10-Q
Table of Contents

 
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, 2015

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.)
 
 
 
212 West 35th Street, 2nd Floor New York, New York
 
10001
(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  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (all as defined in Rule 12b-2 of the Exchange Act).
 
Large accelerated filer
 
¨
Accelerated filer
 
¨
 
 
 
 
 
 
Non-accelerated filer
 
x
Smaller reporting company
 
¨
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 October 28, 2015 there were 12,653,335 shares issued and outstanding of the registrant’s Common Stock, par value $0.02 per share.
 


Table of Contents

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.




Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
 
September 30, 2015
 
December 31, 2014
ASSETS
(Unaudited)
 
(Note 1)
Investments, at fair value
 
 
 
SBA unguaranteed non-affiliate investments (cost of $155,537 and $131,093, respectively; includes $138,426 and $120,990, respectively, related to securitization trust VIE)
$
144,290

 
$
121,477

Controlled investments (cost of $28,675 and $18,065, respectively)
100,726

 
77,499

SBA guaranteed non-affiliate investments (cost of $1,700 and $28,057, respectively)
1,920

 
31,486

Non-control/Non-affiliate investments (cost of $2,116 and $0, respectively)
2,116

 

Investments in money market funds (cost of $36 and $3,000, respectively)
36

 
3,000

Total investments at fair value
249,088

 
233,462

Cash and cash equivalents
3,098

 
17,813

Restricted cash
26,722

 
15,389

Broker receivable
22,238

 

Due from related parties
4,707

 
3,190

Servicing assets, at fair value
11,895

 
9,483

Credits in lieu of cash
1,207

 
2,229

Other assets (includes $2,599 and $2,550, respectively, related to securitization trust VIE)
12,916

 
20,266

Total assets
$
331,871

 
$
301,832

LIABILITIES AND NET ASSETS
 
 
 
Liabilities:
 
 
 
Bank notes payable
$
21,849

 
$
43,023

Notes due 2022
8,200

 

Notes payable - Securitization trust VIE
97,930

 
79,520

Notes payable - related parties
18,121

 

Due to related parties
1,751

 
2,867

Notes payable in credits in lieu of cash
1,207

 
2,229

Accounts payable, accrued expenses and other liabilities
8,080

 
7,775

Total liabilities
157,138

 
135,414

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, 10,353 and 10,206 issued and outstanding at September 30, 2015 and December 31, 2014, respectively, not including 17 shares held in escrow as of December 31, 2014)
207

 
205

Additional paid-in capital
163,005

 
165,532

Distributions in excess of net investment income
(8,786
)
 
(2,523
)
Net unrealized appreciation on investments
6,840

 
2,609

Net realized gains on investments
13,467

 
595

Total net assets (See Note 15 for discussion of October 1, 2015 NAV)
174,733

 
166,418

Total liabilities and net assets
$
331,871

 
$
301,832

Net asset value per common share (See Note 15 for discussion of October 1, 2015 NAV)
$
16.88

 
$
16.31

See accompanying notes to unaudited condensed consolidated financial statements.

1

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
Three Months Ended September 30, 2015
 
Three Months Ended September 30, 2014
 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
Investment income:
 
 
 
 
 
 
 
From non-affiliate investments:
 
 
 
 
 
 
 
Interest income
$
2,153

 
$

 
$
6,509

 
$

Servicing income
1,262

 

 
3,373

 

Other income
472

 

 
1,331

 

Total investment income from non-affiliate investments
3,887

 

 
11,213

 

From controlled investments:
 
 
 
 
 
 
 
Interest income
58

 

 
202

 

Dividend income
3,093

 

 
5,967

 

Other income

 

 
12

 

Total investment income from controlled investments
3,151

 

 
6,181

 

Total investment income
7,038

 

 
17,394

 

Operating revenues:
 
 
 
 
 
 
 
Electronic payment processing

 
22,777

 

 
67,467

Web hosting and design

 
3,739

 

 
11,840

Premium income

 
5,801

 

 
15,930

Interest income

 
1,689

 

 
4,818

Servicing fee income – NSBF portfolio

 
915

 

 
2,661

Servicing fee income – external portfolios

 
1,711

 

 
5,248

Income from tax credits

 
11

 

 
39

Insurance commissions

 
471

 

 
1,272

Other income

 
1,052

 

 
3,106

Total operating revenues

 
38,166

 

 
112,381

Net change in fair value of:
 
 
 
 
 
 
 
SBA loans

 
(493
)
 

 
(1,640
)
Credits in lieu of cash and notes payable in credits in lieu of cash

 
(2
)
 

 
(2
)
Total net change in fair value

 
(495
)
 

 
(1,642
)
Expenses:
 
 
 
 
 
 
 
Electronic payment processing costs

 
19,147

 

 
57,084

Salaries and benefits
3,444

 
6,481

 
9,600

 
19,782

Interest
1,864

 
1,330

 
4,948

 
6,555

Depreciation and amortization
87

 
917

 
257

 
2,668

Provision for loan losses

 
14

 

 
(52
)
Other general and administrative costs
3,134

 
5,259

 
8,851

 
15,674

Total expenses
8,529

 
33,148

 
23,656

 
101,711

Net investment loss
(1,491
)
 

 
(6,262
)
 


2

Table of Contents

 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
Three Months Ended September 30, 2015
 
Three Months Ended September 30, 2014
 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
Net realized and unrealized gains (losses):
 
 
 
 
 
 
 
Net realized gain on non-affiliate investments
6,620

 

 
21,659

 

Net unrealized depreciation on SBA guaranteed non-affiliate investments
(48
)
 

 
(3,210
)
 

Net unrealized depreciation on SBA unguaranteed non-affiliate investments
(531
)
 

 
(1,667
)
 

Net unrealized appreciation on controlled investments
770

 

 
10,289

 

Net unrealized depreciation on servicing assets
(565
)
 

 
(1,177
)
 

Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash
(6
)
 

 
(4
)
 

Net realized and unrealized gains
6,240

 

 
25,890

 

Income before income taxes

 
4,523

 

 
9,028

Net increase in net assets
$
4,749

 
$

 
$
19,628

 
$

Provision for income taxes

 
1,934

 

 
3,694

Net income

 
2,589

 

 
5,334

Net loss attributable to non-controlling interests

 
55

 

 
95

Net income attributable to Newtek Business Services Corp.
$

 
$
2,644

 
$

 
$
5,429

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic

 
7,463

 

 
7,220

Diluted

 
7,699

 

 
7,688

Basic income per share
$

 
$
0.35

 
$

 
$
0.75

Diluted income per share
$

 
$
0.34

 
$

 
$
0.71

Net increase in net assets per share
$
0.46

 
$

 
$
1.92

 
$

Net investment loss per share
$
(0.14
)
 
$

 
$
(0.61
)
 
$

Dividends and distributions declared per common share
$

 
$

 
$
0.86

 
$

Weighted average shares outstanding
10,318

 

 
10,244

 

See accompanying notes to unaudited condensed consolidated financial statements.

3

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
(In Thousands)

 
Nine Months Ended September 30, 2015
Increase in net assets:
 
Net investment loss
$
(6,262
)
Net realized gain on investments
21,659

Net change in unrealized appreciation on investments
5,412

Net change in unrealized depreciation on servicing assets
(1,177
)
Net change in unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash
(4
)
Net increase in net assets
19,628

Distributions to stockholders:
 
Distributions to stockholders from net realized gains
(8,787
)
Total distributions to stockholders
(8,787
)
Capital share transactions:
 
Issuance of common stock under dividend reinvestment plan
87

Issuance of common stock in connection with acquisition of Premier Payments LLC
2,472

Issuance of common stock in connection with legal settlement
215

Net increase in net assets from capital share transactions
2,774

Other transactions:
 
Consolidation of Texas Whitestone Group, LLC and CCC Real Estate Holdings Co., LLC (1)
(33
)
Adjustment to 2014 offering costs
17

Reversal of deferred tax asset
(2,870
)
Distribution to members of Exponential of New York, LLC
(2,414
)
Net decrease in net assets from other transactions
(5,300
)
Total increase in net assets
8,315

Net assets at beginning of period
166,418

Net assets at end of period
$
174,733

Common shares outstanding at end of period
10,353

Capital share activity:
 
Shares issued under dividend reinvestment plan
5

Shares issued in connection with acquisition of Premier Payments LLC
131

Shares issued in connection with legal settlement
11

Net increase in capital activity
147


(1) During the quarter ended June 30, 2015 it was determined that Texas Whitestone Group, LLC and CCC Real Estate Holdings Co., LLC are controlled holding companies.
See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents


NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
Cash flows from operating activities:
 
 
 
Net increase in net assets/net income
$
19,628

 
$
5,334

Adjustments to reconcile net increase in net assets/net income to net cash (used in) provided by operating activities:
 
 
 
Net unrealized appreciation on controlled investments
(10,289
)
 

Net unrealized depreciation on non-affiliate investments
4,877

 

Net unrealized depreciation on servicing assets
1,177

 

Realized gains on non-affiliate investments
(22,287
)
 

Realized losses on non-affiliate investments
628

 

Income from tax credits
(25
)
 
(39
)
Amortization of deferred financing costs and debt discount related to debt refinancing

 
1,905

Accretion of interest expense
21

 
37

Fair value adjustments on SBA loans

 
1,640

Fair value adjustment of credits in lieu of cash and notes payable in credits in lieu of cash
4

 
2

Deferred income taxes

 
(880
)
Depreciation and amortization
257

 
2,668

Purchase of loan from SBA
(703
)
 

Funding of controlled investments
(14,230
)
 

Funding of non-control/non-affiliate investments
(2,200
)
 

Originations of SBA guaranteed non-affiliate investments
(128,672
)
 

Principal payments received from controlled investments
800

 

Principal payments received from non-control/non-affiliate investments
84

 

Return of investment from controlled investment
2,965

 

Proceeds from sale of SBA guaranteed non-affiliate investments
176,973

 

Originations of SBA unguaranteed non-affiliate investments
(39,084
)
 

Payments received on SBA non-affiliate investments
14,191

 

Loss on sale of other real estate owned
(262
)
 

Accretion of discount
167

 
331

Provision for loan losses

 
(52
)
Other, net
982

 
1,340

Changes in operating assets and liabilities:
 
 
 
Net decrease in investments in money market funds
2,964

 

Originations of SBA loans held for sale

 
(103,658
)
Proceeds from sale of SBA loans held for sale

 
104,845

Broker receivable
(22,238
)
 
2,880

Due to/from related parties
(2,634
)
 

Accounts receivable
34

 
549


5

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
Prepaid expenses, accrued interest receivable and other assets
5,613

 
3,549

Accounts payable, accrued expenses, other liabilities and deferred revenue
656

 
3,570

Change in restricted cash
(6,797
)
 
(5,027
)
Capitalized servicing assets
(3,589
)
 
(2,660
)
Net cash (used in) provided by operating activities
(20,989
)
 
16,334

Cash flows from investing activities:
 
 
 
Investments in qualified businesses

 
(177
)
Purchase of fixed assets and customer accounts
(93
)
 
(1,313
)
SBA loans originated for investment, net

 
(33,301
)
Payments received on SBA loans

 
9,134

Proceeds from sale of loan held for investment

 
500

Net cash used in investing activities
(93
)
 
(25,157
)
Cash flows from financing activities:
 
 
 
Net (repayments)/borrowings on bank lines of credit
(12,007
)
 
4,029

Proceeds from term loan

 
10,000

Net borrowings from related party line of credit
18,121

 

Proceeds from notes due 2022
8,200

 

Payments on bank term note payable
(9,167
)
 
(11,007
)
Dividends paid
(8,787
)
 

Payments on senior notes
(13,786
)
 
(8,037
)
Issuance of senior notes, net of issuance costs
32,029

 

Change in restricted cash related to securitization
(4,536
)
 
6,439

Exponential of New York, LLC distribution to members
(2,414
)
 

Additions to deferred financing costs
(1,274
)
 
(513
)
Other, net
(12
)
 
(194
)
Net cash provided by financing activities
6,367

 
717

Net decrease in cash and cash equivalents
(14,715
)
 
(8,106
)
Cash and cash equivalents—beginning of period
17,813

 
12,508

Cash and cash equivalents—end of period
$
3,098

 
$
4,402

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
$
1,043

 
$
1,113

Increase in additional paid-in capital attributable to deferred tax adjustment on vested stock
$

 
$
166

Foreclosed real estate acquired
$
832

 
$
136

Reversal of deferred tax asset
$
2,870

 
$

Issuance of common shares in connection with acquisition of Premier Payments LLC
$
2,472

 
$

Issuance of common shares in connection with legal settlement
$
215

 
$


6

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
 
As a Business Development Company
 
Prior to becoming a Business Development Company
 
Nine Months Ended September 30, 2015
 
Nine Months Ended September 30, 2014
Issuance of common shares under dividend reinvestment plan
$
87

 
$

See accompanying notes to unaudited condensed consolidated financial statements.

7

Table of Contents



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recycling Consultants, Inc. and Prairie State Salvage and Recycling In
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
9/30/2027

 
$
767.5

 
$
767.5

 
$
660.0

 
0.38
%
R.H. Hummer Jr., Inc.
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
9/30/2025

 
375.0

 
375.0

 
347.0

 
0.20
%
Barub Realty LLC and Barub LLC dba Woodlawn Cabinets
 
Furniture and Home Furnishings Stores
 
Term Loan
 
Prime plus 2.75%
 
9/30/2040

 
143.0

 
143.0

 
142.2

 
0.08
%
Naeem Khan LTD
 
Apparel Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/30/2025

 
125.0

 
125.0

 
99.6

 
0.06
%
Accent Homes Services LLC dba Benjamin Franklin Plumbing of Kansas Cit
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/30/2028

 
66.5

 
66.5

 
62.2

 
0.04
%
Bat Bridge Investments Inc dba Kalologie 360 Spa
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2025

 
85.5

 
31.2

 
24.8

 
0.01
%
Binky's Vapes LLC
 
Miscellaneous Store Retailers
 
Term Loan
 
Prime plus 2.75%
 
9/30/2025

 
22.5

 
22.5

 
17.9

 
0.01
%
SCJEN Management Inc dba Bowl of Heaven
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/30/2025

 
60.0

 
17.8

 
14.1

 
0.01
%
Joyce Outdoor Advertising LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/29/2040

 
234.8

 
234.8

 
230.7

 
0.13
%
The Grasso Companies LLC and Grasso Pavement Maintenance LLC Veranda L
 
Heavy and Civil Engineering Construction
 
Term Loan
 
Prime plus 2.75%
 
9/28/2025

 
518.8

 
518.8

 
501.5

 
0.29
%
RIM Investments LLC and RIM Architects LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/28/2040

 
399.0

 
399.0

 
374.8

 
0.21
%
Greensward of Marco Inc.
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
9/28/2040

 
87.5

 
87.5

 
82.7

 
0.05
%
Yachting Solutions LLC
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/25/2040

 
962.5

 
962.5

 
885.4

 
0.51
%
Sandlot Ventures LLC and Sandbox Ventures LLC
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/25/2040

 
442.5

 
442.5

 
408.1

 
0.23
%
Hemingway Custom Cabinetry LLC
 
Furniture and Related Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/25/2025

 
220.0

 
220.0

 
180.3

 
0.10
%
South Towne Dental Center, P.C.
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/25/2025

 
50.0

 
50.0

 
49.4

 
0.03
%
Daniel W. Stark dba Mountain Valley Lodge and RV Park
 
Accommodation
 
Term Loan
 
Prime plus 2.75%
 
9/25/2040

 
13.5

 
13.5

 
13.6

 
0.01
%
Prestigious LifeCare for Seniors LLC
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/25/2025

 
9.8

 
9.8

 
8.7

 
%

8

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
St Lawrence Hotel Corp and Oheka Catering Inc dba Quality Inn
 
Accommodation
 
Term Loan
 
Prime plus 2.75%
 
9/24/2040

 
625.0

 
625.0

 
597.2

 
0.34
%
Hagerstown Muffler, Inc. and JMS Muffler, Inc
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
9/24/2040

 
327.5

 
327.5

 
328.7

 
0.19
%
J.R. Wheeler Corporation dba Structurz Exhibits and Graphics
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
10/24/2025

 
21.0

 
21.0

 
20.8

 
0.01
%
J3K LLC dba Ronan True Value Hardware
 
Building Material and Garden Equipment and Supplies Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/23/2025

 
152.5

 
152.5

 
121.5

 
0.07
%
Stormrider Inc dba Shirley's Stormrider Inc
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
9/23/2025

 
67.5

 
67.5

 
53.8

 
0.03
%
Rutledge Enterprises Inc dba BLC Property Management
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
9/23/2040

 
62.5

 
62.5

 
59.7

 
0.03
%
Finish Strong Inc dba FASTSIGNS St Peters
 
Miscellaneous Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/23/2025

 
50.0

 
50.0

 
39.8

 
0.02
%
Nova Solutions Inc
 
Furniture and Related Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/22/2040

 
320.0

 
320.0

 
306.2

 
0.18
%
Pine Belt Wood Products LLC
 
Forestry and Logging
 
Term Loan
 
Prime plus 2.75%
 
9/22/2040

 
163.8

 
163.8

 
141.6

 
0.08
%
Frozen Treats of Hollywood FL, LLC dba Sub Zero Ice Cream
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/22/2025

 
15.8

 
15.8

 
13.4

 
0.01
%
IIoka Inc dba New Cloud Networks
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/21/2025

 
665.0

 
665.0

 
529.9

 
0.30
%
Sound Manufacturing Inc
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/21/2025

 
50.0

 
50.0

 
42.6

 
0.02
%
Vallmar Studios, LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/21/2025

 
15.8

 
15.8

 
12.6

 
0.01
%
Scent-Sation Inc
 
Textile Product Mills
 
Term Loan
 
Prime plus 2.75%
 
9/18/2040

 
687.5

 
687.5

 
683.6

 
0.39
%
Al-Mustafa Enterprise, Inc. and Al-Mustafa Enterprise Inc
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/18/2040

 
134.0

 
134.0

 
128.2

 
0.07
%
Vanderhoof LLC dba Soxfords
 
Apparel Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/18/2025

 
15.9

 
15.9

 
12.7

 
0.01
%
MiJoy Inc dba Imo's Pizza
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/18/2025

 
8.3

 
8.3

 
6.6

 
%
FirstVitals Health and Wellness Inc
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
9/17/2025

 
150.0

 
150.0

 
119.5

 
0.07
%
Naeem Khan LTD
 
Apparel Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/17/2025

 
125.0

 
125.0

 
99.6

 
0.06
%

9

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Import Car Connection Inc dba Car Connection
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/16/2040

 
407.5

 
407.5

 
400.9

 
0.23
%
Johnson Carwash LLC and Johnson Petroleum LLC
 
Gasoline Stations
 
Term Loan
 
Prime plus 2.75%
 
9/14/2040

 
340.0

 
340.0

 
339.6

 
0.19
%
Almost Home Daycare LLC
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/11/2025

 
62.5

 
62.5

 
59.7

 
0.03
%
Veliu LLC dba FASTSIGNS #15901
 
Miscellaneous Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/10/2025

 
50.0

 
50.0

 
41.2

 
0.02
%
B and A Friction Materials Inc
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
9/9/2025

 
102.5

 
102.5

 
81.7

 
0.05
%
Gardner's Wharf Holdings LLC and Gardner's Wharf Seafood Inc
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
9/8/2040

 
140.0

 
140.0

 
140.5

 
0.08
%
Empowerschool LLC and Behavioral Therapy Center of Au
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/4/2040

 
685.0

 
685.0

 
687.4

 
0.39
%
AIG Inc
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/4/2040

 
363.8

 
363.8

 
329.4

 
0.19
%
Higher Grounds Community Coffeehouse, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/2/2025

 
8.3

 
8.3

 
6.9

 
%
The Camera House Inc
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
8/31/2025

 
1,250.0

 
1,250.0

 
1,102.1

 
0.63
%
Delray Scrap Recycling LLC
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
8/31/2025

 
22.5

 
22.5

 
17.9

 
0.01
%
P and D Enterprises Ind dba Wallaby's Liquor Warehouse
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
8/28/2040

 
888.9

 
888.9

 
847.4

 
0.48
%
LAN Doctors Inc
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/28/2025

 
81.3

 
81.3

 
70.6

 
0.04
%
Trading Group 3 Inc
 
Nonstore Retailers
 
Term Loan
 
Prime plus 2.75%
 
8/28/2025

 
50.0

 
50.0

 
39.8

 
0.02
%
J and K Fitness L.L.C. dba Physiques Womens Fitness Center
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
2/28/2041

 
93.8

 
34.0

 
34.1

 
0.02
%
Elite Institute LLC dba Huntington Learning Center
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
8/28/2025

 
15.0

 
15.0

 
12.0

 
0.01
%
Zephyr Seven Series LLC dba 18/8 Fine Men's Salon
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
8/28/2025

 
81.3

 
10.0

 
9.9

 
0.01
%
B and J Catering Inc dba Culinary Solutions
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/27/2040

 
472.5

 
255.1

 
256.0

 
0.15
%
3000 CSI Property LLC and Consulting Solutions Inc
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/20/2040

 
137.5

 
137.5

 
135.0

 
0.08
%

10

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
God Be Glorified Inc dba (*)GBG Inc
 
Insurance Carriers and Related Activities
 
Term Loan
 
Prime plus 2.75%
 
8/20/2025

 
53.0

 
53.0

 
42.2

 
0.02
%
GDP Gourmet LLC dba Joe and John's Pizza Restaurant
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/19/2040

 
145.0

 
145.0

 
137.5

 
0.08
%
Gold Jet Corp dba The UPS Store
 
Couriers and Messengers
 
Term Loan
 
Prime plus 2.75%
 
8/14/2025

 
68.3

 
68.3

 
59.6

 
0.03
%
Screenmobile Management Inc
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/14/2025

 
47.0

 
47.0

 
37.9

 
0.02
%
SKJ Inc dba Subway
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/13/2025

 
84.8

 
84.8

 
68.7

 
0.04
%
Dosus Inc dba Perry's Pools
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/7/2025

 
112.5

 
112.5

 
91.9

 
0.05
%
Jennifer T Campbell
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/31/2025

 
9.8

 
9.7

 
7.7

 
%
LP Industries Inc dba Childforms
 
Plastics and Rubber Products Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
7/29/2025

 
125.0

 
123.2

 
111.0

 
0.06
%
Advanced Machine & Technology, Inc.
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
7/29/2025

 
90.3

 
89.7

 
79.4

 
0.05
%
Pauley Tree and Lawn Care Inc
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
7/28/2025

 
65.8

 
65.3

 
55.9

 
0.03
%
C & D Medical of Naples, Inc and Forever & Always of Naples, Inc dba I
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/24/2040

 
135.0

 
134.8

 
119.5

 
0.07
%
Forever & Always of Naples Inc dba Island Animal Hospital
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/24/2025

 
107.5

 
106.8

 
93.2

 
0.05
%
Beale Street Blues Company-West Palm Beach LLC dba Lafayette's-West Pa
 
Performing Arts, Spectator Sports, and Related Industries
 
Term Loan
 
Prime plus 2.75%
 
7/24/2025

 
66.3

 
65.8

 
55.0

 
0.03
%
Pooh's Corner Realty LLC and Pooh's Corner Inc
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
7/23/2040

 
103.8

 
103.6

 
102.5

 
0.06
%
Smart Artists Inc.
 
Performing Arts, Spectator Sports, and Related Industries
 
Term Loan
 
Prime plus 2.75%
 
7/23/2025

 
22.5

 
22.4

 
17.8

 
0.01
%
Aaron Delgado and Associates Inc
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
7/22/2025

 
8.2

 
8.1

 
6.5

 
%
Free Ion Advisors LLC
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
7/21/2025

 
64.3

 
63.9

 
50.9

 
0.03
%
Murrayville Donuts, Inc dba Dunkin' Donuts
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
7/15/2040

 
344.5

 
142.9

 
143.4

 
0.08
%
Union 2 LLC dba The Standard
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
7/10/2025

 
91.5

 
91.5

 
81.1

 
0.05
%

11

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
The Smile Place LLC
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/30/2040

 
283.9

 
283.0

 
271.6

 
0.16
%
Anglin Cultured Stone Products LLC dba Anglin Construction
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/30/2025

 
281.8

 
278.3

 
234.5

 
0.13
%
Thrifty Market, Inc. dba Thrifty Foods
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
6/30/2030

 
262.5

 
260.7

 
221.6

 
0.13
%
All About Smiles P A
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/30/2040

 
237.7

 
237.0

 
227.4

 
0.13
%
BJ's Tavern LLC and BJ's Cabana Bar Inc
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/30/2040

 
212.5

 
211.9

 
202.5

 
0.12
%
Jonathan E Nichols and Nichols Fire and Security LLC
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
6/30/2025

 
75.0

 
74.1

 
68.0

 
0.04
%
Home Again Restaurant LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/30/2040

 
59.0

 
58.8

 
57.1

 
0.03
%
Danny V, LLC dba Hugo's Taproom
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/30/2040

 
54.0

 
53.8

 
47.8

 
0.03
%
Advanced Skincare Medcenter Inc dba Advanced Skincare Surgery
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2025

 
337.5

 
333.3

 
271.6

 
0.16
%
Summit Beverage Group LLC
 
Beverage and Tobacco Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
8/29/2030

 
291.9

 
289.9

 
252.8

 
0.14
%
R2 Tape Inc dba Presto Tape
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
6/29/2025

 
176.3

 
174.1

 
160.2

 
0.09
%
North Atlanta RV Rentals LLC
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2025

 
144.3

 
142.6

 
113.6

 
0.07
%
Myclean Inc.
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
6/29/2025

 
15.9

 
15.7

 
12.5

 
0.01
%
Jihan Inc dba ARCO AM/PM and Diana Inc dba Diana's Recycling
 
Gasoline Stations
 
Term Loan
 
Prime plus 2.75%
 
6/26/2040

 
380.0

 
378.9

 
358.5

 
0.21
%
CEM Autobody LLC dba Dawn's Autobody
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
6/26/2040

 
135.5

 
135.1

 
126.0

 
0.07
%
SofRep, Inc dba Force 12 Media
 
Other Information Services
 
Term Loan
 
Prime plus 2.75%
 
6/26/2025

 
66.3

 
65.4

 
52.1

 
0.03
%
E & G Enterprises LLC dba Comfort Keepers
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/26/2025

 
22.5

 
22.2

 
17.8

 
0.01
%
TJU-DGT Inc dba The Lorenz Cafe
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/26/2029

 
20.6

 
20.5

 
19.9

 
0.01
%
Ohs Auto Body, Inc. dba Ohs Body Shop
 
Repair and Maintenance
 
Term Loan
 
7.62%
 
6/25/2040

 
1,207.5

 
1,207.5

 
1,124.9

 
0.64
%
Wolf Enviro Interests, LLC and Enviromax Services Inc
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
6/25/2040

 
246.5

 
245.8

 
217.3

 
0.12
%
Amboy Group, LLC dba Tommy's Moloney's
 
Food Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/24/2025

 
454.0

 
448.4

 
443.0

 
0.25
%

12

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Evinger PA One, Inc. dba Postal Annex, Falcon
 
Miscellaneous Store Retailers
 
Term Loan
 
Prime plus 2.75%
 
6/24/2025

 
22.5

 
22.2

 
19.1

 
0.01
%
Northeast Arkansas Pizza, Inc. dba Domino’s Pizza
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/23/2025

 
608.0

 
600.5

 
482.5

 
0.28
%
Richards Plumbing and Heating Co., Inc. dba Richards Mechanical
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/23/2040

 
551.8

 
550.1

 
552.0

 
0.32
%
RJI Services, Inc.
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/23/2025

 
22.5

 
22.1

 
17.6

 
0.01
%
Real Help LLC dba Real Help Decorative Concrete
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
6/22/2025

 
53.1

 
52.5

 
49.7

 
0.03
%
Balthazar Management Virgin Islands, LLC dba The Beach Cafe
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/22/2025

 
15.8

 
15.6

 
15.4

 
0.01
%
KRN Logistics, LLC,Newsome Trucking, Inc
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
6/19/2025

 
543.5

 
536.8

 
468.6

 
0.27
%
New Paltz Dental Care, PLLC dba Ariel Dental Care
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/19/2025

 
100.0

 
98.8

 
91.9

 
0.05
%
PM Cassidy Enterprises, Inc. dba Junk King
 
Waste Management and Remediation Services
 
Term Loan
 
Prime plus 2.75%
 
6/19/2025

 
14.9

 
14.7

 
11.7

 
0.01
%
Inverted Healthcare Staffing of Florida LLC dba Interim Healthcare Tra
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
6/18/2025

 
61.3

 
60.5

 
48.2

 
0.03
%
Square Deal Siding Company,LLC dba Square Deal Siding Company
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/18/2025

 
22.5

 
22.2

 
22.0

 
0.01
%
Flooring Liquidators Inc and Flooring Liquidators of Mt Kisco LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/17/2025

 
437.5

 
432.1

 
412.8

 
0.24
%
AM PM Properties, LLC and AM PM Willington, LLC
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/17/2040

 
87.1

 
86.8

 
85.2

 
0.05
%
Nelson Sargsyan dba HDA Trucking
 
Support Activities for Transportation
 
Term Loan
 
Prime plus 2.75%
 
6/16/2025

 
130.5

 
128.9

 
102.7

 
0.06
%
Mirage Plastering Inc and Mpire LLC and Mpire II LLC
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
6/12/2040

 
338.8

 
337.8

 
278.5

 
0.16
%
Anturio Marketing Inc dba Logic Consulting
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
6/12/2040

 
290.3

 
289.4

 
290.4

 
0.17
%
Bizzare Foods Inc dba Trooper Foods
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
6/12/2025

 
125.0

 
123.2

 
98.2

 
0.06
%
Eldredge Tavern LLC dba Gonyea's Tavern
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/8/2040

 
56.3

 
56.1

 
56.3

 
0.03
%
ViAr Visual Communications, Inc. dba Fastsigns 281701
 
Miscellaneous Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
6/5/2025

 
62.0

 
61.2

 
50.3

 
0.03
%

13

Table of Contents

NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2015 (UNAUDITED)
(In Thousands)

Portfolio Company
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets
Chitalian Fratelli LLC dba Francesca Brick Oven Pizza and Pasta
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
6/5/2025

 
16.1

 
15.9

 
12.6

 
0.01
%
Nicor LLC dba Fibrenew Sacramento
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
6/5/2022