ATEL 16 Swings to Profit Amidst Liquidation Phase, Assets Decline

TL;DR

**ATEL 16 is successfully winding down, turning a profit despite shrinking assets, but don't expect growth—it's all about returning capital.**

AI Summary

ATEL 16, LLC reported a significant turnaround in net income for the six months ended June 30, 2025, reaching $229 thousand, compared to a net loss of $69 thousand in the prior year period. This improvement was driven by a substantial reduction in operating expenses, which decreased from $1,181 thousand in 2024 to $787 thousand in 2025, primarily due to lower depreciation of operating lease assets and professional fees. Operating revenues saw a slight decline, falling to $1,023 thousand from $1,113 thousand in the same six-month period of 2024, largely due to a $77 thousand decrease in operating lease revenue. The company's total assets decreased by 21.57% from $5,496 thousand at December 31, 2024, to $4,311 thousand at June 30, 2025, mainly due to a reduction in cash and cash equivalents and investment in equipment and leases. Members' capital also declined by 21.09% from $4,520 thousand to $3,574 thousand over the same period, influenced by $1,172 thousand in distributions to Other Members. The company commenced liquidation phase activities on January 1, 2022, impacting its strategic outlook and asset management.

Why It Matters

For investors, ATEL 16's swing to a $229 thousand net income from a $69 thousand loss is a positive sign, but the 21.57% decline in total assets and 21.09% reduction in members' capital highlight the ongoing liquidation phase. This indicates a shrinking asset base and capital return to members, which could impact future distribution potential. The competitive landscape for equipment leasing is dynamic, and ATEL 16's focus on asset disposition rather than new acquisitions means it's not actively competing for new business. Employees and customers are less directly impacted by this financial report, as the company is in a wind-down phase, focusing on existing lease management and asset sales.

Risk Assessment

Risk Level: medium — The risk level is medium due to the company being in a liquidation phase, which inherently involves asset disposition and capital return rather than growth. While net income improved to $229 thousand for the six months ended June 30, 2025, total assets decreased by $1,185 thousand from December 31, 2024, to June 30, 2025, and cash and cash equivalents dropped by $659 thousand in the same period. This ongoing reduction in the asset base and capital, coupled with a loss on sales of operating lease assets of $15 thousand, indicates a controlled but declining operational footprint.

Analyst Insight

Investors should view ATEL 16 as a capital return vehicle rather than a growth investment. Monitor distributions to Other Members, which totaled $1,172 thousand for the six months ended June 30, 2025, and the ongoing reduction in total assets. Consider this a slow, managed exit from the market, with potential for further distributions as assets are liquidated.

Financial Highlights

debt To Equity

0.21

revenue

$1,023K

operating Margin

23.07%

total Assets

$4,311K

total Debt

$399K

net Income

$229K

eps

$0.05

gross Margin

N/A

cash Position

$505K

revenue Growth

-8.09%

Revenue Breakdown

Key Numbers

• $229K — Net income (For the six months ended June 30, 2025, a swing from a $69K net loss in 2024.)
• $4,311K — Total assets (As of June 30, 2025, a decrease from $5,496K at December 31, 2024.)
• $3,574K — Total Members' capital (As of June 30, 2025, a decrease from $4,520K at December 31, 2024.)
• $1,023K — Total operating revenues (For the six months ended June 30, 2025, down from $1,113K in 2024.)
• $787K — Total operating expenses (For the six months ended June 30, 2025, a significant reduction from $1,181K in 2024.)
• $1,172K — Distributions to Other Members (For the six months ended June 30, 2025.)
• 4,264,386 — Limited Liability Company Units outstanding (As of July 31, 2025.)
• $505K — Cash and cash equivalents (As of June 30, 2025, down from $1,164K at December 31, 2024.)

Key Players & Entities

• ATEL 16, LLC (company) — Registrant
• ATEL Managing Member, LLC (company) — Managing Member of ATEL 16, LLC
• ATEL Financial Services, LLC (company) — Controls ATEL Managing Member, LLC
• ATEL Capital Group (company) — Parent company of AFS
• SEC (regulator) — Securities and Exchange Commission
• California (person) — State of incorporation for ATEL 16, LLC
• Nevada (person) — State of incorporation for ATEL Managing Member, LLC
• United States (person) — Primary geographic region for leasing opportunities

FAQ

Risk Factors

• Declining Asset Base [medium — financial]: Total assets decreased by 21.57% from $5,496 thousand to $4,311 thousand as of June 30, 2025. This reduction was primarily due to a decrease in cash and cash equivalents ($659K reduction) and investment in equipment and leases ($509K reduction), indicating a shrinking operational footprint.
• Reduction in Members' Capital [medium — financial]: Members' capital declined by 21.09% from $4,520 thousand to $3,574 thousand. This was significantly influenced by $1,172 thousand in distributions to Other Members, suggesting a capital return strategy that depletes equity.
• Liquidation Phase Activities [high — operational]: The company commenced liquidation phase activities on January 1, 2022. This strategic shift implies a focus on winding down operations and realizing assets, which can lead to unpredictable revenue streams and asset valuations.
• Decreased Cash Position [medium — financial]: Cash and cash equivalents saw a substantial drop from $1,164 thousand at December 31, 2024, to $505 thousand at June 30, 2025, a decrease of $659 thousand. This reduced liquidity could impact the company's ability to meet short-term obligations or fund new initiatives.
• Reduced Operating Lease Revenue [medium — financial]: Operating lease revenue, net, decreased by $77 thousand to $1,024 thousand for the six months ended June 30, 2025, compared to $1,101 thousand in the prior year. This decline in the core revenue stream is a concern, especially during a liquidation phase.
• Lower Depreciation Expenses [low — operational]: While a reduction in depreciation of operating lease assets contributed to lower operating expenses ($268K reduction), it also reflects a smaller asset base, aligning with the overall trend of asset reduction.
• Impact of Distributions [high — financial]: Distributions to Other Members totaling $1,172 thousand for the six months ended June 30, 2025, are a significant outflow of capital, directly impacting Members' capital and potentially limiting future investment or operational capacity.
• Warrants Valuation Fluctuation [low — financial]: The company holds warrants with a fair value of $99 thousand as of June 30, 2025. Unrealized losses of $7 thousand were recorded for the six months ended June 30, 2025, indicating volatility in this asset class.

Industry Context

ATEL 16, LLC operates in the equipment financing and leasing sector. This industry is characterized by capital intensity, reliance on asset management, and sensitivity to economic cycles. Companies in this space typically generate revenue through lease payments and the eventual sale of equipment. The current trend towards a liquidation phase for ATEL 16, LLC suggests a strategic exit from active market participation.

Regulatory Implications

As a limited liability company, ATEL 16, LLC is subject to state-specific LLC regulations. Its operations in equipment leasing may also involve compliance with commercial code provisions related to leases and secured transactions. The company's public offering history also implies adherence to securities regulations during that period.

What Investors Should Do

1. Monitor asset realization and distribution strategy.
2. Analyze the trend of declining operating lease revenue.
3. Evaluate the impact of distributions on remaining capital.
4. Assess the value and liquidity of remaining assets.

Key Dates

• 2012-12-27: Company Formation — ATEL 16, LLC was formed, marking the beginning of its operations in equipment financing and leasing.
• 2014-06-19: Minimum Subscription Target Met — The company reached its minimum subscription target of $7.5 million, allowing for the release of Pennsylvania escrowed amounts and enabling full operational commencement.
• 2015-11-05: Offering Termination — The public offering of Limited Liability Company Units concluded, establishing the final number of outstanding units.
• 2022-01-01: Commencement of Liquidation Phase — The company officially entered its liquidation phase, signaling a strategic shift towards winding down operations and realizing assets.
• 2024-12-31: End of Fiscal Year 2024 — Reported total assets of $5,496 thousand and Members' capital of $4,520 thousand.
• 2025-06-30: Mid-Year Reporting Period End — Reported net income of $229 thousand, total assets of $4,311 thousand, and Members' capital of $3,574 thousand, reflecting changes from the previous year and fiscal year-end.

Glossary

Operating lease revenue, net

Revenue generated from leasing out equipment, net of any direct costs associated with the lease. (This is the primary revenue stream for ATEL 16, LLC, and its decline impacts overall financial performance.)

Depreciation of operating lease assets

The systematic allocation of the cost of leased equipment over its useful life. (A significant operating expense that has decreased, contributing to improved net income, but also reflecting a reduced asset base.)

Members' capital

The total equity investment made by the members (owners) of the limited liability company. (A key indicator of the company's net worth, which has declined due to distributions.)

Distributions to Other Members

Payments made by the company to its 'Other Members' (non-managing members), typically from profits or capital. (A major factor in the decrease of Members' capital, indicating capital being returned to investors.)

Limited Liability Company Units

The ownership interests in ATEL 16, LLC, similar to shares in a corporation. (The number of outstanding units is used for per-unit calculations and reflects the ownership structure.)

Warrants, fair value

Financial instruments that give the holder the right, but not the obligation, to buy or sell an asset (like stock) at a specified price within a certain time frame. 'Fair value' is the estimated market price. (Represents a speculative asset for the company, subject to market fluctuations.)

Non-recourse debt

Debt that is secured by specific assets, and the lender can only seize those assets if the borrower defaults, not other assets of the borrower. (Represents a portion of the company's liabilities, secured by specific leased assets.)

Liquidation phase activities

The stage of a company's life cycle where it is winding down its operations, selling assets, and distributing proceeds to stakeholders. (Defines the current strategic objective of ATEL 16, LLC, influencing its financial reporting and outlook.)

Year-Over-Year Comparison

For the six months ended June 30, 2025, ATEL 16, LLC reported a significant turnaround to a net income of $229 thousand, a substantial improvement from a net loss of $69 thousand in the prior year period. This was primarily driven by a 33.36% reduction in total operating expenses, from $1,181 thousand to $787 thousand, largely due to lower depreciation and professional fees. However, total operating revenues saw a slight decrease of 8.09%, falling to $1,023 thousand from $1,113 thousand, mainly due to a decline in operating lease revenue. Total assets and members' capital both decreased by approximately 21%, reflecting the ongoing liquidation phase and distributions to members.

Key Financial Figures

• $250 thousand — assets. Such deposits are insured up to $250 thousand. The concentration of such deposits is

Filing Documents

• tmb-20250630x10q.htm (10-Q) — 1267KB
• tmb-20250630xex31d1.htm (EX-31.1) — 10KB
• tmb-20250630xex31d2.htm (EX-31.2) — 10KB
• tmb-20250630xex32d1.htm (EX-32.1) — 7KB
• tmb-20250630xex32d2.htm (EX-32.2) — 7KB
• 0001558370-25-011526.txt ( ) — 5343KB
• tmb-20250630.xsd (EX-101.SCH) — 45KB
• tmb-20250630_cal.xml (EX-101.CAL) — 51KB
• tmb-20250630_def.xml (EX-101.DEF) — 150KB
• tmb-20250630_lab.xml (EX-101.LAB) — 273KB
• tmb-20250630_pre.xml (EX-101.PRE) — 242KB
• tmb-20250630x10q_htm.xml (XML) — 1010KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Balance Sheets, June 30, 2025 and December 31, 2024 3 4 5 6 Notes to the Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 4.

Controls and Procedures

Controls and Procedures 25 PART II. OTHER INFORMATION 26 Item 1.

Legal Proceedings

Legal Proceedings 26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item 3. Defaults Upon Senior Securities 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 26 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited). ATEL 16, LLC BALANCE SHEETS JUNE 30, 2025 AND DECEMBER 31, 2024 (In Thousands) (Unaudited) June 30, December 31, 2025 2024 ASSETS Cash and cash equivalents $ 505 $ 1,164 Accounts receivable, net 19 28 Investment in equity securities 48 48 Warrants, fair value 99 106 Investment in equipment and leases, net 3,639 4,148 Prepaid expenses and other assets 1 2 Total assets $ 4,311 $ 5,496 LIABILITIES AND MEMBERS' CAPITAL Accounts payable and accrued liabilities: Due to Managing Member and affiliates $ 17 $ 31 Accrued distributions to Other Members 164 288 Other 99 95 Non-recourse debt 399 480 Unearned operating lease income 58 82 Total liabilities 737 976 Commitments and contingencies (Note 7) Members' capital: Managing Member — — Other Members 3,574 4,520 Total Members' capital 3,574 4,520 Total liabilities and Members' capital $ 4,311 $ 5,496 See accompanying notes. 3 Table of Contents ATEL 16, LLC FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (In Thousands Except for Units and Per Unit Data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Operating revenues: Leasing and lending activities: Operating lease revenue, net $ 515 $ 550 $ 1,024 $ 1,101 Loss on sales of operating lease assets ( 15 ) — ( 15 ) — Other revenue — 5 14 12 Total operating revenues 500 555 1,023 1,113 Operating expenses: Depreciation of operating lease assets 135 277 291 559 Asset management fees to Managing Member 59 76 134 153 Cost reimbursements to Managing Member and/or affiliates 43 64 95 144 Amortization of initial direct costs 2 3 4 6 Interest expense 5 7 10 15 Professional fees 30 118 165 158 Outside services 33 12 65 34 Taxes on incom

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Organization and Limited Liability Company matters: ATEL 16, LLC (the "Company" or the "Fund") was formed under the laws of the state of California on December 27, 2012 ("Date of Inception") for the purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities . The Managing Member of the Company is ATEL Managing Member, LLC (the "Managing Member" or "Manager"), a Nevada limited liability company. The Managing Member is controlled by ATEL Financial Services, LLC ("AFS"), a wholly-owned subsidiary of ATEL Capital Group. The Fund may continue until terminated as provided in the ATEL 16, LLC Limited Liability Company Operating Agreement dated March 1, 2013 (the "Operating Agreement"). Contributions in the amount of $ 500 were received as of December 31, 2012, which represented the initial member's capital investment. As a limited liability company, the liability of any individual member for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member. The Company conducted a public offering of 15,000,000 Limited Liability Company Units ("Units"), at a base price of $ 10 per Unit. As of March 6, 2014, subscriptions for the minimum number of Units ( 120,000 , representing $ 1.2 million), excluding subscriptions from Pennsylvania investors, had been received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations and continued in its development stage activities until transitioning to an operating enterprise during the second quarter of 2014. Pennsylvania subscriptions are subject to a separate escrow and are released to the Fund only when aggregate subscriptions for all investors equal to at least $ 7.5 million. Total contributions to the Fund exceeded $ 7.5 million on June 19, 2014, at which time a request was processed to release the Pennsylvania escr

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. Summary of significant accounting policies: Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP'') for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year. Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data. In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after June 30, 2025, up until the issuance of the financial statements. No events were noted which would require additional disclosure in the footnotes to the financial statements. Cash and cash equivalents: Cash and cash equivalents include cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less. Use of Estimates: The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) The primary geographic region in which the Company seeks leasing opportunities is North America. For the three and six months ended June 30, 2025 and 2024, and as of June 30, 2025 and December 31, 2024, all of the Company's current operating revenues and long-lived assets related to customers domiciled in the United States. Accounts receivable: Accounts receivable represent the amounts billed under operating lease contracts which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received. Investment in securities: From time to time, the Company may receive the right to purchase equity securities of its borrowers or receive warrants in connection with its lending arrangements. Investment in equity securities The Company's equity securities registered for public sale with readily determinable fair values are measured at fair value with any changes in fair value recognized in the Company's results of operations. The Company's equity securities that do not have readily determinable fair values are measured at cost minus impairment and adjusted for changes in observable prices. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer's ability to meet its current obligations and indications of the issuer's subsequent ability to raise capital. The Company had $ 48 thousand of investment securities at both June 30, 2025 and December 31, 2024. Such amounts included investment securities which do not have readily available fa

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating lease receivables, notes receivable and accounts receivable. The Company places the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $ 10 billion in assets. Such deposits are insured up to $250 thousand. The concentration of such deposits is not deemed to create a significant risk to the Company. Accounts receivable represent amounts due from lessees or borrowers in various industries related to equipment on operating lease contracts. Equipment on operating leases and related revenue recognition: Equipment subject to operating leases is stated at cost. Depreciation is recognized on a straight-line method over the terms of the related leases to the equipment's estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 360-10-35-3, over the periods of the lease terms contained in each asset's respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Initial direct costs: Incremental costs of a lease that would not have been incurred if the lease had not been obtained are capitalized and amortized over the lease term. All other costs associated with the execution of the Company's leases are expensed as incurred. Acquisition expense: Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred. Fair Value: Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market. Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company's own estimates of assumptions that market participants would use in pricing the asset or liability. The Company's valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active mark

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset's lease contract and undiscounted future rents from the existing lease contract. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar ass

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