Document_And_Entity_Informatio
Document And Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Registrant Name | 'ATEL Growth Capital Fund 8, LLC | ' |
Entity Central Index Key | '0001537069 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Units Outstanding | ' | 862,551 |
Balance_Sheets
Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
ASSETS | ' | ' |
Cash and cash equivalents | $3,989,932 | $254,739 |
Accounts receivable | 2,136 | 6,664 |
Notes receivable, net | 1,951,512 | 1,313,139 |
Fair value of warrants | 37,370 | 24,412 |
Prepaid expenses and other assets | 10,416 | ' |
Total assets | 5,991,366 | 1,598,954 |
Accounts payable and accrued liabilities: | ' | ' |
Managing Member | 14,619 | 3,315 |
Affiliates | 887,549 | 679,188 |
Accrued distributions to Other Members | 131,573 | 20,868 |
Other | 30,002 | 9 |
Deposits due borrowers | ' | 32,000 |
Total liabilities | 1,063,743 | 735,380 |
Commitments and contingencies | ' | ' |
Members' capital: | ' | ' |
Managing Member | ' | ' |
Other Members | 4,927,623 | 863,574 |
Total Members' capital | 4,927,623 | 863,574 |
Total liabilities and Members' capital | $5,991,366 | $1,598,954 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Revenues: | ' | ' |
Notes receivable interest income, including amortization of net note origination costs and discounts | $52,727 | $149,331 |
Gain on early termination of notes receivable | 46,452 | 46,452 |
Gain on sales or dispositions of securities | 49,911 | 49,911 |
Interest income | 327 | 327 |
Unrealized (loss) gain on fair valuation of warrants | -1,397 | 760 |
Other | 5,096 | 11,477 |
Total revenues | 153,116 | 258,258 |
Expenses: | ' | ' |
Acquisition expense | 38,019 | 185,096 |
Cost reimbursements to affiliates | 16,326 | 41,659 |
Asset management fees to Managing Member | 4,282 | 10,820 |
Professional fees | 4,147 | 8,456 |
Outside services | 5,662 | 14,330 |
Taxes on income and franchise fees | ' | 1,600 |
Bank charges | 2,150 | 6,486 |
Other | 10,241 | 17,405 |
Total operating expenses | 80,827 | 285,852 |
Net income (loss) | 72,289 | -27,594 |
Net income (loss): | ' | ' |
Managing Member | 62,238 | 88,192 |
Other Members | 10,051 | -115,786 |
Net income (loss) | $72,289 | ($27,594) |
Net income (loss) per Limited Liability Company Unit (Other Members) | $0.01 | ($0.22) |
Weighted average number of Units outstanding | 723,893 | 526,487 |
Statements_of_Changes_in_Membe
Statements of Changes in Members' Capital (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
Beginning Balance | ' | $863,574 | $500 |
Capital contributions | 1,353,340 | 6,039,550 | 1,872,760 |
Rescissions of Units | -385 | -5,320 | ' |
Distributions to Other Members | -523,676 | -757,297 | -23,550 |
Distributions to Managing Member | ' | -88,192 | -2,617 |
Net (loss) income | 72,289 | -27,594 | -15,231 |
Ending Balance | 4,927,623 | 4,927,623 | 863,574 |
Other Members [Member] | ' | ' | ' |
Beginning Balance (in units) | ' | 187,326 | 50 |
Beginning Balance | ' | 863,574 | ' |
Capital contributions | ' | 6,039,550 | 1,872,760 |
Capital contributions (in units) | ' | 603,955 | 187,276 |
Rescissions of Units | ' | -5,320 | ' |
Rescissions of Units (in units) | ' | -550 | ' |
Distributions to Other Members | ' | -757,297 | -23,550 |
Net (loss) income | ' | -115,786 | -17,348 |
Ending Balance (in units) | 790,731 | 790,731 | 187,326 |
Ending Balance | 4,927,623 | 4,927,623 | 863,574 |
Managing Member [Member] | ' | ' | ' |
Beginning Balance | ' | ' | 500 |
Distributions to Managing Member | ' | -88,192 | -2,617 |
Net (loss) income | ' | 88,192 | 2,117 |
Selling Commissions To Affiliates [Member] | ' | ' | ' |
Organization and offering costs | ' | -543,065 | -168,503 |
Selling Commissions To Affiliates [Member] | Other Members [Member] | ' | ' | ' |
Organization and offering costs | ' | -543,065 | -168,503 |
Syndication Costs [Member] | ' | ' | ' |
Organization and offering costs | ' | -554,033 | -799,785 |
Syndication Costs [Member] | Other Members [Member] | ' | ' | ' |
Organization and offering costs | ' | ($554,033) | ($799,785) |
Statements_of_Changes_in_Membe1
Statements of Changes in Members' Capital (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
Statements of Changes in Members' Capital [Abstract] | ' | ' | ' |
Distributions to Other Members, per unit | $0.72 | $1.44 | $1.13 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Operating activities: | ' | ' |
Net income (loss) | $72,289 | ($27,594) |
Adjustment to reconcile net income (loss) to cash provided by operating activities: | ' | ' |
Accretion of note discount - warrants | -2,309 | -5,898 |
Amortization of net note origination costs | 3,998 | 7,461 |
Gain on early termination of notes receivable | -46,452 | -46,452 |
Gain on sales or dispositions of securities | -49,911 | -49,911 |
Unrealized loss (gain) on fair valuation of warrants | 1,397 | -760 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 3,589 | 4,528 |
Prepaid expenses and other assets | -5,319 | -10,416 |
Accounts payable, Managing Member | ' | -996 |
Accounts payable, other | 29,999 | 29,993 |
Accrued liabilities, affiliates | -127,726 | -50,658 |
Deposits due borrowers | -32,000 | -32,000 |
Unearned fee income related to notes receivable | 569 | 6,469 |
Net cash used in operating activities | -151,876 | -176,234 |
Investing activities: | ' | ' |
Advance payments | -24,412 | -53,832 |
Proceeds from early termination of notes receivable | 341,880 | 341,880 |
Proceeds from sales of warrants | 54,758 | 54,758 |
Payments of note origination costs | -9,183 | -20,117 |
Note receivable advances | -474,377 | -1,272,447 |
Principal payments received on notes receivable | 154,211 | 387,518 |
Net cash provided by (used in) investing activities | 42,877 | -562,240 |
Financing activities: | ' | ' |
Capital contributions | 1,353,340 | 6,039,550 |
Rescissions of capital contributions | -385 | -5,320 |
Net cash provided by financing activities | 684,464 | 4,473,667 |
Net increase in cash and cash equivalents | 575,465 | 3,735,193 |
Cash and cash equivalents at beginning of period | 3,414,467 | 254,739 |
Cash and cash equivalents at end of period | 3,989,932 | 3,989,932 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid during the period for taxes | ' | 1,600 |
Other Members [Member] | ' | ' |
Financing activities: | ' | ' |
Distributions to Members | -492,931 | -646,590 |
Schedule of non-cash investing and financing transactions: | ' | ' |
Distributions payable to Members at period-end | 131,573 | 131,573 |
Managing Member [Member] | ' | ' |
Financing activities: | ' | ' |
Distributions to Members | -58,818 | -75,891 |
Schedule of non-cash investing and financing transactions: | ' | ' |
Payables to Managing Member and affiliates at period-end (syndication costs) | 882,482 | 882,482 |
Distributions payable to Members at period-end | 14,619 | 14,619 |
Selling Commissions To Affiliates [Member] | ' | ' |
Financing activities: | ' | ' |
Organization and offering costs | -30,666 | -476,954 |
Syndication Costs [Member] | ' | ' |
Financing activities: | ' | ' |
Organization and offering costs | ($86,076) | ($361,128) |
Organization_and_Limited_Liabi
Organization and Limited Liability Company Matters | 9 Months Ended |
Sep. 30, 2013 | |
Organization and Limited Liability Company Matters [Abstract] | ' |
Organization and Limited Liability Company Matters | ' |
1. Organization and Limited Liability Company matters: | |
ATEL Growth Capital Fund 8, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on December 8, 2011 for the purpose of providing financing for the acquisition of equipment and other goods and services used by emerging growth companies and established privately held companies without publicly traded securities, and for providing other forms of financing for, and to acquire equity interests and warrants and rights to purchase equity interests in such companies. The Fund may continue until it is terminated in accordance with the ATEL Growth Capital Fund 8, LLC limited liability company operating agreement dated December 13, 2011 (the “Operating Agreement”). The Managing Member of the Company is AGC 8 Managing Member, LLC (the “Managing Member” or “Manager”), a Nevada limited liability corporation. Contributions in the amount of $500 were received as of December 31, 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 August 20, 2012. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company units (Units) to the public reach $75,000,000. As of November 14, 2012, subscriptions for the minimum number of Units (120,000, representing $1,200,000), excluding subscriptions from Pennsylvania investors, had been received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations. Pennsylvania subscriptions are subject to a separate escrow and are released to the Fund only at such time as total subscription proceeds received by the Fund from all subscribers, including the escrowed Pennsylvania subscriptions, equal to not less than $3,750,000 in gross proceeds. Total contributions to the Fund exceeded $3,750,000 on March 13, 2013, at which time a request was processed to release the Pennsylvania escrowed amounts. | |
As of September 30, 2013, cumulative contributions, net of rescissions and related distributions paid, totaling $7,907,310 (inclusive of the $500 initial Member’s capital investment) have been received. As of such date, a total of 790,731 Units were issued and outstanding. The Fund is actively raising capital and, as of October 31, 2013, has received cumulative contributions, net of rescissions and related distributions paid, in the amount of $8,625,510 (inclusive of the $500 initial Member’s capital investment). | |
The Fund, or Managing Member on behalf of the Fund, has and will continue to incur costs in connection with the organization, registration and issuance of the limited liability company units (Units). The amount of such costs to be borne by the Fund is limited by certain provisions of the Operating Agreement. | |
The Company’s principal objectives are to invest in a diversified portfolio of investments that will (i) preserve, protect and return the Company’s invested capital; (ii) generate regular cash distributions to Unit holders, with any balance remaining after required minimum distributions to be used to purchase additional investments during the Reinvestment Period (ending six calendar years after the completion of the Company’s public offering of Units), (iii) provide additional distributions to Unit holders from any proceeds from sales of Equity interests and (iv) provide total cash distributions to Unit holders equal to a desirable rate of return on their investment capital. The Company is governed by the Operating Agreement. | |
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, 2012, filed with the Securities and Exchange Commission. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 | |
Summary of Significant Accounting Policies [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
2. Summary of Significant Accounting Policies: | |
Basis of presentation: | |
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year. | |
In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30, 2013, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements. | |
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. | |
Segment reporting: | |
The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. | |
The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its financing business operates as one reportable segment because: a) the Company measures profit and loss at the portfolio assets level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment financing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment financing; and e) the Company has not chosen to organize its business around geographic areas. | |
The primary geographic region in which the Company seeks financing opportunities is North America. Currently, 100% of the Company’s operating revenues are from customers domiciled in North America. | |
Investment in securities: | |
From time to time, the Company may purchase securities of its borrowers or receive warrants and rights to purchase securities in connection with its lending arrangements. | |
Purchased securities | |
Purchased securities (primarily preferred stocks) are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. 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. Management has concluded that there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the instruments and that it is not practicable to estimate the fair value of the investment because of its illiquidity. | |
Warrants | |
Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried at an estimated fair value on the balance sheet at the end of the period, as determined by the Managing Member. At September 30, 2013 and December 31, 2012, the Managing Member estimated the fair value of the warrants to be $37,370 and $24,412, respectively. See Note 9 for further discussion. | |
Per Unit data: | |
Net income (loss) per Unit is based upon the weighted average number of Other Members Units outstanding during the period. | |
Recent accounting pronouncements | |
Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company. | |
Notes_Receivable_Net
Notes Receivable, Net | 9 Months Ended | ||
Sep. 30, 2013 | |||
Notes Receivables, Net [Abstract] | ' | ||
Notes Receivable, Net | ' | ||
3. Notes receivable, net: | |||
The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. The terms of the notes receivable are from 31 to 42 months and bear interest at implicit or stated rates ranging from 11.29% to 14.30%. The notes are secured by the equipment financed. The notes mature in 2016. There were neither impaired notes nor notes placed in non-accrual status as of September 30, 2013 and December 31, 2012. | |||
As of September 30, 2013, the minimum future payments receivable are as follows: | |||
Three months ending December 31, 2013 | $ | 176,252 | |
Year ending December 31, 2014 | 806,323 | ||
2015 | 823,117 | ||
2016 | 558,890 | ||
2,364,582 | |||
Less: portion representing unearned interest income, net | -406,682 | ||
Less: advance payments | -6,388 | ||
Notes receivable, net | $ | 1,951,512 | |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Related Party Transactions [Abstract] | ' | |||||
Related Party Transactions | ' | |||||
4. Related party transactions: | ||||||
The terms of the Operating Agreement provide that the Managing Member and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company. | ||||||
The Operating Agreement allows for the reimbursement of costs incurred by the Managing Member and/or affiliates for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and equipment financing 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. | ||||||
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. | ||||||
During the three and nine months ended September 30, 2013, the Managing Member and/or affiliates earned commissions, fees and reimbursements pursuant to the Operating Agreement as follows: | ||||||
For the Three Months Ended | For the Nine Months Ended | |||||
30-Sep-13 | 30-Sep-13 | |||||
Selling commissions, equal to 9% of the selling price of the Limited | $ | 121,801 | $ | 543,065 | ||
Liability Company Units, deducted from Other Members' capital | ||||||
Reimbursement of other syndication costs to Managing Member | 157,733 | 554,033 | ||||
and/or affiliates, deducted from Other Members' capital | ||||||
Administrative costs reimbursed to Managing Member and/or affiliates | 16,326 | 41,659 | ||||
Asset management fees to Managing Member | 4,282 | 10,820 | ||||
Acquisition costs and note origination fees paid to Managing Member | 47,202 | 205,213 | ||||
$ | 347,344 | $ | 1,354,790 | |||
Syndication_Costs
Syndication Costs | 9 Months Ended |
Sep. 30, 2013 | |
Syndication Costs [Abstract] | ' |
Syndication Costs | ' |
5. Syndication costs: | |
Syndication costs are reflected as a reduction to Members’ capital as such costs are netted against the capital raised. The amount shown is primarily comprised of selling commissions as well as fees pertaining to the organization of the Fund, document preparation, regulatory filing fees, and accounting and legal costs. Syndication costs totaled $2,065,386 for the period from December 8, 2011 (Date of Inception) through September 30, 2013. | |
The Operating Agreement places a limit for cost reimbursements to the Managing Member and/or affiliates. When added to selling commissions, such cost reimbursements may not exceed a total equal to 15% of all offering proceeds. As of September 30, 2013, the Company had recorded an approximate $880,000 of syndication costs in excess of the limitation. The limitation on the amount of syndication costs pursuant to the Operating Agreement is determined on the date of termination of the offering. At such time, the Manager guarantees repayment of any excess syndication costs (above the limitation) which it may have collected from the Company, which guarantee is without recourse or reimbursement by the Fund. | |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2013 | |
Commitments [Abstract] | ' |
Commitments | ' |
6. Commitments: | |
At September 30, 2013, there were commitments to fund investments in notes receivable totaling $3,127,553. These amounts represent contract awards which may be canceled by the prospective borrower/investee or may not be accepted by the Company. | |
Guarantees
Guarantees | 9 Months Ended |
Sep. 30, 2013 | |
Guarantees [Abstract] | ' |
Guarantees | ' |
7. Guarantees: | |
The Company enters into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, based upon the Manager’s experience, there have not been any prior claims or losses pursuant to these types of contracts and the expectation of risk of loss is remote. | |
The Managing Member knows of no facts or circumstances that would make the Company’s contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Company’s similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability in accordance with GAAP. | |
Members_Capital
Members' Capital | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Members' Capital [Abstract] | ' | |||||
Members' Capital | ' | |||||
8. Members’ Capital: | ||||||
A total of 790,731 and 187,326 Units were issued and outstanding at September 30, 2013 and December 31, 2012, respectively. The Fund is authorized to issue up to 7,500,000 Units in addition to the Units issued to the initial Member (50 Units). | ||||||
From the commencement of the Fund until the initial closing date, as defined in the Operating Agreement, the Company’s net income and net losses are allocated 100% to the Manager. Commencing with the initial closing date, net income and net losses are allocated 100% to the Members. An amount equal to 5% of all Distributions of Cash Available for Distribution and Net Disposition Proceeds will be allocated to the Manager as the carried interest. An amount equal to (i) an additional 5% of all Distributions from Cash Available for Distribution and 1% of all Distributions of Net Disposition Proceeds will be paid to the Manager as a promotional interest until investors have received total distributions in amounts equal to their Capital Contributions plus an amount equal to a priority return of 8% per annum as defined in the Operating Agreement; and (ii) then 15% of all subsequent distributions will be allocated to the Manager as a promotional interest. Distributions not allocated to the Manager as carried or promotional interests will be allocated and paid to the Unitholders. | ||||||
Distributions to the Other Members for the three and nine months ended September 30, 2013 are as follows: | ||||||
For the Three Months Ended | For the Nine Months Ended | |||||
30-Sep-13 | 30-Sep-13 | |||||
Distributions declared | $ | 523,676 | $ | 757,297 | ||
Weighted average number of Units outstanding | 723,893 | 526,487 | ||||
Weighted average distributions per Unit | $ | 0.72 | $ | 1.44 | ||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||
Fair Value Measurements | ' | ||||||||||||||
9. Fair value measurements: | |||||||||||||||
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. | |||||||||||||||
At September 30, 2013 and December 31, 2012, only the Company’s warrants were measured on a recurring basis. As of the same dates, the Company had no assets or liabilities that required measurement at fair value on a non-recurring basis. | |||||||||||||||
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 and 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 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. | |||||||||||||||
Such fair value adjustments utilized the following methodology: | |||||||||||||||
Warrants (recurring) | |||||||||||||||
Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the volatility of respective similar publicly traded companies, a risk free interest rate for the term(s) of the warrant exercise(s), and the respective exercise prices and number of warrants. As of September 30, 2013 and December 31, 2012, the calculated fair value of the Fund’s warrant portfolio totaled $37,370 and $24,412, respectively. Such valuations are classified within Level 3 of the valuation hierarchy. | |||||||||||||||
The following reconciles the beginning and ending balances of the Company’s Level 3 recurring assets: | |||||||||||||||
Level 3 assets | |||||||||||||||
Balance at December 31, 2011 | $ | - | |||||||||||||
Fair value of new warrants, recorded during the year | 24,412 | ||||||||||||||
(included in net deferred loan fees or costs) | |||||||||||||||
Balance at December 31, 2012 | 24,412 | ||||||||||||||
Fair value of new warrants, recorded during the period | 17,045 | ||||||||||||||
(included in net deferred loan fees or costs) | |||||||||||||||
Net exercise of warrants | -4,847 | ||||||||||||||
Unrealized gain on warrants, net recorded during the period | 760 | ||||||||||||||
Balance at September 30, 2013 | $ | 37,370 | |||||||||||||
The following table summarizes the valuation techniques and significant unobservable inputs used for the Company’s investments categorized as Level 3 in the fair value hierarchy as of September 30, 2013: | |||||||||||||||
Valuation | Valuation | Unobservable | Range of | ||||||||||||
Name | Frequency | Technique | Inputs | Input Values | |||||||||||
Warrants | Recurring | Black-Scholes Model | Stock price | $0.05 - $25.76 | |||||||||||
Exercise price | $0.05 - $25.76 | ||||||||||||||
Time to Maturity (in years) | 5.75 - 9.73 | ||||||||||||||
Annual risk-free interest rate | 1.62% - 2.47% | ||||||||||||||
Annualized volatility | 3.14% - 27.84% | ||||||||||||||
9. Fair value measurements (continued): | |||||||||||||||
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 has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. | |||||||||||||||
Cash and cash equivalents | |||||||||||||||
The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments. | |||||||||||||||
Notes receivable | |||||||||||||||
The fair value of the Company’s notes receivable is estimated using either third party appraisals of collateral or discounted cash flow analyses based upon current market rates for similar types of lending arrangements, with credit risk or estimated collateral liquidation adjustments for non-accrual loans as deemed necessary. | |||||||||||||||
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, 2013 and December 31, 2012: | |||||||||||||||
30-Sep-13 | |||||||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Amount | |||||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 3,989,932 | $ | 3,989,932 | $ | - | $ | - | $ | 3,989,932 | |||||
Notes receivable, net | 1,951,512 | - | - | 1,951,512 | 1,951,512 | ||||||||||
Warrants | 37,370 | - | - | 37,370 | 37,370 | ||||||||||
31-Dec-12 | |||||||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Amount | |||||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 254,739 | $ | 254,739 | $ | - | $ | - | $ | 254,739 | |||||
Notes receivable, net | 1,313,139 | - | - | 1,313,139 | 1,313,139 | ||||||||||
Warrants | 24,412 | - | - | 24,412 | 24,412 | ||||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Summary of Significant Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of presentation: | |
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year. | |
In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30, 2013, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements. | |
Use of Estimates | ' |
Use of estimates | |
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. | |
Segment Reporting | ' |
Segment reporting: | |
The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. | |
The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its financing business operates as one reportable segment because: a) the Company measures profit and loss at the portfolio assets level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment financing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment financing; and e) the Company has not chosen to organize its business around geographic areas. | |
The primary geographic region in which the Company seeks financing opportunities is North America. Currently, 100% of the Company’s operating revenues are from customers domiciled in North America. | |
Investment in Securities | ' |
Investment in securities: | |
From time to time, the Company may purchase securities of its borrowers or receive warrants and rights to purchase securities in connection with its lending arrangements. | |
Purchased securities | |
Purchased securities (primarily preferred stocks) are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. 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. Management has concluded that there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the instruments and that it is not practicable to estimate the fair value of the investment because of its illiquidity. | |
Warrants | |
Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried at an estimated fair value on the balance sheet at the end of the period, as determined by the Managing Member. At September 30, 2013 and December 31, 2012, the Managing Member estimated the fair value of the warrants to be $37,370 and $24,412, respectively. See Note 9 for further discussion. | |
Per Unit Data | ' |
Per Unit data: | |
Net income (loss) per Unit is based upon the weighted average number of Other Members Units outstanding during the period. | |
Recent Accounting Pronouncements | ' |
Recent accounting pronouncements | |
Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company. | |
Notes_Receivable_Net_Tables
Notes Receivable, Net (Tables) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Notes Receivables, Net [Abstract] | ' | ||
Minimum Future Payments Receivable | ' | ||
As of September 30, 2013, the minimum future payments receivable are as follows: | |||
Three months ending December 31, 2013 | $ | 176,252 | |
Year ending December 31, 2014 | 806,323 | ||
2015 | 823,117 | ||
2016 | 558,890 | ||
2,364,582 | |||
Less: portion representing unearned interest income, net | -406,682 | ||
Less: advance payments | -6,388 | ||
Notes receivable, net | $ | 1,951,512 | |
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Related Party Transactions [Abstract] | ' | |||||
Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement | ' | |||||
During the three and nine months ended September 30, 2013, the Managing Member and/or affiliates earned commissions, fees and reimbursements pursuant to the Operating Agreement as follows: | ||||||
For the Three Months Ended | For the Nine Months Ended | |||||
30-Sep-13 | 30-Sep-13 | |||||
Selling commissions, equal to 9% of the selling price of the Limited | $ | 121,801 | $ | 543,065 | ||
Liability Company Units, deducted from Other Members' capital | ||||||
Reimbursement of other syndication costs to Managing Member | 157,733 | 554,033 | ||||
and/or affiliates, deducted from Other Members' capital | ||||||
Administrative costs reimbursed to Managing Member and/or affiliates | 16,326 | 41,659 | ||||
Asset management fees to Managing Member | 4,282 | 10,820 | ||||
Acquisition costs and note origination fees paid to Managing Member | 47,202 | 205,213 | ||||
$ | 347,344 | $ | 1,354,790 | |||
Members_Capital_Tables
Members' Capital (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Members' Capital [Abstract] | ' | |||||
Distributions To Other Members | ' | |||||
Distributions to the Other Members for the three and nine months ended September 30, 2013 are as follows: | ||||||
For the Three Months Ended | For the Nine Months Ended | |||||
30-Sep-13 | 30-Sep-13 | |||||
Distributions declared | $ | 523,676 | $ | 757,297 | ||
Weighted average number of Units outstanding | 723,893 | 526,487 | ||||
Weighted average distributions per Unit | $ | 0.72 | $ | 1.44 | ||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||
Reconciliation of Level 3 Recurring Assets | ' | ||||||||||||||
The following reconciles the beginning and ending balances of the Company’s Level 3 recurring assets: | |||||||||||||||
Level 3 assets | |||||||||||||||
Balance at December 31, 2011 | $ | - | |||||||||||||
Fair value of new warrants, recorded during the year | 24,412 | ||||||||||||||
(included in net deferred loan fees or costs) | |||||||||||||||
Balance at December 31, 2012 | 24,412 | ||||||||||||||
Fair value of new warrants, recorded during the period | 17,045 | ||||||||||||||
(included in net deferred loan fees or costs) | |||||||||||||||
Net exercise of warrants | -4,847 | ||||||||||||||
Unrealized gain on warrants, net recorded during the period | 760 | ||||||||||||||
Balance at September 30, 2013 | $ | 37,370 | |||||||||||||
Summary of Valuation Techniques and Significant Unobservable Inputs | ' | ||||||||||||||
The following table summarizes the valuation techniques and significant unobservable inputs used for the Company’s investments categorized as Level 3 in the fair value hierarchy as of September 30, 2013: | |||||||||||||||
Valuation | Valuation | Unobservable | Range of | ||||||||||||
Name | Frequency | Technique | Inputs | Input Values | |||||||||||
Warrants | Recurring | Black-Scholes Model | Stock price | $0.05 - $25.76 | |||||||||||
Exercise price | $0.05 - $25.76 | ||||||||||||||
Time to Maturity (in years) | 5.75 - 9.73 | ||||||||||||||
Annual risk-free interest rate | 1.62% - 2.47% | ||||||||||||||
Annualized volatility | 3.14% - 27.84% | ||||||||||||||
Estimated Fair Values of Financial Instruments | ' | ||||||||||||||
The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at September 30, 2013 and December 31, 2012: | |||||||||||||||
30-Sep-13 | |||||||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Amount | |||||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 3,989,932 | $ | 3,989,932 | $ | - | $ | - | $ | 3,989,932 | |||||
Notes receivable, net | 1,951,512 | - | - | 1,951,512 | 1,951,512 | ||||||||||
Warrants | 37,370 | - | - | 37,370 | 37,370 | ||||||||||
31-Dec-12 | |||||||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Amount | |||||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 254,739 | $ | 254,739 | $ | - | $ | - | $ | 254,739 | |||||
Notes receivable, net | 1,313,139 | - | - | 1,313,139 | 1,313,139 | ||||||||||
Warrants | 24,412 | - | - | 24,412 | 24,412 | ||||||||||
Organization_and_Limited_Liabi1
Organization and Limited Liability Company Matters (Narrative) (Details) (USD $) | 9 Months Ended | 13 Months Ended | 21 Months Ended | 1 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Mar. 13, 2013 | Dec. 31, 2012 | Nov. 14, 2012 | Dec. 31, 2011 | Oct. 31, 2013 | |
Subsequent Event [Member] | ||||||||
Contributions of capital, initial | ' | ' | ' | ' | ' | ' | $500 | ' |
Maximum offering period | ' | '2 years | ' | ' | ' | ' | ' | ' |
Maximum value of units to be sold in public offering | ' | 75,000,000 | ' | ' | ' | ' | ' | ' |
Minimum amount of subscriptions to release proceeds in escrow | ' | ' | ' | ' | ' | 1,200,000 | ' | ' |
Minimum units to release proceeds in escrow | ' | ' | ' | ' | ' | 120,000 | ' | ' |
Minimum gross proceeds required to release Pennsylvania subscriptions | ' | ' | ' | 3,750,000 | ' | ' | ' | ' |
Capital contribution | ' | ' | $7,907,310 | ' | ' | ' | ' | $8,625,510 |
Units issued | 790,731 | 790,731 | 790,731 | ' | 187,326 | ' | 50 | ' |
Units outstanding | 790,731 | 790,731 | 790,731 | ' | 187,326 | ' | 50 | ' |
Reinvestment period | '6 years | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Narrative) (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
segment | ||
Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Number of operating segments | 1 | ' |
Number of reportable segments | 1 | ' |
Fair value of warrants | $37,370 | $24,412 |
North America [Member] | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Percentage of operating revenues | 100.00% | ' |
Notes_Receivable_Net_Narrative
Notes Receivable, Net (Narrative) (Details) | Sep. 30, 2013 |
Minimum [Member] | ' |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' |
Terms of the notes receivable | '31 months |
Notes receivable, interest rate | 11.29% |
Maximum [Member] | ' |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ' |
Terms of the notes receivable | '42 months |
Notes receivable, interest rate | 14.30% |
Notes maturity period | '2016 |
Notes_Receivable_Net_Minimum_F
Notes Receivable, Net (Minimum Future Payments Receivable) (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes Receivables, Net [Abstract] | ' | ' |
Three months ending December 31, 2013 | $176,252 | ' |
Year ending December 31, 2014 | 806,323 | ' |
2015 | 823,117 | ' |
2016 | 558,890 | ' |
Notes receivable, gross | 2,364,582 | ' |
Less: portion representing unearned interest income, net | -406,682 | ' |
Less: advance payments | -6,388 | ' |
Notes receivable, net | $1,951,512 | $1,313,139 |
Related_Party_Transactions_Aff
Related Party Transactions (Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement (Details) (USD $) | 3 Months Ended | 9 Months Ended | 22 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Organization and offering costs | ' | ' | $2,065,386 |
Administrative costs reimbursed to Managing Member and/or affiliates | 16,326 | 41,659 | ' |
Asset management fees to Managing Member | 4,282 | 10,820 | ' |
Acquisition costs and note origination fees paid to Managing Member | 47,202 | 205,213 | ' |
Related Party Transaction, Expenses from Transactions with Related Party, Total | 347,344 | 1,354,790 | ' |
Selling commission rate | ' | 9.00% | ' |
Selling Commissions To Affiliates [Member] | ' | ' | ' |
Organization and offering costs | 121,801 | 543,065 | ' |
Syndication Costs [Member] | ' | ' | ' |
Organization and offering costs | $157,733 | $554,033 | ' |
Syndication_Costs_Narrative_De
Syndication Costs (Narrative) (Details) (USD $) | 9 Months Ended | 22 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Syndication Costs [Abstract] | ' | ' |
Syndication costs | ' | $2,065,386 |
Cost reimbursements as percentage of all offering proceeds | 15.00% | ' |
Syndication costs in excess of limitation | $880,000 | $880,000 |
Commitments_Narrative_Details
Commitments (Narrative) (Details) (USD $) | Sep. 30, 2013 |
Disclosure Commitments Additional Information [Abstract] | ' |
Commitments to fund investments in notes receivable | $3,127,553 |
Members_Capital_Narrative_Deta
Members' Capital (Narrative) (Details) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2013 |
Managing Member [Member] | Other Members [Member] | ||||
Other Members Capital Account [Line Items] | ' | ' | ' | ' | ' |
Other Members capital account, units issued | 790,731 | 187,326 | 50 | ' | ' |
Other Members capital account, units outstanding | 790,731 | 187,326 | 50 | ' | ' |
Other Members capital account, units authorized | 7,500,000 | 7,500,000 | ' | ' | ' |
Allocation of net Income or net losses from commencement until initial closing date | ' | ' | ' | 100.00% | ' |
Allocation of net Income or net losses commencing with initial closing date | ' | ' | ' | ' | 100.00% |
Allocation of all distributions of cash available for distribution and net disposition proceeds | ' | ' | ' | 5.00% | ' |
Allocation percentage, distributions of cash available for distribution | ' | ' | ' | 5.00% | ' |
Allocation percentage, distributions of net disposition proceeds | ' | ' | ' | 1.00% | ' |
Total distribution, priority return | ' | ' | ' | 8.00% | ' |
Allocation of subsequent distributions | ' | ' | ' | 15.00% | ' |
Members_Capital_Distributions_
Members' Capital (Distributions to Other Members) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
Members' Capital [Abstract] | ' | ' | ' |
Distributions declared | $523,676 | $757,297 | $23,550 |
Weighted average number of Units outstanding | 723,893 | 526,487 | ' |
Weighted average distributions per Unit | $0.72 | $1.44 | $1.13 |
Fair_Value_Measurements_Narrat
Fair Value Measurements (Narrative) (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Fair Value Measurements [Abstract] | ' | ' |
Warrants fair value | $37,370 | $24,412 |
Fair_Value_Measurements_Reconc
Fair Value Measurements (Reconciliation Of Level 3 Recurring Assets) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
Level 3 Estimated Fair Value [Member] | Level 3 Estimated Fair Value [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' | ' |
Balance | ' | $24,412 | $24,412 | ' |
Fair value of new warrants, recorded during the year (included in net deferred loan fees or costs) | ' | ' | 17,045 | 24,412 |
Net exercise of warrants | ' | ' | -4,847 | ' |
Unrealized gain on warrants, net recorded during the period | -1,397 | 760 | 760 | ' |
Balance | $37,370 | $37,370 | $37,370 | $24,412 |
Fair_Value_Measurements_Summar
Fair Value Measurements (Summary of Valuation Techniques and Significant Unobservable Inputs) (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Maximum [Member] | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' |
Stock price | $25.76 |
Exercise price | $25.76 |
Time to Maturity (in years) | '9 years 8 months 23 days |
Annual risk-free interest rate | 2.47% |
Annualized volatility | 27.84% |
Minimum [Member] | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' |
Stock price | $0.05 |
Exercise price | $0.05 |
Time to Maturity (in years) | '5 years 9 months |
Annual risk-free interest rate | 1.62% |
Annualized volatility | 3.14% |
Fair_Value_Measurements_Estima
Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Financial assets: | ' | ' |
Cash and cash equivalents | $3,989,932 | $254,739 |
Notes receivable, net | 1,951,512 | 1,313,139 |
Warrants | 37,370 | 24,412 |
Level 1 Estimated Fair Value [Member] | ' | ' |
Financial assets: | ' | ' |
Cash and cash equivalents | 3,989,932 | 254,739 |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Financial assets: | ' | ' |
Cash and cash equivalents | ' | ' |
Notes receivable, net | ' | ' |
Warrants | ' | ' |
Level 3 Estimated Fair Value [Member] | ' | ' |
Financial assets: | ' | ' |
Notes receivable, net | 1,951,512 | 1,313,139 |
Warrants | 37,370 | 24,412 |
Carrying Amount [Member] | ' | ' |
Financial assets: | ' | ' |
Cash and cash equivalents | 3,989,932 | 254,739 |
Notes receivable, net | 1,951,512 | 1,313,139 |
Warrants | $37,370 | $24,412 |