Document

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, 2019

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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.02 per share
 
NEWT
 
Nasdaq Global Market LLC
6.25% Notes due 2023
 
NEWTI
 
Nasdaq Global Market LLC
5.75% Notes due 2024
 
NEWTL
 
Nasdaq Global Market LLC
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 every Interactive Data File required to be submitted 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. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” 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 11, 2019, there were 19,815,953 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
2010-1 Trust
Newtek Small Business Loan Trust, Series 2010-1, terminated in March 2019
2013-1 Trust
Newtek Small Business Loan Trust, Series 2013-1, terminated in October 2018
2014-1 Trust
Newtek Small Business Loan Trust, Series 2014-1, terminated in July 2019
2016-1 Trust
Newtek Small Business Loan Trust, Series 2016-1
2017-1 Trust
Newtek Small Business Loan Trust, Series 2017-1
2018-1 Trust
Newtek Small Business Loan Trust, Series 2018-1
2019-1 Trust
Newtek Small Business Loan Trust, Series 2019-1
2021 Notes
7.00% Notes due 2021
2022 Notes
7.50% Notes due 2022
2023 Notes
6.25% Notes due 2023
2024 Notes
5.75% Notes due 2024
ASC
Accounting Standards Codification, as issued by the FASB
ASU
Accounting Standards Updates, as issued by the FASB
2017 ATM Equity Distribution Agreement
Second Amended and Restated Equity Distribution Agreement, dated August 31, 2018 by and among the Company and the Placement Agents
2019 ATM Equity Distribution Agreement
Equity Distribution Agreement, dated July 10, 2019 by and among the Company and the Placement Agents
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
The Company's 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
LIBOR
London Interbank Offered Rate
NAV
Net Asset Value
NBL Facility
Revolving Credit and Security Agreement between NBL SPV1, LLC, a wholly-owned subsidiary of NBL and Capital One
Related Party RLOC
Unsecured revolving line of credit agreement between NMS as lender 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
SBLC
Small Business Lending Company
SEC
Securities and Exchange Commission
SMB
Small-and-medium sized businesses
Sterling
Sterling National Bank



Sterling 504 Facility
Loan and Security Agreement between NBC and Sterling, as lender to originate SBA 504 loans
Sterling Receivable and Inventory Facility
Loan and Security Agreement between NBC 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 or GAAP
Generally accepted accounting principles in the United States
 
 
Portfolio Companies and Subsidiaries
 
NSBF
Newtek Small Business Finance, LLC, a consolidated subsidiary
NBL
Newtek Business Lending, LLC, a wholly-owned controlled portfolio company
NCL
Newtek Conventional Lending, LLC, a 50% owned portfolio company
Exponential
Exponential Business Development Co., Inc., a Taxable Subsidiary
NMS
 Newtek Merchant Solutions, LLC (formerly Universal Processing Services of Wisconsin LLC), a wholly-owned controlled portfolio company
Premier
Premier Payments LLC, a former wholly-owned controlled portfolio company which merged into NMS at December 31, 2018
Mobil Money
Mobil Money, LLC, a wholly-owned controlled portfolio company
NTS
Newtek Technology Solutions, Inc., a wholly-owned controlled portfolio company
IPM
International Professional Marketing, Inc., a wholly-owned controlled portfolio company
SIDCO
SIDCO, LLC dba Cloud Nine Services, a wholly-owned controlled portfolio company
EWS
Excel WebSolutions, LLC, a controlled portfolio company
NBCS
CDS Business Services, Inc. dba Newtek Business Credit Solutions, a wholly-owned controlled portfolio company
SBL
Small Business Lending, LLC, a wholly-owned controlled portfolio company
BSP
ADR Partners, LLC dba banc-serv Partners, LLC, a wholly-owned controlled portfolio company
NPS or PMT
PMTWorks Payroll, LLC dba Newtek Payroll and Benefits Solutions, a wholly-owned controlled portfolio company
NIA
Newtek Insurance Agency, LLC, a wholly-owned controlled portfolio company
TAM
Titanium Asset Management LLC, a wholly-owned controlled portfolio company
EMCAP
EMCAP Loan Holdings, LLC
POS
POS on Cloud, LLC, a controlled portfolio company





NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
 
September 30, 2019
 
December 31, 2018
ASSETS
(Unaudited)
 
(Note 1)
Investments, at fair value
 
 
 
SBA unguaranteed non-affiliate investments (cost of $397,745 and $355,589, respectively; includes $235,551 and $323,388, respectively, related to securitization trusts)
$
389,605

 
$
349,402

SBA guaranteed non-affiliate investments (cost of $20,489 and $17,217, respectively)
21,851

 
19,100

Controlled investments (cost of $97,228 and $74,279, respectively)
198,408

 
171,585

Non-control/affiliate investments (cost of $1,000 and $1,000, respectively)
1,000

 
1,000

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

 
9

Total investments at fair value
610,873

 
541,096

Cash
3,596

 
2,316

Restricted cash
24,151

 
29,034

Broker receivable
34,486

 
42,617

Due from related parties
3,911

 
3,232

Servicing assets, at fair value
23,297

 
21,360

Right of use assets
8,253

 

Other assets
22,192

 
13,686

Total assets
$
730,759

 
$
653,341

 
 
 
 
LIABILITIES AND NET ASSETS
 
 
 
Liabilities:
 
 
 
Bank notes payable
$
84,942

 
$
34,700

Notes due 2022 (par: $0 as of September 30, 2019 and $8,324 as of December 31, 2018, see Note 7)

 
8,019

Notes due 2023 (par: $57,500 as of September 30, 2019 and December 31, 2018, see Note 7)
55,917

 
55,564

Notes due 2024 (par: $63,250 as of September 30, 2019 and $0 as of December 31, 2018, see Note 7)
61,249

 

Notes payable - Securitization trusts (par: $172,231 and $220,137 as of September 30, 2019 and December 31, 2018, see Note 7)
169,526

 
216,507

Notes payable - related parties
20,663

 
16,840

Due to related parties
111

 
4

Lease liabilities
10,194

 

Deferred tax liabilities
10,033

 
9,241

Accounts payable, accrued expenses and other liabilities
18,372

 
25,021

Total liabilities
431,007

 
365,896

 
 
 
 
Commitment 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, 19,447 and 18,919 issued and outstanding, respectively)
389

 
379

Additional paid-in capital
266,076

 
254,498

Accumulated undistributed earnings
33,287

 
32,568

Total net assets
299,752

 
287,445

Total liabilities and net assets
$
730,759

 
$
653,341

Net asset value per common share
$
15.41

 
$
15.19


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,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Investment income
 
 
 
 
 
 
 
From non-affiliate investments:
 
 
 
 
 
 
 
Interest income
$
7,468

 
$
5,925

 
$
21,519

 
$
16,602

Servicing income
2,542

 
2,177

 
7,473

 
6,250

Other income
1,233

 
1,128

 
3,720

 
3,291

Total investment income from non-affiliate investments
11,243

 
9,230

 
32,712

 
26,143

From Non-control/affiliate investments:
 
 
 
 
 
 
 
Dividend income
27

 
26

 
86

 
36

From controlled investments:
 
 
 
 
 
 
 
Interest income
223

 
204

 
658

 
553

Dividend income
4,528

 
2,925

 
10,478

 
8,125

Total investment income from controlled investments
4,751

 
3,129

 
11,136

 
8,678

Total investment income
16,021

 
12,385

 
43,934

 
34,857

Expenses:
 
 
 
 
 
 
 
Salaries and benefits
3,587

 
5,469

 
10,659

 
15,559

Interest
5,476

 
4,110

 
14,923

 
11,414

Depreciation and amortization
125

 
122

 
378

 
358

Professional fees
1,215

 
642

 
2,842

 
2,169

Origination and servicing
2,134

 
1,983

 
5,915

 
5,756

Origination and servicing - related party
2,060

 

 
6,719

 

Change in fair value of contingent consideration liabilities
9

 
6

 
64

 
23

Loss on extinguishment of debt
251

 

 
251

 
1,059

Other general and administrative costs
1,697

 
1,499

 
4,782

 
4,872

Total expenses
16,554

 
13,831

 
46,532

 
41,210

Net investment loss
(533
)
 
(1,446
)
 
(2,598
)
 
(6,353
)
Net realized and unrealized gains (losses):
 
 
 
 
 
 
 
Net realized gain on non-affiliate investments - SBA 7(a) loans
10,865

 
10,554

 
32,260

 
30,754

Net realized gain on non-affiliate investments - conventional loan

 
278

 

 
278

Net realized gain on controlled investments
1,600

 

 
1,600

 
52

Net unrealized depreciation on SBA guaranteed non-affiliate investments
(209
)
 
(1,177
)
 
(521
)
 
(1,352
)
Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments
(14
)
 
4,057

 
(1,957
)
 
6,751

Net unrealized appreciation on controlled investments
957

 
1,659

 
3,874

 
1,579

Change in deferred taxes
(27
)
 
(444
)
 
(792
)
 
(417
)
Net unrealized depreciation on servicing assets
(2,002
)
 
(1,097
)
 
(3,469
)
 
(3,175
)
Net realized and unrealized gains
$
11,170

 
$
13,830

 
$
30,996

 
$
34,470

Net increase in net assets resulting from operations
$
10,637

 
$
12,384

 
$
28,398

 
$
28,117

Net increase in net assets resulting from operations per share
$
0.55

 
$
0.66

 
$
1.49

 
$
1.51

Net investment loss per share
$
(0.03
)
 
$
(0.08
)
 
$
(0.14
)
 
$
(0.34
)
Dividends and distributions declared per common share
$
0.58

 
$
0.48

 
$
1.44

 
$
1.30

Weighted average number of shares outstanding
19,228

 
18,791

 
19,115

 
18,656


2
See accompanying notes to unaudited condensed consolidated financial statements.




NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
(In Thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Increase in net assets:
 
 
 
 
 
 
 
Net investment loss
$
(533
)
 
$
(1,446
)
 
$
(2,598
)
 
$
(6,353
)
Net realized gains on investments
12,465

 
10,832

 
33,860

 
31,084

Net unrealized (depreciation) appreciation on investments
(1,295
)
 
2,998

 
(2,864
)
 
3,386

Net increase in net assets resulting from operations
10,637

 
12,384

 
28,398

 
28,117

Distributions to common stockholders
(11,199
)
 
(8,958
)
 
(27,514
)
 
(24,143
)
Capital share transactions:
 
 
 
 
 
 
 
Issuance of common stock under dividend reinvestment plan
300

 
413

 
779

 
759

Stock-based compensation expense
184

 
176

 
462

 
418

Issuance of common stock in connection with investment in Mobil Money, LLC

 

 

 
200

Purchase of vested stock for employee payroll tax withholding

 

 
(76
)
 
(32
)
Issuance of common stock, net of offering costs
6,478

 
1,641

 
10,128

 
4,288

Net increase in net assets from capital share transactions
6,962

 
2,230

 
11,293

 
5,633

Impact of ASC 842 adoption

 

 
130

 

Total increase in net assets
6,400

 
5,656

 
12,307

 
9,607

Net assets at beginning of period
293,352

 
282,280

 
287,445

 
278,329

Net assets at end of period
$
299,752

 
$
287,936

 
$
299,752

 
$
287,936

Common shares outstanding at end of period
19,447

 
18,849

 
19,447

 
18,849

Capital share activity:
 
 
 
 
 
 
 
Shares issued under dividend reinvestment plan
14

 
21

 
38

 
40

Shares issued in connection with sales of common stock under ATM
292

 
80

 
480

 
241

Shares issued in connection with investment in Mobil Money, LLC

 

 

 
11

Purchase of vested stock for employee payroll tax withholding

 

 
(4
)
 
(2
)
Restricted shares issued under Equity Incentive Plan, net of forfeitures
4

 
3

 
14

 
102

Net increase in capital activity
310

 
104

 
528

 
392


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,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net increase in net assets resulting from operations
$
28,398

 
$
28,117

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
 
 
 
Net unrealized depreciation (appreciation) on controlled investments
(3,874
)
 
(1,579
)
Net unrealized depreciation (appreciation) on non-affiliate investments
2,477

 
(5,399
)
Net unrealized depreciation on servicing assets
3,469

 
3,175

Net realized gains on controlled investments
(1,600
)
 
(52
)
Net realized gains on non-affiliate investments
(32,260
)
 
(31,032
)
Allowance for doubtful accounts
(60
)
 
24

Change in fair value of contingent consideration liabilities
64

 
23

Loss on extinguishment of debt
251

 
1,059

Amortization of deferred financing costs
1,486

 
1,239

Deferred income taxes
792

 
417

Depreciation and amortization
378

 
358

Purchase of loans
(10,121
)
 

Funding of guaranteed non-affiliate SBA loans
(249,980
)
 
(243,317
)
Funding of unguaranteed non-affiliate SBA loans
(84,741
)
 
(76,860
)
Funding of controlled investments
(27,534
)
 
(27,762
)
Funding of non-control/affiliate investment

 
(1,000
)
Funding of non-control/non-affiliate investment

 
(5,700
)
Proceeds from sale of non-affiliate SBA loans
293,594

 
284,470

Proceeds from sale of controlled investment

 
2,502

Proceeds from sale of non-control/non-affiliate investment

 
5,978

Principal received on SBA non-affiliate investments
36,183

 
29,517

Principal received from controlled investments
1,885

 
13,836

Distributions received from investments in excess of basis
1,600

 

Return of investment from controlled investments
2,700

 
300

Other, net
(47
)
 
795

Changes in operating assets and liabilities:
 
 
 
Broker receivable
8,131

 
(30,720
)
Due to/from related parties
(511
)
 
(2,597
)
Other assets
(6,529
)
 
(312
)
Accounts payable, accrued expenses and other liabilities
(4,539
)
 
10,445

Capitalized servicing asset
(5,407
)
 
(5,459
)
Other, net
122

 
(10
)
Net cash used in operating activities
(45,673
)
 
(49,544
)
Cash flows from investing activities:
 
 
 
Purchase of fixed assets
(127
)
 
(454
)
Cash flows from financing activities:
 
 
 
Net borrowings on bank notes payable
50,242

 
79,558


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,
Proceeds from common shares sold, net of offering costs
10,128

 
4,289

Net proceeds under related party line of credit
3,823

 
16,974

Proceeds from Notes due 2023

 
57,500

Proceeds from Notes due 2024
63,250

 

Redemption of Notes due 2021

 
(40,250
)
Redemption of Notes due 2022
(8,324
)
 

Payments on Notes Payable - Securitization Trusts
(47,993
)
 
(32,694
)
Dividends paid
(26,735
)
 
(23,383
)
Additions to deferred financing costs
(2,117
)
 
(2,336
)
Purchase of vested stock for employee payroll tax withholding
(77
)
 
(34
)
Net cash provided by financing activities
42,197

 
59,624

Net (decrease) increase in cash and restricted cash
(3,603
)
 
9,626

Cash and restricted cash—beginning of period (Note 2)
31,350

 
20,538

Cash and restricted cash—end of period (Note 2)
$
27,747

 
$
30,164

 
 
 
 
Non-cash operating, investing and financing activities:
 
 
 
Foreclosed real estate acquired
$
1,892

 
$
826

Issuance of common shares in connection with investment in Mobil Money, LLC
$

 
$
200

Issuance of common shares under dividend reinvestment plan
$
779

 
$
760

            



5
See accompanying notes to unaudited condensed consolidated financial statements.



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019 (UNAUDITED)
(In Thousands)

Portfolio Company
Tickmarks
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets

Performing SBA Unguaranteed Investments (1) (1a) (22)
 
 
 
 
 
 
 
 
 
 
 
 
 
299,752
Joseph P Fusco DDS PC
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
$
66.3

 
$
66.3

 
$
59.3

 
0.02
%
Atlantic Pacific Hospitality Solutions Inc dba North Beach Bistro
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
9.5

 
9.5

 
8.4

 
%
MVE, Inc dba Mid-Valley Engineering
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
1,240.0

 
1,240.0

 
1,137.9

 
0.38
%
A Child's Dream Educational Center LLC
(#)
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/30/2044
 
180.0

 
180.0

 
193.7

 
0.06
%
In Power Motors, LLC, In-Power Motors II LLC, In-Power Motors III LLC
(#)
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
9/30/2044
 
625.0

 
625.0

 
655.3

 
0.22
%
Meldi Maa, Inc dba The River Complex
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/30/2044
 
423.3

 
423.3

 
460.2

 
0.15
%
SPIRE Manufacturing Solutions LLC
(#)
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/30/2044
 
1,016.5

 
1,016.5

 
1,131.8

 
0.38
%
International Protection Group, LLC
(#)
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
82.5

 
82.5

 
81.5

 
0.03
%
General Holding Group, LLC
(#)
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
15.0

 
15.0

 
14.3

 
%
AV Strategy, Inc
(#)
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
260.0

 
260.0

 
246.0

 
0.08
%
Bev's Sweets LLC
(#)
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2044
 
213.8

 
213.8

 
231.6

 
0.08
%
DG Business Solutions, Inc
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
225.0

 
225.0

 
202.3

 
0.07
%
Heart and Vascular Associates of Tampa, LLC
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2044
 
775.0

 
775.0

 
800.7

 
0.27
%
50 Taps, LLC dba Colorado Taproom & Grill
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
77.5

 
77.5

 
70.0

 
0.02
%
Crown Waste Corp
(#)
 
Waste Management and Remediation Services
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
50.0

 
50.0

 
47.0

 
0.02
%
A Child's Dream Educational Center LLC
(#)
 
Social Assistance
 
Term Loan
 
Prime plus 2.75%
 
9/30/2029
 
188.5

 
188.5

 
168.9

 
0.06
%
Universe Appliance Repairs Inc.
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
9/27/2044
 
587.5

 
587.5

 
603.8

 
0.20
%
Aztec Machine & Repair Inc, Cranrd & Material
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
9/27/2044
 
712.5

 
712.5

 
743.1

 
0.25
%
Zima Diamond Inc. dba Country Kitchen
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
63.0

 
63.0

 
66.0

 
0.02
%
Cherry and Candlewood Inc dba Aamco
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
9/27/2044
 
433.3

 
433.3

 
482.4

 
0.16
%
Hoagie Barmichaels Inc
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/27/2044
 
113.0

 
113.0

 
115.7

 
0.04
%
Double H Services, LLC, C&T Oil Field Services, LLC and Brian S. Holma
(#)
 
Support Activities for Mining
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
1,025.0

 
1,025.0

 
970.9

 
0.32
%
Wagner & Sons Inc
(#)
 
Nonstore Retailers
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
18.8

 
18.8

 
16.8

 
0.01
%
Titan Laser Screed Concrete Services, LLC
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
50.0

 
50.0

 
45.8

 
0.02
%
Universe Appliance Repairs Inc.
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
662.5

 
662.5

 
619.3

 
0.21
%
Total Pallet Consolidation LLC
(#)
 
Merchant Wholesalers, Durable Goods
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
18.8

 
18.8

 
16.9

 
0.01
%
Zmetra Clearspan Structures LLC
(#)
 
Miscellaneous Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/27/2044
 
437.5

 
437.5

 
487.1

 
0.16
%

6
See accompanying notes to unaudited condensed consolidated financial statements.



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019 (UNAUDITED)
(In Thousands)

Portfolio Company
Tickmarks
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets

Performing SBA Unguaranteed Investments (1) (1a) (22)
 
 
 
 
 
 
 
 
 
 
 
 
 
299,752
Stiegelbauer Associates Inc.
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/27/2029
 
200.0

 
200.0

 
179.1

 
0.06
%
Santa Fe Flooring LLC
(#)
 
Furniture and Related Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/26/2029
 
498.8

 
498.8

 
460.0

 
0.15
%
MeShare Inc.
(#)
 
Data Processing, Hosting, and Related Services
 
Term Loan
 
Prime plus 2.75%
 
9/26/2029
 
1,250.0

 
1,250.0

 
1,179.8

 
0.39
%
Adam's Construction & General Contracting LLC
(#)
 
Construction of Buildings
 
Term Loan
 
Prime plus 2.75%
 
9/26/2029
 
69.0

 
69.0

 
63.8

 
0.02
%
Anderson's Outdoor Adventures, LLC
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/25/2029
 
22.5

 
22.5

 
22.8

 
0.01
%
Byler, Wolfe, Lutsch and Kampfer CPAs, Inc
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/25/2044
 
53.5

 
53.5

 
54.2

 
0.02
%
luv2Play Nor Cal LLC
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/25/2029
 
112.5

 
112.5

 
102.3

 
0.03
%
Quality Machine of Iowa, Inc
(#)
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
9/25/2029
 
67.5

 
67.5

 
70.7

 
0.02
%
Flamingo Bowl, Inc
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/24/2029
 
203.8

 
203.8

 
194.0

 
0.06
%
Unified Utility Services LLC
(#)
 
Heavy and Civil Engineering Construction
 
Term Loan
 
Prime plus 2.75%
 
9/20/2044
 
158.0

 
158.0

 
175.9

 
0.06
%
Standard Real Estate Services LLC
(#)
 
Real Estate
 
Term Loan
 
Prime plus 6.5%
 
9/19/2029
 
12.5

 
12.5

 
12.9

 
%
Payne's Enviromental Service, LLC dba Bamaco
(#)
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
9/18/2044
 
521.3

 
521.3

 
543.9

 
0.18
%
Host Marketing, LLC
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 6.5%
 
9/18/2029
 
12.5

 
12.5

 
12.9

 
%
Vancole Investments, Inc. dba Smoothie King #913
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/17/2029
 
12.0

 
12.0

 
10.7

 
%
Natalie Hart LLC dba Lady of Luxury &dba Country Sugar Events
(#)
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
12/18/2029
 
33.4

 
33.4

 
33.7

 
0.01
%
Win Health Institute
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/17/2029
 
7.5

 
7.5

 
6.9

 
%
Game Station, Inc.
(#)
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
9/16/2029
 
20.3

 
20.3

 
19.2

 
0.01
%
Bay Bowl Inc dba Shasta Lanes
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/13/2044
 
537.5

 
537.5

 
598.5

 
0.20
%
Oak Park Social LLC
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
2/12/2045
 
79.5

 
79.5

 
87.9

 
0.03
%
The Steel Method LLC dba Sneeze It
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/12/2029
 
168.8

 
168.8

 
151.2

 
0.05
%
New Flow Plumbing and Rooter Inc.
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/12/2029
 
50.0

 
50.0

 
45.0

 
0.02
%
ACSS CPA, LLC
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
9/12/2044
 
40.0

 
40.0

 
42.5

 
0.01
%
Bent Frenchman Selections, LLC
(#)
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 6.5%
 
9/11/2029
 
12.5

 
12.5

 
12.9

 
%
Covert Recordings LLC
(#)
 
Rental and Leasing Services
 
Term Loan
 
Prime plus 2.75%
 
9/11/2029
 
12.0

 
12.0

 
12.2

 
%
Miami Squeeze Inc dba Miami Squeeze, LLC
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/11/2029
 
115.5

 
115.5

 
108.3

 
0.04
%
Family Insight, P.C.
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
9/11/2029
 
250.0

 
250.0

 
252.1

 
0.08
%
Prime Precision Machining, LLC
(#)
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
9/11/2029
 
207.5

 
207.5

 
192.9

 
0.06
%
Prime Precision Machining, LLC
(#)
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
9/11/2044
 
268.0

 
268.0

 
283.8

 
0.09
%

7
See accompanying notes to unaudited condensed consolidated financial statements.



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019 (UNAUDITED)
(In Thousands)

Portfolio Company
Tickmarks
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets

Performing SBA Unguaranteed Investments (1) (1a) (22)
 
 
 
 
 
 
 
 
 
 
 
 
 
299,752
Softcare247, LLC
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 6.5%
 
9/11/2029
 
12.5

 
12.5

 
12.9

 
%
Body on Cue Health and Fitness LLC
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
9/6/2029
 
45.0

 
45.0

 
40.8

 
0.01
%
Eco Electric LLC
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/5/2029
 
66.5

 
66.5

 
59.4

 
0.02
%
Smokin AZ, LLC dba Dickey's Barbecue Pit AZ
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/5/2029
 
66.3

 
66.3

 
60.0

 
0.02
%
Philly Games Inc.dba Queen & Rock Game Cafe
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
9/5/2029
 
62.5

 
62.5

 
56.1

 
0.02
%
SVT Masonry Limited Liability Company
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
9/5/2029
 
76.3

 
76.3

 
75.5

 
0.03
%
Thawk LLC
(#)
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
8/30/2029
 
8.3

 
8.3

 
7.4

 
%
No Push Backs, LLC
(#)
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 6.5%
 
8/30/2029
 
12.5

 
12.5

 
12.9

 
%
Dog House Sportfishing Charters Inc
(#)
 
Scenic and Sightseeing Transportation
 
Term Loan
 
Prime plus 6.5%
 
8/30/2029
 
12.5

 
12.5

 
12.9

 
%
3C Consumer Network & Designs LLC
(#)
 
Real Estate
 
Term Loan
 
Prime plus 2.75%
 
8/29/2029
 
15.0

 
15.0

 
13.9

 
%
Double Scoop Ice Cream, LLC
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/29/2044
 
96.8

 
96.8

 
102.5

 
0.03
%
Camror LTD dba Jersey Mike's
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
1/29/2030
 
28.0

 
28.0

 
29.4

 
0.01
%
Esquire Mini Mart LLC & Morgan Store Building LLC
(#)
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
8/29/2029
 
51.3

 
51.3

 
50.0

 
0.02
%
Crown Heights Bunch O Bagels & More Inc & 361 Bagel Holding LLC
(#)
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
8/29/2029
 
40.0

 
40.0

 
41.9

 
0.01
%
Groton Bowling Center and Entertainment Inc
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
8/29/2044
 
945.6

 
945.6

 
1,008.3

 
0.34
%
The BMF Media Group LLC
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/29/2029
 
375.0

 
375.0

 
334.9

 
0.11
%
HRS2, LLC
(#)
 
Nonstore Retailers
 
Term Loan
 
Prime plus 2.75%
 
8/28/2029
 
231.5

 
231.5

 
228.8

 
0.08
%
Khari E. J. Myers dba Khari Imagery & 190 Minerva LLC
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/28/2044
 
60.0

 
60.0

 
66.8

 
0.02
%
DB Talak LLC
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/28/2029
 
87.5

 
87.5

 
91.6

 
0.03
%
Blue Eagle Transport Inc.,Golden Eagle Tran and Green Eagle Transport
(#)
 
Couriers and Messengers
 
Term Loan
 
Prime plus 2.75%
 
8/28/2029
 
450.0

 
450.0

 
416.9

 
0.14
%
Linsey Schwertdfeger,, Inc.
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
8/28/2029
 
70.9

 
70.9

 
64.2

 
0.02
%
The Hometown Welcome Program, Inc & Fredric Anthony Gushwa
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/27/2029
 
97.5

 
97.5

 
92.3

 
0.03
%
Maryland Urgent Care, Inc.
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
8/27/2044
 
46.1

 
46.1

 
49.7

 
0.02
%
ADA Internacional Inc
(#)
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
8/26/2029
 
22.5

 
22.5

 
20.1

 
0.01
%
Crystal S. Prado dba Crystal Clear Accounting
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 6.5%
 
8/26/2029
 
3.2

 
3.2

 
3.3

 
%
JLT Foods, LLC
(#)
 
Food Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
8/23/2029
 
21.0

 
21.0

 
18.8

 
0.01
%
PJT Logistics, Inc.
(#)
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
8/23/2029
 
50.0

 
50.0

 
52.4

 
0.02
%
The Pet Stop, LLC
(#)
 
Personal and Laundry Services
 
Term Loan
 
Prime plus 2.75%
 
8/23/2029
 
7.5

 
7.5

 
6.9

 
%

8
See accompanying notes to unaudited condensed consolidated financial statements.



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019 (UNAUDITED)
(In Thousands)

Portfolio Company
Tickmarks
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets

Performing SBA Unguaranteed Investments (1) (1a) (22)
 
 
 
 
 
 
 
 
 
 
 
 
 
299,752
Elite Motors LLC
(#)
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
8/23/2029
 
87.5

 
87.5

 
91.6

 
0.03
%
SRJ construction Corp
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/23/2029
 
11.3

 
11.3

 
10.2

 
%
MS Integrated Psychotherapy & Counseling, LLC
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
8/22/2029
 
74.3

 
74.3

 
70.4

 
0.02
%
The Roux Southern Kitchen, LLC
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
8/22/2029
 
18.2

 
18.2

 
18.7

 
0.01
%
MB Nursery LLC dba The Garden Center
(#)
 
Administrative and Support Services
 
Term Loan
 
Prime plus 2.75%
 
8/21/2029
 
92.5

 
92.5

 
95.6

 
0.03
%
Metro R Services Inc. and Metal & Roof Supplies, Inc.
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
8/21/2029
 
193.8

 
193.8

 
188.9

 
0.06
%
Auto Unique LLC
(#)
 
Motor Vehicle and Parts Dealers
 
Term Loan
 
Prime plus 2.75%
 
8/20/2044
 
12.3

 
12.3

 
13.7

 
%
William Martinez dba Bad Ass Coffee of Hawaii
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
12/20/2029
 
18.7

 
18.7

 
17.1

 
0.01
%
Signature Rooms, Inc.
(#)
 
Furniture and Home Furnishings Stores
 
Term Loan
 
Prime plus 2.75%
 
8/19/2029
 
168.8

 
168.8

 
176.7

 
0.06
%
AJN Innovations LLC dba Burgerim
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 2.75%
 
2/15/2030
 
24.6

 
24.6

 
22.9

 
0.01
%
Accent Home Services LLC dba Benjamin Franklin Plumbing
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/15/2029
 
112.5

 
112.5

 
108.3

 
0.04
%
American Healthy Vending, Inc
(#)
 
Nonstore Retailers
 
Term Loan
 
Prime plus 2.75%
 
8/15/2029
 
106.3

 
106.3

 
99.1

 
0.03
%
Accelerate Educational Solutions, LLC dba Tutor My Success
(#)
 
Educational Services
 
Term Loan
 
Prime plus 2.75%
 
8/14/2029
 
17.3

 
17.3

 
15.5

 
0.01
%
Ranson Excavating, Inc
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/13/2029
 
15.0

 
15.0

 
13.4

 
%
KM Electrical Services, Inc
(#)
 
Specialty Trade Contractors
 
Term Loan
 
Prime plus 2.75%
 
8/12/2029
 
77.5

 
77.5

 
69.4

 
0.02
%
Love Playing LLC
(#)
 
Amusement, Gambling, and Recreation Industries
 
Term Loan
 
Prime plus 2.75%
 
3/9/2030
 
48.0

 
48.0

 
49.1

 
0.02
%
Elixir Enterprises, LLC dba Guilford Renee's
(#)
 
Food and Beverage Stores
 
Term Loan
 
Prime plus 2.75%
 
8/8/2029
 
19.5

 
19.5

 
17.5

 
0.01
%
A & S Services LLC dba Kona Ice of Troy
(#)
 
Food Services and Drinking Places
 
Term Loan
 
Prime plus 6.5%
 
8/7/2029
 
12.5

 
12.5

 
12.9

 
%
Suite Luxury, Inc
(#)
 
Furniture and Home Furnishings Stores
 
Term Loan
 
Prime plus 2.75%
 
8/7/2029
 
18.8

 
18.8

 
16.8

 
0.01
%
Accord Law, APC
(#)
 
Professional, Scientific, and Technical Services
 
Term Loan
 
Prime plus 2.75%
 
8/2/2029
 
7.5

 
7.5

 
6.7

 
%
Leader Engineering-Fabrication, Inc.
(#)
 
Fabricated Metal Product Manufacturing
 
Term Loan
 
Prime plus 2.75%
 
8/2/2029
 
125.0

 
125.0

 
130.9

 
0.04
%
Randall Miller Company, Inc and Boyz Transportation Services, LLC
(#)
 
Truck Transportation
 
Term Loan
 
Prime plus 2.75%
 
7/31/2029
 
921.9

 
921.9

 
870.5

 
0.29
%
Billy Auto Inc
(#)
 
Repair and Maintenance
 
Term Loan
 
Prime plus 2.75%
 
7/31/2044
 
324.7

 
324.7

 
335.3

 
0.11
%
East Coast Flight Services, Inc and Aviation Consulting Enterprise, LLC
(#)
 
Air Transportation
 
Term Loan
 
Prime plus 2.75%
 
7/31/2029
 
571.9

 
571.9

 
530.1

 
0.18
%
Healthcare Holdings of America, LLC, Senior Market Advisors, Inc
(#)
 
Insurance Carriers and Related Activities
 
Term Loan
 
Prime plus 2.75%
 
7/31/2029
 
441.4

 
441.4

 
434.6

 
0.14
%
Living Spring Home Health Inc.
(#)
 
Ambulatory Health Care Services
 
Term Loan
 
Prime plus 2.75%
 
7/31/2029
 
134.6

 
134.6

 
127.4

 
0.04
%
Joseph Centonze dba Off Kilter Kilts
(#)
 
Clothing and Clothing Accessories Stores
 
Term Loan
 
Prime plus 2.75%
 
7/31/2029
 
8.2

 
8.2

 
7.4

 
%

9
See accompanying notes to unaudited condensed consolidated financial statements.



NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019 (UNAUDITED)
(In Thousands)

Portfolio Company
Tickmarks
 
Industry
 
Type of Investment
 
Interest Rate (2)
 
Maturity
 
Principal
 
Cost
 
Fair Value
 
% of Net Assets

Performing SBA Unguaranteed Investments (1) (1a) (22)
 
 
 
 
 
 
 
 
 
 
 
 
 
299,752
Genecco Produce, Inc. & Leo Genecco & Sons, Inc.
(#)
 
Merchant Wholesalers, Nondurable Goods
 
Term Loan
 
Prime plus 2.75%
 
7/31/2029
 
770.1

 
770.1

 
748.3

 
0.25
%
Canyon Lake Kids Academy, LLC
(#)
 
Social Assistance
 
Term Loan