SEC Company Response from NewtekOne, Inc. (NEWT, NEWTG, NEWTH, NEWTI, NEWTO, NEWTP) (CIK 0001587987) (NEWT) — Jul 9, 2014
NewtekOne, Inc. (NEWT, NEWTG, NEWTH, NEWTI, NEWTO, NEWTP) (CIK 0001587987)
Date: July 9, 2014 · CIK: 0001587987 · Accession: 0001193125-14-264360
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-195998, 814-01035
Letter
VIA EDGAR Division of Investment Management Washington, D.C. 20549 Re: Newtek Business Services Corp. Registration Statement on Form N-14 File No.: 333-195998
Dear Ms. Cole and Ms. Stout:
On behalf of Newtek Business Services Corp. (the “Company”), set forth below are the Company’s responses to the comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to the Company orally on June 10, 2014, June 12, 2014 and July 2, 2014 with respect to the Company’s registration statement on Form N-14 (File No. 333-195998), filed with the Commission on May 15, 2014, as amended (the “Registration Statement”), and the prospectus included therein (the “Prospectus”). The Staff’s comments are set forth below and are followed by the Company’s responses. Where revisions to the Prospectus are indicated in the Company’s responses, such revisions are set forth in the changed pages to the Registration Statement, filed concurrently herewith.
General
1. Cover Page of Proxy Statement—In the third paragraph, please delete the language stating that “Newtek MD’s investment objectives will be substantially similar to Newtek NY’s current investment objective.”
Response: The Company has revised the above referenced disclosure in response to the Staff’s comment.
2. Investment Objectives and Policies—Please clarify whether Newtek Small Business Finance, Inc. (“NSBF”) retains a residual interest in the loans it securitizes.
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Ms. Mary A. Cole
Ms. Sheila Stout
July 9, 2014
Page
Response: The Company has revised the above referenced disclosure in response to the Staff’s comment.
3. Summary Risk Factors— With respect to the Summary Risk Factors, the Company is changing its business and the disclosure should reflect the Company’s shift in focus. Please re-order the risks included in this section to focus more prominently on those related to operating as a BDC.
Response: The Company has revised the above referenced disclosure in response to the Staff’s comment.
4. Risks Relating to Our Common Shares— The disclosure states that two shareholders beneficially own approximately 24% of the Company’s common shares. Please confirm that then approval of the New Equity Compensation Plan will meet the requisite standards for a “required majority” set forth in Section 57(o) of the 1940 Act.
Response: The Company confirms that the approval of the New Equity Compensation Plan will meet the requisite standards for a “required majority” set forth in Section 57(o) of the 1940 Act and has revised the above referenced disclosure accordingly.
5. Risk Factors – Reincorporation Transaction— With respect to the risk factor stating that “a portion of our distributions may be a return of capital,” please clarify that shareholders should not assume that a distribution is derived from net profit. Include disclosure that any distribution does not reflect earnings in any manner. Also, state whether the Company intends to report a distribution yield.
Response: The Company has revised the above referenced disclosure in response to the Staff’s comment.
6. Comparative Fees and Expenses— Please include disclosure in the table clarifying that Newtek MD is currently a shell corporation. Also, please remove the line item “Acquired fund fees and expenses” to the extent those amounts are currently estimated to be zero.
Response: The Company has revised the above referenced disclosure in response to the Staff’s comment.
7. Proposal II – Approval of Reverse Stock Split— Please confirm to the Staff that all outstanding options to officers and affiliates will be terminated prior to Newtek MD’s election to be regulated as a BDC.
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Ms. Mary A. Cole
Ms. Sheila Stout
July 9, 2014
Page
Response: The Company confirms to the Staff on a supplemental basis that all outstanding options to officers and affiliates will be terminated prior to Newtek MD’s election to be regulated as a BDC.
Accounting Comments
1. Please revise the Prospectus to include an audited special purpose Schedule of Investments showing the impact of the Proposed Merger.
Response: The Company has attached a draft unaudited special purpose Schedule of Investments to this correspondence and will amend the Registration Statement to include an audited special purpose Schedule of Investments prior to requesting effectiveness.
2. Please revise the Prospectus to include a Capitalization Table showing the impact of the proposed Merger.
Response: The Company has revised the Prospectus in response to the Staff’s comment by including a draft Capitalization Table in the changed pages attached to this submission. The Capitalization Table will be completed prior to requesting effectiveness.
3. Please confirm that new consents from the Company’s registered public accounting firm will be filed with each pre-effective amendment to the Registration Statement.
Response: The Company confirms that new consents from its registered public accounting firm will be filed with each pre-effective amendment to the Registration Statement.
4. In your response, please explain on a supplemental basis when the Reverse Stock Split will occur. In addition, please note that the effect of the Reverse Stock Split should be reflected in the Selected Financial Data and elsewhere throughout the Company’s registration statement on Form N-2 (File No. 814-01035) (the “N-2 Registration Statement”).
Response: The Company advises the Staff on a supplemental basis that the Reverse Stock Split will occur prior to the Reincorporation Transaction, and shortly following the special Stockholders Meeting.
5. Please include a Senior Securities Table in the Company’s Registration Statement on Form N-2 pertaining to its proposed public offering.
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Ms. Mary A. Cole
Ms. Sheila Stout
July 9, 2014
Page
Response: The Company confirms that it will include a Senior Securities Table in its Registration Statement. The Senior Securities Table will be completed prior to requesting effectiveness.
6. Please advise the Staff on a supplemental basis which entity will be the legal survivor of the Reincorporation Transaction and which entity will be the accounting survivor of the Reincorporation Transaction. In addition, please clarify whether or not performance data, including historical data and financial statements, will be carried over from Newtek Business Services, Inc. to the Company upon completion of the Reincorporation Transaction. If this data is being carried over, include disclosure regarding the change in valuation techniques from Newtek Business Services, Inc. to the Company.
Response: The Company advises the Staff on a supplemental basis that Newtek Business Services Corp. will be both the legal and the accounting survivor of the Reincorporation Transaction. The performance data, including historical data and financial statements will be carried over to Newtek Business Services Corp. from Newtek Business Services, Inc.
7. Please provide to the Staff a list of each of the Company’s non-consolidated portfolio companies and an explanation of why it is appropriate under GAAP and Regulation S-X for each to not be consolidated with the Company, including information regarding any minority owners, if applicable.
Response:
The Company’s significant non-consolidated portfolio companies will include: Universal Processing Services of Wisconsin, LLC d/b/a Newtek Merchant Solutions (“NMS”), Crystaltech Web Hosting, Inc., d/b/a Newtek Managed Technology Solutions (“NTS”), Newtek Insurance Agency, LLC (“NIA”), and CDS Business Services, Inc. (“CDS”). Together, NMS, NTS, NIA, and CDS are the “Portfolio Companies.” In addition, Newtek Small Business Finance, Inc. (“NSBF”) will be consolidated with the Company.
The Company is a Maryland corporation formed in August 2013 as a closed-end, externally managed, non-diversified management investment company that intends to elect to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (“1940 Act”), as amended. Furthermore, as the Company is an investment company, it will apply the guidance in FASB Accounting Standards Codification (“ASC”) Topic 946. In addition, for tax purposes the Company intends on electing to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Upon effectuating the BDC Election, certain of Newtek Business Services, Inc.’s historical operating companies, the Portfolio Companies, will survive as non-consolidated portfolio companies of the Company. Revenue from the Portfolio Companies will not be
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Ms. Mary A. Cole
Ms. Sheila Stout
July 9, 2014
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recognized or reported as revenue of the Company. Instead, such the Portfolio Companies will provide the Company with dividend and interest income in connection with the Company’s equity or debt investments in such entities. In addition, the fair value of the Portfolio Companies will be included on the Company’s balance sheet and any appreciation or deprecation in such fair value will be reflected on the Company’s income statement.
NMS has a long history of providing electronic payment processing to clients. NTS has a long history of providing website hosting, dedicated serving hosting, cloud hosting, web design and development, internet marketing, e-commerce, data storage and backup, and other related services to more than 124,000 customer accounts. NIA has a long history of serving as a retail and wholesale agency specializing in the sale of commercial and health/benefits lines insurance products to small- and medium- sized businesses, as well as providing various personal lines of insurance. CDS has a long history of providing traditional factoring and receivables to small- and medium- sized businesses. As none of the Portfolio Companies meet the definition of investment company set forth below, the Company believes it is appropriate for them to no longer be consolidated.
In accordance with paragraph 810-10-15-10(a)3 of ASC 810 (and 946-810-45-2 of ASC 946), it is not appropriate for an investment company to consolidate a non-investment company. The only exception to this is if that investee non-investment company provides substantial services to the investment company (such as an investment advisor) and is controlled by the investment company. This is because in those cases the purpose of the investee is to provide services and not to provide investment income or realize a gain on disposal.
Accordingly, in all other cases, the investment company must treat the investee as a portfolio company and carry the investment at fair value.
This is detailed in Article 6.03(c) of Regulation S-X, which states:
(1) Consolidated and combined statements filed for registered investment companies shall be prepared in accordance with Rules 3A-01 to 3A-05 (Article 3A), except that
(i) statements of the registrant may be consolidated only with the statements of subsidiaries which are investment companies;
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Ms. Mary A. Cole
Ms. Sheila Stout
July 9, 2014
Page
(ii) a consolidated statement of the registrant and any of its investment company subsidiaries shall not be filed unless accompanied by a consolidating statement which sets forth the individual statements of each significant subsidiary included in the consolidated statement:
Provided, however.
That a consolidating statement need not be filed if all included subsidiaries are totally held; and
(iii) consolidated or combined statements filed for subsidiaries not consolidated with the registrant shall not include any investment companies unless accompanied by consolidating or combining statements which set forth the individual statements of each included investment company which is a significant subsidiary.
In June 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-08, Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. The update amends the criteria that define an investment company, requires additional disclosures, and seeks to clarify the measurement guidance. Public companies were required to apply ASU 2013-08 prospectively for interim and annual reporting periods beginning after December 15, 2013. The Company continues to be an investment company under the new guidance. NMS, NTS, CDS, and NIA continue to not be investment companies under the new guidance.
Per ASC 946-10-15-4, an entity regulated under the 1940 Act is an investment company under this Topic. None of NMS, NTS, CDS, or NIA has ever been regulated under the 1940 Act.
Per ASC 946-10-15-5, an entity that is not regulated under the 1940 Act shall assess all the characteristics of an investment company in paragraphs 946-10-15-6 through 15-7 to determine whether it is an investment company. The entity shall consider its purpose and design when making that assessment.
Per ASC 946-10-15-6, an investment company has the following fundamental characteristics:
a. It is an entity that does both of the following:
1. Obtains funds from one or more investors and provides the investor(s) with investment management services.
2. Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both.
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Ms. Mary A. Cole
Ms. Sheila Stout
July 9, 2014
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b. The entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income.
Per ASC 946-10-15-7, an investment company also has the following typical characteristics:
a. It has more than one investment.
b. It has more than one investor.
c. It has investors that are not related parties of the parent (if there is a parent) or the investment manager.
d. It has ownership interests in the form of equity or partnership interests.
e. It manages substantially all of its investments on a fair value basis.
To be an investment company, an entity shall possess the fundamental characteristics in paragraph ASC 946-10-15-6. Typically, an investment company also has all of the characteristics in ASC 946-10-15-7. However, the absence of one or more of those typical characteristics does not necessarily preclude an entity from being an investment company. If an entity does not possess one or more of the typical characteristics, it shall apply judgment and determine, considering all facts and circumstances, how its activities continue to be consistent (or are not consistent) with those of an investment company.
Each of the Portfolio Companies is an operating company where senior management and employees draw a base salary and earn an annual bonus. None have ever been an investment company under U.S. GAAP nor have any applied investment company accounting. Each of the Portfolio Companies does not meet the fundamental characteristics of an investment company. None have ever provided or offered to provide investment management services. None are registered as an investment advisers or it retained the services of an investment adviser, typical of investment companies. None have promoted themselves or held themselves out to provide or offer investment management services to any investor. Each of the Portfolio Companies have not in the past, and will not in the future, seek investors at all. They do not have a business objective of making i
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CORRESP 1 filename1.htm CORRESP Table of Contents [Sutherland Letterhead] July 9, 2014 VIA EDGAR Ms. Mary A. Cole Ms. Sheila Stout Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Newtek Business Services Corp. Registration Statement on Form N-14 File No.: 333-195998 Dear Ms. Cole and Ms. Stout: On behalf of Newtek Business Services Corp. (the “Company”), set forth below are the Company’s responses to the comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to the Company orally on June 10, 2014, June 12, 2014 and July 2, 2014 with respect to the Company’s registration statement on Form N-14 (File No. 333-195998), filed with the Commission on May 15, 2014, as amended (the “Registration Statement”), and the prospectus included therein (the “Prospectus”). The Staff’s comments are set forth below and are followed by the Company’s responses. Where revisions to the Prospectus are indicated in the Company’s responses, such revisions are set forth in the changed pages to the Registration Statement, filed concurrently herewith. General 1. Cover Page of Proxy Statement—In the third paragraph, please delete the language stating that “Newtek MD’s investment objectives will be substantially similar to Newtek NY’s current investment objective.” Response: The Company has revised the above referenced disclosure in response to the Staff’s comment. 2. Investment Objectives and Policies—Please clarify whether Newtek Small Business Finance, Inc. (“NSBF”) retains a residual interest in the loans it securitizes. Table of Contents Ms. Mary A. Cole Ms. Sheila Stout July 9, 2014 Page 2 Response: The Company has revised the above referenced disclosure in response to the Staff’s comment. 3. Summary Risk Factors— With respect to the Summary Risk Factors, the Company is changing its business and the disclosure should reflect the Company’s shift in focus. Please re-order the risks included in this section to focus more prominently on those related to operating as a BDC. Response: The Company has revised the above referenced disclosure in response to the Staff’s comment. 4. Risks Relating to Our Common Shares— The disclosure states that two shareholders beneficially own approximately 24% of the Company’s common shares. Please confirm that then approval of the New Equity Compensation Plan will meet the requisite standards for a “required majority” set forth in Section 57(o) of the 1940 Act. Response: The Company confirms that the approval of the New Equity Compensation Plan will meet the requisite standards for a “required majority” set forth in Section 57(o) of the 1940 Act and has revised the above referenced disclosure accordingly. 5. Risk Factors – Reincorporation Transaction— With respect to the risk factor stating that “a portion of our distributions may be a return of capital,” please clarify that shareholders should not assume that a distribution is derived from net profit. Include disclosure that any distribution does not reflect earnings in any manner. Also, state whether the Company intends to report a distribution yield. Response: The Company has revised the above referenced disclosure in response to the Staff’s comment. 6. Comparative Fees and Expenses— Please include disclosure in the table clarifying that Newtek MD is currently a shell corporation. Also, please remove the line item “Acquired fund fees and expenses” to the extent those amounts are currently estimated to be zero. Response: The Company has revised the above referenced disclosure in response to the Staff’s comment. 7. Proposal II – Approval of Reverse Stock Split— Please confirm to the Staff that all outstanding options to officers and affiliates will be terminated prior to Newtek MD’s election to be regulated as a BDC. Table of Contents Ms. Mary A. Cole Ms. Sheila Stout July 9, 2014 Page 3 Response: The Company confirms to the Staff on a supplemental basis that all outstanding options to officers and affiliates will be terminated prior to Newtek MD’s election to be regulated as a BDC. Accounting Comments 1. Please revise the Prospectus to include an audited special purpose Schedule of Investments showing the impact of the Proposed Merger. Response: The Company has attached a draft unaudited special purpose Schedule of Investments to this correspondence and will amend the Registration Statement to include an audited special purpose Schedule of Investments prior to requesting effectiveness. 2. Please revise the Prospectus to include a Capitalization Table showing the impact of the proposed Merger. Response: The Company has revised the Prospectus in response to the Staff’s comment by including a draft Capitalization Table in the changed pages attached to this submission. The Capitalization Table will be completed prior to requesting effectiveness. 3. Please confirm that new consents from the Company’s registered public accounting firm will be filed with each pre-effective amendment to the Registration Statement. Response: The Company confirms that new consents from its registered public accounting firm will be filed with each pre-effective amendment to the Registration Statement. 4. In your response, please explain on a supplemental basis when the Reverse Stock Split will occur. In addition, please note that the effect of the Reverse Stock Split should be reflected in the Selected Financial Data and elsewhere throughout the Company’s registration statement on Form N-2 (File No. 814-01035) (the “N-2 Registration Statement”). Response: The Company advises the Staff on a supplemental basis that the Reverse Stock Split will occur prior to the Reincorporation Transaction, and shortly following the special Stockholders Meeting. 5. Please include a Senior Securities Table in the Company’s Registration Statement on Form N-2 pertaining to its proposed public offering. Table of Contents Ms. Mary A. Cole Ms. Sheila Stout July 9, 2014 Page 4 Response: The Company confirms that it will include a Senior Securities Table in its Registration Statement. The Senior Securities Table will be completed prior to requesting effectiveness. 6. Please advise the Staff on a supplemental basis which entity will be the legal survivor of the Reincorporation Transaction and which entity will be the accounting survivor of the Reincorporation Transaction. In addition, please clarify whether or not performance data, including historical data and financial statements, will be carried over from Newtek Business Services, Inc. to the Company upon completion of the Reincorporation Transaction. If this data is being carried over, include disclosure regarding the change in valuation techniques from Newtek Business Services, Inc. to the Company. Response: The Company advises the Staff on a supplemental basis that Newtek Business Services Corp. will be both the legal and the accounting survivor of the Reincorporation Transaction. The performance data, including historical data and financial statements will be carried over to Newtek Business Services Corp. from Newtek Business Services, Inc. 7. Please provide to the Staff a list of each of the Company’s non-consolidated portfolio companies and an explanation of why it is appropriate under GAAP and Regulation S-X for each to not be consolidated with the Company, including information regarding any minority owners, if applicable. Response: The Company’s significant non-consolidated portfolio companies will include: Universal Processing Services of Wisconsin, LLC d/b/a Newtek Merchant Solutions (“NMS”), Crystaltech Web Hosting, Inc., d/b/a Newtek Managed Technology Solutions (“NTS”), Newtek Insurance Agency, LLC (“NIA”), and CDS Business Services, Inc. (“CDS”). Together, NMS, NTS, NIA, and CDS are the “Portfolio Companies.” In addition, Newtek Small Business Finance, Inc. (“NSBF”) will be consolidated with the Company. The Company is a Maryland corporation formed in August 2013 as a closed-end, externally managed, non-diversified management investment company that intends to elect to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (“1940 Act”), as amended. Furthermore, as the Company is an investment company, it will apply the guidance in FASB Accounting Standards Codification (“ASC”) Topic 946. In addition, for tax purposes the Company intends on electing to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Upon effectuating the BDC Election, certain of Newtek Business Services, Inc.’s historical operating companies, the Portfolio Companies, will survive as non-consolidated portfolio companies of the Company. Revenue from the Portfolio Companies will not be Table of Contents Ms. Mary A. Cole Ms. Sheila Stout July 9, 2014 Page 5 recognized or reported as revenue of the Company. Instead, such the Portfolio Companies will provide the Company with dividend and interest income in connection with the Company’s equity or debt investments in such entities. In addition, the fair value of the Portfolio Companies will be included on the Company’s balance sheet and any appreciation or deprecation in such fair value will be reflected on the Company’s income statement. NMS has a long history of providing electronic payment processing to clients. NTS has a long history of providing website hosting, dedicated serving hosting, cloud hosting, web design and development, internet marketing, e-commerce, data storage and backup, and other related services to more than 124,000 customer accounts. NIA has a long history of serving as a retail and wholesale agency specializing in the sale of commercial and health/benefits lines insurance products to small- and medium- sized businesses, as well as providing various personal lines of insurance. CDS has a long history of providing traditional factoring and receivables to small- and medium- sized businesses. As none of the Portfolio Companies meet the definition of investment company set forth below, the Company believes it is appropriate for them to no longer be consolidated. In accordance with paragraph 810-10-15-10(a)3 of ASC 810 (and 946-810-45-2 of ASC 946), it is not appropriate for an investment company to consolidate a non-investment company. The only exception to this is if that investee non-investment company provides substantial services to the investment company (such as an investment advisor) and is controlled by the investment company. This is because in those cases the purpose of the investee is to provide services and not to provide investment income or realize a gain on disposal. Accordingly, in all other cases, the investment company must treat the investee as a portfolio company and carry the investment at fair value. This is detailed in Article 6.03(c) of Regulation S-X, which states: (1) Consolidated and combined statements filed for registered investment companies shall be prepared in accordance with Rules 3A-01 to 3A-05 (Article 3A), except that (i) statements of the registrant may be consolidated only with the statements of subsidiaries which are investment companies; Table of Contents Ms. Mary A. Cole Ms. Sheila Stout July 9, 2014 Page 6 (ii) a consolidated statement of the registrant and any of its investment company subsidiaries shall not be filed unless accompanied by a consolidating statement which sets forth the individual statements of each significant subsidiary included in the consolidated statement: Provided, however. That a consolidating statement need not be filed if all included subsidiaries are totally held; and (iii) consolidated or combined statements filed for subsidiaries not consolidated with the registrant shall not include any investment companies unless accompanied by consolidating or combining statements which set forth the individual statements of each included investment company which is a significant subsidiary. In June 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-08, Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. The update amends the criteria that define an investment company, requires additional disclosures, and seeks to clarify the measurement guidance. Public companies were required to apply ASU 2013-08 prospectively for interim and annual reporting periods beginning after December 15, 2013. The Company continues to be an investment company under the new guidance. NMS, NTS, CDS, and NIA continue to not be investment companies under the new guidance. Per ASC 946-10-15-4, an entity regulated under the 1940 Act is an investment company under this Topic. None of NMS, NTS, CDS, or NIA has ever been regulated under the 1940 Act. Per ASC 946-10-15-5, an entity that is not regulated under the 1940 Act shall assess all the characteristics of an investment company in paragraphs 946-10-15-6 through 15-7 to determine whether it is an investment company. The entity shall consider its purpose and design when making that assessment. Per ASC 946-10-15-6, an investment company has the following fundamental characteristics: a. It is an entity that does both of the following: 1. Obtains funds from one or more investors and provides the investor(s) with investment management services. 2. Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both. Table of Contents Ms. Mary A. Cole Ms. Sheila Stout July 9, 2014 Page 7 b. The entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income. Per ASC 946-10-15-7, an investment company also has the following typical characteristics: a. It has more than one investment. b. It has more than one investor. c. It has investors that are not related parties of the parent (if there is a parent) or the investment manager. d. It has ownership interests in the form of equity or partnership interests. e. It manages substantially all of its investments on a fair value basis. To be an investment company, an entity shall possess the fundamental characteristics in paragraph ASC 946-10-15-6. Typically, an investment company also has all of the characteristics in ASC 946-10-15-7. However, the absence of one or more of those typical characteristics does not necessarily preclude an entity from being an investment company. If an entity does not possess one or more of the typical characteristics, it shall apply judgment and determine, considering all facts and circumstances, how its activities continue to be consistent (or are not consistent) with those of an investment company. Each of the Portfolio Companies is an operating company where senior management and employees draw a base salary and earn an annual bonus. None have ever been an investment company under U.S. GAAP nor have any applied investment company accounting. Each of the Portfolio Companies does not meet the fundamental characteristics of an investment company. None have ever provided or offered to provide investment management services. None are registered as an investment advisers or it retained the services of an investment adviser, typical of investment companies. None have promoted themselves or held themselves out to provide or offer investment management services to any investor. Each of the Portfolio Companies have not in the past, and will not in the future, seek investors at all. They do not have a business objective of making i