Business Context and Reporting Period
This Form 8-K was filed by Newtek Business Services Corp. on March 16, 2018. The report discloses a cybersecurity incident affecting Newtek Technology Solutions, Inc. ("NTS"), a wholly-owned portfolio company of Newtek.
Key Financial Metrics
The filing does not provide current period revenue, profit, cash flow, or margin data. However, it discloses the following asset valuation adjustments related to the incident:
- Investment in NTS (Sept 30, 2017): $16.0 million
- Investment in NTS (Dec 31, 2017): $12.4 million
- Reduction in Fair Value: $3.6 million
- Company Net Assets (Dec 31, 2017): $278.3 million
- Impact on Net Assets: Approximately 4.46%
Material Changes
The primary material change is the reduction in the fair value of the Company's investment in NTS due to the cybersecurity incident. The incident involved the misappropriation of three domain names used for customer website management. Management believes attackers compromised a portion of the shared webhosting system, potentially acquiring customer information and/or gaining access to shared webhosting servers.
Outlook, Risks, and Management Commentary
Management Actions: NTS has notified affected shared webhosting customers and assisted in re-routing web traffic to minimize service disruptions. An investigation has been launched, and forensic investigators are engaged to assess the incident fully.
Risk Mitigation: Steps have been taken to secure systems, enhance security protections, and improve access controls to prevent future unauthorized activity.
Contingencies: The investigation remains ongoing, and the full extent of data compromise is not yet finalized.
Investor Verification Checklist
- Verify the scope of customer data potentially compromised in the NTS incident.
- Confirm the status of the ongoing forensic investigation and any regulatory notifications.
- Assess potential legal liabilities or reputational damage to Newtek Business Services Corp. stemming from the portfolio company's breach.
- Review the Company's broader cybersecurity protocols across other portfolio companies.