SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 001-16123
-----------------
NEWTEK CAPITAL, INC.
--------------------
(Exact name of registrant as specified in its charter)
NEW YORK 11-3504638
----------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Quentin Roosevelt Boulevard, Garden City, NY 11530
--------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 390-2260
-
Check whether the registrant has (1) filed all documents and reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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
ninety days.
Yes No
[X] [ ]
As of August 13, 2002, 24,698,542 shares of Common Stock were issued and
outstanding.
CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2002
and December 31, 2001 2
Condensed Consolidated Statements of Operations (Unaudited) for the Three and
Six Month Periods Ended June 30, 2002 and 2001 3
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Month
Periods Ended June 30, 2002 and 2001 4
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 16
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 20
Exhibits 21
1
ITEM 1. FINANCIAL STATEMENTS
NEWTEK CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
2002 2001
--------------- ---------------
ASSETS
Cash and cash equivalents $ 43,402,592 $ 31,171,966
Credits in lieu of cash 26,411,972 21,810,776
Investments in qualified businesses 5,857,705 14,450,228
Structured insurance product 2,812,597 2,731,894
Prepaid insurance 13,128,123 10,820,841
Prepaid expenses and other assets 1,192,055 953,142
Furniture, fixtures and equipment, net 355,504 128,290
Goodwill 2,656,517 963,736
Asset held for sale - 331,929
--------------- ---------------
Total assets $ 95,817,065 $ 83,362,802
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 2,356,618 $ 1,541,359
Notes payable - certified investors 3,851,285 3,858,389
Notes payable - insurance 9,970,699 9,404,032
Note payable - bank - 575,000
Mortgage payable - 306,929
Interest payable 59,071,128 49,640,846
Deferred tax liability 1,293,673 1,563,018
--------------- ---------------
Total liabilities 76,543,403 66,889,573
--------------- ---------------
Minority interest 2,265,285 5,081,692
--------------- ---------------
Stockholders' equity:
Common Stock (par value $0.02 per share:
authorized 39,000,000 shares, issued and
outstanding 24,559,681 and 22,212,517 491,193 444,250
Additional paid-in Capital 19,452,253 13,442,899
Accumulated deficit (2,935,069) (2,495,612)
--------------- ---------------
Total stockholders' equity 17,008,377 11,391,537
--------------- ---------------
Total liabilities and stockholders' equity $ 95,817,065 $ 83,362,802
=============== ===============
See accompanying notes to these unaudited condensed consolidated
financial statements.
2
NEWTEK CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002, AND 2001
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
2002 2001 2002 2001
------------- ------------- ------------- -------------
Revenue:
Income from tax credits $ 4,871,278 $ 8,621,115 $ 10,258,105 $ 14,651,218
Consulting fee income 52,617 - 99,317 8,000
Interest and dividend income 219,739 574,875 460,449 1,213,085
Other income 207,223 80,603 604,687 125,841
------------- ------------- ------------- -------------
Total revenue 5,350,857 9,276,593 11,422,558 15,998,144
------------- ------------- ------------- -------------
Expenses:
Interest 2,914,776 2,849,622 5,568,363 6,185,154
Payroll and consulting fees 789,320 564,685 2,545,732 1,380,319
Professional fees 434,470 702,768 1,174,438 1,173,582
Insurance 307,877 367,432 864,755 765,539
Other 1,185,939 284,096 1,811,432 450,243
------------- ------------- ------------- -------------
Total expenses 5,632,382 4,768,603 11,964,720 9,954,837
------------- ------------- ------------- -------------
(Loss) income before other than temporary
decline in value of investments, gain on sale
of property, equity in net losses of
affiliates, minority interest, extraordinary
gain and provision for income taxes (281,525) 4,507,990 (542,162) 6,043,307
Other than temporary decline in value of
investments (net of $28,705 recovery in 2002) (369,692) (225,000) (987,605) (225,000)
Gain on sale of property - - 16,841 -
Equity in net losses of affiliates (71,631) (661,938) (672,875) (960,736)
------------- ------------- ------------- -------------
(Loss) income before provision for income taxes,
extraordinary gain and minority interest (722,848) 3,621,052 (2,185,801) 4,857,571
Minority interest in (income)loss (156,888) (948,207) 1,048,638 (929,647)
------------- ------------- ------------- -------------
(Loss) income before provision for income
taxes and extraordinary gain (879,736) 2,672,845 (1,137,163) 3,927,924
Benefit from (provision for) income taxes 334,300 (1,448,421) 432,122 (1,943,029)
------------- ------------- ------------- -------------
(Loss) income before extraordinary gain on
conversion of minority interest into
Newtek stock (545,436) 1,224,424 (705,041) 1,984,895
Extraordinary gain on acquisition of minority
interest, net of taxes of $162,778 for 2002 - - 265,584 -
------------- ------------- ------------- -------------
Net (loss) income $ (545,436) $ 1,224,424 $ (439,457) $ 1,984,895
============= ============= ============= =============
Weighted average common shares outstanding:
Basic 24,428,414 21,731,384 23,634,712 21,558,438
Diluted 24,428,414 21,731,384 23,634,712 21,558,438
Income per share:
Basic $ (.02) $ .06 $ (.02) $ .09
Diluted $ (.02) $ .06 $ (.02) $ .09
(Loss) income per share before extraordinary items:
Basic $ (.02) $ .06 $ (.03) $ .09
Diluted $ (.02) $ .06 $ (.03) $ .09
See accompanying notes to these unaudited condensed consolidated
financial statements.
3
NEWTEK CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
June 30, June 30,
2002 2001
--------------- ---------------
Cash flows from operating activities:
Net (loss) income $ (439,457) $ 1,984,895
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Other than temporary decline in value of investments 987,605 225,000
Gain on sale of property (16,841) -
Equity in net losses of affiliates 672,875 960,736
Extraordinary gain (265,584) -
Income from tax credits (10,258,105) (14,651,218)
Deferred Income Taxes (432,122) 1,787,307
Depreciation and other amortization 57,669 4,026
Accretion of interest income (87,807) (70,221)
Accretion of interest expense 5,179,474 5,671,484
Non-cash compensation - options vested 380,000 23,576
Issuance of stock options to non-employees - 58,800
Issuance of stock for services performed 80,789 -
Minority interest included in loss (1,048,638) 929,647
Changes in assets and liabilities:
Prepaid insurance (307,282) 670,252
Prepaid expenses and other assets (135,647) (25,723)
Accounts payable and accrued expenses 562,405 (1,097,191)
--------------- ---------------
Net cash used in operating activities (5,070,666) (3,528,630)
--------------- ---------------
Cash flows from investing activities:
Proceeds from sale of asset held for sale 348,770 -
Investments in qualified businesses (7,912,762) (14,721,833)
Return of principal - qualified investments 10,869,121 6,899,963
Consolidation of majority owned investments 3,984,764 5,703,333
Other investments - (42,000)
Purchase of furniture, fixtures and equipment (150,627) -
--------------- ---------------
Net cash provided by (used in) investing activities 7,139,266 (2,160,537)
--------------- ---------------
See accompanying notes to these unaudited condensed consolidated
financial statements.
4
NEWTEK CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
June 30, June 30,
2002 2001
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of note payable insurance - 5,200,000
Proceeds from issuance of long-term debt 22,719,496 -
Payments for defeasance of long-term debt (11,640,982) -
Payments of line-of-credit (575,000) -
Payments of note payable insurance (1,433,333) (1,333,334)
Payments on mortgage payable (306,929) (25,046)
Net proceeds from issuance of common stock 1,299,999 726,391
Distributions to CAPCO members (7,867) (402,060)
Cash received from Exponential acquisition 106,642 -
--------------- ---------------
Net cash provided by financing activities 10,162,026 4,165,951
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 12,230,626 (1,523,216)
Cash and cash equivalents - beginning of period 31,171,966 34,697,081
--------------- ---------------
Cash and cash equivalents - end of period $ 43,402,592 $ 33,173,865
=============== ===============
Supplemental disclosure of non-cash financing activities:
Reduction of credits in lieu of cash and interest payable
balances due to delivery of tax credits to certified investors: $ 5,656,909 $ 3,908,599
=============== ===============
Consolidation of investments previously accounted
for under the equity method $ 537,083 $ -
=============== ===============
Acquisition of Exponential (net liabilities assumed) $ 10,978 $ -
=============== ===============
Issuance of common stock in connection with
acquisition of Exponential $ 920,000 $ -
=============== ===============
Issuance of warrants in partial payment for insurance $ 572,298 $ -
=============== ===============
Issuance of common stock in connection with
acquisition of minority interest in Wilshire Investors $ - $ 978,303
=============== ===============
Acquisition of five Capcos minority interests
Newtek Capital common stock issued $ 1,325,385 $ -
Less, minority interests acquired 452,212 -
--------------- ---------------
Goodwill recognized $ 873,173 -
=============== ===============
Acquisition of three Capcos minority interests
Minority interests acquired $ 1,369,156 $ -
Less, Newtek Capital common stock issued 940,794 -
--------------- ---------------
Extraordinary gain recognized $ 428,362 $ -
=============== ===============
See accompanying notes to these unaudited condensed consolidated
financial statements.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of presentation and description of business
The unaudited condensed consolidated financial statements of Newtek
Capital, Inc. and Subsidiaries (the "Company") included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to SEC
rules and regulations. The unaudited condensed consolidated financial statements
of the Company reflect, in the opinion of management, all adjustments necessary
to present fairly the financial position of the Company at June 30, 2002, the
results of its operations for the three month periods ended June 30, 2002 and
2001, and the results of its operations and cash flows for the six month periods
ended June 30, 2002 and June 30, 2001. All adjustments are of a normal recurring
nature. These financial statements should be read in conjunction with the annual
financial statements and notes thereto for the year ended December 31, 2001. The
results of operations for the three months ended June 30, 2002 and the six
months ended June 30, 2002 are not necessarily indicative of the results of
operations to be expected for the year ending December 31, 2002.
The following is a summary of each of the Company's certified capital
companies ("Capco"), state of certification and date of certification:
Capco State of Certification Date of Certification
----------------------------------- ---------------------- ---------------------
Wilshire Advisers, LLC New York May 1998
Wilshire Partners, LLC Florida December 1998
Wilshire Investors, LLC Wisconsin October 1999
Wilshire Louisiana Advisers, LLC Louisiana October 1999
Wilshire New York Advisers II, LLC New York April 2000
Wilshire New York Partners III, LLC New York December 2000
Wilshire Colorado Partners, LLC Colorado October 2001
Exponential of New York, LLC New York April 1998
In general, the capcos issue debt and equity instruments, generally
warrants ("Certified Capital"), to insurance company investors ("Certified
Investors"). The capcos then make targeted investments ("Investments in
Qualified Businesses", as defined under the respective state statutes, or,
"Qualified Businesses"), with the Certified Capital raised. Such investments may
be accounted for as either consolidated subsidiaries, under the equity method or
cost method of accounting, or as notes receivable, depending upon the nature of
the investment and the Company's and/or the capco's ability to control or
otherwise exercise significant influence over the investee. Each capco has a
contractual arrangement with the particular state that legally entitles the
capco to receive (or earn) tax credits from the state upon satisfying
quantified, defined investment percentage thresholds and time requirements. In
order for the capcos to maintain their state-issued certifications, the capcos
must make Investments in Qualified Businesses in accordance with these
requirements. Each capco also has separate, legal contractual arrangements with
the Certified Investors obligating the capco to pay interest on the
aforementioned debt instruments whether or not it meets the statutory
requirements for Investments in Qualified Businesses. The capco can satisfy this
interest payment, at the capco's discretion, by delivering tax credits in lieu
of paying cash. The capcos legally have the right to deliver the tax credits to
the Certified Investors. The Certified Investors legally have the right to
receive and use the tax credits and would, in turn, use these tax credits to
reduce their respective state tax liabilities in an amount usually
6
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
equal to 100% (Louisiana - 110%) of their certified investment. The tax credits
can be utilized over a ten-year period at a rate of 10% (Louisiana - 11%) per
year and in some instances are transferable and can be carried forward.
NOTE 2 - PRIVATE PLACEMENT OF COMMON STOCK:
In the first quarter of 2002, the Company sold 433,333 shares of
common stock in private transactions, with gross and net cash proceeds totaling
approximately $1,300,000.
NOTE 3 - INVESTMENTS IN QUALIFIED BUSINESSES:
The following table is a summary of Qualified Business investments as
of June 30, 2002, shown separately between their debt and equity components,
$4,545,931 and $1,311,774, respectively, for a total non-consolidated investment
in Qualified Businesses of $5,857,705.
In accordance with the provisions of "Financial Accounting Standards
Board No. 115", the Company's debt investments are considered held to maturity
and recorded at cost. The Company periodically assesses these investments for
impairment.
DEBT INVESTMENTS
------------------------------------------------------------------------------------------------------------------------------------
Cumulative
other than
temporary
decline in Cumulative
the value return of
of its Principal
Stated Original investments since Principal
Date of Maturity Interest Principal since original amount
Type Investments Dates Rates Amount original investment outstanding at
investment date June 30, 2002
date
====================================================================================================================================
Total Debt Investments Debt 11/99 - 6/02 Various Various $ 28,080,826 $ (1,706,620) $ (21,828,275) $ 4,545,931
at June 30, 2002 ============ ============= ============= ================
------------------------------------------------------------------------------------------------------------------------------------
EQUITY INVESTMENTS
--------------------------------------------------------------------------------------------------------------------
Cumulative other
than temporary
Date of Type of Common Stock Percentage Original decline in the
Investments Investments Equivalents of Investment value of its
Ownership Amount investments since
original
investment date
--------------------------------------------------------------------------------------------------------------------
Total Equity
Investments at 11/98- Various Various Various $ 4,169,000 $ (733,592)
June 30, 2002 3/02 ============= ===================
--------------------------------------------------------------------------------------------------------------------
Total Debt and Equity Investments as of June 30, 2002 $ 32,249,826
=============
----------------------------------------------------------
Equity in Income
(Losses) and/or
Return of Capital Equity method
since original investment balance
investment date at
June 30, 2002
----------------------------------------------------------
Total Equity
Investments at $ (2,123,634) $ 1,311,774
June 30, 2002 ================== ==================
----------------------------------------------------------
Total Debt and Equity Investments as
of June 30, 2002 $ 5,857,705
==================
7
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - INVESTMENTS IN QUALIFIED BUSINESSES: (CONTINUED)
In addition, the Company consolidates nine of its investments. The
Company's total investments made in these consolidated entities was $23,063,950,
as of June 30, 2002.
The Company has not guaranteed any obligations of these investees, and
the Company is not otherwise committed to provide further financial support for
the investees. However, from time-to-time the Company may provide such
additional financial support which, as of June 30, 2002, was not significant.
Periodically, the Company evaluates each of its individual investments for
potential impairment in value. Should the Company determine that an impairment
exists and it is deemed to be other than temporary, the Company will write down
the recorded value of the asset to its estimated fair value and record a
corresponding charge in the statement of operations. During the six month period
ended June 30, 2002, the Company determined that there was $733,592 of other
than temporary decline in the value of its investments for Starphire
Technologies, LLC, $44,000 of other than temporary decline in the value of its
investments for Gino's Seafood, and a $76,718 other than temporary decline in
the value of its investments for Embosser's Sales and Service. In addition, the
Company determined an impairment existed for certain non-capco investments
(included in prepaid expenses and other assets on the balance sheet), and
recorded a charge of $162,000. In 2002, the Company also recovered $28,705 of
cash on two of its investments written down in 2000. These items aggregate
$987,605 which is shown on the statement of operations as other than temporary
decline in value of investments.
NOTE 4 - EARNINGS PER SHARE:
Basic earnings per share is computed based on the weighted average number
of common shares outstanding during the period. The dilutive effect of common
stock equivalents is included in the calculation of diluted earnings per share
only when the effect of their inclusion would be dilutive. The effect of common
stock equivalents were anti-dilutive for the three and six months ended June 30,
2002 and the three and six months ended June 30, 2001 and, therefore, have been
excluded from the calculation of diluted earnings per share for that period.
The calculations of Net Income (Loss) Per Share were:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2002 2001 2002 2001
----------------- --------------- -------------- ---------------
Basic
Net income (loss) $ (545,436) $ 1,224,424 $ (439,457) $ 1,984,895
Weighted average shares basic 24,428,414 21,731,384 23,634,712 21,558,438
Dilutive effect of stock options - - - -
Weighted average shares - diluted 24,428,414 21,731,384 23,634,712 21,558,438
Basic and diluted $ (.02) $ .06 $ (.02) $ .09
8
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - SUMMARY RESULTS OF QUALIFIED INVESTMENTS:
Principles of Accounting for Ownership Interests in Qualified
Investments
The various interests that the Company acquires in its qualified
investments are accounted for under three methods: consolidation, equity method
and cost method. The applicable accounting method is generally determined based
on the Company's voting interest in a Partner Company.
Investments in which the Company directly or indirectly owns more than
50% of the outstanding voting securities or those the Company has effective
control over are generally accounted for under the consolidation method of
accounting. Under this method, an investment's financial position and results of
operations are reflected within the Company's Balance Sheet and Consolidated
Statements of Operations. All significant inter-company accounts and
transactions have been eliminated. The results of operations and cash flows of a
consolidated Partner Company are included through the latest interim period in
which the Company owned a greater than 50% direct or indirect voting interest
for the entire interim period or otherwise exercised control over the Partner
Company. Upon dilution of control below 50%, the accounting method is adjusted
to the equity or cost method of accounting, as appropriate, for subsequent
periods.
Equity Method. Investees that are not consolidated, but over which the
Company exercises significant influence, are accounted for under the equity
method of accounting. Whether or not the Company exercises significant influence
with respect to an investee depends on an evaluation of several factors
including, among others, representation on the Company's Board of Directors and
ownership level, which is generally a 20% to 50% interest in the voting
securities of the Company, including voting rights associated with the Company's
holdings in common, preferred and other convertible instruments in the investee.
Under the equity method of accounting, an investee's accounts are not reflected
within the Company's Balance Sheet and Consolidated Statements of Operations;
however, the Company's share of the earnings or losses of the investee is
reflected in the caption "Equity income (loss)" in the Consolidated Statements
of Operations.
Cost Method. Investees not accounted for under the consolidation or
the equity method of accounting are accounted for under the cost method of
accounting. Under this method, the Company's share of the earnings or losses of
such companies is not included in the Balance Sheet and Consolidated Statements
of Operations. However, cost method impairment charges are recognized, as
necessary, in the Consolidated Statement of Operations. If circumstances suggest
that the value of the investee has subsequently recovered, such recovery is not
recorded until realized.
On a monthly basis, Newtek Capital Investment Committee meets to
evaluate the Company's investments. The Company considers several factors in
determining whether an impairment exists on the investment, such as the
investee's net book value, cash flow, revenue growth and net income. In
addition, the Investment Committee looks at larger variables, such as the
economy and the investee company's industry, to determine if an other than
temporary decline in value exists in the Company's investments.
The following table is an unaudited summary of the investments which
the Company accounts for under either the equity method or by consolidation.
These financial statements also reflect the degree to which the Company's
partner companies interact with each other to provide and market needed goods
or, particularly, services to each other. Such activity has been quantified
within the accompanying summary within the caption "intercompany items included
in above".
9
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - SUMMARY RESULTS OF QUALIFIED INVESTMENTS: (CONTINUED)
CONSOLIDATED ENTITIES
--------------------------------------------------------------------------------------------------------------------------
NEWTEK STRATEGIES NEWTEK MERCHANT NEWTEK MERCHANT NEWTEK MERCHANT
SOLUTIONS - NY SOLUTIONS - LA SOLUTIONS - WI
==========================================================================================================================
June 30, December June 30, December June 30, December June 30, December
2002 31, 2001 2002 31, 2001 2002 31, 2001 2002 31, 2001
--------------------------------------------------------------------------------------------------------------------------
Cash $ 1,450,988 $ 1,605,753 $ 22,347 $ 2,969,774 $ 921,792 $ 1,259,089 $ 1,077,839 $ 1,798,864
--------------------------------------------------------------------------------------------------------------------------
Other Assets $ 177,359 $ 117,588 $ 432,012 $ 486,632 $ 39,118 $ 19,251 $ 143,250 $ 46,722
--------------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,628,347 $ 1,723,341 $ 454,359 $ 3,456,406 $ 960,910 $ 1,278,340 $ 1,221,089 $ 1,845,586
--------------------------------------------------------------------------------------------------------------------------
Current $ 999,936 $ 53,026 $ 62,440 $ 51,630 $ 52,714 $ 7,251 $ 48,571 $ 19,174
Liabilities
--------------------------------------------------------------------------------------------------------------------------
Total $ 999,936 $ 970,028 $ 537,440 $ 3,451,630 $ 52,714 $ 7,251 $ 1,728,571 $ 1,909,074
Liabilities
--------------------------------------------------------------------------------------------------------------------------
Total Equity $ 628,411 $ 753,313 $ (83,081) $ 4,776 $ 908,196 $ 1,271,089 $ (507,482) $ (63,588)
(Deficit)
--------------------------------------------------------------------------------------------------------------------------
---------------------------------------
PPM LINK
=======================================
June 30, December
2002 31, 2001
---------------------------------------
Cash $ 1,361,581 $ 1,700,109
---------------------------------------
Other Assets $ 278,405 $ 130,558
---------------------------------------
Total Assets $ 1,639,986 $ 1,830,667
---------------------------------------
Current $ 45,672 $ 46,553
Liabilities
---------------------------------------
Total $ 1,895,672 $ 1,896,553
Liabilities
---------------------------------------
Total Equity $ (255,686) $ (65,886)
(Deficit)
---------------------------------------
CONSOLIDATED ENTITIES
-----------------------------------------------------------------------------------------------------------------
Newtek Financial
Information Services, Transworld Business
Netwek IT Services, LLC LLC Brokers - NY Newtek Client Services
=================================================================================================================
June 30, December June 30, December June 30, December June 30, December
2002 31, 2001 2002 31, 2001 2002 31, 2001 2002 31, 2001
-----------------------------------------------------------------------------------------------------------------
Cash $ 43,556 (a) $ 117,296 (a) $ 3,369,055 (a) $ 3,150,000 (a)
-----------------------------------------------------------------------------------------------------------------
Other Assets $ 197,809 (a) $ 121,299 (a) $ 45,447 (a) -- (a)
-----------------------------------------------------------------------------------------------------------------
Total Assets $ 241,365 (a) $ 238,595 (a) $ 3,414,502 (a) $ 3,150,000 (a)
-----------------------------------------------------------------------------------------------------------------
Current $ 74,310 (a) $ 19,019 (a) $ 57,116 (a) -- (a)
Liabilities
-----------------------------------------------------------------------------------------------------------------
Total $ 86,244 (a) $ 169,020 (a) $ 358,867 (a) -- (a)
Liabilities
-----------------------------------------------------------------------------------------------------------------
Total Equity $ 155,121 (a) $ 69,575 (a) $ 3,055,635 (a) $ 3,150,000 (a)
-----------------------------------------------------------------------------------------------------------------
10
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - SUMMARY RESULTS OF QUALIFIED INVESTMENTS (UNAUDITED):
CONSOLIDATED ENTITIES
------------------------------------------------------------------------------------------------------------------------------------
Newtek Merchant Newtek Merchant Newtek Merchant PPM Link
Newtek Strategies Solutions - NY Solutions - LA Solutions - WI
====================================================================================================================================
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2002 2001 2002 2001 2002 2001 2002 2001 2002 2001
------------------------------------------------------------------------------------------------------------------------------------
Revenue $ 323,864 -- $ 163,108 $ 37,506 $ 22,082 (a) $ 50,652 -- $ 128,837 $ 3,000
------------------------------------------------------------------------------------------------------------------------------------
Cost of Sales
& SG&A $ 423,219 $ 30,748 $ 292,343 $ 47,179 $ 279,920 (a) $ 433,654 $ 1,346 $ 265,713 $ 43,838
------------------------------------------------------------------------------------------------------------------------------------
Depreciation
and $ 1,352 -- $ 21,650 $ 1,608 $ 1,135 (a) $ 3,875 -- $ 159 $ 1,368
Amortization
------------------------------------------------------------------------------------------------------------------------------------
Interest
Expense $ 23,750 -- $ 12,008 $ 52,123 $ 51,550 (a) $ 45,063 -- $ 53,187 $ 27,179
------------------------------------------------------------------------------------------------------------------------------------
Net Loss $ (124,457) $(30,748) $(162,893) $(63,404) $(310,523) (a) $(431,940) $(1,346) $(190,222) $ (69,385)
------------------------------------------------------------------------------------------------------------------------------------
INTERCOMPANY ITEMS INCLUDED IN ABOVE
------------------------------------------------------------------------------------------------------------------------------------
Revenue $ 201,948 -- $ 2,500 $ 795 -- (a) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Cost of Sales
& SG&A $ 28,126 -- $ 54,093 $ 3,955 $ 38,946 (a) $ 42,137 -- $ 15,195 $ 1,123
------------------------------------------------------------------------------------------------------------------------------------
Interest
Expense $ 23,750 -- $ 12,008 $ 52,123 $ 51,550 (a) $ 45,063 -- $ 53,187 $ 27,179
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED ENTITIES
----------------------------------------------------------------------------------------
NEWTEK FINANCIAL
NEWTEK IT SERVICES, INFORMATION TRANSWORLD BUSINESS
LLC SERVICES, LLC BROKERS - NY
========================================================================================
June 30, June 30, June 30, June 30, June 30, June 30,
2002 2001 2002 2001 2002 2001
----------------------------------------------------------------------------------------
Revenue $ 226,336 $ 131,151 $ 245,532 $158,918 (a)
----------------------------------------------------------------------------------------
Cost of Sales
& SG&A $ 408,064 $ 290,692 $ 272,068 $219,937 $ 71,242 (a)
----------------------------------------------------------------------------------------
Depreciation &
Amortization $ 7,820 $ 3,720 $ 9,278 $ 4,137 $ 2,081 (a)
----------------------------------------------------------------------------------------
Interest
Expense $ 53,050 $ 50,312 $ 15,951 $ 24,774 $ 26,094 (a)
----------------------------------------------------------------------------------------
Net Loss $(242,598) $(213,573) $ (51,765) $(89,930) $(99,417) (a)
----------------------------------------------------------------------------------------
INTERCOMPANY ITEMS INCLUDED IN ABOVE
----------------------------------------------------------------------------------------
Revenue $ 7,757 $ 9,794 $136,810 $20,868 -- (a)
----------------------------------------------------------------------------------------
Cost of Sales
& SG&A $59,811 $ 2,985 $ 14,251 $ 795 $11,000 (a)
----------------------------------------------------------------------------------------
Interest
Expense $53,050 $50,312 $ 15,951 $24,774 $26,094 (a)
----------------------------------------------------------------------------------------
11
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - SUMMARY RESULTS OF QUALIFIED INVESTMENTS (UNAUDITED):
ENTITIES UNDER THE EQUITY METHOD
-----------------------------------------------------------------------------------------
TRANSWORLD
STARPHIRE NICHEDIRECTORIES BUSINESS
BROKERS - FL
=========================================================================================
June 30, December 31, June 30, December 31, June 30, December 31,
2002 2001 2002 2001 2002 2001
-----------------------------------------------------------------------------------------
Cash $ 135,195 $1,352,823 $ 466,008 $ 556,741 $ 187,131 $ 245,515
-----------------------------------------------------------------------------------------
Other Assets $ 407,301 $ 460,508 $ 141,934 $ 273,328 $ 331,572 $ 334,854
-----------------------------------------------------------------------------------------
TOTAL ASSETS $ 542,496 $1,813,331 $ 607,942 $ 830,069 $ 518,703 $ 580,369
-----------------------------------------------------------------------------------------
Current
Liabilities $ 92,234 $ 85,652 $ 371,166 $ 354,861 $ 33,307 $ 22,457
-----------------------------------------------------------------------------------------
Total
Liabilities $ 92,234 $1,085,652 $ 371,166 $ 354,861 $ 273,306 $ 262,457
-----------------------------------------------------------------------------------------
Total Equity $ 450,262 $ 727,679 $ 236,776 $ 475,208 $ 245,397 $ 317,912
-----------------------------------------------------------------------------------------
ENTITIES UNDER THE EQUITY METHOD
-----------------------------------------------------------------------------------------
TRANSWORLD
STARPHIRE NICHEDIRECTORIES BUSINESS
BROKERS - FL
=========================================================================================
June 30, June 30, June 30, June 30, June 30, June 30,
2002 2001 2002 2001 2002 2001
-----------------------------------------------------------------------------------------
Revenues $ 59,247 $ 216,302 $ 372,737 $ 315,276 $ 935,073 (a)
-----------------------------------------------------------------------------------------
Cost of Sales &
SG&A $ 306,615 $ 609,826 $ 533,581 $ 593,137 $ 981,006 $ 2,150
-----------------------------------------------------------------------------------------
Depreciation &
Amortization $ 14,125 $ 20,088 $ 8,917 $ 10,092 $ 1,222 --
-----------------------------------------------------------------------------------------
Interest Expense $ 13,364 -- -- -- $ 6,000 --
-----------------------------------------------------------------------------------------
Net Loss $(274,857) $(413,612) $(169,761) $(287,953) $ (53,155) $(2,150)
-----------------------------------------------------------------------------------------
INTERCOMPANY ITEMS INCLUDED IN ABOVE
-----------------------------------------------------------------------------------------
Revenue $(1,915) $7,500 -- -- -- --
-----------------------------------------------------------------------------------------
Cost of Sales &
SG&A $27,580 $6,275 $44,697 -- $11,265 --
-----------------------------------------------------------------------------------------
Interest Expense $13,364 -- -- -- $ 6,000 --
-----------------------------------------------------------------------------------------
/(a)/ No activity under Newtek's ownership during this time period
12
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - ACQUISITION OF EXPONENTIAL BUSINESS DEVELOPMENT COMPANY, INC.:
In January 2002, the Company acquired 100% of the outstanding common stock
of Exponential Business Development Company, Inc. (Exponential), of Syracuse,
NY. Exponential's primary business was to make non-controlling investments in
high growth potential companies. The purchase price consisted of 500,000 shares
of Company common stock issued to the sellers. Under the terms of the
acquisition, an additional 500,000 shares will be issued over a seven year
period if acquired assets result in gains of $2 million in excess of an initial
$1 million recovery by the Company. The fair value of the 500,000 common shares
issued, $920,000, was determined based on the quoted market price of the
Company's common stock on the closing date, less a discount due to certain
restrictions on the stock. Since Company management has determined that the
issuance of the additional 500,000 shares is currently unlikely due to
management's estimation that the payout provision will not be met, the Company
has not included the additional shares in the determination of the purchase
price. On a quarterly basis, management will assess the payout provision to
determine if it is likely it will be met in the future, and if so, the Company
will record the additional 500,000 shares as additional purchase price when
issued. Exponential directors and officers will remain with that entity and will
receive a total of 365,000 options pursuant to the Company's option plan to
acquire Company common stock in exchange for future services.
The results of Exponential's operations have been included in the
consolidated financial statements since the acquisition date.
The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.
Current assets (including cash of $106,642) $ 138,013
Other Assets 10,001
--------------
Total assets acquired 148,014
==============
Current liabilities 52,350
--------------
Total liabilities assumed 52,350
==============
Net assets acquired $ 95,664
==============
The difference between the fair value of the net assets acquired, $95,664,
and the value of the Company common stock, $920,000, has been recorded as
goodwill.
NOTE 7 - ACQUISITIONS OF CAPCO MINORITY INTERESTS:
In March and May 2002, the Company issued 1,028,576 and 149,910 shares,
respectively, of its common stock to the minority members of certain Capcos in
exchange for substantially all of such members' minority interests. These have
been accounted for as purchase transactions. The fair value of the Company's
common stock was determined based upon the quoted market price of the Company's
common stock, less a discount due to certain restrictions on the stock. Such
value exceeded the book value of the minority interest by approximately $873,000
for five of the Capcos, and the Company has recorded such amount as goodwill.
For three other Capcos, the fair value of the Company's common stock was less
than the book value of the minority interest by approximately $428,000, and the
Company has recorded such amount as an extraordinary gain.
13
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS:
In 2002, the Company adopted Statement of Financial Accounting Standards
No. 142 "Goodwill and Intangible Assets" (SFAS 142). SFAS 142 includes
requirements to annually test goodwill and indefinite lived intangible assets
for impairment rather than amortize them; accordingly, the Company no longer
amortizes goodwill. The Company did not record any transition intangible asset
impairment loss upon adoption of SFAS 142.
In August 2001, the Financial Accounting Standards Board issued Statement
No. 143, "Accounting for Asset Retirement Obligations" (SFAS No. 143). SFAS No.
143 is effective for the Company's fiscal year beginning January 1, 2003, and
requires the Company to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. The Company is in
the process of evaluating what impact, if any, this standard will have on the
Company's Consolidated Financial Statements.
On October 3, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144 (SFAS No. 144), "Accounting
for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of. SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." SFAS No. 144, however, retains the fundamental provisions of
SFAS No. 121 for (a) recognition and measurement of the impairment of long-lived
assets to be held and used and (b) measurement of long-lived assets to be
disposed of by sale. SFAS No. 144 supersedes the accounting and reporting
provisions of APB Opinion No. 30 ("Opinion 30"), "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for
segments of a business to be disposed of. SFAS No. 144, however, retains the
requirement of Opinion 30 to report discontinued operations separately from
continuing operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, by abandonment, or in a distribution
to owners) or is classified as held for sale. The Company adopted SFAS No. 144
on January 1, 2002 and did not record any impairment charges upon adoption.
On May 1, 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 145 (SFAS No. 145), "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 is effective for the Company's fiscal year beginning
January 1, 2003. The Company is in the process of evaluating what impact, if
any, this standard will have on the Company's Consolidated Financial Statements.
In June 2002, the Financial Accounting Standards Board issued Statement No.
146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS
No. 146). SFAS No. 146 is effective for the Company's fiscal year beginning
January 1, 2003. The Company is in the process of evaluating what impact, if
any, this standard will have on the Company's Consolidated Financial Statements.
NOTE 9 - NEW CAPCO:
In April 2002, the Company raised approximately $22 million of certified
capital for the Company's ninth CAPCO fund, Wilshire Colorado Partners, LLC. The
new CAPCO will target early stage, high growth businesses providing products and
services to the small business market within the State of Colorado.
14
NOTE 10- SUBSEQUENT EVENT:
On August 12, 2002, the Company signed a definitive agreement to acquire
Commercial Capital Corporation. See Item 5, below, and Exhibit 99.1.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Three Months Ended June 30, 2002 compared to Three Months Ended
June 30, 2001
Revenues decreased by approximately $3,926,000 to $5,351,000 for the three
months ended June 30, 2002, from $9,277,000 for the three months ended
June 30, 2001. Income from tax credits decreased by approximately $3,750,000 to
$4,871,000 for the three months ended June 30, 2002, from $8,621,000 for the
three months ended June 30, 2001 due to the Company's meeting different and, in
certain cases, less investment thresholds mandated by the various state Capco
statutes in 2002 versus 2001. Interest and dividend income decreased by
approximately $355,000 to $220,000 for the three months ended June 30, 2002,
from $575,000 for the three months ended June 30, 2001 This decrease was
primarily due to additional investments made in consolidated entities. The
additional investments reduced cash available to earn interest and dividends.
Consulting fee income increased by approximately $53,000 due to the increase in
consulting related activity. Other income increased by approximately $126,000 to
$207,000 for the three months ended June 30, 2002, from $81,000 for the three
months ended June, 2001. This decrease was due to the consolidation of revenues
with additional entities now consolidated into the Company.
Interest expense increased by approximately $65,000 to $2,915,000 for the
three months ended June 30, 2002 from $2,850,000 for the three months ended
June 30, 2001. The increase was due primarily to the new Capco funded in
April 2002. Payroll and consulting fees increased by $224,000 to $789,000 for
the three months ended June 30, 2002 from $565,000 for the three months ended
June 30, 2001. The increase was due to the consolidation of expenses with
additional entities now consolidated into the Company.
Professional fees decreased by approximately $269,000 to $434,000 for the
three months ended June 30, 2002 from $703,000 for the three months ended
June 30, 2001. The decrease was due primarily to the decreased legal expenses
incurred by the Company.
Other expenses increased by approximately $902,000 to $1,186,000 for the
three months ended June 30, 2002 from $284,000 for the three months ended
June 30, 2001. The increase was due primarily to expenses from additional
entities now consolidated into the Company.
15
ITEM 2. MANAGEMENT'S DISCUSSION AD ANALYSIS (CONTINUED)
Six Months Ended June 30, 2002 compared to Six Months Ended June 30, 2001
Revenues decreased by approximately $4,575,000 to $11,423,000 for the six
months ended June 30, 2002, from $15,998,000 for the six months ended
June 30, 2001. Income from tax credits decreased by approximately $4,393,000 to
$10,258,000 for the six months ended June 30, 2002, from $14,651,000 for the six
months ended June 30, 2001, due to the Company's meeting different and, in
certain cases, less investment thresholds mandated by the various state Capco
statutes in 2002 versus 2001. Interest and dividend income decreased by
approximately $753,000 to $460,000 for the six months ended June 30, 2002, from
$1,213,000 for the six months ended June 30, 2001 This decrease was primarily
due to additional investments made in consolidated entities. The additional
investments reduced cash available to earn interest and dividends. Consulting
fee income increased by approximately $91,000 to $99,000 for the six months
ended June 30, 2002 from $8,000 for the six months ended June 30, 2001 due to
the increase in consulting related activity. Other income increased by
approximately $479,000 to $605,000 for the six months ended June 30, 2002, from
$126,000 for the six months ended June, 2001. This increase was due to the
consolidation of revenues with additional entities now consolidated into the
Company.
Interest expense decreased by approximately $617,000 to $5,568,000 for the
six months ended June 30, 2002 from $6,185,000 for the six months ended
June 30, 2001. The decrease was due primarily to the reduction of interest
payable due to delivery of tax credits to certified investors. Payroll and
consulting fees increased by $1,166,000 to $2,546,000 for the six months ended
June 30, 2002 from $1,380,000 for the six months ended June 30, 2001. The
increase was due to the consolidation of expenses with additional entities now
consolidated into the Company.
Other expenses increased by approximately $1,361,000 to $1,811,000 for the
six months ended June 30, 2002 from $450,000 for the six months ended
June 30, 2001. The increase was due primarily to expenses from additional
entities now consolidated into the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations primarily through the issuance of
notes to Certified Investors through the Capco program. To date, the Company has
received approximately $159,000,000 in proceeds from the issuance of long-term
debt through the Capco programs. The Company's principal capital requirements
have been to fund the defeasance of the principal amount of notes issued to the
Certified Investors, the acquisition of Capco insurance policies, the
acquisition of partner companies interests, funding of other investments, and
working capital needs resulting from increased operating and business
development activities of its partner companies.
Net cash used in operating activities for the six months ended June 30,
2002 of approximately $5,071,000 resulted primarily from net loss of $439,000,
decreased by the non-cash interest expense of approximately $5,179,000. It was
also affected by the approximately $673,000 in non-cash equity in net losses of
affiliates, approximately $1,049,000 of minority interest and the approximately
$10,258,000 in non-cash income from tax credits, and the non-cash income tax
benefit of $432,000.
Net cash provided by investing activities for the six months ended
June 30, 2002 of approximately $7,139,000 resulted primarily from return of
principal of qualified investments of
16
$10,869,000, offset by approximately $7,913,000 in additional qualified
investments made during the period. In addition, the Company consolidated
approximately $3,985,000 of its investments.
Net cash provided by financing activities for the six months ended
June 30, 2002 was approximately $10,162,000, primarily attributable to
approximately $22,719,000 of proceeds from the issuance of long-term debt and
$1,300,000 from the private placement of common stock, offset by approximately
$11,641,000 of payments for defeasance of long-term debt, $575,000 for payment
of line of credit, $1,433,000 for payments of note payable - insurance, and
$307,000 in payments on a mortgage payable, during the six months ended
June 30, 2002.
The Company believes that its cash and cash equivalents, its anticipated
cash flow from operations, its ability to access private and public debt and
equity markets, and the availability of funds under its existing credit
agreements will provide it with sufficient liquidity to meet its short and
long-term capital needs.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10 QSB contains forward-looking statements.
Additional written or oral forward-looking statements may be made by the Company
from time to time in filings with the Securities and Exchange Commission or
otherwise. The words "believe," "expect," "seek," and "intend" and similar
expressions identify forward-looking statements, which speak only as of the date
the statement is made. Such forward-looking statements are within the meaning of
that term in Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
may include, but are not limited to, projections of income or loss,
expenditures, acquisitions, plans for future operations, financing needs or
plans relating to services of the Company, as well as assumptions relating to
the foregoing. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by or underlying the forward-looking statements.
The Company does not undertake, and specifically disclaims, any obligation
to publicly release the results of revisions which may be made to
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the of such statements.
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On June 5, 2002 the Company held its annual meeting of shareholders.
(b) All six of the incumbent directors were reelected for one year terms:
John Cox
Jeffrey G. Rubin
Jeffrey M. Schottenstein
Steven A. Shenfeld
Barry Sloane
17
Brian A. Wasserman
(c) With respect to the election of directors, at which a total of
21,268,941, or 86.60 percent, were present in person or by proxy, with
the vote for each of the nominees the same:
For: 21,266,791 votes, or 86.00 percent
Withheld 2,150 votes, or 0.01 percent
In addition, an amendment to the Registrant's 2000 Stock Incentive and
Deferred Compensation Plan was voted upon by the shareholders and was
approved by the following vote:
For; 14,129,068 votes, or 57.00 percent
Withheld: 84,798 votes, or 0.4 percent
Abstain 6,100 votes, or 0.02 percent
Unvoted 7,048,975, or 33.12 percent
ITEM 5 - OTHER INFORMATION
On August 12, 2002, the Registrant issued a press release to announce the
signing of a definitive agreement to acquire Commercial Capital Corporation
("CCC") and its parent, Comcap Holding Corp. Headquartered in New York City, CCC
began operations in 1994 and in 1999 was ranked as the fifteenth largest SBA
lender in the U.S. and the second largest in the New York metropolitan area by
dollar volume. John Cox is expected to step down from his position as a member
of the Company's Board of Directors to join Michael Dowd, both long-time SBA
employees, in managing the small business lender. Charles Freeman will remain as
the President of CCC.
Prior to this agreement, the Company had been exploring investment in other
small business lenders with marketing strategies similar to its own. The
acquisition of CCC and its addition to the business being organized by the
Company will be an important step in this strategy. The transaction is subject
to the approval by the SBA and the stockholders of Comcap Holdings. The Company
has offered to exchange 463,450 of its shares for those of Comcap in an entirely
stock-for-stock exchange.
The Company is currently in discussions with CCC's warehouse lenders and
other potential financial partners to provide additional capital and assist in
the implementation of the direct loan origination strategy. CCC has a portfolio
of loans under management of approximately $247 million, in which it owns
approximately $67 million. In 2000 and 2001, CCC originated approximately $45
and $29 million in SBA guaranteed loans, respectively. If all required approvals
are timely received, the Company expects to close the investment in the small
business lender by late September or early October. A copy of the Press Release
is attached as Exhibit 99.1 to this Quarterly Report on Form 10-Q and
incorporated by reference in this Item 5.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 99.1 Press Release: August 12, 2002: Newtek Capital Signs
Definitive Agreement to Acquire 50 State SBA 7(A) Lender; Newtek Small Business
Finance to be Launched Soon
Exhibit 99.2 Pursuant to the provisions of section 906 of The
Sarbanes-Oxley Act of 2002, the Chief Executive and Chief Financial Officers of
Registrant have provided to the Securities and Exchange
18
Commission their certifications, attached hereto as an exhibit, conforming to
the requirements of said section 906; to wit, that the within report on behalf
of the Registrant on Form 10-QSB, for the period ended June 30, 2002, fully
complies with the requirements of the Securities Exchange Act of 1934, as
amended.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEWTEK CAPITAL, INC.
Date: August 14, 2002 /s/ Barry Sloane
--------------- ----------------
Barry Sloane
Chairman of the Board, Chief Executive Officer,
and Secretary
Date: August 14, 2002 /s/ Brian A. Wasserman
--------------- ----------------------
Brian A. Wasserman
Treasurer, Chief Financial Officer, and Director
Date: August 14, 2002 /s/ Giuseppe Soccodato
--------------- ----------------------
Giuseppe Soccodato
Controller and Chief Accounting Officer
20