American Bio Source LLC	Waste Management and Remediation Services	Term Loan	Prime plus 2.75%	3/23/2027	59.3	59.3	53.7	0.02	%
Color Graphic Press, Inc.	Printing and Related Support Activities	Term Loan	Prime plus 2.75%	3/23/2027	120.0	120.0	121.0	0.05	%
JBK Truck Trailer and Bus Inc.	Repair and Maintenance	Term Loan	Prime plus 2.75%	3/23/2042	88.8	37.0	38.4	0.02	%
Baton Rouge Cargo Services Inc. and 6507 Westport, LLC	Truck Transportation	Term Loan	Prime plus 2.75%	3/22/2042	643.1	643.1	651.1	0.26	%
Vehicle Safety supply LLC	Motor Vehicle and Parts Dealers	Term Loan	Prime plus 2.75%	3/21/2027	22.5	22.5	19.2	0.01	%
J Sivilis LLC dba Pet Wants	Personal and Laundry Services	Term Loan	Prime plus 2.75%	3/17/2027	12.3	12.3	10.8	—	%
Reservoir International LLC	Educational Services	Term Loan	Prime plus 2.75%	3/16/2027	100.0	100.0	92.1	0.04	%
The Purple Cow House of Pancake Inc	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	3/16/2042	162.5	162.5	168.7	0.07	%
Texcor, Inc.dba Texas Corral,Texas Coral Restaurants II, Inc.	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	3/16/2027	300.0	300.0	301.6	0.12	%
Alive Design, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	3/13/2027	22.5	22.5	19.2	0.01	%
1MTX LLC and Sunrise Transportation and Logistics, LLC	Truck Transportation	Term Loan	Prime plus 2.75%	3/13/2027	702.9	702.9	600.5	0.24	%

See accompanying notes to unaudited condensed consolidated financial statements

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Dwayne Bernard Tate	Truck Transportation	Term Loan	Prime plus 2.75%	3/10/2027	10.5	10.5	9.5	—	%
Elegant Occasions, LLC dba E Productions	Personal and Laundry Services	Term Loan	Prime plus 2.75%	3/10/2042	588.2	588.2	582.2	0.24	%
Anthony LLC dba Star of Woodward Market	Food and Beverage Stores	Term Loan	Prime plus 2.75%	3/9/2042	115.0	115.0	119.4	0.05	%
E & P Holdings 1 LLC and Evans & Paul Unlimited Corp.	Miscellaneous Manufacturing	Term Loan	Prime plus 2.75%	3/9/2027	125.0	125.0	106.8	0.04	%
Allegro Assisted Living Of Texas	Nursing and Residential Care Facilities	Term Loan	Prime plus 2.75%	3/6/2027	96.0	96.0	96.3	0.04	%
Robbie E. Bakery and Cafe LLC	Food and Beverage Stores	Term Loan	Prime plus 2.75%	3/3/2027	62.5	62.5	53.6	0.02	%
Podium Auto Sales Inc and RRS Property, LLC	Motor Vehicle and Parts Dealers	Term Loan	Prime plus 2.75%	3/3/2042	90.8	90.8	89.2	0.04	%
SSI Refrigerated Express Inc. and Robert M Stallone dba SSI Express	Truck Transportation	Term Loan	Prime plus 2.75%	2/28/2027	235.5	235.5	201.2	0.08	%
Weeping Willow Kennels, Inc and Aileen N Black	Personal and Laundry Services	Term Loan	Prime plus 2.75%	2/28/2042	140.0	140.0	140.5	0.06	%
Getting Even LLC dba The Zoo Health Club	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	2/28/2027	96.3	96.3	88.1	0.04	%
Total Document Solutions Inc and,TDS Services, LLC	Merchant Wholesalers, Durable Goods	Term Loan	Prime plus 2.75%	2/27/2030	312.5	312.5	285.3	0.12	%
Teracore Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	2/27/2027	163.8	163.8	140.5	0.06	%
John Finn Associates, LLC,Indiepay LLC,Fin Technology,LLC,Isong, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	2/27/2027	675.0	675.0	641.8	0.26	%
McNally Enterprises Inc.	Administrative and Support Services	Term Loan	Prime plus 2.75%	2/27/2027	65.0	65.0	57.7	0.02	%
B & J Bicycle Shop Inc.	Sporting Goods, Hobby, Musical Instrument, and Book Stores	Term Loan	Prime plus 2.75%	2/24/2027	15.0	15.0	15.1	0.01	%
3W Enterprises LLC	Textile Product Mills	Term Loan	Prime plus 2.75%	2/24/2042	81.8	81.8	81.0	0.03	%
TMJ Pizza Mesa LLC dba Rosati's Pizza Restaurant	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	2/24/2027	106.3	61.4	60.1	0.02	%
Eternal Services Incorporated,Ward-Wilson Funeral Home, LLC	Personal and Laundry Services	Term Loan	7.97%	2/23/2042	685.0	685.0	585.4	0.24	%
Victorian Restaurant and Tavern, LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	2/22/2042	107.5	70.0	70.9	0.03	%

See accompanying notes to unaudited condensed consolidated financial statements

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
DER Services, LLC dba A.K.A. Sports	Sporting Goods, Hobby, Musical Instrument, and Book Stores	Term Loan	Prime plus 2.75%	2/17/2042	40.0	40.0	41.5	0.02	%
Bike Slug, LLC, Bike Slug Holdings Inc. and Seven Rivers Group ,LLC	Repair and Maintenance	Term Loan	Prime plus 2.75%	2/17/2027	19.5	19.5	16.7	0.01	%
Ameritube, LLC and Ravone Properties, LLC	Primary Metal Manufacturing	Term Loan	Prime plus 2.75%	2/14/2042	185.0	185.0	192.1	0.08	%
R&S Barnes Enterprises, Inc. dba Massage Envy Spa	Personal and Laundry Services	Term Loan	Prime plus 2.75%	2/10/2027	93.8	93.8	81.0	0.03	%
Baton Rouge Cargo Services Inc. and 2808 Court Street, LLC	Truck Transportation	Term Loan	Prime plus 2.75%	2/10/2042	247.5	247.5	250.6	0.10	%
Sushiya Inc.	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	2/10/2027	18.8	18.8	16.6	0.01	%
Maximo Canot dba Wash and Dry Laundrymat	Personal and Laundry Services	Term Loan	Prime plus 2.75%	2/10/2042	137.5	137.5	139.6	0.06	%
Select Propane & Fuel Inc. and Select Fuel & Convenience LLC	Merchant Wholesalers, Nondurable Goods	Term Loan	Prime plus 2.75%	2/10/2030	1,250.0	1,250.0	1,140.7	0.46	%
Marvic Enterprises Inc dba Jordan's Liquor	Food and Beverage Stores	Term Loan	Prime plus 2.75%	2/10/2042	219.0	99.4	103.2	0.04	%
Harrison Logging Company LLC	Forestry and Logging	Term Loan	Prime plus 2.75%	2/9/2027	106.3	106.3	95.7	0.04	%
8 Minute Oil Change Auto Repair & Tire Center and Jumir L.L.C.	Repair and Maintenance	Term Loan	Prime plus 2.75%	2/7/2042	327.5	327.5	317.9	0.13	%
Christopher Borgia	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	2/6/2027	12.9	12.9	11.2	—	%
Splashlight LLC, Splashlight Photographic & Digital Studios LLC & Maho	Management of Companies and Enterprises	Term Loan	Prime plus 2.75%	2/2/2027	750.0	750.0	683.5	0.28	%
DBMS Consulting, Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	2/1/2042	185.0	185.0	179.6	0.07	%
Brandco, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	1/31/2027	43.8	43.5	37.2	0.02	%
Chidlren's House Learning, Inc and Tarps Investment Group	Social Assistance	Term Loan	Prime plus 2.75%	1/31/2042	321.3	321.0	317.4	0.13	%
Grand Center Inn L.P. dba Grand Center Inn	Accommodation	Term Loan	Prime plus 2.75%	1/31/2027	15.0	14.9	15.0	0.01	%
AP6 LLC and Amishp LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	1/30/2042	127.5	108.8	112.9	0.05	%
Fave Realty, Inc.	Real Estate	Term Loan	Prime plus 2.75%	1/30/2042	54.5	54.4	54.5	0.02	%

See accompanying notes to unaudited condensed consolidated financial statements

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Return to Excellence Inc	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	1/27/2027	17.7	17.6	17.8	0.01	%
ZMKNY Tires Inc dba Houston International Tires	Motor Vehicle and Parts Dealers	Term Loan	Prime plus 2.75%	1/27/2042	107.5	107.3	111.4	0.05	%
House of Bread & Coffee Corp dba Casa Do Pao	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	1/27/2042	176.0	138.1	132.4	0.05	%
SRC Publishing LLC	Securities, Commodity Contracts, and Other Financial Investments and Related Activities	Term Loan	Prime plus 2.75%	1/27/2027	22.5	22.4	19.1	0.01	%
Sideways Sports Lounge and Jonathan E. McGrew and Patricia C. McGrew	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	1/23/2027	18.0	17.9	15.3	0.01	%
Fox Valley Rentals & Investments LLC and Brian M Tomaszewski	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	1/20/2042	42.5	42.4	42.8	0.02	%
Rhone Wolf Vineyard LLC, Goldline Brands Inc. and Myka Cellars, Inc.	Beverage and Tobacco Product Manufacturing	Term Loan	Prime plus 2.75%	1/19/2030	250.4	249.4	228.8	0.09	%
Jolibe LLC and Jolibe Atelier LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	1/18/2027	10.5	10.4	9.2	—	%
Eickmann Management Group LLC dba Jimmy Johns of Dundee	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	1/17/2027	93.8	59.6	60.1	0.02	%
Ramjay Inc.	Transit and Ground Passenger Transportation	Term Loan	Prime plus 2.75%	1/13/2027	435.0	433.4	391.7	0.16	%
Fullbro Trust dba Menemsha Blues	Miscellaneous Store Retailers	Term Loan	Prime plus 2.75%	1/13/2027	22.5	22.4	22.5	0.01	%
Echelon Enterprises, Inc	Sporting Goods, Hobby, Musical Instrument, and Book Stores	Term Loan	Prime plus 2.75%	1/10/2027	50.0	49.7	50.1	0.02	%
Pig-Sty BBQ LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	1/6/2027	9.0	8.9	8.8	—	%
Fort Smith Wings Inc. dba Wing Stop	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	12/28/2026	19.5	19.3	17.2	0.01	%
Sand Hill Associates, Ltd. dba Charlie O's Tavern on the Point	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	12/27/2041	419.9	418.7	408.8	0.17	%
Joshua L. Baker	Insurance Carriers and Related Activities	Term Loan	Prime plus 2.75%	12/23/2026	15.8	15.6	13.3	0.01	%
Jacliff Investments Inc. dba International health Technologies	Publishing Industries (except Internet)	Term Loan	Prime plus 2.75%	12/23/2026	125.0	123.5	105.5	0.04	%
New Image Building Services, Inc.	Administrative and Support Services	Term Loan	Prime plus 2.75%	12/21/2026	43.8	43.2	38.3	0.02	%

See accompanying notes to unaudited condensed consolidated financial statements

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Chestnut Street Associates, LLC and Metropolitan Solutions, Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	12/19/2041	275.0	274.2	260.5	0.11	%
Means Enterprises LLC dba FastFrame Frisco	Furniture and Home Furnishings Stores	Term Loan	Prime plus 2.75%	12/16/2026	22.5	22.2	19.3	0.01	%
New Chicago Wholesale Bakery, Inc.	Food Manufacturing	Term Loan	Prime plus 2.75%	12/15/2041	452.8	451.5	442.6	0.18	%
Soon Im. Chin dba Stan C-Store	Gasoline Stations	Term Loan	Prime plus 2.75%	12/15/2041	212.5	211.9	216.1	0.09	%
Allied Welding Inc.	Fabricated Metal Product Manufacturing	Term Loan	Prime plus 2.75%	12/15/2041	750.0	747.9	726.3	0.29	%
Ericon, Inc. dba Quik Pik	Gasoline Stations	Term Loan	Prime plus 2.75%	12/15/2041	332.2	331.8	326.4	0.13	%
White Hawk Inc.	Truck Transportation	Term Loan	Prime plus 2.75%	12/15/2026	1,097.8	1,086.3	927.7	0.38	%
Elita 7, LLC	Nursing and Residential Care Facilities	Term Loan	Prime plus 2.75%	12/15/2041	712.5	710.5	714.4	0.29	%
Techni-Pro Institute LLC	Educational Services	Term Loan	Prime plus 2.75%	12/15/2026	190.0	187.7	165.0	0.07	%
Sempco, Inc.	Miscellaneous Manufacturing	Term Loan	Prime plus 2.75%	12/15/2041	42.0	41.9	43.5	0.02	%
Trison Enterprises Inc.dba Lee's Automotive	Repair and Maintenance	Term Loan	Prime plus 2.75%	12/14/2041	407.5	406.4	405.3	0.16	%
HMG Strategy, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	12/14/2026	50.0	49.4	42.2	0.02	%
Cardinal Homes Inc. and Bret A Berneche	Wood Product Manufacturing	Term Loan	Prime plus 2.75%	12/14/2041	121.3	120.9	125.0	0.05	%
Cardinal Homes Inc,.Alouette Holdings Inc.	Wood Product Manufacturing	Term Loan	Prime plus 2.75%	12/14/2026	1,071.3	1,058.4	1,063.8	0.43	%
AGG Management Team LLC dba Chevron	Gasoline Stations	Term Loan	Prime plus 2.75%	12/14/2041	287.5	286.7	297.5	0.12	%
D and E Hardware Co. and D and E Pump Sales and Service	Building Material and Garden Equipment and Supplies Dealers	Term Loan	Prime plus 2.75%	12/14/2041	528.6	527.1	517.4	0.21	%
Wayfarer Bicycle LLC	Sporting Goods, Hobby, Musical Instrument, and Book Stores	Term Loan	Prime plus 2.75%	12/13/2041	92.5	92.2	88.7	0.04	%
Success Advertising Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	12/13/2041	466.5	465.2	475.3	0.19	%
Roast Beef Levittown LLC dba Arby's	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	12/13/2026	465.0	144.6	145.7	0.06	%

See accompanying notes to unaudited condensed consolidated financial statements

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Queen Express LLC	Gasoline Stations	Term Loan	Prime plus 2.75%	12/13/2041	187.5	187.0	191.2	0.08	%
Mack Team Enterprises Inc.dba The UPS Store #6815	Couriers and Messengers	Term Loan	Prime plus 2.75%	12/9/2026	20.4	20.2	18.0	0.01	%
Recycling Revolution,LLC	Merchant Wholesalers, Durable Goods	Term Loan	Prime plus 2.75%	12/9/2041	92.2	91.9	90.2	0.04	%
Myndshft Technologies LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	12/9/2026	775.0	765.7	724.0	0.29	%
^New Life Hospital LLC	Hospitals	Term Loan	Prime plus 2.75%	12/8/2041	1,195.5	1,192.1	1,237.1	0.50	%
Imagine By Carleen Inc.	Personal and Laundry Services	Term Loan	Prime plus 2.75%	12/8/2041	52.5	52.4	53.2	0.02	%
Hanson's Greeks LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	12/8/2026	11.3	11.1	11.2	—	%
Yachting Solutions LLC	Motor Vehicle and Parts Dealers	Term Loan	Prime plus 2.75%	12/7/2029	71.3	70.7	66.9	0.03	%
T and B Boots Inc dba Takken's Shoes	Clothing and Clothing Accessories Stores	Term Loan	Prime plus 2.75%	12/7/2026	100.0	99.0	92.1	0.04	%
Lan Doctors, Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	12/7/2026	237.5	234.6	228.4	0.09	%
^The Lake Shore Hospitality Inc dba Dowagiac Baymont Inn & Suites	Accommodation	Term Loan	Prime plus 2.75%	12/5/2041	352.5	351.5	357.7	0.15	%
Lilo Holdings LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	12/5/2026	15.9	15.7	14.2	0.01	%
Transmission Solutions Group, Inc. and Calhoun Satellite Communications	Telecommunications	Term Loan	Prime plus 2.75%	12/2/2041	141.3	141.3	130.2	0.05	%
Calhoun Satellite Communications, Inc.	Telecommunications	Term Loan	Prime plus 2.75%	12/2/2026	192.5	192.3	171.6	0.07	%
^Ericon, Inc.	Gasoline Stations	Term Loan	Prime plus 2.75%	12/1/2041	726.1	725.2	717.2	0.29	%
Noso Development LLC	Construction of Buildings	Term Loan	Prime plus 2.75%	12/1/2026	75.0	74.1	63.3	0.03	%
^Quick Ship, LLC	Couriers and Messengers	Term Loan	Prime plus 2.75%	11/30/2026	10.5	10.3	8.8	—	%
^Pebble Wood Lane, LLC and Good Sam's Assisted Living Resiidence,LLC	Nursing and Residential Care Facilities	Term Loan	Prime plus 2.75%	11/30/2041	67.5	67.2	69.8	0.03	%
Sharaz Shah DBA Thomas Jewelers	Clothing and Clothing Accessories Stores	Term Loan	Prime plus 2.75%	11/30/2026	8.1	8.0	6.8	—	%

See accompanying notes to unaudited condensed consolidated financial statements

Table of Contents



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Choe Trading Group, Inc.dba Rapid Printers of Monterey	Printing and Related Support Activities	Term Loan	Prime plus 2.75%	11/30/2026	22.5	22.1	21.5	0.01	%
Studio Find It Georgia, Inc.	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	11/30/2026	7.5	7.4	6.4	—	%
Imaginarium Foods LLC,	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	2/28/2042	376.7	249.1	258.6	0.10	%
RD Management, LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	11/30/2026	213.8	209.9	181.4	0.07	%
B4 Fitness LLC dba The Zoo Health Club	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	11/30/2026	22.5	22.1	19.6	0.01	%
^Usman Jalil, LLC dba Food Mart	Gasoline Stations	Term Loan	Prime plus 2.75%	11/29/2041	233.3	232.3	222.6	0.09	%
Honor Mansion, Inc.	Accommodation	Term Loan	Prime plus 2.75%	11/29/2026	87.5	85.9	86.6	0.04	%
Access Staffing, LLC	Administrative and Support Services	Term Loan	Prime plus 2.75%	11/29/2026	1,125.0	1,104.6	943.3	0.38	%
Merchant Coterie, Inc.	Merchant Wholesalers, Nondurable Goods	Term Loan	Prime plus 2.75%	11/23/2026	125.0	122.7	104.8	0.04	%
CRK Mens, LLC dba Spiff for Men	Personal and Laundry Services	Term Loan	Prime plus 2.75%	11/23/2026	106.3	104.4	91.0	0.04	%
WPN Recycling Company LLC	Merchant Wholesalers, Durable Goods	Term Loan	Prime plus 2.75%	11/23/2026	22.5	22.1	22.3	0.01	%
Hafa Adai Signs and Graphics LLC dba Fastsigns of Auburn -#281901	Administrative and Support Services	Term Loan	Prime plus 2.75%	11/23/2026	60.0	58.9	51.0	0.02	%
Rognes Corp dba RTS	Heavy and Civil Engineering Construction	Term Loan	Prime plus 2.75%	11/22/2026

Newtek Business Services Corp. - FORM 10-Q - May 8, 2017

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