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EX-32.1 - EXHIBIT 32.1 - Newtek Business Services Corp.newt-63017xexh321.htm
EX-31.2 - EXHIBIT 31.2 - Newtek Business Services Corp.newt-63017xexh312.htm
EX-31.1 - EXHIBIT 31.1 - Newtek Business Services Corp.newt-63017xexh311.htm


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 June 30, 2017

OR

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 (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  ¨    No  x
As of August 7, 2017 there were 17,439,038 shares issued and outstanding of the registrant’s Common Stock, par value $0.02 per share.
 



TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.





NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
 
June 30, 2017
 
December 31, 2016
ASSETS
(Unaudited)
 
(Note 1)
Investments, at fair value
 
 
 
SBA unguaranteed non-affiliate investments (cost of $246,728 and $219,784, respectively; includes $181,568 and $197,927, respectively, related to securitization trusts)
$
239,757

 
$
211,471

SBA guaranteed non-affiliate investments (cost of $10,925 and $10,262, respectively)
12,224

 
11,512

Controlled investments (cost of $58,447 and $41,001, respectively)
137,005

 
121,302

Non-control/non-affiliate investments (cost of $3,255 and $904, respectively)
3,255

 
904

Investments in money market funds (cost of $35 and $35, respectively)
35

 
35

Total investments at fair value
392,276

 
345,224

Cash and cash equivalents
3,550

 
2,051

Restricted cash
23,594

 
20,845

Broker receivable
23,815

 
2,402

Due from related parties
3,345

 
3,748

Servicing assets, at fair value
18,124

 
16,246

Other assets
10,191

 
10,934

Total assets
$
474,895

 
$
401,450

LIABILITIES AND NET ASSETS
 
 
 
Liabilities:
 
 
 
Bank notes payable
$
40,045

 
$
5,100

Notes due 2022 (Note 7)
7,895

 
7,853

Notes due 2021 (Note 7)
38,939

 
38,767

Notes payable - Securitization trusts (Note 7)
101,108

 
118,122

Notes payable - related parties
15,741

 
1,400

Due to related parties
275

 
1,227

Deferred tax liabilities
5,575

 
5,983

Accounts payable, accrued expenses and other liabilities
15,073

 
13,904

Total liabilities
224,651

 
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, 17,432 and 14,624 issued and outstanding, respectively)
349

 
293

Additional paid-in capital
229,891

 
188,472

(Distributions in excess of)/undistributed net investment income
(1,877
)
 
8,092

Net unrealized appreciation, net of deferred taxes
12,017

 
13,008

Net realized gains/(losses)
9,864

 
(771
)
Total net assets
250,244

 
209,094

Total liabilities and net assets
$
474,895

 
$
401,450

Net asset value per common share
$
14.36

 
$
14.30


See accompanying notes to unaudited condensed consolidated financial statements
1


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
 
Three Months Ended June 30, 2017
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Investment income:
 
 
 
 
 
 
 
From non-affiliate investments:
 
 
 
 
 
 
 
Interest income
$
4,635

 
$
2,370

 
$
8,870

 
$
4,821

Servicing income
1,723

 
1,659

 
3,369

 
3,030

Other income
896

 
624

 
1,561

 
1,221

Total investment income from non-affiliate investments
7,254

 
4,653

 
13,800

 
9,072

From controlled investments:
 
 
 
 
 
 
 
Interest income
121

 
77

 
268

 
159

Dividend income
2,475

 
2,493

 
4,775

 
4,786

Other income
54

 

 
54

 

Total investment income from controlled investments
2,650

 
2,570

 
5,097

 
4,945

Total investment income
9,904

 
7,223

 
18,897

 
14,017

Expenses:
 
 
 
 
 
 
 
Salaries and benefits
4,980

 
3,629

 
9,631

 
6,973

Interest
2,617

 
1,975

 
5,147

 
3,463

Depreciation and amortization
96

 
85

 
185

 
125

Professional fees
602

 
954

 
1,449

 
1,712

Origination and servicing
1,269

 
1,392

 
2,653

 
2,653

Other general and administrative costs
2,020

 
3,269

 
3,605

 
4,552

Total expenses
11,584

 
11,304

 
22,670

 
19,478

Net investment loss
(1,680
)
 
(4,081
)
 
(3,773
)
 
(5,461
)
Net realized and unrealized gains (losses):
 
 
 
 
 
 
 
Net realized gain on non-affiliate investments
8,914

 
7,534

 
17,599

 
13,820

Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments
(63
)
 
706

 
50

 
768

Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments
1,817

 
478

 
1,261

 
(549
)
Net unrealized (depreciation) appreciation on controlled investments
(2,674
)
 
2,034

 
(1,743
)
 
5,724

Provision for deferred taxes on unrealized appreciation on controlled investments
976

 
(833
)
 
410

 
(2,441
)
Net unrealized depreciation on non-control/non-affiliate investments

 
(27
)
 

 
(43
)
Net unrealized depreciation on servicing assets
(360
)
 
(438
)
 
(969
)
 
(841
)
Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash

 
(1
)
 

 
(1
)
Net realized and unrealized gains
8,610

 
9,453

 
16,608

 
16,437

Net increase in net assets
$
6,930

 
$
5,372

 
$
12,835

 
$
10,976

Net increase in net assets per share
$
0.40

 
$
0.37

 
$
0.76

 
$
0.76

Net investment loss per share
$
(0.10
)
 
$
(0.28
)
 
$
(0.22
)
 
$
(0.38
)
Dividends declared per common share
$
0.40

 
$
0.35

 
$
0.76

 
$
0.70

Weighted average shares outstanding
17,345

 
14,481

 
16,867

 
14,495


See accompanying notes to unaudited condensed consolidated financial statements
2


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
(In Thousands)
 
Six Months Ended June 30, 2017
Increase in net assets:
 
Net investment loss
$
(3,773
)
Net realized gains on investments
17,599

Net change in unrealized depreciation on investments
(22
)
Net change in unrealized depreciation on servicing assets
(969
)
Net increase in net assets
12,835

Distributions to stockholders:
 
Distributions to stockholders from net investment income
(6,151
)
Distributions to stockholders from net realized gains
(6,916
)
Total distributions to stockholders
(13,067
)
Capital share transactions:
 
Issuance of common stock under dividend reinvestment plan
180

Stock-based compensation expense
752

Issuance of common stock in connection with investment in International Professional Marketing, Inc.
1,000

Issuance of common stock, net of offering costs
39,450

Net increase in net assets from capital share transactions
41,382

Total increase in net assets
41,150

Net assets at beginning of period
209,094

Net assets at end of period (includes $1,877 of distributions in excess of net investment income)
$
250,244

Common shares outstanding at end of period
17,432

Capital share activity:
 
Shares issued under dividend reinvestment plan
11

Shares issued in connection with public offerings
2,728

Shares issued in connection with investment in International Professional Marketing, Inc.
61

Restricted shares issued under Stock Incentive Plan, net of forfeitures
8

Net increase in capital activity
2,808




See accompanying notes to unaudited condensed consolidated financial statements
3



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Cash flows from operating activities:
 
 
 
Net increase in net assets
$
12,835

 
$
10,976

Adjustments to reconcile net increase in net assets to net cash (used in) provided by operating activities:
 
 
 
Net unrealized appreciation (depreciation) on controlled investments
1,743

 
(5,724
)
Net unrealized depreciation on non-affiliate investments
(1,311
)
 
(175
)
Net unrealized depreciation on servicing assets
969

 
841

Realized gains on non-affiliate investments
(17,642
)
 
(13,805
)
Realized losses on non-affiliate investments
43

 

Loss on lease
175

 
1,487

Amortization of deferred financing costs
794

 
564

Deferred income taxes
(410
)
 
2,441

Depreciation and amortization
185

 
125

Purchase of loan from SBA
(3,821
)
 

Purchase of SBA 7(a) loan portfolio
(175
)
 

Funding of controlled investments
(20,781
)
 
(6,150
)
Funding of non-control/non-affiliate investments
(3,255
)
 

Originations of SBA guaranteed non-affiliate investments
(121,371
)
 
(100,533
)
Principal payments received from controlled investments
6,559

 
1,600

Principal payments received from non-control/non-affiliate investments

 
634

Return of investment from controlled investment
50

 

Proceeds from sale of SBA guaranteed non-affiliate investments
138,526

 
107,509

Originations of SBA unguaranteed non-affiliate investments
(37,798
)
 
(31,351
)
Payments received on SBA non-affiliate investments
14,508

 
9,376

Other, net
935

 
193

Changes in operating assets and liabilities:
 
 
 
Broker receivable
(21,413
)
 
12,222

Due to/from related parties
(549
)
 
220

Other assets
1,106

 
663

Accounts payable, accrued expenses, other liabilities and deferred revenue
(192
)
 
889

Change in restricted cash
(1,614
)
 
15,335

Capitalized servicing assets
(2,847
)
 
(2,288
)
Other, net
(3
)
 
19

Net cash (used in) provided by operating activities
(54,754
)
 
5,068

Cash flows from investing activities:
 
 
 
Purchase of fixed assets
(284
)
 
(255
)
Cash flows from financing activities:
 
 
 
Net borrowings (payments) on bank lines of credit
34,945

 
(4,050
)
Net borrowings (payments) on related party line of credit
14,341

 
(847
)

See accompanying notes to unaudited condensed consolidated financial statements
4


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
Six Months Ended June 30, 2017
 
Six Months Ended June 30, 2016
Repurchase of common stock under share repurchase plan

 
(866
)
Proceeds from common shares sold, net of offering costs
39,450

 

Proceeds from Notes due 2021

 
40,250

Dividends paid
(13,067
)
 
(15,940
)
Payments on Notes Payable - Securitization Trusts
(17,516
)
 
(10,241
)
Change in restricted cash related to securitization trusts
(1,135
)
 
(12,461
)
Additions to deferred financing costs
(480
)
 
(1,740
)
Other, net
(1
)
 
(5
)
Net cash provided by (used) in financing activities
56,537

 
(5,900
)
Net increase (decrease) in cash and cash equivalents
1,499

 
(1,087
)
Cash and cash equivalents—beginning of period
2,051

 
4,308

Cash and cash equivalents—end of period
$
3,550

 
$
3,221

 
 
 
 
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
$

 
$
435

Foreclosed real estate acquired
$
62

 
$
124

Issuance of common shares in connection with investment in International Professional Marketing, Inc.
$
1,000

 
$

Fixed assets acquired from tenant improvement allowance
$

 
$
1,288

Issuance of common stock under dividend reinvestment plan
$
180

 
$
505

            


See accompanying notes to unaudited condensed consolidated financial statements
5



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JWH Designs, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
$
106.3

 
$
106.3

 
$
91.6

 
0.04
%
BQRS, Inc. d/b/a Gresham Meineke Car Care Center
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
62.5

 
62.5

 
55.0

 
0.02
%
J&M Civil Construction Services LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
100.0

 
100.0

 
86.2

 
0.03
%
Veola's Day Spa and Wellness Center Inc.
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
9.2

 
9.2

 
8.2

 
%
The Country House Restaurant, LLC and Pelton Real Estate, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/30/2042

 
50.0

 
50.0

 
51.6

 
0.02
%
Qycell Corporation
 
Plastics and Rubber Products Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
76.3

 
76.3

 
77.5

 
0.03
%
Bone Bar & Grill LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/30/2042

 
73.5

 
73.5

 
75.2

 
0.03
%
J. T. O'Neill Company, L.L.C
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
15.0

 
15.0

 
12.9

 
0.01
%
Hamilton & Associates Real Estate and Investments Firm LLC
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
6/30/2042

 
54.1

 
54.1

 
54.6

 
0.02
%
Safeguard Construction Company, Inc.
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
76.3

 
76.3

 
65.7

 
0.03
%
New Chicago Wholesale Bakery Inc.
 
Food Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
15.0

 
15.0

 
14.3

 
0.01
%
Steigelbauer Associates Inc.
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
309.0

 
309.0

 
314.2

 
0.13
%
Miguel Fernando Borda PA d/b/a BGR Dental
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
50.0

 
50.0

 
44.8

 
0.02
%
ElKareh Brothers Investment, LLC Best Choice Meats Inc
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
448.8

 
448.8

 
456.4

 
0.18
%
Oakhill Farms, LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/29/2030

 
100.0

 
100.0

 
101.8

 
0.04
%
Greensboro Plastic Surgical Associates, PA
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2042

 
578.0

 
578.0

 
573.3

 
0.23
%
Ocean Tran LLC and Dehal Trucking LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
602.5

 
602.5

 
519.3

 
0.21
%
HG Ventures, Inc. d/b/a Diamond Head Trucking
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
6/29/2030

 
1,006.8

 
1,006.8

 
876.6

 
0.35
%
Malhame & Company Publishers & Importers Inc.
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
90.0

 
90.0

 
77.7

 
0.03
%

See accompanying notes to unaudited condensed consolidated financial statements
6


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 2017 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Intellixion LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
3.8

 
3.8

 
3.2

 
%
Best Bees Company
 
Animal Production and Aquaculture
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
22.5

 
22.5

 
19.4

 
0.01
%
Foxhop Fitness, LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
6/28/2027

 
91.3

 
41.8

 
36.9

 
0.01
%
Akal Express Inc. d/b/a Truck Trailer Service Stop
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
6/28/2042

 
60.0

 
60.0

 
62.1

 
0.02
%
Old Dominion Transportation Group, Inc.
 
Transit and Ground Passenger Transportation
 
Term Loan
 
Prime plus 2.75%
 
6/28/2027

 
1,133.3

 
1,133.3

 
998.4

 
0.40
%
Citibin, Inc.
 
Furniture and Related Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/27/2027

 
125.0

 
125.0

 
107.8

 
0.04
%
Auxiliary Systems Inc.,Sharrick Company, LLC & KMN, LLC
 
Transportation Equipment Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/27/2030

 
245.3

 
245.3

 
243.8

 
0.10
%
WB Cleaners Inc. d/b/a $2.75 Cleaners
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
6/27/2027

 
22.5

 
22.5

 
22.1

 
0.01
%
Ains Holding Company, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/26/2027

 
1,175.0

 
1,175.0

 
1,035.9

 
0.41
%
Four Seasons Laser Center Inc.
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
6/26/2042

 
216.3

 
163.4

 
168.4

 
0.07
%
Vella Construction Enterprises, Inc. d/b/a Vella Construction
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
6/23/2027

 
22.5

 
22.5

 
19.4

 
0.01
%
Rustic LLC
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
6/23/2042

 
18.8

 
18.8

 
16.9

 
0.01
%
Northern Industries, LLC
 
Miscellaneous Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/23/2042

 
57.8

 
57.8

 
61.0

 
0.02
%
Birches Group, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/22/2027

 
50.0

 
50.0

 
43.1

 
0.02
%
Tarver-Henley Inc. and Tar-Hen LLC
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
6/21/2042

 
320.0

 
320.0

 
317.5

 
0.13
%
704 Meat Center Inc. d/b/a El Mercado and La Plaza Mercado
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
6/20/2042

 
175.0

 
175.0

 
180.9

 
0.07
%
Sanabi Investment ,,LLC d/b/a Oscar's Moving and Storage
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
6/20/2027

 
124.0

 
124.0

 
112.5

 
0.04
%
Scarlet Spartan Inc.d/b/a FastSigns of Brighton
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
6/19/2027

 
55.0

 
37.6

 
33.5

 
0.01
%
Don G. Timpton DDS & Associates PA and Indsaad Properties,LLC
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/16/2042

 
400.0

 
400.0

 
384.5

 
0.15
%

See accompanying notes to unaudited condensed consolidated financial statements
7


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 2017 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
All Regional Recyclers of Wood LLC d/b/a ARROW,Superior Carting,LLC d/b/a
 
Waste Management and Remediation Services
 
Term Loan
 
Prime plus 2.75%
 
6/15/2042

 
314.0

 
314.0

 
310.1

 
0.12
%
 JAM Media Solutions, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/15/2027

 
62.5

 
62.5

 
53.9

 
0.02
%
Tele Tax Express Inc., El Rancho Paiso, LLC and Nestor Romero
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/14/2042

 
92.5

 
92.5

 
95.2

 
0.04
%
Susan Hughes d/b/a Aloha Junction B and B
 
Accommodation
 
Term Loan
 
Prime plus 2.75%
 
6/14/2042

 
62.5

 
62.5

 
66.0

 
0.03
%
Hull's Kitchen, LLC and HK Too, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/14/2042

 
96.3

 
96.3

 
100.9

 
0.04
%
ESA 365 Corp and Lucathor Realty LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
6/14/2042

 
22.5

 
22.5

 
22.8

 
0.01
%
Yachting Solutions LLC
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
6/12/2027

 
118.8

 
118.8

 
111.5

 
0.04
%
Refoleen Inc d/b/a Spice and Tea Exchange
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
6/8/2027

 
3.5

 
3.5

 
3.0

 
%
Earth First Recycling, LLC and 191 Clark Road, LLC
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
6/5/2027

 
354.5

 
354.5

 
353.7

 
0.14
%
Skydive California, LLC
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
6/2/2027

 
55.0

 
55.0

 
55.9

 
0.02
%
SCW, LLC d/b/a Arthur Murray Dance Studio
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
6/2/2042

 
146.0

 
146.0

 
146.0

 
0.06
%
Speaker City, Inc.and Speaker Town, LLC d/b/a Rollin Thunder
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
6/1/2042

 
45.6

 
45.6

 
46.4

 
0.02
%
Sage Oil LLC
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
5/31/2027

 
22.5

 
22.5

 
19.4

 
0.01
%
Funtime, LLC and Universal Entertainment Group LLC
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
5/31/2027

 
66.3

 
66.3

 
58.1

 
0.02
%
Impact Grounds Maintenance and Design, Inc.
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
5/31/2042

 
79.4

 
79.4

 
82.3

 
0.03
%
Ricnet III, Inc. d/b/a Edible Arrangements
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
5/31/2027

 
15.0

 
14.8

 
13.0

 
0.01
%
Haroon Baig,Inc.d/b/a US1 Petrol
 
Gasoline Stations
 
Term Loan
 
Prime plus 2.75%
 
5/31/2042

 
264.0

 
264.0

 
278.7

 
0.11
%
Eagle Wood Works LLC
 
Furniture and Related Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
5/26/2027

 
12.0

 
12.0

 
11.0

 
%
Hurricane Group, Inc.
 
Other Information Services
 
Term Loan
 
Prime plus 2.75%
 
5/26/2027

 
75.0

 
75.0

 
64.6

 
0.03
%

See accompanying notes to unaudited condensed consolidated financial statements
8


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 2017 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Michell Auto Repair, LLC and and C&M Mitchell, LLC
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
5/26/2042

 
193.3

 
193.3

 
197.6

 
0.08
%
Swantown Inn & Spa LLC
 
Accommodation
 
Term Loan
 
Prime plus 2.75%
 
5/26/2042

 
116.0

 
7.4

 
7.8

 
%
Chet Lemon Enterprises LLC d/b/a All American Sports
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
5/26/2042

 
792.5

 
792.5

 
836.7

 
0.33
%
Locavore LLC d/b/a Paloma Restaurant
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
5/25/2027

 
50.0

 
50.0

 
44.6

 
0.02
%
Abdul Naushad MD PC d/b/a Advanced Pain Centers
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
5/25/2042

 
393.8

 
393.8

 
404.6

 
0.16
%
Demand Printing Solutions Inc.
 
Printing and Related Support Activities
 
Term Loan
 
Prime plus 2.75%
 
5/25/2027

 
213.3

 
213.3

 
200.6

 
0.08
%
Beyond Waves A Unique Salon LLC and Lori Ann Carlson
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
5/25/2027

 
15.0

 
15.0

 
13.1

 
0.01
%
Jung Design Inc.
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
5/25/2027

 
9.0

 
9.0

 
7.8

 
%
Juliador Resources LLC d/b/a Cue Hair Salon and Skin Care
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
5/24/2027

 
22.5

 
22.5

 
19.4

 
0.01
%
Innovim, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
5/24/2027

 
337.5

 
337.5

 
290.9

 
0.12
%
Shaffer Automotive Repair, LLC
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
5/24/2030

 
135.8

 
135.8

 
127.0

 
0.05
%
Gill Express Inc. and Gill Express 2 LLC
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
5/23/2042

 
338.8

 
338.8

 
335.0

 
0.13
%
Southeast Recycling, LLC and Southeast Land Holdings LLC d/b/a 67 Motor
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
5/23/2042

 
181.4

 
181.4

 
189.6

 
0.08
%
Prestige Construction of Florida, LLC
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
5/23/2042

 
336.4

 
336.4

 
327.5

 
0.13
%
GEM2K, LLC d/b/a Precision Precast Group
 
Miscellaneous Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
5/19/2027

 
162.5

 
162.5

 
145.7

 
0.06
%
Hayden Trucking LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
5/19/2027

 
262.5

 
262.5

 
242.0

 
0.10
%
Tres K Deli,Grocery,Fruit and Meat Inc.
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
5/19/2027

 
8.3

 
8.3

 
7.7

 
%
 Iron Men Home Repair, Inc. and Ironmen House Lifting Inc.
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
5/19/2042

 
582.5

 
582.5

 
587.9

 
0.23
%
J Harris Trucking LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
5/19/2027

 
19.5

 
19.5

 
18.5

 
0.01
%

See accompanying notes to unaudited condensed consolidated financial statements
9


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 2017 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Enfield Tractor & Equipment Co.
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
5/19/2027

 
296.3

 
296.3

 
283.3

 
0.11
%
PS Camping, Inc. d/b/a Prospectors RV Resort
 
Accommodation
 
Term Loan
 
Prime plus 2.75%
 
5/19/2042

 
257.8

 
257.8

 
270.4

 
0.11
%
Mr. B's Bicycles & Mopeds, Inc.
 
Sporting Goods, Hobby, Musical Instrument, and Book Stores
 
Term Loan
 
Prime plus 2.75%
 
5/18/2042

 
146.8

 
146.8

 
147.3

 
0.06
%
Waterford Plumbing Co, Inc.
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
5/18/2027

 
50.0

 
50.0

 
43.9

 
0.02
%
New Image Building Services, Inc.
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
5/18/2027

 
150.8

 
150.8

 
134.7

 
0.05
%
Bay Car Wash LLC
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
5/18/2042

 
120.8

 
120.8

 
122.2

 
0.05
%
Computech Computers Inc.
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
5/17/2027

 
50.0

 
50.0

 
43.1

 
0.02
%
Arco Electrical Contractors Inc. d/b/a Arco Construction Group
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
5/16/2027

 
360.0

 
360.0

 
330.8

 
0.13
%
5 Stars Learning Center Inc
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
5/16/2042

 
61.8

 
61.8

 
62.1

 
0.02
%
Batter & Company,LLC d/b/a Batter Co. Dessert Collection
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
5/16/2027

 
53.8

 
53.8

 
47.3

 
0.02
%
Band Sawn Lumber,LLC and Nathan Ryan Adams
 
Wood Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
5/15/2042

 
113.8

 
113.8

 
112.1

 
0.04
%
Keys Armored Express, Inc.
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
5/12/2027

 
40.0

 
40.0

 
36.0

 
0.01
%
Sanderson Distribution Inc.
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
5/12/2027

 
10.5

 
10.5

 
9.1

 
%
SG Linke LLC
 
Clothing and Clothing Accessories Stores
 
Term Loan
 
Prime plus 2.75%
 
5/12/2027

 
108.3

 
59.1

 
60.1

 
0.02
%
B G F Bobby Q's Inc
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
5/11/2027

 
7.5

 
7.5

 
7.3

 
%
Estelle Finkel Educational Associates,LLC
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
5/11/2027

 
118.8

 
118.8

 
102.4

 
0.04
%
Labmates,LLC
 
Miscellaneous Store Retailers
 
Term Loan
 
Prime plus 2.75%
 
5/10/2027

 
100.0

 
100.0

 
95.4

 
0.04
%
NHS, LLC
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
5/9/2027

 
88.5

 
88.5

 
79.6

 
0.03
%

See accompanying notes to unaudited condensed consolidated financial statements
10


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 2017 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
NHS, LLC
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
5/9/2042

 
21.9

 
21.9

 
20.5

 
0.01
%
Innovation Transport, LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
5/9/2027

 
86.3

 
86.3

 
81.3

 
0.03
%
1872 Rosecrans, LLC d/b/a Good/b/ar
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
5/9/2027

 
62.5

 
43.6

 
37.9

 
0.02
%
Arclay ,LLC
 
Nonmetallic Mineral Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
5/5/2030

 
145.9

 
145.9

 
134.4

 
0.05
%
Benchmark Building, Inc.
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
5/5/2027

 
22.5

 
22.5

 
19.4

 
0.01
%
Cable Management LLC
 
Waste Management and Remediation Services
 
Term Loan
 
Prime plus 2.75%
 
5/3/2027

 
59.6

 
59.6

 
55.9

 
0.02
%
Fine Arts Center of Easley, Inc. d/b/a Midtown Music
 
Sporting Goods, Hobby, Musical Instrument, and Book Stores
 
Term Loan
 
Prime plus 2.75%
 
5/2/2042

 
116.3

 
116.3

 
122.7

 
0.05
%
Zahmel Restaurant Suppliers Corp d/b/a Cash & Carry; Zahners Hardware
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
4/28/2027

 
88.8

 
88.2

 
77.0

 
0.03
%
Georgia Productions Services LLC
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
4/28/2027

 
91.3

 
90.7

 
83.3

 
0.03
%
Love and Glory Learning Center, Inc.
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
4/28/2042

 
78.0

 
77.9

 
77.4

 
0.03
%
JMA Inc. d/b/a Primecut and Mezzo; Primecut at Marquee
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
4/27/2042

 
222.5

 
222.2

 
234.6

 
0.09
%
Sneads Ferry Foods, Inc. d/b/a DQ Grill & Chill
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
4/27/2042

 
618.3

 
183.5

 
193.7

 
0.08
%
Asheville's Fun Depot, LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
4/26/2027

 
87.5

 
87.0

 
88.5

 
0.04
%
Carl Joseph Johnston d/b/a Viking Transport
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
4/26/2027

 
53.2

 
32.4

 
30.7

 
0.01
%
Resident Research, LLC
 
Other Information Services
 
Term Loan
 
Prime plus 2.75%
 
4/24/2027

 
100.0

 
99.4

 
85.7

 
0.03
%
Getting Even LLC d/b/a The Zoo Health Club
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
4/21/2027

 
7.5

 
7.5

 
6.7

 
%
Ralph's Hair Salon, Inc.
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
4/21/2042

 
50.0

 
49.9

 
50.8

 
0.02
%
M.E. Interiors LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
4/20/2027

 
139.2

 
138.3

 
119.2

 
0.05
%

See accompanying notes to unaudited condensed consolidated financial statements
11


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS JUNE 30, 2017 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
MJ and M Home Improvements LLC d/b/a House Doctors
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
4/20/2027

 
20.5

 
20.4

 
17.9

 
0.01
%
Condron Brothers LLC d/b/a Luv 2 Play
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
4/19/2027

 
116.0

 
116.0

 
105.0

 
0.04
%
Affordable Auto Transport LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
4/17/2027

 
12.8

 
12.7

 
11.8

 
%
Carpeteria (Markarian) Co.
 
Furniture and Home Furnishings Stores
 
Term Loan
 
Prime plus 2.75%
 
4/13/2027

 
132.8

 
132.1

 
130.7

 
0.05
%
Bloomer Machine & Fab, Inc and Dale Stertz Properties
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
4/13/2042

 
205.5

 
205.2

 
211.5

 
0.08
%
Butternuts Beer and Ale LLC
 
Beverage and Tobacco Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
4/12/2027

 
73.7

 
73.3

 
74.5

 
0.03
%
Citizens Lanes, LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
3/31/2042

 
619.4

 
618.0

 
652.1

 
0.26
%
The Altitude Group, LLC and Core Home Security, LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
3/31/2027

 
50.0

 
49.4

 
42.6

 
0.02
%
Shelter Harbor Inn, Inc.
 
Accommodation
 
Term Loan
 
Prime plus 2.75%
 
3/31/2042

 
207.5

 
207.0

 
218.5

 
0.09
%
Golden Hen Inc. d/b/a Cafe
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
3/31/2027

 
64.7

 
64.0

 
55.8

 
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

 
185.3

 
159.6

 
0.06
%
MIT LLC
 
Publishing Industries (except Internet)
 
Term Loan
 
Prime plus 2.75%
 
3/31/2042

 
87.5

 
87.3

 
92.1

 
0.04
%
Applied Integrated Technologies, Inc.
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
3/31/2027

 
125.0

 
123.6

 
106.4

 
0.04
%
Bear Trail Lodge LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
3/31/2042

 
552.5

 
551.2

 
574.7

 
0.23
%
KWG Industries LLC d/b/a Peterson & Marsh Metal Industries
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
3/30/2027

 
30.0

 
29.7

 
29.0

 
0.01
%
Municipal Hydro Sevices Inc.
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
3/30/2027

 
312.5

 
309.1

 
283.8

 
0.11
%
Signature Rooms, Inc d/b/a Gallery Furniture
 
Furniture and Home Furnishings Stores
 
Term Loan
 
Prime plus 2.75%
 
3/30/2042

 
495.8

 
494.6

 
517.9

 
0.21
%
Sea Smoke Barbeque, Corp and Danwen LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%