Atel 14 10Q 2022 Q3 Quarterly report

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended September 30, 2022

☐ 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 000-54356

ATEL 14, LLC

(Exact name of registrant as specified in its charter)

California	26-4695354
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)

The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111

(Address of principal executive offices)

Registrant’s telephone number, including area code: (415) 989-8800

Securities registered pursuant to section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Limited Liability Company Units

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


Title of each class:	Trading Symbol	Name of each exchange on which registered:
N/A	N/A	N/A

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” 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 ☒

The number of Limited Liability Company Units outstanding as of October 31, 2022 was 8,246,919.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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ATEL 14, LLC

Index


Part I.	Financial Information	3

Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets, September 30, 2022 and December 31, 2021	3
	Statements of Operations for the three and nine months ended September 30, 2022 and 2021	4
	Statements of Changes in Members’ Capital for the three and nine months ended September 30, 2022 and 2021	5
	Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	6
	Notes to the Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 4.	Controls and Procedures	25

Part II.	Other Information	25

Item 1.	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

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 14, LLC

BALANCE SHEETS

SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(In Thousands)

(Unaudited)


	September 30,		December 31,
	2022		2021
ASSETS
Cash and cash equivalents	$	902	$	1,748
Accounts receivable, net		37		39
Investment in equity securities		128		133
Warrants, fair value		—		3
Equipment under operating leases, net		7,141		8,411
Prepaid expenses and other assets		9		8
Total assets	$	8,217	$	10,342

LIABILITIES AND MEMBERS’ CAPITAL

Accounts payable and accrued liabilities:
Affiliates	$	26	$	21
Other		140		158
Non-recourse debt		1,432		2,163
Unearned operating lease income		16		25
Total liabilities		1,614		2,367

Commitments and contingencies

Members’ capital:
Managing Member		—		—
Other Members		6,603		7,975
Total Members’ capital		6,603		7,975
Total liabilities and Members’ capital	$	8,217	$	10,342

See accompanying notes.

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ATEL 14, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

(In Thousands Except for Units and Per Unit Data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Operating revenues:
Leasing and lending activities:
Operating leases	$	513	$	516	$	1,649	$	1,754
Gain on sales of operating lease assets		—		6		361		57
Other revenue		—		—		6		3
Total operating revenues		513		522		2,016		1,814

Operating expenses:
Depreciation of operating lease assets		342		351		1,065		1,315
Asset management fees to Managing Member		20		24		70		78
Cost reimbursements to Managing Member and/or affiliates		77		95		255		310
Impairment losses on equipment		—		58		—		619
Interest expense		14		21		47		71
Professional fees		39		12		133		139
Outside services		12		27		38		55
Taxes on income and franchise fees		28		32		85		96
Bank charges		2		3		7		9
Storage fees		1		20		11		80
Railcar maintenance		38		67		94		222
Freight and shipping		—		23		—		79
Other expense		16		16		59		55
Total operating expenses		589		749		1,864		3,128
(Loss) income from operations		(76)		(227)		152		(1,314)

Other (loss) income:
Gain on sale of investment in equity securities		—		—		—		13
Unrealized (loss) gain on fair value adjustment for equity securities		—		(3)		(5)		55
Unrealized loss on fair value adjustment for warrants		—		—		(3)		(28)
Total other (loss) income		—		(3)		(8)		40
Net (loss) income:	$	(76)	$	(230)	$	144	$	(1,274)

Net (loss) income:
Managing Member	$	—	$	—	$	114	$	67
Other Members		(76)		(230)		30		(1,341)
	$	(76)	$	(230)	$	144	$	(1,274)

Net (loss) income per Limited Liability Company Unit - Other Members	$	(0.01)	$	(0.03)	$	0.00	$	(0.16)
Weighted average number of Units outstanding		8,246,919		8,246,919		8,246,919		8,246,919

See accompanying notes.

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ATEL 14, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

(In Thousands Except for Units and Per Unit Data)

(Unaudited)


	Three Months Ended September 30, 2022
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance June 30, 2022	8,246,919	$	6,679	$	—	$	6,679
Net loss	—		(76)		—		(76)
Balance September 30, 2022	8,246,919	$	6,603	$	—	$	6,603

	Nine Months Ended September 30, 2022
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2021	8,246,919	$	7,975	$	—	$	7,975
Distributions to Other Members ($0.17 per Unit)	—		(1,402)		—		(1,402)
Distributions to Managing Member	—		—		(114)		(114)
Net income	—		30		114		144
Balance September 30, 2022	8,246,919	$	6,603	$	—	$	6,603

	Three Months Ended September 30, 2021
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance June 30, 2021	8,246,919	$	8,364	$	—	$	8,364
Net loss	—		(230)		—		(230)
Balance September 30, 2021	8,246,919	$	8,134	$	—	$	8,134

	Nine Months Ended September 30, 2021
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2020	8,246,919	$	10,382	$	—	$	10,382
Distributions to Other Members ($0.11 per Unit)	—		(907)		—		(907)
Distributions to Managing Member	—		—		(67)		(67)
Net (loss) income	—		(1,341)		67		(1,274)
Balance September 30, 2021	8,246,919	$	8,134	$	—	$	8,134

See accompanying notes.

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ATEL 14, LLC

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

(In Thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2022		2021
Operating activities:
Net income (loss)	$	144	$	(1,274)
Adjustment to reconcile net income (loss) to cash provided by operating activities:
Gain on sales of operating lease assets		(361)		(57)
Depreciation of operating lease assets		1,065		1,315
Reversal of provision for doubtful accounts		(4)		(1)
Impairment losses on equipment		—		619
Gain on sale of investment in equity securities		—		(13)
Unrealized loss (gain) on fair value adjustment for equity securities		5		(55)
Unrealized loss on fair value adjustment for warrants		3		28
Changes in operating assets and liabilities:
Accounts receivable		6		10
Prepaid expenses and other assets		(1)		4
Due to/from Managing Member and affiliates		5		77
Other accounts payable and accruals		(18)		(36)
Unearned operating lease income		(9)		(55)
Net cash provided by operating activities		835		562

Investing activities:
Proceeds from sales of investment securities		—		239
Proceeds from sales of operating lease assets		566		1,031
Net cash provided by investing activities		566		1,270

Financing activities:
Repayments under non-recourse debt		(731)		(706)
Distributions to Other Members		(1,402)		(907)
Distributions to Managing Member		(114)		(67)
Net cash used in financing activities		(2,247)		(1,680)

Net (decrease) increase in cash and cash equivalents		(846)		152
Cash and cash equivalents at beginning of period		1,748		909
Cash and cash equivalents at end of period	$	902	$	1,061

Supplemental disclosures of cash flow information:
Cash paid during period for interest	$	47	$	71
Cash paid during period for taxes	$	116	$	93

See accompanying notes.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL 14, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on April 1, 2009 (“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. Prior to May 9, 2011, the Manager was named ATEL Associates 14, LLC. The Managing Member is controlled by ATEL Financial Services, LLC (“AFS”), a wholly-owned subsidiary of ATEL Capital Group. The Fund may continue until December 31, 2030. Contributions in the amount of $500 were received as of May 8, 2009, 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 price of $10 per Unit. As of December 2, 2009, 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 first quarter of 2010. 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 February 12, 2010, at which time a request was processed to release the Pennsylvania escrowed amounts. The offering was terminated on October 6, 2011.

As of September 30, 2022, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $83.5 million (inclusive of the $500 initial Member’s capital investment) have been received. As of the same date, 8,246,919 Units were issued and outstanding.

The Company’s principal objectives are to invest in a diversified portfolio of investments that will (i) preserve, protect and return the Company’s invested capital; (ii) generate regular cash distributions to Unitholders, with any balance remaining after required minimum distributions to be used to purchase additional investments during the Reinvestment Period (ending six calendar years after the completion of the Company’s public offering of Units) and (iii) provide additional cash distributions following the Reinvestment Period and until all investment portfolio assets has been sold or otherwise disposed. The Company is governed by the ATEL 14, LLC amended and restated Limited Liability Company Operating Agreement dated October 7, 2009 (the “Operating Agreement”). On January 1, 2018, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement.

Pursuant to the terms of the Operating Agreement, the Managing Member and/or its affiliates receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (Note 5). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of the Managing Member.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission.

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ATEL 14, LLC

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 nine months ended September 30, 2022 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, 2022, up until the issuance of the financial statements. No events were noted which would require 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 expected future cash flows used for impairment analysis purposes and for determination of the allowances for doubtful accounts.

Segment reporting:

The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.

The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas.

The primary geographic region in which the Company seeks leasing opportunities is North America. For the three and nine months ended September 30, 2022 and 2021, all of the Company’s current operating revenues and long-lived assets relate to customers domiciled in the United States.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

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 securities of its borrowers or receive warrants in connection with its leading arrangement.

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. As of September 30, 2022 and December 31, 2021, equity securities totaled $128 thousand and $133 thousand, respectively. Such amounts included equity securities which do not have readily determinable market value totaling $125 thousand at both September 30, 2022 and December 31, 2021.

There were no gains or losses recorded on securities with readily determinable fair values during the current quarter. During the three months ended September 30, 2021, the Company recorded unrealized losses of $3 thousand on such securities. During the nine-month periods ended September 30, 2022 and 2021, the Company recorded unrealized losses of $5 thousand and unrealized gains of $55 thousand, respectively, on such securities. There were no gains or losses recorded on investment securities which do not have readily determinable fair values during the three and nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company had recorded unrealized gains totaling $57 thousand on such investment securities, all of which were recorded prior to the third quarter of 2021. Cumulative adjustments totaling $186 thousand have been recorded to reduce the value of such investment securities held at September 30, 2022 based on changes in observable prices.

There were no securities sold during the three and nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company sold investment securities valued at approximately $226 thousand and realized a $13 thousand gain on the sales. All of such sales occurred during the first quarter of 2021.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet as determined by the Managing Member. The estimated fair value of the Company’s portfolio of warrants netted to zero at September 30, 2022, and totaled $3 thousand as of December 31, 2021.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

There were no unrealized gains or losses recorded during for the three months ended September 30, 2022 and 2021. During the nine months ended September 30, 2022 and 2021, the Company recorded unrealized losses of $3 thousand and $28 thousand, respectively.

Credit risk:

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

Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is being recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with 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 lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43).

The Company does not use the equipment held in its portfolio, but holds it solely for lease and ultimate sale. In the course of marketing equipment that has come off-lease, management may determine at some point that re-leasing the assets may provide a superior return for investors and would then execute another lease. Upon entering into a new lease contract, management will estimate the residual value once again and resume depreciation. If, and when, the Company, at any time, determines that depreciation in value may have occurred with respect to an asset held-for-sale, the Company would review the value to determine whether a material reduction in value had occurred and recognize any appropriate impairment. All lease assets, including off-lease assets, are subject to the Company’s quarterly impairment analysis, as described below. Maintenance costs associated with the Fund’s portfolio of leased assets are expensed as incurred. Major additions and betterments are capitalized.

Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms from 36 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet.

Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis. Provisions for credit losses relating to operating leases are included in lease income in the Company’s financial statements.

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.

Asset valuation:

Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances.

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, generally on a national exchange.

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.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

Per Unit data:

Net (loss) income and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the period.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP that are intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. Management is currently evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Fund’s financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and equipment under operating leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, equipment under operating leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Management is currently evaluating the standard and expects the update may potentially result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses (“ASU 2018-19”). The new standard clarifies certain aspects of the new CECL impairment model in ASU 2016-13. The amendment clarifies that receivables arising from operating leases are within the scope of ASC 842, rather than ASC 326. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements.

On August 15, 2019, the FASB issued a proposed ASU that would grant certain companies additional time to implement FASB standards on CECL, and hedging. The proposed ASU defers the effective date for CECL to fiscal periods

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

beginning after December 15, 2022, including interim periods within those fiscal years; and defers the effective dates for hedging to fiscal periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The ASU was approved on October 16, 2019. In February 2020, the FASB issued ASU 2020-02 and delayed the effective date of Topic 326 until fiscal year beginning after December 15, 2022.

3. Allowance for doubtful accounts:

The Company’s allowance for doubtful accounts are as follows (in thousands):


	Allowance for
	Doubtful Accounts
	Operating Leases
Balance December 31, 2020	$	5
Reversal of provision for doubtful accounts		(1)
Balance September 30, 2021	$	4

Balance December 31, 2021	$	4
Reversal of provision for doubtful accounts		(4)
Balance September 30, 2022	$	—

4. Equipment under operating leases, net:

The Company’s equipment under operating leases consists of the following (in thousands):


					Depreciation/
					Amortization
	Balance		Reclassifications		Expense or		Balance
	December 31,		Additions and		Amortization		September 30,
	2021		Dispositions		of Leases		2022
Equipment under operating leases, net	$	7,852	$	(135)	$	(1,063)	$	6,654
Assets held for sale or lease, net		559		(70)		(2)		487
Total	$	8,411	$	(205)	$	(1,065)	$	7,141

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $342 thousand and $351 thousand for the respective three months ended September 30. 2022 and 2021. For the nine months ended September 30, 2022 and 2021, depreciation expense totaled $1.1 million and $1.3 million, respectively. Depreciation expense for the three and nine months ended September 30, 2022, include $7 thousand and $36 thousand, respectively, of additional depreciation recorded to reflect year-to-date changes in estimated residual values of certain equipment generating revenue under month to-month extensions. Such additional depreciation totaled $6 thousand and $276 thousand during the three and nine months ended September 30, 2021, respectively.

There were no impairment losses recorded on equipment during the respective three and nine months ended September 30, 2022. By comparison, impairment losses totaling $58 thousand and $619 thousand were recorded for the three and nine months ended September 30, 2021, respectively.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2009 through

2020.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Operating leases:

Property on operating leases consists of the following (in thousands):


	Balance						Balance
	December 31,				Reclassifications		September 30,
	2021		Additions		or Disposition		2022
Marine vessel	$	19,410	$	—	$	—	$	19,410
Transportation, rail		4,032		—		(552)		3,480
Transportation		208		—		—		208
Manufacturing		3,119		—		(2,022)		1,097
Materials handling		125		—		—		125
Construction		582		—		—		582
Agriculture		542		—		(263)		279
		28,018		—		(2,837)		25,181
Less accumulated depreciation		(20,166)		(1,063)		2,702		(18,527)
Total	$	7,852	$	(1,063)	$	(135)	$	6,654

The average estimated residual value for assets on operating leases was 20% of the assets’ original cost at both September 30, 2022 and December 31, 2021. There were no operating leases in non-accrual status at both September 30, 2022 and December 31, 2021.

At September 30, 2022, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):


	Operating
	Leases
Three months ending December 31, 2022	$	381
Year ending December 31, 2023		1,399
2024		422
2025		209
2026		52
	$	2,463

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2022 and December 31, 2021, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):


Equipment category		Useful Life
Transportation, rail		35 - 50
Marine vessel		20 - 30
Manufacturing		10 -15
Agriculture		7 - 10
Construction		7 - 10
Materials handling		7 - 10
Transportation		7 - 10

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

5. Related party transactions:

The terms of the Operating Agreement provide that the Managing Member and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company.

The Operating Agreement allows for the reimbursement of costs incurred by the Managing Member and/or affiliates for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. The Managing Member is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of investments.

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

Cost reimbursements to the Managing Member or its affiliates are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as total assets, number of investors or contributed capital based upon the type of cost incurred. The Managing Member believes that the costs reimbursed are the lower of (i) actual costs incurred on behalf of the Company or (ii) the amount the Company would be required to pay independent parties for comparable administrative services in the same geographic location.

Pursuant to the Operating Agreement, the Managing Member and/or affiliates earned fees and billed for reimbursements during the three and nine months ended September 30, 2022 and 2021 as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Administrative costs reimbursed to Managing Member and/or affiliates	$	77	$	95	$	255	$	310
Asset management fees to Managing Member		20		24		70		78
	$	97	$	119	$	325	$	388

The Fund’s Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self-liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. As of September 30, 2022 and December 31, 2021, the Company has not exceeded the annual and/or cumulative limitations discussed above.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

6. Non-recourse debt:

At September 30, 2022, non-recourse debt consists of a note payable to financial institutions. Such note is due in monthly installments. Interest on the note is at 3.40% per annum. The note is secured by assignments of lease payments and pledges of assets. At September 30, 2022, remaining gross operating lease rentals totaled approximately $1.5 million; and the carrying value of the pledged asset is $5.5 million. The note matures in 2024.

The non-recourse debt does not contain any material financial covenants. The debt is secured by a specific lien granted by the Company to the non-recourse lender on (and only on) the discounted lease transactions. The lender has recourse only to the following collateral: the leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lender, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company’s good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

Future minimum payments of non-recourse debt are as follows (in thousands):


	Principal		Interest		Total
Three months ending December 31, 2022	$	248	$	11	$	259
Year ending December 31, 2023		1,012		25		1,037
2024		172		1		173
	$	1,432	$	37	$	1,469

The non-recourse debt balance represents the remaining portion of half of a $9.2 million non-recourse promissory note executed on May 20, 2019. The non-recourse promissory note was split evenly between the Fund and its affiliate, ATEL 15, LLC, and was used to pay off the senior long-term debt. The non-recourse promissory note is to be serviced by the cash flows generated under a renewed bareboat charter.

7. Commitments and contingencies:

At September 30, 2022, there were no commitments to purchase lease assets or fund investments in notes receivable.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

8. Members’ capital:

A total of 8,246,919 Units were issued and outstanding at September 30, 2022 and December 31, 2021, inclusive of the 50 Units issued to the initial Member (Managing Member). The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Member.

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

The Fund’s net income or net losses are to be allocated 100% to the Members. From the commencement of the Fund until the initial closing date, net income and net loss were allocated 99% to the Managing Member and 1% to the initial Other Members. Commencing with the initial closing date, net income and net loss are to be allocated 92.5% to the Other Members and 7.5% to the Managing Member.

Fund distributions are to be allocated 7.5% to the Managing Member and 92.5% to the Other Members. The Company commenced periodic distributions in December 2009.

Distributions to the Other Members for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands except Units and per Unit data):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Distributions declared	$	—	$	—	$	1,402	$	907
Weighted average number of Units outstanding		8,246,919		8,246,919		8,246,919		8,246,919
Weighted average distributions per Unit	$	—	$	—	$	0.17	$	0.11

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

9. Fair value measurements:

Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

At September 30, 2022 and December 31, 2021, the Company’s warrants and investment in securities registered for public sale were measured on a recurring basis. In addition, certain equipment deemed impaired were measured at fair value on a non-recurring basis as of September 30, 2022 and December 31, 2021.

Such fair value adjustments utilized the following methodology:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, time to maturity, and a risk-free interest rate for the term(s) of the warrant exercise(s). At September 30, 2022, the calculated fair value of the Fund’s warrants portfolio was zero. At December 31, 2021, such calculated fair value totaled $3 thousand. The valuations are classified within Level 3 of the valuation hierarchy.

The fair value of warrants that were accounted for on a recurring basis for the three and nine months ended September 30, 2022 and 2021, and classified as level 3 are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Fair value of warrants at beginning of period	$	—	$	3	$	3	$	31
Unrealized loss on fair value adjustment for warrants		—		—		(3)		(28)
Fair value of warrants at end of period	$	—	$	3	$	—	$	3

Investment securities (recurring)

The Company’s investment 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 fair value of such securities totaled $3 thousand and $8 thousand at September 30, 2022 and December 31, 2021, respectively.

The fair value of investment securities that were accounted for on a recurring basis for the three and nine months ended September 30, 2022 and 2021, and classified as Level 1 are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Fair value of securities at beginning of period	$	3	$	12	$	8	$	238
Securities sold		—		—		—		(226)
Unrealized loss on fair value of securities		—		(3)		(5)		(3)
Fair value of investment securities at end of period	$	3	$	9	$	3	$	9

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Impaired lease and off-lease equipment (non-recurring)

During the three and nine months ended September 30, 2021, the Company recorded fair value adjustments totaling $619 thousand to reduce the cost basis of certain transportation, rail and research equipment. There was no impairment loss on equipment during the three and nine months ended September 30, 2022.

Level 1

Level 2

Level 3

September 30,

Estimated

2022

Fair Value

Assets measured at fair value on a non-recurring basis (in thousands):

Impaired lease and off-lease equipment

—

Level 1

Level 2

Level 3

December 31,

Estimated

2021

Fair Value

Assets measured at fair value on a non-recurring basis (in thousands):

Impaired lease and off-lease equipment

148

—

148

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired lease assets were classified within Level 3 of the valuation hierarchy as the data sources utilized for the valuation of such assets reflect significant inputs that are unobservable in the market. Such valuation utilizes a market approach technique and uses inputs that reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agents not readily available in the market.

The following tables summarize the valuation techniques and significant unobservable inputs used for the Company’s recurring and non-recurring fair value calculation/adjustments categorized as Level 3 in the fair value hierarchy at September 30, 2022 and December 31, 2021:


September 30, 2022
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$24.15 - $24.15 ($24.15)
			Exercise price	$38.64 - $38.64 ($38.64)
			Time to maturity (in years)	0.25 - 0.25 (0.25)
			Risk-free interest rate	3.53% - 3.53% (3.53%)
			Annualized volatility	165.92% - 165.92% (165.92%)

Lease and off-lease equipment	Non-recurring	Market Approach	Third Party Agents' Pricing	$0 - $8,000
			Quotes - per equipment	(total of $8,000)
			Equipment Condition	Poor to Average

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)


December 31, 2021
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$21.93 - $21.93 ($21.93)
			Exercise price	$38.64 - $38.64 ($38.64)
			Time to maturity (in years)	1.00 - 1.00 (1.00)
			Risk-free interest rate	0.42% - 0.42% (0.42%)
			Annualized volatility	167.22% - 167.22% (167.22%)

Lease and off-lease equipment	Non-recurring	Market Approach	Third Party Agents' Pricing	$0 - $148,000
			Quotes - per equipment	(total of $148,000)
			Equipment Condition	Poor to Average

The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Company’s financial statements and related notes.

The Company determines the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents

The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.

Non-recourse debt

The fair value of the Company’s non-recourse debt is estimated using discounted cash flow analyses, based upon current market borrowing rates for similar types of borrowing arrangements.

Commitments and Contingencies

Management has determined that no recognition for the fair value of the Company’s loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Company’s credit requirements at the time of funding.

The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.

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ATEL 14, LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at September 30, 2022 and December 31, 2021 (in thousands):


	Fair Value Measurements at September 30, 2022
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	902	$	902	$	—	$	—	$	902
Investment in securities		3		3		—		—		3
Financial liabilities:
Non-recourse debt		1,432		—		—		1,411		1,411


	Fair Value Measurements at December 31, 2021
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	1,748	$	1,748	$	—	$	—	$	1,748
Investment in securities		8		8		—		—		8
Warrants, fair value		3		—		—		3		3

Financial liabilities:
Non-recourse debt		2,163		—		—		2,197		2,197

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

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

Overview

The Company may continue until December 31, 2030. Periodic distributions are paid at the discretion of the Managing Member.

Results of Operations

The three months ended September 30, 2022 versus the three months ended September 30, 2021

The Company had net losses of $76 thousand and $230 thousand for the respective three months ended September 30, 2022 and 2021. The results for the third quarter of 2022 primarily reflect a decrease in total operating expenses when compared to the prior year period.

Total operating expenses were $589 thousand and $749 thousand for the three months ended September 30, 2022 and 2021, respectively. The $160 thousand, or 21%, decrease in operating expenses was mostly due to decreases in impairment losses on equipment, railcar maintenance expense, freight and shipping costs, and storage fees. These reductions were partially offset by an increase in professional fees.

Impairment losses on equipment decreased by $58 thousand due to a prior year period adjustment of the same amount, which reduced the carrying value of certain assets deemed impaired. No such impairment was deemed necessary for the current quarter. Railcar maintenance costs decreased by $29 thousand due to the decline in lease-end repairs; while freight and shipping costs declined by $23 thousand primarily due to a decrease in railcar returns. In addition, storage fees decreased by $19 thousand as a result of an approximate $1.0 million decline in off-lease inventory since September 30, 2021. Partially offsetting such reductions in expenses was a $27 thousand increase in professional fees, which was attributable to the period over period timing differences in receipt of services and billings.

The Company’s total operating revenues of $513 thousand for the current quarter was relatively flat as compared to revenues of $522 thousand for the prior year period. Most of the $9 thousand unfavorable change was attributable to a decline in gains realized from sales of lease assets, as the Company recorded gains of $6 thousand from such sales during the prior year period. There were no sales of lease assets during the current quarter.

Nine months ended September 30, 2022 versus nine months ended September 30, 2021

The Company had net income of $144 thousand and a net loss of $1.3 million for the nine months ended September 30, 2022 and 2021, respectively. The results for the first nine months of 2022 reflect an increase in total operating revenues and a decrease in total operating expenses partially offset by an unfavorable change in other income.

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Total operating revenues approximated $2.0 million and $1.8 million for the nine months ended September 30, 2022 and 2021, respectively. The $202 thousand, or 11%, increase in operating revenues was primarily due to an increase in gains on sales of lease assets partially offset by a decrease in operating lease revenues.

The increase in gains on sales of lease assets totaled $304 thousand and was largely due to a change in the mix of assets sold; while the reduction in operating lease revenues totaled $105 thousand and was mostly attributable to portfolio run-off and dispositions of lease assets.

Total operating expenses were $1.9 million and $3.1 million for the nine months ended September 30, 2022 and 2021, respectively. The $1.3 million, or 40%, decrease in operating expenses was mostly due to decreases in impairment losses on equipment, depreciation expense, railcar maintenance costs, freight and shipping fees and storage fees.

Impairment losses on equipment decreased by $619 thousand as adjustments of same amount were recorded during the prior year period to reduce the carrying value of certain assets deemed impaired. No such impairments were deemed necessary during the first nine months of 2022. Depreciation expense decreased by $250 thousand primarily due to a $240 thousand decrease in additional depreciation recorded to reflect year-to-date changes in estimated residual values of certain equipment generating revenue under month-to-month extensions, and the impact of portfolio run-off and disposition of lease assets. Railcar maintenance costs were lower by $128 thousand due to a reduction in lease-end repairs. In addition, freight and shipping costs, and storage fees declined by $79 thousand and $69 thousand, respectively, due to decreases in railcar returns and off-lease railcar inventory.

During the first nine months of 2022, the Company also recorded other losses totaling $8 thousand related to the fair valuation of its investment securities and warrants. This compares to other income of $40 thousand recorded on such assets during the prior year period. Such other losses and income for the nine months ended September 30, 2022 and 2021 include $8 thousand of unrealized losses and $27 thousand of net unrealized gains, respectively. Such unfavorable change can be attributed to a prior year period adjustment, which increased unrealized gains on certain private equity securities held by $57 thousand based on changes in observable prices. Also included in the other income recorded for the prior year period was $13 thousand of gains realized from the sale of equity securities. There were no such sales during the current nine-month period.

Capital Resources and Liquidity

At September 30, 2022 and December 31, 2021, the Company’s cash and cash equivalents totaled $902 thousand and $1.7 million, respectively. The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The Company currently believes it has adequate reserves available to meet its immediate cash requirements and those of the next twelve months, but in the event those reserves were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements.

Cash Flows

The following table sets forth summary cash flow data (in thousands):


	Nine Months Ended
	September 30,
	2022		2021
Net cash provided by (used in):
Operating activities	$	835	$	562
Investing activities		566		1,270
Financing activities		(2,247)		(1,680)
Net (decrease) increase in cash and cash equivalents	$	(846)	$	152

During the nine months ended September 30, 2022 and 2021, the Company’s primary source of liquidity were cash flows from its portfolio of operating lease contracts. In addition, during the same respective periods, the Company received $566 thousand and $1.0 million of proceeds from sales of lease assets. During the prior year period, the Company also received $239 thousand of proceeds from sales of investment securities. There were no such sales during the current period.

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During the nine months ended September 30, 2022 and 2021, cash was primarily used to pay distributions, and to repay borrowings under non-recourse debt. Distributions paid to the Other Members and the Managing Member totaled $1.5 million and $974 thousand for the respective nine months ended September 30, 2022 and 2021; while cash used to reduce non-recourse debt totaled $731 thousand and $706 thousand for the same respective periods. Cash was also used to pay invoices related to management fees and expenses, and other payables during both nine-month periods.

Distributions

The Unitholders of record are entitled to certain distributions as provided under the Operating Agreement. The Company commenced periodic distributions beginning with the month of December 2009. The monthly distributions were discontinued in 2018 as the Company entered its liquidation phase. The rates and frequency of periodic distributions paid by the Fund during its liquidation phase are solely at the discretion of the Managing Member.

The following table summarizes distribution activity for the Fund from inception through September 30, 2022 (in thousands except for Units and Per Unit Data):


														Total		Weighted
		Return of				Distribution				Total				Distribution		Average Units
Distribution Period (1)	Paid	Capital				of Income				Distribution				per Unit (2)		Outstanding (3)
Monthly and quarterly distributions
Oct 2009 - Feb 2010
(Distribution of escrow interest)	Jan - Mar 2010	$	—			$	—			$	—			$	—	n/a
Dec 2009 - Dec 2010	Jan 2010 - Jan 2011		2,003				—				2,003				0.90	2,214,171
Jan 2011 - Nov 2011	Feb - Dec 2011		4,855				—				4,855				0.87	5,597,722
Dec 2011 - Nov 2012	Jan - Dec 2012		7,562				—				7,562				0.90	8,400,238
Dec 2012 - Nov 2013	Jan - Dec 2013		7,550				—				7,550				0.90	8,389,923
Dec 2013 - Nov 2014	Jan - Dec 2014		7,548				—				7,548				0.90	8,386,015
Dec 2014 - Nov 2015	Jan - Dec 2015		7,535				—				7,535				0.90	8,378,495
Dec 2015 - Nov 2016	Jan - Dec 2016		7,507				—				7,507				0.90	8,355,428
Dec 2016 - Nov 2017	Jan - Dec 2017		7,429				—				7,429				0.90	8,293,381
Dec 2017	Jan 2018		797				—				797				0.10	8,260,392
Jan 2018 - Dec 2018	Jun 2019		2,063				—				2,063				0.25	8,246,919
Jan 2019 - Dec 2019	Jan 2020		2,103				—				2,103				0.26	8,246,919
Jan 2020 - Dec 2020	Jan 2021		907				—				907				0.11	8,246,919
Jan 2021 - Dec 2021	Jan 2022		1,402				—				1,402				0.17	8,246,919
		$	59,261			$	—			$	59,261			$	8.06
Source of distributions
Lease and loan payments received		$	59,261	100.00	%	$	—	0.00	%	$	59,261	100.00	%
Interest income			—	0.00	%		—	0.00	%		—	0.00	%
Debt against non-cancellable firm term payments on leases and loans			—	0.00	%		—	0.00	%		—	0.00	%
		$	59,261	100.00	%	$	—	0.00	%	$	59,261	100.00	%

(1)

Investors may elect to receive their distributions either monthly or quarterly. See “Timing and Method of Distributions” on Page 67 of the Prospectus.

(2)

Total distributions per Unit represents the per Unit distributions rate for those units which were outstanding for all of the applicable period.

(3)

Balances shown represent weighted average units for the year ended December 31, 2010, and periods from January 1 – November 30, 2011, December 1, 2011 – November 30, 2012, December 1, 2012 – November 30, 2013, December 1, 2013 – November 30, 2014, December 1, 2014 – November 30, 2015, December 1, 2015 – November 30, 2016, December 1, 2016 – November 30, 2017, December 1, 2017, January 1, 2018 – December 31, 2018, January 1, 2019 – December 31, 2019, January 1, 2020 – December 31, 2020, and January 1, 2021 – December 31, 2021, respectively.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At September 30, 2022, there were no commitments to purchase lease assets or fund investments in notes receivable.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Note 2 Summary of Significant Accounting Policies.

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Significant Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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. On an on-going basis, the Company evaluates its estimates, which are based upon historical experiences, market trends and financial forecasts, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these estimates under different assumptions or conditions.

The Company’s significant accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the Company’s significant accounting policies since December 31, 2021.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

The Company’s Managing Member’s Chief Executive Officer, and Executive Vice President and Chief Financial and Operating Officer (“Management”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based on the evaluation of the Company’s disclosure controls and procedures, Management concluded that as of the end of the period covered by this report, the design and operation of these disclosure controls and procedures were effective.

The Company does not control the financial reporting process, and is solely dependent on the Management of the Managing Member, who is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Member’s disclosure controls and procedures, as they are applicable to the Company, means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control

There were no changes in the Managing Member’s internal control over financial reporting, as it is applicable to the Company, during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of conducting business, there may be certain claims, suits, and complaints filed against the Managing Member. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Managing Member’s financial position or results of operations.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a)

Documents filed as a part of this report


		1.	Financial Statement Schedules
			All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

2.	Other Exhibits

	(31.1)	Certification of Dean L. Cash pursuant to Rules 13a-14(a)/15d-14(a)
	(31.2)	Certification of Paritosh K. Choksi pursuant to Rules 13a-14(a)/15d-14(a)
	(32.1)	Certification of Dean L. Cash pursuant to 18 U.S.C. section 1350
	(32.2)	Certification of Paritosh K. Choksi pursuant to 18 U.S.C. section 1350
	(101.INS)	Inline XBRL Instance Document
	(101.SCH)	Inline XBRL Taxonomy Extension Schema Document
	(101.CAL)	Inline XBRL Taxonomy Extension Calculation Linkbase Document
	(101.DEF)	Inline XBRL Taxonomy Extension Definition Linkbase Document
	(101.LAB)	Inline XBRL Taxonomy Extension Label Linkbase Document
	(101.PRE)	Inline XBRL Taxonomy Extension Presentation Linkbase Document
	(104)	The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended
		September 30, 2022 has been formatted in Inline XBRL

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 14, 2022

ATEL 14, LLC

(Registrant)


By:	ATEL Managing Member, LLC Managing Member of Registrant

By:	/s/ Dean L. Cash
	Dean L. Cash
	Chairman of the Board, President and Chief Executive Officer of ATEL Managing Member, LLC (Managing Member)


By:	/s/ Paritosh K. Choksi
	Paritosh K. Choksi
	Director, Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Managing Member, LLC (Managing Member)


By:	/s/ Raymond A. Rigo
	Raymond A. Rigo
	Vice President, Fund Controller of ATEL Managing Member, LLC (Managing Member)

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Atel 14 10-Q2022 Q3 Quarterly report

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