10-Q

Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒              Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended March 31, 2020

☐         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 000‑55417

ATEL 16, LLC

(Exact name of registrant as specified in its charter)

California	90‑0920813
(State or other jurisdiction of	(I. R. S. Employer
incorporation or organization)	Identification No.)

The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111

(Address of principal executive offices)

Registrant’s telephone number, including area code:  (415) 989‑8800

Securities registered pursuant to section 12(b) of the Act:  None

Securities registered pursuant to section 12(g) of the Act:  Limited Liability Company Units

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
N/A	N/A	N/A

Indicate by a 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b‑2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

The number of Limited Liability Company Units outstanding as of April 30, 2020 was 4,274,486.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL 16, LLC

Index

PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets, March 31, 2020 and December 31, 2019	3
	Statements of Operations for the three months ended March 31, 2020 and 2019	4
	Statements of Changes in Members’ Capital for the three months ended March 31, 2020 and 2019	5
	Statements of Cash Flows for the three months ended March 31, 2020 and 2019	6
	Notes to the Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 16, LLC

BALANCE SHEETS

MARCH 31, 2020 AND DECEMBER 31, 2019
(In Thousands)

	March 31,		December 31,
	2020		2019
	(Unaudited)
ASSETS
Cash and cash equivalents	$	6,499	$	7,992
Accounts receivable, net		98		99
Notes receivable, net		1,091		1,384
Investment in securities		47		41
Warrants, fair value		688		730
Equipment under operating leases, net		16,200		15,831
Prepaid expenses and other assets		16		13
Total assets	$	24,639	$	26,090
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Due to Managing Member and affiliates	$	87	$	52
Accrued distributions to Other Members		289		289
Due to Other		105		108
Non-recourse debt		4,548		5,265
Unearned operating lease income		398		244
Total liabilities		5,427		5,958
Commitments and contingencies
Members’ capital:
Managing Member		—		—
Other Members		19,212		20,132
Total Members’ capital		19,212		20,132
Total liabilities and Members’ capital	$	24,639	$	26,090

See accompanying notes.

3

ATEL 16, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED

MARCH 31, 2020 AND 2019
(In Thousands Except for Units and Per Unit Data)

(Unaudited)

	Three Months Ended
	March 31,
	2020		2019
Revenues:
Leasing and lending activities:
Operating lease revenue	$	945	$	1,276
Notes receivable interest income		59		123
(Loss) gain on sales of equipment under operating leases and early termination of notes receivable		(39)		27
Unrealized loss on fair value adjustment for warrants		(42)		(3)
Interest income		1		—
Other		36		2
Total revenues		960		1,425
Expenses:
Depreciation of operating lease assets		611		837
Asset management fees to Managing Member		121		132
Acquisition expense		70		—
Cost reimbursements to Managing Member and/or affiliates		131		156
Provision for losses on notes receivable		—		13
Amortization of initial direct costs		14		1
Interest expense		48		82
Professional fees		60		74
Outside services		21		24
Taxes on income and franchise fees		9		—
Other		46		66
Total expenses		1,131		1,385
Net (loss) income	$	(171)	$	40
Net (loss) income:
Other Members		(171)		40
	$	(171)	$	40
Net (loss) income per Limited Liability Company Unit (Other Members)	$	(0.04)	$	0.01
Weighted average number of Units outstanding		4,274,486		4,274,486

See accompanying notes.

4

ATEL 16, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE THREE MONTHS ENDED

MARCH 31, 2020 AND 2019
(In Thousands Except for Units and Per Unit Data)

(Unaudited)

	Three Months Ended March 31, 2020
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2019	4,274,486	$	20,132	$	—	$	20,132
Distributions to Other Members ($0.18 per Unit)	—		(749)		—		(749)
Net loss	—		(171)		—		(171)
Balance March 31, 2020	4,274,486	$	19,212	$	—	$	19,212
	Three Months Ended March 31, 2019
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2018	4,274,486	$	22,243	$	—	$	22,243
Distributions to Other Members ($0.17 per Unit)	—		(748)		—		(748)
Net income	—		40		—		40
Balance March 31, 2019	4,274,486	$	21,535	$	—	$	21,535

See accompanying notes.

5

ATEL 16, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED

 MARCH 31, 2020 AND 2019
(In Thousands) 

(Unaudited)

	Three Months Ended
	March 31,
	2020		2019
Operating activities:
Net (loss) income	$	(171)	$	40
Adjustment to reconcile net (loss) income to cash provided by operating activities:
Accretion of note discount-warrants		(13)		(20)
Depreciation of operating lease assets		611		837
Loss (gain) on sales of equipment under operating leases and early termination of notes receivable		39		(27)
Amortization of initial direct costs		14		1
Provision for (reversal of) credit losses		5		(39)
Unrealized loss on fair value adjustment for warrants		42		3
Changes in operating assets and liabilities:
Accounts receivable		(4)		55
Due from Managing Members and affiliates		—		(30)
Prepaid expenses and other assets		(3)		(32)
Accounts payable, Managing Member and affiliates		35		35
Accounts payable, other		(3)		(1)
Unearned operating lease income		154		138
Net cash provided by operating activities		706		960
Investing activities:
Purchases of equipment on operating leases		(1,099)		—
Purchase of securities		(7)		—
Proceeds from sales of equipment under operating leases and early termination of notes receivable		68		228
Note receivable advances		—		(13)
Principal payments received on notes receivable		306		422
Net cash (used in) provided by investing activities		(732)		637
Financing activities:
Borrowings under non-recourse debt		—		1,514
Repayments under non-recourse debt		(718)		(678)
Distributions to Other Members		(749)		(748)
Net cash (used in) provided by financing activities		(1,467)		88
Net (decrease) increase in cash and cash equivalents		(1,493)		1,685
Cash and cash equivalents at beginning of period		7,992		4,368
Cash and cash equivalents at end of period	$	6,499	$	6,053
Supplemental disclosures of cash flow information:
Cash paid during period for interest	$	66	$	64
Cash paid during period for taxes	$	5	$	2
Schedule of non-cash investing and financing transactions:
Distributions payable to Other Members at period-end	$	289	$	289

See accompanying notes.

6

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1.  Organization and Limited Liability Company matters:

ATEL 16, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on December 27, 2012 (“Date of Inception”) for the purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities. The Managing Member of the Company is ATEL Managing Member, LLC (the “Managing Member” or “Manager”), a Nevada limited liability company. The Managing Member is controlled by ATEL Financial Services, LLC (“AFS”), a wholly-owned subsidiary of ATEL Capital Group. The Fund may continue until terminated as provided in the ATEL 16, LLC Limited Liability Company Operating Agreement dated March 1, 2013 (the “Operating Agreement”). Contributions in the amount of $500 were received as of December 31, 2012, which represented the initial member’s capital investment. As a limited liability company, the liability of any individual member for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a base price of $10 per Unit. As of March 6, 2014, subscriptions for the minimum number of Units (120,000, representing $1.2 million), excluding subscriptions from Pennsylvania investors, had been received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations and continued in its development stage activities until transitioning to an operating enterprise during the second quarter of 2014.  Pennsylvania subscriptions are subject to a separate escrow and are released to the Fund only when aggregate subscriptions for all investors equal to at least $7.5 million. Total contributions to the Fund exceeded $7.5 million on June 19, 2014, at which time a request was processed to release the Pennsylvania escrowed amounts. The offering was terminated on November 5, 2015.

As of March 31, 2020, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $42.9 million (inclusive of the $500 initial Member’s capital investment) have been received. As of the same date, 4,274,486 Units were issued and outstanding.

The Company’s principal objectives are to invest in a diversified portfolio of investments that will (i) preserve, protect and return the Company’s invested capital; (ii) generate regular cash distributions to Unit holders, with any balance remaining after required minimum distributions to be used to purchase additional investments during the Reinvestment Period (the first six years after the year the offering terminates); and (iii) provide additional cash distributions following the Reinvestment Period and until all investment portfolio assets have been sold or otherwise disposed. The Company is governed by the Operating Agreement.

Pursuant to the terms of the Operating Agreement, the Managing Member and/or its affiliates receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 6, Related party transactions).  The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of the Managing Member.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission.

7

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2.  Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (‘‘GAAP’’) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after March 31, 2020, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

Cash and cash equivalents:

Cash and cash equivalents include cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less.

Use of Estimates:

The preparation of the financial statements in conformity 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 the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.    

Segment reporting:

The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States with activities in the United States and Costa Rica.

The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas.

8

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The table below summarize geographic information relating to the sources, by nation, of the Company’s total revenues for the three months ended March 31, 2020 and 2019 and long-lived assets as of March 31, 2020 and December 31, 2019 (dollars in thousands):

	For The Three Months Ended March 31,
	2020		% of Total		2019		% of Total
Revenue
United States	$	738	77	%	$	1,193	84	%
Costa Rica		222	23	%		232	16	%
Total	$	960	100	%	$	1,425	100	%

	As of March 31,				As of December 31,
	2020		% of Total		2019		% of Total
Long-lived assets
United States	$	13,341	82	%	$	12,972	84	%
Costa Rica		2,859	18	%		2,859	16	%
Total	$	16,200	100	%	$	15,831	100	%

Accounts receivable:

Accounts receivable represent the amounts billed under operating lease contracts and notes receivable which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received.

Financing receivables:

In addition to the allowance established for delinquent accounts receivable, the total allowance related solely to financing receivables also includes anticipated impairment charges on notes receivable.

Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

9

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Investment in securities:

From time to time, the Company may purchase securities of its borrowers or receive warrants in connection with its lending arrangements.

Purchased securities 

The Company’s purchased securities do not have readily determinable fair values and are measured at cost minus impairment, and adjusted for changes in observable prices. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. The Company’s investment securities totaled $47 thousand and $41 thousand at March 31, 2020 and December 31, 2019, respectively. There were no fair value adjustments on investment securities for the respective three months ended March 31, 2020 and 2019. Cumulatively, there has been no fair value adjustment recorded on such securities. There were neither impairment losses nor sales or disposition of securities during the three months ended March 31, 2020 and 2019.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet as determined by the Managing Member. The Company recorded unrealized losses of $42 thousand and $3 thousand on fair valuation of its warrants for the quarters ended March 31, 2020 and 2019, respectively. The estimated fair value of the Company’s warrants were $688 thousand and $730 thousand at March 31, 2020 and December 31, 2019, respectively. The Company realized no gains or losses from the net exercise of warrants during the three months ended March 31, 2020 and 2019.

Credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating lease receivables, notes receivable and accounts receivable. The Company places the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $10 billion in assets. Such deposits are insured up to $250 thousand. The remainder of the Fund’s cash is temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts and notes receivable represent amounts due from lessees or borrowers in various industries, are related to equipment on operating lease contracts and notes receivable.

Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360‑10‑35‑3, over the periods of the lease terms contained in each asset’s respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43).

10

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The Company does not use the equipment held in its portfolio, but holds it solely for lease and ultimate sale. In the course of marketing equipment that has come off-lease, management may determine at some point that re-leasing the assets may provide a superior return for investors and would then execute another lease. Upon entering into a new lease contract, management will estimate the residual value once again and resume depreciation. If, and when, the Company, at any time, determines that depreciation in value may have occurred with respect to an asset held-for-sale, the Company would review the value to determine whether a material reduction in value had occurred and recognize any appropriate impairment. All lease assets, including off-lease assets, are subject to the Company’s quarterly impairment analysis, as described below. Maintenance costs associated with the Fund’s portfolio of leased assets are expensed as incurred. Major additions and betterments are capitalized.

Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms from 36 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet.

Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis. Upon adoption of Accounting Standards Update (“ASU”) 2016-02, provisions for credit losses relating to operating leases are now included in lease income in the Company’s financial statements. Provisions for credit losses prior to January, 1, 2019 were previously included in operating expenses in the Company’s financial statements.

Notes receivable, unearned interest income and related revenue recognition:

The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports only the net amount of principal due on the balance sheet. The unearned interest is recognized over the term of the note and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. Any fees or costs related to notes receivable are recorded as part of the net investment in notes receivable and amortized over the term of the loan.

Allowances for losses on notes receivable are typically established based on historical charge off and collection experience and the collectability of specifically identified borrowers and billed and unbilled receivables. Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

11

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Notes receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with note payments outstanding less than 90 days. Based upon management’s judgment, the related notes may be placed on non-accrual status. Notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable. Until such time, all payments received are applied only against outstanding principal balances.

Initial direct costs:

With the adoption of ASU 2016-02 certain costs associated with the execution of the Company’s leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred effective January 1, 2019. In 2018 and prior, the Company capitalized initial direct costs (“IDC”) associated with the origination of lease assets.  IDC includes both internal costs (e.g., the costs of employees’ activities in connection with successful lease originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease (or note by note) basis based on actual lease term using a straight-line method for operating leases and the effective interest rate method for notes receivable. Upon disposal of the underlying lease assets and notes receivable, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition expense:

Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.

Fair Value:

Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.

12

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

Asset valuation:

Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the Company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than the net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances.

Per Unit data:

Net loss and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the period.

Emerging growth company:

Section 107 of the Jumpstart Our Business Startups Act (the “JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to “opt out” of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

13

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Recent accounting pronouncements:

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP that are intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. Management is currently evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Fund’s financial statements and disclosures.

In June 2016, the FASB issued Accounting Standards Update 2016‑13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016‑13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and equipment under operating leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, equipment under operating leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Management is currently evaluating the standard and expects the update may potentially result in the increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments.

In November 2018, the FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses (“ASU 2018-19”). The new standard clarifies certain aspects of the new CECL impairment model in ASU 2016-13. The amendment clarifies that receivables arising from operating leases are within the scope of ASC 842, rather than ASC 326. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements.

On August 15, 2019, the FASB issued a proposed ASU that would grant certain companies additional time to implement FASB standards on CECL and hedging. The proposed ASU defers the effective date for CECL to fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years; and defers the effective date for hedging to fiscal periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The ASU was approved on October 16, 2019. In February 2020, the FASB issued ASU 2020-02 and delayed the effective date of Topic 326 until fiscal year beginning after December 15, 2022.

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (“ASU 2018-13”), which amends the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU modifies disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Fund adopted ASU 2018-13 on January 1, 2020. Such adoption did not have a significant impact on the Fund’s financial statements and related disclosure requirements.

14

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

3. Notes receivable, net:

The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. As of March 31, 2020, the original terms of the notes are from 30 to 42 months with interest at rates ranging from 11.68% to 16.87% per annum. The notes are secured by the equipment financed and have maturity dates ranging from 2020 through 2022.

As of March 31, 2020, the minimum future payments receivable are as follows (in thousands):

Nine months ending December 31, 2020	$	619
Year ending December 31, 2021		555
2022		115
		1,289
Less: portion representing unearned interest income		(144)
		1,145
Less: warrants - notes receivable discount		(56)
Unamortized initial direct costs		2
Notes receivable, net	$	1,091

IDC expenses related to notes receivable and the Company’s operating leases for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

	Three Months Ended
	March 31,
	2020		2019
IDC amortization - notes receivable	$	1	$	—
IDC amortization - lease assets		13		1
Total	$	14	$	1

4. Equipment under operating leases, net:

The Company’s equipment under operating leases, net consists of the following (in thousands):

	Balance		Additions/		Depreciation/		Balance
	December 31,		Dispositions/		Amortization		March 31,
	2019		Reclassifications		Expense		2020
Equipment under operating leases, net	$	15,704	$	1,036	$	(611)	$	16,129
Assets held for sale or lease, net		43		(43)		—		—
Initial direct costs, net of accumulated amortization of $263    at March 31, 2020 and $291 at December 31, 2019		84		—		(13)		71
Total	$	15,831	$	993	$	(624)	$	16,200

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $611 thousand and $837 thousand for the respective three months ended March 31, 2020 and 2019.  

IDC amortization expense related to the Company’s operating leases totaled $13 thousand and $1 thousand for the three months ended March 31, 2020 and 2019, respectively.

15

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

All of the Company’s lease asset purchases and capital improvements were made during the years from 2014 through 2020.

Operating leases:

Property on operating leases consists of the following (in thousands):

	Balance						Balance
	December 31,						March 31,
	2019		Additions		Dispositions		2020
Aviation	$	4,587	$	—	$	—	$	4,587
Containers		6,545		—		—		6,545
Coal terminal		5,000		—		—		5,000
Railroad		4,017		—		—		4,017
Mining		2,766		—		—		2,766
Materials handling		1,287		—		(280)		1,007
Marine vessels		2,291		—		—		2,291
Trucks and trailers		1,103		—		—		1,103
Manufacturing		1,243		—		—		1,243
Construction		—		1,099		—		1,099
Other		414		—		—		414
		29,253		1,099		(280)		30,072
Less accumulated depreciation		(13,549)		(611)		217		(13,943)
Total	$	15,704	$	488	$	(63)	$	16,129

The average estimated residual value for assets on operating leases was 35% and 34% of the assets’ original cost at March 31, 2020 and December 31, 2019 respectively.  There were no operating leases in non-accrual status at March 31, 2020 and 2019.

At March 31, 2020, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating
	Leases
Nine months ending December 31, 2020	$	1,807
Year ending December 31, 2021		1,833
2022		1,452
2023		648
2024		486
Thereafter		572
	$	6,798

16

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of March 31, 2020, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category	Useful Life
Coal terminal	50 - 60
Railroad	35 - 50
Marine vessel	20 - 30
Aviation	20 - 30
Containers	15 - 20
Manufacturing	10 - 15
Mining	10 - 15
Materials handling	7 - 10
Trucks and trailers	7 - 10

5. Allowance for credit losses:

The Company’s allowance for credit losses are as follows (in thousands):

	Allowance for		Valuation
	Doubtful		Adjustments on
	Accounts		Financing Receivables
	Operating		Notes
	Leases		Receivable		Total
Balance December 31, 2018	$	65	$	133	$	198
Provision for credit losses		(52)		13		(39)
Balance March 31, 2019	$	13	$	146	$	159
	Allowance for		Valuation
	Doubtful		Adjustments on
	Accounts		Financing Receivables
	Operating		Notes
	Leases		Receivable		Total
Balance December 31, 2019	$	8	$	—	$	8
Provision for credit losses		5		—		5
Balance March 31, 2020	$	13	$	—	$	13

The Company evaluates the credit quality of its financing receivables on a scale equivalent to the following quality indicators related to corporate risk profiles:

Pass — Any account whose lessee/debtor, co-lessee/debtor or any guarantor has a credit rating on publicly traded or privately placed debt issues as rated by Moody’s or S&P for either Senior Unsecured debt, Long Term Issuer rating or Issuer rating that are in the tiers of ratings generally recognized by the investment community as constituting an Investment Grade credit rating; or, has been determined by the Manager to be an Investment Grade Equivalent or High Quality Corporate Credit per its Credit Policy or has a Not Rated internal rating by the Manager and the account is not considered by the Chief Credit Officer of the manager to fall into one of the three risk profiles below.

17

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Special Mention — Any traditional corporate type account with potential weaknesses (e.g. large net losses or major industry downturns) or, any growth capital account that has less than three months of cash as of the end of the calendar quarter to fund their continuing operations. These accounts deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the Fund’s receivable at some future date.

Substandard — Any account that is inadequately protected by the current worth and paying capacity of the borrower or of the collateral pledged, if any. Accounts that are so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Fund will sustain some loss as the likelihood of fully collecting all receivables may be questionable if the deficiencies are not corrected. Such accounts are on the Manager’s Credit Watch List.

Doubtful — Any account where the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Accordingly, an account that is so classified is on the Manager’s Credit Watch List, and has been declared in default and the Manager has repossessed, or is attempting to repossess, the equipment it financed. This category includes impaired notes and leases as applicable.

At March 31, 2020 and December 31, 2019, the Company’s financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):

	Notes Receivable
	March 31,		December 31,
	2020		2019
Pass	$	1,145	$	1,451
Special mention		—		—
Substandard		—		—
Doubtful		—		—
Total	$	1,145	$	1,451

There were no impaired investments in financing receivables at March 31, 2020 and December 31, 2019.  

At March 31, 2020 and December 31, 2019, the investment in financing receivables (excludes IDC) is aged as follows (in thousands):

													Recorded
					Greater						Total		Investment>90
	31‑60 Days		61‑90 Days		Than		Total				Notes		Days and
March 31, 2020	Past Due		Past Due		90 Days		Past Due		Current		Receivable		Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,145	$	1,145	$	—

													Recorded
					Greater						Total		Investment>90
	31‑60 Days		61‑90 Days		Than		Total				Notes		Days and
December 31, 2019	Past Due		Past Due		90 Days		Past Due		Current		Receivable		Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,451	$	1,451	$	—

As of March 31, 2020 and December 31, 2019, the Company had no notes receivable on non-accrual status (See Note 3).

18

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

6. Related party transactions:

The terms of the Operating Agreement provide that the Managing Member and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company.

The Operating Agreement allows for the reimbursement of costs incurred by the Managing Member and/or affiliates for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. The Managing Member is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of investments.

Each of AFS and ATEL Leasing Corporation (“ALC”) is a wholly-owned subsidiary of ATEL Capital Group, Inc. and performs services for the Company on behalf of the Managing Member. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS.

Cost reimbursements to the Managing Member or its affiliates are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as total assets, number of investors or contributed capital based upon the type of cost incurred. The Managing Member believes that the costs reimbursed are the lower of (i) actual costs incurred on behalf of the Company or (ii) the amount the Company would be required to pay independent parties for comparable administrative services in the same geographic location.

The Managing Member and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement, during the three months ended March 31, 2020 and 2019 as follows (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Administrative costs reimbursed to Managing Member and/or affiliates	$	131	$	156
Asset management fees to Managing Member		121		132
	$	252	$	288

The Fund’s Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self-liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. As of March 31, 2020 and 2019, the Company has not exceeded the annual and/or cumulative limitations discussed above.

19

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

7. Non-recourse debt:

At March 31, 2020, non-recourse debt consists of notes payable to financial institutions. The notes are due in monthly installments. Interest on the notes is at fixed rates ranging from 2.75% to 4.84% per annum. The notes are secured by assignments of lease payments and pledges of assets. At March 31, 2020, gross operating lease rentals totaled approximately $4.9 million over the remaining lease terms; and the carrying value of the pledged assets is $9.9 million. The notes mature at various dates from 2020 to 2028.

The non-recourse debt does not contain any material financial covenants. The debt is secured by a specific lien granted by the Company to the non-recourse lender on (and only on) the discounted lease transactions. The lender has recourse only to the following collateral: the leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lender, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company’s good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

Future minimum payments of non-recourse debt are as follows (in thousands):

	Principal		Interest		Total
Nine months ending December 31, 2020	$	1,230	$	112	$	1,342
Year ending December 31, 2021		1,173		117		1,290
2022		1,031		75		1,106
2023		343		43		386
2024		290		28		318
Thereafter		481		39		520
	$	4,548	$	414	$	4,962

8. Borrowing facilities:

Effective October 31, 2019, the Company entered into an amended and restated revolving credit facility agreement (the “Credit Facility”) replacing the previous revolving credit facility agreement. The Company participated with ATEL Capital Group and certain subsidiaries and affiliated entities as borrowers, with a syndicate of financial institutions as lenders. The Credit Facility is comprised of a working capital sub-facility, institutional leasing sub-facility, and a venture line sub-facility. The Company participates in the acquisition sub-facility and the institutional leasing sub-facility, on a several, but not joint, basis (ie., the Company is liable only for the amount of the advances extended to the Company under those sub facilities, and not as to amounts extended to any co-borrower).

20

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The aggregate amount of the Credit Facility is $55 million, with sub-limits for each sub-facility, and currently expires June 30, 2021 (unless extended). The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’s assets as collateral for any and all borrowings extended to the Company under the acquisition sub-facility or the institutional leasing sub-facility, on a several, but not joint, basis. The Credit Facility includes certain financial covenants made by the Company, as is customarily found in credit facilities of similar size and nature.

As of March 31, 2020 and December 31, 2019, borrowings under the Credit Facility were as follows (in thousands):

	March 31,		December 31,
	2020		2019
Total available under the financing arrangement	$	55,000	$	55,000
Amount borrowed by the Company under the acquisition facility		—		—
Amount borrowed by affiliated partnerships and limited liability companies   under the venture, acquisition, and warehouse facilities.		(1,849)		(850)
Total remaining available under the working capital, acquisition and warehouse facilities	$	53,151	$	54,150

The Company and its affiliates pay an annual commitment fee to have access to this line of credit. As of March 31, 2020, the aggregate amount of the Credit Facility is potentially available to the Company, subject to certain sub-facility and borrowing-base limitations. However, as amounts are drawn on the Credit Facility by each of the Company and the affiliates who are borrowers under the Credit Facility, the amount remaining available to all borrowers to draw under Credit Facility is reduced. As the Warehousing Facility is a short term bridge facility, any amounts borrowed under the Warehousing Facility, and then repaid by the affiliated borrowers (including the Company) upon allocation of an acquisition to a specific purchaser, become available under the Warehouse Facility for further short term borrowing.

As of March 31, 2020, the Company’s Tangible Net Worth requirement under the Credit Facility was $10.0 million, the permitted maximum leverage ratio was not to exceed 1.25 to 1, and the required minimum interest coverage ratio was not to be less than 2 to 1. The Company was in compliance with these financial covenants under the Credit Facility with a minimum Tangible Net Worth, leverage ratio and interest coverage ratio, as calculated per the Credit Facility agreement of $19.1 million, 0.24 to 1, and 24.59 to 1, respectively, as of March 31, 2020. As such, as of March 31, 2020, the Company was in compliance with all material financial covenants, and with all other material conditions of the Credit Facility. The Company does not anticipate any covenant violations nor does it anticipate that any of these covenants will restrict its operations or its ability to procure additional financing.

Fee and interest terms

The interest rate on the Credit Facility is based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the bank’s Prime rate, which re-prices daily. Principal amounts of loans made under the Credit Facility that are prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Credit Facility. There were no borrowings outstanding at March 31, 2020 and December 31, 2019.

Warehouse facility

To hold the assets under the Warehousing Facility prior to allocation to specific investor programs, a Warehousing Trust has been entered into by the Company, AFS, ALC, and certain of the affiliated partnerships and limited liability companies. The Warehousing Trust is used by the Warehouse Facility borrowers to acquire and hold, on a short-term basis, certain lease transactions that meet the investment objectives of each of such entities. Each of the leasing programs sponsored by AFS and ALC is a pro rata participant in the Warehousing Trust, as described below. When a program no longer has a need for short-term financing provided by the Warehousing Facility, it is removed from participation, and as new leasing investment entities are formed by AFS and ALC and commence their acquisition stages, these new entities are added.

21

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

As of March 31, 2020, the Company participated in the investment program along with ATEL 17, LLC. Pursuant to the Warehousing Trust, the benefit of the lease transaction assets, and the corresponding liabilities under the Warehouse Facility, inure to each of such entities based upon each entity’s pro-rata share in the Warehousing Trust estate. The “pro-rata share” is calculated as a ratio of the net worth of each entity over the aggregate net worth of all entities benefiting from the Warehousing Trust estate, excepting that the trustees, AFS and ALC, are both jointly and severally liable for the pro-rata portion of the obligations of each of the affiliated limited liability companies participating under the Warehouse Facility. Transactions are financed through this Warehouse Facility only until the transactions are allocated to a specific program for purchase or are otherwise disposed by AFS and ALC. When a determination is made to allocate the transaction to a specific program for purchase by the program, the purchaser repays the debt associated with the asset, either with cash or by means of proceeds of a draw under the Acquisition Facility, and the asset is removed from the Warehouse Facility collateral, and ownership of the asset and any debt obligation associated with the asset are assumed solely by the purchasing entity.

9. Commitments:

At March 31, 2020, there was a commitment to fund investments in notes receivable totaling $3.2 million and purchase lease assets totaling $283 thousand. These amounts represents contract awards which may be canceled by the prospective borrower/investee or may not be accepted by the Company.

10. Members’ capital:

A total of 4,274,486 Units were issued and outstanding at both March 31, 2020 and December 31, 2019, including the 50 Units issued to the initial Member (Managing Member). The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Member.

The Company has the right, exercisable at the Managing Member’s discretion, but not the obligation, to repurchase Units of a Unitholder who ceases to be a U.S. Citizen, for a price equal to 100% of the holder’s capital account. The Company is otherwise permitted, but not required, to repurchase Units upon a holder’s request. The repurchase of Fund units is made in accordance with Section 13 of the Amended and Restated Limited Liability Company Operating Agreement. The repurchase would be at the discretion of the Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing Member deems such repurchase to be in the best interest of the Company; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the Unitholder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs.

The Fund’s net income or net losses are to be allocated 100% to the members. From the commencement of the Fund until the initial closing date, net income and net loss were allocated 99% to the Managing Member and 1% to the initial members. Commencing with the initial closing date, net income and net loss are to be allocated 99.9% to the Other Members and 0.01% to the Managing Member.

Fund distributions are to be allocated 0.01% to the Managing Member and 99.99% to the Other Members. The Company commenced periodic distributions in the second quarter of 2014.

22

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Distributions to the Other Members for the three months ended March 31, 2020 and 2019 were as follows (in thousands except Units and per Unit data):

	Three Months Ended
	March 31,
	2020		2019
Distributions	$	749	$	748
Weighted average number of Units outstanding		4,274,486		4,274,486
Weighted average distributions per Unit	$	0.18	$	0.17

11. Fair value measurements:

Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

At March 31, 2020 and 2019, only the Company’s warrants were measured on a recurring basis. As of the same periods, the Company had no assets or liabilities that required measurement at fair value on a non-recurring basis.

Such fair value adjustments utilized the following methodology:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, time to maturity, and a risk free interest rate for the term(s) of the warrant exercise(s). As of March 31, 2020 and December 31, 2019, the calculated fair value of the Fund’s warrant portfolio approximated $688 thousand and $730 thousand, respectively. Such valuations are classified within Level 3 of the valuation hierarchy.

The following table reconciles the beginning and ending balances of the Company’s Level 3 recurring assets (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Fair value of warrants at beginning of period	$	730	$	320
Unrealized loss on fair value adjustment for warrants		(42)		(3)
Fair value of warrants at end of period	$	688	$	317

23

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The following tables summarize the valuation techniques and significant unobservable inputs used for the Company’s recurring and non-recurring fair value calculation/adjustments categorized as Level 3 in the fair value hierarchy at March 31, 2020 and December 31, 2019:

March 31, 2020
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.11 - $16.95  ($0.24)
			Exercise price	$0.02 - $9.00  ($0.09)
			Time to maturity (in years)	4.1 - 11.7  (7.76)
			Risk-free interest rate	0.34% - 1.58%  (0.60%)
			Annualized volatility	32.00% - 115.04%  (46.16%)

December 31, 2019
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.24 - $16.07  ($0.24)
			Exercise price	$0.02 - $9.00  ($0.09)
			Time to maturity (in years)	4.35 - 11.95  (8.01)
			Risk-free interest rate	1.60% - 1.99%  (1.86%)
			Annualized volatility	32.21% - 111.44%  (46.60%)

The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Company’s financial statements and related notes.

The Company determines the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents

The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.

Notes receivable

The fair value of the Company’s notes receivable is generally estimated based upon various methodologies deployed by financial and credit management including, but not limited to, credit analysis, third party appraisal and/or discounted cash flow analysis based upon current market valuation techniques and market rates for similar types of lending arrangements, which may consider adjustments for impaired loans as deemed necessary.

Non-recourse debt

The fair value of the Company’s non-recourse debt is estimated using discounted cash flow analyses, based upon current market borrowing rates for similar types of borrowing arrangements.

24

ATEL 16, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Commitments and Contingencies

Management has determined that no recognition for the fair value of the Company’s loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Company’s credit requirements at the time of funding.

The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	6,499	$	6,499	$	—	$	—	$	6,499
Notes receivable, net		1,091		—		—		1,114		1,114
Warrants, fair value		688		—		—		688		688
Financial liabilities:
Non-recourse debt		4,548		—		—		4,573		4,573

	December 31, 2019
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	7,992	$	7,992	$	—	$	—	$	7,992
Notes receivable, net		1,384		—		—		1,396		1,396
Warrants, fair value		730		—		—		730		730
Financial liabilities:
Non-recourse debt		5,265		—		—		5,271		5,271

12.  Global health emergency:

On January 30, 2020, the World Health Organization declared the novel coronavirus outbreak a public health emergency. The Fund’s operations is located in California, which has restricted gatherings of people due to the coronavirus outbreak. At present, the Fund’s operations have not been adversely affected and continues to function effectively. Due to the dynamic nature of these unprecedented circumstances and possible business disruption, the Fund will continue to monitor the situation closely, but given the uncertainty about the situation, an estimate of the future impact, if any, cannot be made at this time.

25

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

Statements contained in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and elsewhere in this Form 10‑Q, which are not historical facts, may be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, economic recession and changes in general economic conditions, including fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Company’s performance is subject to risks relating to lessee and borrower defaults and the creditworthiness of its lessees and borrowers. The Company’s performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by the condition of the equipment, technological obsolescence and the markets for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10‑Q. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10‑Q or to reflect the occurrence of unanticipated events, other than as required by law.

Overview

ATEL 16, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on December 27, 2012 for the purpose of raising capital and originating equipment financing transactions and acquiring equipment to engage in equipment leasing and sales activities. The offering of the Company was granted effectiveness by the Securities and Exchange Commission as of November 5, 2013.

Through March 31, 2020, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable) totaling $42.9 million (inclusive of the $500 initial Member’s capital investment), had been received. As of March 31, 2020, a total of 4,274,486 Units were issued and outstanding.

Results of Operations

The Company had a  net loss of $171 thousand and net income of $40 thousand for the respective three month periods ended March 31, 2020 and 2019. The results of the first quarter of 2020 reflect decreases in both revenues and expenses when compared to the prior year period.

Total revenues for the quarter ended March 31, 2020 were $960 thousand compared to $1.4 million for the quarter ended March 31, 2019. This reduction of $465 thousand, or 33%, decline in revenues was primarily due to decreases in operating lease revenues, an unfavorable change in gains and losses recognized on the sale of lease assets, a reduction in interest income on notes receivable, and an increase in unrealized losses on the fair market value of warrants.  

Operating lease revenues declined by $331 thousand primarily due to dispositions of lease assets. The unfavorable change in gains and losses on sales of lease assets totaled $66 thousand and was primarily a result of the change in the mix of assets sold. Interest income declined by $64 thousand largely due to maturities of certain notes during the current quarter; and, unrealized losses on the Fund’s warrants increased by $39 thousand as a result of the lower interest rate environment.

Total expenses for the quarter ended March 31, 2020 were $1.1 million compared to $1.4 million for the quarter ended March 31, 2019. The $254 thousand, or 18%, reduction in expenses was primarily due to decreases in depreciation, interest expense and cost reimbursements to Managing Member and/or affiliates partially offset by an increase in acquisition expense.

Depreciation expense was reduced by $226 thousand as a result of run-off and sales of lease assets. Interest expense decreased by $34 thousand as a result of repayments made on the Fund’s borrowings under non-recourse debt since March 31, 2019. Cost reimbursements to Managing Member and/or affiliates declined by $25 thousand due to lower allocated costs. Such decline in allocated costs is reflective of consistent baseline allocations of common costs among the Fund and its affiliates.

26

These reductions in expenses were partially offset by a $70 thousand increase in acquisition expense related to lease assets acquired during the current quarter. There were no acquisitions during the prior year quarter.

Capital Resources and Liquidity

The Company’s cash and cash equivalents totaled $6.5 million and $8.0 million as of March 31, 2020 and December 31, 2019, respectively. The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The Company currently believes it has available adequate reserves to meet its immediate cash requirements and those of the next twelve months, but in the event those reserves were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements. The Managing Member envisions no such requirements for operating purposes.

Cash Flows

The following table sets forth summary cash flow data (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Net cash provided by (used in):
Operating activities	$	706	$	960
Investing activities		(732)		637
Financing activities		(1,467)		88
Net (decrease) increase in cash and cash equivalents	$	(1,493)	$	1,685

During the three months ended March 31, 2020 and 2019, the Company’s main sources of liquidity were cash flows from its portfolio of operating lease contracts, principal payments on its investments in notes receivable, and proceeds from sales of lease assets and early termination of notes receivable. Principal payments received on the notes receivable totaled $306 thousand and $422 thousand for the three months ended March 31, 2020 and 2019, respectively; and, proceeds from sales of assets totaled $68 thousand and $228 thousand for the same respective periods. In addition, during the first quarter of 2019, the Fund had $1.5 million of borrowings under non-recourse debt. There were no such borrowings during the current quarter.

During the three months ended March 31, 2020, cash was used to acquire $1.1 million of lease assets, pay distributions of $749 thousand, and repay $718 thousand of borrowings under non-recourse debt. By comparison, during the three months ended March 31, 2019, cash was primarily used to pay distributions of $748 thousand and repay $678 thousand of borrowings under non-recourse debt. Cash was also used to pay invoices related to management fees and expenses, and other payables during both three-month periods.

Material financial covenants

Under the Credit Facility, the Company is required to maintain a specific tangible net worth, to comply with a leverage ratio and an interest coverage ratio, and to comply with other terms expressed in the Credit Facility, including limitation on the incurrence of additional debt and guaranties, defaults, and delinquencies.

As of March 31, 2020, the material financial covenants are summarized as follows:

Minimum Tangible Net Worth: $10 million

Leverage Ratio (leverage to Tangible Net Worth): Not to exceed 1.25 to 1

Collateral Value: Collateral value under the Warehouse Facility must be no less than the outstanding

borrowings under that facility

EBITDA to Interest Ratio: Not to be less than 2 to 1 for the four fiscal quarters just ended

27

“EBITDA” is defined under the Credit Facility as, for the relevant period of time (1) gross revenues (all payments from leases and notes receivable) for such period minus (2) expenses deducted in determining net income for such period plus (3) to the extent deducted in determining net income for such period (a) provision for income taxes and (b) interest expense, and (c) depreciation, amortization and other non-cash charges. Extraordinary items and gains or losses on (and proceeds from) sales or dispositions of assets outside of the ordinary course of business are excluded in the calculation of EBITDA. “Tangible Net Worth” is defined as, as of the date of determination, (i) the net worth of the Company, after deducting therefrom (without duplication of deductions) the net book amount of all assets of the Company, after deducting any reserves and other amounts for assets which would be treated as intangibles under accounting principles generally accepted in the United States of America (“GAAP”), and after certain other adjustments permitted under the agreements.

The financial covenants referred to above are applicable to the Company only to the extent that the Company has borrowings outstanding under the Credit Facility. The Company was in compliance with these financial covenants under the Credit Facility with a minimum Tangible Net Worth, leverage ratio and interest coverage ratio, as calculated per the Credit Facility agreement of $19.1 million, 0.24 to 1, and 24.59 to 1, respectively, as of March 31, 2020. As such, as of March 31, 2020, the Company was in compliance with all such material financial covenants.

Reconciliation to GAAP of EBITDA

For purposes of compliance with the Credit Facility covenants, the Company uses a financial calculation of EBITDA, as defined therein, which is a non-GAAP financial performance measure. The EBITDA is utilized by the Company to calculate its debt covenant ratios.

The following is a reconciliation of net income to EBITDA, as defined in the loan agreement, for the twelve months ended March 31, 2020 (in thousands):

Net income – GAAP basis	$	651
Interest expense		193
Depreciation and amortization		2,593
Amortization of initial direct costs		106
Provision for credit losses (doubtful accounts)		9
Unrealized loss on fair valuation of warrants		(371)
Principal payments received on Notes Receivable		1,565
EBITDA (for Credit Facility financial covenant calculation only)	$	4,746

Events of default, cross-defaults, recourse and security

The terms of the Credit Facility include standard events of default by the Company which, if not cured within applicable grace periods, could give lenders remedies against the Company, including the acceleration of all outstanding borrowings and a demand for repayment in advance of their stated maturity. If a breach of any material term of the Credit Facility should occur, the lenders may, at their option, increase borrowing rates, accelerate the obligations in advance of their stated maturities, terminate the facility, and exercise rights of collection available to them under the express terms of the facility, or by operation of law. The lenders also retain the discretion to waive a violation of any covenant at the Company’s request.

The Company is currently in compliance with its obligations under the Credit Facility. In the event of a technical default (e.g., the failure to timely file a required report, or a one-time breach of a financial covenant), the Company believes it has ample time to request and be granted a waiver by the lenders, or, alternatively, cure the default under the existing provisions of its debt agreements, including, if necessary, arranging for additional capital from alternate sources to satisfy outstanding obligations.

The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’s assets as collateral for any and all borrowings under the Acquisition Facility, and on a pro-rata basis under the Warehouse Facility. The Acquisition Facility is generally recourse solely to the Company, and is not cross-defaulted to any other obligations of affiliated companies under the Credit Facility, except as described in this paragraph. The Credit Facility is cross-defaulted to a

28

default in the payment of any debt (other than non-recourse debt) or any other agreement or condition beyond the period of grace (not exceeding 30 days), the effect of which would entitle the lender under such agreement to accelerate the obligations prior to their stated maturity in an individual or aggregate principal amount in excess of 15% of the Company’s consolidated Tangible Net Worth. Also, a bankruptcy of AFS will trigger a default for the Company under the Credit Facility.

Distributions

The Unitholders of record are entitled to certain distributions as provided under the Operating Agreement. The Company commenced periodic distributions beginning with the month of April 2014. Additional distributions have been made through March 31, 2020.

Cash distributions were paid by the Fund to Unitholders of record as of February 29, 2020, and paid through March 31, 2020. The distributions may be characterized for tax, accounting and economic purposes as a return of capital, a return on capital (including escrow interest) or a portion of each. Generally, the portion of each cash distribution by a company which exceeds its net income for the fiscal period would constitute a return of capital. The Fund is required by the terms of its Operating Agreement to distribute the net cash flow generated by its investments in certain minimum amounts during the Reinvestment Period before it can reinvest its operating cash flow in additional portfolio assets. See the discussion in the ATEL 16, LLC Prospectus dated November 5, 2013 (“Prospectus”) under “Income, Losses and Distributions.” Accordingly, the amount of cash flow from Fund investments distributed to Unitholders will not be available for reinvestment in additional portfolio assets.

The cash distributions were based on current and anticipated gross revenues from the leases, loans and equity investments acquired. During the Fund’s acquisition and operating stages, the Fund may incur short term borrowing to fund regular distributions of such gross revenues to be generated by newly acquired transactions during their respective initial fixed terms. As such, all Fund periodic cash distributions made during these stages have been, and are expected in the future to be, based on the Fund’s actual and anticipated gross revenues to be generated from the binding initial terms of the leases, loans and investments acquired.

The following table summarizes distribution activity for the Fund from inception through March 31, 2020 (in thousands, except for Units and Per Unit Data):

														Total		Weighted
		Return of				Distribution				Total				Distribution		Average Units
Distribution Period(1)	Paid	Capital				of Income				Distribution				per Unit (2)		Outstanding(3)
Monthly and quarterly distributions
Nov 2013 – Mar 2014 (Distribution of all escrow interest)	Jun 2014	$	—			$	—			$	—				n/a	n/a
Mar 2014 – Nov 2014	Apr 2014 – Dec 2014		453				—				453				0.51	896,524
Dec 2014 – Nov 2015	Jan 2015 – Dec 2015		2,096				—				2,096				0.69	3,044,217
Dec 2015 – Nov 2016	Jan 2016 – Dec 2016		3,016				—				3,016				0.70	4,306,106
Dec 2016 – Nov 2017	Jan 2017 – Dec 2017		3,001				—				3,001				0.70	4,295,644
Dec 2017 – Nov 2018	Jan 2018 – Dec 2018		2,997				—				2,997				0.70	4,276,421
Dec 2018 - Nov 2019	Jan 2019 – Dec 2019		2,992				—				2,992				0.70	4,274,486
Dec 2019 - Feb 2020	Jan 2020 – Mar 2020		749				—				749				0.18	4,274,486
		$	15,304			$	—			$	15,304			$	4.18
Source of distributions
Lease and loan payments and sales proceeds received		$	15,304	100.00	%	$	—	0.00	%	$	15,304	100.00	%
Interest Income			—	0.00	%		—	0.00	%		—	0.00	%
Debt against non-cancellable firm term payments on leases and loans			—	0.00	%		—	0.00	%		—	0.00	%
		$	15,304	100.00	%	$	—	0.00	%	$	15,304	100.00	%

(1) Investors may elect to receive their distributions either monthly or quarterly. See “Timing and Method of Distributions” on Page 67 of the Prospectus.

(2) Total distributions per Unit represents the per Unit distributions rate for those units which were outstanding for all of the applicable period.

(3) Balances shown represent weighted average units for the period from March 6 – November 30, 2014, December 1, 2014 – November 30, 2015, December 31, 2015 – November 30, 2016, December 1, 2016 – November 30, 2017, December 1, 2017 – November 30, 2018,  December 1, 2018 – November 30, 2019 and December 31, 2019 – February 29, 2020, respectively.

29

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At March 31, 2020, there was a commitment to fund investments in notes receivable totaling $3.2 million and purchase lease assets totaling $283 thousand. These amounts represents contract awards which may be canceled by the prospective borrower/investee or may not be accepted by the Company.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Note 2 to the financial statements as set forth in Part I, Item 1, Financial Statements (Unaudited).

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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. On an on-going basis, the Company evaluates its estimates, which are based upon historical experiences, market trends and financial forecasts, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these estimates under different assumptions or conditions.

The Company’s significant accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2019. There have been no material changes to the Company’s significant accounting policies since December 31, 2019.

Item 4. Controls and procedures.

Evaluation of disclosure controls and procedures

The Company’s Managing Member’s Chief Executive Officer, and Executive Vice President and Chief Financial Officer and Chief Operating Officer (“Management”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on the evaluation of the Company’s disclosure controls and procedures, Management concluded that as of the end of the period covered by this report, the design and operation of these disclosure controls and procedures were effective.

The Company does not control the financial reporting process, and is solely dependent on the Management of the Managing Member, who is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Member’s disclosure controls and procedures, as they are applicable to the Company, means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

30

Changes in internal control

There were no changes in the Managing Member’s internal control over financial reporting, as it is applicable to the Company, during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

31

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of conducting business, there may be certain claims, suits, and complaints filed against the Managing Member. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Managing Member’s financial position or results of operations.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a) Documents filed as a part of this report

1.	Financial Statement Schedules
	All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

2.	Other Exhibits
	(31.1)	Certification of Dean L. Cash pursuant to Rules 13a-14(a)/15d-14(a)
	(31.2)	Certification of Paritosh K. Choksi pursuant to Rules 13a-14(a)/15d-14(a)
	(32.1)	Certification of Dean L. Cash pursuant to 18 U.S.C. section 1350
	(32.2)	Certification of Paritosh K. Choksi pursuant to 18 U.S.C. section 1350
	(101.INS)	XBRL Instance Document
	(101.SCH)	XBRL Taxonomy Extension Schema Document
	(101.CAL)	XBRL Taxonomy Extension Calculation Linkbase Document
	(101.DEF)	XBRL Taxonomy Extension Definition Linkbase Document
	(101.LAB)	XBRL Taxonomy Extension Label Linkbase Document
	(101.PRE)	XBRL Taxonomy Extension Presentation Linkbase Document

32

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: May 15, 2020

ATEL 16, LLC

(Registrant)

By:	ATEL Managing Member, LLC Managing Member of Registrant
By:	/s/ Dean L. Cash
	Dean L. Cash
	Chairman of the Board, President and Chief Executive Officer of ATEL Managing Member, LLC (Managing Member)
By:	/s/ Paritosh K. Choksi
	Paritosh K. Choksi
	Director, Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Managing Member, LLC (Managing Member)
By:	/s/ Samuel Schussler
	Samuel Schussler
	Senior Vice President and Chief Accounting Officer of ATEL Managing Member, LLC (Managing Member)

33

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a‑14(a) OR RULE 15d‑14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dean L. Cash, certify that:

1.     I have reviewed this quarterly report on Form 10‑Q of ATEL 16, LLC;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

9

Date:  May 15, 2020

/s/ Dean L. Cash

Dean L. Cash

Chairman of the Board, President and Chief

Executive Officer of ATEL Managing Member, LLC (Managing Member)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a‑14(a) OR RULE 15d‑14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paritosh K. Choksi, certify that:

1.     I have reviewed this quarterly report on Form 10‑Q of ATEL 16, LLC;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 15, 2020

/s/ Paritosh K. Choksi

Paritosh K. Choksi

Director, Executive Vice President and Chief Financial Officer

and Chief Operating Officer of ATEL Managing Member, LLC (Managing Member)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

§906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ATEL 16, LLC (the “Company”) on Form 10‑Q for the period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dean L. Cash, Chairman of the Board, President and Chief Executive Officer of ATEL Managing Member, LLC, Managing Member of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2020

/s/ Dean L. Cash

Dean L. Cash

Chairman of the Board, President and Chief

Executive Officer of ATEL Managing Member, LLC

(Managing Member)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

§906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ATEL 16, LLC (the “Company”) on Form 10‑Q for the period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paritosh K. Choksi, Director, Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Managing Member, LLC, Managing Member of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2020

/s/ Paritosh K. Choksi

Paritosh K. Choksi

Director, Executive Vice President and Chief

Financial Officer and Chief Operating Officer

of ATEL Managing Member, LLC (Managing Member)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Borrowing Facilities (Borrowings Under the Facility) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Total available under the financing arrangement	$ 55,000	$ 55,000
Amounts borrowed by affiliated partnerships and Limited Liability Companies under the venture, acquisition and warehouse facilities	(1,849)	(850)
Total remaining available under the working capital, acquisition and warehouse facilities	53,151	54,150
Credit Facility [Member]
Amount borrowed by the Company under the acquisition facility	$ 0	$ 0

XML

Related Party Transactions (Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Related Party Transactions [Abstract]
Administrative costs reimbursed to Managing Member and/or affiliates	$ 131	$ 156
Asset management fees to Managing Member	121	132
Related party transaction, total	$ 252	$ 288

XML

Allowance for Credit Losses (Narrative) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Allowance for Credit Losses [Abstract]
Impaired investment in financing receivables	$ 0	$ 0
Financing receivable on non-accrual status	$ 0		$ 0

XML

Notes Receivable, Net (Tables)

3 Months Ended

Mar. 31, 2020

Notes Receivable, Net [Abstract]

Minimum Future Payments Receivable

As of March 31, 2020, the minimum future payments receivable are as follows (in thousands):

Nine months ending December 31, 2020	$	619
Year ending December 31, 2021		555
2022		115
		1,289
Less: portion representing unearned interest income		(144)
		1,145
Less: warrants - notes receivable discount		(56)
Unamortized initial direct costs		2
Notes receivable, net	$	1,091

Initial Direct Costs, Expense Related to Notes Receivable and Company's Operating and Direct Finance Leases

IDC expenses related to notes receivable and the Company’s operating leases for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

	Three Months Ended
	March 31,
	2020		2019
IDC amortization - notes receivable	$	1	$	—
IDC amortization - lease assets		13		1
Total	$	14	$	1

XML

Non-Recourse Debt (Tables)

3 Months Ended

Mar. 31, 2020

Non-Recourse Debt [Abstract]

Future Minimum Payments of Non-Recourse Debt

Future minimum payments of non-recourse debt are as follows (in thousands):

	Principal		Interest		Total
Nine months ending December 31, 2020	$	1,230	$	112	$	1,342
Year ending December 31, 2021		1,173		117		1,290
2022		1,031		75		1,106
2023		343		43		386
2024		290		28		318
Thereafter		481		39		520
	$	4,548	$	414	$	4,962

XML

Organization and Limited Liability Company Matters (Narrative) (Details) - USD ($)		3 Months Ended	53 Months Ended
	Dec. 31, 2012	Mar. 31, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 19, 2014	Mar. 06, 2014
Business activities, description		equipment financing and acquiring equipment to engage in equipment leasing and sales activities
Business formation date		Dec. 27, 2012
Business formation State		California
Public offering of Limited Liability Company Units	15,000,000
Public offering of Limited Liability Company Units, price per Unit	$ 10
Sale of Limited Liability Company Units, number of Units						120,000
Proceeds from sale of Limited Liability Company Units						$ 1,200,000
Gross contributions		$ 42,900,000	$ 42,900,000
Reinvestment period			6 years
Minimum [Member]
Amount of aggregate subscriptions for Pennsylvania subscriptions to be released to the Fund						$ 7,500,000
Contributions received, net of rescissions					$ 7,500,000
Other Members [Member]
Members capital Units issued		4,274,486	4,274,486	4,274,486
Members capital, Units outstanding		4,274,486	4,274,486	4,274,486
Initial Member [Member]
Initial Member's capital investment	$ 500
Members capital Units issued		50	50	50

XML

Equipment Under Operating Leases, Net (Future Minimum Lease Payments Receivable) (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Operating Leases Future Minimum Payments Receivable [Abstract]
Nine months ending December 31, 2020	$ 1,807
Year ending December 31, 2021	1,833
2022	1,452
2023	648
2024	486
Thereafter	572
Operating leases, future minimum payments receivable, total	$ 6,798

XML

Notes Receivable, Net (Initial Direct Costs, Expense Related to Notes Receivable and Company's Operating and Direct Finance Leases) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortization of initial direct costs	$ 14	$ 1
Notes Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortization of initial direct costs	1
Lease Assets [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amortization of initial direct costs	$ 13	$ 1

XML

Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Unrealized loss on fair value adjustment for warrants	$ 42	$ 3
Impairment losses on investment in securities	0	0
Gain (Loss) on exercise of warrants	0	0
Fair value adjustments in investment in securities	$ 0	0
Equipment in operating leases, depreciation method	straight-line
Warrants, fair value	$ 688		$ 730
Investment in securities	47		$ 41
Sales or disposition of securities	$ 0	$ 0
Number of operating segments | segment	1
Number of reportable segments | segment	1
Minimum [Member]
Required assets value of financial institutions for cash deposits	$ 10,000,000
Operating leases, period for non-accrual status	90 days
Notes receivable, period for non-accrual status	90 days
Operating leases, initial terms	36 months
Maximum [Member]
U.S. Treasury instruments maturity period	90 days
Cash deposits, insured amount	$ 250
Operating leases, period of review for impairment	90 days
Notes receivable, period of review for impairment	90 days
Operating leases, initial terms	120 months

XML

Statements of Changes in Members' Capital - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Beginning Balance	$ 20,132	$ 22,243
Distributions to Other Members	(749)	(748)
Net (loss) income	(171)	40
Ending Balance	19,212	21,535
Other Members [Member]
Beginning Balance	$ 20,132	$ 22,243
Beginning Balance (in Units)	4,274,486	4,274,486
Distributions to Other Members	$ (749)	$ (748)
Net (loss) income	(171)	40
Ending Balance	$ 19,212	$ 21,535
Ending Balance (in Units)	4,274,486	4,274,486

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (‘‘GAAP’’) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after March 31, 2020, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

Cash and cash equivalents:

Cash and cash equivalents include cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less.

Use of Estimates:

The preparation of the financial statements in conformity 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 the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.    

Segment reporting:

The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States with activities in the United States and Costa Rica.

The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas.

The table below summarize geographic information relating to the sources, by nation, of the Company’s total revenues for the three months ended March 31, 2020 and 2019 and long-lived assets as of March 31, 2020 and December 31, 2019 (dollars in thousands):

	For The Three Months Ended March 31,
	2020		% of Total		2019		% of Total
Revenue
United States	$	738	77	%	$	1,193	84	%
Costa Rica		222	23	%		232	16	%
Total	$	960	100	%	$	1,425	100	%

	As of March 31,				As of December 31,
	2020		% of Total		2019		% of Total
Long-lived assets
United States	$	13,341	82	%	$	12,972	84	%
Costa Rica		2,859	18	%		2,859	16	%
Total	$	16,200	100	%	$	15,831	100	%

Accounts receivable:

Accounts receivable represent the amounts billed under operating lease contracts and notes receivable which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received.

Financing receivables:

In addition to the allowance established for delinquent accounts receivable, the total allowance related solely to financing receivables also includes anticipated impairment charges on notes receivable.

Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

Investment in securities:

From time to time, the Company may purchase securities of its borrowers or receive warrants in connection with its lending arrangements.

Purchased securities

The Company’s purchased securities do not have readily determinable fair values and are measured at cost minus impairment, and adjusted for changes in observable prices. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. The Company’s investment securities totaled $47 thousand and $41 thousand at March 31, 2020 and December 31, 2019, respectively. There were no fair value adjustments on investment securities for the respective three months ended March 31, 2020 and 2019. Cumulatively, there has been no fair value adjustment recorded on such securities. There were neither impairment losses nor sales or disposition of securities during the three months ended March 31, 2020 and 2019.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet as determined by the Managing Member. The Company recorded unrealized losses of $42 thousand and $3 thousand on fair valuation of its warrants for the quarters ended March 31, 2020 and 2019, respectively. The estimated fair value of the Company’s warrants were $688 thousand and $730 thousand at March 31, 2020 and December 31, 2019, respectively. The Company realized no gains or losses from the net exercise of warrants during the three months ended March 31, 2020 and 2019.

Credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating lease receivables, notes receivable and accounts receivable. The Company places the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $10 billion in assets. Such deposits are insured up to $250 thousand. The remainder of the Fund’s cash is temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts and notes receivable represent amounts due from lessees or borrowers in various industries, are related to equipment on operating lease contracts and notes receivable.

Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360‑10‑35‑3, over the periods of the lease terms contained in each asset’s respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43).

The Company does not use the equipment held in its portfolio, but holds it solely for lease and ultimate sale. In the course of marketing equipment that has come off-lease, management may determine at some point that re-leasing the assets may provide a superior return for investors and would then execute another lease. Upon entering into a new lease contract, management will estimate the residual value once again and resume depreciation. If, and when, the Company, at any time, determines that depreciation in value may have occurred with respect to an asset held-for-sale, the Company would review the value to determine whether a material reduction in value had occurred and recognize any appropriate impairment. All lease assets, including off-lease assets, are subject to the Company’s quarterly impairment analysis, as described below. Maintenance costs associated with the Fund’s portfolio of leased assets are expensed as incurred. Major additions and betterments are capitalized.

Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms from 36 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet.

Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis. Upon adoption of Accounting Standards Update (“ASU”) 2016-02, provisions for credit losses relating to operating leases are now included in lease income in the Company’s financial statements. Provisions for credit losses prior to January, 1, 2019 were previously included in operating expenses in the Company’s financial statements.

Notes receivable, unearned interest income and related revenue recognition:

The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports only the net amount of principal due on the balance sheet. The unearned interest is recognized over the term of the note and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. Any fees or costs related to notes receivable are recorded as part of the net investment in notes receivable and amortized over the term of the loan.

Allowances for losses on notes receivable are typically established based on historical charge off and collection experience and the collectability of specifically identified borrowers and billed and unbilled receivables. Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

Notes receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with note payments outstanding less than 90 days. Based upon management’s judgment, the related notes may be placed on non-accrual status. Notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable. Until such time, all payments received are applied only against outstanding principal balances.

Initial direct costs:

With the adoption of ASU 2016-02 certain costs associated with the execution of the Company’s leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred effective January 1, 2019. In 2018 and prior, the Company capitalized initial direct costs (“IDC”) associated with the origination of lease assets. IDC includes both internal costs (e.g., the costs of employees’ activities in connection with successful lease originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease (or note by note) basis based on actual lease term using a straight-line method for operating leases and the effective interest rate method for notes receivable. Upon disposal of the underlying lease assets and notes receivable, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition expense:

Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.

Fair Value:

Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

Asset valuation:

Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the Company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than the net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances.

Per Unit data:

Net loss and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the period.

Emerging growth company:

Section 107 of the Jumpstart Our Business Startups Act (the “JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to “opt out” of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Recent accounting pronouncements:

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP that are intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. Management is currently evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Fund’s financial statements and disclosures.

In June 2016, the FASB issued Accounting Standards Update 2016‑13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016‑13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and equipment under operating leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, equipment under operating leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Management is currently evaluating the standard and expects the update may potentially result in the increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments.

In November 2018, the FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses (“ASU 2018-19”). The new standard clarifies certain aspects of the new CECL impairment model in ASU 2016-13. The amendment clarifies that receivables arising from operating leases are within the scope of ASC 842, rather than ASC 326. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements.

On August 15, 2019, the FASB issued a proposed ASU that would grant certain companies additional time to implement FASB standards on CECL and hedging. The proposed ASU defers the effective date for CECL to fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years; and defers the effective date for hedging to fiscal periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The ASU was approved on October 16, 2019. In February 2020, the FASB issued ASU 2020-02 and delayed the effective date of Topic 326 until fiscal year beginning after December 15, 2022.

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (“ASU 2018-13”), which amends the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU modifies disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Fund adopted ASU 2018-13 on January 1, 2020. Such adoption did not have a significant impact on the Fund’s financial statements and related disclosure requirements.

XML

Non-Recourse Debt

3 Months Ended

Mar. 31, 2020

Non-Recourse Debt [Abstract]

Non-Recourse Debt

7. Non-recourse debt:

At March 31, 2020, non-recourse debt consists of notes payable to financial institutions. The notes are due in monthly installments. Interest on the notes is at fixed rates ranging from 2.75% to 4.84% per annum. The notes are secured by assignments of lease payments and pledges of assets. At March 31, 2020, gross operating lease rentals totaled approximately $4.9 million over the remaining lease terms; and the carrying value of the pledged assets is $9.9 million. The notes mature at various dates from 2020 to 2028.

The non-recourse debt does not contain any material financial covenants. The debt is secured by a specific lien granted by the Company to the non-recourse lender on (and only on) the discounted lease transactions. The lender has recourse only to the following collateral: the leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lender, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company’s good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

Future minimum payments of non-recourse debt are as follows (in thousands):

	Principal		Interest		Total
Nine months ending December 31, 2020	$	1,230	$	112	$	1,342
Year ending December 31, 2021		1,173		117		1,290
2022		1,031		75		1,106
2023		343		43		386
2024		290		28		318
Thereafter		481		39		520
	$	4,548	$	414	$	4,962

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

11. Fair value measurements:

Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

At March 31, 2020 and 2019, only the Company’s warrants were measured on a recurring basis. As of the same periods, the Company had no assets or liabilities that required measurement at fair value on a non-recurring basis.

Such fair value adjustments utilized the following methodology:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, time to maturity, and a risk free interest rate for the term(s) of the warrant exercise(s). As of March 31, 2020 and December 31, 2019, the calculated fair value of the Fund’s warrant portfolio approximated $688 thousand and $730 thousand, respectively. Such valuations are classified within Level 3 of the valuation hierarchy.

The following table reconciles the beginning and ending balances of the Company’s Level 3 recurring assets (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Fair value of warrants at beginning of period	$	730	$	320
Unrealized loss on fair value adjustment for warrants		(42)		(3)
Fair value of warrants at end of period	$	688	$	317

The following tables summarize the valuation techniques and significant unobservable inputs used for the Company’s recurring and non-recurring fair value calculation/adjustments categorized as Level 3 in the fair value hierarchy at March 31, 2020 and December 31, 2019:

March 31, 2020
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.11 - $16.95  ($0.24)
			Exercise price	$0.02 - $9.00  ($0.09)
			Time to maturity (in years)	4.1 - 11.7  (7.76)
			Risk-free interest rate	0.34% - 1.58%  (0.60%)
			Annualized volatility	32.00% - 115.04%  (46.16%)

December 31, 2019
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.24 - $16.07  ($0.24)
			Exercise price	$0.02 - $9.00  ($0.09)
			Time to maturity (in years)	4.35 - 11.95  (8.01)
			Risk-free interest rate	1.60% - 1.99%  (1.86%)
			Annualized volatility	32.21% - 111.44%  (46.60%)

The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Company’s financial statements and related notes.

The Company determines the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents

The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.

Notes receivable

The fair value of the Company’s notes receivable is generally estimated based upon various methodologies deployed by financial and credit management including, but not limited to, credit analysis, third party appraisal and/or discounted cash flow analysis based upon current market valuation techniques and market rates for similar types of lending arrangements, which may consider adjustments for impaired loans as deemed necessary.

Non-recourse debt

The fair value of the Company’s non-recourse debt is estimated using discounted cash flow analyses, based upon current market borrowing rates for similar types of borrowing arrangements.

Commitments and Contingencies

Management has determined that no recognition for the fair value of the Company’s loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Company’s credit requirements at the time of funding.

The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	6,499	$	6,499	$	—	$	—	$	6,499
Notes receivable, net		1,091		—		—		1,114		1,114
Warrants, fair value		688		—		—		688		688
Financial liabilities:
Non-recourse debt		4,548		—		—		4,573		4,573

	December 31, 2019
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	7,992	$	7,992	$	—	$	—	$	7,992
Notes receivable, net		1,384		—		—		1,396		1,396
Warrants, fair value		730		—		—		730		730
Financial liabilities:
Non-recourse debt		5,265		—		—		5,271		5,271

XML

Members' Capital (Distributions to Other Members) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Distributions	$ 749	$ 748
Weighted average number of Units outstanding	4,274,486	4,274,486
Other Members [Member]
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Distributions	$ 749	$ 748
Weighted average number of Units outstanding	4,274,486	4,274,486
Weighted average distributions per Unit	$ 0.18	$ 0.17

XML

Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Financial assets:
Cash and cash equivalents	$ 6,499	$ 7,992
Notes receivable, net	1,114	1,396
Warrants, fair value	688	730
Financial liabilities:
Non-recourse debt	4,573	5,271
Level 1 Estimated Fair Value [Member]
Financial assets:
Cash and cash equivalents	6,499	7,992
Level 3 Estimated Fair Value [Member]
Financial assets:
Notes receivable, net	1,114	1,396
Warrants, fair value	688	730	$ 317	$ 320
Financial liabilities:
Non-recourse debt	4,573	5,271
Carrying Amount [Member]
Financial assets:
Cash and cash equivalents	6,499	7,992
Notes receivable, net	1,091	1,384
Warrants, fair value	688	730
Financial liabilities:
Non-recourse debt	$ 4,548	$ 5,265

XML

Equipment Under Operating Leases, Net (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Lessor, Lease, Description [Line Items]
Amortization of initial direct costs	$ 14	$ 1
Depreciation of operating lease assets	$ 611	837
Average estimated residual value of assets on operating leases (in percentage)	35.00%		34.00%
Operating leases on non-accrual status	$ 0	0
Lease Assets [Member]
Lessor, Lease, Description [Line Items]
Amortization of initial direct costs	$ 13	$ 1

XML

Summary of Significant Accounting Policies (Summary of Geographic Information Relating to Sources, by Nation, of Partnership's Total Revenue and Long-Lived Assets) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 960	$ 1,425
Long-lived assets	$ 16,200		$ 15,831
Operating Revenue [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Percentage of concentration risk	100.00%	100.00%
Long-Lived Assets [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Percentage of concentration risk	100.00%		100.00%
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 738	$ 1,193
Long-lived assets	$ 13,341		$ 12,972
United States [Member] | Operating Revenue [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Percentage of concentration risk	77.00%	84.00%
United States [Member] | Long-Lived Assets [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Percentage of concentration risk	82.00%		84.00%
Costa Rica [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 222	$ 232
Long-lived assets	$ 2,859		$ 2,859
Costa Rica [Member] | Operating Revenue [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Percentage of concentration risk	23.00%	16.00%
Costa Rica [Member] | Long-Lived Assets [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Percentage of concentration risk	18.00%		16.00%

XML

Equipment Under Operating Leases, Net (Schedule of Useful Lives of Lease Assets) (Details)	3 Months Ended
	Mar. 31, 2020
Coal Terminal [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	50 years
Coal Terminal [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	60 years
Railroad [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	35 years
Railroad [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	50 years
Marine Vessels [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	20 years
Marine Vessels [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	30 years
Aviation [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	20 years
Aviation [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	30 years
Containers [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	15 years
Containers [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	20 years
Manufacturing [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	10 years
Manufacturing [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	15 years
Mining [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	10 years
Mining [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	15 years
Materials Handling [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	7 years
Materials Handling [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	10 years
Trucks and Trailers [Member] | Minimum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	7 years
Trucks and Trailers [Member] | Maximum [Member]
Lessor, Lease, Description [Line Items]
Useful lives of lease assets	10 years

XML

Notes Receivable, Net

3 Months Ended

Mar. 31, 2020

Notes Receivable, Net [Abstract]

Notes Receivable, Net

3. Notes receivable, net:

The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. As of March 31, 2020, the original terms of the notes are from 30 to 42 months with interest at rates ranging from 11.68% to 16.87% per annum. The notes are secured by the equipment financed and have maturity dates ranging from 2020 through 2022.

As of March 31, 2020, the minimum future payments receivable are as follows (in thousands):

Nine months ending December 31, 2020	$	619
Year ending December 31, 2021		555
2022		115
		1,289
Less: portion representing unearned interest income		(144)
		1,145
Less: warrants - notes receivable discount		(56)
Unamortized initial direct costs		2
Notes receivable, net	$	1,091

IDC expenses related to notes receivable and the Company’s operating leases for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

	Three Months Ended
	March 31,
	2020		2019
IDC amortization - notes receivable	$	1	$	—
IDC amortization - lease assets		13		1
Total	$	14	$	1

XML

Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

6. Related party transactions:

The terms of the Operating Agreement provide that the Managing Member and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company.

The Operating Agreement allows for the reimbursement of costs incurred by the Managing Member and/or affiliates for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. The Managing Member is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of investments.

Each of AFS and ATEL Leasing Corporation (“ALC”) is a wholly-owned subsidiary of ATEL Capital Group, Inc. and performs services for the Company on behalf of the Managing Member. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS.

Cost reimbursements to the Managing Member or its affiliates are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as total assets, number of investors or contributed capital based upon the type of cost incurred. The Managing Member believes that the costs reimbursed are the lower of (i) actual costs incurred on behalf of the Company or (ii) the amount the Company would be required to pay independent parties for comparable administrative services in the same geographic location.

The Managing Member and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement, during the three months ended March 31, 2020 and 2019 as follows (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Administrative costs reimbursed to Managing Member and/or affiliates	$	131	$	156
Asset management fees to Managing Member		121		132
	$	252	$	288

The Fund’s Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self-liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. As of March 31, 2020 and 2019, the Company has not exceeded the annual and/or cumulative limitations discussed above.

XML

Members' Capital

3 Months Ended

Mar. 31, 2020

Members' Capital [Abstract]

Members' Capital

10. Members’ capital:

A total of 4,274,486 Units were issued and outstanding at both March 31, 2020 and December 31, 2019, including the 50 Units issued to the initial Member (Managing Member). The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Member.

The Company has the right, exercisable at the Managing Member’s discretion, but not the obligation, to repurchase Units of a Unitholder who ceases to be a U.S. Citizen, for a price equal to 100% of the holder’s capital account. The Company is otherwise permitted, but not required, to repurchase Units upon a holder’s request. The repurchase of Fund units is made in accordance with Section 13 of the Amended and Restated Limited Liability Company Operating Agreement. The repurchase would be at the discretion of the Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing Member deems such repurchase to be in the best interest of the Company; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the Unitholder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs.

The Fund’s net income or net losses are to be allocated 100% to the members. From the commencement of the Fund until the initial closing date, net income and net loss were allocated 99% to the Managing Member and 1% to the initial members. Commencing with the initial closing date, net income and net loss are to be allocated 99.9% to the Other Members and 0.01% to the Managing Member.

Fund distributions are to be allocated 0.01% to the Managing Member and 99.99% to the Other Members. The Company commenced periodic distributions in the second quarter of 2014.

Distributions to the Other Members for the three months ended March 31, 2020 and 2019 were as follows (in thousands except Units and per Unit data):

	Three Months Ended
	March 31,
	2020		2019
Distributions	$	749	$	748
Weighted average number of Units outstanding		4,274,486		4,274,486
Weighted average distributions per Unit	$	0.18	$	0.17

XML

Statements of Changes in Members' Capital (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Other Members [Member]
Weighted average distributions per Unit	$ 0.18	$ 0.17

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Cover [Abstract]
Document Type	10-Q
Entity Registrant Name	ATEL 16, LLC
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Central Index Key	0001575048
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Smaller Reporting Company	true
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Units Outstanding		4,274,486

XML

Member's Capital (Narrative) (Details) - shares	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Potential repurchase price of units as percentage of holder's capital account	100.00%
Allocation of net income of net losses	100.00%
Managing Member [Member]
Allocation of net income or net losses from commencement until initial closing date	99.00%
Allocation of net income or net losses commencing with initial closing date	0.01%
Percentage of fund distributions, managing members	0.01%
Other Members [Member]
Members capital Units issued	4,274,486	4,274,486
Members capital, Units outstanding	4,274,486	4,274,486
Allocation of net income or net losses from commencement until initial closing date	1.00%
Allocation of net income or net losses commencing with initial closing date	99.90%
Percentage of fund distributions, other members	99.99%
Initial Member [Member]
Members capital Units issued	50	50
Maximum [Member] | Other Members [Member]
Members capital account, maximum Units authorized	15,000,000	15,000,000

XML

Fair Value Measurements (Summary of Valuation Techniques and Significant Unobservable Inputs Used) (Details) - Level 3 Estimated Fair Value [Member] - Recurring [Member] - Warrants [Member] - Black-Scholes Formulation [Member]	Mar. 31, 2020 Y $ / shares USD ($)	Dec. 31, 2019 Y $ / shares USD ($)
Minimum [Member] | Unobservable Inputs, Stock Price [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values | $ / shares	0.11	0.24
Minimum [Member] | Unobservable Inputs, Exercise Price [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	0.02	0.02
Minimum [Member] | Unobservable Inputs, Time to Maturity (in Years) [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	4.10	4.35
Minimum [Member] | Unobservable Inputs, Risk Free Interest Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	0.0034	0.0160
Minimum [Member] | Unobservable Inputs, Annualized Volatility [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	0.3200	0.3221
Maximum [Member] | Unobservable Inputs, Stock Price [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values | $ / shares	16.95	16.07
Maximum [Member] | Unobservable Inputs, Exercise Price [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	9.00	9.00
Maximum [Member] | Unobservable Inputs, Time to Maturity (in Years) [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	11.70	11.95
Maximum [Member] | Unobservable Inputs, Risk Free Interest Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	0.0158	0.0199
Maximum [Member] | Unobservable Inputs, Annualized Volatility [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	1.1504	1.1144
Weighted Average [Member] | Unobservable Inputs, Stock Price [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values | $ / shares	0.24	0.24
Weighted Average [Member] | Unobservable Inputs, Exercise Price [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values | $ / shares	0.09	0.09
Weighted Average [Member] | Unobservable Inputs, Time to Maturity (in Years) [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values | Y	7.76	8.01
Weighted Average [Member] | Unobservable Inputs, Risk Free Interest Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	0.0060	0.0186
Weighted Average [Member] | Unobservable Inputs, Annualized Volatility [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Warrants, Range of Input Values	0.4616	0.4660

XML

Non-Recourse Debt (Narrative) (Details) - Non-Recourse Debt [Member] $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Debt Instrument [Line Items]
Gross operating lease rentals and future payments on direct financing leases	$ 4.9
Assets pledged as collateral	$ 9.9
Notes payable, maturity date description	The notes mature at various dates from 2020 to 2028.
Minimum [Member]
Debt Instrument [Line Items]
Fixed interest rate on notes	2.75%
Maximum [Member]
Debt Instrument [Line Items]
Fixed interest rate on notes	4.84%

XML

Allowance for Credit Losses (Activity in Allowance for Credit Losses) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Balance	$ 8	$ 198
Provision for credit losses	5	(39)
Ending Balance	13	159
Operating Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Balance	8	65
Provision for credit losses	5	(52)
Ending Balance	$ 13	13
Notes Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Balance		133
Provision for credit losses		13
Ending Balance		$ 146

XML

Commitments (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Commitments [Abstract]
Commitments to fund investments in notes receivable	$ 3,200
Commitments to fund investments in equipment	$ 283

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Measurements [Abstract]

Fair Value, Warrants Measured on Recurring Basis

The following table reconciles the beginning and ending balances of the Company’s Level 3 recurring assets (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Fair value of warrants at beginning of period	$	730	$	320
Unrealized loss on fair value adjustment for warrants		(42)		(3)
Fair value of warrants at end of period	$	688	$	317

Summary of Valuation Techniques and Significant Unobservable Inputs Used

The following tables summarize the valuation techniques and significant unobservable inputs used for the Company’s recurring and non-recurring fair value calculation/adjustments categorized as Level 3 in the fair value hierarchy at March 31, 2020 and December 31, 2019:

March 31, 2020
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.11 - $16.95  ($0.24)
			Exercise price	$0.02 - $9.00  ($0.09)
			Time to maturity (in years)	4.1 - 11.7  (7.76)
			Risk-free interest rate	0.34% - 1.58%  (0.60%)
			Annualized volatility	32.00% - 115.04%  (46.16%)

December 31, 2019
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.24 - $16.07  ($0.24)
			Exercise price	$0.02 - $9.00  ($0.09)
			Time to maturity (in years)	4.35 - 11.95  (8.01)
			Risk-free interest rate	1.60% - 1.99%  (1.86%)
			Annualized volatility	32.21% - 111.44%  (46.60%)

Estimated Fair Values of Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	6,499	$	6,499	$	—	$	—	$	6,499
Notes receivable, net		1,091		—		—		1,114		1,114
Warrants, fair value		688		—		—		688		688
Financial liabilities:
Non-recourse debt		4,548		—		—		4,573		4,573

	December 31, 2019
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	7,992	$	7,992	$	—	$	—	$	7,992
Notes receivable, net		1,384		—		—		1,396		1,396
Warrants, fair value		730		—		—		730		730
Financial liabilities:
Non-recourse debt		5,265		—		—		5,271		5,271

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies [Abstract]

Summary of Geographic Information Relating to Sources, by Nation, of Partnership's Total Revenue and Long-Lived Assets

The table below summarize geographic information relating to the sources, by nation, of the Company’s total revenues for the three months ended March 31, 2020 and 2019 and long-lived assets as of March 31, 2020 and December 31, 2019 (dollars in thousands):

	For The Three Months Ended March 31,
	2020		% of Total		2019		% of Total
Revenue
United States	$	738	77	%	$	1,193	84	%
Costa Rica		222	23	%		232	16	%
Total	$	960	100	%	$	1,425	100	%

	As of March 31,				As of December 31,
	2020		% of Total		2019		% of Total
Long-lived assets
United States	$	13,341	82	%	$	12,972	84	%
Costa Rica		2,859	18	%		2,859	16	%
Total	$	16,200	100	%	$	15,831	100	%

XML

Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement

The Managing Member and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement, during the three months ended March 31, 2020 and 2019 as follows (in thousands):

	Three Months Ended
	March 31,
	2020		2019
Administrative costs reimbursed to Managing Member and/or affiliates	$	131	$	156
Asset management fees to Managing Member		121		132
	$	252	$	288

XML

Equipment Under Operating Leases, Net

3 Months Ended

Mar. 31, 2020

Equipment Under Operating Leases, Net [Abstract]

Equipment Under Operating Leases, Net

4. Equipment under operating leases, net:

The Company’s equipment under operating leases, net consists of the following (in thousands):

	Balance		Additions/		Depreciation/		Balance
	December 31,		Dispositions/		Amortization		March 31,
	2019		Reclassifications		Expense		2020
Equipment under operating leases, net	$	15,704	$	1,036	$	(611)	$	16,129
Assets held for sale or lease, net		43		(43)		—		—
Initial direct costs, net of accumulated amortization of $263    at March 31, 2020 and $291 at December 31, 2019		84		—		(13)		71
Total	$	15,831	$	993	$	(624)	$	16,200

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $611 thousand and $837 thousand for the respective three months ended March 31, 2020 and 2019.  

IDC amortization expense related to the Company’s operating leases totaled $13 thousand and $1 thousand for the three months ended March 31, 2020 and 2019, respectively.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2014 through 2020.

Operating leases:

Property on operating leases consists of the following (in thousands):

	Balance						Balance
	December 31,						March 31,
	2019		Additions		Dispositions		2020
Aviation	$	4,587	$	—	$	—	$	4,587
Containers		6,545		—		—		6,545
Coal terminal		5,000		—		—		5,000
Railroad		4,017		—		—		4,017
Mining		2,766		—		—		2,766
Materials handling		1,287		—		(280)		1,007
Marine vessels		2,291		—		—		2,291
Trucks and trailers		1,103		—		—		1,103
Manufacturing		1,243		—		—		1,243
Construction		—		1,099		—		1,099
Other		414		—		—		414
		29,253		1,099		(280)		30,072
Less accumulated depreciation		(13,549)		(611)		217		(13,943)
Total	$	15,704	$	488	$	(63)	$	16,129

The average estimated residual value for assets on operating leases was 35% and 34% of the assets’ original cost at March 31, 2020 and December 31, 2019 respectively. There were no operating leases in non-accrual status at March 31, 2020 and 2019.

At March 31, 2020, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating
	Leases
Nine months ending December 31, 2020	$	1,807
Year ending December 31, 2021		1,833
2022		1,452
2023		648
2024		486
Thereafter		572
	$	6,798

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of March 31, 2020, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category	Useful Life
Coal terminal	50 - 60
Railroad	35 - 50
Marine vessel	20 - 30
Aviation	20 - 30
Containers	15 - 20
Manufacturing	10 - 15
Mining	10 - 15
Materials handling	7 - 10
Trucks and trailers	7 - 10

XML

Borrowing Facilities

3 Months Ended

Mar. 31, 2020

Borrowing Facilities [Abstract]

Borrowing Facilities

8. Borrowing facilities:

Effective October 31, 2019, the Company entered into an amended and restated revolving credit facility agreement (the “Credit Facility”) replacing the previous revolving credit facility agreement. The Company participated with ATEL Capital Group and certain subsidiaries and affiliated entities as borrowers, with a syndicate of financial institutions as lenders. The Credit Facility is comprised of a working capital sub-facility, institutional leasing sub-facility, and a venture line sub-facility. The Company participates in the acquisition sub-facility and the institutional leasing sub-facility, on a several, but not joint, basis (ie., the Company is liable only for the amount of the advances extended to the Company under those sub facilities, and not as to amounts extended to any co-borrower).

The aggregate amount of the Credit Facility is $55 million, with sub-limits for each sub-facility, and currently expires June 30, 2021 (unless extended). The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’s assets as collateral for any and all borrowings extended to the Company under the acquisition sub-facility or the institutional leasing sub-facility, on a several, but not joint, basis. The Credit Facility includes certain financial covenants made by the Company, as is customarily found in credit facilities of similar size and nature.

As of March 31, 2020 and December 31, 2019, borrowings under the Credit Facility were as follows (in thousands):

	March 31,		December 31,
	2020		2019
Total available under the financing arrangement	$	55,000	$	55,000
Amount borrowed by the Company under the acquisition facility		—		—
Amount borrowed by affiliated partnerships and limited liability companies   under the venture, acquisition, and warehouse facilities.		(1,849)		(850)
Total remaining available under the working capital, acquisition and warehouse facilities	$	53,151	$	54,150

The Company and its affiliates pay an annual commitment fee to have access to this line of credit. As of March 31, 2020, the aggregate amount of the Credit Facility is potentially available to the Company, subject to certain sub-facility and borrowing-base limitations. However, as amounts are drawn on the Credit Facility by each of the Company and the affiliates who are borrowers under the Credit Facility, the amount remaining available to all borrowers to draw under Credit Facility is reduced. As the Warehousing Facility is a short term bridge facility, any amounts borrowed under the Warehousing Facility, and then repaid by the affiliated borrowers (including the Company) upon allocation of an acquisition to a specific purchaser, become available under the Warehouse Facility for further short term borrowing.

As of March 31, 2020, the Company’s Tangible Net Worth requirement under the Credit Facility was $10.0 million, the permitted maximum leverage ratio was not to exceed 1.25 to 1, and the required minimum interest coverage ratio was not to be less than 2 to 1. The Company was in compliance with these financial covenants under the Credit Facility with a minimum Tangible Net Worth, leverage ratio and interest coverage ratio, as calculated per the Credit Facility agreement of $19.1 million, 0.24 to 1, and 24.59 to 1, respectively, as of March 31, 2020. As such, as of March 31, 2020, the Company was in compliance with all material financial covenants, and with all other material conditions of the Credit Facility. The Company does not anticipate any covenant violations nor does it anticipate that any of these covenants will restrict its operations or its ability to procure additional financing.

Fee and interest terms

The interest rate on the Credit Facility is based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the bank’s Prime rate, which re-prices daily. Principal amounts of loans made under the Credit Facility that are prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Credit Facility. There were no borrowings outstanding at March 31, 2020 and December 31, 2019.

Warehouse facility

To hold the assets under the Warehousing Facility prior to allocation to specific investor programs, a Warehousing Trust has been entered into by the Company, AFS, ALC, and certain of the affiliated partnerships and limited liability companies. The Warehousing Trust is used by the Warehouse Facility borrowers to acquire and hold, on a short-term basis, certain lease transactions that meet the investment objectives of each of such entities. Each of the leasing programs sponsored by AFS and ALC is a pro rata participant in the Warehousing Trust, as described below. When a program no longer has a need for short-term financing provided by the Warehousing Facility, it is removed from participation, and as new leasing investment entities are formed by AFS and ALC and commence their acquisition stages, these new entities are added.

As of March 31, 2020, the Company participated in the investment program along with ATEL 17, LLC. Pursuant to the Warehousing Trust, the benefit of the lease transaction assets, and the corresponding liabilities under the Warehouse Facility, inure to each of such entities based upon each entity’s pro-rata share in the Warehousing Trust estate. The “pro-rata share” is calculated as a ratio of the net worth of each entity over the aggregate net worth of all entities benefiting from the Warehousing Trust estate, excepting that the trustees, AFS and ALC, are both jointly and severally liable for the pro-rata portion of the obligations of each of the affiliated limited liability companies participating under the Warehouse Facility. Transactions are financed through this Warehouse Facility only until the transactions are allocated to a specific program for purchase or are otherwise disposed by AFS and ALC. When a determination is made to allocate the transaction to a specific program for purchase by the program, the purchaser repays the debt associated with the asset, either with cash or by means of proceeds of a draw under the Acquisition Facility, and the asset is removed from the Warehouse Facility collateral, and ownership of the asset and any debt obligation associated with the asset are assumed solely by the purchasing entity.

XML

Organization and Limited Liability Company Matters

3 Months Ended

Mar. 31, 2020

Organization and Limited Liability Company Matters [Abstract]

Organization and Limited Liability Company Matters

1. Organization and Limited Liability Company matters:

ATEL 16, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on December 27, 2012 (“Date of Inception”) for the purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities. The Managing Member of the Company is ATEL Managing Member, LLC (the “Managing Member” or “Manager”), a Nevada limited liability company. The Managing Member is controlled by ATEL Financial Services, LLC (“AFS”), a wholly-owned subsidiary of ATEL Capital Group. The Fund may continue until terminated as provided in the ATEL 16, LLC Limited Liability Company Operating Agreement dated March 1, 2013 (the “Operating Agreement”). Contributions in the amount of $500 were received as of December 31, 2012, which represented the initial member’s capital investment. As a limited liability company, the liability of any individual member for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a base price of $10 per Unit. As of March 6, 2014, subscriptions for the minimum number of Units (120,000, representing $1.2 million), excluding subscriptions from Pennsylvania investors, had been received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations and continued in its development stage activities until transitioning to an operating enterprise during the second quarter of 2014. Pennsylvania subscriptions are subject to a separate escrow and are released to the Fund only when aggregate subscriptions for all investors equal to at least $7.5 million. Total contributions to the Fund exceeded $7.5 million on June 19, 2014, at which time a request was processed to release the Pennsylvania escrowed amounts. The offering was terminated on November 5, 2015.

As of March 31, 2020, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $42.9 million (inclusive of the $500 initial Member’s capital investment) have been received. As of the same date, 4,274,486 Units were issued and outstanding.

The Company’s principal objectives are to invest in a diversified portfolio of investments that will (i) preserve, protect and return the Company’s invested capital; (ii) generate regular cash distributions to Unit holders, with any balance remaining after required minimum distributions to be used to purchase additional investments during the Reinvestment Period (the first six years after the year the offering terminates); and (iii) provide additional cash distributions following the Reinvestment Period and until all investment portfolio assets have been sold or otherwise disposed. The Company is governed by the Operating Agreement.

Pursuant to the terms of the Operating Agreement, the Managing Member and/or its affiliates receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 6, Related party transactions). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of the Managing Member.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission.

XML

Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leasing and lending activities:
Operating lease revenue	$ 945	$ 1,276
Notes receivable interest income	59	123
(Loss) gain on sales of equipment under operating leases and early termination of notes receivable	(39)	27
Unrealized loss on fair value adjustment for warrants	(42)	(3)
Interest income	1
Other	36	2
Total revenues	960	1,425
Expenses:
Depreciation of operating lease assets	611	837
Asset management fees to Managing Member	121	132
Acquisition expense	70
Cost reimbursements to Managing Member and/or affiliates	131	156
Provision for losses on notes receivable		13
Amortization of initial direct costs	14	1
Interest expense	48	82
Professional fees	60	74
Outside services	21	24
Taxes on income and franchise fees	9
Other	46	66
Total expenses	1,131	1,385
Net (loss) income	(171)	40
Net (loss) income:
Other Members	(171)	40
Net (loss) income	$ (171)	$ 40
Net (loss) income per Limited Liability Company Unit (Other Members)	$ (0.04)	$ 0.01
Weighted average number of Units outstanding	4,274,486	4,274,486

XML

Global Health Emergency

3 Months Ended

Mar. 31, 2020

Global Health Emergency [Abstract]

Global Health Emergency

12.  Global health emergency:

On January 30, 2020, the World Health Organization declared the novel coronavirus outbreak a public health emergency. The Fund’s operations is located in California, which has restricted gatherings of people due to the coronavirus outbreak. At present, the Fund’s operations have not been adversely affected and continues to function effectively. Due to the dynamic nature of these unprecedented circumstances and possible business disruption, the Fund will continue to monitor the situation closely, but given the uncertainty about the situation, an estimate of the future impact, if any, cannot be made at this time.

XML

Equipment Under Operating Leases, Net (Property on Operating Leases) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	$ 30,072	$ 29,253
Less accumulated depreciation	(13,943)	(13,549)
Property on operating leases, net	16,129	15,704
Additions, gross	1,099
Additions, less accumulated depreciation	(611)
Additions, net	488
Dispositions, gross	(280)
Dispositions, less accumulated depreciation	217
Dispositions, net	(63)
Aviation [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	4,587	4,587
Dispositions, gross
Containers [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	6,545	6,545
Additions, gross
Coal Terminal [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	5,000	5,000
Additions, gross
Dispositions, gross
Railroad [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	4,017	4,017
Dispositions, gross
Mining [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	2,766	2,766
Additions, gross
Dispositions, gross
Materials Handling [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	1,007	1,287
Additions, gross
Dispositions, gross	(280)
Marine Vessels [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	2,291	2,291
Additions, gross
Dispositions, gross
Trucks and Trailers [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	1,103	1,103
Additions, gross
Dispositions, gross
Manufacturing [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	1,243	1,243
Additions, gross
Dispositions, gross
Construction [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	1,099
Additions, gross	1,099
Other [Member]
Lessor, Lease, Description [Line Items]
Property on operating leases, gross	414	$ 414
Additions, gross

XML

Notes Receivable, Net (Minimum Future Payments Receivable) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable, gross	$ 1,145	$ 1,451
Notes receivable, net	1,091	$ 1,384
Notes Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nine months ending December 31, 2020	619
Year ending December 31, 2021	555
2022	115
Financing receivable, gross	1,289
Less: portion representing unearned interest income	(144)
Notes receivable, gross	1,145
Less: warrants-notes receivable discount	(56)
Unamortized initial direct costs	2
Notes receivable, net	$ 1,091

XML

Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Fair Value Measurements [Abstract]
Warrants, fair value	$ 688		$ 730
Impairment losses on investment in securities	$ 0	$ 0

XML

Borrowing Facilities (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Line of Credit Facility [Line Items]
Maximum amount of credit facility	$ 55,000	$ 55,000
Line of credit facility effective date	Oct. 31, 2019
Credit facility expiration date	Jun. 30, 2021
Total remaining available under the working capital, acquisition and warehouse facilities	$ 53,151	54,150
Tangible net worth	$ 19,100
Leverage ratio	0.24
Interest coverage ratio	24.59
Credit Facility [Member]
Line of Credit Facility [Line Items]
Long-term Line of Credit	$ 0	$ 0
Minimum [Member] | Covenant Requirement [Member]
Line of Credit Facility [Line Items]
Tangible net worth requirement under the Credit Facility	$ 10,000
Interest coverage ratio	2
Maximum [Member] | Covenant Requirement [Member]
Line of Credit Facility [Line Items]
Leverage ratio	1.25

XML

Allowance for Credit Losses (Net Investment in Financing Receivables by Age) (Details) - Notes Receivable [Member] - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable Recorded Investment Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	$ 1,145	$ 1,451
Total Notes Receivables	$ 1,145	$ 1,451

XML

Equipment Under Operating Leases, Net (Tables)

3 Months Ended

Mar. 31, 2020

Equipment Under Operating Leases, Net [Abstract]

Investment in Leases

The Company’s equipment under operating leases, net consists of the following (in thousands):

	Balance		Additions/		Depreciation/		Balance
	December 31,		Dispositions/		Amortization		March 31,
	2019		Reclassifications		Expense		2020
Equipment under operating leases, net	$	15,704	$	1,036	$	(611)	$	16,129
Assets held for sale or lease, net		43		(43)		—		—
Initial direct costs, net of accumulated amortization of $263    at March 31, 2020 and $291 at December 31, 2019		84		—		(13)		71
Total	$	15,831	$	993	$	(624)	$	16,200

Property On Operating Leases

Property on operating leases consists of the following (in thousands):

	Balance						Balance
	December 31,						March 31,
	2019		Additions		Dispositions		2020
Aviation	$	4,587	$	—	$	—	$	4,587
Containers		6,545		—		—		6,545
Coal terminal		5,000		—		—		5,000
Railroad		4,017		—		—		4,017
Mining		2,766		—		—		2,766
Materials handling		1,287		—		(280)		1,007
Marine vessels		2,291		—		—		2,291
Trucks and trailers		1,103		—		—		1,103
Manufacturing		1,243		—		—		1,243
Construction		—		1,099		—		1,099
Other		414		—		—		414
		29,253		1,099		(280)		30,072
Less accumulated depreciation		(13,549)		(611)		217		(13,943)
Total	$	15,704	$	488	$	(63)	$	16,129

Future Minimum Lease Payments Receivable

At March 31, 2020, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating
	Leases
Nine months ending December 31, 2020	$	1,807
Year ending December 31, 2021		1,833
2022		1,452
2023		648
2024		486
Thereafter		572
	$	6,798

Schedule of Useful Lives of Lease Assets

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of March 31, 2020, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category	Useful Life
Coal terminal	50 - 60
Railroad	35 - 50
Marine vessel	20 - 30
Aviation	20 - 30
Containers	15 - 20
Manufacturing	10 - 15
Mining	10 - 15
Materials handling	7 - 10
Trucks and trailers	7 - 10

XML

Borrowing Facilities (Tables)

3 Months Ended

Mar. 31, 2020

Borrowing Facilities [Abstract]

Borrowings Under the Facility

As of March 31, 2020 and December 31, 2019, borrowings under the Credit Facility were as follows (in thousands):

	March 31,		December 31,
	2020		2019
Total available under the financing arrangement	$	55,000	$	55,000
Amount borrowed by the Company under the acquisition facility		—		—
Amount borrowed by affiliated partnerships and limited liability companies   under the venture, acquisition, and warehouse facilities.		(1,849)		(850)
Total remaining available under the working capital, acquisition and warehouse facilities	$	53,151	$	54,150

XML

Non-Recourse Debt (Future Minimum Payments of Non-Recourse Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Principal
Nine months ending December 31, 2020	$ 1,230
Year ending December 31, 2021	1,173
2022	1,031
2023	343
2024	290
Thereafter	481
Long-term debt, total	4,548	$ 5,265
Interest
Nine months ending December 31, 2020	112
Year ending December 31, 2021	117
2022	75
2023	43
2024	28
Thereafter	39
Long-term debt interest, total	414
Total
Nine months ending December 31, 2020	1,342
Year ending December 31, 2021	1,290
2022	1,106
2023	386
2024	318
Thereafter	520
Principal and interest, total	$ 4,962

XML

Allowance for Credit Losses (Financing Receivables by Credit Quality Indicator and by Class) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment [Line Items]
Notes receivable	$ 1,145	$ 1,451
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Notes receivable	$ 1,145	$ 1,451

XML

Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2020

Allowance for Credit Losses [Abstract]

Activity in Allowance for Credit Losses

The Company’s allowance for credit losses are as follows (in thousands):

	Allowance for		Valuation
	Doubtful		Adjustments on
	Accounts		Financing Receivables
	Operating		Notes
	Leases		Receivable		Total
Balance December 31, 2018	$	65	$	133	$	198
Provision for credit losses		(52)		13		(39)
Balance March 31, 2019	$	13	$	146	$	159
	Allowance for		Valuation
	Doubtful		Adjustments on
	Accounts		Financing Receivables
	Operating		Notes
	Leases		Receivable		Total
Balance December 31, 2019	$	8	$	—	$	8
Provision for credit losses		5		—		5
Balance March 31, 2020	$	13	$	—	$	13

Financing Receivables by Credit Quality Indicator and by Class

At March 31, 2020 and December 31, 2019, the Company’s financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):

	Notes Receivable
	March 31,		December 31,
	2020		2019
Pass	$	1,145	$	1,451
Special mention		—		—
Substandard		—		—
Doubtful		—		—
Total	$	1,145	$	1,451

Net Investment in Financing Receivables by Age

At March 31, 2020 and December 31, 2019, the investment in financing receivables (excludes IDC) is aged as follows (in thousands):

													Recorded
					Greater						Total		Investment>90
	31‑60 Days		61‑90 Days		Than		Total				Notes		Days and
March 31, 2020	Past Due		Past Due		90 Days		Past Due		Current		Receivable		Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,145	$	1,145	$	—

													Recorded
					Greater						Total		Investment>90
	31‑60 Days		61‑90 Days		Than		Total				Notes		Days and
December 31, 2019	Past Due		Past Due		90 Days		Past Due		Current		Receivable		Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,451	$	1,451	$	—

XML

Members' Capital (Tables)

3 Months Ended

Mar. 31, 2020

Members' Capital [Abstract]

Distributions to Other Members

Distributions to the Other Members for the three months ended March 31, 2020 and 2019 were as follows (in thousands except Units and per Unit data):

	Three Months Ended
	March 31,
	2020		2019
Distributions	$	749	$	748
Weighted average number of Units outstanding		4,274,486		4,274,486
Weighted average distributions per Unit	$	0.18	$	0.17

XML

Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities:
Net (loss) income	$ (171)	$ 40
Adjustment to reconcile net (loss) income to cash provided by operating activities:
Accretion of note discount-warrants	(13)	(20)
Depreciation of operating lease assets	611	837
Loss (gain) on sales of equipment under operating leases and early termination of notes receivable	39	(27)
Amortization of initial direct costs	14	1
Provision for (reversal of) credit losses	5	(39)
Unrealized loss on fair value adjustment for warrants	42	3
Changes in operating assets and liabilities:
Accounts receivable	(4)	55
Due from Managing Members and affiliates		(30)
Prepaid expenses and other assets	(3)	(32)
Accounts payable, Managing Member and affiliates	35	35
Accounts payable, other	(3)	(1)
Unearned operating lease income	154	138
Net cash provided by operating activities	706	960
Investing activities:
Purchases of equipment on operating leases	(1,099)
Purchase of securities	(7)
Proceeds from sales or dispositions of assets and early termination of notes	68	228
Note receivable advances		(13)
Principal payments received on notes receivable	306	422
Net cash (used in) provided by investing activities	(732)	637
Financing activities:
Borrowings under non-recourse debt		1,514
Repayments under non-recourse debt	(718)	(678)
Distributions to Other Members	(749)	(748)
Net cash (used in) provided by financing activities	(1,467)	88
Net (decrease) increase in cash and cash equivalents	(1,493)	1,685
Cash and cash equivalents at beginning of period	7,992	4,368
Cash and cash equivalents at end of period	6,499	6,053
Supplemental disclosures of cash flow information:
Cash paid during period for interest	66	64
Cash paid during period for taxes	5	2
Other Members [Member]
Operating activities:
Net (loss) income	(171)	40
Schedule of non-cash financing transactions:
Distributions payable to Other Members at period-end	$ 289	$ 289

XML

Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 6,499	$ 7,992
Accounts receivable, net	98	99
Notes receivable, net	1,091	1,384
Investment in securities	47	41
Warrants, fair value	688	730
Equipment under operating leases, net	16,200	15,831
Prepaid expenses and other assets	16	13
Total assets	24,639	26,090
Accounts payable and accrued liabilities:
Due to Managing Member and affiliates	87	52
Accrued distributions to Other Members	289	289
Due to Other	105	108
Non-recourse debt	4,548	5,265
Unearned operating lease income	398	244
Total liabilities	5,427	5,958
Commitments and contingencies
Members' capital:
Managing Member
Other Members	19,212	20,132
Total Members' capital	19,212	20,132
Total liabilities and Members' capital	$ 24,639	$ 26,090

XML

Summary of Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (‘‘GAAP’’) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after March 31, 2020, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

Cash and cash equivalents

Cash and cash equivalents:

Cash and cash equivalents include cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less.

Use of Estimates

Use of Estimates:

The preparation of the financial statements in conformity 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 the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.

Segment Reporting

Segment reporting:

The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States with activities in the United States and Costa Rica.

The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas.

The table below summarize geographic information relating to the sources, by nation, of the Company’s total revenues for the three months ended March 31, 2020 and 2019 and long-lived assets as of March 31, 2020 and December 31, 2019 (dollars in thousands):

	For The Three Months Ended March 31,
	2020		% of Total		2019		% of Total
Revenue
United States	$	738	77	%	$	1,193	84	%
Costa Rica		222	23	%		232	16	%
Total	$	960	100	%	$	1,425	100	%

	As of March 31,				As of December 31,
	2020		% of Total		2019		% of Total
Long-lived assets
United States	$	13,341	82	%	$	12,972	84	%
Costa Rica		2,859	18	%		2,859	16	%
Total	$	16,200	100	%	$	15,831	100	%

Accounts Receivable

Accounts receivable:

Accounts receivable represent the amounts billed under operating lease contracts and notes receivable which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received.

Financing Receivables

Financing receivables:

In addition to the allowance established for delinquent accounts receivable, the total allowance related solely to financing receivables also includes anticipated impairment charges on notes receivable.

Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

Investment in Securities

Investment in securities:

From time to time, the Company may purchase securities of its borrowers or receive warrants in connection with its lending arrangements.

Purchased securities

The Company’s purchased securities do not have readily determinable fair values and are measured at cost minus impairment, and adjusted for changes in observable prices. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. The Company’s investment securities totaled $47 thousand and $41 thousand at March 31, 2020 and December 31, 2019, respectively. There were no fair value adjustments on investment securities for the respective three months ended March 31, 2020 and 2019. Cumulatively, there has been no fair value adjustment recorded on such securities. There were neither impairment losses nor sales or disposition of securities during the three months ended March 31, 2020 and 2019.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet as determined by the Managing Member. The Company recorded unrealized losses of $42 thousand and $3 thousand on fair valuation of its warrants for the quarters ended March 31, 2020 and 2019, respectively. The estimated fair value of the Company’s warrants were $688 thousand and $730 thousand at March 31, 2020 and December 31, 2019, respectively. The Company realized no gains or losses from the net exercise of warrants during the three months ended March 31, 2020 and 2019.

Credit Risk

Credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating lease receivables, notes receivable and accounts receivable. The Company places the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $10 billion in assets. Such deposits are insured up to $250 thousand. The remainder of the Fund’s cash is temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts and notes receivable represent amounts due from lessees or borrowers in various industries, are related to equipment on operating lease contracts and notes receivable.

Equipment on Operating Leases and Related Revenue Recognition

Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360‑10‑35‑3, over the periods of the lease terms contained in each asset’s respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43).

The Company does not use the equipment held in its portfolio, but holds it solely for lease and ultimate sale. In the course of marketing equipment that has come off-lease, management may determine at some point that re-leasing the assets may provide a superior return for investors and would then execute another lease. Upon entering into a new lease contract, management will estimate the residual value once again and resume depreciation. If, and when, the Company, at any time, determines that depreciation in value may have occurred with respect to an asset held-for-sale, the Company would review the value to determine whether a material reduction in value had occurred and recognize any appropriate impairment. All lease assets, including off-lease assets, are subject to the Company’s quarterly impairment analysis, as described below. Maintenance costs associated with the Fund’s portfolio of leased assets are expensed as incurred. Major additions and betterments are capitalized.

Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms from 36 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet.

Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis. Upon adoption of Accounting Standards Update (“ASU”) 2016-02, provisions for credit losses relating to operating leases are now included in lease income in the Company’s financial statements. Provisions for credit losses prior to January, 1, 2019 were previously included in operating expenses in the Company’s financial statements.

Notes Receivable, Unearned Interest Income and Related Revenue Recognition

Notes receivable, unearned interest income and related revenue recognition:

The Company records all future payments of principal and interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports only the net amount of principal due on the balance sheet. The unearned interest is recognized over the term of the note and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. Any fees or costs related to notes receivable are recorded as part of the net investment in notes receivable and amortized over the term of the loan.

Allowances for losses on notes receivable are typically established based on historical charge off and collection experience and the collectability of specifically identified borrowers and billed and unbilled receivables. Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

Notes receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with note payments outstanding less than 90 days. Based upon management’s judgment, the related notes may be placed on non-accrual status. Notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable. Until such time, all payments received are applied only against outstanding principal balances.

Initial Direct Costs

Initial direct costs:

With the adoption of ASU 2016-02 certain costs associated with the execution of the Company’s leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred effective January 1, 2019. In 2018 and prior, the Company capitalized initial direct costs (“IDC”) associated with the origination of lease assets. IDC includes both internal costs (e.g., the costs of employees’ activities in connection with successful lease originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease (or note by note) basis based on actual lease term using a straight-line method for operating leases and the effective interest rate method for notes receivable. Upon disposal of the underlying lease assets and notes receivable, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition Expense

Acquisition expense:

Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.

Fair Value

Fair Value:

Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

Asset Valuation

Asset valuation:

Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the Company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than the net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances.

Per Unit Data

Per Unit data:

Net loss and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the period.

Emerging Growth Company

Emerging growth company:

Section 107 of the Jumpstart Our Business Startups Act (the “JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to “opt out” of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Recent Accounting Pronouncements

Recent accounting pronouncements:

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP that are intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. Management is currently evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Fund’s financial statements and disclosures.

In June 2016, the FASB issued Accounting Standards Update 2016‑13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016‑13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and equipment under operating leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, equipment under operating leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Management is currently evaluating the standard and expects the update may potentially result in the increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments.

In November 2018, the FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses (“ASU 2018-19”). The new standard clarifies certain aspects of the new CECL impairment model in ASU 2016-13. The amendment clarifies that receivables arising from operating leases are within the scope of ASC 842, rather than ASC 326. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements.

On August 15, 2019, the FASB issued a proposed ASU that would grant certain companies additional time to implement FASB standards on CECL and hedging. The proposed ASU defers the effective date for CECL to fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years; and defers the effective date for hedging to fiscal periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The ASU was approved on October 16, 2019. In February 2020, the FASB issued ASU 2020-02 and delayed the effective date of Topic 326 until fiscal year beginning after December 15, 2022.

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (“ASU 2018-13”), which amends the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU modifies disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Fund adopted ASU 2018-13 on January 1, 2020. Such adoption did not have a significant impact on the Fund’s financial statements and related disclosure requirements.

XML

Allowance for Credit Losses

3 Months Ended

Mar. 31, 2020

Allowance for Credit Losses [Abstract]

Allowance for Credit Losses

5. Allowance for credit losses:

The Company’s allowance for credit losses are as follows (in thousands):

	Allowance for		Valuation
	Doubtful		Adjustments on
	Accounts		Financing Receivables
	Operating		Notes
	Leases		Receivable		Total
Balance December 31, 2018	$	65	$	133	$	198
Provision for credit losses		(52)		13		(39)
Balance March 31, 2019	$	13	$	146	$	159
	Allowance for		Valuation
	Doubtful		Adjustments on
	Accounts		Financing Receivables
	Operating		Notes
	Leases		Receivable		Total
Balance December 31, 2019	$	8	$	—	$	8
Provision for credit losses		5		—		5
Balance March 31, 2020	$	13	$	—	$	13

The Company evaluates the credit quality of its financing receivables on a scale equivalent to the following quality indicators related to corporate risk profiles:

Pass — Any account whose lessee/debtor, co-lessee/debtor or any guarantor has a credit rating on publicly traded or privately placed debt issues as rated by Moody’s or S&P for either Senior Unsecured debt, Long Term Issuer rating or Issuer rating that are in the tiers of ratings generally recognized by the investment community as constituting an Investment Grade credit rating; or, has been determined by the Manager to be an Investment Grade Equivalent or High Quality Corporate Credit per its Credit Policy or has a Not Rated internal rating by the Manager and the account is not considered by the Chief Credit Officer of the manager to fall into one of the three risk profiles below.

Special Mention — Any traditional corporate type account with potential weaknesses (e.g. large net losses or major industry downturns) or, any growth capital account that has less than three months of cash as of the end of the calendar quarter to fund their continuing operations. These accounts deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the Fund’s receivable at some future date.

Substandard — Any account that is inadequately protected by the current worth and paying capacity of the borrower or of the collateral pledged, if any. Accounts that are so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Fund will sustain some loss as the likelihood of fully collecting all receivables may be questionable if the deficiencies are not corrected. Such accounts are on the Manager’s Credit Watch List.

Doubtful — Any account where the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Accordingly, an account that is so classified is on the Manager’s Credit Watch List, and has been declared in default and the Manager has repossessed, or is attempting to repossess, the equipment it financed. This category includes impaired notes and leases as applicable.

At March 31, 2020 and December 31, 2019, the Company’s financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):

	Notes Receivable
	March 31,		December 31,
	2020		2019
Pass	$	1,145	$	1,451
Special mention		—		—
Substandard		—		—
Doubtful		—		—
Total	$	1,145	$	1,451

There were no impaired investments in financing receivables at March 31, 2020 and December 31, 2019.

At March 31, 2020 and December 31, 2019, the investment in financing receivables (excludes IDC) is aged as follows (in thousands):

													Recorded
					Greater						Total		Investment>90
	31‑60 Days		61‑90 Days		Than		Total				Notes		Days and
March 31, 2020	Past Due		Past Due		90 Days		Past Due		Current		Receivable		Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,145	$	1,145	$	—

													Recorded
					Greater						Total		Investment>90
	31‑60 Days		61‑90 Days		Than		Total				Notes		Days and
December 31, 2019	Past Due		Past Due		90 Days		Past Due		Current		Receivable		Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,451	$	1,451	$	—

As of March 31, 2020 and December 31, 2019, the Company had no notes receivable on non-accrual status (See Note 3).

XML

Commitments

3 Months Ended

Mar. 31, 2020

Commitments [Abstract]

Commitments

9. Commitments:

At March 31, 2020, there was a commitment to fund investments in notes receivable totaling $3.2 million and purchase lease assets totaling $283 thousand. These amounts represents contract awards which may be canceled by the prospective borrower/investee or may not be accepted by the Company.

XML

Equipment Under Operating Leases, Net (Investment in Leases) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Leases Disclosure [Line Items]
Balance December 31, 2019	$ 15,831
Additions/Dispositions	993
Depreciation/Amortization Expense	(624)
Balance March 31, 2020	16,200
Initial direct costs, accumulated amortization	263	$ 291
Lease Assets [Member]
Leases Disclosure [Line Items]
Balance December 31, 2019	43
Additions/Dispositions	(43)
Operating Leases [Member]
Leases Disclosure [Line Items]
Balance December 31, 2019	15,704
Additions/Dispositions	1,036
Depreciation/Amortization Expense	(611)
Balance March 31, 2020	16,129
Initial Direct Cost [Member]
Leases Disclosure [Line Items]
Balance December 31, 2019	84
Depreciation/Amortization Expense	(13)
Balance March 31, 2020	$ 71

XML

Notes Receivable, Net (Narrative) (Details)	3 Months Ended
	Mar. 31, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Notes receivable maturity date description	have maturity dates ranging from 2020 through 2022
Minimum [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Terms of the notes receivable	30 months
Notes receivable, interest rate	11.68%
Maximum [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Terms of the notes receivable	42 months
Notes receivable, interest rate	16.87%

XML

Fair Value Measurements (Reconciliation of Level 3 Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair value of warrants at beginning of period	$ 730
Unrealized loss on fair value adjustment for warrants	(42)	$ (3)
Fair value of warrants at end of period	688
Level 3 Estimated Fair Value [Member]
Fair value of warrants at beginning of period	730	320
Unrealized loss on fair value adjustment for warrants	(42)	(3)
Fair value of warrants at end of period	$ 688	$ 317