Table of Contents

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 SeptemberJune 30, 20222023

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

For the transition period from        to

Commission File number 333-203841

ATEL 17, LLC

(Exact name of registrant as specified in its charter)

California

90-1108275

(State or other jurisdiction of
incorporation or organization)

(I. R. S. Employer
Identification No.)

The Transamerica Pyramid, 600505 Montgomery Street, 9th7th 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: None

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 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 such 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 OctoberJuly 31, 20222023 was 2,565,749.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

ATEL 17, LLC

Index

Part I. Financial Information

3

Item 1.

Financial Statements (Unaudited)

3

Balance Sheets, SeptemberJune 30, 20222023 and December 31, 20212022

3

Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022

4

Statements of Changes in Members’ Capital for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022

5

Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20222023 and 20212022

6

Notes to the Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2219

Item 4.

Controls and Procedures

2623

Part II. Other Information

2724

Item 1.1.

Legal Proceedings

2724

Item 2.

Defaults Upon Senior Securities

2724

Item 3.

Mine Safety Disclosures

2724

Item 4.

Other Information

2724

Item 5.

Exhibits

2724

2

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 17, LLC

BALANCE SHEETS

SEPTEMBERJUNE 30, 20222023 AND DECEMBER 31, 20212022

(In Thousands)

(Unaudited)

September 30, 

December 31, 

June 30, 

December 31, 

    

2022

    

2021

    

2023

    

2022

ASSETS

 

  

 

  

 

  

 

  

Cash and cash equivalents

$

3,062

$

4,035

$

1,825

$

2,644

Due from Managing Member and affiliates

-

32

Accounts receivable, net

 

37

 

26

 

18

 

42

Investment in equity securities

 

42

 

308

 

19

 

21

Warrants, fair value

 

145

 

142

 

136

 

138

Investments in equipment and leases, net

 

6,936

 

8,076

 

5,896

 

6,589

Prepaid expenses and other assets

 

9

 

9

 

3

 

6

Total assets

$

10,231

$

12,628

$

7,897

$

9,440

LIABILITIES AND MEMBERS' CAPITAL

 

  

 

  

 

  

 

  

Accounts payable and accrued liabilities:

 

  

 

  

 

  

 

  

Due to Managing Member and affiliates

$

26

$

-

$

33

$

40

Accrued distributions to Other Members

228

228

228

228

Options - short position

-

1

Other

 

68

 

158

 

55

 

59

Non-recourse debt

1,247

1,633

848

1,115

Unearned operating lease income

 

112

 

107

 

96

 

106

Total liabilities

 

1,681

 

2,127

 

1,260

 

1,548

Members’ capital:

 

  

 

  

 

  

 

  

Managing Member

1

1

1

1

Other Members

 

8,549

 

10,500

 

6,636

 

7,891

Total Members’ capital

 

8,550

 

10,501

 

6,637

 

7,892

Total liabilities and Members’ capital

$

10,231

$

12,628

$

7,897

$

9,440

See accompanying notes.

3

Table of Contents

ATEL 17, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINESIX MONTHS ENDED

SEPTEMBERJUNE 30, 20222023 AND 20212022

(In Thousands Except for Units and Per Unit Data)

(Unaudited)

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

June 30, 

June 30, 

2022

    

2021

    

2022

    

2021

2023

    

2022

    

2023

    

2022

Operating revenues:

  

 

  

 

  

 

  

  

 

  

 

  

 

  

Leasing and lending activities:

  

 

  

 

  

 

  

  

 

  

 

  

 

  

Operating lease revenue, net

$

445

$

616

$

1,340

$

1,723

$

435

$

423

$

875

$

895

Notes receivable interest income

 

-

 

14

 

-

 

52

Gain (loss) on sales of lease assets

(6)

(111)

202

(111)

Gain on sales of lease assets

-

27

-

208

Other revenue

 

-

 

-

 

23

 

1

 

1

 

4

 

1

 

23

Total operating revenues

 

439

 

519

 

1,565

 

1,665

 

436

 

454

 

876

 

1,126

Operating expenses:

 

  

 

  

 

 

 

  

 

  

 

 

Depreciation of operating lease assets

 

348

 

423

 

1,034

 

1,179

 

341

 

342

 

682

 

686

Asset management fees to Managing Member

 

53

 

64

 

165

 

195

 

55

 

55

 

110

 

112

Acquisition expense

 

2

 

3

 

4

 

17

 

-

 

-

 

-

 

2

Cost reimbursements to Managing Member and/or affiliates

 

74

 

92

 

230

 

274

 

68

 

76

 

151

 

156

Amortization of initial direct costs

 

6

 

9

 

21

 

24

 

6

 

8

 

11

 

15

Interest expense

14

20

47

65

11

16

22

33

Professional fees

 

43

 

26

 

126

 

127

 

20

 

59

 

60

 

83

Outside services

 

8

 

17

 

30

 

36

 

18

 

8

 

44

 

22

Taxes on income and franchise fees

 

1

 

1

 

4

 

3

Bank charges

 

8

 

9

 

24

 

25

Other expense

 

6

 

12

 

30

 

28

 

9

 

21

 

21

 

43

Total operating expenses

 

563

 

676

 

1,715

 

1,973

 

528

 

585

 

1,101

 

1,152

Net loss from operations

(124)

(157)

(150)

(308)

(92)

(131)

(225)

(26)

Other loss:

Gain on sale of securities

-

-

-

78

Realized gain on sale of options

-

-

1

-

Other (loss) gain:

Unrealized loss on fair value adjustment for equity securities

(10)

(492)

(266)

(423)

(6)

(72)

(2)

(256)

Unrealized gain (loss) on fair value adjustment for warrants

 

1

 

4

 

3

 

(26)

 

-

 

1

 

(2)

 

2

Unrealized gain on fair value of options

-

34

-

34

Realized gain on sale of options

-

-

-

1

Total other loss

(9)

(454)

(262)

(337)

(6)

(71)

(4)

(253)

Net loss

$

(133)

$

(611)

$

(412)

$

(645)

$

(98)

$

(202)

$

(229)

$

(279)

Net loss:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Managing Member

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

Other Members

(133)

(611)

(412)

(645)

(98)

(202)

(229)

(279)

$

(133)

$

(611)

$

(412)

$

(645)

$

(98)

$

(202)

$

(229)

$

(279)

Net loss per Limited Liability Company Unit -
Other Members

$

(0.05)

$

(0.24)

$

(0.16)

$

(0.25)

$

(0.04)

$

(0.08)

$

(0.09)

$

(0.11)

Weighted average number of Units outstanding

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

See accompanying notes.

4

Table of Contents

ATEL 17, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE THREE AND NINESIX MONTHS ENDED

SEPTEMBERJUNE 30, 20222023 AND 20212022

(In Thousands Except for Units and Per Unit Data)

(Unaudited)

Three Months Ended September 30, 2022

Three Months Ended June 30, 2023

Amount

Amount

Other

Managing

Other

Managing

Units

Members

Member

Total

Units

Members

Member

Total

Balance June 30, 2022

2,565,749

$

9,195

$

1

$

9,196

Balance March 31, 2023

2,565,749

$

7,247

$

1

$

7,248

Distributions to Other Members ($0.20 per Unit)

 

-

 

(513)

 

-

 

(513)

 

-

 

(513)

 

-

 

(513)

Net loss

 

-

 

(133)

 

-

 

(133)

 

-

 

(98)

 

-

 

(98)

Balance September 30, 2022

 

2,565,749

$

8,549

$

1

$

8,550

Balance June 30, 2023

 

2,565,749

$

6,636

$

1

$

6,637

Six Months Ended June 30, 2023

Amount

Other

Managing

Units

Members

Member

Total

Balance December 31, 2022

2,565,749

$

7,891

$

1

$

7,892

Distributions to Other Members ($0.40 per Unit)

 

-

 

(1,026)

 

-

 

(1,026)

Net loss

 

-

 

(229)

 

-

 

(229)

Balance June 30, 2023

 

2,565,749

$

6,636

$

1

$

6,637

Three Months Ended June 30, 2022

Amount

Other

Managing

Units

Members

Member

Total

Balance March 31, 2022

 

2,565,749

$

9,910

$

1

$

9,911

Distributions to Other Members ($0.20 per Unit)

 

-

 

(513)

 

-

 

(513)

Net loss

 

-

 

(202)

 

-

 

(202)

Balance June 30, 2022

 

2,565,749

$

9,195

$

1

$

9,196

Nine Months Ended September 30, 2022

Six Months Ended June 30, 2022

Amount

Amount

Other

Managing

Other

Managing

Units

Members

Member

Total

Units

Members

Member

Total

Balance December 31, 2021

2,565,749

$

10,500

$

1

$

10,501

 

2,565,749

$

10,500

$

1

$

10,501

Distributions to Other Members ($0.60 per Unit)

 

-

 

(1,539)

 

-

 

(1,539)

Distributions to Other Members ($0.40 per Unit)

 

-

 

(1,026)

 

-

 

(1,026)

Net loss

 

-

 

(412)

 

-

 

(412)

 

-

 

(279)

 

-

 

(279)

Balance September 30, 2022

 

2,565,749

$

8,549

$

1

$

8,550

Balance June 30, 2022

 

2,565,749

$

9,195

$

1

$

9,196

Three Months Ended September 30, 2021

Amount

Other

Managing

Units

Members

Member

Total

Balance June 30, 2021

 

2,565,749

$

12,152

$

1

$

12,153

Distributions to Other Members ($0.20 per Unit)

 

-

 

(513)

 

-

 

(513)

Net loss

 

-

 

(611)

 

-

 

(611)

Balance September 30, 2021

 

2,565,749

$

11,028

$

1

$

11,029

Nine Months Ended September 30, 2021

Amount

Other

Managing

Units

Members

Member

Total

Balance December 31, 2020

 

2,565,749

$

13,212

$

1

$

13,213

Distributions to Other Members ($0.60 per Unit)

 

-

 

(1,539)

 

-

 

(1,539)

Net loss

 

-

 

(645)

 

-

 

(645)

Balance September 30, 2021

 

2,565,749

$

11,028

$

1

$

11,029

See accompanying notes.

5

Table of Contents

ATEL 17, LLC

STATEMENTS OF CASH FLOWS

FOR THE NINESIX MONTHS ENDED SEPTEMBER

JUNE 30, 20222023 AND 20212022

(In Thousands)

(Unaudited)

Nine Months Ended

September 30, 

June 30, 

    

2022

    

2021

    

2023

    

2022

Operating activities:

 

  

 

  

 

  

 

  

Net loss

$

(412)

$

(645)

$

(229)

$

(279)

Adjustment to reconcile net loss to net cash provided by operating activities:

 

 

(Gain) loss on sales of lease assets

 

(202)

 

111

Accretion of note discount - warrants

-

(32)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

Gain on sales of lease assets

 

-

 

(208)

Depreciation of operating lease assets

1,034

1,179

682

686

Amortization of initial direct costs

21

24

11

15

Provision for credit losses

-

(17)

Gain on sale of securities

-

(78)

Realized gain on sale of options

(1)

-

-

(1)

Unrealized gain on sale of options

-

(34)

Unrealized loss on fair value adjustment for equity securities

266

423

2

256

Unrealized (gain) loss on fair value adjustment for warrants

 

(3)

 

26

Unrealized loss (gain) on fair value adjustment for warrants

 

2

 

(2)

Changes in operating assets and liabilities:

Accounts receivable

 

(11)

 

30

 

24

 

(2)

Due from/to Managing Member and affiliates

 

8

 

69

Prepaid expenses and other assets

-

(6)

3

8

Due to/from Managing Member and affiliates

 

(7)

 

9

Accounts payable, other

(90)

46

(4)

(104)

Unearned operating lease income

 

5

 

-

 

(10)

 

7

Net cash provided by operating activities

 

615

 

1,096

 

474

 

385

Investing activities:

 

  

 

  

 

  

 

  

Purchases of equipment under operating leases

 

(133)

 

(355)

 

-

 

(134)

Proceeds from sale of securities

-

697

Proceeds from sale of options

50

-

-

50

Proceeds from early termination of notes receivable

-

76

Proceeds from sales of equipment under operating leases

420

339

Principal payments received on notes receivable

 

-

 

340

Proceeds from sales of lease assets

-

379

Net cash provided by investing activities

 

337

 

1,097

 

-

 

295

Financing activities:

 

  

 

  

 

  

 

  

Repayments under non-recourse debt

(386)

(571)

(267)

(256)

Distributions to Other Members

 

(1,539)

 

(1,539)

 

(1,026)

 

(1,026)

Net cash used in financing activities

 

(1,925)

 

(2,110)

 

(1,293)

 

(1,282)

Net (decrease) increase in cash and cash equivalents

 

(973)

 

83

Net decrease in cash and cash equivalents

 

(819)

 

(602)

Cash at beginning of period

 

4,035

 

2,873

 

2,644

 

4,035

Cash at end of period

$

3,062

$

2,956

$

1,825

$

3,433

Supplemental disclosures of cash flow information:

 

  

 

  

 

  

 

  

Cash paid during the period for interest

$

48

$

66

$

22

$

33

Cash paid during the period for taxes

$

13

$

1

$

1

$

13

Schedule of non-cash investing and financing transactions:

 

  

 

  

 

  

 

  

Distributions payable to Other Members at period-end

$

228

$

228

$

228

$

228

Options - short position sold through due to/from affiliate

$

-

$

50

See accompanying notes.

6

Table of Contents

ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL 17, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on April 16, 2015 (“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 as provided in the ATEL 17, LLC limited liability operating agreement dated April 24, 2015 (the “Operating Agreement”). Contributions in the amount of $500 were received as of April 28, 2015, 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 offering of the Company was granted effectiveness by the Securities and Exchange Commission as of January 5, 2016. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company units (Units) to the public reach $150 million. As of February 2, 2016, 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 first quarter of 2016. 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 July 6, 2016, at which time a request was processed to release the Pennsylvania escrowed amounts. The offering terminated on January 5, 2018.

As of SeptemberJune 30, 2022,2023, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $25.7 million (inclusive of the $500 initial Member’s capital investment) have been received. As of the same date, 2,565,749 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 members, with any balance remaining after required minimum distributions to be used to purchase additional investments during the Reinvestment Period (ending six calendar years after the completion of the Company’s public offering of Units) and (iii) provide additional cash distributions following the Reinvestment Period and until all investment portfolio assets have been sold or otherwise disposed.

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 4, Related party transactions.) The Company is required to maintain reasonable cash reserves for working capital, for the repurchase of Units and for 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, 2021,2022, filed with the Securities and Exchange Commission.Commission

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ATEL 17, LLC
 
NOTES TO THE 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 and ninesix months ended SeptemberJune 30, 20222023 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 SeptemberJune 30, 2022,2023, 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 on accounts 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.

The Company���sCompany’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 primary geographic region in which the Company seeks leasing opportunities is North America. AllFor the three and six months ended June 30, 2023 and 2022, all of the Company’s current operating revenues for the three and nine months ended September 30, 2022 and 2021, and long-lived assets as of September 30, 2022 and December 31, 2021 relate to customers domiciled in the United States.

8

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ATEL 17, LLC
 
NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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.

Investment in securities:

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

Investment in equity securities

The Company’s equity securities registered for public sale with readily determinable fair values are measured at fair value with any changes in fair value recognized in the Company’s results of operations. The Company’s equity securities that do not have readily determinable fair values 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 had $42$19 thousand and $308$21 thousand of investment in equity securities as of SeptemberJune 30, 20222023 and December 31, 2021,2022, respectively. All of such securities were publicly held and had readily determinable fair values. During the three months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded unrealized losses of $10$6 thousand and $492$72 thousand respectively, on its investment securities.securities, respectively. During the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded unrealized losses of $266$2 thousand and $423$256 thousand, respectively. There were no impairment losses onsales of securities duringfor the three and ninesix months ended SeptemberJune 30, 20222023 and 2021. During the prior year nine-month period, the Company recorded gains of $78 thousand on sales of securities, all of which were sold during the first half of 2021. There were no other sales of securities during the three and nine months ended September 30, 2022 and 2021.2022.

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 estimated fair value of the Company’s portfolio of warrants was $145$136 thousand and $142$138 thousand as of SeptemberJune 30, 20222023 and December 31, 2021,2022, respectively. TheChanges in fair value for the three months ended June 30, 2023 were deemed de minimus. By comparison, the Company recorded unrealized gains of $1 thousand and $4 thousand on fair valuation of its warrants for the three months ended SeptemberJune 30, 2022 and 2021, respectively.2022. During the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded unrealized gainslosses of $3$2 thousand and unrealized lossesgains of $26$2 thousand, respectively.

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(Unaudited)

Options - short position

During the third quarter ofyear ended December 31, 2021, the Company had sold options contracts on a publicly traded investment security. Such contracts were sold in two tranches as follows: 125 options at a premium of $3.00 and 75 options at $1.64 per share. Accordingly, the Company recorded a liability for the initial options value totaling $38 thousand and $12 thousand, respectively. During the three and nine months ended September 30, 2021, the Company recorded unrealized gains totaling $34 thousand related to the options. Such realized gains reflect changes in the fair value of the options, and effectively reduces the liability related to the options.$50 thousand. The options contracts both expired on January 21, 2022 with a strike price of $15.00 and $12.50, respectively. The Company realized gains totaling $1 thousand related to the expiration of the options.options during the first six months of 2022.

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Credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating lease receivablereceivables, 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 Funds’ 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 receivable represent amounts due from lessees in various industries, related to equipment on operating leases.

Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is being 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 Accounting Standards CondificationCodification (“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).sell.

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.

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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. Provisions for credit lossesdoubtful accounts relating to operating leases are included in lease income in the Company’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

Initial direct costs:

Incremental costs of a lease that would not have been incurred if the lease had not been obtained are capitalized and amortized over the lease term. All other costs associated with the execution of the Company’s leases are expensed as incurred.

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 companyCompany 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 theirthe 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.

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 andAgreement. 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.

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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.

Per Unit data:

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

Recent accounting pronouncements:

In March 2020, the Financial Accounting Standards Board (“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 adoptingThe Company adopted this new accounting guidance but does not expecton January 1, 2023. Such adoption will have ahad no material impact on the Fund’sCompany’s financial statements and disclosures.

In June 2016, the FASB issued ASU 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 evaluatingThe Company adopted this new accounting guidance on January 1, 2023. Such adoption had no material impact on the standardCompany’s financial statements 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.disclosures.

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

In November 2018, the FASB issued ASU 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 dates 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.

3. Investment in equipment and leases, net:

The Company’s investmentsinvestment in equipment and leases net consists of the following (in thousands):

Balance

Additions/

Depreciation/

Balance

Balance

Additions/

Depreciation/

Balance

December 31, 

Dispositions/

Amortization

September 30, 

December 31, 

Dispositions/

Amortization

June 30, 

2021

    

Reclassifications

    

Expense

    

2022

2022

    

Reclassifications

    

Expense

    

2023

Equipment under operating leases, net

$

8,003

$

(85)

$

(1,034)

$

6,884

$

6,543

$

-

$

(682)

$

5,861

Assets held for sale or lease, net

Initial direct costs, net

 

73

 

 

(21)

 

52

 

46

 

-

 

(11)

 

35

Total

$

8,076

$

(85)

$

(1,055)

$

6,936

$

6,589

$

-

$

(693)

$

5,896

Impairment of equipment:

As a result of impairment reviews, management determined that no impairment losses existed for the three- and six- month periods ended SeptemberJune 30, 20222023 and 2021.

The Company utilizes a straight-line depreciation method over the term of the equipment lease for equipment under operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $348 thousand and $423 thousand for the respective three months ended September 30, 2022 and 2021; and was $1.0 million and $1.2 million for the respective nine months ended September 30, 2022 and 2021. Total depreciation for the three months ended September 30, 2022 and 2021 include $7 thousand and $102 thousand of additional depreciation recorded to reflect quarter-to-date changes in estimated residual values of certain equipment generating revenue under month-to-month extensions. For the respective nine months ended September 30, 2022 and 2021, such additional depreciation totaled $14 thousand and $167 thousand. The estimated residual values of equipment associated with leases on month-to-month extensions are evaluated at least semi-annually, and depreciation recorded for the change in the estimated reduction in value.

IDC amortization expense related to the Company’s operating leases totaled $6 thousand and $9 thousand for the three months ended September 30, 2022 and 2021, respectively, and was $21 thousand and $24 thousand for the nine months ended September 30, 2022 and 2021.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2016 through 2022.

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment under operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $341 thousand and $342 thousand for the respective three months ended June 30, 2023 and 2022; and was $682 thousand and $686 thousand for the respective six months ended June 30, 2023 and 2022. Total depreciation for the prior year quarter included $7 thousand of additional depreciation recorded to reflect quarter-to-date changes in estimated residual values of certain equipment generating revenue under month-to-month extensions. Such estimated residual values of equipment associated with leases on month-to-month extensions are evaluated at least semi-annually, and depreciation recorded for the change in the estimated reduction in value. There was no such adjustment recorded for the current quarter.

IDC amortization expense related to the Company’s operating leases totaled $6 thousand and $8 thousand for the three months ended June 30, 2023 and 2022, respectively, and was $11 thousand and $15 thousand for of the six months ended June 30, 2023 and 2022, respectively.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2016 through 2022.

Operating leases:

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

Balance

Balance

Balance

Balance

December 31, 

Reclassifications

September 30, 

December 31, 

Reclassifications

June 30, 

    

2021

    

Additions

    

or Dispositions

    

2022

    

2022

    

Additions

    

or Dispositions

    

2023

Construction

$

3,218

$

-

$

-

$

3,218

Mining

 

2,749

 

-

 

-

 

2,749

Aviation

 

2,327

 

-

 

-

 

2,327

Transportation, rail

$

1,723

$

$

$

1,723

1,723

-

-

1,723

Mining

 

2,749

 

 

 

2,749

Construction

 

3,725

 

 

(507)

 

3,218

Aviation

 

2,327

 

 

 

2,327

Materials handling

 

1,249

 

-

 

-

 

1,249

Paper processing

 

1,058

 

 

 

1,058

 

1,058

 

-

 

-

 

1,058

Agriculture

 

742

 

16

 

(742)

 

16

Materials handling

 

1,315

 

118

 

(82)

 

1,351

Transportation, other

 

97

 

 

 

97

 

215

 

-

 

-

 

215

 

13,736

 

134

 

(1,331)

 

12,539

 

12,539

 

-

 

-

 

12,539

Less accumulated depreciation

 

(5,733)

 

(1,034)

 

1,112

 

(5,655)

 

(5,996)

 

(682)

 

-

 

(6,678)

Total

$

8,003

$

(900)

$

(219)

$

6,884

$

6,543

$

(682)

$

-

$

5,861

The average estimated residual value for assets on operating leases was 27% and 28% of the assets’ original cost at SeptemberJune 30, 20222023 and December 31, 2021, respectively.2022. There were no operating leases in non-accrual status at SeptemberJune 30, 20222023 and December 31, 2021.2022.

At SeptemberJune 30, 2022,2023, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

    

Operating

    

Operating

Leases

Leases

Three months ending December 31, 2022

$

427

Year ending December 31, 2023

 

1,652

2024

 

1,191

Six months ending December 31, 2023

$

812

Year ending December 31, 2024

 

1,191

2025

 

536

 

536

2026

301

 

301

2027

233

Thereafter

311

78

$

4,418

$

3,151

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of SeptemberJune 30, 2022,2023, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category

    

Useful Life

Transportation, rail

 

35 - 50

Aviation

 

15 - 20

Mining

 

10 - 15

Paper processing

 

10 - 15

Agriculture

7 - 10

Construction

 

7 - 10

Materials handling

 

7 - 10

Transportation, other

 

7 - 10

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

4. 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.

Pursuant to the Operating Agreement, the Managing Member and/or affiliates earned fees and billed for reimbursements during the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022 as follows (in thousands):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

June 30, 

June 30, 

    

2022

    

2021

2022

    

2021

    

2023

    

2022

2023

    

2022

    

Administrative costs reimbursed to Managing Member and/or affiliates

$

74

$

92

$

230

$

274

$

68

$

76

$

151

$

156

Asset management fees to Managing Member

 

53

 

64

 

165

 

195

 

55

 

55

 

110

 

112

Acquisition and initial direct costs paid to Managing Member

2

3

4

17

-

-

-

2

$

129

$

159

$

399

$

486

$

123

$

131

$

261

$

270

5. Non-recourse debt:

At SeptemberJune 30, 2022,2023, non-recourse debt consists of notes payable to financial institutions. The note payments are due in monthly installments. Interest on the notes range from 3.82% to 4.66% per annum. The notes are secured by assignments

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

of lease payments and pledges of assets. At SeptemberJune 30, 2022, remaining2023, gross operating lease rentals totaled approximately $1.3 million$914 thousand over the remaining lease terms and the carrying value of the pledged assets was $2.4$2.0 million. The notes mature from 2023 through 2028.

The non-recourse debt does not contain any material financial covenants. The debt is secured by a lien granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific 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

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

generally liable and responsible for certain representations, warranties, and covenants made to the lenders, 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

    

Principal

    

Interest

    

Total

Three months ending December 31, 2022

$

132

$

13

$

145

Year ending December 31, 2023

522

39

561

2024

288

20

308

Six months ending December 31, 2023

$

254

$

16

$

270

Year ending December 31, 2024

288

20

308

2025

73

13

86

73

13

86

2026

76

9

85

76

9

85

2027

80

6

86

Thereafter

156

7

163

77

2

79

 

$

1,247

 

$

101

 

$

1,348

 

$

848

 

$

66

 

$

914

6. Borrowing facilities:Commitments:

Effective June 30, 2021, the Company entered into an amended and restated revolving credit facility agreement (the “Credit Facility”) which replaced a previous agreement that had an expiration date of June 2021. 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, an acquisition 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 (i.e., 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 expiresAt June 30, 2023, (unless extended). The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’sthere were no commitments to purchase lease assets as collateral for any and all borrowings extendedor 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 foundfund investments in credit facilities of similar size and nature.notes receivable.

As of September 30, 2022 and December 31, 2021, borrowings under the Credit Facility were as follows (in thousands):

    

September 30, 

    

December 31, 

2022

2021

Total available under the financing arrangement

$

55,000

$

55,000

Amount borrowed by affiliated partnerships and limited liability companies under the venture, acquisition, and warehouse facilities.

 

(685)

 

(730)

Total remaining available under the working capital, acquisition and warehouse facilities

$

54,315

$

54,270

7. Guarantees:

The Company and its affiliates pay an annual commitment fee to have access to this lineenters into contracts that contain a variety of credit. As of September 30, 2022, the aggregate amount of the Credit Facilityindemnifications. The Company’s maximum exposure under these arrangements is potentially available tounknown. However, the Company subjecthas not had prior claims or losses pursuant to certain sub-facilitythese contracts and borrowing-base limitations. However, as amounts are drawn onexpects the Credit Facility by eachrisk of loss to be remote.

The Managing Member knows of no facts or circumstances that would make the Company’s contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and the affiliates who are borrowersindustry practice, and that any potential liability under the Credit Facility,Company’s similar commitments is remote. Should any such indemnification obligation become payable, 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 theCompany would separately record and/or disclose such liability in accordance with GAAP.

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NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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 September 30, 2022, 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. At September 30, 2022, the Company’s minimum Tangible Net Worth, leverage ratio and interest coverage ratio, as calculated per the Credit Facility agreement, were $8.6 million, 0.15 to 1, and 21.51 to 1, respectively. As such, as of September 30, 2022, the Company’s leverage ratio and interest coverage ratio were in compliance with the conditions of the Credit Facility. However, the Company’s Tangible Net Worth did not meet the requirements of the Credit Facility. Accordingly, the Fund will not be able to borrow from the Credit Facility unless all material covenants are met. The Company does not anticipate that such inability to borrow from the Credit Facility will have any material impact on future operations.

Fee and interest terms

The interest rate on the Credit Facility is based on either the LIBOR plus 2.25% 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 September 30, 2022 and December 31, 2021.

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 September 30, 2022, the Company is the sole participant in the investment program. 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.

7. Commitments and contingencies:

At September 30, 2022, there was no commitment to purchase lease assets.

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ATEL 17, LLC
 
NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

8. Members’ capital:

A total of 2,565,749 Units were issued and outstanding at both SeptemberJune 30, 20222023 and December 31, 2021,2022, inclusive of 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 99.99% 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 February 2016.

Distributions to the Other Members for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022 were as follows (in thousands except Units and per Unit data):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

June 30, 

June 30, 

    

2022

    

2021

2022

    

2021

    

2023

    

2022

2023

    

2022

Distributions

$

513

$

513

$

1,539

$

1,539

$

513

$

513

$

1,026

$

1,026

Weighted average number of Units outstanding

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

 

2,565,749

Weighted average distributions per Unit

$

0.20

$

0.20

$

0.60

$

0.60

$

0.20

$

0.20

$

0.40

$

0.40

9. 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 SeptemberJune 30, 20222023 and December 31, 20212022, the Company’s warrants and investmentinvestments securities were measured on a recurring basis. In addition, at December 31, 2021, the Company’s options - short position were also measuredfair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis as of SeptemberJune 30, 20222023 and December 31, 2021.2022.

1816

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ATEL 17, LLC
 
NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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 are determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, the time to maturity, and a risk free interest rate for the term(s) of the warrant exercise(s). As of SeptemberJune 30, 20222023 and December 31, 2021,2022, the calculated fair value of the Fund’s warrant portfolio approximated $145$136 thousand and $142$138 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 for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022 (in thousands):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

June 30, 

June 30, 

    

2022

    

2021

2022

    

2021

    

2023

    

2022

2023

    

2022

Fair value of warrants at beginning of period

$

144

$

157

$

142

$

187

$

136

$

143

$

138

$

142

Unrealized gain (loss) on fair value adjustment for warrants

 

1

 

4

 

3

 

(26)

 

-

 

1

 

(2)

 

2

Fair value of warrants at end of period

$

145

$

161

$

145

$

161

$

136

$

144

$

136

$

144

Investment in equity securities (recurring)

The Company’s equity securities registered for public sale with readily determinable fair values are measured at fair value with any changes in fair value recognized in the Company’s results of operations. As of SeptemberJune 30, 20222023 and December 31, 2021,2022, the calculated fair value of the Fund’s investment securities approximated $42$19 thousand and $308$21 thousand, respectively. Such valuations are classified within Level 1 of the valuation hierarchy.

The fair value of investment securities that were accounted for on a recurring basis for the three and nine months ended September 30, 2022 and 2021 and classified as Level 1 are as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2022

2021

2022

2021

Fair value of securities at the beginning of period

$

52

$

898

$

308

$

1,448

Securities sold

(619)

Unrealized (loss) gain on fair value adjustment for equity securities

(10)

(492)

(266)

(423)

Fair value of investment securities at the end of period

$

42

$

406

$

42

$

406

Options - short position (recurring)

The liability associated with the Company’s options – short position contracts were measured at fair value based on the price of the publicly traded options contracts, with any changes in fair value recognized in the Company’s results of operations. During the three and nine months ended September 30, 2021, the Company recorded $34 thousand of unrealized gains on the options, which reduced the $50 thousand initial value of the options to $16 thousand at September 30, 2021. Such value was further reduced to $1 thousand as of December 31, 2021. The options both expired on January 22, 2022, upon which the Company realized $1 thousand of gains on the transactions.

19

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes 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 SeptemberJune 30, 20222023 and December 31, 2021:2022:

SeptemberJune 30, 20222023

    

Valuation 

    

Valuation

    

Unobservable

    

Range of Input Values

Name

Frequency

Technique

Inputs

(Weighted Average)

Warrants

 

Recurring

 

Black-Scholes formulation

 

Stock price

$0.01 - $11.71 ($0.07)

 

  

 

  

 

Exercise price

$0.02 - $9.00 ($0.07)

 

  

 

  

 

Time to maturity (in years)

 

5.164.41 - 9.19 (5.32)

Risk-free interest rate

3.86% - 4.05% (4.04%)8.45 (4.58)

 

  

 

  

 

Annualized volatility

 

40.26%41.87% - 115.04% (49.88%83.00% (52.34%)

December 31, 20212022

    

Valuation 

    

Valuation

    

Unobservable

    

Range of Input Values

Name

Frequency

Technique

Inputs

(Weighted Average)

Warrants

 

Recurring

 

Black-Scholes formulation

 

Stock price

$0.01 - $11.71 ($0.07)

 

  

 

  

 

Exercise price

$0.02 - $9.00 ($0.07)

 

  

 

  

 

Time to maturity (in years)

5.914.91 - 9.94 (6.06)

Risk-free interest rate

1.35% - 1.58% (1.37%)8.94 (5.07)

 

  

 

  

 

Annualized volatility

37.90%41.18% - 115.04% (55.09%83.00% (51.34%)

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

17

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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.

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.arranagements.

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.

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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 SeptemberJune 30, 20222023 and December 31, 20212022 (in thousands):

Fair Value Measurements at September 30, 2022

Fair Value Measurements at June 30, 2023

    

Carrying

    

    

    

    

    

Carrying

    

    

    

    

Amount

Level 1

Level 2

Level 3

Total

Amount

Level 1

Level 2

Level 3

Total

Financial assets:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

$

3,062

$

3,062

$

$

$

3,062

$

1,825

$

1,825

$

-

$

-

$

1,825

Investment in equity securities

42

42

 

 

42

19

19

 

-

-

 

19

Warrants, fair value

 

145

 

 

 

145

 

145

 

136

 

-

 

-

 

136

 

136

Financial liabilities:

Non-recourse debt

1,247

1,214

1,214

848

-

-

824

824

Fair Value Measurements at December 31, 2021

    

Carrying

    

    

    

    

Amount

Level 1

Level 2

Level 3

Total

Financial assets:

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

$

4,035

$

4,035

$

$

$

4,035

Investment in equity securities

 

308

308

 

 

308

Warrants, fair value

142

 

 

 

142

 

142

Financial liabilities:

Options - short position

1

1

1

Non-recourse debt

1,633

1,673

1,673

Fair Value Measurements at December 31, 2022

    

Carrying

    

    

    

    

Amount

Level 1

Level 2

Level 3

Total

Financial assets:

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

$

2,644

$

2,644

$

-

$

-

$

2,644

Investment in equity securities

 

21

21

 

-

-

 

21

Warrants, fair value

138

 

-

 

-

 

138

 

138

Financial liabilities:

Non-recourse debt

1,115

-

-

1,086

1,086

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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 17, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on April 16, 2015 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 January 5, 2016.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company Units to the public reach $150 million. As of February 2, 2016, 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. Pennsylvania subscriptions are subject to a separate escrow and will be released to the Fund only at such time as total subscription proceeds received by the Fund from all subscribers, including the escrowed Pennsylvania subscriptions, equal not less than $7.5 million in gross proceeds. Total contributions to the Fund exceeded $7.5 million on July 6, 2016. The offering was terminated on January 5, 2018.

Results of Operations

The three months ended SeptemberJune 30, 20222023 versus the three months ended SeptemberJune 30, 20212022

The Company had net losses of $133$98 thousand and $611$202 thousand for the three months ended SeptemberJune 30, 20222023 and 2021,2022, respectively. Compared to the prior year period,quarter, the currentresults for the second quarter resultsof 2023 reflect decreases in total operating expenses and other losslosses related to fair valuation of the Company’s investmentFund’s equity securities and warrants, and in total operating expenses partially offset by a declinereduction in total operating revenues.

Revenues

Total operating revenues declined by $80$18 thousand, or 15%4%, primarily due to the $171 thousand decrease in operating lease revenues partially offset by a $105 thousand reduction in lossesabsence of gains realized from leaseon asset sales. The decrease in operating lease revenues was mainly attributable to lease run-off and dispositions of lease assets, while the reduction in losses from lease asset sales was largely a result of a change in the mix of assets sold.

Expenses

Total operating expenses decreased by $113 thousand, or 17%, primarily due to decreases in depreciation of operating lease assets, cost reimbursements to the Managing Member, and asset management fees to Managing Member partially offset by an increase in professional fees.operating lease revenues.

During the prior year quarter, the Company realized gains totaling $27 thousand on sales of equipment. There were no lease asset sales during the current period. Partially offsetting such a decrease was a $12 thousand increase in operating lease revenues, which was a result of an increase in month-to-month rents. Such month-to-month rents are only recorded as revenues once received.

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Expenses

The decreaseTotal operating expenses decreased by $57 thousand, or 10%, primarily due to a $39 thousand reduction in depreciation totaled $75 thousand andprofessional fees, which was attributable to lease run-offperiod over period timing differences in receipt of services and dispositions of lease assets since September 30, 2021. Costsbillings. In addition, costs reimbursed to the Manager were lowerdeclined by $18$8 thousand largely due toas a result of lower allocated costs associated with the continued decline of the Fund’s asset base. In addition, management fees were reduced by $11 thousand due to a decrease in managed assets and related rents. Partially offsetting such decreases in expenses was a $17 thousand increase in professional fees, which can be attributed to timing differences between receipt of services and billings.

Other loss

During the three months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded other losses of $9totaling $6 thousand and $454$71 thousand, respectively, to reflect netboth unrealized and realized gains and losses on the Fund’s portfolio of equityinvestment securities and warrants and options. Mostportfolio. The favorable change in such other loss was mostly attributable to the significant decline in the price of the unrealized lossesCompany's publicly traded securities during the three months ended September 30, 2022 and 2021, totaling $10 thousand and $492 thousand, were related to oneprior year period, which resulted in losses of the Company’s publicly traded equity securities, which had experienced a significant price reduction during the third quarter of 2021.$72 thousand. The price of such equity securities continued to decline during the current quarter, albeithas since changed at a substantially lower amount.

During the prior year period, the Company also recorded $34 thousand of unrealized gains on options which expired during the first quarter of 2022.rate.

The ninesix months ended SeptemberJune 30, 20222023 versus the ninesix months ended SeptemberJune 30, 20212022

The Company had net losses of $412$229 thousand and $645$279 thousand for the ninesix months ended SeptemberJune 30, 2023 and 2022, and 2021, respectively. Compared to the prior year period, theThe results for the first ninesix months of 20222023 reflect decreases in total operating expenses and in other losslosses related to fair valuation of the Company’s investmentFund’s equity securities and warrants, partially offset by a declinereduction in total operating revenuesrevenues.

Revenues

Total operating revenues for the first ninesix months of 20222023 declined $250 thousand, or 22%, when compared to the prior year period. Such decrease was due to the absence of gains realized on asset sales, and reductions in both other revenue and operating lease revenue.

During the prior year six-month period, the Company realized gains totaling $208 thousand on sales of equipment. There were no lease asset sales during the current six-month period. In addition, other revenue decreased by $22 thousand due to a decline in deferred maintenance fees related to excess wear and tear on returned equipment; and operating lease revenues declined by $100$20 thousand mostly due to lease run-off.

Expenses

Total operating expenses had a net decrease of $51 thousand, or 6%4%, when compared to the prior year period. Such decrease was comprised of offsetting changes, of which the most notable were reductions in operating lease revenuesprofessional fees, bank charges and notes receivable interest income partially offset by increasesexpense, and an increase in gains on sales of lease assets and in other revenue.outside services.

Operating lease revenuesProfessional fees decreased by $383 thousand largely due to lease run-off and sales of lease assets since September 30, 2021; while notes receivable interest income declined by $52 thousand, and was zero during the first nine months of 2022 as all the Fund’s notes receivable have been paid in full and terminated as December 31, 2021. Partially offsetting such decreases were increases in gains on sales of lease assets and other revenue totaling $313 thousand and $22 thousand, respectively. The increase in gains on sales of lease assets was attributable to the changes in the mix of assets sold, while the increase in other revenue reflects higher deferred maintenance fees received on certain returned equipment with excessive wear and tear.

Expenses

Total operating expenses decreased by $258 thousand, or 13%, largely due to decreases in depreciation of operating lease assets, cost reimbursements to the Managing Member, asset management fees and interest expense.

Depreciation of operating lease assets decreased by $145$23 thousand due to lease run-offperiod over period timing differences in receipt of services and sales of lease assets, while cost reimbursements to the Managing Memberbillings. Bank charges declined by $44$12 thousand due to the continued declinetermination of the Company’s asset base. Likewise, asset management fees were lowerparticipation in a revolving credit facility at the end of 2022, and interest expense declined by $30$11 thousand due to the decline in managed assets and related rents, and interest expense decreased by $18 thousand due to the declining balance of the Company’s non-recourse debt. In contrast, outside services increased by $22 thousand primarily due to costs related to consulting fees associated with a new accounting software, and Sarbanes-Oxley compliance.

Other loss

During the six months ended June 30, 2023 and 2022, the Company recorded other losses totaling $4 thousand and $253 thousand, respectively, to reflect both unrealized and realized gains and losses on the Fund’s investment securities and warrants portfolio. The favorable change in such other loss was mostly attributable to the significant decline in the price of the Company's publicly traded securities during the prior year period, which resulted in losses of $256 thousand. The price of such securities has since steadied and changed at a substantially lower rate.

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Other loss

During the nine months ended September 30, 2022 and 2021, the Company recorded other losses of $262 thousand and of $337 thousand, respectively, to reflect both realized and unrealized gains/losses on the Fund’s investment securities and warrants portfolio. Most of the unrealized losses during the nine months ended September 30, 2022 and 2021, totaling $266 thousand and $423 thousand, respectively, were related to one of the Company’s publicly traded equity securities, which had experienced a significant price reduction during the prior year period. The price of such equity securities continued to decline during the current period, albeit at a lower amount.

During the prior year period, the Company recorded $34 thousand of unrealized gains on options which expired during the first quarter of 2022. The Company also recorded $26 thousand of unrealized losses related to the fair valuation of its warrants portfolio and realized $78 thousand of gains from sales of equity securities. There were no sales of securities during the current period.

Capital Resources and Liquidity

At SeptemberJune 30, 20222023 and December 31, 2021,2022, the Company’s cash and cash equivalents totaled $3.1$1.8 million and $4.0$2.6 million, 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 leases and other 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 adequate reserves available to meet its immediate cash requirements and those of the next twelve months, but in the event those reserves are 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):

Nine Months Ended

Six Months Ended

September 30, 

June 30, 

2022

2021

2023

2022

Net cash provided by (used in):

Operating activities

$

615

$

1,096

$

474

$

385

Investing activities

 

337

 

1,097

 

-

 

295

Financing activities

 

(1,925)

 

(2,110)

 

(1,293)

 

(1,282)

Net (decrease) increase in cash and cash equivalents

$

(973)

$

83

Net decrease in cash and cash equivalents

$

(819)

$

(602)

During the respective ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company’s main source of liquidity werewas cash flows from its portfolio of operating lease contracts. During the currentprior year period, the Company also received $420$379 thousand of proceeds from sales of lease assets and $50 thousand of proceeds from the sale of options - short position contracts. By comparison,There were no such proceeds during the prior year period, the Company received $697 thousand of proceeds from sales of equity securities, $415 thousand of proceeds from sales of equipment and early termination of notes receivable, and $340 thousand of principal payments on its investments in notes receivable.current period.

During the respective ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, cash was primarily used to pay distributions and repay borrowings under non-recourse debt, and acquire assets.debt. Cash used to pay distributions totaled $1.5$1.0 million for each of the nine-monthsix-month periods ended SeptemberJune 30, 20222023 and 2021;2022; and repayments of non-recourse debt totaled $386$267 thousand and $571$256 thousand for the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively. In addition, during the prior year period, cash was used to acquire lease assets totaled $133 thousand and $355 thousand fortotaling $134 thousand. There were no lease asset acquisitions during the nine months ended September 30, 2022 and 2021, respectively.current period. Cash was also used to pay invoices related to management fees and expenses, and other payables in both nine-monthsix-month periods.

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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 2016.

Cash distributions were paid by the Fund to Unitholders of record as of AugustMay 31, 2022,2023, and paid through SeptemberJune 30, 2022.2023. 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 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 loans funded 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 loans and investments funded.

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The following table summarizes distribution activity for the Fund from inception through SeptemberJune 30, 20222023 (in thousands except for Units and Per Unit Data):

Total

Weighted

Total

Weighted

Return of

Distribution

Total

Distribution

Average Units

Return of

Distribution

Total

Distribution

Average Units

Distribution Period (1)

  

Paid

  

Capital

  

  

of Income

  

  

Distribution

  

  

per Unit (2)

  

Outstanding (3)

    

Paid

    

Capital

    

  

of Income

    

    

Distribution

    

    

per Unit (2)

    

Outstanding (3)

Monthly and quarterly distributions

  

  

  

  

Feb 2016 - Nov 2016

Apr 2016 - Dec 2016

$

492

$

$

492

$

0.64

770,832

Apr 2016 - Dec 2016

$

492

$

-

$

492

$

0.64

770,832

Dec 2016 - Nov 2017

Jan 2017 - Dec 2017

 

1,540

 

 

1,540

0.78

1,967,313

Jan 2017 - Dec 2017

 

1,540

 

-

 

1,540

0.78

1,967,313

Dec 2017 - Nov 2018

Jan 2018 - Dec 2018

2,043

2,043

0.80

2,562,088

Jan 2018 - Dec 2018

2,043

-

2,043

0.80

2,562,088

Dec 2018 - Nov 2019

Jan 2019 - Dec 2019

2,052

2,052

0.80

2,565,749

Jan 2019 - Dec 2019

2,052

-

2,052

0.80

2,565,749

Dec 2019 - Nov 2020

Jan 2020 - Dec 2020

2,052

2,052

0.80

2,565,749

Jan 2020 - Dec 2020

2,052

-

2,052

0.80

2,565,749

Dec 2020 - Nov 2021

Jan 2021 - Dec 2021

2,053

2,053

0.80

2,565,749

Jan 2021 - Dec 2021

2,053

-

2,053

0.80

2,565,749

Dec 2021 - Aug 2022

Jan 2022 - Sep 2022

1,539

1,539

0.60

2,565,749

Dec 2021 - Nov 2022

Jan 2022 - Dec 2022

2,053

-

2,053

0.80

2,565,749

Dec 2022 - May 2023

Jan 2023 - Jun 2023

1,026

-

1,026

0.40

2,565,749

$

11,771

$

$

11,771

$

5.22

$

13,311

$

-

$

13,311

$

5.82

Source of distributions

 

 

  

 

 

 

 

 

  

 

 

 

Lease and loan payments and sales proceeds received

$

11,771

100.00%

$

0.00%

$

11,771

100.00%

 

 

$

13,311

100.00%

$

-

0.00%

$

13,311

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%

 

 

 

 

(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 February 2 - November 30, 2016, December 1, 2016 - November 30, 2017, December 1, 2017 - November 30, 2018, December 1, 2018 - November 30, 2019, December 1, 2019 - November 30, 2020, December 1, 2020 - November 30, 2021, December 1, 2021- November 30, 2022, and December 1, 20212022 - AugustMay 31, 2022,2023, respectively.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At SeptemberJune 30, 2022, 2023, there waswere no commitmentcommitments to purchase lease assets.assets or to fund investments in notes receivable.

Off-Balance Sheet Transactions

None.

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Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Note 2, summarySummary of significant accounting policies.

Significant 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, 2021.2022. There have been no material changes to the Company’s significant accounting policies since December 31, 2021.2022.

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Item 4.  Controls and procedures.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)) 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.

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 SeptemberJune 30, 20222023 that has materially affected, or is reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

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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. Defaults Upon Senior Securities.

None.

Item 3. Mine Safety Disclosures.

Not Applicable.

Item 4. Other Information.

None.

Item 5. 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)

Inline XBRL Instance Document

(101.SCH)

Inline XBRL Taxonomy Extension Schema Document

(101.CAL)

Inline XBRL Taxonomy Extension Calculation Linkbase Document

(101.DEF)

Inline XBRL Taxonomy Extension Definition Linkbase Document

(101.LAB)

Inline XBRL Taxonomy Extension Label Linkbase Document

(101.PRE)

Inline XBRL Taxonomy Extension Presentation Linkbase Document

(104)

The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended

SeptemberJune 30, 20222023 has been formatted in Inline XBRL

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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: NovemberAugust 14, 20222023

ATEL 17, 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/ Raymond A. Rigo

Raymond A. Rigo

Vice President, Fund Controller of ATEL Managing

Member, LLC (Managing Member)

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