10-Q 1 d756450d10q.htm 10-Q 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2014

OR

 

¨ 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 333-185676

 

 

TriLinc Global Impact Fund, LLC

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   36-4732802

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1230 Rosecrans Avenue, Suite 605,

Manhattan Beach, CA 90266

(Address of principal executive offices)

(310) 997-0580

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

 

 

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 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 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   x  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

 

 

 


Table of Contents

Table of Contents

 

Part I. Financial Information

     3   

Item 1. Consolidated Financial Statements

     3   

Consolidated Statements of Assets and Liabilities as of June 30, 2014 (unaudited) and December 31, 2013

     3   

Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013 (unaudited)

     4   

Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2014 and 2013 (unaudited)

     5   

Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited)

     6   

Consolidated Schedule of Investments as of June 30, 2014 (unaudited) and December 31, 2013

     7-8   

Notes to Financial Statements (unaudited)

     9   

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     20   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     30   

Item 4. Controls and Procedures

     30   

Part II. Other Information

     30   

Item 1. Legal Proceedings

     30   

Item 1A. Risk Factors

     30   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     31   

Item 3. Defaults Upon Senior Securities

     32   

Item 4. Mine Safety Disclosures

     32   

Item 5. Other Information

     32   

Item 6. Exhibits

     33   

 

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Table of Contents

Part I. Financial Information

Item 1. Consolidated Financial Statements.

TriLinc Global Impact Fund, LLC

Consolidated Statements of Assets and Liabilities

 

     As of  
     June 30,     December 31,  
     2014     2013  
     (Unaudited)        

ASSETS

    

Investments owned, at fair value (amortized cost of $17,993,558 and $6,547,061, respectively)

   $ 17,993,558      $ 6,547,061   

Cash

     10,981,833        6,666,659   

Interest receivable

     239,778        114,809   

Due from affiliates (see Note 5)

     814,394        79,109   

Prepaid expenses

     7,740        54,180   
  

 

 

   

 

 

 

Total assets

     30,037,303        13,461,818   
  

 

 

   

 

 

 

LIABILITIES

    

Due to unitholders

     128,489        65,015   

Management fee payable

     149,467        —     

Due to affiliates (see Note 6)

     15,480        31,391   

Other payables

     —          149   
  

 

 

   

 

 

 

Total liabilities

     293,436        96,555   
  

 

 

   

 

 

 

NET ASSETS

   $ 29,743,867      $ 13,365,263   
  

 

 

   

 

 

 

ANALYSIS OF NET ASSETS:

    

Net capital paid in on Class A units

   $ 12,599,702      $ 3,405,283   

Net capital paid in on Class C units

     1,704,981        385,565   

Net capital paid in on Class I units

     17,058,237        10,280,361   

Offering costs

     (1,619,053     (705,946
  

 

 

   

 

 

 

Net assets (equivalent to $8.559 and $8.572, respectively per Class A, Class C and Class I unit based on units outstanding of 3,475,116.678 and 1,559,136.769, respectively)

   $ 29,743,867      $ 13,365,263   
  

 

 

   

 

 

 

Net assets, Class A (units outstanding of 1,396,088.817 and 377,316.669, respectively)

   $ 11,949,262      $ 3,234,442   

Net assets, Class C (units outstanding of 188,917.532 and 42,721.867, respectively)

     1,616,964        366,221   

Net assets, Class I (units outstanding of 1,890,110.329 and 1,139,098.233, respectively)

     16,177,641        9,764,600   
  

 

 

   

 

 

 

Net assets

   $ 29,743,867      $ 13,365,263   
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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TriLinc Global Impact Fund, LLC

Consolidated Statements of Operations

(Unaudited)

 

     Three months ended      Six months ended  
     June 30, 2014     June 30, 2013      June 30, 2014     June 30, 2013  

INVESTMENT INCOME

         

Interest income

   $ 656,910      $ 3,674       $ 946,684      $ 3,674   

Interest from cash

     651        —           651        39   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total investment income

     657,561        3,674         947,335        3,713   
  

 

 

   

 

 

    

 

 

   

 

 

 

EXPENSES

         

Management fees

     149,467        3,090         258,546        3,090   

Incentive fees

     99,663        —           157,618        —     

Operating expenses

     9,780        —           9,780        —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Total expenses

     258,910        3,090         425,944        3,090   

Expense support payment from Sponsor

     (99,663     —           (266,697     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Net expenses

     159,247        3,090         159,247        3,090   
  

 

 

   

 

 

    

 

 

   

 

 

 

NET INVESTMENT INCOME

     498,314        584         788,088        623   
  

 

 

   

 

 

    

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 498,314      $ 584       $ 788,088      $ 623   
  

 

 

   

 

 

    

 

 

   

 

 

 

NET INCOME PER UNITS - BASIC AND DILUTED

   $ 0.17      $ 0.01       $ 0.32      $ 0.01   

WEIGHTED AVERAGE UNITS OUTSTANDING - BASIC AND DILUTED

     2,906,193.746        91,828.126         2,493,438.210        57,186.847   

See accompanying notes to the consolidated financial statements.

 

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TriLinc Global Impact Fund, LLC

Consolidated Statements of Changes in Net Assets

(Unaudited)

 

     Six months ended  
     June 30, 2014     June 30, 2013  

INCREASE FROM OPERATIONS

    

Net investment income

   $ 788,088      $ 623   
  

 

 

   

 

 

 

Net increase from operations

     788,088        623   
  

 

 

   

 

 

 

DECREASE FROM DISTRIBUTIONS

    

Distributions to Class A unitholders

     (269,458     —     

Distributions to Class C unitholders

     (28,208     —     

Distributions to Class I unitholders

     (522,111     —     
  

 

 

   

 

 

 

Net decrease from distributions

     (819,777     —     
  

 

 

   

 

 

 

INCREASE/(DECREASE) FROM CAPITAL TRANSACTIONS

    

Issuance of Class A units

     9,194,335        2,900,000   

Issuance of Class C units

     1,319,449        —     

Issuance of Class I units

     6,777,866        19,650   

Contribution from Sponsor

     31,750        —     

Offering costs

     (913,107     (155,983
  

 

 

   

 

 

 

Net increase from capital transactions

     16,410,293        2,763,667   
  

 

 

   

 

 

 

Net increase in net assets

     16,378,604        2,764,290   

Net assets at beginning of period

     13,365,263        199,862   
  

 

 

   

 

 

 

Net assets at end of period

   $ 29,743,867      $ 2,964,152   
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

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TriLinc Global Impact Fund, LLC

Consolidated Statements of Cash Flows

(Unaudited)

 

     Six months ended  
     June 30, 2014     June 30, 2013  

Cash flows from operating activities

    

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 788,088      $ 623   

ADJUSTMENT TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES

    

Purchase of investments

     (17,465,336     (737,325

Maturity of investments

     6,121,226     

Accretion of discounts on investments

     (102,387     —     

Increase in interest receivable

     (124,969     (3,237

Increase in due from affiliates

     (754,569     —     

Decrease in prepaid expenses

     46,440        —     

Increase in due to unitholders

     63,474        —     

Increase in management fee payable

     149,467        3,090   

Decrease in due to affiliates

     —          350   

Decrease in other payable

     (149     —     
  

 

 

   

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

     (11,278,715     (736,499
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of units

     17,068,565        2,919,650   

Distributions paid to unitholders

     (596,692     —     

Payments of offering costs

     (929,018     (155,983

Capital contribution from our Sponsor

     51,034        —     
  

 

 

   

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

     15,593,889        2,763,667   
  

 

 

   

 

 

 

TOTAL INCREASE IN CASH

     4,315,174        2,027,168   

CASH AT BEGINNING OF THE PERIOD

     6,666,659        200,114   
  

 

 

   

 

 

 

CASH AT END OF THE PERIOD

   $ 10,981,833      $ 2,227,282   
  

 

 

   

 

 

 

Supplemental non-cash information

    

Issuance of units in connection with distribution reinvestment plan

   $ 223,085      $ —     

Capital contribution from our Sponsor

     31,750     

See accompanying notes to the consolidated financial statements.

 

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TriLinc Global Impact Fund, LLC

Consolidated Schedule of Investments

As of June 30, 2014

(Unaudited)

 

Investment Type /
Country

  Portfolio
Company
  Sector   Description   Interest     Fees (2)     Maturity (3)     Principal
Amount
    Current
Commitment (4)
    Amortized
Cost
    Fair
Value
    % of Net
Assets
 

Senior Secured Term Loan Participations (1)

                     

Peru

  Corporacion
Prodesa
S.R.L.
  Consumer
Products
  Diaper
Manufacturer
   

 

13.00

13.10

%- 

 

 

0.0

   
 
2/15/2015-
7/12/2016
 
  
    2,750,000        2,750,000        2,750,000        2,750,000        9.2

Brazil

  Usivale
Industria y
Commercio
  Agricultural
Products
  Sugar
Producer
    12.43     0.0    
 
12/15/2014-
12/15/2016
 
  
    3,000,000        3,000,000        3,000,000        3,000,000        10.1

Peru

  Phoenix
Foods,
S.A.C.
  Food
Products
  Food
Processor
    13.00     0.0     11/29/2014        464,000        464,000        464,000        464,000        1.6
                 

 

 

   

 

 

   

 

 

 

Total Senior Secured Term Loan Participations

                    6,214,000        6,214,000        20.9

Senior Secured Trade Finance Participations (1)

                     

Argentina

  Compania
Argentina
De Granos
  Agricultural
Products
  Agriculture
Distributor
    9.41     0.0     4/2/2015        3,136,738        5,000,000        3,136,738        3,136,738        10.5

Argentina

  Sancor
Coop
Unidas Ltd.
  Consumer
Products
  Dairy Co-
Operative
    10.33     0.0     8/1/2014        3,142,820        5,000,000        3,142,820        3,142,820        10.6

Peru

  Conductores
y Cables del
Peru
  Electrical
Equipment
  Insulated
Wire
Manufacturer
    8.00     0.0     9/25/2014        1,500,000        3,000,000        1,500,000        1,500,000        5.0

Argentina

  Frigorifico
Regional
Industrias
Alimenticias
S.A.
  Meat,
Poultry &
Fish
  Beef
Exporter
    11.98     0.0     6/5/2015        4,000,000        5,000,000        4,000,000        4,000,000        13.4
                 

 

 

   

 

 

   

 

 

 

Total Senior Secured Trade Finance Participations

                    11,779,558        11,779,558        39.5
                 

 

 

   

 

 

   

Total Investments

                  $ 17,993,558      $ 17,993,558     
                 

 

 

   

 

 

   

See accompanying notes to the consolidated financial statements.

 

1  Refer to Notes 3 and 4 of the consolidated financial statements for additional information on the Company’s investments.
2  Fees may include upfront, origination, commitment, facility and/or other fees that the borrower must contractually pay to the Company.
3  Given the nature of trade finance contracts, trade finance borrowers typically have a 30 day grace period relative to the maturity date.
4  Loan commitments are subject to the availability of funds and do not represent a contractual obligation to provide funding to the borrower.

 

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TriLinc Global Impact Fund, LLC

Consolidated Schedule of Investments

December 31, 2013

 

Investment Type /

Country

  Portfolio
Company
  Sector   Description   Interest     Fees (2)     Maturity     Principal
Amount
    Current
Commitment (3)
    Amortized
Cost
    Fair
Value
    % of Net
Assets
 

Secured Mezzanine Term Loan (1)

                     

Indonesia

  PT Indah
Global
Semesta
(IGS) (4)
  Consumer
Electronics
  Electronics
Retailer
    10.00     4.50     7/26/2014      $ 3,000,000        3,000,000      $ 2,952,836      $ 2,952,836        22.1
                 

 

 

   

 

 

   

 

 

 

Total Secured Mezzanine Term Loan

                    2,952,836        2,952,836        22.1

Senior Secured Term Loan Participations (1)

                     

Peru

  Corporacion
Prodesa
S.R.L.
  Consumer
Products
  Diaper
Manufacturer
    13.10     0.0     7/12/2016        500,000        500,000        500,000        500,000        3.7

Brazil

  Usivale
Industria y
Commercio
  Agricultural
Products
  Sugar
Producer
    12.43     0.0    
 
12/15/2014-
12/15/2016
  
  
    2,500,000        2,500,000        2,500,000        2,500,000        18.7
                 

 

 

   

 

 

   

 

 

 

Total Senior Secured Term Loan Participations

                    3,000,000        3,000,000        22.4

Senior Secured Trade Finance Participations (1)

                     

Chile

  Forestal Rio
Calle Calle
S.A.
  Forest
Products
  Sustainable
Timber
Exporter
    9.85     0.0     1/14/2014        500,000        500,000        500,000        500,000        3.7

Ecuador

  Gondi. S.A.   Meat,
Poultry &
Fish
  Other    

 

12.46

12.55

%- 

    0.0    
 
8/08/2014-
9/21/2014
  
  
    94,225        500,000        94,225        94,225        0.7
                 

 

 

   

 

 

   

 

 

 

Total Senior Secured Trade Finance Participations

                    594,225        594,225        4.4
                 

 

 

   

 

 

   

Total Investments

                  $ 6,547,061      $ 6,547,061     
                 

 

 

   

 

 

   

See accompanying notes to the consolidated financial statements.

 

1  Refer to Notes 3 and 4 of the consolidated financial statements for additional information on the Company’s investments.
2  Fees may include upfront, origination, commitment, facility and/or other fees that the borrower must contractually pay to the Company.
3  Other than the IGS loan facility, all other loan commitments are subject to the availability of funds and do not represent a contractual obligation to provide funding to the borrower.
4  Subject to the Advisor’s approval, the borrower has the option to extend the loan for 3 years at 12-month intervals.

 

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TRILINC GLOBAL IMPACT FUND, LLC

Notes to Consolidated Financial Statements

June 30, 2014

(Unaudited)

Note 1. Organization and Operations of the Company

TriLinc Global Impact Fund, LLC (the “Company”) was organized as a Delaware limited liability company on April 30, 2012 and formally commenced operations on June 11, 2013. The Company makes impact investments in Small and Medium Enterprises, known as SMEs, primarily in developing economies that provide the opportunity to achieve both competitive financial returns and positive measurable impact. The Company uses the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. The Company’s investment objectives are to generate current income, capital preservation and modest capital appreciation primarily through investments in SMEs. The Company is externally managed by TriLinc Advisors, LLC (the “Advisor”). The Advisor is an investment advisor registered in the State of California.

TriLinc Global, LLC (the “Sponsor”) owns 85% of the units of the Advisor, and is the sponsor of the Company. Strategic Capital Advisory Services, LLC (“SCAS”) owns 15% of the Advisor, and is considered an affiliate of the Company. The Sponsor employs staff who operate both the Advisor and the Company. The Sponsor, the Advisor and SCAS are Delaware limited liability companies.

In May 2012, the Advisor purchased 22,160.665 Class A units for aggregate gross proceeds of $200,000. The Company commenced its initial public offering of up to $1,500,000,000 in units of limited liability company interest (the “Offering”) on February 25, 2013. On June 11, 2013, the Company satisfied its minimum offering requirement of $2,000,000 when the Sponsor purchased 321,329.639 Class A units for aggregate gross proceeds of $2,900,000 and the Company commenced operations. The Company’s offering period is currently scheduled to terminate two years after the initial offering date, or February 25, 2015, unless extended.

Although the Company was organized and intends to conduct its business in a manner so that it is not required to register as an investment company under the Investment Company Act of 1940, as amended, the consolidated financial statements are prepared using the specialized accounting principles of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies. Overall, the Company’s management believes the use of investment company accounting makes the Company’s financial statements more useful to investors and other financial statement users since it allows a more appropriate basis of comparison to other entities with similar objectives.

To assist the Company in achieving its investment objective, the Company makes investments via wholly owned subsidiaries. As of June 30, 2014, the Company’s subsidiaries are TriLinc Global Impact Fund – Asia, Ltd. (“TGIF-A”), TriLinc Global Impact Fund – Latin America, Ltd. (“TGIF-LA”), TriLinc Global Impact Fund – Trade Finance, Ltd. (“TGIF-TF”), and TriLinc Global Impact Fund – African Trade Finance, Ltd. (“TGIF-ATF”) (which was organized on June 20, 2014), all of which are Cayman Islands exempted companies. To assist the Advisor in managing the Company and its subsidiaries, the Advisor may provide services via TriLinc Advisors International, Ltd. (“TAI”), a Cayman Islands exempted company that is wholly owned by TriLinc Advisors, LLC. As of June 30, 2014, the Company has made, through its subsidiaries, loans in several countries located in South America and Asia.

Note 2. Significant Accounting Policies

Basis of Presentation

The Company’s financial information is prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These financial statements are presented in United States dollars.

 

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The interim consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q. Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP is not required for interim reporting purposes and has been omitted herein. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission (“SEC”) on March 31, 2014.

The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results that ultimately may be achieved for the full year ending December 31, 2014.

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, which were established to hold certain investments of the Company. The Company owns 100% of each subsidiary and, as such, the subsidiaries are consolidated into the Company’s consolidated financial statements. Transactions between subsidiaries, to the extent they occur, are eliminated in consolidation. The consolidated financial statements reflect all adjustments, consisting solely of normal recurring accruals, that, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition as of and for the periods presented.

Cash

Cash consists of demand deposits at a financial institution. Such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limits. The Company considers the credit risk of this financial institution to be remote and has not experienced and does not expect to experience any losses in any such accounts.

Prepaid expenses

Prepaid expenses represent prepaid insurance paid by the Company during 2013. Prepaid insurance is being amortized over the term of the insurance policy, which is one year. The amortization of prepaid expense for the three and six months ended June 30, 2014, is reimbursable to the Company by the Sponsor under the Amended and Restated Operating Expense Responsibility Agreement.

Revenue Recognition

The Company records interest income on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest on loans for accounting purposes if there is reason to doubt the ability to collect such interest. Structuring, upfront and similar fees are recorded as a discount on investments purchased and are accreted into interest income, on a straight line basis, which we have determined not to be materially different from the effective yield method. The Company records prepayment fees on loans and debt securities as interest income.

The Company places loans on non-accrual status when principal and interest are past due 90 days or more or when there is a reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment of the financial condition of the borrower. Non-accrual loans are generally restored to accrual status when past due principal and interest is paid and, in the Company’s management’s judgment, is likely to remain current over the remainder of the term.

Valuation of Investments

The Company applies fair value accounting to all of its investments in accordance with ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC 820, fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, the Company has categorized its investments into a three-level fair value hierarchy as discussed in Note 3.

ASC 820 establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

 

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Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

 

    Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

    Level 2 — Valuations based on inputs other than quoted prices included in Level 1, which are either directly or indirectly observable.

 

    Level 3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. The information may also include pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

The inputs used in the determination of fair value may require significant judgment or estimation.

Investments for which market quotations are readily available are valued at those quotations. Most of our investments are loans to private companies, which are not actively traded in any market and for which quotations are not available. For those investments for which market quotations are not readily available, or when such market quotations are deemed by the Advisor not to represent fair value, our board of managers has approved a multi-step valuation process to be followed each fiscal quarter, as described below:

 

  1. Each investment is valued by the Advisor in collaboration with the relevant sub-advisor;

 

  2. For all investments with a maturity of greater than 12 months, we have engaged Duff & Phelps, LLC (“Duff & Phelps”) to conduct a review on the reasonableness of our internal estimates of fair value on each asset on a quarterly rotating basis, with each of such investments being reviewed at least annually, and provide an opinion that the Advisor’s estimate of fair value for each investment is reasonable;

 

  3. The audit committee of our board of managers reviews and discusses the preliminary valuation prepared by the Advisor and any opinion rendered by Duff & Phelps; and

 

  4. Our board of managers discusses the valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Advisor, Duff & Phelps and the audit committee. Our board of managers is ultimately responsible for the determination, in good faith, of the fair value of each investment.

Below is a description of factors that our board of managers may consider when valuing our investments.

Fixed income investments are typically valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including the sale of a business). The income approach uses valuation techniques to convert future amounts (for example, interest and principal payments) to a single present value amount (discounted) calculated based on an appropriate discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in valuing our investments include, as applicable: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the borrower’s ability to make payments, its earnings and discounted cash flows, the markets in which the Company does business, comparisons of financial ratios of peer companies that are public, the principal market for the borrower’s securities and an estimate of the borrower’s enterprise value, among other factors.

Equity interests in portfolio companies for which there is no liquid public market are valued at fair value. The board of managers, in its analysis of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income,

 

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revenues or in limited instances book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or the effects of acquisitions, recapitalizations, restructurings or other similar items.

We may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. We may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors we deem relevant in measuring the fair values of our investments.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

The Company measures net realized gains or losses by the difference between the net proceeds from the repayment or sale on investments and the amortized cost basis of the investment including unamortized upfront fees and prepayment penalties. Realized gains or losses on the disposition of an investment are calculated using the first in first out (FIFO) method, utilizing the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Payment-in-Kind Interest

The Company may have investments that contain a payment-in-kind, or PIK, interest provision. For loans with contractual PIK interest, any interest will be added to the principal balance of such investments and be recorded as income, if the valuation indicates that such interest is collectible.

Income Taxes

The Company, as a limited liability company, allocates all income or loss to its unitholders according to their respective percentage of ownership. Therefore, no provision for federal or state income taxes has been included in these financial statements.

The Company may be subject to withholding taxes on income and capital gains imposed by certain countries in which the Company invests. The withholding tax on income is netted against the income accrued or received. Any reclaimable taxes are recorded as income. The withholding tax on realized or unrealized gain is recorded as a liability.

The Company follows the guidance for uncertainty in income taxes included in the ASC 740, Income Taxes. This guidance requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including the resolution of any related appeals or litigation processes, based on the technical merits of the position.

At June 30, 2014, no tax liability for uncertain tax provision has been recognized in the accompanying financial statements nor did the Company recognize any interest and penalties related to unrecognized tax benefits. The earliest year that the Company’s income tax returns are subject to examination is the period ending December 31, 2012.

Unitholders are individually responsible for reporting income or loss, to the extent required by the federal and state income tax laws and regulations, based upon their respective share of the Company’s income and expense as reported for income tax purposes.

Calculation of Net Asset Value

The Company’s net asset value is calculated on a quarterly basis and commenced with respect to the first full quarter after the Company commenced operations. The Company calculates its net asset value per unit by subtracting total liabilities from the total value of the Company’s assets on the date of valuation and dividing the result by the total number of outstanding units on the date of valuation. The net asset value per Class A, Class C and Class I units are calculated on a pro-rata basis based on total units outstanding.

 

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Net Income (Loss) per Unit

Basic net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members’ units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income (loss) by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. The Company did not have any potentially dilutive units outstanding at June 30, 2014 and 2013.

Organization and Offering Costs

The Sponsor has incurred organization and offering costs on behalf of the Company. Organization and offering costs are reimbursable to the Sponsor up to 5.00% of the gross offering proceeds (the “O&O Reimbursement Limit”) raised from the offering and will be accrued and payable by the Company only to the extent that such costs do not exceed the O&O Reimbursement Limit. Reimbursement of organization and offering costs that exceed the O&O Reimbursement Limit will be expensed in the period they become reimbursable, which is dependent on the gross offering proceeds raised in such period, and are therefore not included on the Statements of Assets and Liabilities as of June 30, 2014 or December 31, 2013. These expense reimbursements are subject to regulatory caps and approval by the Company’s board of managers. If the Company sells the maximum amount of the Offering, it anticipates that such expenses will equal approximately 1.25% of the gross proceeds raised.

The Company may reimburse the dealer manager for certain expenses that are deemed underwriting compensation. Assuming an aggregate selling commission and a dealer manager fee of 9.75% of the gross offering proceeds (which assumes all offering proceeds come from Class A units), the Company would reimburse the dealer manager in an amount up to 0.25% of the gross offering proceeds. Because the aggregate selling commission and dealer manager fees will be less than 9.75% of the gross offering proceeds due to a portion of the offering proceeds coming from the sale of Class C and Class I units, the Company may reimburse the dealer manager for expenses in an amount greater than 0.25% of the gross offering proceeds, provided that the Company will not pay or reimburse any of the foregoing costs to the extent such payment would cause total underwriting compensation to exceed 10.0% of the gross proceeds of the primary offering as of the termination of the Offering, as required by the rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”).

Operating Expense Responsibility Agreement

On August 8, 2014, the Company, Advisor and the Sponsor entered into an Amended and Restated Operating Expense Responsibility Agreement effective as of June 11, 2013 and covering expenses through June 30, 2014. Pursuant to the terms of the Amended and Restated Operating Expense Responsibility Agreement, the Sponsor has paid expenses on behalf of the Company through June 30, 2014 and will additionally pay the accrued operating expenses of the Company as of June 30, 2014 on behalf of the Company. Such expenses will not be reimbursable to the Sponsor until the Company has raised $200 million of gross proceeds and, therefore, have not been recorded as expenses of the Company as of June 30, 2014. In accordance with ASC 450, Contingencies, such expenses will be accrued and payable by the Company in the period that they become both probable and estimable.

Recently Issued Accounting Pronouncements

Under the Jumpstart Our Business Startups Act (the “JOBS Act”), emerging growth companies can delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. The Company is choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, the Company’s financial statements may not be comparable to those of companies that comply with public company effective dates. There are no new or revised accounting standards that we have not adopted.

In June 2013, the FASB issued ASU 2013-08, Financial Services—Investment Companies: Amendments to the Scope, Measurement, and Disclosure Requirements (“ASU 2013-08”). ASU 2013-08 amends the current criteria for an entity to qualify as an investment company, creates new disclosure requirements and amends the measurement criteria for certain interests in other investment companies. ASU 2013-08 was effective on January 1, 2014, and did not have a material effect on the Company’s consolidated financial statements.

Risk Factors

The Company has limited operating history and is subject to the business risks and uncertainties associated with any new business. As an externally-managed Company, the Company is largely dependent on the efforts of the Advisor and other service providers.

 

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The Company is subject to financial market risks, including changes in interest rates. Global economies and capital markets can and have experienced significant volatility, which has increased the risks associated with investments in collateralized private debt instruments. Investment in the Company carries risk and there are no guarantees that the Company’s investment objectives will be achieved. The Company is also exposed to credit risk related to maintaining all of its cash at a major financial institution.

The Company’s investments consist of loans, loan participations and trade finance that are illiquid and non-traded, making purchase or sale of such financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral securing the loan and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as the Company’s borrowers, and those for which market yields are observable increase materially.

At June 30, 2014, the Company’s investment portfolio included 7 companies and was comprised of $6,214,000 or 34.5% in senior secured term loan participations, and $11,779,558 or 65.5% in senior secured trade finance participations. The Company’s largest loan by value was $4,000,000 or 22.2% of total investments. Participation in loans amounted to 100% of the Company’s total portfolio at June 30, 2014.

Note 3. Fair Value Measurements

The following table summarizes the fair value of the Company’s investments based on the inputs at June 30, 2014:

 

     Fair                       
     Value      Level 1      Level 2      Level 3  

Senior secured term loan participations

   $ 6,214,000       $ —         $ —         $ 6,214,000   

Senior secured trade finance participations

     11,779,558         —           —           11,779,558   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 17,993,558       $ —         $ —         $ 17,993,558   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table summarizes the fair value of the Company’s investments based on the inputs at December 31, 2013:

  

     Fair
Value
     Level 1      Level 2      Level 3  

Senior secured term loan participations

   $ 3,000,000       $ —        $ —        $ 3,000,000   

Secured mezzanine term loan

     2,952,836         —          —          2,952,836   

Senior secured trade finance participations

     594,225         —          —          594,225   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 6,547,061       $ —        $ —        $ 6,547,061   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following is a reconciliation for the six months ended June 30, 2014, of investments for which Level 3 inputs were used in determining fair value:

 

     Fair Value at
December 31,
2013
     Purchases      Maturities or
Prepayments
    Amortization      Fair Value at
June 30, 2014
 

Senior secured term loan participations

   $ 3,000,000       $ 3,326,000       $ (112,000   $ —         $ 6,214,000   

Senior mezzanine term loan

     2,952,836         1,944,777         (5,000,000     102,387         —     

Senior secured trade finance participations

     594,225         12,194,559         (1,009,226     —           11,779,558   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 6,547,061       $ 17,465,336       $ (6,121,226   $ 102,387       $ 17,993,558   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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As of June 30, 2014, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of June 30, 2014:

 

     Fair value      Valuation technique      Unobservable input      Range (weighted average)

Senior secured trade finance participations

   $ 11,779,558         Income approach         Market yield       9.41% - 11.98% (10.54%)

Senior secured term loan participations

   $ 6,326,000         Income approach         Market yield       12.43% - 13.10% (12.77%)

The significant unobservable inputs used in the fair value measurement of the Company’s trade finance investments are market yields. Significant increases in market yields would result in significantly lower fair value measurements.

For details of the country-specific risk concentrations for the Company’s investments, refer to the Consolidated Schedule of Investments and Note 4.

Note 4. Investments

As of June 30, 2014, one of the Company’s borrowers, Corporacion Prodesa S.R.L. (“Prodesa”), was late in making a $200,000 principal payment on one of the Company’s term loans. Prodesa has continued to make the required interest payments under the loan but has been unable to make the principal payment. The Company’s investment in Prodesa is comprised of two loans: 1) a $2,000,000 participation in a senior secured term loan requiring $200,000 quarterly principal payments and maturing in July 2016 and 2) a $750,000 participation in a loan secured by inventory maturing in February 2015. As of July 30, 2014, the Company and Prodesa have agreed to restructure the terms of the loans as follows: extend the maturity of the $2,000,000 loan to June 2017 with equal monthly principal payment starting March 2015; extend the maturity of the $750,000 loan to December 2016 with equal monthly principal payment starting January 2016; assess to both loans additional deferred interest or PIK of 1.75%; the pledge of additional collateral securing the loans; and increased reporting requirements including biannual audited financial statements and monthly internal financial statements. At closing of the restructure, Prodesa will pay the Company a restructuring fee of $46,250. Prodesa has also agreed to secure a $400,000 equity injection. If Prodesa fails to secure the $400,000 equity injection, the deferred interest rate will increase to 2.5%. The Company has determined that no concessions were granted to Prodesa and, therefore, the restructure is not considered a troubled debt restructuring.

As of June 30, 2014, the Company’s investments consisted of the following:

 

     Amortized      Fair      Percentage  
     Cost      Value      of Total  

Senior secured term loan participations

   $ 6,214,000       $ 6,214,000         34.5

Senior secured trade finance participations

     11,779,558         11,779,558         65.5
  

 

 

    

 

 

    

 

 

 

Total

   $ 17,993,558       $ 17,993,558         100.0
  

 

 

    

 

 

    

 

 

 

As of December 31, 2013, the Company’s investments consisted of the following:

 

     Amortized
Cost
     Fair
Value
     Percentage
of Total
 

Senior secured term loan participations

   $ 3,000,000       $ 3,000,000         45.8

Secured mezzanine term loan

     2,952,836         2,952,836         45.1

Senior secured trade finance participations

     594,225         594,225         9.1
  

 

 

    

 

 

    

 

 

 

Total investments

   $ 6,547,061       $ 6,547,061         100.0
  

 

 

    

 

 

    

 

 

 

 

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The industry composition of the Company’s portfolio, at fair market value, as of June 30, 2014, and December 31, 2013, was as follows:

 

     As of June 30, 2014     As of December 31, 2013  
     Fair      Percentage     Fair      Percentage  

Industry

   Value      of Total     Value      of Total  

Agricultural Products

   $ 6,136,738         34.1     2,500,000         38.3

Consumer Electronics

     —           0.0   $ 2,952,836         45.1

Electrical Equipment

     1,500,000         8.3     —           0.0

Food Products

     464,000         2.6     —           0.0

Forest Products

     —           0.0     500,000         7.6

Meat, Poultry & Fish

     4,000,000         22.2     94,225         1.4

Personal and Nondurable Consumer Products

     5,892,820         32.7     500,000         7.6
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 17,993,558         100.0   $ 6,547,061         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

The table below shows the portfolio composition by geography classification at fair value as of June 30, 2014, and December, 31, 2013:

 

     As of June 30, 2014     As of December 31, 2013  
     Fair      Percentage     Fair      Percentage  

Country

   Value      of Total     Value      of Total  

Indonesia

   $ —           0.0   $ 2,952,836         45.1

Peru

     4,714,000         26.2     500,000         7.6

Argentina

     10,279,558         57.1     —           0.0

Brazil

     3,000,000         16.7     2,500,000         38.2

Chile

     —           0.0     500,000         7.6

Ecuador

     —           0.0     94,225         1.4
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 17,993,558         100.0   $ 6,547,061         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Note 5. Related Parties

Agreements

Advisory Agreement

In February 2014, the Company entered into an Amended and Restated Advisory Agreement with the Advisor to renew the Company’s arrangement with the Advisor for an additional year.

Asset management fees payable to the Advisor are remitted quarterly in arrears and are equal to 0.50% (2.00% per annum) of Gross Asset Value, as defined in the Amended and Restated Advisory Agreement between the Company and the Advisor. Asset management fees are paid to the Advisor in exchange for fund management and administrative services. Although the Advisor manages, on the Company’s behalf, many of the risks associated with global investments in developing economies, management fees do not include the cost of any hedging instruments or insurance policies that may be required to appropriately manage the Company’s risk. If certain financial goals are reached by the Company, the Company is required to pay the Advisor an incentive fee on net investment income and an incentive fee on capital gains. The incentive fee on net investment income, or the subordinated incentive fee on income, is calculated and payable quarterly in arrears and is based upon the Company’s pre-incentive fee net investment income for the immediately preceding quarter. No subordinated incentive fee is earned by the Advisor in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the quarterly preferred return rate of 1.50% (6.00% annualized) (the “Preferred Return”). In any quarter, all of the Company’s pre-incentive fee net investment income, if any, that exceeds the quarterly Preferred Return, but is less than or equal to 1.875% (7.50% annualized) at the end of the immediately preceding fiscal quarter, is payable to the Advisor. For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.875% on its net assets at the end of the immediately preceding fiscal quarter, the incentive fee on income equals 20% of the amount of the Company’s pre-incentive fee net investment income.

 

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An incentive fee on capital gains will be earned on investments sold and shall be determined and payable to the Advisor in arrears as of the end of each calendar year. The incentive fee on capital gains is equal to 20% of the Company’s realized capital gains on a cumulative basis from inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees on capital gains. The Company had no capital gains and therefore did not accrue an incentive fee for the three and six months ended June 30, 2014.

Transactions

For the three and six months ended June 30, 2014, the Company incurred $456,835 and $973,573, respectively, in operating expenses excluding the management and incentive fees earned by the Advisor. As discussed in Note 2, for the six months ended June 30, 2014, the Sponsor assumed responsibility for $966,793 of the Company’s operating expenses under the Amended and Restated Operating Expense Responsibility Agreement.

For the three and six months ended June 30, 2014, the Advisor earned $149,467 and $258,546, respectively, in management fees and $99,663 and $157,618, respectively, in incentive fees. For the six months ended June 30, 2014, the Sponsor paid an aggregate of $266,697 in management and incentive fees under the Amended and Restated Operating Expense Responsibility Agreement.

As of June 30, 2014, pursuant to the terms of the Amended and Restated Operating Expense Responsibility Agreement, the Sponsor has paid approximately $1,936,600 of operating expenses on behalf of the Company and will pay or reimburse to us an additional $1,078,500 of expenses, which have been accrued by the Sponsor as of June 30, 2014. Such expenses will be expensed and payable by the Company to the Sponsor once the Company has raised gross proceeds of $200 million.

On March 31, 2014, the Sponsor made a permanent capital contribution to the Company in the amount of $31,750 to cover the amount of distributions paid by the Company that were in excess of net investment income. This contribution is not covered by the Amended and Restated Operating Expense Responsibility Agreement and thus will not be repaid to the Sponsor by the Company.

Due from affiliates on the Consolidated Statement of Assets and Liabilities in the amount of $814,394 is comprised of $782,644 due from the Sponsor in connection with the Amended and Restated Operating Expense Responsibility Agreement and $31,750, in capital contribution due from the Sponsor. The $782,644 in operating expenses were paid by the Company during the six months ended June 30, 2014, but under the terms of the Amended and Restated Operating Expense Responsibility Agreement are the responsibility of the Sponsor. The amount due from affiliates is payable at the discretion of the Sponsor. On July 31, 2014, the Sponsor made a payment to the Company for the $31,750 capital contribution.

For the six months ended June 30, 2014, the Company paid a total of $1,032,623 in dealer manager fees and selling commissions to the Company’s dealer manager, SC Distributors. These fees and commissions were paid in connection with the sales of the Company’s units to investors and, as such, were recorded against the proceeds from the issuance of units and are not reflected in the Company’s consolidated statement of operations.

Note 6. Organization and Offering Costs

As of June 30, 2014, the Sponsor has paid approximately $5.6 million of offering costs and $236,000 of organization costs, all of which were paid directly by the Sponsor on behalf of the Company, and will be reimbursed to the Sponsor as disclosed in Note 2 of the consolidated financial statements. Such amounts include approximately $782,000 of offering costs, which were incurred by the Sponsor during the six months ended June 30, 2014. During the six months ended June 30, 2014, $929,018 was reimbursed to the Sponsor. In addition, as of June 30, 2014, $15,480 was accrued towards the reimbursement of offering costs and is reflected in the statement of assets and liabilities as due to affiliate. The total reimbursement to the Sponsor for the six months ended June 30, 2014 of $913,107 is included as a reduction to net assets on the Consolidated Statement of Changes in Net Assets. As of June 30, 2014, the Company has reimbursed the Sponsor a total of $1,619,053 of offering costs.

 

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Note 7. Unit Capital

The Company has three classes of units: Class A units, Class C units and Class I units. The unit classes have different sales commissions and dealer manager fees, and there is an ongoing distribution fee with respect to Class C units. All units participate in the income and expenses of the Company on a pro-rata basis based on the number of units outstanding and therefore have the same net asset value per unit. The following table is a summary of the units issued during the six months ended June 30, 2014:

 

     Units Outstanding as of
December 31, 2013
     Units Issued
During the Period
     Units Outstanding as of
June 30, 2014
 

Class A units

     377,316.669         1,018,772.148         1,396,088.817   

Class C units

     42,721.867         146,195.665         188,917.532   

Class I units

     1,139,098.233         751,012.096         1,890,110.329   
  

 

 

    

 

 

    

 

 

 

Total

     1,559,136.769         1,915,979.909         3,475,116.678   
  

 

 

    

 

 

    

 

 

 

The total of 1,915,979.909 units issued during the six months ended June 30, 2014 includes 24,718.535 units issued under the Distribution Reinvestment Plan at a value of $223,085.

Note 8. Distributions

On January 28, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from January 1 through January 31, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00173082 per unit per day (less the distribution fee with respect to Class C units). On February 4, 2014, $71,184 of these distributions were paid in cash and on January 31, 2014, $21,091 were reinvested in units for those unitholders participating in the Amended and Restated Distribution Reinvestment Plan (“Distribution Reinvestment Plan”).

On February 24, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from February 1 through February 28, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00173082 per unit per day (less the distribution fee with respect to Class C units). On March 3, 2014, $83,752 of these distributions were paid in cash and on February 28, 2014, $19,925 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

On March 25, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from March 1 through March 31, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00173082 per unit per day (less the distribution fee with respect to Class C units). On April 3, 2014, $95,043 of these distributions were paid in cash and on March 31, 2014, $30,466 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

On April 21, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from April 1 through April 30, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00173082 per unit per day (less the distribution fee with respect to Class C units). On May 1, 2014, $97,345 of these distributions were paid in cash and on April 30, 2014, $40,089 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

On May 25, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from May 1 through May 31, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00197808 per unit per day (less the distribution fee with respect to Class C units). On June 1, 2014, $120,880 of these distributions were paid in cash and on May 31, 2014, $51,552 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

On June 25, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from June 1 through June 30, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00197808 per unit per day (less the distribution fee with respect to Class C units). On July 1, 2014, $128,489 of these distributions were paid in cash and on June 30, 2014, $59,962 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

 

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Note 9. Financial Highlights

The following is a schedule of financial highlights of the Company for the six months ended June 30, 2014 and 2013. The Company’s income and expense is allocated pro-rata across the outstanding Class A, Class C and Class I units, as applicable, and, therefore, the financial highlights are equal for each of the outstanding classes.

 

     2014     2013  

Per unit data (1):

    

Net proceeds before offering costs (2)

   $ 9.025      $ 9.025   

Offering costs

     (0.466     —     
  

 

 

   

 

 

 

Net Proceeds after offering costs

     8.559        9.025   

Net investment income/(loss)

     0.316        0.002   

Distributions

     (0.329     —     

Capital contribution

     0.013        —     
  

 

 

   

 

 

 

Net increase/(decrease) in net assets

     0.000        0.002   
  

 

 

   

 

 

 

Net asset value at end of period

     8.559        9.027   
  

 

 

   

 

 

 

Total return based on net asset value (3)

     3.842     0.022

Net assets at end of period

   $ 29,743,867      $ 2,964,152   

Units Outstanding at end of period

     3,475,116.678        345,667.530   

Ratio/Supplemental data (annualized) (4)(5):

    

Ratio of net investment income/(loss) to average net assets

     7.34     0.40

Ratio of operating expenses to average net assets

     1.48     0.00

 

1  The per unit data was derived by using the weighted average units outstanding during the six months ended June 30, 2014, which was 2,493,438.
2  Represents net asset value at the beginning of the period.
3  Net asset value would have been lower if the Sponsor had not made capital contributions as of March 31, 2014, and December 31, 2013, of $31,750 and $51,034, respectively, or had not absorbed and deferred reimbursement for a substantial portion of the Company’s operating expenses since the Company began operations.
4  Total return, ratio of net investment income and ratio of operating expenses to average net assets for the six months ended June 30, 2014 and 2013, prior to the effect of the Amended and Restated Operating Expense Responsibility Agreement were as follows; total return: (1.92%) and (8.84%), ratio of net investment income/(loss): (4.12%) and (17.23%), and ratio of net expenses to average net assets: 11.46% and 17.27%, respectively.
5  The Company’s net investment income has been annualized assuming consistent results over a full fiscal year, however, this may not be indicative of a full fiscal year.

Note 10. Subsequent Events

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in the Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the six months ended June 30, 2014, except as discussed below.

Distributions

On July 22, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from July 1 through July 31, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00197808 per unit per day (less the distribution fee with respect to Class C units). On August 4, 2014, $152,386 of these distributions were paid in cash and on July 31, 2014, $71,215 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

Status of the Offering

For the period from July 1, 2014 through August 11, 2014, the Company sold approximately 975,694 units in the Offering (including units issued pursuant to the Distribution Reinvestment Plan) for approximately $9,284,000 in gross proceeds. As of August 11, 2014, the Company had received approximately $41.7 million in total gross offering proceeds through the issuance of approximately 4.5 million total units in the Offering (including units issued pursuant to the Distribution Reinvestment Plan).

 

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Unit Offering Price

Pursuant to the net asset value determination by the Company’s board of managers, the value has not increased above nor decreased below the Company’s net proceeds per unit; therefore, the Company will continue to sell units at a price of $10.00 per Class A unit, $9.576 per Class C unit and $9.186 per Class I unit. The Company’s net asset value and the offering prices would have decreased if the Sponsor had not made a capital contribution in the amount of $31,750 in the quarter ended March 31, 2014, or had not absorbed and deferred reimbursement for a substantial portion of the Company’s operating expenses since the Company began its operations.

Investments

For the period from July 1, 2014 through August 11, 2014, the Company funded approximately $11 million in new loans. On August 1, 2014, the Company received a repayment of $2.3 million on a maturing trade finance participation.

Agreements

On July 1, 2014, TriLinc Global Impact Fund – African Trade Finance, Ltd. and TriLinc Advisors International, Ltd entered into a sub-advisory agreement with Barak Fund Management Ltd. to become a sub-advisor with respect to the Company’s investments in Sub-Saharan Africa.

On August 8, 2014, the Company entered into an Amended and Restated Operating Expense Responsibility Agreement with the Company’s Sponsor and Advisor. Pursuant to the terms of this agreement, the Sponsor agreed to be responsible for the Company’s cumulative operating expenses incurred through June 30, 2014, including the incentive fee earned by the Advisor during the quarter ended June 30, 2014. For additional information regarding the Amended and Restated Operating Expense Responsibility Agreement refer to Notes 2 and 5.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Company’s financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q.

Except as otherwise specified, references to “we,” “us,” “our,” or the “Company,” refer to TriLinc Global Impact Fund, LLC.

Forward Looking Statements

Some of the statements in this Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report involve risks and uncertainties, including statements as to:

 

    our future operating results;

 

    our ability to raise capital in our public offering;

 

    our ability to purchase or make investments in a timely manner;

 

    our business prospects and the prospects of our borrowers;

 

    the economic, social and/or environmental impact of the investments that we expect to make;

 

    our contractual arrangements and relationships with third parties;

 

    the dependence of our future success on the general economy and its impact on the companies in which we invest;

 

    our dependence on our Advisor and our dependence on and the availability of the financial resources of our Sponsor;

 

    the ability of our borrowers to make required payments;

 

    the ability of our sub-advisors and borrowers to achieve their objectives;

 

    our expected financings and investments;

 

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    the adequacy of our cash resources and working capital; and

 

    the timing of cash flows, if any, from the operations of our borrowers.

We use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC.

Overview

We make impact investments in SMEs that provide the opportunity to achieve both competitive financial returns and positive measurable impact. We were organized as a Delaware limited liability company on April 30, 2012. We have and intend to continue to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940. We use the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, loan participations, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. A substantial portion of our assets consists of collateralized private debt instruments, which we believe offer opportunities for competitive risk-adjusted returns and income generation. We are externally managed and advised by TriLinc Advisors.

Our business strategy is to generate competitive financial returns and positive economic, social and environmental impact by providing financing to SMEs, primarily in developing economies. Our style of investment is referred to as impact investing, which J.P. Morgan Global Research and Rockefeller Foundation in a 2010 report called “an emerging alternative asset class” and defined as investing with the intent to create positive impact beyond financial return. We believe it is possible to generate competitive financial returns while creating positive, measurable impact. We measure the economic, social and environmental impact of our investments using industry-standard metrics, including the Impact Reporting and Investment Standards. Through our investments in SMEs, we believe we are enabling job creation and stimulating economic growth.

We commenced the Offering on February 25, 2013. Pursuant to the Offering, we are offering on a continuous basis up to $1.5 billion in units of our limited liability company interest, consisting of up to $1.25 billion of units in the primary Offering consisting of Class A units at an initial offering price of $10.00 per unit, Class C units at $9.576 per unit and Class I units at $9.186 per unit, and up to $250 million of units pursuant to the Distribution Reinvestment Plan. SC Distributors, LLC is the dealer manager for the Offering. The Company’s offering period is currently scheduled to terminate two years after the initial offering date, or February 25, 2015, unless extended.

In May 2012, the Advisor purchased 22,160.665 Class A units for aggregate gross proceeds of $200,000. On June 11, 2013, we satisfied the minimum offering requirement of $2,000,000 when the Sponsor purchased 321,329.639 Class A units for aggregate gross proceeds of $2.9 million and we commenced operations. As of June 30, 2014, we had received subscriptions for and issued 3,475,116.678 of our units, including 30,287.784 units issued under our Distribution Reinvestment Plan, for gross proceeds of $32,440,973 including $273,347 reinvested under our Distribution Reinvestment Plan (before dealer-manager fees of $257,451 and selling commissions of $820,568, for net proceeds of $31,362,954).

Investments

Our investment objectives are to provide our unitholders current income, capital preservation, and modest capital appreciation. These objectives are achieved primarily through SME trade finance and term loan financing, while employing rigorous risk-mitigation and due diligence practices, and transparently measuring and reporting the economic, social and environmental impacts of our investments. The majority of our investments are senior and other collateralized loans to SMEs with established, profitable businesses in developing economies. With the four sub-advisors that we have contracted to assist the Advisor in implementing the Company’s investment program, we expect to provide growth capital financing generally ranging in size from $1-10 million. We seek to protect and grow investor capital by: (1) targeting countries with favorable economic growth and investor protections; (2) partnering with sub-advisors with significant experience in local markets; (3) focusing on creditworthy lending targets who have at least 3-year operating histories and demonstrated cash flows enabling loan repayment; (4) making primarily debt investments, backed by collateral and borrower guarantees; (5) employing best practices in our due diligence and risk mitigation processes; and (6) monitoring our portfolio on an ongoing basis.

 

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Investments will continue to be primarily credit facilities to developing economy SMEs, including trade finance and term loans, through TriLinc Advisor’s team of professional sub-advisors with a local presence in the markets where they invest. We typically provide financing that is collateralized, has a short to medium-term maturity and is self-liquidating through the repayment of principal. By providing additional liquidity to growing small businesses, we believe we support both economic growth and the expansion of the global middle class.

Revenues

Since we anticipate that the majority of our assets will continue to consist of term loans and trade finance instruments, we expect that the majority of our revenue will continue to be generated in the form of interest. Our senior and subordinated debt investments may bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semi-annually. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally is due at the maturity date. In addition, we generate revenue in the form of acquisition and other fees in connection with some transactions. Original issue discounts and market discounts or premiums are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.

Expenses

Our primary operating expenses include the payment of asset management fees and expenses reimbursable to our Advisor under the Amended and Restated Advisory Agreement. We bear all other costs and expenses of our operations and transactions.

Since our inception through June 30, 2014, our Sponsor has assumed substantially all our operating expenses under the terms of the Amended and Restated Operating Expense Responsibility Agreement.

Portfolio and Investment Activity

During the six months ended June 30, 2014, we invested, either through direct loans or loans participation, $17,465,336 across 9 portfolio companies, including 5 new and 4 existing portfolio companies. The new investments consisted of senior secured term loan participations and senior secured trade finance participations. Additionally, we received proceeds from repayment of investment principal of $6,121,226. For the six months ended June 30, 2013, we invested $737,325 in loan participations with 2 companies.

At June 30, 2014, the Company’s investment portfolio included loans to 7 companies and was comprised of $6,214,000 or 34.5% in senior secured term loan participations, and $11,779,558 or 65.5% in senior secured trade finance participations. The Company’s largest loan by value was $4,000,000 or 22.2% of total investments. Participation in loans amounted to 100% of the Company’s total portfolio at June 30, 2014.

The weighted average yield of our senior secured term loan participations and senior secured trade finance participations at their current cost basis were 12.8% and 10.5%, respectively at June 30, 2014.

Results of Operations

Revenues. For the three months ended June 30, 2014, investment income totaled $657,561. Interest income from loan participations and direct loans amounted to $410,532 and $178,000, respectively. Interest income also included $68,378 in amortization of upfront fees paid on our secured mezzanine term loan position and $651 in interest earned on our cash balance.

For the six months ended June 30, 2014, investment income totaled $947,335. Interest income from loan participations and direct loans amounted to $549,964 and $294,333, respectively. Interest income also included $102,387 in amortization of upfront fees paid on our secured mezzanine term loan position and $651 in interest earned on our cash balance.

For the three and six months ended June 30, 2013, interest income from loan participations amounted to $3,674. We also earned $39 in interest on our cash balance.

 

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Expenses. For the three months ended June 30, 2014, the management and incentive fees amounted to $149,467 and $99,663, respectively. The entire amount of the incentive fee was paid by the Sponsor under the Amended and Restated Operating Expense Responsibility Agreement. We incurred $9,780 in operating expenses. In addition, the Sponsor assumed responsibility for our operating expenses in the aggregate amount of $447,055 under the Amended and Restated Operating Expense Responsibility Agreement for expenses paid or incurred by the Company.

For the six months ended June 30, 2014, the management and incentive fees amounted to $258,546 and $157,618, respectively. An aggregate of $266,697 of the management and incentive fees was paid by the Sponsor under the Amended and Restated Operating Expense Responsibility Agreement. We incurred $9,780 in operating expenses. In addition, the Sponsor assumed responsibility for our operating expenses in the aggregate amount of $963,793 under the Amended and Restated Operating Expense Responsibility Agreement for expenses paid or incurred by the Company.

For the three and six months ended June 30, 2013, we incurred a management fee of $3,090.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments. We measure net realized gains or losses by the difference between the net proceeds from the repayment or sale of an investment and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized. We had no realized or unrealized gains or losses for the three and six months ended June 30, 2014 and 2013.

Changes in Net Assets from Operations. For the six months ended June 30, 2014, and 2013, we recorded a net increase in net assets resulting from operations of $788,088 and $623, respectively.

Financial Condition, Liquidity and Capital Resources

As of June 30, 2014, we had $11 million in cash. We generate cash primarily from the net proceeds from the sale of units, from cash flows from interest, dividends and fees earned from our investments and principal repayments and proceeds from sales of our investments. We may also generate cash in the future from debt financing. Our primary use of cash is to make loans, either directly or through participations, payments of our expenses, repayment of debt, if any, and cash distributions to our unitholders. We expect to maintain cash reserves from time to time for investment opportunities, working capital and distributions. We sell our units on a continuous basis at initial offering prices of $10.00 per Class A unit, $9.576 per Class C unit, and $9.186 per Class I unit; however, to the extent that our net asset value on the most recent valuation date increases above or decreases below our net proceeds per unit as stated in the Company’s prospectus, our board of managers will adjust the offering prices of all classes of units to ensure that no unit is sold at a price, after deduction of selling commissions, dealer manager fees and organization and offering expenses, that is above or below our net asset value per unit as of such valuation date.

Based on the valuation with respect to the quarter ended June 30, 2014, the offering price of our units has not changed and we are continuing to sell our units at their original prices. However, the valuation and the offering prices would have decreased if the Sponsor had not made a capital contribution in the amount of $31,750 as of March 31, 2014, and $51,034 as of December 31, 2013, and had not absorbed and deferred reimbursement for substantially all of the Company’s operating expenses since it began its operations.

As of June 30, 2014, the Company had sold approximately 3.48 million total units in the Offering (including units pursuant to the Distribution Reinvestment Plan) for total gross offering proceeds of approximately $32.4 million.

We may borrow funds to make investments, including before we have fully invested the proceeds raised from the issuance of units, to the extent we determine that leveraging our portfolio would be appropriate. We have not decided whether, and to what extent, we will finance portfolio investments using debt or the specific form that any such financing would take. Accordingly, we cannot predict with certainty what terms any such financing would have or the costs we would incur in connection with any such arrangement. As of June 30, 2014, we had no debt outstanding and no available sources of debt financing.

 

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Contractual Obligations and Commitments

The Company does not include a contractual obligations table herein because all obligations of the Company are short-term. We have included the following information related to commitments of the Company to further assist investors in understanding the Company’s outstanding commitments.

We have entered into certain contracts under which we have material future commitments. On February 25, 2013, we entered into the Advisory Agreement with the Advisor. The Advisory Agreement was effective as of February 25, 2013, the date that the Company’s registration statement was declared effective by the SEC. In February 2014, we entered into an Amended and Restated Advisory Agreement with the Advisor to renew our arrangement with the Advisor for an additional year. The Advisor serves as our advisor in accordance with the terms of our Amended and Restated Advisory Agreement. Payments under our Amended and Restated Advisory Agreement in each reporting period consist of (i) an asset management fee equal to a percentage of the value of our gross assets, as defined in the agreement, and (ii) the reimbursement of certain expenses. Certain subordinated fees based on our performance are payable after our subordination is met.

We also had unfunded commitments to three trade finance borrowers of $4 million as of June 30, 2014. These commitments expire in August and October 2014, and are subject to approval by our Advisor and the availability of funds. Our secured mezzanine term loan borrower, with an outstanding balance of zero as of June 30, 2014, has the option, based upon Company approval, to extend the maturity of the loan for 3 years in 12-month increments. Each extension requires the secured mezzanine term loan borrower to meet the extension criteria in the loan agreement and to pay a fee of 2.5% of the loan balance at the time of extension.

If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Amended and Restated Advisory Agreement.

Off-Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not expect to have any off-balance sheet financings or liabilities. The Company reimburses organization and offering expenses to the Sponsor to the extent that such reimbursement does not exceed 5.0% of the gross offering proceeds raised from the offering. As of June 30, 2014, the total amount that would be due to be reimbursed to the Sponsor is approximately $4.2 million.

Pursuant to the terms of an Amended and Restated Operating Expense Responsibility Agreement between the Company, the Advisor and the Sponsor, the Sponsor has paid expenses on behalf of the Company through June 30, 2014, and will pay additional accrued operating expenses of the Company, which will not be reimbursable to the Sponsor until the Company has raised $200 million of gross proceeds in the Offering. Such expenses will be expensed and payable by the Company in the period they become reimbursable and are estimated to be approximately $3.0 million through June 30, 2014.

Distributions

We have paid distributions commencing with the month beginning July 1, 2013, and we intend to continue to pay distributions on a monthly basis. From time to time, we may also pay interim distributions at the discretion of our board. Distributions are subject to the board of managers’ discretion and applicable legal restrictions and accordingly, there can be no assurance that we will make distributions at a specific rate or at all. Distributions are made on all classes of our units at the same time. The cash distributions with respect to the Class C units are lower than the cash distributions with respect to Class A and Class I units because of the distribution fee relating to Class C units, which is allocated as a Class C specific expense. Amounts distributed to each class are allocated among the unitholders in such class in proportion to their units. Distributions are paid in cash or reinvested in units, for those unitholders participating in the Distribution Reinvestment Plan. For the six months ended June 30, 2014 we have paid a total of $819,777 in distributions, comprised of $596,692 paid in cash and $223,085 reinvested under our Distribution Reinvestment Plan.

 

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The table below contains additional information regarding distributions to our unitholders:

 

                                 Sources  

Months ended

   Amount
per Unit
     Cash
Distributions
     Distributions
Reinvested
     Total
Declared
     Cash Flows from
Operating
Activities
     Cash Flows from
Financing
Activities (1)
 

January 31, 2014

   $ 0.05366       $ 71,183         21,091         92,274       $ 71,183       $ —     

February 28, 2014

   $ 0.04846         83,752         19,925         103,677         83,752         —     

March 31, 2014

   $ 0.05366         95,044         30,466         125,510         63,294         31,750   

April 30, 2014

   $ 0.05192         97,345         40,089         137,434         97,345         —     

May 31, 2014

   $ 0.05986         120,880         51,552         172,432         120,880         —     

June 30, 2014

   $ 0.05792         128,488         59,962         188,450         128,488         —     
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total for 2014

      $ 596,692       $ 223,085       $ 819,777       $ 564,942       $ 31,750   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

July 31, 2013

   $ 0.05366       $ 857       $ 18,547       $ 19,404       $ 857       $ —     

August 31, 2013

   $ 0.05366         22,932         1,452         24,384         22,932         —     

September 30, 2013

   $ 0.05192         22,892         1,771         24,663         22,892         —     

October 31, 2013

   $ 0.05366         47,409         6,287         53,696         47,409         —     

November 30, 2013

   $ 0.05192         57,275         9,370         66,645         57,275         —     

December 31, 2013

   $ 0.05366         65,015         12,835         77,850         13,981         51,034   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total for 2013

      $ 216,380       $ 50,262       $ 266,642       $ 165,346       $ 51,034   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Capital contribution from our Sponsor

Related Party Transactions

For the three and six months ended June 30, 2014, the Company incurred $456,835 and $973,573, respectively, in operating expenses excluding the management and incentive fees earned by the Advisor. For the six months ended June 30, 2014, the Sponsor assumed responsibility for $966,793 of the Company’s operating expenses under the Amended and Restated Operating Expense Responsibility Agreement.

For the three and six months ended June 30, 2014, the Advisor earned $149,467 and $258,546, respectively, in management fees and $99,663 and $157,618, respectively, in incentive fees. For the six months ended June 30, 2014, the Sponsor paid an aggregate of $266,697 in management and incentive fees under the Amended and Restated Operating Expense Responsibility Agreement.

As of June 30, 2014, pursuant to the terms of the Amended and Restated Operating Expense Responsibility Agreement, the Sponsor has paid approximately $1,936,600 of operating expenses on behalf of the Company and will pay or reimburse to us an additional $1,078,500 of expenses, which have been accrued by the Sponsor as of June 30, 2014. Such expenses will be expensed and payable by the Company to the Sponsor once the Company has raised gross proceeds of $200 million.

On March 31, 2014, the Sponsor made a permanent capital contribution to the Company in the amount of $31,750 to cover the amount of distributions paid by the Company that were in excess of net investment income.

Due from affiliates on the Consolidated Statement of Assets and Liabilities in the amount of $814,394 is comprised of $782,644 due from the Sponsor in connection with the Amended and Restated Operating Expense Responsibility Agreement and $31,750, in capital contribution due from the Sponsor. The $782,644 in operating expenses were paid by the Company during the six months ended June 30, 2014, but under the terms of the Amended and Restated Operating Expense Responsibility Agreement are the responsibility of the Sponsor.

For the six month ended June 30, 2014, the Company paid a total of $1,032,623 in dealer manager fees and selling commissions to the Company’s dealer manager, SC Distributors. These fees and commissions were paid in connection with the sales of the Company’s units to investors.

Legal Proceedings

The Company is not party to any legal proceedings.

 

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Subsequent Events

There have been no subsequent events that occurred during such period that would require disclosure in the Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended June 30, 2014, except as discussed below.

Distributions

On July 22, 2014, with the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from July 1 through July 31, 2014. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00193082 per unit per day (less the distribution fee with respect to Class C units). On August 4, 2014, $152,386 of these distributions were paid in cash and on July 31, 2014, $71,215 were reinvested in units for those unitholders participating in the Distribution Reinvestment Plan.

Status of the Offering

For the period from July 1, 2014 through August 11, 2014, the Company sold approximately 975,694 units in the Offering (including shares issued pursuant to the Distribution Reinvestment Plan) for approximately $9,284,000 in gross proceeds. As of August 11, 2014, the Company had received $41.7 million in total gross offering proceeds through the issuance of approximately 4.5 million total units in the Offering (including shares issued pursuant to the Distribution Reinvestment Plan).

Unit Offering Price

Based on the Company’s net asset value of $29,743,867 as of June 30, 2014, our board of managers has determined that no change to the offering price of our units is required and we are continuing to sell our units at their original price of $10.00 per Class A unit, $9.576 per Class C unit and $9.186 per Class I unit. Our net asset value and the offering prices would have decreased if the Sponsor had not made a capital contribution in the amount of $31,750 and $51,034 in the quarters ended March 31, 2014, and December 31, 2013, respectively, or had not absorbed and deferred reimbursement for a substantial portion of our operating expenses since we began our operations.

Investments

For the period from July 1, 2014 through August 11, 2014, the Company funded approximately $11 million in new loans.

Agreements

On July 1, 2014, the Company’s wholly-owned subsidiary, TriLinc Global Impact Fund – African Trade Finance, Ltd. and TriLinc Advisors International, Ltd entered into a sub-advisory agreement with Barak Fund Management Ltd. to become a sub-advisor with respect to the Company’s investments in Sub-Saharan Africa.

On August 8, 2014, we entered into an Amended and Restated Operating Expenses Responsibility Agreement with our Sponsor and Advisor. Pursuant to the term of this agreement, our Sponsor agreed to be responsible for our cumulative operating expenses incurred through June 30, 2014, including management fees earned by the Advisor during the quarter ended June 30, 2014.

Critical Accounting Policies and Use of Estimates

The following discussion addresses the initial accounting policies that we utilize based on our current expectations of our operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments upon which our financial statements are based are reasonable at the time made and based upon information available to us at that time. Our critical accounting policies and accounting estimates will be expanded over time as we continue to implement our business and operating strategy. In addition to the discussion below, we also describe our critical accounting policies in the notes to our financial statements.

 

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Basis of Presentation

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties.

Although we were organized and intend to conduct our business in a manner so that we are not required to register as an investment company under the Investment Company Act of 1940, our financial statements are prepared using the specialized accounting principles of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies. Overall, we believe that the use of investment company accounting makes our financial statements more useful to investors and other financial statement users since it allows a more appropriate basis of comparison to other entities with similar objectives.

Valuation of Investments

Our board of managers has established procedures for the valuation of our investment portfolio in accordance with ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC 820, fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

 

    Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

    Level 2 — Valuations based on inputs other than quoted prices included in Level 1, which are either directly or indirectly observable.

 

    Level 3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates and earnings before EBITDA multiples. The information may also include pricing information or broker quotes that include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

The inputs used in the determination of fair value may require significant judgment or estimation.

Investments for which market quotations are readily available are valued at those quotations. Most of our investments are loans to private companies, which are not actively traded in any market and for which quotations are not available. For those investments for which market quotations are not readily available, or when such market quotations are deemed by the Advisor not to represent fair value, our board of managers has approved a multi-step valuation process to be followed each fiscal quarter, as described below:

 

  1. Each investment is valued by the Advisor in collaboration with the relevant sub-advisor;

 

  2. For all investments with a maturity of greater than 12 months, we have engaged Duff & Phelps, LLC (“Duff & Phelps”) to conduct a review on the reasonableness of our internal estimates of fair value on each asset on a quarterly rotating basis, with each of such investments being reviewed at least annually, and provide an opinion that the Advisor’s estimate of fair value for each investment is reasonable;

 

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  3. The audit committee of our board of managers reviews and discusses the preliminary valuation prepared by the Advisor and any opinion rendered by Duff & Phelps; and

 

  4. Our board of managers discusses the valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Advisor, Duff & Phelps and the audit committee. Our board of managers is ultimately responsible for the determination, in good faith, of the fair value of each investment.

Below is a description of factors that our board of managers may consider when valuing our investments.

Fixed income investments are typically valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including the sale of a business). The income approach uses valuation techniques to convert future amounts (for example, interest and principal payments) to a single present value amount (discounted) calculated based on an appropriate discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in valuing our investments include, as applicable: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the borrower’s ability to make payments, its earnings and discounted cash flows, the markets in which the company does business, comparisons of financial ratios of peer companies that are public, the principal market for the borrower’s securities and an estimate of the borrower’s enterprise value, among other factors.

Equity interests in portfolio companies for which there is no liquid public market are valued at fair value. The board of managers, in its analysis of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or in limited instances book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or the effects of acquisitions, recapitalizations, restructurings or other similar items.

We may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. We may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors we deem relevant in measuring the fair values of our investments.

Revenue Recognition

We record interest income on an accrual basis to the extent that we expect to collect such amounts. We do not accrue as a receivable interest on loans for accounting purposes if we have reason to doubt our ability to collect such interest. Structuring, upfront and similar fees are recorded as a discount on investments purchased and are accreted into interest income, on a straight line basis, which we have determined not to be materially different from the effective yield method. We record prepayment fees on loans and debt securities as interest income.

We place loans on non-accrual status when principal and interest are past due 90 days or more or when there is a reasonable doubt that we will collect principal or interest. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment of the financial condition of the borrower. Non-accrual loans are generally restored to accrual status when past due principal and interest is paid and, in the Advisor’s judgment, is likely to remain current over the remainder of the term.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

We measure net realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, including unamortized upfront fees and prepayment penalties. Realized gains or losses on the disposition of an investment are calculated using the first in first out (FIFO) method, utilizing the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

 

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Payment-in-Kind Interest

We may have investments that contain a payment-in-kind, or PIK, interest provision. For loans with contractual PIK interest, any interest will be added to the principal balance of such investments and be recorded as income, if the valuation indicates that such interest is collectible.

Organization Expenses

Organization expenses, together with offering expenses, are reimbursable to the Sponsor up to 5.00% of the gross offering proceeds (the “O&O Reimbursement Limit”) raised from the offering and will be accrued and payable by the Company only to the extent that such costs do not exceed the O&O Reimbursement Limit. Reimbursement of organization and offering costs that exceed the O&O Reimbursement Limit will be expensed in the period they become reimbursable, which is dependent on the gross offering proceeds raised in such period, and are therefore not included on the Statements of Assets and Liabilities as of June 30, 2014 and December 31, 2013. These expense reimbursements are subject to regulatory caps and approval by the Company’s board of managers. If the Company sells the maximum amount of the Offering, it anticipates that such expenses will equal approximately 1.25% of the gross proceeds raised.

Offering Expenses

Offering expenses, which consist of fees paid in relation to items such as legal, accounting, regulatory and printing work incurred related to our offering, are charged directly against the proceeds of the offering. Offering expenses, together with organization expenses, are reimbursable to the Sponsor up to the O&O Reimbursement Limit and will be accrued and payable by the Company only to the extent that such costs do not exceed the O&O Reimbursement Limit. Reimbursement of organization and offering costs that exceed the O&O Reimbursement Limit will be expensed in the period they become reimbursable, which is dependent on the gross offering proceeds raised in such period, and are, therefore, not included on the Statements of Assets and Liabilities as of June 30, 2014 and December 31, 2013. These expense reimbursements are subject to regulatory caps and approval by the Company’s board of managers. If the Company sells the maximum amount of the Offering, it anticipates that such expenses will equal approximately 1.25% of the gross proceeds raised.

The Company may reimburse the dealer manager for certain expenses that are deemed underwriting compensation. Assuming an aggregate selling commission and a dealer manager fee of 9.75% of the gross offering proceeds (which assumes all offering proceeds come from Class A units), the Company would reimburse the dealer manager in an amount up to 0.25% of the gross offering proceeds. Because the aggregate selling commission and dealer manager fees will be less than 9.75% of the gross offering proceeds due to a portion of the offering proceeds coming from the sale of Class C and Class I units, the Company may reimburse the dealer manager for expenses in an amount greater than 0.25% of the gross offering proceeds, provided that the Company will not pay or reimburse any of the foregoing costs to the extent such payment would cause total underwriting compensation to exceed 10.0% of the gross proceeds of the primary offering as of the termination of the Offering, as required by the rules of FINRA.

Expense Responsibility Agreement

Pursuant to the terms of the Amended and Restated Operating Expense Responsibility Agreement, the Sponsor has paid expenses on behalf of the Company through June 30, 2014, and will additionally pay the accrued operating expenses of the Company as of June 30, 2014, on behalf of the Company. Such expenses will not be reimbursable to the Sponsor until the Company has raised $200 million of gross proceeds and, therefore, have not been recorded as expenses of the Company as of June 30, 2014. In accordance with ASC 450, Contingencies, such expenses will be accrued and payable by the Company in the period that they become both probable and estimable.

Income Taxes

We are characterized as a partnership for U.S. federal income tax purposes.

Calculation of Net Asset Value

The Company’s net asset value is calculated on a quarterly basis and commenced with respect to the first full quarter after the Company commenced operations. The Company calculates its net asset value per unit by subtracting total liabilities from the total value of the Company’s assets on the date of valuation and dividing the result by the total number of outstanding units on the date of valuation. The net asset value per Class A, Class C and Class I units are calculated on a pro-rata basis based on units outstanding.

 

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Recently Issued Accounting Pronouncements

Under the Jumpstart Our Business Startups Act (the “JOBS Act”), emerging growth companies can delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates. There are no new or revised accounting standards that we have not adopted.

In June 2013, the FASB issued ASU 2013-08, Financial Services—Investment Companies: Amendments to the Scope, Measurement, and Disclosure Requirements (“ASU 2013-08”). ASU 2013-08 amends the current criteria for an entity to qualify as an investment company, creates new disclosure requirements and amends the measurement criteria for certain interests in other investment companies. ASU 2013-08 is effective on January 1, 2014, and did not have a material effect on the Company’s consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. Our investments are currently structured with both fixed and floating interest rates. Those structured with floating rates are referenced to LIBOR and incorporate fixed interest rate floors. If rates go down further, interest income will not decrease from current levels. To the extent that interest rates go up substantially, these investments will accrue higher amounts of income than currently being realized. Returns on investments that carry fixed rates are not subject to fluctuations in interest rates, and will not adjust should rates move up or down.

To the extent that we borrow money to make investments, our net investment income will be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Although we operate in a number of foreign markets, all investments are currently denominated in U.S. Dollars. Therefore, the current portfolio does not present currency risk to U.S. unitholders. In the future, we may hedge against interest rate and currency exchange rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.

Item 4. Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that the disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings.

There are no pending material legal proceedings to which the Company or any of our subsidiaries or any of our property is subject.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 31, 2014 (“2013 Form 10-K”), which could materially affect our business, financial condition, and/or future results. The risks described in our 2013 Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.

 

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With the exception of the revised risk factors set forth below, there have been no material changes to the risk factors disclosed in our 2013 Form 10-K.

If we pay distributions from sources other than our cash flow from operations, we will have less funds available for the investments, and the overall return for our unitholders may be reduced.

Our operating agreement permits us to make distributions from any source, including offering proceeds and, subject to certain limitations, borrowings, and we may choose to pay distributions when we do not have sufficient cash flow from operations to fund such distributions. We have not established a limit on the amount of proceeds we may use to fund distributions. Until the proceeds from our public offering are fully invested and from time to time during our operational stage, we may not generate sufficient cash flow from operations to fund distributions. If we fund distributions from borrowings or the net proceeds from this offering, we will have less funds available for the investments, and your overall return may be reduced.

During the quarter ended December 31, 2013, we paid cash distributions in excess of our net investment income for that quarter in the amount of $51,034. On December 31, 2013, our Sponsor made a capital contribution to the Company to make up this excess distribution. During the quarter ended March 31, 2014, we paid cash distributions in excess of our net investment income for that quarter in the amount of $31,750. On July 31, 2014, our Sponsor made a capital contribution to the Company to make up this excess distribution. Our Sponsor is not required to make such capital contribution and there is no assurance that our Sponsor will provide any capital infusions in the future.

Non-payment by our borrowers would prevent us from realizing expected income and could result in the decrease in our net asset value.

All of our fixed-income investments are subject to the risk that a borrower will fail to repay a portion or all of periodically scheduled interest and/or principal and, as of the June 30, 2014, one of our borrowers was in default in making a $200,000 principal payment. When this occurs, we fail to realize expected income and in some instances this could possibly result in a write-down of the value of under-performing loans as well as our net asset value.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended June 30, 2014, we did not sell or issue any equity securities that were not registered under the Securities Act.

Use of Proceeds from Registered Securities

On February 25, 2013, the Registration Statement on Form S-1, File No. 333-185676 covering the Offering, of up to $1.5 billion in units of our limited liability company interest, was declared effective under the Securities Act of 1933 by the SEC. The Offering commenced on February 25, 2013, and is currently expected to terminate on or before February 24, 2015, unless extended by our board of managers.

Through SC Distributors, LLC, the dealer manager for the Offering, we are offering to the public on a best efforts basis up to $1.25 billion of units, consisting of Class A units at $10.00 per unit, Class C units at $9.576 per unit and Class I units at $9.186 per unit.

We are also offering up to $250 million of units to be issued pursuant to our Distribution Reinvestment Plan. Units issued under the Distribution Reinvestment Plan are offered at a price equal to the then current offering price per unit less the sales fees associated with that class of units in the Primary Offering. The units being offered can be reallocated among the different classes and between the primary Offering and the Distribution Reinvestment Plan.

As of June 30, 2014, we had received subscriptions for and issued 3,475,116.678 of our units, including 30,287.784 units issued under our Distribution Reinvestment Plan, for gross proceeds of $32,440,973 including $273,347 reinvested under our Distribution Reinvestment Plan, (before dealer-manager fees of $257,451 and selling commissions of $820,568, for net proceeds of $31,362,954). From the net offering proceeds, we paid and accrued a total of $1,619,053 towards reimbursement to our Sponsor for our organization and offering costs. With net offering proceeds, we have financed a total of $17,993,558 in senior secured trade finance and senior secured term loan transactions.

 

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As of June 30, 2014, approximately $4.2 million remained payable to our Sponsor for costs related to our organization and offering.

Beginning June 11, 2014, we commenced a unit repurchase program pursuant to which we may conduct quarterly unit repurchases of up to 5% of our weighted average number of outstanding units in any 12-month period to allow our unitholders, who have held our units for a minimum of one year, to sell their units back to us at a price equal to the then current offering price less the sales fees associated with that class of units. Our unit repurchase program includes numerous restrictions, including a one-year holding period, that limit the ability of our unitholders to sell their units. Unless our board of managers determines otherwise, we will limit the number of units to be repurchased during any calendar year to the number of units we can repurchase with the proceeds we receive from the sale of units under our distribution reinvestment plan. At the sole discretion of our board of managers, we may also use cash on hand, cash available from borrowings and cash from liquidation of investments as of the end of the applicable quarter to repurchase units.

Our board of managers has the right to amend, suspend or terminate the unit repurchase program to the extent that it determines that it is in our best interest to do so. We will promptly notify our unitholders of any changes to the unit repurchase program, including any amendment, suspension or termination of it in our periodic or current reports or by means of other notice. Moreover, the unit repurchase program will terminate on the date that our units are listed on a national securities exchange, are included for quotation in a national securities market or, in the sole determination of our board of managers, a secondary trading market for the units otherwise develops.

The above description of the unit repurchase program is a summary of certain of the terms of the unit repurchase program. Please see the full text of the unit repurchase program, which is incorporated by reference as Exhibit 4.3 to this Quarterly Report on Form 10-Q, for all the terms and conditions.

As of June 30, 2014, the Company has not received any redemption request eligible for redemption prior to June 30, 2014.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

 

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Item 6. Exhibits.

 

Number

 

Description

    3.1   Certificate of Formation of TriLinc Global Impact Fund, LLC. Incorporated by reference to Exhibit 3.1 to the Draft Registration Statement on Form S-1 (File No. 377-00015) filed with the Securities and Exchange Commission (the “SEC”) on November 1, 2012.
    3.2   Amended and Restated Limited Liability Company Operating Agreement. Incorporated by reference to Appendix A to the Prospectus filed pursuant to Rule 424(b)(3) with the SEC on February 27, 2013.
    4.1   Amended and Restated Distribution Reinvestment Plan. Incorporated by reference to Appendix C to the Prospectus filed pursuant to Rule 424(b)(3) with the SEC on February 27, 2013.
    4.3   Unit Repurchase Program. Incorporated by reference to Appendix D to the Prospectus filed pursuant to Rule 424(b)(3) with the SEC on February 27, 2013 as supplemented by the Prospectus Supplement No. 8 filed pursuant to Rule 424(b)(3) with the SEC on October 4, 2013.
  10.1*   Amended and Restated Operating Expense Responsibility Agreement among TriLinc Global Impact Fund, LLC, TriLinc Global, LLC and TriLinc Advisors, LLC dated August 8, 2014.
  31.1*  

Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934,

as amended.

  31.2*   Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
  32.1*   Certification of CEO and Interim CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**   The following materials from TriLinc Global Impact Fund LLC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed on August 12, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Assets and Liabilities, (ii) Consolidated Statement of Operations, (iii) Consolidated Statement of Changes in Net Assets, (iv) Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements.

 

* Filed herewith
** In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

 

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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.

 

    TRILINC GLOBAL IMPACT FUND, LLC.
August 12, 2014     By:  

/s/ Gloria S. Nelund

      Gloria S. Nelund
      Chief Executive Officer
August 12, 2014     By:  

/s/ Brent L. VanNorman

      Brent L. VanNorman
      Chief Financial Officer

 

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