ATEL 16 Swings to Profit Amidst Liquidation Phase, Cash Declines

TL;DR

**ATEL 16 is effectively liquidating, turning a profit despite shrinking assets, but don't expect growth—it's all about capital return now.**

AI Summary

ATEL 16, LLC reported a significant turnaround in its financial performance for the nine months ended September 30, 2025, achieving a net income of $443 thousand, a substantial improvement from the net loss of $46 thousand in the prior year period. This positive shift was primarily driven by a decrease in operating expenses, which fell to $1,081 thousand from $1,682 thousand, largely due to reduced depreciation of operating lease assets and lower asset management fees. Operating lease revenue, however, saw a slight decline to $1,547 thousand from $1,609 thousand. Cash and cash equivalents decreased to $550 thousand as of September 30, 2025, from $1,164 thousand at December 31, 2024, mainly due to $1,846 thousand in net cash used in financing activities, including $1,721 thousand in distributions to Other Members. Total assets declined to $4,196 thousand from $5,496 thousand, reflecting a reduction in investment in equipment and leases, net, from $4,148 thousand to $3,502 thousand. The company commenced liquidation phase activities on January 1, 2022, impacting its strategic outlook towards asset disposition and capital return to members.

Why It Matters

ATEL 16's shift to profitability, despite declining revenues and assets, is a critical signal for investors, particularly given its ongoing liquidation phase. The company's ability to generate $443 thousand in net income for the nine months ended September 30, 2025, suggests effective cost management and asset disposition strategies are in play, which could enhance returns for Other Members. However, the significant reduction in cash and cash equivalents, coupled with decreased investment in equipment, indicates a shrinking asset base as the company winds down operations. This context is vital for investors evaluating the timing and magnitude of future distributions, while employees and customers may see reduced activity as the portfolio is liquidated. Competitively, this highlights the challenges and opportunities in the equipment leasing sector's end-of-life cycle management.

Risk Assessment

Risk Level: medium — The risk level is medium due to the company being in a liquidation phase since January 1, 2022, which inherently involves asset disposition risks and uncertainty regarding final returns. While net income improved to $443 thousand for the nine months ended September 30, 2025, total assets decreased by $1,300 thousand from December 31, 2024, to $4,196 thousand, indicating a shrinking operational base and potential for further asset value fluctuations.

Analyst Insight

Investors should closely monitor the pace and terms of asset sales and distributions to Other Members, which totaled $1,721 thousand for the nine months ended September 30, 2025. Given the liquidation phase, focus on the company's ability to maximize proceeds from its remaining equipment and leases, which stood at $3,502 thousand net as of September 30, 2025, to assess potential final capital returns.

Financial Highlights

debt To Equity

0.25

revenue

$1,546K

operating Margin

N/A

total Assets

$4,196K

total Debt

$358K

net Income

$443K

eps

$0.10

gross Margin

N/A

cash Position

$550K

revenue Growth

-3.5%

Revenue Breakdown

Key Numbers

• $443K — Net Income (Swung from a $46K loss in 2024 to a $443K profit in 2025 for the nine-month period.)
• $1,547K — Operating Lease Revenue (Slightly decreased from $1,609K in 2024 for the nine-month period.)
• $1,081K — Total Operating Expenses (Significantly reduced from $1,682K in 2024 for the nine-month period.)
• $550K — Cash and Cash Equivalents (Decreased from $1,164K at December 31, 2024, reflecting cash used in financing activities.)
• $3,363K — Total Members' Capital (Decreased from $4,520K at December 31, 2024, primarily due to distributions.)
• $1,721K — Distributions to Other Members (Cash outflow for the nine months ended September 30, 2025.)
• 4,264,386 — Limited Liability Company Units Outstanding (As of September 30, 2025, slightly down from 4,265,386 at December 31, 2024.)
• $0.10 — Net income per Unit - Other Members (For the nine months ended September 30, 2025, up from a $0.01 loss per unit in 2024.)

Key Players & Entities

• ATEL 16, LLC (company) — Registrant and Fund
• 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 of ATEL Financial Services, LLC
• Securities and Exchange Commission (regulator) — Regulates filings like 10-Q
• $443 thousand (dollar_amount) — Net income for the nine months ended September 30, 2025
• $46 thousand (dollar_amount) — Net loss for the nine months ended September 30, 2024
• $1,547 thousand (dollar_amount) — Operating lease revenue for the nine months ended September 30, 2025
• $1,609 thousand (dollar_amount) — Operating lease revenue for the nine months ended September 30, 2024
• $550 thousand (dollar_amount) — Cash and cash equivalents as of September 30, 2025

FAQ

Risk Factors

• Declining Cash Position [medium — financial]: Cash and cash equivalents decreased from $1,164K at December 31, 2024, to $550K as of September 30, 2025. This was primarily driven by $1,846K in net cash used in financing activities, including substantial distributions of $1,721K to Other Members.
• Reduction in Total Assets [medium — financial]: Total assets have declined from $5,496K at December 31, 2024, to $4,196K as of September 30, 2025. This reduction is largely attributable to a decrease in 'Investment in equipment and leases, net,' from $4,148K to $3,502K, reflecting the company's liquidation phase and asset disposition strategy.
• Decreasing Members' Capital [medium — financial]: Total Members' Capital decreased from $4,520K at December 31, 2024, to $3,363K as of September 30, 2025. This decline is a direct result of distributions made to members, aligning with the company's liquidation objectives.
• Liquidation Phase Operations [medium — operational]: The company commenced liquidation phase activities on January 1, 2022. This strategic shift implies a focus on asset disposition and returning capital to members, which inherently involves a reduction in asset base and potentially fluctuating revenues and expenses as assets are sold.
• Unearned Operating Lease Income [low — financial]: Unearned operating lease income increased significantly from $82K to $200K. While this could indicate future revenue, it also represents a liability that needs to be fulfilled through future service delivery or lease terms.

Industry Context

ATEL 16, LLC operates in the equipment leasing sector, which is capital-intensive and sensitive to economic cycles. The industry involves managing a portfolio of physical assets, requiring expertise in asset valuation, maintenance, and remarketing. Trends include shifts towards specialized equipment, longer lease terms, and the impact of technological obsolescence. Competition often comes from specialized leasing companies, financial institutions, and manufacturers offering their own leasing programs.

Regulatory Implications

As a limited liability company, ATEL 16, LLC is subject to state-specific LLC regulations. Its operations involving financial transactions and potential public offerings may also fall under SEC oversight. Compliance with accounting standards (GAAP) is crucial for accurate financial reporting, especially during liquidation, to ensure transparency for members and any relevant regulatory bodies.

What Investors Should Do

1. Monitor the pace of asset disposition and capital return: Given the liquidation phase, investors should track the speed at which assets are sold and distributions are made to assess the remaining value and timeline.
2. Analyze the sustainability of reduced operating expenses: While lower expenses boosted net income, understand if these reductions are sustainable or a temporary effect of liquidation, and if they impact future revenue-generating capacity.
3. Evaluate the impact of distributions on cash reserves: The significant distributions to members have depleted cash reserves. Investors should assess if the remaining cash is adequate for ongoing liquidation costs and potential contingencies.

Key Dates

• 2022-01-01: Commencement of Liquidation Phase — Marks a strategic shift towards asset disposition and capital return to members, impacting the company's operational focus and financial reporting.
• 2025-09-30: Balance Sheet Date — Represents the end of the reporting period for the unaudited financial statements, showing a reduced asset base and cash position compared to year-end 2024.
• 2025-09-30: End of Nine-Month Reporting Period — The period for which the company reported a significant turnaround in net income, driven by reduced operating expenses.

Glossary

Operating lease revenue, net

Revenue generated from leasing out equipment, net of any direct costs associated with the lease. (This is the primary source of revenue for ATEL 16, LLC, and its slight decline indicates a potential reduction in the active leasing portfolio.)

Depreciation of operating lease assets

The systematic allocation of the cost of leased assets over their useful lives. (A significant reduction in this expense contributed to the improved net income, as the company's leased assets are aging or being disposed of.)

Asset management fees to Managing Member

Fees paid to the entity managing the company's assets. (A reduction in these fees also contributed to lower operating expenses, reflecting a potential scaling back of management activities or a change in fee structure.)

Members' capital

The total investment made by the members (owners) of the limited liability company. (The decrease in members' capital is a direct consequence of distributions made to members as part of the liquidation process.)

Limited Liability Company Units Outstanding

The total number of ownership units in the LLC that are currently held by investors. (A slight decrease in units outstanding suggests some repurchases or redemptions, which is common during a liquidation phase.)

Net income (loss) per Limited Liability Company Unit - Other Members

The portion of the company's net income or loss allocated to each unit held by 'Other Members'. (The positive net income per unit indicates improved profitability on a per-share basis for the reporting period.)

Year-Over-Year Comparison

Compared to the prior year period, ATEL 16, LLC has shown a significant financial turnaround, moving from a net loss of $46K to a net income of $443K for the nine months ended September 30, 2025. This improvement was driven by a substantial reduction in operating expenses, particularly depreciation and asset management fees, which fell from $1,682K to $1,081K. However, operating lease revenue saw a slight decrease from $1,609K to $1,547K. Total assets and members' capital have also declined, reflecting the company's ongoing liquidation phase and focus on returning capital 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-20250930x10q.htm (10-Q) — 1252KB
• tmb-20250930xex31d1.htm (EX-31.1) — 10KB
• tmb-20250930xex31d2.htm (EX-31.2) — 10KB
• tmb-20250930xex32d1.htm (EX-32.1) — 7KB
• tmb-20250930xex32d2.htm (EX-32.2) — 7KB
• 0001104659-25-112267.txt ( ) — 5352KB
• tmb-20250930.xsd (EX-101.SCH) — 45KB
• tmb-20250930_cal.xml (EX-101.CAL) — 51KB
• tmb-20250930_def.xml (EX-101.DEF) — 152KB
• tmb-20250930_lab.xml (EX-101.LAB) — 278KB
• tmb-20250930_pre.xml (EX-101.PRE) — 244KB
• tmb-20250930x10q_htm.xml (XML) — 1011KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Balance Sheets, September 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 SEPTEMBER 30, 2025 AND DECEMBER 31, 2024 (In Thousands) (Unaudited) September 30, December 31, 2025 2024 ASSETS Cash and cash equivalents $ 550 $ 1,164 Accounts receivable, net 11 28 Investment in equity securities 48 48 Warrants, fair value 84 106 Investment in equipment and leases, net 3,502 4,148 Prepaid expenses and other assets 1 2 Total assets $ 4,196 $ 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 94 95 Non-recourse debt 358 480 Unearned operating lease income 200 82 Total liabilities 833 976 Commitments and contingencies (Note 7) Members' capital: Managing Member — — Other Members 3,363 4,520 Total Members' capital 3,363 4,520 Total liabilities and Members' capital $ 4,196 $ 5,496 See accompanying notes. 3 Table of Contents ATEL 16, LLC FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (In Thousands Except for Units and Per Unit Data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Operating revenues: Leasing and lending activities: Operating lease revenue, net $ 523 $ 508 $ 1,547 $ 1,609 Loss on sales of operating lease assets — — ( 15 ) — Other revenue — 12 14 24 Total operating revenues 523 520 1,546 1,633 Operating expenses: Depreciation of operating lease assets 135 243 426 802 Asset management fees to Managing Member 53 76 187 229 Cost reimbursements to Managing Member and/or affiliates 35 92 130 236 Amortization of initial direct costs 2 1 6 7 Interest expense 5 7 15 22 Professional fees 36 27 201 185 Outside services 8 22 7

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 nine months ended September 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 September 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 leas

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 nine months ended September 30, 2025 and 2024, and as of September 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 September 30, 2025 and December 31, 2024. Such amounts included investment securities which do not have read

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

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