Atel 15 10-Q 2020 Q3 Quarterly report

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 September 30, 2020

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

For the transition period from        to

Commission File number 000-54931

ATEL 15, LLC

(Exact name of registrant as specified in its charter)

California	45-1625956
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)

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

(Address of principal executive offices)

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

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

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

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

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

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

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

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

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

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

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

The number of Limited Liability Company Units outstanding as of October 31, 2020 was 6,542,557.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL 15, LLC

Index

Part I.	Financial Information	3
Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets, September 30, 2020 and December 31, 2019	3
	Statements of Operations for the three and nine months ended September 30, 2020 and 2019	4
	Statements of Changes in Members’ Capital for the three and nine months ended September 30, 2020 and 2019	5
	Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	6
	Notes to the Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 4.	Controls and Procedures	25
Part II.	Other Information	26
Item 1.	Legal Proceedings	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 15, LLC

BALANCE SHEETS

SEPTEMBER 30, 2020 AND DECEMBER 31, 2019

(In Thousands)

	September 30,		December 31,
	2020		2019
	(Unaudited)
ASSETS
Cash and cash equivalents	$	1,013	$	3,027
Accounts receivable, net		71		73
Investment in securities		796		316
Warrants, fair value		22		225
Equipment under operating leases, net		16,389		18,314
Prepaid expenses and other assets		17		21
Total assets	$	18,308	$	21,976
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Due to Managing Member and affiliates	$	46	$	155
Accrued distributions to Other Members		—		1,472
Other		106		138
Non-recourse debt		3,340		4,067
Unearned operating lease income		187		69
Total liabilities		3,679		5,901
Commitments and contingencies
Members’ capital:
Managing Member		—		—
Other Members		14,629		16,075
Total Members’ capital		14,629		16,075
Total liabilities and Members’ capital	$	18,308	$	21,976

See accompanying notes.

3

ATEL 15, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019

(In Thousands Except for Units and Per Unit Data)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Operating revenues:
Leasing and lending activities:
Operating leases revenue, net	$	969	$	1,038	$	2,926	$	3,508
Interest on notes receivable		—		14		—		41
Gain (loss) on sales of operating lease assets		65		(541)		166		(542)
Other revenue		4		12		8		603
Total operating revenues		1,038		523		3,100		3,610
Operating expenses:
Depreciation of operating lease assets		770		872		1,803		2,663
Asset management fees to Managing Member		46		56		115		161
Cost reimbursements to Managing Member and/or affiliates		124		146		403		438
Amortization of initial direct costs		—		23		1		23
Interest expense		29		40		95		103
Professional fees		14		56		116		186
Outside services		27		28		54		70
Taxes on income and franchise fees		17		10		85		141
Storage fees		34		44		98		91
Other expense		43		75		105		180
Total operating expenses		1,104		1,350		2,875		4,056
Net (loss) income from operations		(66)		(827)		225		(446)
Other income (loss):
Unrealized gain (loss) on fair value adjustment for securities		41		(33)		144		(25)
Unrealized (loss) gain on fair value adjustment for warrants		(4)		4		130		(9)
Total other income (loss)		37		(29)		274		(34)
Net (loss) income	$	(29)	$	(856)	$	499	$	(480)
Net (loss) income:
Managing Member	$	—	$	119	$	146	$	239
Other Members		(29)		(975)		353		(719)
	$	(29)	$	(856)	$	499	$	(480)
Net (loss) income per Limited Liability Company Unit (Other Members)	$	—	$	(0.15)	$	0.05	$	(0.11)
Weighted average number of Units outstanding		6,542,557		6,542,557		6,542,557		6,542,557

See accompanying notes.

4

ATEL 15, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019

(In Thousands Except for Units and Per Unit Data)

(Unaudited)

	Three Months Ended September 30, 2020
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance June 30, 2020	6,542,557	$	14,658	$	—	$	14,658
Net loss	—		(29)		—		(29)
Balance September 30, 2020	6,542,557	$	14,629	$	—	$	14,629
	Nine Months Ended September 30, 2020
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2019	6,542,557	$	16,075	$	—	$	16,075
Distributions to Other Members ($0.27 per Unit)	—		(1,799)		—		(1,799)
Distributions to Managing Member	—		—		(146)		(146)
Net income	—		353		146		499
Balance September 30, 2020	6,542,557	$	14,629	$	—	$	14,629
	Three Months Ended September 30, 2019
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance June 30, 2019	6,542,557	$	20,059	$	—	$	20,059
Distributions to Other Members ($0.22 per Unit)	—		(1,471)		—		(1,471)
Distributions to Managing Member	—		—		(119)		(119)
Net (loss) income	—		(975)		119		(856)
Balance September 30, 2019	6,542,557	$	17,613	$	—	$	17,613
	Nine Months Ended September 30, 2019
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2018	6,542,557	$	21,289	$	—	$	21,289
Distributions to Other Members ($0.45 per Unit)	—		(2,957)		—		(2,957)
Distributions to Managing Member	—		—		(239)		(239)
Net (loss) income	—		(719)		239		(480)
Balance September 30, 2019	6,542,557	$	17,613	$	—	$	17,613

See accompanying notes.

5

ATEL 15, LLC

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019

(In Thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2020		2019
Operating activities:
Net income (loss)	$	499	$	(480)
Adjustment to reconcile net income (loss) to cash provided by operating activities:
(Gain) loss on sales of operating lease assets		(166)		542
Depreciation of operating lease assets		1,803		2,663
Amortization of initial direct costs		1		23
Provision for credit losses		—		13
Unrealized (gain) loss on fair value adjustment for securities		(144)		25
Unrealized (gain) loss on fair value adjustment for warrants		(130)		9
Changes in operating assets and liabilities:
Accounts receivable		2		12
Prepaid expenses and other assets		4		2
Due to Managing Member and affiliates		10		22
Accounts payable, other		(32)		(352)
Unearned operating lease income		118		145
Net cash provided by operating activities		1,965		2,624
Investing activities:
Purchase of securities		(3)		(14)
Proceeds from sales of operating lease assets		287		563
Principal payments received on direct financing leases		—		3
Net cash provided by investing activities		284		552
Financing activities:
Borrowings under non-recourse debt		—		4,624
Repayments under non-recourse debt		(727)		(1,389)
Repayments under senior long term debt		—		(2,068)
Distributions to Other Members		(3,271)		(1,486)
Distributions to Managing Member		(265)		(120)
Net cash used in financing activities		(4,263)		(439)
Net (decrease) increase in cash and cash equivalents		(2,014)		2,737
Cash and cash equivalents at beginning of period		3,027		1,716
Cash and cash equivalents at end of period	$	1,013	$	4,453
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	95	$	69
Cash paid during the period for taxes	$	85	$	121
Schedule of non-cash financing transactions:
Distributions payable to Other Members at period-end	$	—	$	1,471
Distributions payable to Managing Member at period-end	$	—	$	119
Conversion of warrants to equity securities	$	333	$	168

See accompanying notes.

6

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL 15, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on March 4, 2011 for the purpose of raising capital and originating equipment financing transactions 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 (“AFS”), a wholly-owned subsidiary of ATEL Capital Group. The Fund may continue until terminated as provided in the ATEL 15, LLC Amended and Restated Limited Liability Company Operating Agreement dated October 28, 2011 ( the ”Operating Agreement”). Contributions in the amount of $500 were received as of May 3, 2011, 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 October 28, 2011.

As of September 30, 2020, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $65.9 million (inclusive of the $500 initial Member’s capital investment) have been received. As of the same date, 6,542,557 Units were issued and outstanding.

The Company is governed by its Operating Agreement. Pursuant to the terms of the Operating Agreement, the Managing Member and/or its affiliates receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 5). The Company is required to maintain reasonable cash reserves for working capital, the repurchases of Units and contingencies. The repurchase of Units is solely at the discretion of the Managing Member.

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

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 nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts may have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results of operations.

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 September 30, 2020, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

7

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Cash and cash equivalents:

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

Use of estimates:

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.

Segment reporting:

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

The primary geographic region in which the Company seeks leasing and financing opportunities is North America. All of the Company’s current operating revenues for the respective three and nine months ended September 30, 2020 and 2019, and long-lived tangible assets as of September 30, 2020 and December 31, 2019 relate to customers domiciled in the United States.

Accounts receivable:

Accounts receivable represent the amounts billed under operating lease which is 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.

Accounts receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with lease outstanding less than 90 days. Based upon management’s judgment, such leases may be placed in 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 receivable is probable. Until such time, revenues on operating leases are recognized on a cash basis. All payments received on amounts billed under operating lease is applied only against outstanding principal balances.

8

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Investment in securities:

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

Purchased securities

The Company’s purchased 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 purchased 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 $796 thousand and $316 thousand of purchased securities at September 30, 2020 and December 31, 2019, respectively. An approximate $333 thousand of the purchased securities balance at September 30, 2020 reflects the fair market value of certain warrants converted to equity securities during the current quarter. Such conversion related to a borrower’s completion of an initial public offering in June 2020. During the respective three months ended September 30, 2020 and 2019, the Company recorded $41 thousand of unrealized gains and $33 thousand of unrealized losses on investment securities with readily determinable fair values. During the respective nine months ended September 30, 2020 and 2019, the Company recorded $144 thousand of unrealized gains and $25 thousand of unrealized losses on investment securities with readily determinable fair values. There were no fair value adjustments on the Company’s remaining investment securities that do not have readily determinable fair values during the three and nine months ended September 30, 2020 and 2019. Cumulatively, a total of $17 thousand was recorded to reduce the value of such investment securities held at September 30, 2020 based on changes in observable prices. The Company had no impairment adjustments on investment securities during the three and nine months ended September 30, 2020 and 2019. There were no sales or dispositions of investment in securities during the three and nine months ended September 30, 2020 and 2019.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet, as determined by the Managing Member. As of September 30, 2020 and December 31, 2019, the estimated fair value of the Company’s portfolio of warrants was $22 thousand and $225 thousand, respectively. During the three months ended September 30, 2020 and 2019, the Company recorded unrealized losses of $4 thousand and unrealized gains of $4 thousand, respectively, on fair valuation of the Company’s portfolio of warrants. During the nine months ended September 30, 2020 and 2019, the Company recorded unrealized gains of $130 thousand and unrealized losses of $9 thousand, respectively, on fair valuation of its warrants. There were net exercises of warrants in exchange for securities totaling $333 thousand during the third quarter of 2020 and $168 thousand during the first quarter of 2019. No other warrant exercises occurred during the nine-month periods ended September 30, 2020 and 2019.

Credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents 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 Company’s cash is temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company.

9

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Accounts and notes receivable represent amounts due from lessees or borrowers in various industries, related to equipment on operating and direct financing leases or notes receivable.

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 Codification (“ASC”) 360-10-35-3, over the periods of the lease terms contained in each asset’s respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43).

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

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

Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis.Uponadoptionof Accounting Standards Update (“ASU”) 2016-02,provisionsfor creditlossesrelatingto operatingleasesare now includedin lease income in theCompany’s financial statements.ProvisionsforcreditlossespriortoJanuary1,2019were previously includedin operating expensesin theCompany’sfinancial statements.

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.

10

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Asset valuation:

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

Per Unit data:

The Company issues only one class of Units, none of which are considered dilutive. Net (loss) income and distributions per Unit is based upon the weighted average number of Other Members Units outstanding during the period.

Fair value:

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

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

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

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

11

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

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

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 adopting this new accounting guidance but does not expect adoption will have a material impact on the Fund’s financial statements and disclosures.

In June 2016, the FASB issued 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 evaluating the standard and expects the update may potentially result in the increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments.

In November 2018, the FASB issued 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 the FASB standards on CECL and hedging. The proposed ASU defers the effective date for CECL to fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years; and defers the effective date for hedging to fiscal periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The ASU was approved on October 16, 2019. In February 2020, the FASB issued ASU 2020-02 and delayed the effective date of Topic 326 until the fiscal year beginning after December 15, 2022.

12

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

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

3. Allowance for credit losses:

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

	Allowance for		Valuation
	Doubtful		Adjustments		Total
	Accounts		on		Allowance for
	Operating Leases		Notes Receivable		Credit Losses
Balance December 31, 2018	$	—	$	67	$	67
Provision for credit losses		—		13		13
Write-off		—		(80)		(80)
Balance September 30, 2019	$	—	$	—	$	—
Balance December 31, 2019	$	—	$	—	$	—
Provision for credit losses		—		—		—
Balance September 30, 2020	$	—	$	—	$	—

4. Equipment under operating leases, net:

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

					Depreciation/
					Amortization
	Balance		Reclassifications		Expense or		Balance
	December 31,		& Additions /		Amortization		September 30,
	2019		Dispositions		of Leases		2020
Equipment under operating leases, net	$	15,159	$	(436)	$	(1,803)	$	12,920
Assets held for sale or lease, net		3,149		315		—		3,464
Initial direct costs, net		6		—		(1)		5
Total	$	18,314	$	(121)	$	(1,804)	$	16,389

For the respective three and nine months ended September 30, 2020 and 2019, the Company did not record any impairment losses.

13

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $770 thousand and $872 thousand for the three months ended September 30, 2020 and 2019, respectively. Depreciation expense on the Company’s equipment totaled $1.8 million and $2.7 million for the nine months ended September 30, 2020 and 2019, respectively. Both three-and-nine months periods ended September 30, 2020 include $276 thousand of additional depreciation recorded to reflect year-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 were no such additional adjustments to depreciation recorded during the three and nine months ended September 30, 2019.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2011 through 2015.

Operating leases:

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

	Balance						Balance
	December 31,				Reclassifications		September 30,
	2019		Additions		or Dispositions		2020
Marine vessel	$	19,410	$	—	$	—	$	19,410
Manufacturing		6,437		—		—		6,437
Transportation, rail		5,094		—		—		5,094
Facility – other		5,084		—		—		5,084
Agriculture		2,112		—		(1,698)		414
Construction		1,775		—		—		1,775
Other		1,158		—		—		1,158
		41,070		—		(1,698)		39,372
Less accumulated depreciation		(25,911)		(1,803)		1,262		(26,452)
Total	$	15,159	$	(1,803)	$	(436)	$	12,920

The average estimated residual value for assets on operating leases was 18% of the assets’ original cost at September 30, 2020 and 23% December 31, 2019, respectively.

As of September 30, 2020, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating
	Leases
Three months ending December 31, 2020	$	432
Year ending December 31, 2021		2,037
2022		1,903
2023		1,175
2024		254
2025		16
	$	5,817

14

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2020, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category	Useful Life
Transportation, rail	35 – 50
Marine vessel	20 – 30
Manufacturing	10 – 15
Agriculture	7 – 10
Construction	7 – 10
Facility - other	7 – 10
Other	7 – 10

5. 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.

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

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

The Managing Member and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement, during the three and nine months ended September 30, 2020 and 2019 as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Administrative costs reimbursed to Managing Member and/or affiliates	$	124	$	146	$	403	$	438
Asset management fees to Managing Member		46		56		115		161
	$	170	$	202	$	518	$	599

15

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

6. Non-recourse debt:

At September 30, 2020, non-recourse debt consists of a note payable to financial institutions. The note payments are due in monthly installments. Interest on the note is 3.40% per annum. The note is secured by assignments of lease payments and pledges of assets. At September 30, 2020, gross operating lease rentals totaled approximately $3.5 million over the remaining lease terms and the carrying value of the pledged assets is $7.7 million. The note matures in 2024.

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

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

	Principal		Interest		Total
Three months ending December 31, 2020	$	231	$	28	$	259
Year ending December 31, 2021		946		91		1,037
2022		979		58		1,037
2023		1,012		25		1,037
2024		172		1		173
Total	$	3,340	$	203	$	3,543

The non-recourse debt represents half of a $9.2 million non-recourse promissory note executed on May 20, 2019. The non-recourse promissory note was split evenly between the Fund and its affiliate, ATEL 14, LLC, and was used to pay off the senior long-term debt. The non-recourse promissory note is to be serviced by the cash flows generated under a renewed bareboat charter.

7. Borrowing facilities:

The Company was a party with ATEL Capital Group and certain subsidiaries, and affiliated funds in a $75 million revolving credit facility with a syndicate of financial institutions as lenders. The credit facility was renewed during the fourth quarter of 2019, whereupon, the Company ceased to be a participant.

8. Commitments:

At September 30, 2020, there were no commitments to purchase lease assets or to fund investments in notes receivable.

16

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

9. Members’ capital:

A total of 6,542,557 Units were issued and outstanding at September 30, 2020 and December 31, 2019, including the 50 Units issued to the initial Member (Managing Member). The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Member.

Distributions to the Other Members for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands except Units and per Unit data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Distributions declared	$	—	$	1,471	$	1,799	$	2,957
Weighted average number of Units outstanding		6,542,557		6,542,557		6,542,557		6,542,557
Weighted average distributions per Unit	$	—	$	0.22	$	0.27	$	0.45

10. 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 September 30, 2020 and December 31, 2019, the Company’s investment in securities and warrants were measured on a recurring basis.

The measurement methodology is as follows:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, and a risk free interest rate for the term(s) of the warrant exercise(s). As of September 30, 2020 and December 31, 2019, the calculated fair value of the Fund’s warrant portfolio approximated $22 thousand and $225 thousand, respectively. Such valuations are classified within Level 3 of the valuation hierarchy.

The fair value of warrants that were accounted for on a recurring basis and classified as Level 3 are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Fair value of warrants at beginning of period	$	359	$	195	$	225	$	376
Unrealized (loss) gain on fair market valuation of warrants		(4)		4		130		(9)
Warrants converted to securities		(333)		—		(333)		(168)
Fair value of warrants at end of period	$	22	$	199	$	22	$	199

17

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Investment securities (recurring)

The Company’s investment 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 September 30, 2020 and December 31, 2019, the fair value of such investment securities totaled $755 thousand and $70 thousand respectively.

The fair value of investment securities that were accounted for on a recurring basis as of the three and nine months ended September 30, 2020 and 2019 classified as Level 1 are as follows (in thousands):

		Three Months Ended			Nine Months Ended
		September 30,			September 30,
		2020		2019		2020		2019
Fair value of securities at the beginning of period	$	381	$	95	$	70	$	127
Conversion of previously held private securities		—		—		53		—
Warrants converted to securities		333		—		333		—
Unrealized gain (loss) on fair market valuation of securities		41		(33)		299		(65)
Fair value of investment securities at the end of period	$	755	$	62	$	755	$	62

The following tables summarize the valuation techniques and significant unobservable inputs used for the Company’s recurring and non-recurring fair value calculation/adjustments categorized as Level 3 in the fair value hierarchy at September 30, 2020 and December 31, 2019:

September 30, 2020
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.05 - $17.97 ($3.20)
			Exercise price	$0.10 - $160.05 ($6.63)
			Time to maturity (in years)	1.23 - 3.60 (3.17)
			Risk-free interest rate	0.12% - 0.21% (0.19%)
			Annualized volatility	33.63% - 121.45% (50.77%)

December 31, 2019
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.12- $12.92 ($0.38)
			Exercise price	$0.10 - $160.05 ($0.41)
			Time to maturity (in years)	1.98 - 6.08 (2.20)
			Risk-free interest rate	1.58% - 1.73% (1.59%)
			Annualized volatility	37.97% - 109.07% (48.35%)

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

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

18

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

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.

Investment in securities

The Company's purchased securities registered for public sale with readily determinable fair value are carried at fair value. These investment securities are valued based on their quoted market price.

Non-recourse debt

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

Commitments and Contingencies

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

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

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at September 30, 2020 and December 31, 2019 (in thousands):

	Fair Value Measurements at September 30, 2020
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	1,013	$	1,013	$	—	$	—	$	1,013
Investment in securities		755		755		—		—		755
Warrants, fair value		22		—		—		22		22
Financial liabilities:
Non-recourse debt		3,340		—		—		3,459		3,459

	Fair Value Measurements at December 31, 2019
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	3,027	$	3,027	$	—	$	—	$	3,027
Investment in securities		70		70		—		—		70
Warrants, fair value		225		—		—		225		225
Financial liabilities:
Non-recourse debt		4,067		—		—		4,115		4,115

19

ATEL 15, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

11. Global health emergency:

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

20

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 15, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on March 4, 2011 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 Fund was granted effectiveness by the Securities and Exchange Commission as of October 28, 2011.

As of September 30, 2020, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $65.9 million (inclusive of the $500 initial Member’s capital investment) had been received. As of the same date, 6,542,557 Units were issued and outstanding.

Results of Operations

The three months ended September 30, 2020 versus the three months ended September 30, 2019

The Company had net losses of $29 thousand and $856 thousand for the three months ended September 30, 2020 and 2019, respectively. The results for the third quarter of 2020 reflect an increase in total operating revenues, a decrease in total operating expenses, and an increase in other income when compared to the prior year period.

Total operating revenues were $1.0 million and $523 thousand for the three months ended September 30, 2020 and 2019, respectively. The $515 thousand, or 98%, period over period increase in operating revenues was primarily due to a $606 thousand positive change in gains and losses recognized on sales of operating lease assets partially offset by a $69 thousand decline in operating lease revenues. The favorable variance in gains/losses recognized on sales of operating lease assets was attributable to the change in mix of assets sold. During the prior year quarter, the Fund incurred $540 thousand of losses on sales of railroad equipment. The decrease in operating lease revenues was primarily due to continued run-off and disposition of lease assets.

Total operating expenses were $1.1 million and $1.4 million for the three months ended September 30, 2020 and 2019, respectively. The $246 thousand, or 18%, reduction in operating expenses was primarily due to decreases in depreciation expense, professional fees, other expense, amortization of initial direct costs, and costs reimbursed to the Manager.

The net decline in depreciation expense was $102 thousand. Such decline was comprised of a $378 thousand decrease resulting from a growth in assets fully depreciated to their residual values, run-off and sales; offset by $276 thousand of additional depreciation recorded to reflect year-to-date changes in estimated residual values of certain equipment generating revenue under month-to-month extensions. Professional fees decreased by $42 thousand primarily due to lower audit-related billings; and, other expense was reduced by $32 thousand primarily due to lower freight and shipping, and railcar maintenance costs. In addition, amortization of initial direct costs declined by $23 thousand as such costs have been substantially amortized; and costs reimbursed to the Manager decreased by $22 thousand due to lower allocated costs reflective of the Fund’s declining assets.

21

During the current quarter, the Company also recorded other income totaling $37 thousand related to the fair valuation of its investment securities and warrants. This compares to other loss of $29 thousand recorded on such assets during the prior year period. An approximate $33 thousand of the current quarter unrealized gains reflects the fair market value of certain warrants converted to equity securities during the current quarter subsequent to a borrower’s completion of an initial public offering in June 2020.

The nine months ended September 30, 2020 versus the nine months ended September 30, 2019

The Company had net income of $499 thousand and a net loss of $480 thousand for the nine months ended September 30, 2020 and 2019, respectively. The results for the first nine months of 2020 reflect decreases in both revenues and operating expenses, and an increase in other income when compared to the prior year period.

Total operating revenues were $3.1 million and $3.6 million for the nine months ended September 30, 2020 and 2019, respectively. The $510 thousand, or 14%, period over period decline in operating revenues was primarily due to decreases in other revenue and operating lease revenues partially offset by a favorable change in gains recorded on sales of operating lease assets.

Other revenue declined by $595 thousand as the prior year amount included an approximate $584 thousand of deferred maintenance fees for excess wear and tear on certain equipment returned during the second quarter of 2019. Operating lease revenues decreased by $582 thousand primarily due to continued run-off and disposition of lease assets since September 30, 2019. As a partial offset to such decreases, the Company recorded gains on sales of operating lease assets totaling $166 thousand as compared to $542 thousand of losses during the prior year period. The favorable variance is attributable to a change in the mix of assets sold.

Total operating expenses were $2.9 million and $4.1 million for the nine months ended September 30, 2020 and 2019, respectively. The $1.2 million, or 29%, period over period reduction in expenses was primarily due to decreases in depreciation expense, other expense, professional fees, taxes on income and franchise fees, asset management fees and costs reimbursed to the Manager.

Depreciation expense was reduced by $860 thousand. Such reduction was comprised of a $1.1 million decrease resulting from a growth in assets fully depreciated to their residual values, run-off and sales; offset by $276 thousand of additional depreciation recorded to reflect year-to-date changes in estimated residual values of certain equipment generating revenue under month-to-month extensions. Other expense decreased by $75 thousand primarily due to lower freight and shipping, railcar maintenance and insurance costs; and professional fees decreased by $70 thousand as a result of lower audit-related and tax services billings. In addition, taxes on income and franchise fees decreased by $56 thousand due to a lower estimated tax liability. Asset management fees was lower by $46 thousand due to the decline in managed assets and related rents; and costs reimbursed to the Manager decreased by $35 thousand due to lower allocated costs reflective of the Fund’s declining assets.

During the first nine months of 2020, the Company recorded other income totaling $274 thousand related to the fair valuation of its investment securities and warrants. This compares to other loss of $34 thousand recorded during the prior year period. An approximate $158 thousand and $137 thousand of unrealized gains on the fair valuation of the Fund’s investment in securities and warrants, respectively, reflects the fair value of certain warrants converted to equity securities during the third quarter of 2020 following a borrower’s completion of an initial public offering in June 2020.

Capital Resources and Liquidity

At September 30, 2020 and December 31, 2019, the Company’s cash and cash equivalents totaled $1.0 million and $3.0 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 distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

22

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 were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements.

Cash Flows

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

	Nine Months Ended
	September 30,
	2020		2019
Net cash provided by (used in):
Operating activities	$	1,965	$	2,624
Investing activities		284		552
Financing activities		(4,263)		(439)
Net (decrease) increase in cash and cash equivalents	$	(2,014)	$	2,737

During the nine months ended September 30, 2020 and 2019, the Company’s primary source of liquidity was cash flow from its portfolio of operating lease contracts. In addition, during the same respective periods, the Company received $287 thousand and $563 thousand of proceeds from sales of lease assets. Also, during the first half of 2019, the Company obtained $4.6 million of borrowings under non-recourse debt. There were no such borrowings in 2020.

During the nine months ended September 30, 2020 and 2019, cash was primarily used to pay distributions, and to repay borrowings under non-recourse debt. Distributions paid to the Other Members and the Managing Member totaled $3.5 million and $1.6 million for the respective nine months ended September 30, 2020 and 2019; and, cash used to reduce non-recourse debt totaled $727 thousand and $1.4 million for the same respective periods. In addition, during the prior year period, repayments were made to settle the $2.1 million outstanding balance on the senior long term debt. Cash was also used to pay invoices related to management fees and expenses, and other payables for both nine-month periods.

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 January 2012. Additional distributions have been made consistently through September 30, 2020.

Cash distributions were made by the Fund to Unitholders of record as of June 30, 2020 and paid through July 31, 2020. Distributions may be characterized for tax, accounting and economic purposes as a return of capital, a return on capital (including escrow interest) or a portion of each. Generally, the portion of each cash distribution by a company which exceeds its net income for the fiscal period would constitute a return of capital.

The Fund is required by the terms of its Operating Agreement to distribute the net cash flow generated by its investments in certain minimum amounts during the Reinvestment Period before it can reinvest its operating cash flow in additional portfolio assets. See the discussion in the ATEL 15, LLC Prospectus dated October 28, 2011 (“Prospectus”) under “Income, Losses and Distributions — Reinvestment.” Accordingly, the amount of cash flow from Fund investments distributed to Unitholders will not be available for reinvestment in additional portfolio assets. The cash distributions were based on current and anticipated gross revenues from the leases and loans acquired. During the Fund’s acquisition and operating stages, the Fund may incur short term borrowing to fund regular distributions of such gross revenues to be generated by newly acquired transactions during their respective initial fixed terms. As such, all Fund periodic cash distributions made during these stages have been, and are expected in the future to be, based on the Fund’s actual and anticipated gross revenues to be generated from the binding initial terms of the leases and loans acquired as they provide free cash balances. Further, distributions are declared and distributed at the discretion of the managing member.

As net cash flows from operations are anticipated to fluctuate during the remaining life of the Fund, distributions will only be paid on an annual basis beginning with March of 2018.

23

The following table summarizes distribution activity for the Fund from inception through September 30, 2020 (in thousands except for Units and Per Unit Data):

														Total		Weighted
		Return of				Distribution				Total				Distribution		Average Units
Distribution Period (1)	Paid	Capital				of Income				Distribution				per Unit(2)		Outstanding(3)
Monthly and quarterly distributions
Oct 2011 – Dec 2011 (Distribution of escrow interest)	Feb 2012 – Jun 2012	$	—			$	—			$	—			$	n/a	n/a
Jan 2012 – Nov 2012	Feb 2012 – Dec 2012		1,173				—				1,173				0.79	1,476,249
Dec 2012 – Nov 2013	Jan 2013 – Dec 2013		4,191				—				4,191				0.88	4,758,784
Dec 2013 – Nov 2014	Jan 2014 – Dec 2014		5,952				—				5,952				0.90	6,620,428
Dec 2014 – Nov 2015	Jan 2015 – Dec 2015		5,951				—				5,951				0.90	6,612,560
Dec 2015 – Nov 2016	Jan 2016 – Dec 2016		5,934				—				5,934				0.90	6,606,921
Dec 2016 – Nov 2017	Jan 2017 – Dec 2017		5,892				—				5,892				0.90	6,567,800
Dec 2017 – Nov 2018	Jan 2018 – Dec 2018		1,918				—				1,918				0.29	6,554,450
Dec 2018 – Nov 2019	Jan 2019 – Dec 2019		2,958				—				2,958				0.45	6,542,557
Dec 2019 – Jun 2020	Jan 2020 – Jul 2020		3,271				—				3,271				0.50	6,542,557
		$	37,240			$	—			$	37,240			$	6.51
Source of distributions
Lease and loan payments and sales proceeds received		$	37,240	100.00	%	$	—	0.00	%	$	37,240	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	%
		$	37,240	100.00	%	$	—	0.00	%	$	37,240	100.00	%

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

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

(3) Balances shown represent weighted average units for the period from January 1, 2012 to November 30, 2012, December 1, 2012 to November 30, 2013, December 1, 2013 to November 30, 2014, December 1, 2014 to November 30, 2015, December 1, 2015 to November 30, 2016, December 1, 2016 to November 30, 2017, December 1, 2017 to November 30, 2018, December 1, 2018 to November 30, 2019, December 1, 2019 to June 30, 2020, respectively.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At September 30, 2020, there were no commitments to purchase lease assets or to fund investments in notes receivable.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Note 2 Summary of Significant Accounting Policies.

Critical Accounting Policies and Estimates

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

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

Item 4. Controls and procedures.

Evaluation of disclosure controls and procedures

The Company’s Managing Member’s Chief Executive Officer, and Executive Vice President and Chief Financial Officer and Chief Operating Officer (“Management”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) 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 September 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

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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. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a) Documents filed as a part of this report

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

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

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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: November 16, 2020

ATEL 15, LLC

(Registrant)

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

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