TriLinc Global Impact Fund LLC - FORM 10-Q

Attached files

file	filename
EX-32.1 - EX-32.1 - TriLinc Global Impact Fund LLC	trilinc-ex321_7.htm
EX-31.2 - EX-31.2 - TriLinc Global Impact Fund LLC	trilinc-ex312_8.htm
EX-31.1 - EX-31.1 - TriLinc Global Impact Fund LLC	trilinc-ex311_9.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-55432

TriLinc Global Impact Fund, LLC

(Exact name of registrant as specified in its charter)

Delaware

36-4732802

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1230 Rosecrans Avenue, Suite 605,

Manhattan Beach, CA 90266

(Address of principal executive offices)

(310) 997-0580

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

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

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


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

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

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

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

None

As of November 12, 2020, the Company had outstanding 17,990,379 Class A units, 7,987,823 Class C units, 10,519,470 Class I units, 24,555 Class W units, 1,825,862 Class Y units, and 8,423,851 Class Z units.

Table of Contents

Part I. Financial Information		1

Item 1. Consolidated Financial Statements		1

Consolidated Statements of Assets and Liabilities as of September 30, 2020 (unaudited) and December 31, 2019		1

Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (unaudited)		2

Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2020 and 2019 (unaudited)		3

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)		4

Consolidated Schedules of Investments as of September 30, 2020 (unaudited) and December 31, 2019		5-8

Notes to Consolidated Financial Statements (unaudited)		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		31

Item 3. Quantitative and Qualitative Disclosures About Market Risk		41

Item 4. Controls and Procedures		41

Part II. Other Information		42

Item 1. Legal Proceedings		42

Item 1A. Risk Factors		42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42

Item 3. Defaults Upon Senior Securities		43

Item 4. Mine Safety Disclosures		43

Item 5. Other Information		43

Item 6. Exhibits		44

Part I. Financial Information

Item 1. Consolidated Financial Statements.

TriLinc Global Impact Fund, LLC

Consolidated Statements of Assets and Liabilities

	As of
	September 30,			December 31,
	2020			2019
ASSETS	(Unaudited)
Investments owned, at fair value (amortized cost of $354,080,560 and $352,351,819, respectively)	$	327,269,549		$	340,298,376
Cash		12,331,482			22,333,304
Interest receivable		24,612,389			16,501,872
Due from affiliates (see Note 5)		4,057,734			4,240,231
Other assets		2,355,026			317,000
Total assets		370,626,180			383,690,783

LIABILITIES
Due to unitholders		1,563,943			1,572,295
Management fee payable		1,826,321			1,889,835
Incentive fee payable		1,626,134			1,481,726
Notes payable		5,000,000			5,000,000
Unit repurchases payable		2,279,645			2,312,031
Accrued distribution and other fees		351,000			647,000
Other payables		1,186,812			1,192,336
Total liabilities		13,833,855			14,095,223
Commitments and Contingencies (see Note 5)
NET ASSETS	$	356,792,325		$	369,595,560

ANALYSIS OF NET ASSETS:
Net capital paid in on Class A units	$	145,659,877		$	151,476,548
Net capital paid in on Class C units		64,336,316			67,804,541
Net capital paid in on Class I units		85,125,581			88,748,417
Net capital paid in on Class W units		198,328			206,243
Net capital paid in on Class Y units		14,132,909			11,007,080
Net capital paid in on Class Z units		64,577,121			67,590,538
Offering costs		(17,237,807	)		(17,237,807	)
Net assets (equivalent to $7.666 and $8.024, respectively per unit based on total units outstanding of 46,588,053 and 46,143,564, respectively)	$	356,792,325		$	369,595,560
Net assets, Class A (units outstanding of 17,943,580 and 17,861,312, respectively)	$	137,555,215		$	143,313,977
Net assets, Class C (units outstanding of 7,966,743 and 8,067,787, respectively)		60,737,939			64,117,584
Net assets, Class I (units outstanding of 10,488,316 and 10,468,162, respectively)		80,388,273			83,964,495
Net assets, Class W (units outstanding of 24,555 and 24,555, respectively)		187,237			195,021
Net assets, Class Y (units outstanding of 1,741,008 and 1,297,897, respectively)		13,346,540			10,413,945
Net assets, Class Z (units outstanding of 8,423,851 and 8,423,851, respectively)		64,577,121			67,590,538
NET ASSETS	$	356,792,325		$	369,595,560

See accompanying notes to the consolidated financial statements.

TriLinc Global Impact Fund, LLC

Consolidated Statements of Operations

(Unaudited)

	Three months ended						For the Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2020			2019			2020			2019
INVESTMENT INCOME
Interest income	$	11,563,734		$	10,682,816		$	32,424,036		$	33,024,926
Interest from cash		8,651			21,592			71,030			59,278
Total investment income		11,572,385			10,704,408			32,495,066			33,084,204
EXPENSES
Asset management fees		1,826,223			1,904,766			5,517,650			5,812,736
Incentive fees		1,626,134			1,489,914			4,105,320			4,249,021
Professional fees		1,115,678			610,850			2,902,437			2,859,857
General and administrative expenses		366,147			292,711			1,009,400			1,250,104
Interest expense		69,290			382,138			206,363			1,590,805
Board of managers fees		64,375			64,375			193,125			193,125
Total expenses		5,067,847			4,744,754			13,934,295			15,955,648
NET INVESTMENT INCOME		6,504,538			5,959,654			18,560,771			17,128,556
Net change in unrealized depreciation on investments		(4,114,774	)		(347,218	)		(13,845,677	)		(2,250,398	)
Foreign exchange loss		14,896			(5,994	)		15,991			(5,717	)
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS	$	2,404,660		$	5,606,442		$	4,731,085		$	14,872,441

NET INVESTMENT INCOME PER UNIT - BASIC AND DILUTED	$	0.14		$	0.13		$	0.40		$	0.39
EARNINGS PER UNIT - BASIC AND DILUTED	$	0.05		$	0.13		$	0.10		$	0.34
WEIGHTED AVERAGE UNITS OUTSTANDING - BASIC AND DILUTED		46,611,977			44,796,299			46,497,461			44,215,313

See accompanying notes to the consolidated financial statements.

TriLinc Global Impact Fund, LLC

Consolidated Statements of Changes in Net Assets

(Unaudited)

	For the Nine Months Ended
	September 30,			September 30,
	2020			2019
INCREASE FROM OPERATIONS
Net investment income	$	18,560,771		$	17,128,556
Foreign exchange (loss) gain		15,991			(5,717	)
Net change in unrealized depreciation on investments		(13,845,677	)		(2,250,398	)
Net increase from operations		4,731,085			14,872,441
DECREASE FROM DISTRIBUTIONS
Distributions to Class A unitholders		(8,283,084	)		(8,264,383	)
Distributions to Class C unitholders		(3,649,963	)		(3,678,026	)
Distributions to Class I unitholders		(4,861,496	)		(4,865,378	)
Distributions to Class W unitholders		(10,261	)		(10,501	)
Distributions to Class Y unitholders		(726,736	)		(553,780	)
Distributions to Class Z unitholders		(3,893,247	)		(2,912,693	)
Net decrease from distributions		(21,424,787	)		(20,284,761	)
INCREASE (DECREASE) FROM CAPITAL TRANSACTIONS
Issuance of Class A units		3,259,118			3,337,016
Issuance of Class C units		1,613,550			1,756,760
Issuance of Class I units		2,105,920			2,039,900
Issuance of Class W units		—			—
Issuance of Class Y units		3,579,722			420,000
Issuance of Class Z units		—			20,000,000
Repurchase of units		(6,963,843	)		(10,076,392	)
Distribution and other fees		296,000			450,000
Offering costs		—			(26,690	)
Net increase from capital transactions		3,890,467			17,900,594
NET (DECREASE) INCREASE IN NET ASSETS		(12,803,235	)		12,488,274
Net assets at beginning of period		369,595,560			360,070,359
Net assets at end of period	$	356,792,325		$	372,558,633

See accompanying notes to the consolidated financial statements.

TriLinc Global Impact Fund, LLC

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	September 30,			September 30,
	2020			2019
Cash flows from operating activities
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	4,731,085		$	14,872,441
ADJUSTMENT TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Purchase of investments		(24,250,000	)		(19,675,000	)
Maturity of investments		37,950,300			51,589,499
Payment-in-kind interest		(14,275,118	)		(6,616,741	)
Net change in unrealized depreciation on investments		13,845,677			2,250,398
Foreign exchange gain (loss)		(15,991	)		5,717
Accretion of discounts on investments		(242,031	)		(620,736	)
Changes in assets and liabilities:
(Increase) decrease in interest receivable		(8,094,526	)		(4,401,220	)
(Increase) decrease in other assets		(1,855,529	)		82,041
Increase (decrease) in due to unitholders		(8,352	)		81,286
Increase (decrease) in management and incentive fees payable		80,894			(372,534	)
Increase (decrease) in other payables		(5,524	)		311,777
NET CASH PROVIDED BY OPERATING ACTIVITIES		7,860,885			37,506,928
Cash flows from financing activities
Net proceeds from issuance of units		3,577,742			20,411,740
Distributions paid to unitholders		(14,444,219	)		(13,142,825	)
Payments of offering costs		—			(26,690	)
Repurchase of units		(6,996,230	)		(10,414,105	)
Repayments of notes payable		—			(27,875,000	)
NET CASH USED IN FINANCING ACTIVITIES		(17,862,707	)		(31,046,880	)
TOTAL INCREASE (DECREASE) IN CASH		(10,001,822	)		6,460,048
Cash at beginning of period		22,333,304			8,101,629
Cash at end of period	$	12,331,482		$	14,561,677
Supplemental information
Cash paid for interest during the period	$	206,363		$	1,861,032
Supplemental non-cash information
Issuance of units in connection with distribution reinvestment plan	$	6,980,569		$	7,141,936
Change in accrual of distribution and other fees	$	(296,000	)	$	(450,000	)

See accompanying notes to the consolidated financial statements.

TriLinc Global Impact Fund, LLC

Consolidated Schedule of Investments

As of September 30, 2020

(Unaudited)

Investment Type / Country	Portfolio Company	Sector	Description	Interest	Fees (2)			Maturity (3)	Principal Amount		Participation % (4)	Amortized Cost		Fair Value		% of Net Assets
Senior Secured Term Loans (1)
Brazil	Usivale Industria E Commercio Ltda (12), (17)	Agricultural Products	Sugar Producer	12.43%		0.0	%	12/15/2020	$	2,851,296	N/A	$	2,851,296	$	2,577,164		0.7	%
Chile	Itelecom Holding Chile SPA (5), (17)	Electric Services	LED Lighting Service Provider	11.00%		0.0	%	6/6/2021		1,456,162	N/A		1,421,461		1,421,461		0.4	%
Colombia	Other Investments (5)	Personal Credit Institutions	Consumer Lender	11.25%		0.0	%	8/1/2021		2,388,151	N/A		2,388,151		2,388,151		0.7	%
Ecuador	Other Investments	Corrugated and solid fiber boxes	Sustainable Packaging Manufacturer	9.16% Cash/2.20% PIK		0.0	%	6/18/2025		13,351,735	N/A		13,351,735		13,351,735		3.7	%
Hong Kong	Other Investments (22)	Secondary Nonferrous Metals	Minor Metals Resource Trader	12.00%		0.0	%	6/22/2021		10,000,000	N/A		10,000,000		10,000,000		2.8	%
Hong Kong	Other Investments (23)	Coal and Other Minerals and Ores	Resource Trader	11.50%		0.0	%	12/31/2020		17,166,559	N/A		17,166,559		17,166,559		4.8	%
Singapore	Triton Metallics Pte Ltd. (17)	Coal and Other Minerals and Ores	Non-Ferrous Metal Trader	3.00% Cash/3.00% PIK		0.0	%	8/18/2025		17,959,733	N/A		17,959,733		16,296,587		4.6	%
Malaysia	Other Investments (24)	Chemicals and Allied Products	Wholesale Distributor	12.00%		0.0	%	3/31/2021		15,000,000	N/A		15,000,000		15,000,000		4.2	%
Mexico	Blue Arrow Biojet Holdings, LLC (9)	Refuse Systems	Waste to Fuels Processor	14.50% PIK		0.0	%	7/27/2021		27,511,646	N/A		27,511,646		27,511,646		7.7	%
Peru	Kinder Investments, Ltd. (16)	Consumer Products	Diaper Manufacturer II	11.00%		0.0	%	12/31/2024		4,599,086	N/A		4,599,086		4,599,086		1.3	%
Total Senior Secured Term Loans													112,249,667		110,312,389		30.9	%
Senior Secured Term Loan Participations (1)
Botswana	Other Investments	Short-Term Business Credit	SME Financier	11.47%		0.0	%	8/18/2021		4,740,000	47%		4,740,000		4,740,000		1.3	%
Brazil	Other Investments (21)	Programming and Data Processing	IT Service Provider	10.00% Cash/1.50% PIK		0.0	%	11/24/2022		17,847,364	27%		18,031,250		18,031,250		5.1	%
Brazil	Other Investments (21)	Boatbuilding and Repairing	Ship Maintenance & Repair Service Provider	8.00% Cash/4.00% PIK		0.0	%	12/7/2023		5,918,938	42%		5,916,249		5,916,249		1.7	%
Cabo Verde	TRG Cape Verde Holdings Ltd (6), (17)	Hotels and Motels	Hospitality Service Provider	10.00% Cash/4.75% PIK		0.0	%	8/21/2021		13,316,643	88%		13,316,643		11,404,266		3.2	%
Colombia	Azteca Comunicaciones Colombia S.A.S. (11), (21)	Telephone Communications	Fiber Optics Network Provider	8.95% Cash/5.00% PIK		0.0	%	10/15/2023		20,576,143	76%		20,796,141		20,796,141		5.8	%
Croatia	Other Investments (8), (20)	Department Stores	Mall Operator	8.50% Cash/4.50% PIK		0.0	%	1/23/2021		9,148,108	5%		9,148,108		9,148,108		2.6	%
Ghana	Other Investments (6)	Petroleum and Petroleum Products	Tank Farm Operator	12.00%		0.0	%	2/10/2023		14,592,683	76%		14,592,683		14,592,683		4.1	%
Jersey	Africell Holding Limited (27)	Telephone Communications	Mobile Network Operator	11.20%		3.0	%	3/28/2023		14,345,000	16%		14,060,000		14,060,000		3.9	%
Kenya	Other Investments	Freight Transportation Arrangement	Freight and Cargo Transporter	7.86% Cash/4.00% PIK		0.0	%	3/31/2023		13,920,375	42%		13,920,375		13,920,375		3.9	%
Namibia	Trustco Group Holdings Ltd. (14), (17)	Land Subdividers and Developers	Property Developer	8.50% Cash/4.00% PIK		0.0	%	8/15/2021		17,352,309	100%		17,322,844		15,057,045		4.2	%
Netherlands	Other Investments (9)	Motor Vehicle Parts and Accessories	Wheel Manufacturer	15.00%		0.0	%	8/20/2021		8,776,515	44%		9,100,782		9,100,782		2.6	%
Nigeria	Helios Maritime I (15), (17)	Water Transportation	Marine Logistics Provider	10.66%		0.8	%	9/16/2020		14,542,437	100%		14,542,437		12,078,217		3.4	%
Romania	Other Investments (8)	Food Products	Bread Manufacturer	8.00% Cash/5.00% PIK		2.5	%	7/18/2021		1,807,414	25%		1,793,942		1,793,942		0.5	%
Uganda	Other Investments	Farm Products	Grain Processor C	14.50%		0.0	%	4/30/2024		6,850,000	100%		6,884,478		6,884,478		1.9	%
Zambia	Other Investments (5)	Soap, Detergents, and Cleaning	FMCG Manufacturer	10.38%		0.0	%	8/27/2023		2,445,680	26%		2,445,680		2,445,680		0.7	%
Total Senior Secured Term Loan Participations													166,611,612		159,969,216		44.9	%
Senior Secured Trade Finance Participations (1)
Argentina	Compania Argentina de Granos S.A. (17)	Agricultural Products	Agriculture Distributor	10.45%		0.0	%	6/30/2018		12,500,000	83%		12,500,000		9,679,636		2.7	%
Argentina	Sancor Cooperativas Unidas Ltda (17)	Consumer Products	Dairy Co-Operative	10.67%		0.0	%	7/29/2019		6,000,000	22%		6,000,000		4,719,383		1.3	%
Argentina	Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (17), (18)	Meat, Poultry & Fish	Beef Exporter	11.50%		0.0	%	8/31/2017		9,000,000	28%		9,000,000		6,361,679		1.8	%
Argentina	Algodonera Avellaneda S.A. (17), (18)	Fats and Oils	Oilseed Distributor	9.00%		0.0	%	8/31/2017		6,000,000	27%		6,000,000		3,398,558		1.0	%
Cameroon	Producam SA (17)	Chocolate and Cocoa Products	Cocoa & Coffee Exporter	9.00%		0.0	%	8/31/2019		13,243,285	72%		13,243,285		13,254,796		3.7	%

Investment Type / Country	Portfolio Company	Sector	Description	Interest	Fees (2)			Maturity (3)	Principal Amount		Participation % (4)	Amortized Cost		Fair Value		% of Net Assets
Chile	Functional Products Trading S.A. (17), (18)	Farm Products	Chia Seed Exporter	10.90%		0.0	%	3/4/2018		1,326,687	100%		1,326,687		1,375,794		0.4	%
Ecuador	Other Investments (7), (25), (17)	Commercial Fishing	Fish Processor & Exporter	9.00%		0.0	%	6/19/2019		35,838	3%		35,838		35,838		0.0	%
Guatemala	Procesos Fabriles S.A. (17), (18)	Farm Products	Sesame Seed Exporter	12.00%		0.0	%	3/31/2016		881,800	24%		881,800		10,504		0.0	%
Hong Kong	Conplex International Ltd. (17)	Telephone and Telegraph Apparatus	Mobile Phone Distributor	12.00%		0.0	%	4/24/2020		9,500,000	26%		9,500,000		3,366,356		0.9	%
Mauritius	Other Investments (26)	Groceries and Related Products	Vanilla Exporter	10.66%		0.0	%	8/6/2020		433,586	2%		433,586		433,586		0.1	%
Morocco	Mac Z Group SARL (17)	Secondary Nonferrous Metals	Scrap Metal Recycler	11.00%		0.0	%	7/31/2018		7,349,626	73%		7,349,626		6,734,018		1.9	%
Nigeria	Other Investments (9), (26)	Farm Products	Cocoa Trader III	8.50%		0.0	%	8/31/2020		675,256	25%		675,256		675,256		0.2	%
Nigeria	Other Investments (9), (26)	Farm Products	Cocoa Trader II	8.50%		0.0	%	8/31/2020		838,967	14%		838,967		838,967		0.2	%
South Africa	Applewood Trading 199 Pty, Ltd.(17), (18)	Food Products	Fruit & Nut Distributor	10.00%		0.0	%	5/22/2015		785,806	19%		785,806		497,462		0.1	%
United Arab Emirates	Global Pharma Intelligence Sarl (17), (18)	Drugs, Proprietaries, and Sundries	Pharmaceuticals Distributor	14.60%		0.0	%	6/30/2018		648,430	60%		648,430		648,430		0.2	%
Total Senior Secured Trade Finance Participations													69,219,281		52,030,263		14.5	%
Short Term Investments (1)
N/A	IIG TOF B.V. (17), (18), (19)	Financial services	Receivable from IIG TOF B.V.	8.75%		0.0	%	N/A		6,000,000	N/A		6,000,000		3,758,063		1.1	%
Equity Warrants
Mexico	Blue Arrow Biojet Holdings, LLC	Refuse Systems	Waste to Fuels Processor	N/A	N/A			N/A	N/A		N/A		-		1,199,618		0.3	%

Total Investments												$	354,080,560	$	327,269,549

See accompanying notes to the consolidated financial statements.

¹	Refer to Notes 2, 3 and 4 of the consolidated financial statements for additional information on the Company’s investments.

²	Fees may include upfront, origination, commitment, facility and/or other fees that the borrower must contractually pay to the Company. Fees, if any, are typically received in connection with term loan transactions and are rarely applicable to trade finance transactions.

Trade finance borrowers may be granted flexibility with respect to repayment relative to the stated maturity date to accommodate specific contracts and/or business cycle characteristics. This flexibility in each case is agreed upon between the Company and the sub-advisor and between the sub-advisor and the borrower.

⁴	Percentage of the Company’s participation in total borrowings outstanding under sub-advisor provided financing facility.

⁵	Principal and interest paid monthly.

⁶	Principal and interest paid quarterly.

⁷	Monthly interest only payment. Principal due at maturity.

⁸	Quarterly interest only payment. Principal due at maturity.

⁹	Principal and interest to be paid at maturity.

₁₀	Two-thirds and one-third of the principal and accrued interest to be paid on the 36^th and 42^nd months after original drawdown date of 8/10/2017, respectively.

₁₁	Cash interest paid monthly. Principal, including PIK interest, to be repaid in equal monthly installments starting in October 2020.

₁₂	Principal and interest paid annually. The maturity date is expected to be extended in connection with a restructure of the loan.

₁₃	In October 2017, this investment was refinanced from a trade finance participation to a term loan participation and the maturity dates were extended to 8/31/2022.

₁₄	Quarterly interest payments. Refer to Note 3 for additional information.

₁₅	Interest accrues at a variable rate of one-month London Interbank Offered Rate (“Libor”) + 10.5%, which is paid currently, and also includes 4.68% of deferred interest due at maturity.

₁₆	In connection with a restructure of the underlying facilities, all maturity dates were extended to 12/31/2024. This investment was removed from the Watch List on April 1, 2019.

₁₇	Watch List investment. Refer to Note 3 for additional information.

₁₈	Investment on non-accrual status.

₁₉

This investment was originally classified as an investment in a credit facility originated by IIG Trade Opportunities Fund B.V. (“IIG TOF B.V.”), a fund advised by The International Investment Group L.L.C. (“IIG”). During the third quarter of 2018, as part of its quarterly verification process, the Company learned new information concerning this investment, which resulted in the Company reclassifying it from senior secured trade finance participations to short term investments. Please see Note 3 for additional information.

₂₀

Loan is denominated in euro currency with a principal amount of 6,200,000 euro; however, the Company’s participation is denominated in US dollars. The quarterly interest payments are paid at the current exchange rate and subject to foreign currency fluctuations. The fair value includes an investment premium of $91,200.

²¹	Interest includes a stated coupon rate plus additional contingent interest payments based on a percentage of EBITDA after a minimum threshold has been achieved by the borrower.

₂₂	Interest paid quarterly. Principal to be repaid in four equal quarterly installments starting in September 2020.

₂₃	Interest paid quarterly. Principal to be repaid in two equal quarterly installments starting in September 2020.

₂₄	Interest paid quarterly. Principal to be repaid in three quarterly installments starting in September 2020.

₂₅	IIG was the sub-advisor for this investment. See Note 3 for additional information about IIG.

₂₆	The Company is currently working on extending the maturity dates of these investments. These extensions are anticipated to be finalized during the fourth quarter of 2020.

₂₇	Quarterly interest payments. Principal to start amortizing 15 months from initial utilization date (IUD) as follows: 4.5% of loan balance quarterly until IUD + 27 months, then 6.5% of loan balance quarterly until IUD + 48 months, thereafter 7.5% of loan balance quarterly until maturity.

TriLinc Global Impact Fund, LLC

Consolidated Schedule of Investments

December 31, 2019

Investment Type / Country	Portfolio Company	Sector	Description	Interest	Fees (2)			Maturity (3)	Principal Amount		Participation % (4)	Amortized Cost		Fair Value		% of Net Assets
Senior Secured Term Loans (1)
Brazil	Usivale Industria E Commercio Ltda (12), (17)	Agricultural Products	Sugar Producer	12.43%		0.0	%	12/15/2020	$	2,851,296	N/A	$	2,851,296	$	2,577,164		0.7	%
Chile	Other Investments (5)	Electric Services	LED Lighting Service Provider	11.00%		0.0	%	6/6/2021		1,456,161	N/A		1,383,269		1,383,269		0.4	%
Colombia	Other Investments (5)	Personal Credit Institutions	Consumer Lender	11.25%		0.0	%	8/1/2021		3,603,592	N/A		3,603,592		3,603,592		1.0	%
Hong Kong	Other Investments (22)	Secondary Nonferrous Metals	Minor Metals Resource Trader	12.00%		0.0	%	6/22/2021		10,000,000	N/A		10,000,000		10,000,000		2.7	%
Hong Kong	Other Investments (23)	Coal and Other Minerals and Ores	Resource Trader	11.50%		0.0	%	12/28/2020		15,891,820	N/A		15,891,820		15,891,820		4.3	%
Malaysia	Other Investments (24)	Chemicals and Allied Products	Wholesale Distributor	12.00%		0.0	%	3/31/2021		15,000,000	N/A		15,000,000		15,000,000		4.1	%
Mexico	Blue Arrow Biojet Holdings, LLC (9)	Refuse Systems	Waste to Fuels Processor	14.50% PIK		0.0	%	7/27/2021		24,685,841	N/A		24,685,841		24,685,841		6.7	%
New Zealand	Other Investments (10)	Logging	Sustainable Timber Exporter	11.50%		0.0	%	2/11/2021		5,612,436	N/A		5,612,436		5,612,436		1.5	%
Peru	Kinder Investments, Ltd. (16)	Consumer Products	Diaper Manufacturer II	10.00%		0.0	%	8/15/2021		4,599,086	N/A		4,599,086		4,599,086		1.2	%
Total Senior Secured Term Loans													83,627,340		83,353,208		22.6	%
Senior Secured Term Loan Participations (1)
Botswana	Other Investments (7)	Short-Term Business Credit	SME Financier	11.67%		0.0	%	8/18/2021		4,740,000	47%		4,740,000		4,740,000		1.3	%
Brazil	Other Investments (7), (21)	Programming and Data Processing	IT Service Provider	10.00% Cash/1.50% PIK		0.0	%	11/24/2022		17,644,892	75%		17,644,892		17,740,330		4.8	%
Brazil	Other Investments (6), (21)	Boatbuilding and Repairing	Ship Maintenance & Repair Service Provider	8.00% Cash/4.00% PIK		0.0	%	12/7/2023		5,741,741	42%		5,669,936		5,695,069		1.5	%
Cabo Verde	Other Investments (6)	Hotels and Motels	Hospitality Service Provider	10.00% Cash/4.75% PIK		0.0	%	8/21/2021		12,846,584	88%		12,846,584		12,846,584		3.5	%
Colombia	Azteca Comunicaciones Colombia S.A.S. (11), (21)	Telephone Communications	Fiber Optics Network Provider	8.95% Cash/4.00% PIK		0.0	%	10/15/2023		19,807,750	76%		19,659,665		19,875,473		5.4	%
Croatia	Other Investments (8), (20)	Department Stores	Mall Operator	7.00% Cash/6.00% PIK		0.0	%	1/23/2021		8,519,535	5%		8,519,535		8,638,109		2.3	%
Ghana	Other Investments (6)	Petroleum and Petroleum Products	Tank Farm Operator	12.00%		0.0	%	8/10/2021		15,500,000	76%		15,500,000		15,500,000		4.2	%
Ghana	Other Investments (13)	Electric Services	Power Producer	12.46%		0.0	%	11/12/2022		15,000,000	49%		15,000,000		15,000,000		4.1	%
Jersey	Africell Holding Limited (28)	Telephone Communications	Mobile Network Operator	12.35%		3.0	%	3/28/2023		17,290,000	16%		16,919,500		16,919,500		4.6	%
Kenya	Other Investments (6)	Freight Transportation Arrangement	Freight and Cargo Transporter	9.88% Cash/4.00% PIK		0.0	%	3/31/2023		13,505,035	42%		13,505,035		13,505,035		3.7	%
Namibia	Other Investments (14)	Land Subdividers and Developers	Property Developer	8.50% Cash/4.00% PIK		0.0	%	8/15/2021		16,834,571	100%		16,781,000		16,781,000		4.5	%
Netherlands	Other Investments (9)	Motor Vehicle Parts and Accessories	Wheel Manufacturer	15.00%		0.0	%	8/20/2021		8,275,000	44%		8,275,000		8,731,936		2.4	%
Nigeria	Other Investments (15)	Water Transportation	Marine Logistics Provider	12.94%		0.8	%	9/16/2020		12,762,670	100%		12,748,503		12,748,503		3.4	%
Romania	Other Investments (8)	Food Products	Bread Manufacturer	8.00% Cash/5.00% PIK		2.5	%	7/18/2021		2,059,785	27%		2,034,188		2,034,188		0.6	%
Uganda	Other Investments (7)	Farm Products	Grain Processor C	14.50%		0.0	%	4/30/2024		6,850,000	100%		6,850,000		6,850,000		1.9	%
Zambia	Other Investments (5)	Soap, Detergents, and Cleaning	FMCG Manufacturer	12.23%		0.0	%	8/27/2023		2,894,698	25%		2,894,698		2,894,698		0.8	%
Total Senior Secured Term Loan Participations													179,588,536		180,500,425		49.0	%
Senior Secured Trade Finance Participations (1)
Argentina	Compania Argentina de Granos S.A. (17), (18)	Agricultural Products	Agriculture Distributor	10.45%		0.0	%	6/30/2018		12,500,000	83%		12,500,000		9,839,958		2.7	%
Argentina	Sancor Cooperativas Unidas Ltda (17), (18)	Consumer Products	Dairy Co-Operative	10.67%		0.0	%	7/29/2019		6,000,000	22%		6,000,000		4,719,383		1.3	%
Argentina	Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (17), (18)	Meat, Poultry & Fish	Beef Exporter	11.50%		0.0	%	8/31/2017		9,000,000	28%		9,000,000		6,240,961		1.7	%
Argentina	Algodonera Avellaneda S.A. (17), (18)	Fats and Oils	Oilseed Distributor	9.00%		0.0	%	8/31/2017		6,000,000	27%		6,000,000		3,398,558		0.9	%
Cameroon	Producam SA (17)	Chocolate and Cocoa Products	Cocoa & Coffee Exporter	16.42%		0.0	%	8/31/2019		10,413,683	72%		10,413,683		9,687,887		2.6	%
Chile	Functional Products Trading S.A. (17), (18)	Farm Products	Chia Seed Exporter	10.90%		0.0	%	3/4/2018		1,326,687	100%		1,326,687		1,269,586		0.3	%
Ecuador	Other Investments (7), (25)	Commercial Fishing	Fish Processor & Exporter	9.00%		0.0	%	6/19/2019		35,838	3%		35,838		35,838		0.0	%

Investment Type / Country	Portfolio Company	Sector	Description	Interest	Fees (2)			Maturity (3)	Principal Amount		Participation % (4)	Amortized Cost		Fair Value		% of Net Assets
Guatemala	Procesos Fabriles S.A. (17), (18)	Farm Products	Sesame Seed Exporter	12.00%		0.0	%	3/31/2016		881,800	24%		881,800		10,504		0.0	%
Hong Kong	Other Investments (9)	Coal and Other Minerals and Ores	Non-Ferrous Metal Trader	11.50%		0.0	%	5/4/2020		16,456,270	N/A		16,456,270		16,456,270		4.5	%
Hong Kong	Conplex International Ltd. (17)	Telephone and Telegraph Apparatus	Mobile Phone Distributor	12.00%		0.0	%	3/31/2020		9,500,000	26%		9,500,000		8,840,048		2.4	%
Mauritius	Other Investments (9)	Groceries and Related Products	Vanilla Exporter	12.20%		0.0	%	5/8/2020		468,756	2%		468,756		468,756		0.1	%
Morocco	Mac Z Group SARL (17), (18)	Secondary Nonferrous Metals	Scrap Metal Recycler	11.00%		0.0	%	7/31/2018		7,349,626	73%		7,349,626		7,530,616		2.0	%
Nigeria	Other Investments (9), (27)	Farm Products	Cocoa Trader III	9.00%		0.0	%	4/30/2020		675,256	25%		675,256		675,256		0.2	%
Nigeria	Other Investments (9), (27)	Farm Products	Cocoa Trader II	9.00%		0.0	%	4/30/2020		838,967	14%		838,967		838,967		0.2	%
South Africa	Applewood Trading 199 Pty, Ltd.(17), (18)	Food Products	Fruit & Nut Distributor	10.00%		0.0	%	5/22/2015		785,806	19%		785,806		690,616		0.2	%
South Africa	Other Investments (9),	Communications Equipment	Electronics Assembler	12.00%		0.0	%	2/14/2020		100,000	1%		100,000		100,000		0.0	%
United Arab Emirates	Global Pharma Intelligence Sarl (17), (18)	Drugs, Proprietaries, and Sundries	Pharmaceuticals Distributor	14.60%		0.0	%	6/30/2018		803,254	60%		803,254		803,254		0.2	%
Total Senior Secured Trade Finance Participations													83,135,943		71,606,458		19.3	%
Short Term Investments (1)
N/A	IIG TOF B.V. (17), (18), (19)	Financial services	Receivable from IIG TOF B.V.	8.75%		0.0	%	N/A		6,000,000	N/A		6,000,000		3,758,063		1.0	%
Equity Warrants
Mexico	Blue Arrow Biojet Holdings, LLC	Refuse Systems	Waste to Fuels Processor	N/A	N/A			N/A	N/A		N/A		-		1,080,222		0.3	%

Total Investments												$	352,351,819	$	340,298,376

See accompanying notes to the consolidated financial statements.

¹	Refer to Notes 2, 3 and 4 of the consolidated financial statements for additional information on the Company’s investments.

²	Fees may include upfront, origination, commitment, facility and/or other fees that the borrower must contractually pay to the Company. Fees, if any, are typically received in connection with term loan transactions and are rarely applicable to trade finance transactions.

⁴	Percentage of the Company’s participation in total borrowings outstanding under sub-advisor provided financing facility.

⁵	Principal and interest paid monthly.

⁶	Principal and interest paid quarterly.

⁷	Monthly interest only payment. Principal due at maturity.

⁸	Semi-annual interest only payment. Principal due at maturity.

⁹	Principal and interest paid at maturity.

₁₀	Two-thirds and one-third of the principal and accrued interest to be paid on the 36^th and 42^nd months after original drawdown date of 8/10/2017, respectively. Subsequent to 9/30/2019, $1.8 million was received as partial repayment.

₁₁	Cash interest paid monthly. Principal, including PIK interest, to be repaid in equal monthly installments starting in October 2020.

₁₂	Principal and interest paid annually. The maturity date was extended to 2/28/2021 in connection with a restructure of the loan. Refer to Note 3 for additional information.

₁₃	Semi-annual interest payments. Semi-annual principal payment of $1.07 million starting January 31, 2021 with remaining balance due at maturity.

₁₄	Quarterly interest payments. Principal payments of 30% of total principal balance disbursed to be repaid on 6/30/2020 and 6/30/2021, with the remaining principal to be paid at maturity.

₁₅	Interest accrues at a variable rate of one-month Libor + 10.5%, which is paid currently, and also includes 4.68% of deferred interest due at maturity.

₁₆	In connection with a restructure of the underlying facilities, all maturity dates were extended to 8/15/21. This investment was removed from the Watch List on April 1, 2019.

₁₇	Watch List investment. Refer to Note 3 for additional information.

₁₈	Investment on non-accrual status.

₁₉

This investment was originally classified as an investment in a credit facility originated by IIG TOF B.V., a fund advised IIG. During the third quarter of 2018, as part of its quarterly verification process, the Company learned new information concerning this investment, which resulted in the Company reclassifying it from senior secured trade finance participations to short term investments. Please see Note 3 for additional information.

₂₀

Loan is denominated in euro currency with a principal amount of 6,200,000 euro, however the Company’s participation is denominated in US dollars. The quarterly interest payments are paid at the current exchange rate and subject to foreign currency fluctuations. The fair value includes an investment premium of $228,027.

₂₁	Cash interest paid monthly. Principal, including PIK interest, to be repaid in equal monthly installments starting in October 2020.

₂₂	Interest paid quarterly. Principal to be repaid in four equal quarterly installments starting in September 2020.

₂₃	Interest paid quarterly. Principal to be repaid in four equal quarterly installments starting in March 2020.

₂₄	Interest paid quarterly. Principal to be repaid in five equal quarterly installments starting in March 2020.

₂₅	During the third quarter 2018, the maturity date of this investment was extended to 6/19/2019.

₂₆	The maturity dates of these investments were previously extended to 1/2/2019 to 2/14/2019. During the first quarter 2019, they were further extended to December 2019 to February 2020.

₂₇	The Company extended the maturity dates of these investments during the fourth quarter of 2019 to 4/30/2020.

₂₈	Quarterly interest payments. Principal to start amortizing 15 months from initial utilization date (IUD) as follows: 4.5% of loan balance quarterly until IUD + 27 months, then 6.5% of loan balance quarterly until IUD + 48 months, thereafter 7.5% of loan balance quarterly until maturity.

TRILINC GLOBAL IMPACT FUND, LLC

Notes to Consolidated Financial Statements

September 30, 2020

(Unaudited)

Note 1. Organization and Operations of the Company

TriLinc Global Impact Fund, LLC (the “Company”) was organized as a Delaware limited liability company on April 30, 2012 and formally commenced operations on June 11, 2013. The Company makes impact investments in Small and Medium Enterprises, known as SMEs, which the Company defines as those businesses having less than 500 employees, primarily in developing economies that provide the opportunity to achieve both competitive financial returns and positive measurable impact. The Company uses the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. To a lesser extent, the Company may also make impact investments in companies that may not meet our technical definition of SMEs due to a larger number of employees but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. The Company generally expects that such investments will have similar investment characteristics as SMEs as defined by the Company. The Company’s investment objectives are to generate current income, capital preservation and modest capital appreciation primarily through investments in SMEs. The Company is externally managed by TriLinc Advisors, LLC (the “Advisor”). The Advisor is an investment advisor registered with the Securities and Exchange Commission (“SEC”).

TriLinc Global, LLC (the “Sponsor”) is the sponsor of the Company and employs staff who operate both the Advisor and the Company. Until July 2019, the Sponsor owned 85% of the units of the Advisor and Strategic Capital Advisory Services, LLC (“SCAS”) owned 15% of the Advisor, and was considered an affiliate of the Company. The Sponsor, the Advisor and SCAS are Delaware limited liability companies. In July 2019, the Sponsor acquired SCAS’ 15% ownership interest in the Advisor. As a result, the Sponsor now owns 100% of the Advisor and SCAS is no longer considered to be an affiliate of the Company.

In May 2012, the Advisor purchased 22,161 Class A units for aggregate gross proceeds of $200,000. The Company commenced its initial public offering of up to $1,500,000,000 in units of limited liability company interest (the “Offering”) on February 25, 2013. On June 11, 2013, the Company satisfied its minimum offering requirement of $2,000,000 when the Sponsor purchased 321,330 Class A units for aggregate gross proceeds of $2,900,000 and the Company commenced operations. The primary offering terminated on March 31, 2017. The Company continues to offer and sell units pursuant to its Distribution Reinvestment Plan (“DRP”). Through the termination of the primary offering, the Company raised approximately $361,776,000 in gross proceeds, including approximately $13,338,000 raised through the DRP. For the period from April 1, 2017 to September 30, 2020, the Company raised an additional $91,988,000 pursuant to a private placement and $35,278,000 pursuant to the DRP for total gross proceeds of $489,042,000 as of September 30, 2020.

Although the Company was organized and intends to conduct its business in a manner so that it is not required to register as an investment company under the Investment Company Act of 1940, as amended, the consolidated financial statements are prepared using the specialized accounting principles of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies. Overall, the Company’s management believes the use of investment company accounting makes the Company’s financial statements more useful to investors and other financial statement users since it allows a more appropriate basis of comparison to other entities with similar objectives.

To assist the Company in achieving its investment objective, the Company makes investments via wholly owned subsidiaries (each a “Subsidiary” and collectively, the “Subsidiaries”), all of which are Cayman Islands exempted companies. The Subsidiaries own all of the Company’s investments. As of September 30, 2020, the Company’s subsidiaries are as follows:

•

TriLinc Global Impact Fund – Asia, Ltd.

•

TriLinc Global Impact Fund – Latin America, Ltd.

•

TriLinc Global Impact Fund – Trade Finance, Ltd.

•

TriLinc Global Impact Fund – African Trade Finance, Ltd.

•

TriLinc Global Impact Fund – Africa, Ltd.

•

TriLinc Global Impact Fund – Latin America II, Ltd.

•

TriLinc Global Impact Fund – African Trade Finance II, Ltd.

•

TriLinc Global Impact Fund – Latin America III, Ltd.

•

TriLinc Global Impact Fund – Asia II, Ltd.

•

TriLinc Global Impact Fund – Asia III, Ltd.

•

TriLinc Global Impact Fund – African Trade Finance III, Ltd.

•

TriLinc Global Impact Fund – Europe, Ltd.

•

TriLinc Global Impact Fund – Cayman, Ltd.

Through September 30, 2020, the Company has made, through its Subsidiaries, loans in a number of countries located in South America, Asia, Africa, and Europe.

COVID-19

There is an ongoing COVID-19 pandemic (more commonly referred to as the Coronavirus), which continues to adversely impact many industries and businesses directly or indirectly. Adverse impacts include disrupted global travel and supply chains, which adversely impact global commercial activity. Many businesses across the globe, first in Asia, then in Europe, then in the United States, and finally Latin America and Africa, have seen a downturn in production and productivity due to the suspension of business and temporary closure of offices and factories in an attempt to curb the spread of the Coronavirus. Any of these adverse developments could have a material adverse effect on our business, financial condition and results of operations. In addition, the extent of the impact of COVID-19 on the Company borrowers’ business, financial condition and results of operations may result in their inability to make required payments in the near term which could impact the fair value of the Company’s investments. Although the Coronavirus has created material uncertainty and economic disruption, due to the rapidly evolving nature of the situation, we cannot predict the ultimate impact it will have on us. The Company is managing the situation through active engagement with its borrowers and is analyzing the potential effects COVID-19 may have on the portfolio or any potential capital deployments. Additionally, our Advisor has implemented its business continuity plan and additional procedures designed to protect against the introduction of the coronavirus to the workforce, including permitting and encouraging employees to work remotely, temporarily ceasing travel and significantly enhanced office sterilization procedures to minimize the probability of contagion.

As of the date of this report, with respect to current and future payment performance, 19.5% of investments (based on the fair value of the investments as of September 30, 2020), are known to have been significantly impacted, including material losses to revenues, by COVID-19 resulting in the need to restructure or extend payments associated with the aforementioned investments.

While many of the Company’s borrowers' businesses have experienced some disruption related to COVID-19, degrees of effect have varied to-date. As indicated under "-Watch List Investments" below, the borrowers with respect to three of the six investments added to the Watch List for the nine months ended September 30, 2020 have not made required payments in part due to adverse impacts they have experienced related to the COVID-19 pandemic. Where appropriate, the Company and/or the Company’s sub-advisors are working with borrowers to restructure facilities and may restructure additional facilities to provide relief needed by certain borrowers, without necessarily providing concessions that are out of market. In the case of one investment, where efforts to reach an appropriate risk-adjusted restructuring have been unsuccessful, the Company sub-advisor issued a notice of default and acceleration notice, including the initiation of legal proceedings to recover amounts due.

Due to the disruptions associated with COVID-19, the Company can provide no assurances that it will be able to continue to collect interest and principal payments at levels comparable to those prior to the pandemic. Further, the Company can provide no assurances that it will be able to recover all past due amounts from delinquent borrowers. The economic uncertainty and disruption caused by the pandemic is expected to be prolonged and the Company may see further defaults and additional investments may be added to the Watch List in subsequent quarters. Similar to many companies, the adverse impact of COVID-19 was a significant contributor to an initial decline in the Company’s net asset value (“NAV”) per unit, with a $0.22 decline in the Company's NAV per unit as of March 31, 2020, as compared to the Company’s NAV per unit as of December 31, 2019. Subsequent to the first quarter of 2020, the Company has not seen additional declines in NAV per unit of this magnitude, but the impact of COVID-19 has continued to be a significant contributor to additional declines in the Company's NAV of approximately $0.10 and $0.04 per unit for the third and second quarters of 2020, respectively.

In addition, the Company has seen, and expects to continue to see, a slowdown in transaction volume due to the impact of the pandemic, as smaller SMEs and those in industries most affected by COVID-19 (travel and hospitality, retail sales, etc.) may no longer be in a position to appropriately add debt capital. Transaction volumes may also be affected by restrictions on travel and other shelter in place orders, making it more difficult to conduct in-person visits with potential borrowers. Additionally, in future periods the Company may hold higher levels of cash than before the pandemic to ensure it has sufficient cash available to meet its cash obligations. A potential slower pace of deployment or higher cash balances each have the potential to further reduce cash flow generated to cover the Company’s distributions to its unitholders and/or cause the Company to further reduce its NAV in future periods.

Note 2. Significant Accounting Policies

Basis of Presentation

The Company’s financial information is prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company follows the accounting and reporting guidance in the FASB ASC Topic 946 — Financial Services, Investment Companies (“ASC 946”). The preparation of financial statements in accordance 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. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business, the businesses of the Company's borrowers and the global markets generally. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including fair value measurements, and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

The interim consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q. Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP is not required for interim reporting purposes and has been omitted herein. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 30, 2020.

The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that ultimately may be achieved for the full year ending December 31, 2020.

The accompanying consolidated financial statements include the accounts of the Company and its Subsidiaries, which were established to hold certain investments of the Company. The Company owns 100% of each Subsidiary and, as such, the Subsidiaries are consolidated into the Company’s consolidated financial statements. Transactions between Subsidiaries, to the extent they occur, are eliminated in consolidation. The consolidated financial statements reflect all adjustments, consisting solely of normal recurring accruals, that, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition as of and for the periods presented. These financial statements are presented in United States (“U.S.”) dollars, which is the functional and reporting currency of the Company and all its subsidiaries.

Cash

Cash consists of demand deposits at a financial institution located in the U.S. Such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limits. The Company considers the credit risk of this financial institution to be remote and has not experienced and does not expect to experience any losses in any such accounts.

Revenue Recognition

The Company records interest income on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest on loans for accounting purposes if there is reason to doubt the ability to collect such interest. Structuring, upfront and similar fees are recorded as a discount on investments purchased and are accreted into interest income, on a straight-line basis, which the Company has determined not to be materially different from the effective yield method.

The Company records prepayment fees for loans and debt securities paid back to the Company prior to the maturity date as income upon receipt.

The Company generally places loans on non-accrual status when there is a reasonable doubt that principal or interest will be collected. If, however, management believes the principal and interest will be collected, a loan may be left on accrual status during the period the Company is pursuing repayment of the loan. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment of the financial condition of the borrower. Non-accrual loans are generally restored to accrual status when past due principal and interest is paid and, in the Company’s management’s judgment, is likely to remain current over the remainder of the term.

Valuation of Investments

The Company carries all of its investments at fair value with changes in fair value recognized in the consolidated statement of operations. Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

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Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

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Level 2 — Valuations based on inputs other than quoted prices included in Level 1, which are either directly or indirectly observable.

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Level 3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities.

These investments include debt and equity investments in private companies or assets valued using the income, market or cost approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. The information may also include pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. Certain investments may be valued based upon a collateral approach, which uses estimated value of underlying collateral and include adjustments deemed necessary for estimates of costs to obtain control and liquidate available collateral. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

The inputs used in the determination of fair value may require significant judgment or estimation.

Investments for which market quotations are readily available are valued at those quotations. Most of the Company’s investments are loans to private companies, which are not actively traded in any market and for which quotations are not available. For those investments for which market quotations are not readily available, or when such market quotations are deemed by the Advisor not to represent fair value, the Company’s board of managers has approved a multi-step valuation process to be followed each fiscal quarter, as described below:

Each investment is valued by the Advisor in collaboration with the relevant sub-advisor;

For all investments with a stated maturity of greater than 12 months, the Company has engaged a third-party independent valuation firm to perform certain limited procedures that the Company identified and requested the independent valuation firm perform a review on the reasonableness of the Company’s internal estimates of fair value on each asset on a quarterly rotating basis, with each of such investments being reviewed at least annually. In addition, the Company engaged an independent valuation firm to perform certain limited procedures that the Company identified and requested the independent valuation firm to perform to provide an estimate of the range of fair value of material investments on the Watch List. The analysis performed by the independent valuation firm was based upon data and assumptions provided to it by the Company and received from third party sources, which the independent valuation firm relied upon as being accurate without independent verification. The results of the analyses performed by the independent valuation firm are among the factors taken into consideration by the Company and its management in making its determination with respect to the fair value of such investments, but are not determinative. The Company and its management are solely and ultimately responsible for determining the fair value of the Company’s investments in good faith;

The audit committee of the Company’s board of managers reviews and discusses the preliminary valuation prepared by the Advisor and any report rendered by the independent valuation firm; and

The board of managers discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the inputs which include but are not limited to, inputs of the Advisor, the independent valuation firm and the audit committee. The Company and its board of managers are solely and ultimately responsible for the determination, in good faith, of the fair value of each investment.

Below is a description of factors that the Company’s board of managers may consider when valuing the Company’s investments.

Fixed income investments are typically valued utilizing a market approach, income approach, collateral based approach, or a combination of these approaches (and any others, as appropriate). The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including the sale of a business) and is used less frequently due to the private nature of the Company’s investments. The income approach uses valuation techniques to convert future amounts (for example, interest and principal payments) to a single present value amount (Discounted Cash Flow or “DCF”) calculated based on an appropriate discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts. For Watch List investments, the Company predominantly uses the income approach, but may also use a collateral based approach (also known as a liquidation or net recovery approach), or a hybrid approach consisting of the income approach and the collateral based approach. The collateral based approach uses estimates of the collateral value of the borrower’s assets using an expected recovery model. When using the collateral based approach, the Company determines the fair value of the remaining assets, discounted to reflect the anticipated amount of time to recovery and the uncertainty of recovery. The Company also may make further adjustments to account for anticipated costs of recovery, including legal fees and expenses. In following a given approach, the types of factors that the Company may take into account in valuing the Company’s investments include, as applicable:

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Macro-economic factors that are relevant to the investment or the underlying borrower

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Industry factors that are relevant to the investment or the underlying borrower

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Historical and projected financial performance of the borrower based on most recent financial statements

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Borrower draw requests and payment track record

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Loan covenants, duration and drivers

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Performance and condition of the collateral (nature, type and value) that supports the investment

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Sub-Advisor recommendation as to possible impairment or reserve, including updates and feedback

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For participations, the Company’s ownership percentage of the overall facility

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Key inputs and assumptions that are believed to be most appropriate for the investment and the approach utilized

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Applicable global interest rates

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Impact of investments placed on non-accrual status

With respect to warrants and other equity investments, as well as certain fixed income investments, the Company may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies, option pricing models or industry practices in determining fair value. The Company may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors the Company deems relevant in measuring the fair values of the Company’s investments.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

The Company measures net realized gains or losses by the difference between the net proceeds from the repayment or sale on investments and the amortized cost basis of the investment including unamortized upfront fees and prepayment penalties. Realized gains or losses on the disposition of an investment are calculated using the specific identification method, utilizing the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering any prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Payment-in-Kind Interest

The Company has investments that contain a payment-in-kind, or PIK, interest provision. For loans with contractual PIK interest, any interest will be added to the principal balance of such investments and be recorded as income, if the valuation indicates that such interest is collectible. For the three and nine months ended September 30, 2020, the Company earned and capitalized PIK interest of $8,422,426 and $14,275,118, respectively. For the three and nine months ended September 30, 2019, the Company earned and capitalized PIK interest of $2,714,393 and $6,616,741, respectively.

Distribution and Ongoing Dealer Manager and Services Fees

The Company pays a distribution fee equal to 0.8% per annum of the Company’s current estimated value per share for each Class C unit sold in the Offering or pursuant to a private placement. The distribution fee is payable until the earlier to occur of the following: (i) a listing of the Class C units on a national securities exchange, (ii) following completion of each respective offering, total selling compensation equaling 10% of the gross proceeds of such offering, or (iii) there are no longer any Class C units outstanding. In addition, the Company pays an ongoing dealer manager fee for each Class I unit and Class W unit sold pursuant to a private placement. Such ongoing dealer manager fee is payable for five years until the earlier of: (x) the date on which such Class I units or Class W units are repurchased by the Company; (y) the listing of the Class I units or Class W units on a national securities exchange, the sale of the

Company or the sale of all or substantially all of the Company’s assets; or (z) the fifth anniversary of the admission of the investor as a unitholder. Further, the Company pays an ongoing service fee for each Class W unit sold pursuant to the private placement. Such ongoing service fee is payable for six years until the earlier of: (x) the date on which such Class W units are repurchased by the Company; (y) the listing of the Class W units on a national securities exchange, the sale of the Company or the sale of all or substantially all of the Company’s assets; or (z) the sixth anniversary of the admission of the investor as a unitholder. The distribution fees, ongoing dealer manager fees and service fees are not paid at the time of purchase. Such fees are payable monthly in arrears, as they become contractually due.

The Company accounts for the distribution fees as a charge to equity at the time each Class C unit was sold in the Offering and recorded a corresponding liability for the estimated amount to be paid in future periods. The Company accounts for the ongoing dealer manager fees and service fees paid in connection with the sale of Class I and Class W units in the private placement in the same manner. At September 30, 2020, the estimated unpaid distribution fees for Class C units amounted to $335,000, the unpaid dealer manager fees for Class I units amounted to $15,000 and the unpaid dealer manager and service fees for Class W units amounted to $1,000.

Income Taxes

The Company is classified as a partnership for U.S. federal income tax purposes. As such, the Company allocates all income or loss to its unitholders according to their respective percentage of ownership, and is generally not subject to tax at the entity level. Therefore, no provision for federal or state income taxes has been included in these financial statements.

The Company may be subject to withholding taxes on income and capital gains imposed by certain countries in which the Company invests. The withholding tax on income is netted against the income accrued or received. Any reclaimable taxes are recorded as income. The withholding tax on realized or unrealized gain is recorded as a liability.

The Company follows the guidance for uncertainty in income taxes included in the ASC 740, Income Taxes. This guidance requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including the resolution of any related appeals or litigation processes, based on the technical merits of the position.

As of September 30, 2020, no tax liability for uncertain tax provision had been recognized in the accompanying financial statements nor did the Company recognize any interest and penalties related to unrecognized tax benefits. The earliest year that the Company’s income tax returns are subject to examination is the period ended December 31, 2016.

Unitholders are individually responsible for reporting income or loss, to the extent required by the federal and state income tax laws and regulations, based upon their respective share of the Company’s income and expense as reported for income tax purposes.

Calculation of Net Asset Value

The Company’s net asset value is calculated on a quarterly basis. As of September 30, 2020, the Company has six classes of units: Class A units, Class C units, Class I units, Class W units, Class Y and Class Z units. All units participate in the income and expenses of the Company on a pro-rata basis based on the number of units outstanding. Under GAAP, pursuant to SEC guidance, the Company records liabilities for (i) ongoing fees that the Company currently owes to the dealer manager under the terms of the dealer manager agreement and (ii) for an estimate of the fees that the Company may pay to the dealer manager in future periods. As of September 30, 2020, under GAAP, the Company has recorded a liability in the amount of $351,000 for the estimated future amount of Class C unit distribution fees, Class I unit dealer manager fees, Class W unit ongoing dealer manager fees and Class W unit service fees payable.

The Company is not required to determine its net asset value per unit under GAAP and therefore, its determination of net asset value per unit for Class C units, Class I units and Class W units varies from GAAP. The Company does not deduct the liability for estimated future distribution fees in its calculation of net asset value per unit for Class C units. Further, the Company does not deduct the liability for estimated future dealer manager fees in its calculation of the net asset value per unit for Class I units and Class W units. Likewise, the Company does not deduct the liability for estimated future service fees in its calculation of the net asset value per unit for Class W units. The Company believes this approach is consistent with the industry standard and appropriate since the Company intends for the net asset value to reflect the estimated value on the date that the Company determines its net asset value.

Accordingly, the Company believes that its estimated net asset value at any given time should not include consideration of any estimated future distribution, ongoing dealer manager or service fees that may become payable after such date. As a result, as of September 30, 2020, each of the Class A, Class C, Class I, Class W, Class Y and Class Z units have the same net asset value per unit of $7.666, which is different than the net asset value per unit of $7.660 (on an aggregate basis for all unit classes) as shown in Note 10 – Financial Highlights. This net asset value per unit reflects a decrease of $0.103 per unit compared to the net asset value per unit of $7.769 as of June 30, 2020 and reflects a decrease of $0.358 per unit from the net asset value per unit of $8.024 as of December 31, 2019. The decrease in net asset value per unit was primarily due to the Company having recorded $13,845,677 in unrealized depreciation on its investments during the nine months ended September 30, 2020.

Net Income (Loss) per Unit

Basic net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members’ units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income (loss) by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. The Company did not have any potentially dilutive units outstanding at September 30, 2020 and 2019.

Organization and Offering Costs

The Sponsor has incurred organization and offering costs on behalf of the Company. Organization and offering costs incurred in connection with the Offering are reimbursable to the Sponsor to the extent the aggregate of selling commissions, dealer manager fees and other organization and offering costs do not exceed 15.0% of the gross offering proceeds (the “O&O Reimbursement Limit”) raised from the Offering and will be accrued and payable by the Company only to the extent that such costs do not exceed the O&O Reimbursement Limit. These expense reimbursements are subject to regulatory caps and approval by the Company’s board of managers. Reimbursements to the Sponsor are included as a reduction to net assets on the Consolidated Statement of Changes in Net Assets. Based on the proceeds raised in the Offering at the end of the primary offering, the organization and offering expenses were equal to 4.7% of the gross proceeds. As a result of the termination of the primary offering, effective March 31, 2017, the Company no longer pays the dealer manager selling commissions and dealer manager fees under a dealer manager agreement relating to the Offering. The Company will continue to incur certain organization and offering costs associated with the DRP and ongoing distribution fees on Class C units. In addition, the Sponsor has and may continue to incur organization and offering costs on behalf of the Company in connection with private placements of the Company’s units and the Company will pay selling commissions, dealer manager fees and ongoing distribution, dealer manager, and service fees to the dealer manager for certain sales pursuant to private placements. As of September 30, 2020, the Sponsor has incurred approximately $596,000 in organization and offering costs on behalf of the Company related to private placements of the Company’s units. Through September 30, 2020, the Company has reimbursed an aggregate amount of approximately $87,000 of the organization and offering costs incurred relating to such private placements and is under no obligation to reimburse the Sponsor for the remainder.

Operating Expense Responsibility Agreement

On March 26, 2018, the Company, Advisor and the Sponsor entered into an Amended and Restated Operating Expense Responsibility Agreement (“Responsibility Agreement”) originally effective as of June 11, 2013 and covering expenses through December 31, 2017. Since the inception of the Company through December 31, 2017, pursuant to the terms of the Responsibility Agreement, the Sponsor paid approximately $12,420,600 of operating expenses, asset management fees, and incentive fees on behalf of the Company and will reimburse to the Company an additional $4,057,734 of expenses, which have been paid by the Company as of December 31, 2017.

The Sponsor will only be entitled to reimbursement of the cumulative expenses it has incurred on the Company’s behalf to the extent the Company’s investment income in any quarter, as reflected on the statement of operations, exceeds the sum of (a) total distributions to unitholders incurred during the quarter and (b) the Company’s expenses as reflected on the statement of operations for the same quarter (the “Reimbursement Hurdle”). If the Sponsor is entitled to receive reimbursement for any given quarter because the Company’s investment income exceeds the Reimbursement Hurdle for such quarter, the Company will apply the excess amount (the “Excess Amount”) as follows: (i) first, the Company will reimburse the Sponsor for all expenses, other than asset management fees and incentive fees, that the Sponsor previously paid on the Company’s behalf, which will generally consist of operating expenses (the “Previously Paid Operating Expenses”) until all Previously Paid Operating Expenses incurred to date have been reimbursed; and (ii) second, the Company will apply 50% of the Excess Amount remaining after the payment of Previously Paid Operating Expenses to reimburse the Sponsor for the asset management fees and incentive fees that the Sponsor has agreed to pay on the Company’s behalf until all such asset management fees and incentive fees accrued to date have been reimbursed.

The Company did not meet the Reimbursement Hurdle for the three months ended September 30, 2020 and 2019. Therefore, none of the expenses of the Company covered by the Responsibility Agreement have been recorded as expenses of the Company for the three months ended September 30, 2020 and 2019. As of September 30, 2020, there is a remaining aggregate balance of approximately $16,091,300 in expenses covered by the Responsibility Agreement which are not yet reimbursable to the Sponsor and have not been recorded by the Company. In accordance with ASC 450, Contingencies, such expenses will be accrued and payable by the Company in the period that they become both probable and estimable. The Sponsor may demand the reimbursement of cumulative Company expenses covered by the Responsibility Agreement to the extent the Company exceeds the Reimbursement Hurdle during any quarter.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces an approach based on expected losses to estimate credit losses for financial instruments measured at amortized cost. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022. The guidance requires companies to apply the requirements in the year of adoption through cumulative adjustment with some aspects of the update requiring a prospective transition approach. The Company believes that the adoption of ASU 2016-13 will not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. This update removes the disclosure requirements for the amounts of and the reasons for transfers between Level 1 and Level 2 and disclosure of the policy for timing of transfers between levels. This update also removes disclosure requirements for the valuation processes for Level 3 fair value measurements. Additionally, this update adds disclosure requirements for the changes in unrealized gains and losses for recurring Level 3 fair value measurements and quantitative information for certain unobservable inputs in Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. The Company adopted this guidance effective January 1, 2020, which did not have a material impact on its consolidated financial statements.

Risk Factors

As an externally-managed company, the Company is largely dependent on the efforts of the Advisor, the sub-advisors and other service providers and has been dependent on the Sponsor for financial support in prior periods.

The Company’s sub-advisors are responsible for locating, performing due diligence and closing on suitable acquisitions based on their access to local markets, local market knowledge for quality deal flow and extensive local private credit experience. However, because the sub-advisors are separate companies from the Advisor, the Company is subject to the risk that one or more of its sub-advisors will be ineffective or materially underperform. The Company’s ability to achieve its investment objectives and to pay distributions to unitholders will be dependent upon the performance of its sub-advisors in the identification, performance of due diligence on and acquisition of investments, the determination of any financing arrangements, and the management of the Company’s projects and assets. The Company is subject to the risk that the Company’s sub-advisors may fail to perform according to the Company’s expectations, or the due diligence conducted by the sub-advisors may fail to reveal all material risks of the Company’s investments, which could result in the Company being materially adversely affected.

The Company is subject to financial market risks, including changes in interest rates. Global economies and capital markets can and have experienced significant volatility, which has increased the risks associated with investments in collateralized private debt instruments. Investment in the Company carries risk and there are no guarantees that the Company’s investment objectives will be achieved. The Company relies on the ability of the Advisor and the ability of the sub-advisors’ investment professionals to obtain adequate information to evaluate the potential returns from these investments, which primarily are made in, with or through private companies. If the Company is unable to uncover all material information about these companies or is provided incorrect or inadequate information about these companies from the Company’s subadvisors, the Company may not make a fully informed investment decision, and the Company may lose money on its investments. As described further in “Note 3—Investments—Watch List Investments,” IIG was the sub-advisor with respect to eight of the 19 investments that we have deemed Watch List investments, which are investments with respect to which we have determined there have been significant changes in the credit and collection risk of the investment. As described in Note 3, IIG failed to provide the Company with complete and accurate information with respect to the Company’s investments for which IIG was the sub-advisor, and sold the Company a $6 million participation in a loan that did not exist. In November 2019, the SEC charged IIG with fraud and revoked IIG's registration as an investment adviser. On March 30, 2020, the SEC obtained a final judgment on consent that enjoins IIG from violating the antifraud provisions of the federal securities laws. IIG has ceased operations and the Company does not expect to receive any further reporting from IIG with respect to its outstanding investments. IIG’s acts and omissions have negatively affected and are likely to continue to negatively affect the value of certain of our investments, which could adversely affect returns to the Company’s unitholders.

The Company’s investments consist of loans, loan participations and trade finance participations that are illiquid and non-traded, making purchase or sale of such financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral securing the loan and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as the Company’s borrowers, and those for which market yields are observable increase materially. The majority of the Company’s investments are in the form of participation interests, in financing facilities originated by one of the Company’s sub-advisors. Accordingly, the Company’s counterparty for investments in participation interests generally will be the respective sub-advisor or its affiliate. The Company will not have a contract with the underlying borrower and therefore, in the event of default, will not have the ability to directly seek recovery against the collateral and instead will have to seek recovery through the Company’s sub-advisor counterparty, which increases the risk of full recovery. These risks may be further exacerbated by the adverse impact the COVID-19 pandemic has had and is expected to continue to have on the business of our borrowers. In addition, as of September 30, 2020 and December 31, 2019, all but one of the Company’s investments were denominated in U.S. dollars. If the U.S. dollar rises, it may become more difficult for borrowers to make loan payments if the borrowers are operating in markets where the local currencies are depreciating relative the U.S. dollar.

In addition, certain of the Company’s investments in loans contain a PIK interest provision. These investments may expose us to higher risks, including an increased risk of potential loss because PIK interest results in an increase in the size of the outstanding loan balance. The Company may also be exposed to the risk that it may be more difficult to value the investments because the continuing accrual of interest requires continuing subjective judgments about the collectability of the deferred payments and the value of the underlying collateral. To the extent the loan is structured as a PIK interest-only loan, the probability and magnitude of a loss on the Company’s investment may increase.

At September 30, 2020, the Company’s largest loan by value was $27,511,646 or 8.4% of total investments and provides for PIK interest, with principal and interest due at maturity. The Company’s five largest loans by value comprised 29.8% of the Company’s portfolio at September 30, 2020. Participation in loans amounted to 82.6% of the Company’s total portfolio at September 30, 2020.

Note 3. Investments

As of September 30, 2020, the Company’s investments consisted of the following:

					Percentage
	Amortized Cost		Fair Value		of Total Investments
Senior secured term loans	$	112,249,667	$	110,312,389		33.7	%
Senior secured term loan participations		166,611,612		159,969,216		48.9	%
Senior secured trade finance participations		69,219,281		52,030,263		15.9	%
Other investments		6,000,000		3,758,063		1.1	%
Equity warrants		-		1,199,618		0.4	%
Total investments	$	354,080,560	$	327,269,549		100.0	%

As of December 31, 2019, the Company’s investments consisted of the following:

					Percentage
	Amortized Cost		Fair Value		of Total Investments
Senior secured term loans	$	83,627,340	$	83,353,208		24.5	%
Senior secured term loan participations		179,588,536		180,500,425		53.0	%
Senior secured trade finance participations		83,135,943		71,606,458		21.0	%
Short term investments		6,000,000		3,758,063		1.1	%
Equity warrants		-		1,080,222		0.3	%
Total investments	$	352,351,819	$	340,298,376		100.0	%

Participations

The majority of the Company’s investments are in the form of participation interests (“Participations”). Participations are interests in financing facilities originated by one of the Company’s sub-advisors. Participations may be interests in one specific loan or trade finance transaction, several loans or trade finance transactions under a facility, or may be interests in an entire facility. The Company’s rights under Participations include, without limitation, all corresponding rights in payments, collateral, guaranties, and any other security interests obtained by the respective sub-advisor in the underlying financing facilities.

Interest Receivable

Depending on the specific terms of the Company’s investments, interest earned by the Company is payable either monthly, quarterly, or, in the case of most trade finance investments, at maturity. As such, some of the Company’s trade finance investments have up to a year of accrued interest receivable as of September 30, 2020. In addition, certain of the Company’s investments in term loans accrue deferred interest, which is not payable until the maturity of the loans. Accrued deferred interest included in the interest receivable balance as of September 30, 2020 and December 31, 2019 amounted to $3,069,648 and $2,796,466, respectively. The Company’s interest receivable balances at September 30, 2020 and December 31, 2019 are recorded at the amounts that the Company expects to collect.

Trade Finance

Trade finance encompasses a variety of lending structures that support the export, import or sale of goods between producers and buyers in various countries and across various jurisdictions. The strategy is most prevalent in the financing of commodities. The Company’s Participations in trade finance positions typically fall into two broad categories: pre-export financing and receivable/inventory financing. Pre-export financing represents advances to borrowers based on proven orders from buyers. Receivable/inventory financing represents advances on borrowers’ eligible receivable and inventory balances. For trade finance, the structure and terms of the facility underlying the Company’s Participations vary according to the nature of the transaction being financed. The structure can take the form of a revolver with multiple draw requests and maturity of up to one year based on collateral and performance requirements. The structure can also be specific to the individual transaction being financed, which typically have shorter durations of 60 – 180 days. With respect to underwriting, particular consideration is given to the following:

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nature of the goods or transaction being financed,

•

the terms associated with the sale and repayment of the goods,

•

the execution risk associated with producing, storing and shipment of the goods,

•

the financial and performance profile of both the borrower and end buyer(s),

•

the underlying advance rate and subsequent Loan to Value (“LTV”) associated with lending against the goods that serve to secure the facility or transaction,

•

collateral and financial controls (collection accounts and inventory possession),

•

third party inspections and insurance, and

•

the region, country or jurisdiction in which the financing is being completed.

Collateral varies by transaction, but is typically raw or finished goods inventory, and/or receivables. In the case of pre-export finance, the transaction is secured by purchase orders from buyers or offtake contracts, which are agreements between a buyer and seller to purchase/sell a future product.

Terms depend on the nature of the facility or transaction being financed. As such, they depend on the credit profile of the underlying financing, as well as the speed and detail associated with the request for financing. Interest can be paid as often as monthly or quarterly on revolving facilities (one year in duration) or at maturity when dealing with specific transactions with shorter duration, which is the case for the majority of the Company’s trade finance positions. At times, settlement can be delayed due to documentation, shipment, transportation or port clearing issues, delays associated with the end buyer or off-taker assuming possession, possible changes to contract or offtake terms, and the aggregation of settlement of multiple individual transactions. Conversely, at times payments are made ahead of schedule, as transactions either clear faster than expected, borrowers decide to prepay or pay down ahead of schedule, counterparties clear multiple individual transactions in one settlement, or less expensive financing is secured by the borrower.

On occasion, the Company may receive notice from the respective sub-advisor that a borrower or counterparty to a financing facility underlying one of the Company’s Participations intends to pay ahead of schedule or in one lump sum (settling multiple draw requests all at once). Depending on timing and the ability to redeploy these funds, combined with projected inflows of fund capital, these outsize payments can negatively impact the Company’s performance. In these situations, the credit profile of the borrower, and the transaction in general, is reviewed with the sub-advisor and a request may be made to either stagger payments, where at all possible, or request that payment only be made at the end of that specific financial quarter. These requests or accommodations, which happen very rarely, will only be made where the Company has strong comfort in and around the credit profile of the transaction or borrower.

Short Term Investments

Short term investments are defined by the Company as investments that generally meet the standard underwriting guidelines for trade finance and term loan transactions and that also have the following characteristics: (1) maturity of less than one year, (2) loans to borrowers to whom, at the time of funding, the Company does not expect to re-lend. Impact data is not tracked for short term investments.

Warrants

Certain investments, including loans and participations, may carry equity warrants, which allow the Company to buy shares of the portfolio company at a given price, which the Company may exercise at its discretion during the life of the portfolio company. The Company’s goal is to ultimately dispose of such equity interests and realize gains upon the disposition of such interests. However, these warrants and equity interests are generally illiquid and it may be difficult for the Company to dispose of them. In addition, the Company expects that any warrants or other return enhancements received when the Company makes or invests in loans may require several years to appreciate in value and may not appreciate at all.

Watch List Investments

The Company monitors and reviews the performance of its investments and if the Company determines that there are any significant changes in the credit and collection risk of an investment, the investment will be placed on the Watch List. The Company places an investment on the Watch List when it believes the investment has material performance weakness driven by company-specific and macro events that may affect the timing of future cash flows. For all Watch List investments, the Company evaluates: (i) liquidation value of collateral; (ii) rights and remedies enforceable against the borrower; (iii) any credit insurance and/or guarantees; (iv) market, sector and macro events and (v) other relevant information (e.g., third party purchase of the borrower and potential or ongoing litigation). At September 30, 2020, seven portfolio companies were on non-accrual status with an aggregate fair value of $25,906,728 or 7.9% of the fair value of the Company’s total investments. At December 31, 2019, ten portfolio companies were on non-accrual status with an aggregate fair value of $38,261,499 or 11.2% of the fair value of the Company’s total investments. Interest income not recorded relative to the original terms of the loans to the companies on non-accrual status amounted to approximately $660,001 and $2,667,811, respectively for the three and nine months ended September 30, 2020. Interest income not recorded relative to the original terms of the loans to the companies on non-accrual status amounted to approximately $1,177,023 and $3,419,981, respectively for the three and nine months ended September 30, 2019 As of September 30, 2020 and December 31, 2019, respectively, the Company had 19 and 13 Watch List investments.

As of September 30, 2020, the Company’s Watch List investments consisted of the following:

									Interest not accrued on Investments on Non-Accrual status
									Three Months Ended				Nine months ended
									September 30,		September 30,		September 30,		September 30,
Portfolio Company	Principal Balance		Fair Value		Accrued Interest		Sub-advisor	Valuation Approach	2020		2019		2020		2019
Trustco Group Holdings Ltd.	$	17,352,309	$	15,057,045	$	1,745,356	Helios	Income approach	$	-	$	-	$	-	$	-
TRG Cape Verde Holdings Ltd.		13,316,643		11,404,266		1,570,400	Helios	Income approach		—		—		—		—
Helios Maritime		14,542,437		12,078,217		3,387,579	Helios	Income approach		—		—		—		—
Compania Argentina de Granos S.A.		12,500,000		9,679,636		664,010	IIG	Income approach		—		333,819		330,191		990,573
Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay		9,000,000		6,361,679		264,500	IIG	Income approach		264,500		264,500		787,750		784,875
Sancor Cooperativas Unidas Ltda		6,000,000		4,719,383		768,240	IIG	Hybrid income/collateral based approach		—		—		161,829		—
IIG TOF B.V.		6,000,000		3,758,063		572,000	IIG	Income approach		134,167		134,167		399,583		398,125
Algodonera Avellaneda S.A.		6,000,000		3,398,558		778,500	IIG	Income approach		138,000		138,000		411,000		409,500
Functional Products Trading S.A. (1)		1,326,687		1,375,794		220,881	IIG	Income approach		36,956		36,956		110,064		36,956
Representaciones Saldana S.A. (1)		35,838		35,838		5,725	IIG	Income approach		—		—		—		—
Procesos Fabriles S.A. (1)		881,800		10,504		—	IIG	Collateral based approach		27,042		27,832		80,537		82,588
Triton Metallics Pte Ltd.		17,959,733		16,296,587		137,691	TransAsia	Income approach		—		—		—		—
Conplex International Ltd.		9,500,000		3,366,356		1,312,945	TransAsia	Collateral based approach		—		—		—		—
Producam S.A.		13,243,285		13,254,796		—	AMC	Income approach		—		—		—		—
Global Pharma Intelligence Sarl (1)		648,430		648,430		134,215	Scipion	Income approach		24,194		—		77,831		—
Mac Z Group SARL		7,349,626		6,734,018		2,254,833	Scipion	Income approach		—		206,606		204,361		613,081
Applewood Trading 199 Pty, Ltd. (1)		785,806		497,462		—	Barak	Income approach		35,142		35,143		104,665		104,283
Usivale Industria E Commercio Ltda (1)		2,851,296		2,577,164		645,932	N/A	Income approach		—		—		—		—
Itelecom Holding Chile SPA (1)		1,456,162		1,421,461		78,651	Alsis	Income approach		—		—		—		—
Total Watchlist	$	140,750,052	$	112,675,257	$	14,541,458			$	660,001	$	1,177,023	$	2,667,811	$	3,419,981

¹	Investments with a fair value below 1.0% of the Company's net assets as of September 30, 2020. Additional information regarding Watch List investments with a fair value equal to or greater than 1.0% of the Company's net assets as of September 30, 2020 is presented below.

As of December 31, 2019, the Company’s Watch List investments consisted of the following:

Portfolio Company	Principal Balance		Fair Value		Accrued Interest		Sub-advisor	Valuation Approach
Compania Argentina de Granos S.A.	$	12,500,000	$	9,839,958	$	-	IIG	Income approach
Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay		9,000,000		6,240,961		264,500	IIG	Income approach
Sancor Cooperativas Unidas Ltda		6,000,000		4,719,383		442,805	IIG	Hybrid income/collateral based approach
IIG TOF B.V.		6,000,000		3,758,063		572,000	IIG	Income approach
Algodonera Avellaneda S.A.		6,000,000		3,398,558		778,500	IIG	Income approach
Functional Products Trading S.A. (1)		1,326,687		1,269,586		220,882	IIG	Income approach
Procesos Fabriles S.A. (1)		881,800		10,504		—	IIG	Collateral based approach
Conplex International Ltd.		9,500,000		8,840,048		482,667	TransAsia	Income approach
Producam S.A.		10,413,683		9,687,887		2,403,043	AMC	Income approach
Global Pharma Intelligence Sarl (1)		803,254		803,254		134,215	Scipion	Income approach
Mac Z Group SARL		7,349,626		7,530,616		—	Scipion	Income approach
Applewood Trading 199 Pty, Ltd. (1)		785,806		690,616		—	Barak	Income approach
Usivale Industria E Commercio Ltda (1)		2,851,296		2,577,164		376,075	N/A	Income approach
Total Watchlist	$	73,412,152	$	59,366,598	$	5,674,687

Investments through Helios Investment Partners, LLP (“Helios”) as the Sub-Advisor

Trustco Group Holdings Ltd

In January 2017, the Company purchased a $15,000,000 Participation in a term loan facility with Trustco Group Holdings Ltd (“Trustco”), a Namibia based group operating a diversified set of business lines including property development, financial services (insurance, retail banking), education, and diamond mining. Repayment on this position has been slower than originally anticipated, largely due to a slowdown in the local real estate market. Helios has been actively working with the borrower to restructure the facility. As this has proved challenging, Helios issued a notice of default and acceleration notice to Trustco along with launching initial legal proceedings. A demand has also been made against Elisenheim as guarantor in respect of Trustco’s obligations to Helios. In addition to recourse against Trustco, Helios has the benefit of a security interest in property owned by the guarantor. The estimated proceeds from the collateral and the guarantor are enough to cover the principal and the interest for Trustco.

TRG Cape Verde Holdings Ltd

In May 2016, the Company purchased a $17,000,000 Participation in a term loan facility with TRG Cape Verde Holdings Ltd (“TRG Cape Verde”), an owner and developer of resorts based in Cabo Verde. Repayment on this position has been slower than originally anticipated due to regulatory changes in TRG Cape Verde’s fundraising model, along with further challenges associated with little to no occupancy at its resort properties due to the ongoing COVID-19 pandemic. Helios is actively working with the borrower to restructure the facility which is expected to be finalized in the coming quarters.

Helios Maritime I

Between July 2015 and December 2017, the Company purchased six Participations totaling $15,300,000 in a term loan facility with Helios Maritime I (“Helios Maritime”), a company setup for the purposes of on-lending to Starz Investment Company, Ltd., a Nigerian shipping and logistics company for the purpose of acquiring a handling tug vessel. Repayment on this position has been slower than originally anticipated due to delays in acquiring a long-term contract, which has been further prolonged based on challenges presented by the COVID-19 pandemic and the recent decline in oil prices. Helios is actively working with the borrower to restructure the facility which is expected to be finalized in the coming quarters.

Investments through The International Investment Group L.L.C. (“IIG”) as the Sub-Advisor

The International Investment Group L.L.C. (“IIG”) was the sub-advisor with respect to certain investments that the Company made in South America, including eight of the 19 Watch List investments as of September 30, 2020. Since June 30, 2018, the Company has discovered, among other things, that IIG failed to provide the Company with complete and accurate information with respect to the investments for which IIG was the sub-advisor and, in 2017, sold the Company a $6 million participation in a loan to Nacadie (defined below) that did not exist. The Company has not received any material updated information from IIG concerning the investments for which IIG was the sub-advisor since the first quarter of 2019, despite IIG being contractually obligated to provide the Company with updated information.

The SEC previously charged IIG with fraud on November 21, 2019 and revoked IIG's registration as an investment adviser on November 26, 2019. On March 30, 2020, the SEC obtained a final judgment on consent that enjoins IIG from violating the antifraud provisions of the federal securities laws. On July 17, 2020, the SEC filed fraud charges against David Hu, one of IIG's co-founders, who was also charged by the U.S. Attorney's Office for the Southern District of New York in a parallel criminal action. IIG has ceased operations and the Company does not expect to receive any further reporting from IIG with respect to its outstanding investments. The Company is taking necessary steps, including legal action in some cases, in order to ascertain as much information as possible regarding these investments.

Most of the outstanding investments for which IIG was the sub-advisor were purchased from IIG TOF B.V., a Dutch Limited Liability Company advised by IIG. On December 11, 2019, a subsidiary of the Company filed an application in Amsterdam District Court to declare IIG TOF B.V. bankrupt. As set forth in the application for the Declaration of Bankruptcy, the Company and other creditors believe they have multiple due and payable claims against IIG TOF B.V. which IIG TOF B.V. has acknowledged it is unable to pay. On January 21, 2020, the Amsterdam District Court declared IIG TOF B.V. bankrupt and appointed a Dutch law firm as liquidator. The Company is seeking recovery of amounts due and payable to the Company with respect to the Participations it acquired from IIG TOF B.V. There can be no assurances as to when or if the Company will recover the amounts to which the Company believes it is entitled. Additional information regarding Watch List investments for which IIG was the sub-advisor with a fair value equal to or greater than 1.0% of the Company's net assets as of September 30, 2020 is presented below.

Compania Argentina de Granos

Between October 2016 and February 2017, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Compania Argentina de Granos (“CAGSA”), as borrower. The Company purchased the initial Participation in October 2016 for $10,000,000 and subsequently increased the Participation by another $2,500,000 in February 2017. This facility is collateralized by two export contracts. CAGSA, an Argentine company, is mainly engaged in the trading of grain and oilseed and the distribution and processing of food ingredients. Due to unfavorable weather conditions, CAGSA was unable to make delivery of toasted soybean meal under the terms of its export contracts. As a result, it failed to pay IIG its outstanding principal due on June 30, 2018.

IIG previously informed the Company that it had been in active discussions with CAGSA and other CAGSA lenders to protect its rights under the credit facility. Additionally, IIG had previously informed the Company that IIG is a member of the creditors committee, which would determine all financial and restructuring options of CAGSA, which may include additional equity infusions by the existing shareholders. In February 2019, CAGSA disclosed that it had reached a preliminary settlement with its creditors. As of the date of this report, the Company does not know if the preliminary settlement has been finalized and details of the terms of the preliminary settlement were not available. As noted above, IIG has ceased operations and the Company has taken legal action in an attempt to recover amounts due.

Sancor Cooperativas Unidas Limitada

In April 2016 the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Sancor Cooperativas Unidas Limitada (“Sancor”), an Argentine company that distributes dairy products, as the borrower. IIG had worked with Sancor to restructure the existing loan and extended the maturity to July 29, 2019, with an annual renewal option. Since February 2019, Sancor has announced the sale of certain of its assets, which allowed it to make some payments to creditors and maintain operations, but the Company has not received any payment as a result of those asset sales. It is the Company’s understanding that Sancor is engaged in ongoing negotiations with its lenders regarding a debt restructuring. As noted above, IIG has ceased operations and the Company has taken legal action in an attempt to recover amounts due. During the quarter ended September 30, 2020, the Company learned, in connection with certain court proceedings in the United States Bankruptcy Court for the Southern District of New York regarding a fund advised by IIG, that funds had been received in a New York bank account controlled by an affiliate of IIG and that such funds may include prior debt service payments by Sancor related to the Company’s interests in the Sancor trade finance facility. The Company is monitoring the proceedings and expects to take steps, which may include legal action, to obtain control over any funds in such account to which the Company is entitled. There can be no assurances as to the amount of funds the Company may be able to obtain, or that it will be able to obtain any amounts from the account.

Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay and Algodonera Avellaneda S.A.

Between June 2016 and July 2016, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (“FRIAR”), an Argentine company that produces, processes and exports beef, as the borrower. In June 2017, IIG called a technical event of default due to non-payment by FRIAR. In an effort to seek repayment from FRIAR, IIG filed the promissory notes for FRIAR in the commercial court in Buenos Aires, Argentina.

In August 2019, the Company was informed by IIG’s legal counsel that the commercial court proceedings had been terminated due to the parties having reached a settlement. The Company also was told by IIG’s legal counsel that the settlement proceeds have been placed in an escrow account, however, the Company has not received a copy of the settlement agreement, does not know the amount received in the settlement, and does not know when or if it will receive any of the settlement proceeds. Accordingly, the Company does not know with certainty any amount that it may receive from the settlement.

In March 2017, the Company purchased a Participation in a trade finance facility originated by IIG TOF B.V., with Algodonera Avellaneda S.A. (“Algodonera”) as the borrower for $6,000,000. The loan agreement states that Vicentin has guaranteed the payments to be made by Algodonera under the facility. Algodonera is an Argentinian vertically integrated cotton business. IIG informed the Company that in June 2017, IIG called a technical default on Algodonera under the facility due to nonpayment of interest and on Vicentin under the payment guarantee due to the breach of informational covenants. Thereafter, IIG made a filing against Vicentin and Algodonera in the commercial court in Buenos Aires, Argentina on July 4, 2017. The commercial court has jurisdiction over commercial claims and disputes of this type.

IIG Trade Opportunities Fund B.V. Receivable

In March 2017, the Company purchased a Participation from IIG TOF B.V. in what the Company at that time believed to be a trade finance facility originated by IIG TOF B.V., with Nacadie Commercial S.A. (“Nacadie”) as the borrower. The Company purchased the Participation in March 2017 for $6,000,000. In connection with the Company’s review of this investment during the third quarter of 2018, IIG informed the Company that IIG had misapplied the funds the Company had transmitted at the time the Company made this investment. As a result, IIG offered to refund the Company’s investment amount, including all accrued interest. However, IIG did not repay the Company for this Participation. As noted above, the Company knows that the Nacadie facility in which it purchased this Participation did not exist and the Company considers this asset to be a receivable from IIG TOF B.V. rather than a Participation in a trade finance facility.

As noted above, IIG TOF B.V. has been declared bankrupt in the Netherlands, and the Company is seeking to recover amounts to which it is entitled through the bankruptcy proceedings. The Company has applied a discount to the fair value based on the risk created by the uncertainty of the ultimate resolution of the Company’s attempt to recover amounts to which it is entitled through the bankruptcy proceedings in the Netherlands.

Investments through TransAsia Private Capital Ltd. (“TransAsia”) as the Sub-Advisor

Triton Metallics Pte. Ltd.

In November 2019, the Company made an investment in Triton Metallics Pte. Ltd. (“Triton”) totaling $16,456,270 in a trade finance facility. Triton is a Singapore based diversified commodities trading company. TransAsia informed the Company in early 2020 that due to the COVID-19 pandemic there have been constrained trading volumes. As a result, TransAsia then began working with the borrower to restructure the facility and a restructuring agreement was executed on August 17, 2020. Under the new agreement, the loan was restructured from a trade finance facility into a term loan with the interest rate reduced from 11.5% to 6%, including 3% of PIK interest. The unpaid interest of $1,503,463 under the old trade finance facility has been capitalized and added to the outstanding principal balance as of the date of the new agreement. During the period of July 1, 2020 through August 16, 2020, $241,816 of interest income was recognized prior to the date the loan was restructured.

Conplex International Ltd.

Between November 2018 and May 2019, the Company purchased three Participations totaling $9,500,000 in a trade finance facility with Conplex International Ltd. (“Conplex”), a Hong Kong-based international open market distributor and wholesaler of electronics products. TransAsia had informed the Company that the borrower had a large portion of receivables overdue from a large off-taker. Subsequently, TransAsia began to actively work with the borrower to restructure the facility. While the restructuring was still progressing, TransAsia, after its regular search and review process, found that a winding-up petition was filed and approved on October 7, 2020. TransAsia immediately notified the Company while a court appointed provisional liquidator took control of Conplex. On October 14, 2020, TransAsia appointed a receiver to enforce on the secured facility.

Investments through Africa Merchant Capital Group (“AMC”) as the Sub-Advisor

Producam SA

Between March 2018 and June 2018, the Company purchased three Participations totaling $15,986,369 in a trade finance facility with Producam SA (“Producam”), a Cameroon based cocoa and coffee exporter, as the borrower. Repayment on these Participations has been slower than originally anticipated due to short run cash flow pressure on Producam. AMC informed the Company that the borrower misapplied the proceeds from the sale of certain of its inventory to finance its own cash flow needs rather than repay the facility. AMC then began working with the borrower to restructure the facility and the restructuring process is expected to be finalized during the fourth quarter of 2020.

Investments through Scipion Capital, Ltd. (“Scipion”) as the Sub-Advisor

Mac Z Group SARL

Between July 2016 and April 2017, the Company purchased nine Participations totaling $9,000,000 in a trade finance facility with Mac Z Group SARL (“Mac Z”), a scrap metal recycler, as the borrower. Mac Z is located in Morocco. The primary collateral securing this Participation was 1,970 tons of copper scrap. In late October 2017, Scipion’s designated collateral manager for Mac Z notified Scipion of an investigation into a 1,820 ton, approximately $13.3 million, shortage of copper scrap inventory physically held in the warehouse. The copper scrap is pledged to the Company and serves as the primary collateral for this Participation. The missing inventory led the Company to place Mac Z on the Watch List and on non-accrual status.

In addition to conducting its investigation, Scipion issued an event of default and has taken steps to enforce the corporate guarantee, personal guarantee and relevant pledges made for the benefit of Scipion with respect to the facility, which include two insurance policies. Scipion has placed a blocking notice on all of Mac Z’s bank accounts and has requested a freeze order from the Moroccan local courts on the physical assets of the company. Since the initial discovery and actions, Mac Z sold remaining inventory and the Company was paid interest of approximately $330,000 in January 2018 and $292,000 during the first week April 2018.

Mortgages against two unencumbered parcels of land ($5.9 million estimated value) are in the process of being finalized in favor of Scipion under this facility. A judgment was received on December 18, 2017, in English court ordering the borrower and the corporate guarantor to make payment. In parallel to its recovery plan with respect to Mac Z, Scipion informed the Company that it has received a judgment in its favor with respect to its claim against the collateral manager under its professional indemnity insurance policy, which covers up to $40 million in losses. Subsequent to quarter end, $9,377,199 from a settlement under this insurance policy was received by the Company in October 2020.

The industry composition of the Company’s portfolio, at fair value as of September 30, 2020 and December 31, 2019, was as follows:

	As of September 30, 2020					As of December 31, 2019
	Fair		Percentage			Fair		Percentage
Industry	Value		of Total			Value		of Total
Agricultural Products	$	12,256,800		3.7	%	$	12,417,122		3.6	%
Boatbuilding and Repairing		5,916,249		1.8	%		5,695,069		1.7	%
Chemicals and Allied Products		15,000,000		4.6	%		15,000,000		4.4	%
Chocolate and Cocoa Products		13,254,796		4.1	%		9,687,887		2.8	%
Coal and Other Minerals and Ores		33,463,146		10.2	%		32,348,090		9.5	%
Commercial Fishing		35,838		0.0	%		35,838		0.0	%
Communications Equipment		—		0.0	%		100,000		0.0	%
Consumer Products		9,318,469		2.8	%		9,318,469		2.7	%
Corrugated and solid fiber boxes		13,351,735		4.1	%		—		—
Department Stores		9,148,108		2.8	%		8,638,109		2.5	%
Drugs, Proprietaries, and Sundries		648,430		0.2	%		803,254		0.2	%
Electric Services		1,421,461		0.4	%		16,383,269		4.8	%
Farm Products		9,784,999		3.0	%		9,644,313		2.8	%
Fats and Oils		3,398,558		1.0	%		3,398,558		1.0	%
Financial services		3,758,063		1.1	%		3,758,063		1.1	%
Freight Transportation Arrangement		13,920,375		4.3	%		13,505,035		4.0	%
Food Products		2,291,404		0.7	%		2,724,804		0.8	%
Groceries and Related Products		433,586		0.1	%		468,756		0.1	%
Hotels and Motels		11,404,266		3.5	%		12,846,584		3.8	%
Land Subdividers and Developers		15,057,045		4.6	%		16,781,000		4.9	%
Logging		—		0.0	%		5,612,436		1.6	%
Meat, Poultry & Fish		6,361,679		1.9	%		6,240,961		1.8	%
Motor Vehicle Parts and Accessories		9,100,782		2.8	%		8,731,936		2.6	%
Personal Credit Institutions		2,388,151		0.7	%		3,603,592		1.1	%
Petroleum and Petroleum Products		14,592,683		4.5	%		15,500,000		4.6	%
Programming and Data Processing		18,031,250		5.5	%		17,740,330		5.2	%
Refuse Systems		28,711,264		9.0	%		25,766,063		7.6	%
Secondary Nonferrous Metals		16,734,018		5.1	%		17,530,616		5.2	%
Short-Term Business Credit		4,740,000		1.4	%		4,740,000		1.4	%
Soap, Detergents, and Cleaning		2,445,680		0.7	%		2,894,698		0.9	%
Telephone and Telegraph Apparatus		3,366,356		1.0	%		8,840,048		2.6	%
Telephone Communications		34,856,141		10.7	%		36,794,973		10.8	%
Water Transportation		12,078,217		3.7	%		12,748,503		3.7	%
Total	$	327,269,549		100.0	%	$	340,298,376		100.0	%

The table below shows the portfolio composition by geographic classification at fair value as of September 30, 2020 and December 31, 2019:

	As of September 30, 2020					As of December 31, 2019
	Fair		Percentage			Fair		Percentage
Country	Value		of Total			Value		of Total
Argentina (1)	$	24,159,256		7.4	%	$	24,198,860		7.1	%
Botswana		4,740,000		1.4	%		4,740,000		1.4	%
Brazil		26,524,663		8.1	%		26,012,563		7.6	%
Cabo Verde		11,404,266		3.5	%		12,846,584		3.8	%
Cameroon		13,254,796		4.1	%		9,687,887		2.9	%
Chile		2,797,255		0.9	%		2,652,855		0.8	%
Colombia		23,184,292		7.1	%		23,479,065		6.9	%
Croatia		9,148,108		2.8	%		8,638,109		2.5	%
Ecuador		13,387,573		4.1	%		35,838		0.0	%
Ghana		14,592,683		4.5	%		30,500,000		9.0	%
Guatemala		10,504		0.0	%		10,504		0.0	%
Hong Kong		30,532,915		9.3	%		51,188,138		15.0	%
Jersey		14,060,000		4.3	%		16,919,500		5.0	%
Kenya		13,920,375		4.3	%		13,505,035		4.0	%
Malaysia		15,000,000		4.6	%		15,000,000		4.4	%
Mauritius		433,586		0.1	%		468,756		0.1	%
Mexico		28,711,264		8.8	%		25,766,063		7.6	%
Morocco		6,734,018		2.1	%		7,530,616		2.2	%
Namibia		15,057,045		4.6	%		16,781,000		4.9	%
Netherlands		9,100,782		2.8	%		8,731,936		2.6	%
New Zealand		—		0.0	%		5,612,436		1.7	%
Nigeria		13,592,440		4.0	%		14,262,726		4.2	%
Peru		4,599,086		1.4	%		4,599,086		1.4	%
Romania		1,793,942		0.5	%		2,034,188		0.6	%
Singapore		16,296,587		5.0	%		—		0.0	%
South Africa		497,462		0.2	%		790,616		0.2	%
United Arab Emirates		648,430		0.2	%		803,254		0.2	%
Uganda		6,884,478		2.1	%		6,850,000		2.0	%
Zambia		2,445,680		0.7	%		2,894,698		0.9	%
N/A		3,758,063		1.1	%		3,758,063		1.1	%
Total	$	327,269,549		100.0	%	$	340,298,376		100.0	%

(1)	All of the Company’s investments in Argentina are Participations in trade finance facilities originated by IIG TOF B.V., a subsidiary of a fund advised by the Company’s sub-advisor, IIG. See Note 3 “Watch List Investments” for further information.

Note 4. Fair Value Measurements

The following table summarizes the valuation of the Company’s investments by the fair value hierarchy levels required under ASC 820 as of September 30, 2020:

	Fair
	Value		Level 1		Level 2		Level 3
Senior secured term loans	$	110,312,389	$	—	$	—	$	110,312,389
Senior secured term loan participations		159,969,216		—		—		159,969,216
Senior secured trade finance participations		52,030,263		—		—		52,030,263
Other investments		3,758,063		—		—		3,758,063
Equity warrants		1,199,618		—		—		1,199,618
Total	$	327,269,549	$	—	$	—	$	327,269,549

The following table summarizes the valuation of the Company’s investments by the fair value hierarchy levels required under ASC 820 as of December 31, 2019:

	Fair
	Value		Level 1		Level 2		Level 3
Senior secured term loan	$	83,353,208	$	—	$	—	$	83,353,208
Senior secured term loan participations		180,500,425						180,500,425
Senior secured trade finance participations		71,606,458		—		—		71,606,458
Short term investments		3,758,063						3,758,063
Equity warrants		1,080,222						1,080,222
Total	$	340,298,376	$	—	$	—	$	340,298,376

The following is a reconciliation of activity for the nine months ended September 30, 2020, of investments classified as Level 3:

	Fair Value at December 31, 2019		Purchases		Maturities or Prepayments			Accretion of discounts / Payment-in-kind interest		Net change in unrealized appreciation (depreciation)			Fair Value at September 30, 2020
Senior secured term loans	$	83,353,208	$	13,250,000	$	9,443,728		$	5,928,599	$	(1,663,146	)	$	110,312,389
Senior secured term loan participations		180,500,425		-		(19,647,763	)		5,758,950		(6,642,396	)		159,969,216
Senior secured trade finance participations		71,606,458		7,000,000		(23,746,265	)		2,829,601		(5,659,531	)		52,030,263
Short term and other investments		3,758,063		4,000,000		(4,000,000	)		—					3,758,063
Equity warrants		1,080,222		—		—			—		119,396			1,199,618
Total	$	340,298,376	$	24,250,000	$	(37,950,300	)	$	14,517,150	$	(13,845,677	)	$	327,269,549

There were no realized gains or losses for any of the Company’s investments classified as Level 3 during the three and nine months ended September 30, 2020 and 2019. Net unrealized depreciation for the nine months ended September 30, 2020 and 2019 reported in the Company’s consolidated statements of operations attributable to the Company’s Level 3 assets still held at period end were $13,845,677 and $2,250,398, respectively. These unrealized losses were primarily driven by macro events including the uncertainty created by the recent COVID-19 pandemic and its impact on the future cash flows generated by our investments as well as the ultimate realization of the underlying collateral.

As of September 30, 2020, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of September 30, 2020:

	Fair value		Valuation technique	Unobservable input	Range (weighted average)
Senior secured trade finance participations (2)	$	48,653,403	Income approach (DCF)	Market yield	8.5% - 14.6% (10.5%)
Senior secured trade finance participations (1)	$	3,376,860	Collateral based approach	Value of collateral (collateral coverage)	1.0x - 1.1x
Senior secured term loans	$	110,312,389	Income approach (DCF)	Market yield	11.0% - 14.5% (11.4%)
Senior secured term loan participations	$	159,969,216	Income approach (DCF)	Market yield	10.3% - 15.0% (12.4%)
Other investments (3)	$	3,758,063	Income approach (DCF)	Market yield	8.80%
Equity warrants	$	1,199,618	Option Pricing Method	Estimated company value	N/A

(1)	Collateral based approach used for the following watch list investments: Procesos Fabriles S.A. ("Profasa") and Conplex International Ltd. (“Conplex”). See Note 3 “Watch List Investments” for further information.

(2)

The Company used the income approach for all Watch List investments except for Conplex, Sancor and Profasa and a hybrid of the collateral based approach and the income approach for Sancor, using additional unobservable inputs including recovery rates ranging from 15% to 30%, after considering potential and ongoing litigation and expected collection period ranging from 2 to 3 years. See Note 3 “Watch List Investments” for further information.

(3)	Receivable from IIG TOF B.V. using additional discount rate of 20%.

As of December 31, 2019, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of December 31, 2019:

	Fair value		Valuation technique	Unobservable input	Range (weighted average)
Senior secured trade finance participations (2)	$	70,792,700	Income approach (DCF)	Market yield	9.0% - 16.8% (12.7%)
Senior secured trade finance participations (1)	$	813,758	Collateral based approach	Value of collateral (collateral coverage)	1.0x - 1.1x
Senior secured term loans	$	83,353,208	Income approach (DCF)	Market yield	10.0% - 14.5% (12.4%)
Senior secured term loan participations	$	180,500,425	Income approach (DCF)	Market yield	11.0% - 15.9% (13.0%)
Other investments (3)	$	3,758,063	Hybrid income/collateral based approach	Market yield / value of collateral	8.75%
Equity warrants	$	1,080,222	Option Pricing Method	Estimated company value	N/A

(1)	Collateral based approach used for the following watch list investments: Profasa and Global Pharma Intelligence Sarl (“GPI”). See Note 3 “Watch List Investments” for further information.

(2)

The Company used the income approach for Algodonera, FRIAR, CAGSA, and Functional Products Trading S.A. (“Functional”) and a hybrid of the collateral based approach and the income approach for Sancor and Mac Z, using additional unobservable inputs including recovery rates ranging from 15% to 30%, after considering potential and ongoing litigation and expected collection period ranging from 2 to 3 years. See Note 3 “Watch List Investments” for further information.

(3)	Receivable from IIG TOF B.V. using additional discount rate of 20%.

The significant unobservable Level 3 inputs used in the fair value measurement of the Company’s investments are market yields used to discount the estimated future cash flows expected to be received from the underlying investments, which include both future principal and interest payments. Significant increases in market yields would result in significantly lower fair value measurements. In addition, a significant decrease in future cash flows is expected to be received from the underlying investments due to a projected decrease in results of operations and cash flows from the underlying investments, would result in significantly lower fair value measurements.

For additional information concerning of the country-specific risk concentrations for the Company’s investments, refer to the Consolidated Schedule of Investments and Note 3.

Note 5. Contingencies and Related Parties

Agreements

Advisory Agreement

The current term of the Advisory Agreement between the Company and the Advisor, (the “Advisory Agreement”) ends on February 25, 2021, subject to an unlimited number of one-year renewals upon mutual consent of the Company and the Advisor.

Asset management fees payable to the Advisor are remitted quarterly in arrears and are equal to 0.50% (2.00% per annum) of Gross Asset Value, as defined in the Advisory Agreement between the Company and the Advisor. Asset management fees are paid to the Advisor in exchange for fund management and administrative services. Although the Advisor manages, on the Company’s behalf, many of the risks associated with global investments in developing economies, management fees do not include the cost of any hedging instruments or insurance policies that may be required to appropriately manage the Company’s risk.

If certain financial goals are reached by the Company, the Company is required to pay the Advisor an incentive fee that is comprised of two parts: (i) a subordinated fee on net investment income and (ii) an incentive fee on capital gains. The subordinated incentive fee on income is calculated and payable quarterly in arrears and is based upon the Company’s pre-incentive fee net investment income for the immediately preceding quarter. No subordinated incentive fee is earned by the Advisor in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the quarterly preferred return rate of 1.50% (6.00% annualized) (the “Preferred Return”). In any quarter, all of the Company’s pre-incentive fee net investment income, if any, that exceeds the quarterly Preferred Return, but is less than or equal to 1.875% (7.50% annualized) at the end of the immediately preceding fiscal quarter, is payable to the Advisor. For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.875% on its net assets at the end of the immediately preceding fiscal quarter, the subordinated incentive fee on income equals 20% of the amount of the Company’s pre-incentive fee net investment income.

An incentive fee on capital gains will be earned on investments sold and shall be determined and payable to the Advisor in arrears as of the end of each calendar year. The incentive fee on capital gains is equal to 20% of the Company’s realized capital gains on a cumulative basis from inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees on capital gains. The Company had no capital gains and therefore did not accrue an incentive fee on capital gains for the three and nine months ended September 30, 2020 and 2019.

Transactions

For the three months ended September 30, 2020 and 2019, the Advisor earned $1,826,223, and $1,904,766, respectively, in asset management fees and $1,626,134 and $1,489,914, respectively, in incentive fees. For the nine months ended September 30, 2020 and 2019, the Advisor earned $5,517,650 and $5,812,736, respectively, in asset management fees and $4,105,320 and $4,249,021, respectively, in incentive fees.

As of September 30, 2020 and December 31, 2019, due from affiliates on the Consolidated Statement of Assets and Liabilities in the amount of $4,057,734 and $4,240,231, respectively was due from the Sponsor pursuant to the Responsibility Agreement for operating expenses which were paid by the Company, but, under the terms of the Responsibility Agreement, are the responsibility of the Sponsor. The Sponsor anticipates paying this receivable in the due course of business.

Note 6. Organization and Offering Costs

As of September 30, 2020, the Sponsor has paid approximately $17,529,000 of offering costs and $236,000 of organization costs relating to the Offering, all of which were paid directly by the Sponsor on behalf of the Company, and were reimbursed to the Sponsor as disclosed in Note 2 of the consolidated financial statements. Such amounts include approximately $0 and $57,000 of offering costs, which were incurred by the Sponsor during the nine months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020 and 2019, the Company did not make any reimbursement of offering costs to the Sponsor. Such offering costs reimbursed by the Company have been recognized against the proceeds from the issuance of units.

From the commencement of the Company’s operations through September 30, 2020, the Company has reimbursed the Sponsor a total of $17,238,000 of offering and organization costs and there is a remaining balance of approximately $490,000 of offering costs that have not yet been reimbursed to the Sponsor as of September 30, 2020.

For the nine months ended September 30, 2020 and 2019, we paid SC Distributors, the dealer manager for certain of our offerings, $354,000 and $392,000, respectively in ongoing distributions fees, dealer manager fees and service fees.

Note 7. Notes Payable

The Company notes payable consist of the following:

	September 30, 2020		December 31, 2019
	Outstanding Balance		Outstanding Balance
Christian Super promissory note	$	5,000,000	$	5,000,000
Total notes payable	$	5,000,000	$	5,000,000

Christian Super Promissory Notes

On August 7, 2017, Trilinc Global Impact Fund Cayman, Ltd. (“TGIFC”) issued $5 million in the first of a Series 1 Senior Secured Promissory Notes private offering (the “CS Note”) to State Street Australia Ltd ACF Christian Super (“Christian Super”). The CS Note was issued pursuant to a private offering targeting $25 million in the aggregate amount.

The CS Note had an interest rate of 4.0% per annum plus one-year LIBOR and interest was payable quarterly in arrears within 15 days after the end of each calendar quarter. The entire principal balance under the CS Note (and any unpaid interest) was due in one balloon payment on August 7, 2021, which is the fourth anniversary of the issuance date. The principal balance of the CS Note may be prepaid prior to the maturity date without premium or penalty.

In September 2019, the Company repaid the entire principal amount of $5 million that was due under the CS Note.

On December 18, 2018, TGIFC issued $5 million of Series 2 Senior Secured Promissory Notes (“Series 2 Note”) to Christian Super pursuant to the CS Notes private offering. The Series 2 Note has an interest rate of 3.5% per annum plus one-year LIBOR (3.05% as of March 31, 2020) and interest is payable quarterly in arrears within 15 days after the end of each calendar quarter. The interest rate may not exceed the maximum rate of non-usurious interest permitted by applicable law, with excess interest to be applied to the principal amount of the CS Note. The entire principal balance under the Series 2 Note (and any unpaid interest) is due in one balloon payment on December 18, 2021, which is the fourth anniversary of the issuance date. The principal balance of the CS Note may be prepaid prior to the maturity date without premium or penalty.

TGIFC’s obligation under the CS Note is secured by an equitable mortgage pursuant to the Equitable Mortgage Over Shares by and between TGIFC and the Noteholders, dated as of August 7, 2017 (the “CS Equitable Mortgage”), granting the holder of the CS Note a mortgage over 10 shares out of a total of 32.11 of the issued and outstanding shares of the Subsidiaries. While the collateral initially pledged under the CS Equitable Mortgage greatly exceeds the amount funded under the CS Note based on the current net asset value of the Company’s investments held by the Subsidiaries, the Company may issue more shares of the Subsidiaries to secure further financing obligations as long as the pro rata value of TGIFC shares (based on the aggregate net asset value of the investments held by the Subsidiaries) is equal to at least the outstanding amount due and payable under the CS Note. The CS Note and the CS Equitable Mortgage contain representations, warranties and covenants customary for financing and mortgage arrangements of this type. As of September 30, 2020, the Company was in full compliance with all such representations, warranties and covenants.

For the three months ended September 30, 2020 and 2019, the Company recognized $69,290 and $382,138, respectively, in interest expense. For the nine months ended September 30, 2020 and 2019, the Company recognized $206,363 and $1,590,805, respectively, in interest expense. Due to the variable rate structure of these borrowings, the carrying basis of these debt obligations is considered to approximate their fair value.

The principal payments due on borrowings for each of the next five years ending December 31 and thereafter, are as follows:

Year ending December 31:	Principal payments
2020	$	—
2021		5,000,000
Thereafter		-
	$	5,000,000

Note 8. Unit Capital

As of September 30, 2020, the Company had six classes of units: Class A, Class C, Class I, Class W, Class Y and Class Z units. The unit classes have been sold with different upfront sales commissions and dealer manager fees as well as different ongoing distribution fees, dealer manager fees and/or service fees with respect to certain classes of units, including a distribution fee with respect to Class C units, an ongoing dealer manager fee with respect to Class I and Class W units, and an ongoing service fee with respect to Class W units. As of September 30, 2020, the Company recorded a liability in the aggregate amount of $351,000 for the estimated future amount of ongoing distribution fees, dealer manager fees and service fees payable. The estimated liability as of September 30, 2020 is calculated based on a net asset value per Class C, Class I and Class W units of $7.769 with a distribution fee of 0.80% for Class C units, an ongoing dealer manager fee of 0.50% for Class I units, and ongoing aggregate dealer and service fees of 0.75% for Class W units, per annum applied to the net asset value, during the expected period that Class C, Class W and Class I units remain outstanding, and discounted using an annual rate of 4%. All units participate in the income and expenses of the Company on a pro-rata basis based on the number of units outstanding. The following table is a summary of unit activity during the nine months ended September 30, 2020:

	Units							Units
	Outstanding				Units			Outstanding
	as of		Units Issued		Repurchased			as of
	December 31,		During		During			September 30,
	2019		the Period		the Period			2020
Class A units		17,861,312		393,646		(311,378	)		17,943,580
Class C units		8,067,787		93,430		(194,474	)		7,966,743
Class I units		10,468,162		395,701		(375,547	)		10,488,316
Class W units		24,555		-		-			24,555
Class Y units		1,297,897		447,106		(3,995	)		1,741,008
Class Z units		8,423,851		-		-			8,423,851
Total		46,143,564		1,329,883		(885,394	)		46,588,053

The total of 1,329,883 units issued during the nine months ended September 30, 2020 included 883,263 units issued under the DRP at a value of $6,981,000 and 447,106 units sold pursuant to our private placement for aggregate gross proceeds of $3,580,000.

Beginning June 11, 2014, the Company commenced a unit repurchase program pursuant to which the Company may conduct quarterly unit repurchases of up to 5% of the weighted average number of outstanding units in any 12-month period to allow the Company’s unitholders, who have held units for a minimum of one year, to sell their units back to the Company at a price equal to the most recently determined net asset value per unit for each class of units, as most recently disclosed by the Company in a public filing with the SEC at the time of repurchase. Repurchases for the third quarter of 2020 have been made at a price equal to $7.769 per units, which was the net asset value per unit of each class as of June 30, 2020, the most recently disclosed net asset value at the time of repurchase.

The unit repurchase program includes numerous restrictions, including a one-year holding period, that limit the ability of the Company’s unitholders to sell their units. Unless the Company’s board of managers determines otherwise, the Company will limit the number of units to be repurchased during any calendar year to the number of units that can be repurchased with the proceeds the Company receives from the sale of units under the Company’s DRP. At the sole discretion of the Company’s board of managers, the Company may also use cash on hand, cash available from borrowings and cash from the repayment or liquidation of investments as of the end of the applicable quarter to repurchase units.

During the nine months ended September 30, 2020, the Company fulfilled repurchase requests for a total of 885,394 units at a weighted average repurchase price per unit of $7.865 for an aggregate repurchase price of $6,963,843. As of September 30, 2020, $2,279,645 of these repurchase requests were pending processing and were completed by the Company in October 2020. For the quarter ended September 30, 2020, eligible repurchase requests exceeded the limitations of the Company’s unit repurchase program described above and the requests were fulfilled on a pro rata basis, such that the Company fulfilled 12.42% of eligible repurchase requests (based on the number of units submitted for repurchase) and 1,886,000 units were not redeemed. Pursuant to the terms of the Company’s unit repurchase program, the unsatisfied portion of repurchase requests that were not fulfilled at quarter-end will be carried over to the next quarter and treated as a request for repurchase at the next quarter-end repurchase date, unless the repurchase request is withdrawn.

Note 9. Distributions

Since July 2013, the Company has paid monthly distributions for all classes of units. The following table summarizes the distributions paid for the nine months ended September 30, 2020:

		Daily Rate		Cash		Distributions		Total
Month ended	Date Declared	Per Unit		Distributions		Reinvested		Declared
January 31, 2020	January 15, 2020	$	0.00168675	$	1,610,076	$	793,883	$	2,403,959
February 29, 2020	February 14, 2020	$	0.00168675		1,513,649		743,093		2,256,742
March 31, 2020	February 21, 2020	$	0.00168675		1,648,333		772,972		2,421,305
April 30, 2020	February 21, 2020	$	0.00168675		1,573,136		769,639		2,342,775
May 31, 2020	February 21, 2020	$	0.00168675		1,630,166		798,492		2,428,658
June 30, 2020	May 14, 2020	$	0.00168675		1,586,255		768,554		2,354,809
July 31, 2020	May 14, 2020	$	0.00168675		1,633,362		790,735		2,424,097
August 31, 2020	May 14, 2020	$	0.00168675		1,647,236		784,492		2,431,728
September 30, 2020	August 11, 2020	$	0.00168675		1,602,006		758,709		2,360,715
Total for 2020				$	14,444,219	$	6,980,569	$	21,424,788

Note 10. Financial Highlights

The following is a schedule of financial highlights of the Company for the nine months ended September 30, 2020 and 2019:

	Nine months ended
	September 30,			September 30,
	2020			2019
Per unit data (1):
Net asset value at beginning of period	$	8.01		$	8.20
Net investment income	$	0.40		$	0.39
Net change in unrealized depreciation on investments	$	(0.30	)	$	(0.05	)
Net increase in net assets resulting from operations	$	0.10		$	0.34
Distributions	$	(0.46	)	$	(0.46	)
Net change in accrued distribution and other fees	$	0.01		$	0.02
Net decrease in net assets	$	(0.35	)	$	(0.10	)
Net asset value at end of period (2)	$	7.66		$	8.10
Total return based on net asset value (3)		1.27	%		4.10	%
Net assets at end of period	$	356,792,325		$	372,558,633
Units Outstanding at end of period		46,588,053			46,061,361
Ratio/Supplemental data (annualized) (3):
Ratio of net investment income to average net assets		6.12	%		6.25	%
Ratio of net operating expenses to average net assets		4.92	%		5.82	%

1	The per unit data was derived by using the weighted average units outstanding during the nine months ended September 30, 2020 and 2019, which were 46,497,461 and 44,215,313, respectively.

For financial statement reporting purposes under GAAP, as of September 30, 2020 and 2019, the Company recorded a liability in the amount of $351,000 and $780,000, respectively, for the estimated future amount of Class C distribution fees, Class I dealer manager fees, Class W dealer manager fees and Class W services fees payable. This liability is reflected in this table, which is consistent with the financial statements. While the Company follows GAAP for financial reporting purposes, it has determined that deducting the accrual for the estimated future amount of Class C distribution fees, Class I dealer manager fees, Class W dealer manager fees and Class W services fees may not be the appropriate approach for determining the net asset value used on the quarterly investor statements and for other purposes. The Company believes that not making such deduction for purposes of net asset value determination is consistent with the industry standard and is more appropriate since the Company intends for the net asset value to reflect the estimated value on the date that the Company determines its net asset value.

3	The Company’s net investment income has been annualized assuming consistent results over a full fiscal year, however, this may not be indicative of actual results over a full fiscal year.

Note 11. Subsequent Events

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in the Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three and nine months ended September 30, 2020, except as discussed below.

Distributions

With the authorization of the Company’s board of managers, the Company declared distributions for all classes of units for the period from October 1 through October 31, 2020. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00168675 per unit per day (less the distribution fee with respect to Class C units, the ongoing dealer manager fee with respect to certain Class I units and Class W units, and the ongoing service fee with respect to Class W units).

The cash distributions for October totaled $1,617,920. With respect to unitholders participating in the Distribution Reinvestment Plan, $779,445 of the distributions for October were reinvested in units.

The Company’s board of managers has authorized the declaration of distributions for November 2020. The November distributions will be calculated based on unitholders of record for each day in an amount equal to $0.00168675 per unit per day (less the distribution fee with respect to Class C units, the ongoing dealer manager fee with respect to certain Class I units and Class W units and the ongoing service fee with respect to Class W units). These distributions will be paid in cash on or about December 1, 2020 or reinvested in units, for those unitholders participating in the Distribution Reinvestment Plan.

Investments

Subsequent to September 30, 2020 through November 13, 2020, the Company did not fund any new investments and received proceeds from repayment of investments of approximately $20.2 million. In addition, $9,377,199 from a settlement under the insurance policy with respect to Mac Z was received by the Company in October 2020.

Sub-advisors

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

The following discussion and analysis should be read in conjunction with the Company’s financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q.

Except as otherwise specified, references to “we,” “us,” “our,” or the “Company,” refer to TriLinc Global Impact Fund, LLC.

Forward Looking Statements

Some of the statements in this Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

•

our future operating results;

•

our ability to purchase or make investments in a timely manner;

•

our business prospects and the prospects of our borrowers;

•

the impact of the COVID-19 pandemic and actions taken to prevent its spread on our business, results of operations, financial condition, liquidity and net asset value per unit;

•

the economic, social and/or environmental impact of the investments that we expect to make;

•

our contractual arrangements and relationships with third parties;

•

our ability to make distributions to our unitholders;

•

the dependence of our future success on the general economy and its impact on the companies in which we invest;

•

the availability of cash flow from operating activities for distributions and payment of operating expenses;

•

the performance of our Advisor, our sub-advisors and our Sponsor;

•

our dependence on our Advisor and our dependence on and the availability of the financial resources of our Sponsor;

•

the ability of our borrowers to make required payments;

•

our Advisor’s ability to attract and retain sufficient personnel to support our growth and operations;

•

the lack of a public trading market for our units;

•

our ongoing litigation;

•

our ability to borrow funds;

•

our expected financings and investments;

•

the adequacy of our cash resources and working capital;

•

performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments;

•

any failure in our Advisor’s or sub-advisors’ due diligence to identify all relevant facts in our underwriting process or otherwise;

•

the ability of our sub-advisors and borrowers to achieve their objectives;

•

the effectiveness of our portfolio management techniques and strategies;

•

failure to maintain effective internal controls; and

•

the loss of our exemption from the definition of an “investment company” under the Investment Company Act of 1940, as amended.

We use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason.

The foregoing list of factors is not exhaustive. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC.

Overview

We make impact investments in SMEs that provide the opportunity to achieve both competitive financial returns and positive measurable impact. We were organized as a Delaware limited liability company on April 30, 2012. We have operated and intend to continue to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940, as amended. We use the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, loan participations, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. A substantial portion of our assets consists of collateralized private debt instruments, which we believe offer opportunities for competitive risk-adjusted returns and income generation. We are externally managed and advised by TriLinc Advisors, LLC, or the Advisor. The Advisor is an investment advisor registered with the SEC.

Our business strategy is to generate competitive financial returns and positive economic, social and environmental impact by providing financing to SMEs, which we define as those business having less than 500 employees, primarily in developing economies. To a lesser extent, we may also make impact investments in companies that may not meet our technical definition of SMEs due to a larger number of employees but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. We generally expect that such investments will have similar investment characteristics as SMEs as defined by us. Our style of investment is referred to as impact investing, which J.P. Morgan Global Research and Rockefeller Foundation in a 2010 report called “an emerging alternative asset class” and defined as investing with the intent to create positive impact beyond financial return. We believe it is possible to generate competitive financial returns while creating positive, measurable impact. We measure the economic, social and environmental impact of our investments using industry-standard metrics, including the Impact Reporting and Investment Standards. Through our investments in SMEs, we intend to enable job creation and stimulate economic growth.

We commenced the Offering on February 25, 2013. Pursuant to the Offering, we were offering on a continuous basis up to $1.5 billion in units of our limited liability company interest, consisting of up to $1.25 billion of units in the primary offering consisting of Class A and Class C units at initial offering prices of $10.00 and $9.576 per unit, respectively, and Class I units at $9.025 per unit, and up to $250 million of units pursuant to our Distribution Reinvestment Plan. SC Distributors, LLC was the dealer manager for the Offering. In May 2012, the Advisor purchased 22,161 Class A units for aggregate gross proceeds of $200,000. On June 11, 2013, we satisfied the minimum offering requirement of $2,000,000 when the Sponsor purchased 321,330 Class A units for aggregate gross proceeds of $2,900,000 and we commenced operations. The Offering terminated on March 31, 2017. Through the termination of the Offering, we raised approximately $361,776,000 in gross proceeds, including approximately $13,338,000 raised through our Distribution Reinvestment Plan.

Upon termination of the primary portion of the Offering, we registered $75 million in Class A, Class C and Class I units to continue to be offered pursuant to our Distribution Reinvestment Plan to the investors who have purchased units in the Offering. Units issued pursuant to our Distribution Reinvestment Plan are being offered at the price equal to the net asset value per unit of each class of units, as most recently disclosed by the Company in a public filing with the SEC at the time of reinvestment. Our Distribution Reinvestment Plan was amended, effective May 25, 2020, to allow holders of all classes of units other than Class Z units to participate, including holders who purchased units in our private placements. The offering must be registered or exempt from registration in every state in which we offer or sell units. If the offering is not exempt from registration, the required registration generally is for a period of one year. Therefore, we may have to stop selling units in any state in which the registration is not renewed annually and the offering is not otherwise exempt from registration.

From time to time we opportunistically seek to raise capital through sales of our common units in private placements that are exempt from registration under the Securities Act, as amended (the “Securities Act”). For example, we currently are seeking to raise up to $100,000,000 in a continuous private offering of our Class Y and Class Z units that will expire on December 31, 2020, unless terminated earlier by us.

For the nine months ended September 30, 2020, we issued 883,263 of our units pursuant to our Distribution Reinvestment Plan for gross proceeds of approximately $6,981,000. In addition, for the nine months ended September 30, 2020, we issued 447,106 of our units for gross proceeds of approximately $3,580,000 pursuant to our ongoing private placement described above. As of September 30, 2020, $39,722,000 in units remained available for sale pursuant to the Distribution Reinvestment Plan.

From our inception to September 30, 2020, we have issued an aggregate of 52,817,207 of our units, including 6,229,154 units issued under our Distribution Reinvestment Plan, for gross proceeds of approximately $489,042,000 including approximately $48,616,000 reinvested under our Distribution Reinvestment Plan (before dealer manager fees of approximately $4,801,000 and selling commissions of $16,862,000), for net proceeds of $467,379,000.

Impact of COVID-19

There is an ongoing COVID-19 pandemic (more commonly referred to as the Coronavirus), which continues to adversely impact many industries and businesses directly or indirectly. Adverse impacts include disrupted global travel and supply chains, which adversely impact global commercial activity. Many businesses across the globe, first in Asia, then in Europe, then in the United States, and finally Latin America and Africa, have seen a downturn in production and productivity due to the suspension of business and temporary closure of offices and factories in an attempt to curb the spread of the Coronavirus. Any of these adverse developments could have a material adverse effect on our business, financial condition and results of operations. In addition, the extent of the impact of COVID-19 on the business, financial condition and results of operations of our borrowers may result in their inability to make required payments in the near term which could impact the fair value of our investments. Although the Coronavirus has created material uncertainty and economic disruption, due to the rapidly evolving nature of the situation, we cannot predict the ultimate impact it will have on us. We are managing the situation through active engagement with our borrowers and are analyzing the potential effects COVID-19 may have on the portfolio or any potential capital deployments. Additionally, our Advisor has implemented its business continuity plan and additional procedures designed to protect against the introduction of the Coronavirus to the workforce, including permitting and encouraging employees to work remotely, temporarily ceasing travel and significantly enhanced office sterilization procedures to minimize the probability of contagion.

As of the date of this report, with respect to current and future payment performance, 19.5% of investments (based on the fair value of the investments as of September 30, 2020, are known to have been significantly impacted, including material losses to revenues, by COVID-19 resulting in the need to restructure or extend payments associated with the aforementioned investments.

While many of our borrowers' businesses have experienced some disruption related to COVID-19, degrees of effect have varied to-date. As indicated in “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments," the borrowers with respect to three of the four investments we added to the Watch List for the nine months ended September 30, 2020 have not made required payments in part due to adverse impacts they have experienced related to the COVID-19 pandemic. Where appropriate, we and/or our sub-advisors are working with borrowers to restructure facilities and may restructure additional facilities to provide relief needed by certain borrowers, without necessarily providing concessions that are out of market. In the case of one investment, where efforts to reach an appropriate risk-adjusted restructuring have been unsuccessful, our sub-advisor issued a notice of default and acceleration notice, including the initiation of legal proceedings to recover amounts due.

Due to the disruptions associated with COVID-19, we can provide no assurances that we will be able to continue to collect interest and principal payments at levels comparable to those prior to the pandemic. Further, we can provide no assurances that we will be able to recover all past due amounts from delinquent borrowers. The economic uncertainty and disruption caused by the pandemic are expected to be prolonged and we may see further defaults and additional investments may be added to the Watch List in subsequent quarters. The adverse impact of COVID-19 was a significant contributor to the $0.358 decline in our NAV per unit as of September 30, 2020, as compared to our NAV per unit as of December 31, 2019.

In addition, we have seen, and expects to continue to see, a slowdown in transaction volume due to the impact of the pandemic, as smaller SMEs and those in industries most affected by COVID-19 (travel and hospitality, retail sales, etc.) may no longer be in a position to appropriately add debt capital. Transaction volumes may also be affected by restrictions on travel and other shelter in place orders, making it more difficult to conduct in-person visits with potential borrowers. Additionally, in future periods, we may hold higher levels of cash than before the pandemic to ensure we have sufficient cash available to meet our cash obligations. A potential slower pace of deployment or higher cash balances each have the potential to further reduce cash flow generated to cover our distributions to our unitholders and/or cause us to further reduce our NAV in future periods.

Investments

Our investment objectives are to provide our unitholders current income, capital preservation, and modest capital appreciation. These objectives are achieved primarily through SME trade finance and term loan financing, while employing rigorous risk-mitigation and due diligence practices, and transparently measuring and reporting the economic, social and environmental impacts of our investments. The majority of our investments are senior and other collateralized loans to SMEs with established, profitable businesses in developing economies. To a lesser extent, we may also make investments in financing to companies that may not meet our technical definition of SMEs due, for example, to the companies having a larger number of employees, but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. Furthermore, we may also make investments in developed economies, including the United States. With the sub-advisors that our Advisor has contracted with to assist the Advisor in implementing the Company’s investment program, we expect to provide growth capital financing generally ranging in size from $5-20 million per transaction for direct SME loans and $500,000 to $15 million for trade finance transactions. We seek to protect and grow investor capital by: (1) targeting countries with favorable economic growth and investor protections; (2) partnering with sub-advisors with significant experience in local markets; (3) focusing on creditworthy lending targets who have at least 3-year operating histories and demonstrated cash flows enabling loan repayment; (4) making primarily debt investments, backed by collateral and borrower guarantees; (5) employing best practices in our due diligence and risk mitigation processes; and (6) monitoring our portfolio on an ongoing basis. By providing additional liquidity to growing small businesses, we believe we support both economic growth and the expansion of the global middle class.

Investments will continue to be primarily credit facilities and participations in credit facilities to developing economy SMEs, including trade finance and term loans, through the Advisor’s team of professional sub-advisors with a local presence in the markets where they invest. As of September 30, 2020, more than a majority of our investments were in the form of participations and we expect that future investments will continue to be primarily participations. We typically provide financing that is collateralized, has a short to medium-term maturity and is self-liquidating through the repayment of principal. Our counterparty for participations generally will be the respective sub-advisor or its affiliate that originates the loan in which we are participating. We will not have a contract with the underlying borrower and therefore, in the event of default, we will not have the ability to directly seek recovery against the collateral and instead will have to seek recovery through our sub-advisor counterparty, which increases the risk of full recovery.

Certain investments, including loans and participations, may carry equity warrants on borrowers, which allow us to buy shares of the portfolio company at a given price, which we will exercise at our discretion during the life of the portfolio company. Our goal is to ultimately dispose of such equity interests and realize gains upon the disposition of such interests. However, these warrants and equity interests are illiquid and it may be difficult for the Company to dispose of them. In addition, we expect that any warrants or other return enhancements received when we make or invest in loans may require several years to appreciate in value and may not appreciate at all.

Revenues

Since we anticipate that the majority of our assets will continue to consist of trade finance instruments and term loans, we expect that the majority of our revenue will continue to be generated in the form of interest. Our senior and subordinated debt investments may bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semi-annually. In some cases, some of our investments provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally is due at the maturity date. In addition, we generate revenue in the form of acquisition and other fees in connection with some transactions. Original issue discounts and market discounts or premiums are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.

Expenses

Our primary operating expenses include the payment of asset management fees and expenses reimbursable to our Advisor under the Advisory Agreement. We bear all other costs and expenses of our operations and transactions.

From our inception through December 31, 2017, under the terms of the Expense Responsibility Agreement, our Sponsor assumed substantially all our operating expenses. Our Sponsor has not assumed any of our operating expenses subsequent to December 31, 2017. As of December 31, 2017, the Sponsor had agreed to pay a cumulative total of approximately $16.7 million of operating expenses, of which $16.1 million have not been reimbursed to the Sponsor as of September 30, 2020.

Portfolio and Investment Activity

During the nine months ended September 30, 2020, we invested approximately $24.3 million across four separate portfolio companies, including one new borrower. Our investments consisted of senior secured trade finance participations, senior secured term loan participations, senior secured term loans, short term notes, and equity warrants. Additionally, we received proceeds from repayments of investment principal of approximately $38.0 million.

At September 30, 2020 and December 31, 2019, the Company’s investment portfolio included 41 and 47 companies, respectively, and the fair value of our portfolio was comprised of the following:

	As of September 30, 2020					As of December 31, 2019
	Investments		Percentage of			Investments		Percentage of
	at Fair Value		Total Investments			at Fair Value		Total Investments
Senior secured term loans	$	110,312,389		33.7	%	$	83,353,208		24.5	%
Senior secured term loan participations		159,969,216		49.0	%		180,500,425		53.0	%
Senior secured trade finance participations		52,030,263		15.9	%		71,606,458		21.0	%
Short term and other investments *		3,758,063		1.1	%		3,758,063		1.1	%
Equity warrants		1,199,618		0.4	%		1,080,222		0.3	%
Total investments	$	327,269,549		100.0	%	$	340,298,376		100.0	%

As of September 30, 2020, the weighted average yields, based upon the cost of our portfolio, on trade finance participations, term loan participations, senior secured term loans, and short term investments were 10.5%, 12.4%, 11.4%, and 8.8%, respectively, for a weighted average yield on investments of approximately 11.7% on our total portfolio.

As of September 30, 2019, the weighted average yields, based upon the cost of our portfolio, on trade finance participations, term loan participations, senior secured term loans, and short term investments were 12.7%, 13.0%, 12.4%, and 8.8%, respectively, for a weighted average yield on investments of approximately 12.7% on our total portfolio.

As of September 30, 2020, we had the following investments, listed by description of the underlying borrower (if applicable):

Description

Sector

Industry Classification

Country

Interest

Maturity (1)

Principal

Amount

Fair Value

Sugar Producer

Agricultural Products

Sustainable Agriculture & Agroprocessing

Brazil

12.43%

12/15/2020

(2)

2,851,296

2,577,164

LED Lighting Service Provider

Electric Services

Technological Innovation

Chile

11.00%

6/6/2021

(2)

1,456,162

1,421,461

Minor Metals Resource Trader

Secondary Nonferrous Metals

Responsible Metals Distribution

Hong Kong

12.00%

6/22/2021

10,000,000

Consumer Lender

Personal Credit Institutions

Inclusive Finance

Colombia

11.25%

8/1/2021

2,388,151

Sustainable Packaging Manufacturer

Corrugated and solid fiber boxes

Recycling

Ecuador

9.16% Cash/2.20% PIK

6/18/2025

13,351,735

Resource Trader

Coal and Other Minerals and Ores

Responsible Natural Resources Distribution

Hong Kong

11.50%

12/31/2020

17,166,559

Wholesale Distributor

Chemicals and Allied Products

Responsible Industrial Goods Distribution

Malaysia

12.00%

3/31/2021

15,000,000

Waste to Fuels Processor

Refuse Systems

Recycling

Mexico

14.50% PIK

7/27/2021

(3)

27,511,646

28,711,264

Sustainable Timber Exporter

Logging

Sustainable Forestry

New Zealand

11.50%

2/11/2021

Diaper Manufacturer II

Consumer Products

Responsible Consumer Goods Production

Peru

11.00%

12/31/2024

4,599,086

SME Financier

Short-Term Business Credit

Inclusive Finance

Botswana

11.47%

8/18/2021

4,740,000

IT Service Provider

Programming and Data Processing

Access to Technology

Brazil

10.00% Cash/1.50% PIK

11/24/2022

17,847,364

18,031,250

Ship Maintenance & Repair Service Provider

Boatbuilding and Repairing

Infrastructure Development

Brazil

8.00% Cash/4.00% PIK

12/7/2023

5,918,938

5,916,249

Hospitality Service Provider

Hotels and Motels

Infrastructure Development

Cabo Verde

10.00% Cash/4.75% PIK

8/21/2021

(2)

13,316,643

11,404,266

Fiber Optics Network Provider

Telephone Communications

Access to Technology

Colombia

8.95% Cash/5.00% PIK

10/15/2023

20,576,143

20,796,141

Mall Operator

Department Stores

Infrastructure Development

Croatia

8.50% Cash/4.50% PIK

1/23/2021

9,148,108

Tank Farm Operator

Petroleum and Petroleum Products

Responsible Fuel Storage

Ghana

12.00%

2/10/2023

14,592,683

Mobile Network Operator

Telephone Communications

Access to Technology

Jersey

11.20%

3/28/2023

14,345,000

14,060,000

Freight and Cargo Transporter

Freight Transportation Arrangement

Responsible Logistics Management

Kenya

7.86% Cash/4.00% PIK

3/31/2023

13,920,375

Property Developer

Land Subdividers and Developers

Infrastructure Development

Namibia

8.50% Cash/4.00% PIK

8/15/2021

(2)

17,352,309

15,057,045

Wheel Manufacturer

Motor Vehicle Parts and Accessories

Responsible Consumer Goods Production

Netherlands

15.00%

8/20/2021

8,776,515

9,100,782

Marine Logistics Provider

Water Transportation

Responsible Logistics Management

Nigeria

10.66%

9/16/2020

(2)

14,542,437

12,078,217

Bread Manufacturer

Food Products

Responsible Consumer Goods Production

Romania

8.00% Cash/5.00% PIK

7/18/2021

1,807,414

1,793,942

Grain Processor C

Farm Products

Sustainable Agriculture & Agroprocessing

Uganda

14.50%

4/30/2024

6,850,000

6,884,478

FMCG Manufacturer

Soap, Detergents, and Cleaning

Responsible Consumer Goods Production

Zambia

10.38%

8/27/2023

2,445,680

Agriculture Distributor

Agricultural Products

Sustainable Agriculture & Agroprocessing

Argentina

10.45%

6/30/2018

(2)

12,500,000

9,679,636

Dairy Co-Operative

Consumer Products

Sustainable Dairy Production

Argentina

10.67%

7/29/2019

(2)

6,000,000

4,719,383

Beef Exporter

Meat, Poultry & Fish

Sustainable Agriculture & Agroprocessing

Argentina

11.50%

8/31/2017

(2)

9,000,000

6,361,679

Oilseed Distributor

Fats and Oils

Sustainable Agriculture & Agroprocessing

Argentina

9.00%

8/31/2017

(2)

6,000,000

3,398,558

Cocoa & Coffee Exporter

Chocolate and Cocoa Products

Sustainable Agriculture & Agroprocessing

Cameroon

9.00%

8/31/2019

(2)

13,243,285

13,254,796

Chia Seed Exporter

Farm Products

Sustainable Agriculture & Agroprocessing

Chile

10.90%

3/4/2018

(2)

1,326,687

1,375,794

Fish Processor & Exporter

Commercial Fishing

Sustainable Aquaculture & Processing

Ecuador

9.00%

6/19/2019

(2), (4)

35,838

Sesame Seed Exporter

Farm Products

Sustainable Agriculture & Agroprocessing

Guatemala

12.00%

3/31/2016

(2)

881,800

10,504

Non-Ferrous Metal Trader

Coal and Other Minerals and Ores

Responsible Metals Distribution

Singapore

3.00% Cash/3.00% PIK

8/18/2025

(2)

17,959,733

16,296,587

Mobile Phone Distributor

Telephone and Telegraph Apparatus

Access to Technology

Hong Kong

12.00%

4/24/2020

(2)

9,500,000

3,366,356

Vanilla Exporter

Groceries and Related Products

Sustainable Agriculture & Agroprocessing

Mauritius

10.66%

8/6/2020

(4)

433,586

Scrap Metal Recycler

Secondary Nonferrous Metals

Recycling

Morocco

11.00%

7/31/2018

(2)

7,349,626

6,734,018

Cocoa Trader III

Farm Products

Sustainable Agriculture & Agroprocessing

Nigeria

8.50%

8/31/2020

(4)

675,256

Cocoa Trader II	Farm Products	Sustainable Agriculture & Agroprocessing	Nigeria	8.50%	8/31/2020	(4)	838,967		838,967
Fruit & Nut Distributor	Food Products	Sustainable Agriculture & Agroprocessing	South Africa	10.00%	5/22/2015	(2)	785,806		497,462
Pharmaceuticals Distributor	Drugs, Proprietaries, and Sundries	Access to Healthcare and Pharmaceuticals	United Arab Emirates	14.60%	6/30/2018	(2)	648,430		648,430
Receivable from IIG TOF B.V.	Financial services	Other	N/A	8.75%	N/A	(2)	6,000,000		3,758,063
Total Investments								$	327,269,549

²	See Watch List Investments section below for further information.

³	This investment consists of a senior secured term loan and equity warrants in the borrower.

₄	Refer to the Consolidated Schedule of Investments for further information about the status of this investment.

As of September 30, 2020, the composition our investments based on the Company created industry classification was as follows:

Industry Classification	Value		of Total
Access to Healthcare and Pharmaceuticals	$	648,430		0.2	%
Access to Technology		56,253,747		17.2	%
Inclusive Finance		7,128,151		2.2	%
Infrastructure Development		41,525,668		12.7	%
Recycling		48,797,017		14.9	%
Responsible Consumer Goods Production		17,939,490		5.5	%
Responsible Fuel Storage		14,592,683		4.5	%
Responsible Industrial Goods Distribution		15,000,000		4.6	%
Responsible Logistics Management		25,998,592		7.9	%
Responsible Metals Distribution		26,296,587		8.0	%
Responsible Natural Resources Distribution		17,166,559		5.2	%
Sustainable Agriculture & Agroprocessing		45,987,880		14.2	%
Sustainable Aquaculture & Processing		35,838		0.0	%
Sustainable Dairy Production		4,719,383		1.5	%
Sustainable Forestry		—		0.0	%
Technological Innovation		1,421,461		0.4	%
Other		3,758,063		1.0	%
Total	$	327,269,549		100.0	%

Concentration Limits

The Company is subject to the following concentration limits:

•

Maximum 45% regional exposure

•

Maximum 20% country exposure

•

Maximum 5% individual investment exposure

We may only make investments that do not cause us to exceed these limits on the date of investment. These limits are calculated as a percentage of the aggregate of all outstanding principal balances on our investments and our cash balances on the date of investment. As of September 30, 2020, the Company was in compliance with all of the above concentration limits.

Watch List Investments

Please see “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments".

Results of Operations

Consolidated operating results for the three and nine months ended September 30, 2020 and 2019 are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Investment income
Interest income	$	11,563,734	$	10,682,816	$	32,424,036	$	33,024,926
Interest from cash		8,651		21,592		71,030		59,278
Total investment income		11,572,385		10,704,408		32,495,066		33,084,204
Expenses
Asset management fees		1,826,223		1,904,766		5,517,650		5,812,736
Incentive fees		1,626,134		1,489,914		4,105,320		4,249,021
Professional fees		1,115,678		610,850		2,902,437		2,859,857
General and administrative expenses		366,147		292,711		1,009,400		1,250,104
Interest expense		69,290		382,138		206,363		1,590,805
Board of managers fees		64,375		64,375		193,125		193,125
Total expenses		5,067,847		4,744,754		13,934,295		15,955,648
Expense support payment to (from) Sponsor		-		-		-		-
Net expenses		5,067,847		4,744,754		13,934,295		15,955,648
Net investment income	$	6,504,538	$	5,959,654	$	18,560,771	$	17,128,556

Revenues

Three months ended September 30, 2020 and 2019

For the three months ended September 30, 2020 and 2019, total investment income amounted to $11,572,385 and $10,704,408, respectively. Interest income increased by $880,918 during the three months ended September 30, 2020 compared to the same period in 2019 as a result of an increase in the weighted average yield of approximately 1.1% from a weighted average yield of 11.9% for the three months ended September 30, 2019 to approximately 13.0% for the three months ended September 30, 2020, offset by a decrease in our weighted average investment portfolio of approximately $19,673,000. The increase in yield was primarily due to a change in the mix of investments in our portfolio. The decrease in the average size of our portfolio during the third quarter of 2020 was due to investment repayments that were not redeployed.

During the three months ended September 30, 2020, $8,101,606 or 70.0% of the interest income earned came from loan and trade finance participations and $3,462,128 or 30.0% came from direct loans. In addition, we earned $8,651 in interest income on our cash balances.

During the three months ended September 30, 2019, $7,827,575 or 73.3% of the interest income earned came from loan and trade finance participations and $2,849,019 or 26.7% came from direct loans. In addition, we earned $21,592 in interest income on our cash balances.

Nine months ended September 30, 2020 and 2019

For the nine months ended September 30, 2020 and 2019, total investment income amounted to $32,495,066 and $33,084,204, respectively. Interest income decreased by $600,890 during the nine months ended September 30, 2020 compared to the same period in 2019 as a result of a decrease in our weighted average investment portfolio of approximately $19,673,000, and decrease in the weighted average yield of approximately 0.4% from a weighted average yield of 12.3% for the nine months ended September 30, 2019 to approximately 11.9% for the nine months ended September 30, 2020. The decrease in the average size of our portfolio during the third quarter of 2020 was due to investment repayments that were not redeployed. The decrease in yield was primarily due to a change in the mix of investments in our portfolio.

During the nine months ended September 30, 2020, $21,881,715 or 67.5% of the interest income earned came from loan and trade finance participations and $10,542,321 or 32.5% came from direct loans. In addition, we earned $71,030 in interest income on our cash balances.

During the nine months ended September 30, 2019, $24,801,361 or 75.1% of the interest income earned came from loan and trade finance participations and $8,217,344 or 24.9% came from direct loans. In addition, we earned $59,278 in interest income on our cash balances.

Expenses

Three months ended September 30, 2020 and 2019

Total operating expenses, excluding the asset management and incentive fees, incurred for the three months ended September 30, 2020 increased by $265,416 to $1,615,490 from $1,350,074 for the three months ended September 30, 2019. The increase was primarily due to the following: 1) an increase in general and administrative expenses of $73,436 which was primarily due to an increase in transfer agent costs, and 2) an increase in professional fees of $504,828 which was primarily due to more fees incurred for legal, valuation and accounting services in connection with the valuation of our portfolio and our ongoing efforts to recover amounts outstanding with respect to investments for which IIG was the sub-advisor, offset by 3) a decrease in interest expense of $312,848, which was attributable to a decrease in outstanding indebtedness

For the three months ended September 30, 2020 and 2019, the asset management fees amounted to $1,826,223 and $1,904,766, respectively. The incentive fees for the three months ended September 30, 2020 and 2019 amounted to $1,626,134 and $1,489,914, respectively. The increase in incentive fees is due to higher operating expenses during the three months ended September 30, 2020 which caused the company not to meet the performance above hurdle offset by the decrease in revenue during the three months ended September 30, 2020.

Nine months ended September 30, 2020 and 2019

Total operating expenses, excluding the asset management and incentive fees, incurred for the nine months ended September 30, 2020 decreased by $1,582,566 to $4,311,325 from $5,893,891 for the nine months ended September 30, 2019. The decrease was primarily due to the following: 1) a decrease in interest expense of $1,384,442, which was attributable to a decrease in outstanding indebtedness, 2) a decrease in general and administrative expenses of $240,704 which was primarily due to a decrease in travel expenses, offset by 3) an increase in professional fees of $42,580 which was primarily due to more fees incurred for legal, valuation and accounting services in connection with the valuation of our portfolio and our ongoing efforts to recover amounts outstanding with respect to investments for which IIG was the sub-advisor.

For the nine months ended September 30, 2020 and 2019, the asset management fees amounted to $5,517,650 and $5,812,736, respectively. The incentive fees for the nine months ended September 30, 2020 and 2019 amounted to $4,105,320 and $4,249,021, respectively. The decrease in incentive fees is due to the decrease in revenue during the nine months ended September 30, 2020.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments. We measure net realized gains or losses by the difference between the net proceeds from the repayment or sale of an investment and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment fair market values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized. We had no realized gains or losses for the three and nine months ended September 30, 2020 and 2019. We recorded unrealized losses of $4,114,774 and $347,218 for the three months ended September 30, 2020 and 2019, respectively. We recorded unrealized losses of $13,845,677 and $2,250,398 for the nine months ended September 30, 2020 and 2019, respectively. These unrealized losses were primarily driven by macro events, including the uncertainty created by the recent COVID-19 pandemic and its impact on the future cash flows generated by our investments as well as the ultimate realization of the underlying collateral.

Financial Condition, Liquidity and Capital Resources

As of September 30, 2020, we had approximately $12.3 million in cash. We generate cash primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, proceeds from sales of our investments and from sales of promissory notes, and proceeds from private placements of our units. We may also generate cash in the future from debt financing. Our primary use of cash will be to make loans, either directly or through participations, payments of our expenses, payments on our notes and any other borrowings, and cash distributions to our unitholders. We expect to maintain cash reserves from time to time for investment opportunities, working capital and distributions. As noted above, the combination of a potential slower pace of deployment of capital with higher cash balances may further reduce cash flows generated to cover our distributions to our unitholders and/or cause us to further reduce our NAV in future periods. From the beginning of the Company’s operations to date, our Sponsor has assumed a significant portion of our operating expenses under the Responsibility Agreement in the amount of approximately $16.5 million. The Company may only reimburse the Sponsor for expenses assumed by the Sponsor pursuant to the Responsibility Agreement to the extent the Company’s investment income in any quarter, as reflected on the statement of operations, exceeds the sum of (a) total distributions to unitholders incurred during the quarter and (b) the Company’s expenses as reflected on the statement of operations for the same quarter (the “Reimbursement Hurdle”). To the extent the Company is not successful in satisfying the Reimbursement Hurdle, no amount will be payable in that quarter by the Company for reimbursement to the Sponsor of the Company’s cumulative operating expenses. The Company did not meet the Reimbursement Hurdle for the quarter ended September 30, 2020. Therefore, none of the expenses of the Company covered by the Responsibility Agreement have been recorded as expenses of the Company for the quarter ended September 30, 2020. As of September 30, 2020, there is a remaining aggregate balance of approximately $16,091,300 in operating expenses assumed by the Sponsor pursuant to the Responsibility Agreement which have not been recorded by the Company. Thus, such amounts are not yet reimbursable by the Company to the Sponsor. Such reimbursements to the Sponsor would affect the amount of cash available to the Company to pay distributions and/or make investments.

Our Sponsor is under no obligation to pay our operating expenses and, if our Sponsor does not assume our operating expenses, the distributions we pay to our unitholders may need to be reduced. Our Sponsor determined not to assume any of our additional operating expenses, commencing January 1, 2018. Commencing with distributions payable for the month of March 2018, our board of managers approved a decrease in our daily distribution rate from $0.00197808 to $0.00168675 per unit, per day (less the ongoing fees applicable to certain classes of units which reduce the amount of distributions paid to the applicable unitholders). If our Sponsor continues not to assume our operating expenses in the future and we do not generate sufficient investment income to cover our operating expenses, the distributions we pay to our unitholders may need to be further reduced.

We may borrow additional funds to make investments. We have not decided to what extent going forward we will finance portfolio investments using debt or the specific form that any such financing would take, but we believe that obtaining financing is necessary for us to fully achieve our long-term goals. We have been, and still are, actively seeking further financing through both development banks and several commercial banks. Accordingly, we cannot predict with certainty what terms any such financing would have or the costs we would incur in connection with any such arrangement. On August 7, 2017, TGIFC issued $5 million in the first of a Series 1 Senior Secured Promissory Notes private offering to State Street Australia Ltd ACF Christian Super (“Christian Super”). On December 18, 2018, TGIFC issued $5 million of Series 2 Senior Secured Promissory Notes to Christian Super. As of September 30, 2020, TGIFC has $5.0 million total outstanding under the Christian Super notes. For more information on this note, please see “Notes to Consolidated Financial Statements— Note 7. Notes Payable—Christian Super Promissory Note.” As of September 30, 2020, we had $5,000,000 in total debt outstanding with a debt to equity ratio of 1.4%.

Contractual Obligations and Commitments

The following table shows our payment obligations for repayment of debt, which represent our total contractual obligations as of September 30, 2020:

Total

Less than 1

Year

1 - 3 Years

3- 5 years

More than 5

years

Notes payable

5,000,000

Total contractual obligations

5,000,000

We have included the following information to further assist investors in understanding our outstanding commitments.

We have entered into certain contracts under which we have material future commitments. Our Advisory Agreement between us and the Advisor, originally dated as of February 25, 2014, had previously been renewed and is subject to an unlimited number of one-year renewals upon mutual consent of the Company and the Advisor. The current term of the Advisory Agreement ends on February 25, 2021. The Advisor will serve as our advisor in accordance with the terms of our Advisory Agreement. Payments under our Advisory Agreement in each reporting period will consist of (i) asset management and incentive fees described in Part 1, Item 1. Business – Operating Expense Responsibility Agreement and – Investment Advisory Agreements and Fees of our Annual Report on Form 10-K for the year ended December 31, 2019, and (ii) the reimbursement of certain expenses.

If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our Advisory Agreement.

Off-Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not expect to have any off-balance sheet financings or liabilities. The Company reimburses organization and offering expenses to the Sponsor to the extent that the aggregate of selling commissions, dealer manager fees and other organization and offering costs do not exceed 15.0% of the gross offering proceeds raised from the particular offering. As of September 30, 2020, there is a remaining balance of approximately $490,000 of offering costs that have not been reimbursed to the Sponsor.

Pursuant to the terms of the Responsibility Agreement between the Company, the Advisor and the Sponsor, the Sponsor has paid expenses on behalf of the Company through December 31, 2017, which may not be reimbursable to the Sponsor if the Company does not satisfy the Reimbursement Hurdle. Such expenses will be expensed and payable by the Company in the period they become reimbursable and are estimated to be approximately $16.1 million as of September 30, 2020.

Distributions

We have paid distributions commencing with the month beginning July 1, 2013, and we intend to continue to pay distributions on a monthly basis. From time to time, we may also pay interim distributions at the discretion of our board. Distributions are subject to the board of managers’ discretion and applicable legal restrictions and accordingly, there can be no assurance that we will make distributions at a specific rate or at all. Distributions are made on all classes of our units at the same time. The cash distributions received by our unitholders with respect to the Class C units, Class W units and certain Class I units, are and will continue to be lower than the cash distributions with respect to Class A and certain other Class I units because of the distribution fee relating to Class C units, the ongoing dealer manager fee relating to Class W units and Class I units issued pursuant to a private placement and the ongoing service fee relating to the Class W units, which are expenses specific to those classes of units. Amounts distributed to each class are allocated among the unitholders in such class in proportion to their units. Distributions are paid in cash or reinvested in units, for those unitholders participating in the DRP. For the nine months ended September 30, 2020, we paid a total of $21,424,788 in distributions, comprised of $14,444,219 paid in cash and $6,980,569 reinvested under our DRP.

Related Party Transactions

For the nine months ended September 30, 2020 and 2019, the Advisor earned $5,517,650, and $5,812,736, respectively, in asset management fees and $4,105,320 and $4,249,021, respectively, in incentive fees.

From our inception through September 30, 2017, pursuant to the terms of the Responsibility Agreement, the Sponsor has paid approximately $12,420,600 of operating expenses, asset management fees, and incentive fees on our behalf and will reimburse us an additional $4,057,734 of expenses, which we had paid as of September 30, 2017. Such expenses, in the aggregate of $16,478,300 since the Company’s inception, may be expensed and payable by the Company to the Sponsor only if the Company satisfies the Reimbursement Hurdle. The Company did not meet the Reimbursement Hurdle for the quarter ended September 30, 2020. Therefore, none of the expenses of the Company covered by the Responsibility Agreement have been recorded as expenses of the Company for the quarter ended September 30, 2020.

Legal Proceedings

As of September 30, 2020, the Company was not a party to any material legal proceedings other than as set forth in “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments".

Critical Accounting Policies and Use of Estimates

In preparing our Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations promulgated by the SEC, we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and discuss our critical accounting policies and estimates with the audit committee of our board of managers. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.

There have been no significant changes to our critical accounting policies, estimates and judgments during nine months ended September 30, 2020, compared to the critical accounting policies, estimates and judgments disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the amounts reported in the financial statements. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company's business, the businesses of the Company's borrowers and the global markets generally. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including fair value measurements, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Recent Accounting Pronouncements

See Note 2 to our accompanying Consolidated Financial Statements for a description of recent accounting pronouncements and our expectation of their impact on our results of operations and financial condition.

Subsequent Events

Distributions

With the authorization of our board of managers, we declared distributions for all classes of units for the period from October 1 through October 31, 2020. These distributions were calculated based on unitholders of record for each day in an amount equal to $0.00168675 per unit per day (less the distribution fee with respect to Class C units, the ongoing dealer manager fee with respect to certain Class I units and Class W units, and the ongoing service fee with respect to Class W units).

Our board of managers has authorized the declaration of distributions for November 2020. The November distributions will be calculated based on unitholders of record for each day in an amount equal to $0.00168675 per unit per day (less the distribution fee with respect to Class C units, the ongoing dealer manager fee with respect to certain Class I units and Class W units and the ongoing service fee with respect to Class W units). These distributions will be paid in cash on or about December 1, 2020 or reinvested in units, for those unitholders participating in the Distribution Reinvestment Plan.

Investments

Sub-advisors

On November 12, 2020, the Advisor entered into a sub-advisory agreement with Enhanced Capital Impact Lending, LLC (“Enhanced Capital”). This agreement is expected to expand the diversification of the portfolio of the Company, by securing senior and other collateralized loans to SME’s operating within the United States. Founded in 1999, Enhanced Capital is a US based impact investment firm. Enhanced Capital invests capital into local businesses, renewable energy projects, historic real estate rehabilitation and affordable housing projects thorough federal and state incentive programs and other public policy investment strategies. Enhanced Capital has completed over $3.0B of transactions, investing in 36 states across the United States. $1.7 B of the transactions support small businesses through their Impact Lending strategy and other small business lending strategies. Enhanced Capital’s principals have a combined experience of over 150 Years in credit analysis and asset management. There have been no investments made through Enhanced Capital as of November 13, 2020.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that the disclosure controls and procedures were effective as of September 30, 2020.

There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As a result of COVID-19, starting in March 2020, our Advisor has implemented its business continuity plan and additional procedures designed to protect against the introduction of COVID-19 amongst its personnel, including permitting and encouraging employees to work remotely and temporarily ceasing travel and significantly enhanced office sterilization procedures to minimize the probability of contagion. The cessation of travel has caused us to adapt the methods we use to review our sub-advisors and investments. While our pre-existing controls were not specifically designed to operate in a predominantly remote work operating environment with no international travel, we have re-evaluated and adapted our review and reporting processes for this environment and we believe that our disclosure controls and procedures and internal controls over financial reporting continue to be effective. We are monitoring and assessing our internal control environment to ensure that our controls continue to be designed effectively and continue to operate effectively throughout the duration of the pandemic.

Part II. Other Information

Item 1. Legal Proceedings.

As of September 30, 2020, the Company was not a party to any material legal proceedings other than the legal proceedings described in “Notes to Consolidated Financial Statements—Note 3. Investments—Watch List Investments".

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 30, 2020 (“2019 Form 10-K”) and in Part II, Item 1A, "Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 15, 2020 (the "Q1 2020 10-Q"), which could materially affect our business, financial condition, and/or future results. The risks described in our 2019 Form 10-K and our Q1 2020 10-Q are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.

There have been no material changes to the risk factors disclosed in our 2019 Form 10-K and our Q1 2020 10-Q.

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

During the nine months ended September 30, 2020, we sold an aggregate of 447,106 Class Y units to accredited investors for an aggregate amount of $3,580,000. The units were issued pursuant to an exemption from registration provided under Rule 506 of Regulation D promulgated under the Securities Act, for transactions not involving a public offering.

Unit Repurchase Program

Beginning June 11, 2014, we commenced a unit repurchase program pursuant to which we conduct quarterly unit repurchases of up to 5% of our weighted average number of outstanding units in any 12-month period to allow our unitholders, who have held our units for a minimum of one year, to sell their units back to us. Our unit repurchase program includes numerous restrictions, including a one-year holding period, that limit our unitholders’ ability to sell their units. Additionally, we have no obligation to repurchase units if the repurchase would violate the restrictions on distributions under federal law or Delaware law, and all units to be repurchased under the program must be fully transferable and not be subject to any liens or other encumbrances and free from any restrictions on transfer. Unless our board of managers determines otherwise, we will limit the number of units to be repurchased during any calendar year to the number of units we can repurchase with the proceeds we receive from the sale of units under our distribution reinvestment plan. At the sole discretion of our board of managers, we may also use cash on hand, cash available from borrowings and cash from liquidation of investments as of the end of the applicable quarter to repurchase units.

On August 9, 2019, our board of managers amended and restated our unit repurchase program in order to amend the basis on which we will honor repurchase requests in the event repurchase requests exceed the existing limitations of the program. The amended and restated unit repurchase program took effect on September 30, 2019. Under the amended and restated unit repurchase program, if we cannot repurchase all units presented for repurchase in any quarter because of the limitations on repurchases set forth in the program, then we will honor repurchase requests in the following order of priority (unless our board of managers determines that we will not repurchase units in that quarter):

•

first, we will repurchase units pursuant to repurchase requests made in connection with the death or disability of a unitholder (or on a pro rata basis among such requests if less than all of such death or disability requests can be satisfied);

•

second, we will repurchase units pursuant to any repurchase request that has been carried over from one or more previous quarterly periods where the value of the units that have not yet been repurchased pursuant to such request (with the value calculated as the number of units multiplied by the estimated net asset value per unit for units of that class, as most recently disclosed by us in a filing with the SEC) is less than $2,500 (or on a pro rata basis among such requests if less than all of such requests carried over from prior periods can be satisfied); and

•

third, we will repurchase units pursuant to all other repurchase requests on a pro rata basis.

Unit repurchases are made on the last calendar day of the quarter at a price equal to the estimated net asset value per unit for each class of units, as most recently disclosed by us in a public filing with the SEC. Redemptions for the third quarter of 2020 were redeemed at a price equal to $7.769 per unit, which was the net asset value per unit of each class as of June 30, 2020.

Our board of managers has the right to amend, suspend or terminate the unit repurchase program to the extent that it determines that it is in our best interest to do so. We will promptly notify our unitholders of any changes to the unit repurchase program, including any amendment, suspension or termination of it in our periodic or current reports or by means of other notice. Moreover, the unit repurchase program will terminate on the date that our units are listed on a national securities exchange, are included for quotation in a national securities market or, in the sole determination of our board of managers, a secondary trading market for the units otherwise develops.

During the three months ended September 30, 2020, we fulfilled the following requests pursuant to our unit repurchase program:

Period	Total Number of Units Purchased		Average Price Paid Per Unit		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Units that May Yet be Purchased Under the Program
07/01/2020 - 07/31/2020		302,028	$	7.804		302,028		892,446
08/01/2020 - 08/31/2020		837	$	7.804		837		892,446
09/01/2020 - 09/30/2020		222	$	7.804		222		892,446
Total		303,087	$	7.804		303,087

During the three months ended September 30, 2020, we repurchased 303,087 units for a total of $2,365,299. In addition, as of September 30, 2020, there were repurchase requests for a total of 293,428 units that were pending which were processed by the Company during October 2020 at a price of $7.769 per unit. For the quarter ended September 30, 2020, eligible repurchase requests exceeded the limitations of our unit repurchase program described above and the requests were fulfilled on a pro rata basis, such that we fulfilled 12.42% of eligible repurchase requests (based on the number of units submitted for repurchase). Pursuant to the terms of our unit repurchase program, the unsatisfied portion of repurchase requests that were not fulfilled at quarter-end will be carried over to the next quarter and treated as a request for repurchase at the next quarter-end repurchase date, unless the repurchase request is withdrawn.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Number		Description

3.1		Certificate of Formation of TriLinc Global Impact Fund, LLC. Incorporated by reference to Exhibit 3.1 to the Draft Registration Statement on Form S-1 (File No. 377-00015) filed with the Securities and Exchange Commission (the “SEC”) on November 1, 2012.

3.2		Fifth Amended and Restated Limited Liability Company Operating Agreement dated January 20, 2018. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on January 25, 2018.

4.1		Fourth Amended and Restated Distribution Reinvestment Plan. Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on August 14, 2020.

4.2		Third Amended and Restated Unit Repurchase Program. Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on March 9, 2018.

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

32.1*		Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from TriLinc Global Impact Fund LLC’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed on November 13, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Assets and Liabilities, (ii) Consolidated Statement of Operations, (iii) Consolidated Statement of Changes in Net Assets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Schedules of Investments and (vi) Notes to the Consolidated Financial Statements.

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.

	TRILINC GLOBAL IMPACT FUND, LLC.

November 13, 2020	By:	/s/ Gloria S. Nelund
		Gloria S. Nelund
		Chief Executive Officer

November 13, 2020	By:	/s/ Mark A. Tipton
		Mark A. Tipton
		Chief Financial Officer

TriLinc Global Impact Fund LLC - FORM 10-Q - November 13, 2020

Attached files

TriLinc Global Impact Fund LLC Reports