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EX-32.1 - EXHIBIT 32.1 - Newtek Business Services Corp.newt-93017xexh321.htm
EX-31.2 - EXHIBIT 31.2 - Newtek Business Services Corp.newt-93017xexh312.htm
EX-31.1 - EXHIBIT 31.1 - Newtek Business Services Corp.newt-93017xexh311.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 September 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, a 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 November 7, 2017 there were 18,004,247 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.




Defined Terms

We have used “we,” “us,” “our”, “our company”, and “the Company” to refer to Newtek Business Services Corp. and its subsidiaries in this report. We also have used several other terms in this report, which are explained or defined below:

Terms
 
1940 Act
Investment Company Act of 1940, as amended
2016-1 Trust
Newtek Small Business Loan Trust, Series 2016-1
2021 Notes
7% Notes due 2021
2022 Notes
7.5% Notes due 2022
ASC
Accounting Standards Codification, as issued by the FASB
ASU
Accounting Standards Updates, as issued by the FASB
ATM Equity Distribution Agreement
At the Market equity distribution agreement dated March 20, 2017 with JMP Securities, LLC, Compass Point Research & Trading, LLC and Ladenburg Thalman & Co., Inc., each Placement Agents. Amended and restated on September 6, 2017 to include D.A. Davidson as a Placement Agent
BDC
Business Development Company under the 1940 Act
Board
The Company's board of directors
Capital One
Capital One Bank, N.A.
Code
Internal Revenue Code of 1986, as amended
DRIP
Dividend reinvestment plan
EBITDA
Earnings before interest, taxes, depreciation and amortization
Equity Incentive Plan
The Company's 2015 Equity Incentive Plan
Exchange Act
Securities and Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
Goldman Facility
Credit and Guaranty Agreement between UPSW and NTS and GS Bank; amended on September 18, to include Premier as a borrower; amended on June 21, 2017 to include BSP and SBL as borrowers
Goldman Sachs
Goldman Sachs Bank
LIBOR
London Interbank Offered Rate
Related Party RLOC
Unsecured revolving line of credit agreement between UPSW, NTS, Premier, BSP and SBL as lenders and Newtek as borrower
PLP
Preferred Lender Program, as authorized by the SBA
RIC
Regulated investment company under the Code
S&P
Standard and Poor's
SBA
United States Small Business Administration
SEC
Securities and Exchange Commission
SMB
Small-and-medium sized businesses
Sterling
Sterling National Bank
Sterling 504 Facility
Loan and Security Agreement between NBCS and Sterling, as lender to fund SBA 504 loans
Sterling Receivable and Inventory Facility
Loan and Security Agreement between NBCS and Sterling, as lender to fund accounts receivable and inventory financing arrangements
Taxable Subsidiaries
Companies formed by Newtek which are taxed as corporations for income tax purposes
Trustee
U.S. Bank, N.A.
U.S. GAAP
Generally accepted accounting principles in the United States
 
 
Portfolio Companies and Subsidiaries
 



NSBF
Newtek Small Business Finance, LLC, a consolidated subsidiary which operates as a nationally licensed SBA lender under the federal Section 7(a) program with PLP status
UPSW
Universal Processing Services of Wisconsin, LLC dba Newtek Merchant Solutions, a wholly-owned controlled portfolio company which markets credit and debit card processing services, check approval services, processing equipment and software
Premier
Premier Payments LLC, a wholly-owned controlled portfolio company which markets credit and debit card processing services, check approval services, processing equipment and software
NTS
Newtek Technology Solutions, Inc., a wholly-owned controlled portfolio company that provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, ecommerce, data storage, backup and disaster recovery and other related services
IPM
International Professional Marketing, Inc., a wholly-owned controlled portfolio company which provides consulting, design and implementation of technology solutions for enterprise and commercial clients
SIDCO
SIDCO, LLC dba Cloud Nine, a wholly-owned controlled portfolio company which provides consulting, design and implementation of technology solutions for enterprise and commercial clients
EWS
Excel WebSolutions, LLC, a controlled portfolio company which provides web design services to SMB's
NBCS
CDS Business Services, Inc. dba Newtek Business Credit Solutions, a wholly-owned controlled portfolio company which provides receivable and inventory financing, management services and managerial assistance to SMBs and originates loans under the SBA 504 loan program
SBL
Small Business Lending, LLC, a wholly-owned controlled portfolio company which provides third-party loan services for SBA and non-SBA loans
BSP
ADR Partners, LLC dba banc-serv Partners, LLC, a wholly-owned controlled portfolio company which provides lending institutions with outsourced solutions for the entire SBA lending process, including credit analysis, structuring and eligibility, packaging, closing compliance and servicing
NPS
PMTWorks Payroll, LLC dba Newtek Payroll and Benefits Solutions, a wholly-owned controlled portfolio company which provides payroll management, payment and tax reporting services to SMBs
NIA
Newtek Insurance Agency, LLC, a wholly-owned controlled portfolio company which specializes in the sale of commercial and health/benefits insurance products to the SMB market as well as various personal lines of insurance
TAM
Titanium Asset Management LLC, a wholly-owned controlled portfolio company which provides 24/7 customer service and call center support





NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
 
September 30, 2017
 
December 31, 2016
ASSETS
(Unaudited)
 
(Note 1)
Investments, at fair value
 
 
 
SBA unguaranteed non-affiliate investments (cost of $265,132 and $219,784, respectively; includes $176,934 and $197,927, respectively, related to securitization trusts)
$
257,136

 
$
211,471

SBA guaranteed non-affiliate investments (cost of $21,637 and $10,262, respectively)
24,088

 
11,512

Controlled investments (cost of $58,891 and $41,001, respectively)
136,949

 
121,302

Non-control/non-affiliate investments (cost of $0 and $904, respectively)

 
904

Investments in money market funds (cost of $9 and $35, respectively)
9

 
35

Total investments at fair value
418,182

 
345,224

Cash and cash equivalents
3,915

 
2,051

Restricted cash
26,602

 
20,845

Broker receivable
25,003

 
2,402

Due from related parties
2,553

 
3,748

Servicing assets, at fair value
19,092

 
16,246

Other assets
10,980

 
10,934

Total assets
$
506,327

 
$
401,450

LIABILITIES AND NET ASSETS
 
 
 
Liabilities:
 
 
 
Bank notes payable
$
66,146

 
$
5,100

Notes due 2022 (Note 7)
7,915

 
7,853

Notes due 2021 (Note 7)
39,027

 
38,767

Notes payable - Securitization trusts (Note 7)
95,376

 
118,122

Notes payable - related parties
20,541

 
1,400

Due to related parties
812

 
1,227

Deferred tax liabilities
5,240

 
5,983

Accounts payable, accrued expenses and other liabilities
15,658

 
13,904

Total liabilities
250,715

 
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, 17,730 and 14,624 issued and outstanding, respectively)
355

 
293

Additional paid-in capital
234,955

 
188,472

(Distributions in excess of)/undistributed net investment income
(3,069
)
 
8,092

Net unrealized appreciation, net of deferred taxes
11,347

 
13,008

Net realized gains/(losses)
12,024

 
(771
)
Total net assets
255,612

 
209,094

Total liabilities and net assets
$
506,327

 
$
401,450

Net asset value per common share
$
14.40

 
$
14.30


1
See accompanying notes to unaudited condensed consolidated financial statements.




NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
 
Three Months Ended September 30, 2017
 
Three Months Ended September 30, 2016
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
Investment income:
 
 
 
 
 
 
 
From non-affiliate investments:
 
 
 
 
 
 
 
Interest income
$
4,363

 
$
2,583

 
$
13,233

 
$
7,404

Servicing income
1,794

 
1,551

 
5,163

 
4,581

Other income
705

 
692

 
2,266

 
1,913

Total investment income from non-affiliate investments
6,862

 
4,826

 
20,662

 
13,898

From controlled investments:
 
 
 
 
 
 
 
Interest income
188

 
92

 
456

 
251

Dividend income
2,551

 
2,933

 
7,326

 
7,719

Other income

 

 
54

 

Total investment income from controlled investments
2,739

 
3,025

 
7,836

 
7,970

Total investment income
9,601

 
7,851

 
28,498

 
21,868

Expenses:
 
 
 
 
 
 
 
Salaries and benefits
4,776

 
3,665

 
14,407

 
10,638

Interest
2,986

 
2,341

 
8,133

 
5,804

Depreciation and amortization
107

 
84

 
292

 
209

Professional fees
605

 
807

 
2,054

 
2,519

Origination and servicing
1,433

 
1,537

 
4,086

 
4,190

Change in fair value of contingent consideration liabilities
(748
)
 

 
(748
)
 

Other general and administrative costs
1,634

 
1,542

 
5,239

 
6,094

Total expenses
10,793

 
9,976

 
33,463

 
29,454

Net investment loss
(1,192
)
 
(2,125
)
 
(4,965
)
 
(7,586
)
Net realized and unrealized gains (losses):
 
 
 
 
 
 
 
Net realized gain on non-affiliate investments
9,938

 
8,716

 
27,537

 
22,536

Net unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments
1,151

 
(78
)
 
1,201

 
690

Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments
(1,023
)
 
1,418

 
238

 
869

Net unrealized (depreciation) appreciation on controlled investments
(500
)
 
4,638

 
(2,243
)
 
10,362

Change in provision for deferred taxes on unrealized depreciation (appreciation) on investments
335

 
(2,028
)
 
745

 
(4,469
)
Net unrealized depreciation on non-control/non-affiliate investments

 

 

 
(43
)
Net unrealized depreciation on servicing assets
(632
)
 
(500
)
 
(1,601
)
 
(1,341
)
Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash

 
(1
)
 

 
(2
)
Net realized and unrealized gains
9,269

 
12,165

 
25,877

 
28,602

Net increase in net assets
$
8,077

 
$
10,040

 
$
20,912

 
$
21,016

Net increase in net assets per share
$
0.46

 
$
0.69

 
$
1.22

 
$
1.45

Net investment loss per share
$
(0.07
)
 
$
(0.15
)
 
$
(0.29
)
 
$
(0.52
)
Dividends declared per common share
$
0.44

 
$
0.43

 
$
1.20

 
$
1.13

Weighted average shares outstanding
17,487

 
14,556

 
17,076

 
14,515


2
See accompanying notes to unaudited condensed consolidated financial statements.




NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
(In Thousands)
 
Nine Months Ended September 30, 2017
Increase in net assets:
 
Net investment loss
$
(4,965
)
Net realized gains on investments
27,537

Net change in unrealized depreciation on investments
(59
)
Net change in unrealized depreciation on servicing assets
(1,601
)
Net increase in net assets
20,912

Distributions to common stockholders:
 
Dividends to common stockholders from net investment income
(6,151
)
Distributions to stockholders from net realized gains
(14,686
)
Total distributions to stockholders
(20,837
)
Capital share transactions:
 
Issuance of common stock under dividend reinvestment plan
475

Stock-based compensation expense
904

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

Purchase of vested stock for employee payroll tax withholding
(644
)
Issuance of common stock, net of offering costs
44,708

Net increase in net assets from capital share transactions
46,443

Total increase in net assets
46,518

Net assets at beginning of period
209,094

Net assets at end of period (includes $3,069 of distributions in excess of net investment income)
$
255,612

Common shares outstanding at end of period
17,750

Capital share activity:
 
Shares issued under dividend reinvestment plan
30

Shares issued in connection with public offerings
3,043

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

Purchase of vested stock for employee payroll tax withholding
(38
)
Restricted shares issued under Equity Incentive Plan, net of forfeitures
10

Net increase in capital activity
3,106


3
See accompanying notes to unaudited condensed consolidated financial statements.





NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
Cash flows from operating activities:
 
 
 
Net increase in net assets
$
20,912

 
$
21,016

Adjustments to reconcile net increase in net assets to net cash used in operating activities:
 
 
 
Net unrealized depreciation (appreciation) on controlled investments
2,243

 
(10,362
)
Net unrealized appreciation on non-affiliate investments
(1,438
)
 
(1,516
)
Net unrealized depreciation on servicing assets
1,602

 
1,341

Realized gains on non-affiliate investments
(27,668
)
 
(23,299
)
Realized losses on non-affiliate investments
131

 
763

Loss on lease
249

 
1,335

Amortization of deferred financing costs
1,075

 
921

Change in fair value of contingent consideration liabilities
748

 

Deferred income taxes
(745
)
 
4,469

Depreciation and amortization
292

 
209

Purchase of loan from SBA
(3,821
)
 
(2,057
)
Purchase of SBA 7(a) loan portfolio
(175
)
 

Funding of controlled investments
(27,000
)
 
(6,175
)
Funding of non-control/non-affiliate investments
(3,255
)
 
(1,020
)
Originations of SBA guaranteed non-affiliate investments
(200,620
)
 
(166,212
)
Principal payments received from controlled investments
12,332

 
1,800

Principal payments received from non-control/non-affiliate investments
3,255

 
910

Return of investment from controlled investment
50

 

Proceeds from sale of SBA guaranteed non-affiliate investments
217,016

 
183,452

Originations of SBA unguaranteed non-affiliate investments
(62,185
)
 
(51,567
)
Payments received on SBA non-affiliate investments
20,327

 
15,336

Other, net
1,139

 
527

Changes in operating assets and liabilities:
 
 
 
Net decrease in investments in money market funds
26

 

Broker receivable
(22,601
)
 
10,588

Due to/from related parties
780

 
542

Other assets
437

 
470

Accounts payable, accrued expenses and other liabilities
(133
)
 
1,300

Change in restricted cash
(4,585
)
 
(1,923
)
Capitalized servicing assets
(4,447
)
 
(3,919
)
Other, net
(80
)
 
23

Net cash used in operating activities
(76,139
)
 
(23,048
)
Cash flows from investing activities:
 
 
 
Purchase of fixed assets
(345
)
 
(294
)
Cash flows from financing activities:
 
 
 
Net borrowings on bank lines of credit
61,046

 
20,819


4
See accompanying notes to unaudited condensed consolidated financial statements.




NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
Net borrowings on related party line of credit
19,141

 
1,753

Repurchase of common stock under share repurchase plan

 
(866
)
Proceeds from common shares sold, net of offering costs
44,708

 

Purchase of vested stock for employee payroll tax withholding
(644
)
 

Proceeds from Notes due 2021

 
40,250

Dividends paid
(20,836
)
 
(22,168
)
Payments on Notes Payable - Securitization Trusts
(23,414
)
 
(16,297
)
Change in restricted cash related to securitization trusts
(1,172
)
 
11

Additions to deferred financing costs
(480
)
 
(1,740
)
Other, net
(1
)
 
(10
)
Net cash provided by financing activities
78,348

 
21,752

Net increase (decrease) in cash and cash equivalents
1,864

 
(1,590
)
Cash and cash equivalents—beginning of period
2,051

 
4,308

Cash and cash equivalents—end of period
$
3,915

 
$
2,718

 
 
 
 
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
$

 
$
652

Foreclosed real estate acquired
$
212

 
$
387

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

 
$

Issuance of common stock under dividend reinvestment plan
$
477

 
$
588

Fixed assets acquired from tenant improvement allowance
$

 
$
1,288

            


5
See accompanying notes to unaudited condensed consolidated financial statements.





NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dan Cline Transport Inc.
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
9/29/2030

 
$
1,005.5

 
$
1,005.5

 
$
895.1

 
0.35
%
Lone Star Hardware and Home Decor, LLC
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/29/2027

 
72.5

 
72.5

 
62.8

 
0.02
%
Threads of Time LLC
 
Sporting Goods, Hobby, Musical Instrument, and Book Stores
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
137.5

 
137.5

 
136.6

 
0.05
%
Miechella Suzette Decker
 
Miscellaneous Store Retailers
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
100.0

 
100.0

 
105.6

 
0.04
%
Harco Metal Products Inc
 
Primary Metal Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
489.0

 
489.0

 
467.3

 
0.18
%
SSN GROUP LLC and Dockside Steel Processing LLC
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
1,250.0

 
1,250.0

 
1,264.9

 
0.49
%
Sashshel Corporation
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
212.5

 
212.5

 
224.4

 
0.09
%
Dr Richard Rolle JR, PLLC dba Rolle Oral & Facial Surgery PLLC
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
875.0

 
875.0

 
864.0

 
0.34
%
Cagwin Trucking LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
9/29/2042

 
325.0

 
325.0

 
336.8

 
0.13
%
Pets A Go Go LLC
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
9/28/2042

 
198.1

 
198.1

 
202.6

 
0.08
%
Rhode Island Tennis Management LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/28/2042

 
550.0

 
550.0

 
545.3

 
0.21
%
Nicholson Lumber Co Inc.
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/28/2030

 
215.0

 
215.0

 
211.5

 
0.08
%
National Media Services, Inc
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/28/2027

 
18.8

 
18.8

 
16.2

 
0.01
%
Rhode Island Tennis Management LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/28/2042

 
383.0

 
383.0

 
379.7

 
0.15
%
Moreno Brother's Inc.
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
9/28/2027

 
15.0

 
15.0

 
12.9

 
0.01
%
Complete Care IT LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/27/2027

 
15.0

 
15.0

 
12.9

 
0.01
%
Technologist Inc
 
Heavy and Civil Engineering Construction
 
Term Loan
 
Prime plus 2.75%
 
9/27/2027

 
434.5

 
434.5

 
411.9

 
0.16
%
Inspirations Food Design, Inc
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/26/2042

 
466.0

 
466.0

 
468.5

 
0.18
%

6
See accompanying notes to unaudited condensed consolidated financial statements.




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

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Rollins Construction & Trucking LLC
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
9/26/2027

 
341.3

 
341.3

 
332.0

 
0.13
%
JPS Arthur Kill Rd Bakery Corp dba Aunt Butches of Brooklyn
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/22/2027

 
22.5

 
22.5

 
19.6

 
0.01
%
KB Waterjet Cutting LLC
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/22/2027

 
10.2

 
10.2

 
9.3

 
%
Magnation Corporation
 
Utilities
 
Term Loan
 
Prime plus 2.75%
 
9/22/2027

 
50.0

 
50.0

 
50.8

 
0.02
%
Sallee Pro-Custom Fabrication Shop LLC
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
9/21/2027

 
9.0

 
9.0

 
9.2

 
%
Excel, RP Inc.
 
Machinery Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
100.0

 
100.0

 
92.2

 
0.04
%
Denek Contracting Inc and Denek Leasing LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/20/2042

 
209.8

 
209.8

 
221.5

 
0.09
%
Max Home Deliveries, Inc
 
Couriers and Messengers
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
80.8

 
80.8

 
73.8

 
0.03
%
CR Park Incorporated dba Define Body and Mind
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
100.0

 
27.5

 
26.8

 
0.01
%
Sound Manufacturing, Inc. & Monster Power Equipment, Inc.
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
200.0

 
200.0

 
189.1

 
0.07
%
Alpha Preparatory Academy LLC
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/20/2042

 
162.5

 
162.5

 
160.7

 
0.06
%
Montessori Community School
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/20/2042

 
391.5

 
391.5

 
380.8

 
0.15
%
NY Tent LLC & NY Tent Parent, LLC dba Tent Company of New York
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
1,027.5

 
1,027.5

 
978.6

 
0.38
%
Imagine By Carleen, Inc.
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
7.5

 
7.5

 
7.3

 
%
Alexander Pierce Corporation
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/20/2042

 
625.0

 
625.0

 
621.9

 
0.24
%
Venus Pizza, Inc.
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/20/2042

 
91.3

 
91.3

 
96.3

 
0.04
%
Insight Diagnostic Technologist Services
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
302.8

 
302.8

 
271.7

 
0.11
%
Commonwealth Diagnostics International, Inc
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/20/2027

 
1,250.0

 
1,250.0

 
1,271.2

 
0.50
%
Stone's Construction and Remodeling, LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/19/2027

 
5.3

 
5.3

 
4.5

 
%
CIS BIG DOG, LLC
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
9/19/2027

 
61.3

 
61.3

 
61.1

 
0.02
%

7
See accompanying notes to unaudited condensed consolidated financial statements.




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

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Party By Design Inc.
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
9/18/2042

 
1,205.0

 
1,205.0

 
1,188.4

 
0.46
%
Li Family Spokane LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/15/2042

 
384.5

 
384.5

 
395.6

 
0.15
%
SD Kickboxing LLC dba CKO Kickboxing Dan Diego
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/15/2027

 
40.0

 
40.0

 
36.0

 
0.01
%
Clark Realty LLC
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
9/15/2027

 
62.5

 
62.5

 
57.3

 
0.02
%
Inglis Food Mart Inc.
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
9/15/2027

 
22.5

 
22.5

 
22.3

 
0.01
%
Clinton Food Market LLC
 
Gasoline Stations
 
Term Loan
 
Prime plus 2.75%
 
9/15/2042

 
262.5

 
262.5

 
262.1

 
0.10
%
Tarleton & Family Landscaping, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/15/2027

 
83.8

 
83.8

 
74.7

 
0.03
%
Alaska Motor Home Inc
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
9/13/2027

 
331.5

 
331.5

 
285.7

 
0.11
%
Fox Valley Rentals & Investments, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 3.75%
 
9/13/2027

 
7.5

 
7.5

 
7.5

 
%
Nails By Mercede LLC
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
9/13/2027

 
14.3

 
14.3

 
13.3

 
0.01
%
Town & Country Transportation Co. and Popco, LLC.
 
Transit and Ground Passenger Transportation
 
Term Loan
 
Prime plus 2.75%
 
9/12/2042

 
168.8

 
168.8

 
178.2

 
0.07
%
Rajbai Maa Inc. dba Nara Lounge
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/12/2042

 
388.1

 
388.1

 
375.6

 
0.15
%
Morgan Lynn Kerstetter dba Catherine School of Dance
 
Performing Arts, Spectator Sports, and Related Industries
 
Term Loan
 
Prime plus 2.75%
 
9/11/2027

 
7.5

 
7.5

 
7.6

 
%
Health & Performance Center, LLC
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/11/2027

 
20.4

 
20.4

 
17.6

 
0.01
%
Foxtail, LLC and Tottly New Services Corp
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/8/2042

 
291.3

 
291.3

 
291.8

 
0.11
%
Desert Ribs, LLC and Famous Charlie, LLC and Famous Freddie, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/8/2042

 
1,250.0

 
1,250.0

 
1,177.4

 
0.46
%
Echelon Planning Group, LLC dba Echelon Financial Services
 
Insurance Carriers and Related Activities
 
Term Loan
 
Prime plus 2.75%
 
9/8/2027

 
7.5

 
7.5

 
7.3

 
%
South Fulton Landscape & Nursery, Inc.
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/7/2042

 
100.0

 
100.0

 
105.6

 
0.04
%
Crazy Beatz Productions LLC
 
Motion Picture and Sound Recording Industries
 
Term Loan
 
Prime plus 3.75%
 
9/7/2027

 
5.3

 
5.3

 
5.0

 
%

8
See accompanying notes to unaudited condensed consolidated financial statements.




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

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Dreaming Big Learning Center Inc
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/5/2042

 
367.8

 
367.8

 
368.2

 
0.14
%
Big Coop's Trucking LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
9/1/2027

 
100.0

 
100.0

 
93.8

 
0.04
%
Blue Eagel Transport Inc
 
Couriers and Messengers
 
Term Loan
 
Prime plus 2.75%
 
8/31/2027

 
383.5

 
383.5

 
330.6

 
0.13
%
Evernook Valley Milk LLC
 
Animal Production and Aquaculture
 
Term Loan
 
Prime plus 2.75%
 
8/31/2042

 
642.5

 
642.5

 
639.5

 
0.25
%
Bark Life, Inc.
 
Miscellaneous Store Retailers
 
Term Loan
 
Prime plus 2.75%
 
8/31/2027

 
22.5

 
22.5

 
19.4

 
0.01
%
The Pink Alli, LLC dba The Alli
 
Miscellaneous Store Retailers
 
Term Loan
 
Prime plus 2.75%
 
8/30/2027

 
18.0

 
18.0

 
16.1

 
0.01
%
Busby Outdoor LLC
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
8/29/2042

 
700.0

 
700.0

 
631.0

 
0.25
%
Busby Outdoor LLC
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
8/29/2042

 
550.0

 
550.0

 
495.8

 
0.19
%
Lake County Tow LLC
 
Support Activities for Transportation
 
Term Loan
 
Prime plus 2.75%
 
8/25/2042

 
87.5

 
87.5

 
87.0

 
0.03
%
Parlay Disributors LLC
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
8/25/2027

 
112.5

 
112.5

 
98.5

 
0.04
%
InUSA Ventures Inc dba InUSA Services
 
Securities, Commodity Contracts, and Other Financial Investments and Related Activities
 
Term Loan
 
Prime plus 2.75%
 
8/24/2027

 
25.0

 
25.0

 
21.5

 
0.01
%
Genuine Ventures LLC and Seaweed Ventures LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/24/2030

 
557.8

 
557.8

 
521.4

 
0.20
%
R & R Strength & Conditioning Corp dba Crossfit Light House Point
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
8/23/2042

 
82.5

 
82.5

 
87.1

 
0.03
%
Delicias de Minas Restaurant, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/22/2027

 
206.3

 
206.3

 
201.2

 
0.08
%
The Holder Grooup LLC
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
8/22/2027

 
7.5

 
7.5

 
6.5

 
%
L&V Auto Sales, Inc.
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
8/21/2027

 
18.0

 
18.0

 
18.3

 
0.01
%
M.E. Interiors LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/21/2027

 
16.5

 
16.5

 
14.2

 
0.01
%
Damiano Global Corp
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/21/2027

 
22.5

 
22.5

 
21.1

 
0.01
%
Tier1Solutions, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/18/2027

 
18.8

 
18.8

 
16.8

 
0.01
%

9
See accompanying notes to unaudited condensed consolidated financial statements.




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

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Tony Herring & Associates, Inc
 
Furniture and Home Furnishings Stores
 
Term Loan
 
Prime plus 2.75%
 
8/17/2027

 
7.5

 
7.5

 
6.5

 
%
Chester's World Enterprise LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
8/16/2027

 
22.5

 
22.5

 
20.3

 
0.01
%
D'Amato & Sons Construction, Inc.
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/11/2027

 
8.3

 
8.3

 
7.5

 
%
HTP LLC dba Hot Tomatoes Pizza
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/11/2027

 
11.3

 
11.3

 
10.5

 
%
Roundhay Partners LLC and Roundhay Farming LLC
 
Crop Production
 
Term Loan
 
Prime plus 2.75%
 
8/8/2042

 
912.5

 
912.5

 
830.5

 
0.32
%
Splashlight LLC, Splashlight Photographic and Digital Studios, LLC
 
Management of Companies and Enterprises
 
Term Loan
 
Prime plus 2.75%
 
8/7/2027

 
500.0

 
500.0

 
446.8

 
0.17
%
L & J Corporate Services Inc
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/4/2027

 
7.5

 
7.4

 
6.5

 
%
Furniture Masters Limited Liability Company
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
8/3/2027

 
9.0

 
9.0

 
7.8

 
%
HMG Strategy LLC,
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/2/2027

 
50.0

 
50.0

 
43.1

 
0.02
%
Hope Health Care, LLC
 
Nursing and Residential Care Facilities
 
Term Loan
 
Prime plus 2.75%
 
7/31/2027

 
10.5

 
10.4

 
9.0

 
%
Bowl Mor LLC dba Bowl Mor Lanes
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
7/31/2027

 
7.5

 
7.5

 
6.4

 
%
Royal Blue Investments, Inc. and Cleland Pharmacy LLC
 
Health and Personal Care Stores
 
Term Loan
 
Prime plus 2.75%
 
7/31/2042

 
53.0

 
52.9

 
54.7

 
0.02
%
Raffi's Inc dba Atlantic Auto Center
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
7/31/2027

 
14.3

 
14.2

 
14.1

 
0.01
%
Sharon G McMillen, MA Psychologist, Inc.
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
7/28/2027

 
18.6

 
18.5

 
15.9

 
0.01
%
Work of Heart Inc.dba Little Nest Portraits
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/28/2027

 
50.0

 
21.4

 
18.7

 
0.01
%
HQTRONIC LLC
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
7/27/2027

 
22.5

 
22.4

 
19.3

 
0.01
%
Oberon IT, Inc.
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/26/2027

 
218.7

 
217.5

 
198.7

 
0.08
%
Gilles Peress Studio LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/25/2027

 
62.5

 
62.1

 
53.6

 
0.02
%
Ocean Trans LLC
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
7/21/2027

 
37.5

 
37.3

 
32.1

 
0.01
%

10
See accompanying notes to unaudited condensed consolidated financial statements.




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

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Obok LLC
 
Food Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
7/21/2027

 
12.0

 
11.9

 
11.1

 
%
Lil Tots' Learning Center LLC
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
7/21/2042

 
47.5

 
47.4

 
47.2

 
0.02
%
Nova Solutions, Inc.
 
Furniture and Related Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
7/19/2027

 
25.0

 
24.9

 
24.3

 
0.01
%
Webb Eye Associates, PA
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
7/19/2027

 
73.8

 
73.3

 
69.5

 
0.03
%
Matrix Z LLC
 
Nonmetallic Mineral Product Manufacturing
 
Term Loan
 
Prime plus 3.75%
 
7/19/2027

 
7.5

 
7.5

 
7.6

 
%
Aitheras Aviation Group, LLC, Aitheras Aviation Group, LLC
 
Air Transportation
 
Term Loan
 
Prime plus 2.75%
 
7/18/2027

 
825.0

 
819.9

 
711.5

 
0.28
%
Wildflour Bakery & Cafe, LLC
 
Food Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
7/17/2027

 
22.5

 
22.4

 
22.7

 
0.01
%
Florida Home and Kitchen LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/14/2027

 
12.0

 
11.9

 
10.3

 
%
Koep Companies dba Pipestone True value
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
7/14/2042

 
326.5

 
326.1

 
318.4

 
0.12
%
Rocks Auto Exchange LLC
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
7/13/2027

 
15.0

 
14.9

 
12.9

 
0.01
%
McCord Holdings, Inc. dba Fast Signs 176101
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
7/7/2027

 
18.7

 
18.6

 
16.4

 
0.01
%
Thrifty Market Inc dba Thrifty Foods
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
7/6/2027

 
102.5

 
101.9

 
92.1

 
0.04
%
New Chicago Wholesale Bakery Inc.
 
Food Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
15.0

 
14.8

 
14.2

 
0.01
%
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

 
49.9

 
51.4

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

 
76.3

 
75.4

 
76.6

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

 
73.5

 
73.4

 
75.0

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

 
15.0

 
14.8

 
12.8

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

 
54.0

 
53.9

 
54.5

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

 
100.0

 
98.8

 
85.1

 
0.03
%
BQRS, Inc. DBA Gresham Meineke Car Care Center
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
62.5

 
61.8

 
54.3

 
0.02
%

11
See accompanying notes to unaudited condensed consolidated financial statements.




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

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
JWH Designs, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
106.3

 
105.0

 
90.4

 
0.04
%
Safeguard Construction Company, Inc.
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
6/30/2027

 
76.3

 
75.4

 
64.9

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

 
9.1

 
9.0

 
8.1

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

 
309.0

 
305.4

 
310.4

 
0.12
%
Best Bees Company
 
Animal Production and Aquaculture
 
Term Loan
 
Prime plus 2.75%
 
6/29/2027

 
22.5

 
22.2

 
19.2

 
0.01
%
Greensboro Plastic Surgical Associates, PA
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2042

 
578.0

 
576.9

 
572.0

 
0.22
%
Ocean Trans LLC and Dehal Trucking LLC