Venture Lending & Leasing VI 10-Q 2016 Q1 Quarterly report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended March 31, 2016

[  ] 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 814-00799

Venture Lending & Leasing VI, Inc.

(Exact Name of Registrant as specified in its charter)

Maryland	27-1682622
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
104 La Mesa Drive, Suite 102	Portola Valley, CA 94028
(Address of principal executive offices)	(Zip Code)

(650) 234-4300

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x]  No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ]   No [ ]

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

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [x] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ]  No [x]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class	Outstanding as of May 13, 2016
Common Stock, $.001 par value	100,000

VENTURE LENDING & LEASING VI, INC.

INDEX

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Statements of Assets and Liabilities (Unaudited)
	As of March 31, 2016 and December 31, 2015
	Condensed Statements of Operations (Unaudited)
	For the three months ended March 31, 2016 and 2015
	Condensed Statements of Changes in Net Assets (Unaudited)
	For the three months ended March 31, 2016 and 2015
	Condensed Statements of Cash Flows (Unaudited)
	For the three months ended March 31, 2016 and 2015
	Notes to Condensed Financial Statements (Unaudited)
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Mine Safety Issues
Item 5.	Other Information
Item 6.	Exhibits
SIGNATURES

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

AS OF MARCH 31, 2016 AND DECEMBER 31, 2015

	March 31, 2016			December 31, 2015
ASSETS
Investments:
Loans, at estimated fair value
(Cost of $83,119,217 and $109,048,869)	$	68,911,671		$	95,005,982
Interest Rate Caps (Cost of $92,000 and $115,000)	6,733			25,340
Total Investments (Cost of $83,211,217 and $109,163,869)	68,918,404			95,031,322
Cash and cash equivalents	2,939,802			2,646,011
Other assets	1,766,039			1,963,441
Total assets	73,624,245			99,640,774
LIABILITIES
Borrowings under debt facility	29,600,000			40,400,000
Accrued management fees	460,152			622,755
Accounts payable and other accrued liabilities	74,385			112,819
Total liabilities	30,134,537			41,135,574
NET ASSETS	$	43,489,708		$	58,505,200
Analysis of Net Assets:
Capital paid in on shares of capital stock	$	241,525,000		$	241,525,000
Unrealized depreciation on investments	(14,292,814		)	(14,132,547		)
Distribution in excess of net investment income	(183,742,478		)	(168,887,253		)
Net assets (equivalent to $434.90 and $585.05 per share based on 100,000 shares of capital stock outstanding - See Note 6)	$	43,489,708		$	58,505,200
Commitments & Contingent Liabilities:          Unfunded unexpired commitments (See Note 4)	$	—		$	1,750,000

See notes to condensed financial statements.

3

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015

	For the Three Months Ended March 31, 2016			For the Three Months Ended March 31, 2015
INVESTMENT INCOME:
Interest on loans	$	3,102,628		$	10,291,534
Other interest and other income	3,722			58,227
Total investment income	3,106,350			10,349,761
EXPENSES:
Management fees	460,152			1,284,958
Interest expense	340,074			771,347
Banking and professional fees	88,232			154,565
Other operating expenses	24,598			26,953
Total expenses	913,056			2,237,823
Net investment income	2,193,294			8,111,938
Net realized loss from investments	(1,042,091		)	(1,018,031		)
Net change in unrealized loss from investments	(164,659		)	(4,522,997		)
Net change in unrealized gain (loss) from hedging activities	4,393			(53,383		)
Net realized and change in unrealized loss from investments and hedging activities	(1,202,357		)	(5,594,411		)
Net increase in net assets resulting from operations	$	990,937		$	2,517,527
Net increase in net assets resulting from operations per share	$	9.91		$	25.18
Weighted average shares outstanding	100,000			100,000

See notes to condensed financial statements.

4

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015

	For the Three Months Ended March 31, 2016			For the Three Months Ended March 31, 2015
Net increase in net assets resulting from operations:
Net investment income	$	2,193,294		$	8,111,938
Net realized loss from investments	(1,042,091		)	(1,018,031		)
Net change in unrealized loss from investments	(164,659		)	(4,522,997		)
Net change in unrealized gain (loss) from hedging activities	4,393			(53,383		)
Net increase in net assets resulting from operations	990,937			2,517,527
Distributions of income to shareholder	(1,151,205		)	(7,093,907		)
Return of capital to shareholder	(14,855,224		)	(16,215,270		)
Decrease in capital transactions	(16,006,429		)	(23,309,177		)
Total decrease in net assets	(15,015,492		)	(20,791,650		)
Net assets
Beginning of period	58,505,200			137,015,488
End of period (undistributed net investment income of $0 and $0)	$	43,489,708		$	116,223,838

See notes to condensed financial statements.

5

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015

	For the Three Months Ended March 31, 2016			For the Three Months Ended March 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations	$	990,937		$	2,517,527
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Net realized loss from investments	1,042,091			1,018,031
Net change in unrealized loss from investments	164,659			4,522,997
Net change in unrealized (gain) loss from hedging activities	(4,393		)	53,383
Amortization of deferred costs related to borrowing facility	56,998			56,998
Net decrease in other assets	163,404			811,370
Net decrease in accounts payable, other accrued liabilities, and accrued management fees	(201,037		)	(519,035		)
Origination of loans	—			(2,112,500		)
Principal payments on loans	24,881,132			39,582,754
Acquisition of equity securities	—			(56,163		)
Net cash provided by operating activities	27,093,791			45,875,362
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distribution to shareholder	(16,000,000		)	(22,000,000		)
Repayment of debt facility	(10,800,000		)	(18,850,000		)
Payment of bank facility fees and costs				—
Net cash used in financing activities	(26,800,000		)	(40,850,000		)
Net increase in cash and cash equivalents	293,791			5,025,362
CASH AND CASH EQUIVALENTS:
Beginning of period	2,646,011			14,006,961
End of period	$	2,939,802		$	19,032,323
SUPPLEMENTAL DISCLOSURES:
CASH PAID DURING THE PERIOD:
Interest	$	328,794		$	751,005
NON-CASH ACTIVITIES:
Distributions of equity securities to shareholder	$	6,429		$	1,309,177
Receipt of equity securities as repayment of loans	$	6,429		$	1,253,014

See notes to condensed financial statements.

6

VENTURE LENDING & LEASING VI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND OPERATIONS OF THE FUND

Venture Lending & Leasing VI, Inc. (the “Fund”), was incorporated in Maryland on January 11, 2010 as a non-diversified closed-end management investment company electing status as a business development company (“BDC”) under the Investment Company Act of 1940, as amended ("1940 Act") and is managed by Westech Investment Advisors, LLC, formerly known as Westech Investment Advisors, Inc. (“Manager” or “Management”). The Fund will be dissolved on December 31, 2020 unless an election is made to dissolve earlier by the Board of Directors of the Fund (the “Board”). One hundred percent of the stock of the Fund is held by Venture Lending & Leasing VI, LLC (the “Company”).  Prior to commencing its operations on June 29, 2010, the Fund had no operations other than the sale to the Company of 100,000 shares of common stock, $0.001 par value for $25,000 in January 2010.  This issuance of stock was a requirement in order to apply for a finance lender's license from the California Commissioner of Corporations, which was obtained on April 13, 2010.

In the Manager's opinion, the accompanying financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of financial position and results of operations for interim periods. Certain information and note disclosures normally included in audited annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted; however, the Fund believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three months ended March 31, 2016 are not necessarily indicative of what the results would be for a full year. It is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the Fund's Annual Report on Form 10-K for the year ended December 31, 2015.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The preparation of 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 those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and money market mutual funds with maturities of 90 days or less. Money market mutual funds held as cash equivalents are valued at their most recently traded net asset value.

Interest Income

Interest income on loans is recognized using the effective interest method including amounts from the amortization of discounts attributable to equity securities received as part of the loan transaction.  Additionally, fees received as part of the transaction are added to the loan discount and amortized over the life of the loan.

Valuation Procedures

The Fund accounts for loans at fair value in accordance with the “Valuation Methods” below.  All valuations are determined under the direction of the Manager, in accordance with the Valuation Methods.

The Fund's loans are valued in connection with the issuance of its periodic financial statements, the issuance or repurchase of the Fund's shares at a price equivalent to the current net asset value per share, and at such other times as

7

required by law.  On a quarterly basis, Management submits to the Board a “Valuation Report” and "Valuation Notes" which detail the rationale for the valuation of investments.

As of March 31, 2016 and December 31, 2015, the financial statements include nonmarketable investments of $68.9 million and $95.0 million, respectively (or 94% and 95% of total assets, respectively), with fair values determined by the Manager in the absence of readily determinable market values.  Because of the inherent uncertainty of these valuations, estimated fair values of such investments may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Below is the information used by the Manager in making these estimates.

Loans

The Fund defines fair value as the price that would be received to sell an asset or paid to lower a liability in an orderly transaction between market participants at the measurement date. There is no secondary market for the loans made by the Fund to borrowers, hence Management determines fair value based on hypothetical markets. Venture loans are generally held to maturity and are recorded at estimated fair value. The determination of fair value is based on a number of factors including the amount for which an investment could be exchanged in a current sale, which assumes an orderly disposition over a reasonable period other than in a forced sale. Management also considers the fact that no ready market exists for substantially all of the investments held by the Fund. Management determines whether to adjust the estimated fair value of a loan based on a number of factors including but not limited to the borrower's payment history, available cash and “burn rate,” revenues, net income or loss, the likelihood that the borrower will be able to secure additional financing in the future, as well as an evaluation of the general interest rate environment. The amount of any valuation adjustment considers liquidation analysis and is determined based upon a credit analysis of the borrower and an analysis of the expected recovery from the borrower, including consideration of factors such as the nature and quality of the Fund's security interests in collateral, the estimated value of the Fund's collateral, the size of the loan, and the estimated time that will elapse before the Fund achieves a recovery. Management has evaluated these factors and has concluded that the effect of deterioration in the quality of the underlying collateral, increase in the size of the loan, increase in the estimated time to recovery, and increase in the hypothetical market coupon rate would have the effect of lowering the value of the current portfolio of loans.

Non-accrual Loans

The Fund's policy is to place a loan on non-accrual status when the loan stops performing and Management deems that it is unlikely that the loan will return to performing status.  When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed for the quarter in which the loan was placed on non-accrual status.  Any uncollected interest related to quarters prior to when the loan was placed on non-accrual status is added to the principal balance, and the aggregate balance of the principal and interest is evaluated in accordance with the policy for valuation of loans in determining Management's best estimate of fair value. Interest received by the Fund on non-accrual loans will be recorded if and when the proceeds exceed the book value of the loans.

If a borrower of a non-accrual loan resumes making regular payments and Management deems that the borrower has sufficient resources that it is unlikely the loan will return to non-accrual status, the loan is re-classified back to accrual or performing status.  Interest that would have been accrued during the non-accrual status will be added back to the remaining payment schedule, and thus changing the effective interest rate.

As of March 31, 2016, loans with a cost basis of $22.0 million and a fair value of $8.7 million, have been classified as non-accrual. As of December 31, 2015, loans with a cost basis of $20.9 million and a fair value of $7.0 million, have been classified as non-accrual.

8

Warrants and Stock

Warrants and stock that are received in connection with loan transactions generally will be assigned a fair value at the time of acquisition. These securities are then distributed by the Fund to its shareholder at the assigned value. Warrants are valued based on a modified Black-Scholes option pricing model which takes into account factors underlying stock value, expected term, volatility and the risk-free interest rate, among other factors.  

Underlying asset value is estimated based on information available, including information regarding recent rounds of funding of the portfolio company, or the publicly-quoted stock price at the end of the financial reporting period for warrants for comparable publicly-quoted securities.

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on an index of publicly traded companies grouped by industry and which are similar in nature to the underlying portfolio companies issuing the warrant (“Industry Index”). The volatility assumption for each Industry Index is based on the average volatility for individual public companies within the portfolio company's industry for a period of time approximating the expected life of the warrants. A hypothetical increase in the volatility of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The remaining expected lives of warrants are based on historical experience of the average life of the warrants, as warrants are often exercised in the event of acquisitions, mergers, or initial public offerings and terminated due to events such as bankruptcies, restructuring activities, or additional financings. These events cause the expected term to be less than the remaining contractual term of the warrants. For the three months ended March 31, 2016 and March 31, 2015, the Fund assumed the average duration of a warrant is 3.5 years. The effect of a hypothetical increase in the estimated initial term of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The risk-free interest rate is derived from the constant maturity tables issued by the U.S. Treasury Department. The effect of a hypothetical increase in the estimated risk-free rate used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The Fund engages an independent valuation company to provide valuation assistance including the evaluations of the Fund's valuation methodology and the reasonableness of the assumptions used from the perspective of a market participant. They calculate several of the inputs used such as volatility and risk-free rate. Upon the receipt of such data from the valuation company, a sample test is performed to ensure the accuracy of their calculations and that the source of data is reliable and consistent with the way in which the calculations were made in prior periods. Such inputs are entered into the database with a second review to ensure the accuracy of the input information. All calculations of warrant values are performed by one employee and reviewed by a second employee. The inputs of the modified Black-Scholes option pricing model are reevaluated every quarter.

Other Assets and Liabilities

Other Assets include costs incurred in conjunction with borrowings under the Fund's debt facility and are stated at initial cost. The costs are amortized over the term of the facility.

As of March 31, 2016 and December 31, 2015, the fair values of Other Assets and Liabilities are estimated at their carrying values because of the short-term nature of these assets or liabilities.

As of March 31, 2016 and December 31, 2015, based on borrowing rates available to the Fund, which are Level 2 inputs, the estimated fair values of the borrowings under the debt facility were $29.6 million and $40.4 million, respectively.

9

Commitment Fees

Unearned income and commitment fees on loans are recognized in interest on loans using the effective interest method over the term of the loan. Commitment fees are carried as liabilities when received for commitments upon which no draws have been made. When the first draw is made, the fee is treated as unearned income and is recognized as described above.  If a draw is never made, the forfeited commitment fee less any applicable legal costs becomes recognized as other income after the commitment expires.

Interest Rate Cap Agreements

On September 30, 2014, the Fund entered into interest rate cap agreements which are primarily valued on the basis of the future expected interest rates on the notional principal balance remaining, which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value and other factors underlying cap instruments. The contracts are recorded at fair value in interest rate caps in the Condensed Statements of Assets and Liabilities. The changes in fair value are recorded in Net change in unrealized gain (loss) from hedging activities in the Condensed Statements of Operations. The interest received on the interest rate cap contracts, if any, is recorded in Net realized gain (loss) from hedging activities in the Condensed Statements of Operations.

Deferred Bank Fees

The deferred bank fees and costs associated with the debt facility have been allocated over the estimated life of the facility, which was originally determined to be until January 2014. Starting in October 2011, the estimated life of the facility changed to September 2014. The debt facility was extended again on September 23, 2014 and then on September 30, 2014, it was amended, restated and renewed through March 23, 2017. Deferred bank fees and costs associated with the renewal of the debt facility are being amortized over the estimated life of the renewed facility through March 23, 2017. The amortization of these costs was recorded as interest expense in the Condensed Statement of Operations (see Note 7).

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-03 Interest-Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. Debt issuance costs related to lines of credit and revolving debt facilities are not required to be deducted from the carrying amount of that debt liability. The amended guidance is effective for the Fund’s interim and annual periods beginning on January 1, 2016. The adoption of this guidance did not significantly impact the Fund’s financial position or results of operations.

Tax Status

The Fund has elected to be treated as a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) and operates in a manner so as to qualify for the tax treatment applicable to RICs. Failing to maintain at least 70% of total assets in “qualifying assets” will result in the loss of BDC status, resulting in losing its favorable tax treatment as a RIC. As of March 31, 2016, the Fund has met the BDC and RIC requirements.

In order to qualify for favorable tax treatment as a RIC, the Fund is required to distribute annually to its shareholder at least 90% of its investment company taxable income, as defined by the Code. To avoid federal excise taxes, the Fund must distribute annually at least 98% of its ordinary income and 98.2% of net capital gains from the current year and any undistributed ordinary income and net capital gains from the preceding years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If the Fund chooses to do so, all other things being equal, this would increase expenses and reduce the amount available to

10

be distributed to shareholder. The Fund will accrue excise tax on estimated undistributed taxable income as required. Below is a table summarizing the cost (on GAAP and tax basis) and the appreciation and depreciation of the investments reported on the Schedule of Investments in Note 3 below.

As of March 31, 2016:

Asset	Cost		Unrealized Appreciation	Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Loans	$	83,119,217	—	$	(14,207,546	)	$	(14,207,546	)	$	68,911,671
Interest Rate Caps	92,000		—	(85,267		)	(85,267		)	6,733
Total	$	83,211,217	—	$	(14,292,813	)	$	(14,292,813	)	$	68,918,404

As of December 31, 2015:

Asset	Cost		Unrealized Appreciation	Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Loans	$	109,048,869	—	$	(14,042,887	)	$	(14,042,887	)	$	95,005,982
Interest Rate Caps	115,000		—	(89,660		)	(89,660		)	25,340
Total	$	109,163,869	—	$	(14,132,547	)	$	(14,132,547	)	$	95,031,322

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with GAAP. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Fund's annual RIC tax return.

Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are reclassified among the Fund's capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP.

Through March 31, 2016, the Fund had no undistributed earnings. Additionally, for the three months ended March 31, 2016, distributions were made in excess of distributable earnings by $ 14.9 million. The Fund may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the shareholder's tax basis in its shares. As of March 31, 2016, the Fund had no uncertain tax positions. As of March 31, 2016, the Fund had no capital loss carry forwards.

The Fund's tax years are open to examination by federal tax authorities for the years 2012 and forward and California tax authorities for the years 2011 and forward.

3. SCHEDULES OF INVESTMENTS

As of March 31, 2016, all loans were made to non-affiliates as follows (unaudited):

	Percentage	Estimated Fair	Par Value	Final
Borrower	of Net Assets	Value 3/31/16	Value 3/31/16	Maturity Date
Computers & Storage
Clustrix, Inc.		$ 1,016,805	$ 1,016,805	5/1/2017
D-Wave Systems, Inc. **		824,105	824,105	2/1/2017

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Gridstore, Inc.		775,217	775,217	6/1/2017
Veloxum, Inc.		0	416,093	*
Subtotal:	6.0%	$ 2,616,127	$ 3,032,220
Enterprise Networking
Apprion, Inc.		$ 130,533	$ 144,533	*
Subtotal:	0.3%	$ 130,533	$ 144,533
Internet
CustomMade Ventures Corp.		$ 687,276	$ 687,276	*
Digital Caddies, Inc. **		0	987,584	*
FanBridge, Inc.		453,896	643,896	*
Giddy Apps, Inc.		499,454	999,454	*
Giveforward, Inc.		181,334	364,333	*
Grovo Learning, Inc.		425,455	425,455	3/1/2017
Kiwi Crate, Inc.		770,027	770,027	4/1/2018
Lightside Games, Inc.		36,230	109,230	*
Madison Reed, Inc.		1,164,144	1,164,144	6/1/2018
Monetate, Inc.		2,256,665	2,256,665	6/1/2018
Navigating Cancer, Inc.		93,558	93,558	7/1/2016
Osix Corp.		30,470	30,470	10/1/2016
Piryx, Inc.		1,187,196	1,467,196	*
Pixalate, Inc.		177,975	177,975	3/1/2017
Playstudios, Inc.		1,864,949	1,864,949	6/1/2018
Quantcast Corp.		2,826,957	2,826,957	4/1/2017
Quri, Inc.		1,525,053	1,525,053	6/1/2018
Radius Intelligence, Inc.		1,106,967	1,106,967	10/1/2017
Rivet Games, Inc.		26,082	120,082	*
Schooltube, Inc.		0	108,222	*
Schoola, Inc.		78,956	78,956	12/1/2016
Smart Lunches, Inc.		38,083	38,083	6/1/2016
Sociable Labs, Inc.		87,631	87,631	8/1/2016
THECLYMB		836,536	836,536	10/1/2017
Weddington Way, Inc.		168,010	168,010	11/1/2016
WHI, Inc.		920,218	1,227,218	*
YouDocs Beauty, Inc.		1,179,032	1,192,024	*
Subtotal:	42.8%	$ 18,622,154	$ 21,357,951
Medical Devices
AxioMed, Inc.		$ 14,238	$ 1,560,238	*
Blockade Medical, LLC		303,730	303,730	9/1/2017
MimOSA, Inc.		111,774	211,774	6/1/2017
Redox Medical, Inc.		250,000	3,600,000	*
Subtotal:	1.6%	$ 679,742	$ 5,675,742

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Other Healthcare
Cogito Corporation		$ 252,344	$ 252,344	4/1/2017
Health Integrated, Inc.		1,087,770	1,087,770	10/1/2017
Hi.Q, Inc.		955,309	955,309	6/1/2018
Mulberry Health, Inc.		3,065,426	3,065,426	12/1/2017
Physician Software Systems, LLC		275,125	275,125	7/1/2017
Practice Fusion, Inc.		827,898	827,898	6/1/2016
Project Healthy Living, Inc.		322,645	322,645	10/1/2016
Therapydia, Inc.		279,246	279,246	10/1/2017
Urgent Care Centers of New England, Inc.		2,784,510	2,784,510	9/1/2018
Subtotal:	22.6%	$ 9,850,273	$ 9,850,273
Other Technology
21, Inc.		$ 4,733,288	$ 4,733,288	8/1/2019
Automatic Labs, Inc.		301,814	301,814	12/1/2016
Beeline Bikes, Inc.		76,002	76,002	6/1/2017
Daylight Solutions, Inc.		1,159,750	1,159,750	8/1/2017
General Assembly, Inc.		797,195	797,195	12/1/2016
InsideTrack, Inc.		776,473	776,473	9/1/2017
LanzaTech New Zealand Ltd.**		916,928	916,928	7/1/2016
Lumo BodyTech, Inc.		878,206	878,206	12/1/2017
Neuehouse, LLC		2,202,177	2,202,177	7/1/2017
nWay, Inc.		469,185	939,185	*
Pinnacle Engines, Inc.		761,241	761,241	12/1/2017
Prana Holdings, Inc.		760,747	1,522,747	7/1/2016
Scoot Networks, Inc.		207,540	207,540	3/1/2017
Skully, Inc.		140,784	140,784	7/1/2017
Tribogenics, Inc.		273,900	273,900	9/1/2016
Zeachem		0	2,759,807	*
YPX Cayman Holdings Co. **		40,961	40,961	4/1/2016
Subtotal:	33.3%	$ 14,496,191	$ 18,487,998
Security
Agari Data, Inc.		$ 640,509	$ 640,509	9/1/2017
Guardian Analytics, Inc.		2,153,964	2,153,964	2/1/2019
Subtotal:	6.4%	$ 2,794,473	$ 2,794,473
Software
3Scale, Inc.		$ 513,046	$ 513,046	9/1/2017
Appconomy, Inc.		400,000	1,839,362	*
Atigeo Corporation		1,826,613	1,826,613	9/1/2017
Beanstock Media, Inc. ***		100,000	1,322,744	*
BlazeMeter, Inc. **		610,655	610,655	1/1/2018
ClearPath, Inc.		44,390	44,390	5/1/2016
Clypd, Inc.		215,426	215,426	11/1/2016
Corduro, Inc.		4,712	94,712	*
Encoding.com, Inc.		162,336	162,336	11/1/2016

13

gloStream, Inc.		747,873	1,047,873		*
Innerworkings, Inc.		0	326,744		*
MediaPlatform, Inc.		55,188	55,188		9/1/2016
Mintigo, Inc.**		937,243	937,243		1/1/2018
Nectar Holdings, Inc.		761,261	761,261		12/1/2017
OrderGroove, Inc.		630,570	630,570		12/1/2017
Palantir Technologies, Inc.		475,780	475,780		4/1/2016
SCVNGR, Inc.		632,677	632,677		10/1/2016
SoundHound, Inc.		1,589,231	1,589,231		5/1/2017
StreetLight Data, Inc.		308,199	308,199		4/1/2017
Workspot, Inc.		53,905	53,905		9/1/2016
ZeroTurnaround USA, Inc.**		1,145,323	1,145,323		6/1/2018
Subtotal:	25.8%	$ 11,214,428	$ 14,593,278
Technology Services
Akademos, Inc.***		$ 514,955	$ 514,955		6/1/2017
Amped, Inc.		901,055	901,055		11/1/2017
Blazent, Inc.		75,260	75,260		5/1/2016
Blue Technologies Limited**		384,843	384,843		6/1/2017
BountyJobs, Inc.		289,430	289,430		10/1/2017
Callisto Media, Inc.		158,381	158,381		9/1/2016
FSA Store, Inc.		729,686	729,686		9/1/2017
Grassroots Unwired, Inc.		13,904	13,904		8/1/2016
Maxi Mobility, Inc.		36,949	36,949		7/1/2016
Rated People, Ltd.**		1,025,952	1,370,952		*
TiqIQ, Inc.		150,393	150,393		7/1/2017
Subtotal:	9.9%	$ 4,280,808	$ 4,625,808
Wireless
Azumio, Inc.		$ 305,883	$ 405,883		*
GPShopper, LLC		274,096	274,096		7/1/2017
InfoReach, Inc.		218,295	218,295		3/1/2017
Kicksend Holdings		31,475	61,474		*
SpiderCloud Wireless, Inc.		3,397,193	3,397,193		7/1/2017
Subtotal:	9.8%	$ 4,226,942	$	4,356,941
Total Loan (Cost of $83,119,217)	158.5%	68,911,671	84,919,217
Interest Rate Caps (Cost of $92,000)	0.0%	6,733	92,000
Total Investment (Cost of $83,211,217)	158.5%	$ 68,918,404	$	85,011,217

*As of March 31, 2016, loans with a cost basis of $22.0 million and a fair value of $8.7 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems "non-qualifying assets” under section 55(a) of the 1940 Act, as amended. Qualifying assets must represent at least 70% of the Fund’s total assets at the time of acquisition of any additional non-qualifying assets. As of March 31, 2016, 8.2% of the Fund’s assets represented non-qualifying assets.

14

*** Indicates assets that are not senior loans.

As of December 31, 2015, all loans were made to non-affiliates as follows:

	Percentage	Estimated Fair	Par Value	Final
Borrower	of Net Assets	Value 12/31/15	Value12/31/15	Maturity Date
Computers & Storage
Clustrix, Inc.		$ 1,258,439	$ 1,258,439	5/1/2017
D-Wave Systems, Inc. **		1,003,360	1,003,360	2/1/2017
Gridstore, Inc.		913,030	913,030	6/1/2017
Veloxum, Inc.		0	416,093	*
Subtotal:	5.4%	$ 3,174,829	$ 3,590,922
Enterprise Networking
Apprion, Inc.		$ 147,799	$ 147,799	4/1/2016
Subtotal:	0.3%	$ 147,799	$ 147,799
Internet
CustomMade Ventures Corp.		$ 687,276	$ 687,276	*
DailyFeats, Inc.		18,441	18,441	1/1/2016
Digital Caddies, Inc. **		0	987,584	*
FanBridge, Inc.		453,896	643,896	*
Giddy Apps, Inc.		1,063,297	1,063,297	12/1/2017
Giveforward, Inc.		406,113	406,113	7/1/2017
Grovo Learning, Inc.		522,397	522,397	3/1/2017
HEXAGRAM 49, Inc.		18,716	18,716	1/1/2016
InsideVault, Inc.		259,715	259,715	5/1/2017
Kitsy Lane, Inc.		39,441	169,441	*
Kiwi Crate, Inc.		814,731	814,731	4/1/2018
Lightside Games, Inc.		54,230	127,230	*
Madison Reed, Inc.		1,276,132	1,276,132	6/1/2018
Monetate, Inc.		2,475,198	2,475,198	6/1/2018
Navigating Cancer, Inc.		184,646	184,646	7/1/2016
Osix Corp.		57,340	57,340	10/1/2016
Piryx, Inc.		1,187,196	1,467,196	*
Pixalate, Inc.		227,339	227,339	3/1/2017
Playstudios, Inc.		2,065,680	2,065,680	6/1/2018
Quantcast Corp.		3,404,740	3,404,740	4/1/2017
Quri, Inc.		1,696,743	1,696,743	6/1/2018
Radius Intelligence, Inc.		1,257,560	1,257,560	10/1/2017
Rivet Games, Inc.		63,082	130,082	*
Schooltube, Inc.		0	108,222	*
Schoola, Inc.		102,300	102,300	12/1/2016
Smart Lunches, Inc.		63,640	63,640	6/1/2016
Sociable Labs, Inc.		113,422	113,422	7/1/2016
THECLYMB		870,456	870,456	10/1/2017
Weddington Way, Inc.		306,628	306,628	11/1/2016
WHI, Inc.		1,160,565	1,160,565	7/1/2017

15

YouDocs Beauty, Inc.***		1,061,305	1,192,024	*
Yourmechanic, Inc.		151,324	151,324	7/1/2017
Subtotal:	37.7%	$ 22,063,549	$ 24,030,073
Medical Devices
AxioMed, Inc.		$ 14,238	$ 1,560,238	*
Blockade Medical, LLC		347,432	347,432	9/1/2017
Hourglass Technology, Inc.		0	872,325	*
MimOSA, Inc.		109,833	209,833	12/1/2016
Redox Medical, Inc.		250,000	3,600,000	*
Subtotal:	1.2%	$ 721,503	$ 6,589,828
Other Healthcare
Cogito Health, Inc.		$ 309,223	$ 309,223	4/1/2017
Health Integrated, Inc.		1,305,577	1,305,577	10/1/2017
HealthEquityLabs, Inc.		949,393	949,393	6/1/2018
Mulberry Health, Inc.		3,436,073	3,436,073	12/1/2017
Physician Software Systems, LLC		321,221	321,221	7/1/2017
Practice Fusion, Inc.		1,604,096	1,604,096	6/1/2016
Project Healthy Living, Inc.		444,667	444,667	10/1/2016
Therapydia, Inc.		352,299	352,299	10/1/2017
Urgent Care Centers of New England, Inc.		3,050,202	3,050,202	9/1/2018
Subtotal:	20.1%	$ 11,772,751	$ 11,772,751
Other Technology
21, Inc.		$ 10,680,985	$ 10,680,985	9/1/2017
Automatic Labs, Inc.		401,358	401,358	12/1/2016
Beeline Bikes, Inc.		89,107	89,107	6/1/2017
Daylight Solutions, Inc.		1,338,564	1,338,564	8/1/2017
eco.logic brands, inc.		375,524	375,524	6/1/2017
General Assembly, Inc.		1,045,212	1,045,212	12/1/2016
InsideTrack, Inc.		906,204	906,204	9/1/2017
LanzaTech New Zealand Ltd.**		2,167,522	2,167,522	7/1/2016
Lumo BodyTech, Inc.		987,135	987,135	12/1/2017
Neuehouse, LLC		2,609,757	2,609,757	7/1/2017
nWay, Inc.		1,049,777	1,049,777	3/1/2018
Pinnacle Engines, Inc.		870,363	870,363	12/1/2017
Prana Holdings, Inc.		2,280,795	2,280,795	7/1/2016
Scoot Networks, Inc.		253,204	253,204	42,795
Skully, Inc.		161,357	161,357	7/1/2017
Sproutling, Inc.		483,241	483,241	1/15/2016
Tribogenics, Inc.		471,201	471,201	9/1/2016
Zeachem		0	3,023,095	*
YPX Cayman Holdings Co. **		177,626	177,626	4/1/2016
Subtotal:	45.0%	$ 26,348,932	$ 29,372,028
Security
Agari Data, Inc.		$ 734,959	$ 734,959	9/1/2017
Guardian Analytics, Inc.		2,124,840	2,124,840	2/1/2019

16

Uplogix, Inc.		421,843	1,121,843	*
Subtotal:	5.6%	$ 3,281,642	$ 3,981,642
Software
3Scale, Inc.		$ 594,565	$ 594,565	9/1/2017
Appconomy, Inc.		400,000	1,839,362	*
Atigeo Corporation		2,088,385	2,088,385	9/1/2017
Beanstock Media, Inc. ***		85,000	1,322,744	*
BlazeMeter, Inc. **		697,581	697,581	1/1/2018
ClearPath, Inc.		95,856	95,856	5/1/2016
Clypd, Inc.		291,458	291,458	11/1/2016
Corduro, Inc.		12,212	102,212	*
Encoding.com, Inc.		239,707	239,707	11/1/2016
gloStream, Inc.		786,295	1,086,295	*
Innerworkings, Inc.		0	326,744	*
MediaPlatform, Inc.		165,244	165,244	9/1/2016
Mintigo, Inc.**		1,048,984	1,048,984	1/1/2018
Nectar Holdings, Inc.		872,439	872,439	12/1/2017
OrderGroove, Inc.		704,374	704,374	12/1/2017
Palantir Technologies, Inc.		1,865,160	1,865,160	4/1/2016
SCVNGR, Inc.		887,926	887,926	10/1/2016
SoundHound, Inc.		2,026,388	2,026,388	5/1/2017
STG-Impact Holdings Corp.		2,094,582	2,094,582	1/21/2016
StreetLight Data, Inc.		378,297	378,297	4/1/2017
Top Hat Monocle Corp.**		253,954	253,954	7/1/2016
Workspot, Inc.		78,658	78,658	9/1/2016
ZeroTurnaround USA, Inc.**		1,252,981	1,252,981	6/1/2018
Subtotal:	28.9%	$ 16,920,046	$ 20,313,896
Technology Services
Akademos, Inc.***		$ 598,955	$ 598,955	6/1/2017
Amped, Inc.		1,036,377	1,036,377	11/1/2017
BidPal, Inc.		229,075	229,075	7/1/2016
Blazent, Inc.		184,686	184,686	5/1/2016
Blue Technologies Limited**		453,140	453,140	6/1/2017
BountyJobs, Inc.		332,991	332,991	10/1/2017
Callisto Media, Inc.		248,078	248,078	9/1/2016
FSA Store, Inc.		833,766	833,766	9/1/2017
Grassroots Unwired, Inc.		27,182	27,182	8/1/2016
Maxi Mobility, Inc.		63,044	63,044	7/1/2016
Rated People, Ltd.**		1,050,689	1,395,689	*
Stackstorm, Inc.		211,072	211,072	1/1/2018
TiqIQ, Inc.		172,041	172,041	7/1/2017
Subtotal:	9.3%	$ 5,441,096	$ 5,786,096
Wireless
Azumio, Inc.		$ 372,598	$ 472,598	*

17

GPShopper, LLC		317,990		317,990	7/1/2017
InfoReach, Inc.		264,276		264,276	3/1/2017
Kicksend Holdings		31,476		61,475	*
SpiderCloud Wireless, Inc.		4,147,495		4,147,495	7/1/2017
Subtotal:	8.8%	$	5,133,835	$ 5,263,834
Total Loan (Cost of $109,048,869)	162.4%	95,005,982		110,848,869
Interest Rate Caps (Cost of $115,000)	0.0%	25,340		115,000
Total Investment (Cost of $109,163,869)	162.4%	$ 95,031,322		$ 110,963,869

*As of December 31, 2015, loans with a cost basis of $20.9 million and a fair value of $7.0 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems "non-qualifying assets” under section 55(a) of the 1940 Act, as amended. Qualifying assets must represent at least 70% of the Fund’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2015, 8.3% of the Fund’s assets represented non-qualifying assets.

*** Indicates assets that are not senior loans.

4. FAIR VALUE DISCLOSURES

Loans generally are made to borrowers pursuant to commitments whereby the Fund agrees to finance assets and provide working or growth capital up to a specified amount for the term of the commitment, upon the terms and subject to the conditions specified by such commitment. As of March 31, 2016, the Fund's investments in loans were primarily to companies based within the United States and were diversified among borrowers in the industry segments shown below.  The percentage of net assets that each industry group represents is shown with the industry totals below  (the sum of the percentages does not equal 100 percent because the percentages are based on net assets as opposed to total loans).  All loans are senior to unsecured creditors except for that of Akademos, Inc. which is subordinate.

The Fund defines fair value as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale.

Loan balances are summarized by borrower.  Typically a borrower's balance will be composed of several loans drawn under a commitment made by the Fund with the interest rate on each loan fixed at the time each loan is funded. Each loan drawn under a commitment may have a different maturity date and amount.  For the three months ended March 31, 2016 and March 31, 2015, the weighted-average interest rate on the performing loans was 15.46% and 18.97%, respectively. These rates were inclusive of both cash and non-cash interest income. For the three months ended March 31, 2016 and March 31, 2015, the weighted-average interest rate on the cash portion of the interest income was 11.51% and 13.57%, respectively. Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants and new loans funded during the period.

The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and loan as described in our loan accounting policy. Such changes result in the fair value being adjusted from par value of the individual loan. Where the risk profile is consistent with the original underwriting, which is primarily the case for this loan portfolio, the par value of the loan will approximate fair value.

18

All loans as of March 31, 2016 were pledged as collateral for the debt facility, and the Fund's borrowings are subsequently collateralized by all assets of the Fund.

The Fund provides asset-based financing primarily to start-up and emerging growth venture-capital-backed companies.  These loans are generally secured by assets of the borrowers.  As a result, the Fund is generally subject to credit risk associated with such companies.  As of March 31, 2016 and December 31, 2015, the Fund had unexpired unfunded commitments to borrowers of $0 million and $1.8 million, respectively.

Valuation Hierarchy

Under FASB Accounting Standards Codification (“ASC”) 820-10 Fair Value Measurement, the Fund categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Fund's valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

Level 1	Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
Level 2	Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3	Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Transfer of investments between levels of the fair value hierarchy is recorded on the actual date of the event or

change in circumstances that caused the transfer. There were no transfers in and out of Level 1, 2, and 3 during the

period ended March 31, 2016.

The Fund's cash equivalents were valued at the traded net asset value of the money market mutual fund. As a result, these measurements are classified as Level 1. The Fund's investments in the interest rate cap are based on quotes from the market makers that derive fair values from market data, and therefore, are classified as Level 2. The Fund uses estimated exit values when determining the value of its investments.  Because loan transactions are individually negotiated and unique, and there is no market in which these assets trade, the inputs for these assets, which are discussed in the Valuation Methods listed above, are classified as Level 3.

The following tables provide quantitative information about the Fund's Level 3 fair value measurements of its investments as of March 31, 2016 and December 31, 2015. In addition to the techniques and inputs noted in the tables below, the Fund may also use other valuation techniques and methodologies when determining its fair value measurements.

19

Investment Type
- Level 3	Fair Value at		Valuation Techniques/		Weighted Average/
Debt Investments	3/31/2016		Methodologies	Unobservable Input	Amount/Range
Computer & Storage	$	2,616,127	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	20%
			Liquidation	Investment Collateral	$0
Enterprise Networking	$	130,533	Liquidation	Investment Collateral	$130,533
Internet	$	18,622,154	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	17%
			Liquidation	Investment Collateral	$0- $1,187,196
Medical Devices	$	679,742	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
			Liquidation	Investment Collateral	$14,238-$250,000
Other Healthcare	$	9,850,273	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	13%
Other Technology	$	14,496,191	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
			Liquidation	Investment Collateral	$0-$469,185
Security	$	2,794,473	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	17%
Software	$	11,214,428	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
			Liquidation	Investment Collateral	$0-$747,873
Technology Services	$	4,280,808	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	15%
			Liquidation	Investment Collateral	$1,025,952
Wireless	$	4,226,942	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	15%
			Liquidation	Investment Collateral	$31,475- $305,883
Total	$68,911,671

Investment Type
- Level 3	Fair Value at	Valuation Techniques/		Weighted Average/
Debt Investments	12/31/2015	Methodologies	Unobservable Input	Amount/Range
Computer & Storage	3,174,829	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	20%
		Liquidation	Investment Collateral	$0
Internet	$22,063,549	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$0- $1,187,196
Other Healthcare	11,772,751	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	14%
Other Technology	26,348,932	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$0
Security	3,281,642	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	17%
		Liquidation	Investment Collateral	$412,843
Software	$16,920,046	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$0- $786,295
Technology Services	5,441,096	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$1,050,689
Wireless	5,133,835	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	15%
		Liquidation	Investment Collateral	$31,476-$372,598
Other (*)	869,302	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	17%
		Liquidation	Investment Collateral	$0-$250,000
Total	95,005,982

(*) Other loans are comprised of companies in Enterprise Networking and Medical Device industries.

20

The following table presents the balances of assets and liabilities as of March 31, 2016 and December 31, 2015 measured at fair value on a recurring basis:

As of March 31, 2016	Level 1		Level 2		Level 3		Total
ASSETS:
Loans*			$	—	$	68,911,671	$	68,911,671
Interest Rate Caps	—		6,733		—		6,733
Cash equivalents	2,939,802		—		—		2,939,802
Total	$	2,939,802	$	6,733	$	68,911,671	$	71,858,206

As of December 31, 2015	Level 1		Level 2		Level 3		Total
ASSETS:
Loans*	$	—	$	—	$	95,005,982	$	95,005,982
Interest Rate Caps	—		25,340		—		25,340
Cash equivalents	2,646,011		—		—		2,646,011
Total	$	2,646,011	$	25,340	$	95,005,982	$	97,677,333

*For a detailed listing of borrowers comprising this amount please refer to Note 3, Schedule of Investments.

The following table provides a summary of changes in Level 3 assets measured at fair value on a recurring basis:

	For the Three Months Ended March 31, 2016
	Loans			Warrants
Beginning balance	$	95,005,982		$	—
Acquisitions and originations	—			6,429
Principal reductions	(24,887,561		)	—
Distribution to shareholder	—			(6,429		)
Net change in unrealized loss from investments	(164,659		)	—
Net realized loss from investments	(1,042,091		)	—
Ending balance	$	68,911,671		$	—
Net change in unrealized loss on investments relating to investments still held at March 31, 2016	$	(1,866,985	)

21

	For the Three Months Ended March 31, 2015
	Loans			Warrants			Stock			Conv. Note
Beginning balance	$	227,745,693		$	—		$	—		$	—
Acquisitions and originations	2,112,500			416,950			642,227			250,000
Principal reductions	(40,835,768		)	—			—			—
Distribution to shareholder	—			(416,950		)	(642,227		)	(250,000		)
Net change in unrealized loss from investments	(4,522,997		)	—			—			—
Net realized loss from investments	(1,018,031		)	—			—			—
Ending balance	$	183,481,397		$	—		$	—		$	—
Net change in unrealized loss on investments relating to investments still held at March 31, 2015	$	(6,028,478	)

Net change in unrealized loss from investments and Net realized loss from investments are recorded in Net change in unrealized loss from investments and Net realized loss from investments in the Statement of Operations.

5. EARNINGS PER SHARE

Basic earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average common shares outstanding.  Diluted earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average common shares outstanding, including the dilutive effects of potential common shares (e.g., stock options).  The Fund held no instruments that would be potential common shares; thus, reported basic and diluted earnings per share are the same.

6. CAPITAL STOCK

As of March 31, 2016 and December 31, 2015, the Fund had 10,000,000 shares of $0.001 par value common stock authorized, and 100,000 shares issued and outstanding.  Total committed capital of the Company, as of March 31, 2016, was $294.0 million.  Total contributed capital to the Company through March 31, 2016 and December 31, 2015 was $279.3 million, of which $241.5 million was contributed to the Fund.  The remaining $14.7 million in committed capital as of March 31, 2016 expired in June 2015 as the five year anniversary passed. No further capital can be called.  

The chart below shows the distributions of the Fund for the three months ended March 31, 2016 and 2015.

	For the Three Months Ended March 31, 2016		For the Three Months Ended March 31, 2015
Cash distributions	$	16,000,000	$	22,000,000
Distributions of equity securities	6,429		1,309,177
Total distributions to shareholder	$	16,006,429	$	23,309,177

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Final classification of the distributions as either a return of capital or a distribution of income is an annual determination made at the end of each year dependent upon the Fund's current year and cumulative earnings and profits.

7. DEBT FACILITY

The Fund established a secured revolving loan facility in an amount of up to $160 million with Union Bank, N.A., Wells Fargo Bank, N.A. and Bank Leumi USA on September 23, 2011 (the "Loan Agreement").  Borrowings under the Loan Agreement are collateralized by all of the assets of the Fund. The Fund will pay interest on its borrowings, and will also pay a fee on the unused portion of the facility.

The Loan Agreement was extended on September 23, 2014 and then amended and restated in its entirety on September 30, 2014, reducing the size to $120 million, and securing an initial 12-month repayment plan and a subsequent 18-month amortized repayment plan. The size of the facility was reduced to $84 million on April 15, 2015, $74 million on June 12, 2015, $64 million on July 21, 2015 and $54 million on August 20, 2015 and by $3 million per month from October 23, 2015. The Fund will continue to reduce the facility because of its sufficient cash and cash flow to meet the needs of the unfunded commitments as well as pay expenses without further need to borrow.

Amounts borrowed under the Loan Agreement may be, at the option of the Fund, either Reference Rate loans or LIBOR loans at an annual rate of either LIBOR plus 2.75% or the Reference Rate plus 1.75%. Reference Rate Loan is defined as a Loan bearing interest at the highest of: (a) the Federal Funds Rate for such day plus one percent (1.0%), and (b) the rate most recently announced by Union Bank, N.A at its corporate headquarters as the “Union Bank, N.A. Reference Rate”. LIBOR Rate Loan is defined as a Loan bearing interest at the prevailing LIBOR rate determined by Union Bank, N.A. to be the per annum rate (rounded upward to the nearest one-hundredth of one percent (1/100%)) at which Dollar deposits in immediately available funds and in lawful money of the United States would be offered to Union Bank, N.A., on behalf of Union Bank, N.A., Wells Fargo Bank, N.A. and Bank Leumi USA, outside of the United States at approximately 11:00 a.m. (LIBOR time) three (3) Business Days before the first day of such LIBOR Loan Period, in an amount approximately equal to the principal amount of, and for a length of time approximately equal to the LIBOR Loan Period for, the LIBOR Loan sought by the Fund. As of March 31, 2016, all of the Fund’s borrowings were based on the LIBOR rate.

The facility revolved for 12 months from September 30, 2014, after that, the Loan Agreement size began to reduce. The Loan Agreement will terminate on March 23, 2017, but can be accelerated under an event of default such as failure by the Fund to make timely interest or principal payments.

Borrowings under the facility are collateralized by receivables under loans advanced by the Fund with assignment to the financial institution, plus other assets of the Fund. The Fund pays an unused line fee of 0.325% of the total unused commitment amount on a quarterly basis. As of March 31, 2016, the LIBOR rate is as follows:

1 month LIBOR	0.4373	%
3 month LIBOR	0.6286	%

Bank fees of $280,000 and legal fees of $59,983 were incurred in connection with the renewal of the facility on September 30, 2014. The bank fees and other costs incurred are capitalized and amortized to interest expense on a straight line basis over the expected life of the facility. Fees and costs previously incurred under the facility have been fully amortized.

The facility contains various covenants including financial covenants related to: (i) debt to net worth ratio, (ii) minimum debt service coverage ratio, (iii) interest coverage ratio, (iv) asset coverage, (v) asset coverage under investment company act, (vi) maximum loan loss reserves, and (vii) unfunded commitment ratio. There are also various restrictive covenants, including limitations on (i) the incurrence of liens, (ii) consolidations, mergers and asset

23

sales, and (iii) capital expenditures. As of March 31, 2016, Management believes that the Fund was in compliance with these covenants.

The following is the summary of the outstanding facility draws as of March 31, 2016:

Roll-Over Date	Amount			Maturity Date	Floating Interest Rate
March 14, 2016	$	10,000,000	(*)	April 14, 2016	3.19%
March 14, 2016	$	19,600,000		June 14, 2016	3.39%
TOTAL OUTSTANDING	$	29,600,000

(*) $4.2 million was paid on April 14, 2016 and the remaining $5.8 million loan amount was subsequently rolled for a 30-day LIBOR loan, which will mature on May 13, 2016.

8. INTEREST RATE CAP AGREEMENT

On September 30, 2014, the Fund has entered into two interest rate cap contracts with MUFG Union Bank, N.A. and Wells Fargo Bank, N.A. to cap floating interest rates at 0.7%. The purpose of the interest rate cap contract is to protect the Fund against rising interest rates, as the Fund originates loans with fixed interest rates. There were not any additional contracts entered into since September 30, 2014. The Fund continues to adjust the notional principal amount as the expected outstanding balance under the debt facility changes. As of March 31, 2016, the notional principal amount was $25.0 million. The Fund paid upfront fees of $230,000 which are amortized on a straight line basis over the life of the instrument and receives from the counterparty a payment of interest amounts above the 0.7% cap based on 30-day LIBOR. Payments, if necessary are made monthly and will terminate on March 23, 2017. As of March 31, 2016, the 30 day LIBOR rate was 0.4373%.

The average notional amount outstanding was $29.5 million and $72.8 million for the 3 months ended March 31, 2016 and March 31, 2015.

As of March 31, 2016 and December 31, 2015, the fair value of the Fund's derivative financial instruments was as follows:

	Asset Derivatives
	March 31, 2016			December 31, 2015
Derivatives:	Condensed Statement of Assets and Liabilities	Fair Value		Condensed Statement of Assets and Liabilities	Fair Value
Interest rate cap agreement	Interest Rate Caps	$	6,733	Interest Rate Caps	$	25,340

For the three months ended March 31, 2016 and March 31, 2015 , the derivative financial instruments had the following effect on the Condensed Statements of Operations:

		For the three months ended	For the three months ended
Derivatives	Condensed Statements of Operations	March 31, 2016	March 31, 2016	March 31, 2015
Interest rate cap agreement	Net change in unrealized loss from hedging activities	$(6,876)	$4,393	$(53,383)

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9.  FINANCIAL HIGHLIGHTS

GAAP requires disclosure of financial highlights of the Fund for the periods presented, the three months ended March 31, 2016 and 2015.  The total rate of return is defined as the return based on the change in value during the period of a theoretical investment made at the beginning of the period.  The total rate of return assumes a constant rate of return for the Fund during the period reported and weights each cash flow by the amount of time held in the Fund.  This required methodology differs from an internal rate of return.

The ratios of expenses and net investment income to average net assets, calculated below, are annualized and are computed based upon the aggregate weighted average net assets of the Fund for the periods presented.  Net investment income is inclusive of all investment income net of expenses, and excludes realized or unrealized gains and losses.

Beginning and ending net asset values per share are based on the beginning and ending number of shares outstanding.

Other per share information is calculated based upon the aggregate weighted average net assets of the Fund for the periods presented.

The following per share data and ratios have been derived from the information provided in the financial statements:

	For the Three Months Ended March 31, 2016			For the Three Months Ended March 31, 2015
Total return **	1.79		%	1.98		%
Per share amounts:
Net asset value, beginning of period	$	585.05		$	1,370.15
Net investment income	21.94			81.12
Net realized and change in unrealized
loss from investments and
hedging activities	(12.03		)	(55.94		)
Net increase in net assets from operations	9.91			25.18
Distributions of income to shareholder	(11.51		)	(70.94		)
Return of capital to shareholder	(148.55		)	(162.15		)
Net asset value, end of period	$	434.90		$	1,162.24
Net assets, end of period	$	43,489,708		$	116,223,838
Ratios to average net assets:
Expenses*	6.54		%	6.95		%
Net investment income*	15.71		%	25.19		%
Portfolio turnover rate	0		%	0		%
Average debt outstanding	$	34,525,000		$	96,925,000
* Annualized
** Total return amounts presented above are not annualized.

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

In addition to the historical information contained herein, the information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws.  These forward-looking statements reflect the current view of Venture Lending & Leasing VI, Inc. (the “Fund”) with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond the Fund's control.  All statements, other than statements of historical facts included in this report, regarding the strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Fund are forward-looking statements.  When used in this report, the words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.  All forward-looking statements speak only as of the date of this report.  The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome.  The Fund's actual results could differ materially from those suggested by such forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments and competition.  This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Fund's business. The Fund does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

The Fund is 100% owned by Venture Lending & Leasing VI, LLC (the “Company”).  The Fund's shares of Common Stock, at $0.001 par value, were sold to its shareholder, the Company, under a stock purchase agreement.  The Fund has issued 100,000 of the Fund's 10,000,000 authorized shares.  The Company will not make additional capital contributions to the Fund.

The Fund is a financial services company primarily providing financing and advisory services to a variety of carefully selected venture-backed companies primarily located throughout the United States with a focus on growth-oriented companies.  The Fund's portfolio is well diversified and consists of companies in the communications, information services, media, and technology, including software and technology-enabled business services, bio-technology, and medical devices industry sectors, among others.  The Fund's capital is generally used by our portfolio companies to finance acquisitions of fixed assets and/or for working capital.  On June 29, 2010, the Fund completed its first closing of capital contributions, made its first investments, and became a non-diversified, closed-end investment company that elected to be treated as a business development company under the Investment Company Act of 1940.  The Fund elected to be treated for federal income tax purposes as a Regulated Investment Company ("RIC") under the Internal Revenue Code with the filing of its federal corporate income tax return for 2010.  Pursuant to this election, the Fund generally will not have to pay corporate-level taxes on any income it distributes to the Company as dividends, allowing the Company to substantially reduce or eliminate its corporate-level tax liability.

The Fund will seek to meet the ongoing requirements, including the diversification requirements, to qualify as a RIC under the Internal Revenue Code.  If the Fund fails to meet these requirements, it would be taxed as an ordinary corporation on its taxable income for that year (even if that income were distributed to the Company) and all distributions out of its earnings and profits would be taxable to the Members of the Company as ordinary income; thus, such income would be subject to a double layer of tax.  There is no assurance that the Fund will meet the ongoing requirements to qualify as a RIC for tax purposes.

The Fund's investment objective is to achieve superior risk adjusted investment returns.  The Fund seeks to achieve its investment objective by providing debt financing to portfolio companies.  Since inception, the Fund's investing activities have focused primarily on private debt securities.  The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments.  The Fund distributes these warrants to its

26

shareholder upon receipt.  The Fund also has guidelines for the percentages of total assets which will be invested in different types of assets.

The portfolio investments of the Fund primarily consist of debt financing to venture capital backed companies.  The borrower's ability to repay its loans may be adversely impacted by a number of factors, and as a result, the loan may not fully be repaid.  Furthermore, the Fund's security interest in any collateral over the borrower's assets may be insufficient to make up any shortfall in payments.

Transactions with Venture Lending & Leasing V, Inc. (“Fund V”)

The Manager also served as investment manager for Fund V, which was dissolved on August 6, 2014 and no longer funded any commitments. However, prior to the dissolution of Fund V, the Fund's Board of Directors determined that so long as Fund V has capital available to invest in loan transactions with final maturities earlier than December 31, 2015 (the date on which Fund V was planned to be dissolved), the Fund will invest in each portfolio company in which Fund V invests (“Investments”). Initially the amount of each Investment was allocated 50% to the Fund and 50% to Fund V so long as Fund V had capital available to invest. After February 2011, Fund V was no longer permitted to enter into new commitments to borrowers, after June 2014, the Fund was no longer permitted to enter into new commitments to borrowers; however, both the Fund and Fund V are permitted to fund existing commitments. While investing the Fund's capital in the same companies in which Fund V is also investing could provide the Fund with greater diversification and access to larger transactions, it could also result in a slower pace of investment than would be the case if the Fund were investing in companies by itself.

Transactions with Venture Lending & Leasing VII, Inc. (“Fund VII”)

The Manager also serves as investment manager for Fund VII. The Fund's Board of Directors determined that so long as the Fund has capital available to invest in loan transactions with final maturities earlier than December 31, 2020 (the date on which the Fund will be dissolved), the Fund had invested in each portfolio company in which Fund VII invested (“Investments”). Initially the amount of each Investment had been allocated 50% to the Fund and 50% to Fund VII so long as the Fund has capital available to invest. After June 2014, the Fund was no longer permitted to enter into new commitments to borrowers; however, the Fund will be permitted to fund existing commitments. While investing the Fund's capital in the same companies in which Fund VII is also investing could provide the Fund with greater diversification and access to larger transactions, it could also result in a slower pace of investment than would be the case if the Fund were investing in companies by itself.

Critical Accounting Policies

The Manager has identified the most critical accounting estimates upon which the financial statements depend and determined the critical accounting estimates by considering accounting policies that involve the most complex or subjective decisions or assessments. The two critical accounting policies relate to the valuation of loans and treatment of non-accrual loans.

Loans are held at fair value as determined by Management, in accordance with the valuation methods described in the valuation of loans section of Note 2 in the Fund's financial statements (Summary of Significant Accounting Policies).  Critical factors in determining the fair value of a loan include payment history, collateral position, financial strength of the borrower, prospects for the borrower raising future equity rounds, likelihood of sale or acquisition of the borrower, and length of expected holding period of the loan, as well as an evaluation of the general interest rate environment.  The actual value of the loans may differ from Management's estimates, which would affect net change in net assets resulting from operations as well as assets.

Results of Operations - For the three Months Ended March 31, 2016 and 2015

Total investment income for the three months ended March 31, 2016 and 2015 was $3.1 million and $10.3 million, respectively, which primarily consisted of interest on the venture loans outstanding. The remaining income

27

consisted of interest and dividends on the temporary investment of cash, forfeited commitment fees, and fees earned from waivers to loan agreements. The decrease in investment income was due to the decrease in the average loans outstanding from $201.0 million for the three months ended March 31, 2015 to $76.0 million for the three months ended March 31, 2016. This decrease was also because of the decrease in average interest rates from 18.97% for the three months ended March 31, 2015 to 15.46% for the three months ended March 31, 2016. Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including volatility of values ascribed to warrants, and new loans funded during the year and early payoffs.

Management fees for the three months ended March 31, 2016 and 2015 were $0.5 million and $1.3 million, respectively. Management fees are calculated as 2.5 percent of the Fund's total assets. Management fees decreased because assets under management as of March 31, 2016 were lower than assets as of March 31, 2015.

Total interest expense was $0.3 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively. Interest expense decreased primarily due to the decreased average borrowings, which decreased from $96.9 million for the three months ended March 31, 2015 to $34.5 million for the three months ended March 31, 2016. These decreases in interest expense is offset by the increase in interest expense percentage from 3.18% for the three months ended March 31, 2015 to 3.94% for the three months ended March 31, 2016.

Total banking and professional fees were $0.1 million and $0.2 million for the three months ended March 31, 2016 and 2015, respectively. The banking and professional fees were comprised of legal, audit, banking and other professional fees. The decrease was primarily due to lower accounting and legal fees.

Total other operating expenses were less than $0.1 million for the three months ended March 31, 2016 and 2015, respectively.

Net investment income for the three months ended March 31, 2016 and 2015, was $2.2 million and $8.1 million, respectively.

Net realized loss from investments was $1.0 million for the three months ended March 31, 2016 and 2015.

Net change in unrealized loss from investments was $0.2 million and $4.5 million for the three months ended March 31, 2016 and 2015, respectively. The unrealized loss consists of fair market value adjustments to loans.

Net change in unrealized gain (loss) from hedging activities was less than $0.1 million and ($0.1 million) for the three months ended March 31, 2016 and 2015, respectively. The unrealized gain (loss) consists of the unrealized losses from hedging activities. The Fund entered into interest rate swap transactions with Union Bank, N.A and Wells Fargo Bank, N.A. to convert floating rate liabilities to fixed rates, which terminated on September 23, 2014. On September 30, 2014, the Fund entered into interest rate cap transactions with Union Bank, N.A and Wells Fargo Bank, N.A. to cap the floating rate liabilities at a fixed rate (see Note 8 in the Fund's financial statements).

Net increase in net assets resulting from operations for the three months ended March 31, 2016 and 2015 was $1.0 million and $2.5 million, respectively. On a per share basis, the net increase in net assets resulting from operations was $9.91 and $25.18 for the three months ended March 31, 2016 and 2015, respectively.

Liquidity and Capital Resources – March 31, 2016 and December 31, 2015

Total capital contributed to the Fund was $241.5 million, prior to distribution of capital, as of March 31, 2016. Committed capital to the Company at March 31, 2016 was $294.0 million, of which $279.3 million had been called.  The remaining $14.7 million in committed capital as of March 31, 2016 expired in June 2015 as the five year anniversary passed. No further capital can be called.

The Fund established a secured revolving debt facility in an amount of up to $160 million with Union Bank, N.A., Wells Fargo Bank, N.A. and Bank Leumi USA. The facility was extended through March 23, 2017 and the

28

amount available was reduced to $120 million. The size of the facility was further reduced to $36 million and $45 million as of March 31, 2016 and December 31, 2015 respectively. The Fund will continue to reduce the facility because of its limited borrowing base, sufficient cash and cash flow to meet the needs of the unfunded commitments as well as pay expenses without further need to borrow. As of March 31, 2016 and December 31, 2015, the outstanding balance under the facility was $29.6 million and $40.4 million, respectively. Subsequent to the quarter-end, the Fund paid $4.2 million on April 14, 2016 and the outstanding balance under the facility was reduced to $25.4 million.

As of March 31, 2016 and December 31, 2015, 4% and 3%, respectively, of the Fund's assets consisted of cash and cash equivalents.  The Fund invested its assets in venture loans during the three months ended March 31, 2016. No loans were disbursed during the three months ended March 31, 2016.  Net loan amounts outstanding after amortization and fair market adjustment decreased by approximately $26.1 million for the same period.  There were no unexpired, unfunded commitments as of March 31, 2016.

As of	Cumulative Amount Disbursed	Principal Reductions and Fair Market Adjustments	Balance Outstanding - Fair Value	Unexpired Unfunded Commitments
March 31, 2016	$715.4 million	$646.5 million	$68.9 million	—
December 31, 2015	$715.4 million	$620.4 million	$95.0 million	$1.8 million

Because venture loans are privately negotiated transactions, investments in these assets are relatively illiquid.  It is the Fund's experience that not all unfunded commitments will be used by borrowers.

The Fund seeks to meet the requirements to qualify for the special pass-through status available to RICs under the Internal Revenue Code, and thus to be relieved of federal income tax on that part of its net investment income and realized capital gains that it distributes to the Company.  To qualify as a RIC, the Fund must distribute to the Company for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income and net short-term capital gain) (“Distribution Requirement”).  To the extent that the terms of the Fund's venture loans provide for the receipt by the Fund of additional interest at the end of the loan term or provide for the receipt by the Fund of a purchase price for the asset at the end of the loan term (“residual income”), the Fund would be required to accrue such residual income over the life of the loan, and to include such accrued income in its gross income for each taxable year even if it receives no portion of such residual income in that year.  Thus, in order to meet the Distribution Requirement and avoid payment of income taxes or an excise tax on undistributed income, the Fund may be required in a particular year to distribute as a dividend an amount in excess of the total amount of income it actually receives.  Those distributions will be made from the Fund's cash assets, from amounts received through amortization of loans or from borrowed funds.

The Fund has adequate cash reserves and approximately $45.1 million in scheduled receivable payments over the next year.  These amounts are sufficient to meet the declining commitment backlog and operational expenses of the Fund over the next year.  Since the Fund is no longer making new commitments, liquidity demands will continue to decrease.  The Fund does not expect to increase its borrowings as the Fund has sufficient cash on hand and from operations to meet the Fund’s foreseeable cash needs.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

The Fund's business activities contain elements of risk.  The Fund considers the principal types of market risk to be interest rate risk and credit risk.  The Fund considers the management of risk essential to conducting its business and to maintaining profitability.  Accordingly, the Fund's risk management procedures are designed to identify and analyze the Fund's risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.  

29

The Fund manages its market risk by maintaining a portfolio that is diverse by industry, size of investment, stage of development, and borrower. The Fund has limited exposure to public market price fluctuations as the Fund primarily invests in private business enterprises and the Fund distributes all equity investments upon receipt to the Company.

The Fund's investments are subject to market risk based on several factors, including, but not limited to, the borrower's credit history, available cash, support of the borrower's underlying investors, available liquidity, "burn rate", revenue income, security interest, secondary markets for collateral, the size of the loan, term of the loan, and the ability to exit via Initial Public Offering or Merger and Acquisition.

The Fund's sensitivity to changes in interest rates is regularly monitored and analyzed by measuring the characteristics of assets and liabilities. The Fund utilizes various methods to assess interest rate risk in terms of the potential effect on interest income net of interest expense, the value of net assets and the value at risk in an effort to ensure that the Fund is insulated from any significant adverse effects from changes in interest rates. As of March 31, 2016, the outstanding debt balance was $29.6 million with interest based on a weighted averaged interest rate of 0.57%, for which the Fund had an interest rate cap in place at 0.70% on $25.0 million of outstanding debt, leaving the Fund's maximum exposure to interest rate sensitivity at 0.13% on the $25.0 million capped portion of the debt, which the Manager does not believe is material to the financial statements. Additionally, the Fund has interest rate risk on the $4.6 million uncapped portion of the debt facility.

Although the Manager believes that this measure is indicative of the Fund's sensitivity to interest rate changes, it makes estimates to adjust for potential changes in credit quality, size and composition of the balance sheet and other business developments that could affect net income. Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.

Item 4.Controls and Procedures:

Evaluation of Disclosure Controls and Procedures:

As of the end of the period covered by this quarterly report on Form 10-Q, the Fund's chief executive officer and chief financial officer conducted an evaluation of the Fund's disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934).  Based upon this evaluation, the Fund's chief executive officer and chief financial officer concluded that the Fund's disclosure controls and procedures were effective in timely alerting them of any material information relating to the Fund that is required to be disclosed by the Fund in the reports it files or submits under the Securities Exchange Act of 1934.

Changes in Internal Controls:

There were no changes in the Fund's internal controls or in other factors that could materially affect these controls during the period covered by this quarterly report on Form 10-Q.

PART II — OTHER INFORMATION

Item 1.Legal Proceedings

The Fund may become party to certain lawsuits from time to time in the normal course of business.  While the outcome of any legal proceedings cannot at this time be predicted with certainty, the Fund does not expect any such proceedings will have a material effect upon the Fund's financial condition or results of operation. Management is not aware of any pending legal proceedings involving the Fund.  

Item 1A.Risk Factors

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See item 1A - 'Risk Factors' in the Fund's 2015 Annual Report on Form 10-K for a detailed description of the risks attendant to the Fund and its business. There were no material changes to these factors during the three months ended March 31, 2016.

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

Prior to the Fund's commencement of operations on June 29, 2010, the Fund sold 100,000 shares to the Fund's sole shareholder, the Company, for $25,000 in January 2010.  No other shares of the Fund have been sold; however, the Fund received an additional $241.5 million of paid in capital during the period from June 29, 2010 through March 31, 2016 which was used to acquire venture loans and fund operations.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Issues

Not applicable.

Item 5.Other Information

None.

Item 6.Exhibits

Exhibit Number	Description
3(i)	Articles of Incorporation of the Fund as filed with the Maryland Secretary of State on January 11, 2010, incorporated by reference to the Fund's Form 10 filed with the Securities and Exchange Commission on February 9, 2010.
3(ii)	Bylaws of the Fund, incorporated by reference to the Fund's Form 10 filed with the Securities and Exchange Commission on February 9, 2010.
4.1	Form of Purchase Agreement between the Fund and the Company, incorporated by reference to the Fund's Registration Statement on Form 10 filed with the Securities and Exchange Commission on February 9, 2010.
31.1-32.2	Certifications pursuant to The Sarbanes-Oxley Act of 2002 (Rule 13a-14 and Section 1350 Certifications).

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

VENTURE LENDING & LEASING VI, INC.

(Registrant)

By:	/s/ Maurice C. Werdegar	By:	/s/ Martin D. Eng
Maurice C. Werdegar		Martin D. Eng
President and Chief Executive Officer		Chief Financial Officer
Date:	May 13, 2016	Date:	May 13, 2016

32

EXHIBIT INDEX

Exhibit Number	Description
31.1-32.2	Certifications pursuant to The Sarbanes-Oxley Act of 2002.

33