Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the quarterly period ended September 30, 2014

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

For the transition period from          to         

Commission File number 333-174418

ATEL 16, LLC

(Exact name of registrant as specified in its charter)

California		90-0920813
(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

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 x No o

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

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

Large accelerated filer o     Accelerated filer o     Non-accelerated filer o     Smaller reporting company x

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

The number of Limited Liability Company Units outstanding as of October 31, 2014 was 1,467,890.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL 16, LLC
 
Index

Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Balance Sheets, September 30, 2014 and December 31, 2013			3
Statements of Operations for the three and nine months ended September 30, 2014			4
Statements of Changes in Members’ Capital for the period from December 27, 2012 (Date of Inception) through December 31, 2013 and for the nine months ended September 30, 2014			5
Statements of Cash Flows for the three and nine months ended September 30, 2014			6
Notes to the Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 4. Controls and Procedures			22
Part II. Other Information			23
Item 1. Legal Proceedings			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults Upon Senior Securities			24
Item 4. Mine Safety Disclosures			24
Item 5. Other Information			24
Item 6. Exhibits			24

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 16, LLC
 
BALANCE SHEETS
 
SEPTEMBER 30, 2014 AND DECEMBER 31, 2013

		September 30, 2014				December 31, 2013
		(Unaudited)
ASSETS
Cash and cash equivalents		$	3,851,932			$	500
Accounts receivable, net			12,124				—
Notes receivable, net of unearned interest income of $76,608 as of September 30, 2014			409,624				—
Investments in equipment and leases, net of accumulated depreciation of $370,933 at September 30, 2014			6,750,282				—
Prepaid expenses and other assets			38,602				—
Total assets		$	11,062,564			$	500
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member		$	5,733			$	—
Affiliates			210,752				—
Accrued distributions to Other Members			76,813				—
Other			25,100				—
Unearned operating lease income			378,398				—
Total liabilities			696,796				—
Commitments and contingencies
Members’ capital:
Managing Member			—				500
Other Members			10,365,768				—
Total Members’ capital			10,365,768				500
Total liabilities and Members’ capital		$	11,062,564			$	500

See accompanying notes.

3

ATEL 16, LLC
 
STATEMENTS OF OPERATIONS
 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014
(Unaudited)

		Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
Revenues:
Operating lease revenue		$	327,188			$	419,441
Notes receivable interest income			15,200				26,117
Interest income			17				34
Other			47				5,997
Total revenues			342,452				451,589
Expenses:
Depreciation of operating lease assets			284,300				370,933
Asset management fees to Managing Member			21,264				34,779
Acquisition expense			(50,990	)			20,928
Cost reimbursements to affiliates			44,129				46,727
Amortization of initial direct costs			7,643				12,086
Interest expense			3,160				4,472
Professional fees			26,171				32,627
Outside services			22,898				75,279
Taxes on income and franchise fees			3,000				4,600
Bank charges			6,441				13,149
Other			11,283				13,995
Total expenses			379,299				629,575
Net loss		$	(36,847	)		$	(177,986	)
Net income (loss):
Managing Member		$	18			$	(471	)
Other Members			(36,865	)			(177,515	)
		$	(36,847	)		$	(177,986	)
Net loss per Limited Liability Company Unit (Other Members)		$	(0.04	)		$	(0.25	)
Weighted average number of Units outstanding			1,029,531				721,007

See accompanying notes.

4

ATEL 16, LLC
 
STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL
 
FOR THE PERIOD FROM DECEMBER 27, 2012 (Date of Inception)
THROUGH DECEMBER 31, 2013 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2014

		Units				Amount								Total
						Other Members				Managing Member
Member’s capital as of December 27, 2012 (Date of Inception)			—			$	—			$	—			$	—
Capital contribution			50				—				500				500
Balance December 31, 2013			50				—				500				500
Capital contributions			1,273,864				12,738,640				—				12,738,640
Less selling commissions to affiliates			—				(1,144,467	)			—				(1,144,467	)
Syndication costs			—				(763,002	)			—				(763,002	)
Distributions to Other Members ($0.40 per Unit)			—				(287,888	)			—				(287,888	)
Distributions to Managing Member			—				—				(29	)			(29	)
Net loss			—				(177,515	)			(471	)			(177,986	)
Balance September 30, 2014 (Unaudited)			1,273,914			$	10,365,768			$	—			$	10,365,768

See accompanying notes.

5

ATEL 16, LLC
 
STATEMENTS OF CASH FLOWS
 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014
(Unaudited)

		Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
Operating activities:
Net loss		$	(36,847	)		$	(177,986	)
Adjustment to reconcile net loss to cash (used in) provided by operating activities:
Depreciation of operating lease assets			284,300				370,933
Amortization of initial direct costs			7,643				12,086
Changes in operating assets and liabilities:
Accounts receivable			7,610				(12,124	)
Prepaid expenses and other assets			14,494				(38,602	)
Accounts payable, Managing Member			1,647				5,725
Accounts payable, other			17,445				25,091
Accrued liabilities, affiliates			(906,659	)			210,752
Unearned operating lease income			368,960				378,398
Net cash (used in) provided by operating activities			(241,407	)			774,273
Investing activities:
Purchases of equipment on operating leases			(408,783	)			(7,021,096	)
Payments of initial direct costs			(54,530	)			(113,862	)
Note receivable advances			—				(480,207	)
Principal payments received on notes receivable			33,919				72,240
Net cash used in investing activities			(429,394	)			(7,542,925	)
Financing activities:
Selling commissions to affiliates			(427,227	)			(1,144,458	)
Syndication costs paid to Managing Member and affiliates			(284,818	)			(763,002	)
Distributions to Other Members			(148,523	)			(211,075	)
Distributions to Managing Member			(15	)			(21	)
Capital contributions			4,746,970				12,738,640
Net cash provided by financing activities			3,886,387				10,620,084
Net increase in cash and cash equivalents			3,215,586				3,851,432
Cash at beginning of period			636,346				500
Cash at end of period		$	3,851,932			$	3,851,932
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	3,521			$	4,472
Cash paid during the period for taxes		$	—			$	1,600
Schedule of non-cash investing and financing transactions:
Distributions payable to Other Members at period-end		$	76,813			$	76,813
Distributions payable to Managing Member at period-end		$	8			$	8
Syndication and organizational costs payable to affiliated company		$	9			$	9

See accompanying notes.

6

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

1. Organization and Limited Liability Company matters:

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

The offering of the Company was granted effectiveness by the Securities and Exchange Commission as of November 5, 2013. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company units (Units) to the public reach $150,000,000. As of March 6, 2014, 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 and continued in its development stage activities until transitioning to an operating enterprise during the second quarter of 2014. Pennsylvania subscriptions are subject to a separate escrow and are released to the Fund only at such time as total subscription proceeds received by the Fund from all subscribers, including the escrowed Pennsylvania subscriptions, equal not less than $7,500,000 in gross proceeds. Total contributions to the Fund exceeded $7,500,000 on June 19, 2014.

As of September 30, 2014, cumulative contributions totaling $12,739,140 have been received, inclusive of the $500 initial member’s capital investment. As of such date, a total of 1,273,914 Units were issued and outstanding. The Fund is actively raising capital and, as of October 31, 2014, has received cumulative contributions in the amount of $14,678,900, 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 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 Unitholders during the Offering Stage and Operating Stages of the Fund, any balance remaining after required minimum distributions, equal to not less than 7% nor more than 9% per annum on investors’ Original Invested Capital, during the Operating Stage, to be used to purchase additional investments during the Reinvestment Period (the first six years after the year the offering terminates); and (iii) provide additional cash distributions during the Liquidating Stage, commencing with the end of the Operating Stage/Reinvestment Period and continuing until all investment portfolio assets have been sold or otherwise disposed. 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, 2013, filed with the Securities and Exchange Commission.

7

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

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, 2014 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.

In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30, 2014, up until the issuance of the financial statements. No events were noted which would require additional disclosure in the footnotes to the financial statements.

Cash:

Cash is maintained in a non-interest bearing checking account.

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 determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.

Accounts receivable:

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

Credit risk:

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

8

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies: - (continued)

guidelines consistent with ASC 840-20-35-3, 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 in Note 4. 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.

Notes receivable, unearned interest income and related revenue recognition:

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

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

9

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies: - (continued)

This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

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

Initial direct costs:

The Company capitalizes initial direct costs (“IDC”) associated with the origination and funding of lease assets and investments in notes receivable. IDC includes both internal costs (e.g., the costs of employees’ activities in connection with successful lease and loan originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease (or note by note) basis based on actual contract term using a straight-line method for operating leases and the effective interest rate method for direct financing leases and notes receivable. Upon disposal of the underlying lease and loan assets, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition expense:

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

Asset valuation:

Recorded values of the Company’s leased asset portfolio are periodically reviewed for impairment. 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 estimated residual value of the asset at the end of the asset’s expected holding period and estimates of undiscounted future rents. 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 market place 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.

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.

10

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies: - (continued)

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 and long-lived assets relate to customers domiciled in North America.

Unearned operating lease income:

The Company records prepayments on operating leases as a liability under the caption of unearned operating lease income. The liability is recorded when prepayments are received and recognized as operating lease revenue over the period to which the prepayments relate using a straight-line method.

Per Unit data:

Net loss and distributions declared per Unit for the third quarter of 2014 is based upon the weighted average number of Other Members Units outstanding during the period. The net loss and distributions declared per Unit for the first nine months of 2014 is based upon the weighted average number of Other Members Units from March 6, 2014 (Release Date of Escrow) through September 30, 2014.

Recent accounting pronouncements:

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases and loans, which comprise the majority of the Company’s revenues.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements — Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance relative to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management is currently evaluating the standard and its operational and related disclosure requirements.

11

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

3. Notes receivable, net:

The Company has various notes receivables from borrowers who have financed the purchase of equipment through the Company. The terms of the notes receivable are from 30 to 36 months and bear interest at rates ranging from 11.26% to 17.31% per annum. The notes are secured by the equipment financed. The notes mature from 2016 through 2017. There were neither impaired notes nor notes placed in non-accrual status as of September 30, 2014. The Company had no notes receivable outstanding prior to the second quarter of 2014.

As of September 30, 2014, the minimum future payments receivable are as follows:

Three months ending December 31, 2014		$	49,119
Year ending December 31, 2015			196,478
2016			185,768
2017			53,210
			484,575
Less: portion representing unearned interest income			(76,608	)
			407,967
Unamortized initial direct costs			1,657
Notes receivable, net		$	409,624

IDC amortization expense related to notes receivable and the Company’s operating leases for the three and nine months ended September 30, 2014 are as follows:

		Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
IDC amortization – notes receivable		$	333			$	531
IDC amortization – lease assets			7,310				11,555
Total		$	7,643			$	12,086

4. Investment in equipment and leases, net:

The Company’s investment in leases consists of the following:

		Balance December 31, 2013				Reclassifications & Additions/ Dispositions				Depreciation/ Amortization Expense or Amortization of Leases				Balance September 30, 2014
Net investment in operating leases		$	—			$	7,021,096			$	(370,933	)		$	6,650,163
Initial direct costs, net of accumulated amortization of $11,555 at September 30, 2014			—				111,674				(11,555	)			100,119
Total		$	—			$	7,132,770			$	(382,488	)		$	6,750,282

Additions to net investment in operating lease assets are stated at cost. All of the Company’s leased property was acquired beginning in March 2014 through August 2014.

Impairment of investments in leases:

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

12

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

4. Investment in equipment and leases, net: - (continued)

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.

As a result of these reviews, management determined that no impairment losses existed during the respective three and nine months ended September 30, 2014.

The Company utilizes a straight-line depreciation method for equipment in all of the categories currently in its portfolio of lease transactions. Depreciation expense on the Company’s equipment totaled $284,300 and $370,933 for the respective three and nine months ended September 30, 2014. IDC amortization expense related to the Company’s operating leases totaled $7,310 and $11,555 for the same respective periods.

Operating leases:

Property on operating leases consists of the following:

		Balance December 31, 2013				Additions				Reclassifications or Dispositions				Balance September 30, 2014
Coal terminal		$	—			$	5,000,000			$	—			$	5,000,000
Materials handling			—				1,751,997				—				1,751,997
Aircraft ground support			—				181,599				—				181,599
Transportation			—				87,500				—				87,500
			—				7,021,096				—				7,021,096
Less accumulated depreciation			—				(370,933	)			—				(370,933	)
Total		$	—			$	6,650,163			$	—			$	6,650,163

The average estimated residual value for assets on operating leases was 63% of the assets’ original cost at September 30, 2014. There were no operating leases in non-accrual status as of September 30, 2014.

At September 30, 2014, the aggregate amounts of future minimum lease payments receivable are as follows:

		Operating Leases
Three months ending December 31, 2014		$	128,665
Year ending December 31, 2015			1,602,816
2016			514,662
2017			196,243
2018			39,511
2019			28,079
Thereafter			7,044
		$	2,517,020

13

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

4. Investment in equipment and leases, net: - (continued)

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2014, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category		Useful Life
Coal terminal			50 – 60
Aircraft ground support			15 – 20
Transportation			7 – 10
Materials handling			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 acquisition and asset management services and to receive reimbursements for payments made on behalf of the Fund for certain operating expenses, which are more fully described in Section 8 of the Operating Agreement.

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 managed 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.

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

During its offering period, the Fund will pay selling commissions of up to 9% of the selling price of the Units to ATEL Securities Corporation (“ASC”), an affiliate of the Managing Member acting as Dealer Manager for the group of selling broker-dealers. ASC will in turn pay to participating broker-dealers selling commissions of up to 7% of the price of the Units sold by them, retaining the balance of 2%.

14

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

5. Related Party Transactions: - (continued)

During the three and nine months ended September 30, 2014, the Managing Member and/or affiliates earned commissions and fees, and billed for reimbursements pursuant to the Operating Agreement as follows:

		Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
Selling commissions, equal to 9% of the selling price of the Limited Liability Company Units, deducted from Other Members capital		$	425,127			$	1,144,467
Reimbursement of other syndication costs to Managing Member and/or affiliates, deducted from Other Members capital			283,471				763,002
Administrative costs reimbursed to Managing Member and/or affiliates			44,129				46,727
Asset management fees to Managing Member			21,264				34,779
Acquisition and initial direct costs paid to Managing Member			3,540				134,790
		$	777,531			$	2,123,765

6. 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 $708,598 and $1,907,469 for the respective three and nine months ended September 30, 2014.

The Operating Agreement places a limit for syndication 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, 2014, syndication costs recorded in excess of the limitation were nominal. 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.

7. Borrowing facilities:

Effective January 7, 2014, the Company has been added as a participant with AFS and certain of its affiliates in a revolving credit facility (the “Credit Facility”) with a syndicate of financial institutions. The Credit Facility is comprised of a working capital facility to AFS, an acquisition facility (the “Acquisition Facility”) and a warehouse facility (the “Warehouse Facility”) to AFS, the Company and affiliates, and a venture facility available to an affiliate. The line was set at $75,000,000 with an expiration date of June 2015. The lending syndicate providing the Credit Facility will have a blanket lien on all of the Company’s assets as collateral for any and all borrowings under the Acquisition Facility, and on a pro-rata basis under the Warehouse Facility. Such Credit Facility includes certain financial covenants. The Company had no outstanding borrowings under the Credit Facility as of September 30, 2014.

8. Commitments:

At September 30, 2014, there were commitments to purchase lease assets and fund investments in notes receivable totaling approximately $2,919,025 and $2,162,978, respectively. These amounts represent contract awards which may be canceled by the prospective borrower/lessee or may not be accepted by the Company.

15

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

9. 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.

10. Members’ Capital:

A total of 1,273,914 and 50 Units were issued and outstanding as of September 30, 2014 and December 31, 2013, respectively, including the 50 Units issued to the initial Member (Managing Member). The Fund is authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Member.

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

The Fund’s net income or net losses are to be allocated 100% to the Members. From the commencement of the Fund until the initial closing date, net income and net loss shall be allocated 99% to the Managing Member and 1% to the initial other members. Commencing with the initial closing date, net income and net loss shall be allocated 99.99% to the Other Members and 0.01% to the Managing Member.

Fund distributions are to be allocated 0.01% to the Managing Member and 99.99% to the Other Members. The Company commenced periodic distributions, based on cash flows from operations, during the second quarter of 2014.

Distributions to the Other Members for the three and nine months ended September 30, 2014 were as follows:

		Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
Distributions		$	180,476			$	287,888
Weighted average number of Units outstanding			1,029,531				721,007
Weighted average distributions per Unit		$	0.18			$	0.40

16

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

11. 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, 2014 and December 31, 2013, the Company had no assets or liabilities that require measurement at fair value on a recurring or 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, 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.

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 impaired loans as deemed necessary.

17

ATEL 16, LLC
 
NOTES TO FINANCIAL STATEMENTS

11. Fair value measurements: - (continued)

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, 2014 and December 31, 2013:

		September 30, 2014
		Carrying Amount				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	3,851,932			$	3,851,932			$	—			$	—			$	3,851,932
Notes receivable, net			409,624				—				—				409,624				409,624

		December 31, 2013
		Carrying Amount				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	500			$	500			$	—			$	—			$	500

18

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

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

Overview

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

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company Units to the public reach $150,000,000. As of March 6, 2014, 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 and continued in its development stage activities until transitioning to an operating enterprise during the second quarter of 2014. Pennsylvania subscriptions are subject to a separate escrow and are released to the Fund only at such time as total subscription proceeds received by the Fund from all subscribers, including the escrowed Pennsylvania subscriptions, equal not less than $7,500,000 in gross proceeds. Total contributions to the Fund exceeded $7,500,000 on June 19, 2014. The Fund is actively raising capital and, as of October 31, 2014, has received cumulative contributions in the amount of $14,678,900, inclusive of the $500 initial member’s capital investment.

Results of Operations

The Company had net losses of $36,847 and $177,986 for the respective three and nine months ended September 30, 2014.

The three months ended September 30, 2014

The net loss for the three months ended September 30, 2014 was a result of total expenses of $379,299 partially offset by total revenues of $342,452.

Total expenses were primarily comprised of the following: depreciation expense, costs reimbursed to the affiliates, professional fees, outside services and asset management fees paid to the Manager which, combined, totaled $398,762. In addition, the Company had expenses of $31,527 related to amortization of initial direct costs, bank charges, taxes, interest and other expense. Such total expenses were partially offset by a $50,990 credit resulting from an adjustment to year-to-date acquisition expense. The adjustment was a result of continued analysis of costs incurred in successful originations of Fund leases and loans.

Total revenues mostly consisted of $327,188 of operating lease revenues and $15,200 of interest income derived from the Fund’s investments in notes receivable.

19

The nine months ended September 30, 2014

The net loss for the nine months ended September 30, 2014 was comprised of total expenses amounting to $629,575 offset, in part, by total revenues of $451,589.

Total expenses were primarily comprised of the following: depreciation expense, outside services, costs reimbursed to the affiliates, asset management fees paid to the Manager, professional fees and acquisition expense which, combined, totaled $581,273. The remainder of the Company’s expenses for the period, which totaled $48,302, was mostly related to bank charges, amortization of initial direct costs, taxes, interest and other expense.

Total revenues mainly consisted of $419,441 of operating lease revenues, $26,117 of interest income derived from the Fund’s investments in notes receivable, and $5,997 of other income related to program fees paid to the Fund by finance borrowers.

Capital Resources and Liquidity

The Company’s cash and cash equivalents totaled $3,851,932 and $500 at September 30, 2014 and December 31, 2013, respectively. The liquidity of the Company will vary in the future, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

Cash Flows

The following table sets forth summary cash flow data:

		For the Three Months Ended September 30, 2014				For the Nine Months Ended September 30, 2014
Net cash (used in) provided by:
Operating activities		$	(241,407	)		$	774,273
Investing activities			(429,394	)			(7,542,925	)
Financing activities			3,886,387				10,620,084
Net increase in cash and cash equivalents		$	3,215,586			$	3,851,432

During the three and nine months ended September 30, 2014, the Company’s primary source of liquidity was subscription proceeds from the public offering of Units. Capital contributions totaled $4,746,970 and $12,738,640 for the respective three and nine months ended September 30, 2014. As of September 30, 2014, cumulative capital contributions totaling $12,739,140 (1,273,914 Units) have been received.

During the same respective periods, cash was primarily used to purchase equipment, to fund investments in notes receivable, to pay commissions and syndication costs associated with the offering, and to pay distributions.

Equipment purchases totaled $408,783 and $7,021,096 for the respective three and nine months ended September 30, 2014. The Fund did not originate loans during the third quarter of 2014 but had funded investments in notes receivable totaling $480,207 during the first nine months of 2014. Commissions and syndication costs paid during the respective three and nine months ended September 30, 2014 totaled $712,045 and $1,907,460; and, distributions paid to the Managing Member and Other Members totaled $148,538 and $211,096.

Distributions

The Unitholders of record are entitled to certain distributions as provided under the Operating Agreement. The Company commenced periodic distributions beginning with the month of April 2014. Additional distributions have been made through September 30, 2014.

Cash distributions were paid by the Fund to Unitholders of record as of August 31, 2014, and paid through September 30, 2014. The distributions may be characterized for tax, accounting and economic purposes as a

20

return of capital, a return on capital (including escrow interest) or a portion of each. Generally, the portion of each cash distribution by a company which exceeds its net income for the fiscal period would constitute a return of capital. The Fund is required by the terms of its Operating Agreement to distribute the net cash flow generated by its investments in certain minimum amounts during the Reinvestment Period before it can reinvest its operating cash flow in additional portfolio assets. See the discussion in the Prospectus under “Income, Losses and Distributions.” Accordingly, the amount of cash flow from Fund investments distributed to Unitholders will not be available for reinvestment in additional portfolio assets.

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

The following table summarizes distribution activity for the Fund from inception through September 30, 2014:

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At September 30, 2014, there were commitments to purchase lease assets and fund investments in notes receivable totaling approximately $2,919,025 and $2,162,978, respectively. These amounts represent contract awards which may be canceled by the prospective borrower/lessee or may not be accepted by the Company.

Off-Balance Sheet Transactions

None.

21

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases and loans, which comprise the majority of the Company’s revenues.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements — Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance relative to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management is currently evaluating the standard and its operational and related disclosure requirements.

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 and Operating Officer (“Management”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on the evaluation of the Company’s disclosure controls and procedures, the Chief Executive Officer and Executive Vice President and Chief Financial and Operating Officer 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, 2014 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.

22

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.

Information provided pursuant to §229.701 (Item 701(f)) (formerly included in Form SR):

(1) Effective date of the offering: November 5, 2013; File Number: 333-188924
(2) Offering commenced: November 5, 2013
(3) The offering did not terminate before any securities were sold.
(4) The managing underwriter is ATEL Securities Corporation.
(5) The title of the registered class of securities is “Units of Limited Liability Company Interest.”
(6) Aggregate amount and offering price of securities registered and sold as of September 30, 2014:

Title of Security		Amount Registered				Aggregate price of offering amount registered				Units sold				Aggregate price of offering amount sold
Units of Limited Company Interest			15,000,000			$	150,000,000				1,273,864			$	12,738,640

(7) Costs incurred for the issuers’ account in connection with the issuance and distribution of the securities registered for each category listed below:

		Direct or indirect payments to directors, officers, Managing Members of the issuer or their associates, to persons owning ten percent or more of any class of equity securities of the issuer; and to affiliates of the issuer				Direct or indirect payments to others				Total
Underwriting discounts and commissions		$	254,324			$	890,134			$	1,144,458
Other syndication costs			—				763,002				763,002
Total expenses		$	254,324			$	1,653,136			$	1,907,460

(8) Net offering proceeds to the issuer after total expenses in item 7:						$    10,831,180
(9) The amount of net offering proceeds to the issuer used for each of the purposes listed below:

		Direct or indirect payments to directors, officers, Managing Members of the issuer or their associates, to persons owning ten percent or more of any class of equity securities of the issuer; and to affiliates of the issuer				Direct or indirect payments to others				Total
Purchase and installation of machinery and equipment		$	111,673			$	7,021,096			$	7,132,769
Investment in notes receivable			2,189				480,207				482,396
Distributions paid and accrued			29				287,888				287,917
Other expenses			—				246,556				246,556
		$	113,891			$	8,035,747			$	8,149,638

(10) Net offering proceeds to the issuer after total expenses in item 9:						$        2,681,542

23

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

All other 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.

31.1		Certification of Dean L. Cash
31.2		Certification of Paritosh K. Choksi
32.1		Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2		Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

24

SIGNATURES

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

Date: November 13, 2014

ATEL 16, LLC
(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 Vice President and Chief Accounting Officer of ATEL Managing Member, LLC (Managing Member)

25