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 ~~June~~September 30, 2023

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

For the transition period from to

Commission File number 333-203841

ATEL 17, LLC

(Exact name of registrant as specified in its charter)

California	90-1108275

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

505 Montgomery Street, 7th 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: None

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. (Check one):


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 ~~July~~October 31, 2023 was 2,565,749.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

ATEL 17, LLC

Index


Part I. Financial Information		3

Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets, ~~June~~September 30, 2023 and December 31, 2022	3
	Statements of Operations for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022	4
	Statements of Changes in Members’ Capital for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022	5
	Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022	6
	Notes to the Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 4.	Controls and Procedures	2324

Part II. Other Information		2425

Item 1.	Legal Proceedings	2425

Item 2.	Defaults Upon Senior Securities	2425

Item 3.	Mine Safety Disclosures	2425

Item 4.	Other Information	2425

Item 5.	Exhibits	2425

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 17, LLC

BALANCE SHEETS

~~JUNE~~SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

(In Thousands)

(Unaudited)


	~~June~~September 30,		December 31,
	2023		2022

ASSETS
Cash and cash equivalents	$	1,~~825~~361	$	2,644
Accounts receivable, net		1837		42
Investment in equity securities		1911		21
Warrants, fair value		~~136~~131		138
Investments in equipment and leases, net		5,~~896~~548		6,589
Prepaid expenses and other assets		34		6
Total assets	$	7,~~897~~092	$	9,440

LIABILITIES AND MEMBERS' CAPITAL

Accounts payable and accrued liabilities:
Due to Managing Member and affiliates	$	3328	$	40
Accrued distributions to Other Members		228		228
Other		55		59
Non-recourse debt		~~848~~712		1,115
Unearned operating lease income		9686		106
Total liabilities		1,~~260~~109		1,548

Commitments and contingencies

Members’ capital:
Managing Member		1		1
Other Members		65,~~636~~982		7,891
Total Members’ capital		65,~~637~~983		7,892
Total liabilities and Members’ capital	$	7,~~897~~092	$	9,440

See accompanying notes.

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ATEL 17, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED

~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(In Thousands Except for Units and Per Unit Data)

(Unaudited)


		Three Months Ended				~~Six~~Nine Months Ended
		~~June~~September 30,				~~June~~September 30,
	2023		2022		2023		2022
Operating revenues:
Leasing and lending activities:
Operating lease revenue, net	$	~~435~~434	$	~~423~~445	$	~~875~~1,309	$	~~895~~1,340
Gain on sales of lease assets		-		27		-		208
(Loss) gain on sales of lease assets		-		(6)		-		202
Other revenue		1		4-		12		23
Total operating revenues		~~436~~435		~~454~~439		~~876~~1,311		1,~~126~~565

Operating expenses:
Depreciation of operating lease assets		~~341~~342		~~342~~348		~~682~~1,024		~~686~~1,034
Asset management fees to Managing Member		55		5553		~~110~~165		~~112~~165
Acquisition expense		-		-2		-		24
Cost reimbursements to Managing Member and/or affiliates		6875		7674		~~151~~226		~~156~~230
Amortization of initial direct costs		6		86		1117		1521
Interest expense		118		1614		2230		3347
Professional fees		2058		5943		60118		83126
Outside services		1812		8		4456		2230
Other expense		97		2115		2128		4358
Total operating expenses		~~528~~563		~~585~~563		1,~~101~~664		1,~~152~~715
Net loss from operations		(92128)		(~~131~~124)		(~~225~~353)		(26150)

Other (loss) gain:
Unrealized loss on fair value adjustment for equity securities		(68)		(7210)		(210)		(~~256~~266)
Unrealized gain (loss) on fair value adjustment for warrants		-		1		(2)		2
Unrealized (loss) gain on fair value adjustment for warrants		(5)		1		(7)		3
Realized gain on sale of options		-		-		-		1
Total other loss		(613)		(719)		(417)		(~~253~~262)
Net loss	$	(98141)	$	(~~202~~133)	$	(~~229~~370)	$	(~~279~~412)

Net loss:
Managing Member	$	-	$	-	$	-	$	-
Other Members		(98141)		(~~202~~133)		(~~229~~370)		(~~279~~412)
	$	(98141)	$	(~~202~~133)	$	(~~229~~370)	$	(~~279~~412)

Net loss per Limited Liability Company Unit - Other Members	$	(0.0405)	$	(0.0805)	$	(0.0914)	$	(0.1116)
Weighted average number of Units outstanding		2,565,749		2,565,749		2,565,749		2,565,749

See accompanying notes.

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ATEL 17, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED

~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(In Thousands Except for Units and Per Unit Data)

(Unaudited)


	Three Months Ended ~~June~~September 30, 2023
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance March 31, 2023	2,565,749	$	7,247	$	1	$	7,248
Balance June 30, 2023	2,565,749	$	6,636	$	1	$	6,637
Distributions to Other Members ($0.20 per Unit)	-		(513)		-		(513)
Net loss	-		(98141)		-		(98141)
Balance June 30, 2023	2,565,749	$	6,636	$	1	$	6,637
Balance September 30, 2023	2,565,749	$	5,982	$	1	$	5,983

	~~Six~~Nine Months Ended ~~June~~September 30, 2023
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2022	2,565,749	$	7,891	$	1	$	7,892
Distributions to Other Members ($0.40 per Unit)	-		(1,026)		-		(1,026)
Distributions to Other Members ($0.60 per Unit)	-		(1,539)		-		(1,539)
Net loss	-		(~~229~~370)		-		(~~229~~370)
Balance June 30, 2023	2,565,749	$	6,636	$	1	$	6,637
Balance September 30, 2023	2,565,749	$	5,982	$	1	$	5,983

	Three Months Ended ~~June~~September 30, 2022
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance March 31, 2022	2,565,749	$	9,910	$	1	$	9,911
Distributions to Other Members ($0.20 per Unit)	-		(513)		-		(513)
Net loss	-		(202)		-		(202)
Balance June 30, 2022	2,565,749	$	9,195	$	1	$	9,196
Distributions to Other Members ($0.20 per Unit)	-		(513)		-		(513)
Net loss	-		(133)		-		(133)
Balance September 30, 2022	2,565,749	$	8,549	$	1	$	8,550

	~~Six~~Nine Months Ended ~~June~~September 30, 2022
		Amount
		Other		Managing
	Units	Members		Member		Total
Balance December 31, 2021	2,565,749	$	10,500	$	1	$	10,501
Distributions to Other Members ($0.40 per Unit)	-		(1,026)		-		(1,026)
Distributions to Other Members ($0.60 per Unit)	-		(1,539)		-		(1,539)
Net loss	-		(~~279~~412)		-		(~~279~~412)
Balance June 30, 2022	2,565,749	$	9,195	$	1	$	9,196
Balance September 30, 2022	2,565,749	$	8,549	$	1	$	8,550

See accompanying notes.

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ATEL 17, LLC

STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED

~~JUNE~~SEPTEMBER 30, 2023 AND 2022

(In Thousands)

(Unaudited)


	~~June~~Nine ~~30,~~Months Ended
	September 30,
	2023		2022
Operating activities:
Net loss	$	(~~229~~370)	$	(~~279~~412)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on sales of lease assets		-		(~~208~~202)
Depreciation of operating lease assets		~~682~~1,024		~~686~~1,034
Amortization of initial direct costs		1117		1521
Realized gain on sale of options		-		(1)
Unrealized loss on fair value adjustment for equity securities		210		~~256~~266
Unrealized loss (gain) on fair value adjustment for warrants		27		(23)
Changes in operating assets and liabilities:
Accounts receivable		245		(211)
Prepaid expenses and other assets		32		8-
Due to/from Managing Member and affiliates		(712)		98
Accounts payable, other		(4)		(~~104~~90)
Unearned operating lease income		(1020)		75
Net cash provided by operating activities		~~474~~659		~~385~~615

Investing activities:
Purchases of equipment under operating leases		-		(~~134~~133)
Proceeds from sale of options		-		50
Proceeds from sales of lease assets		-		~~379~~420
Net cash provided by investing activities		-		~~295~~337

Financing activities:
Repayments under non-recourse debt		(~~267~~403)		(~~256~~386)
Distributions to Other Members		(1,~~026~~539)		(1,~~026~~539)
Net cash used in financing activities		(1,~~293~~942)		(1,~~282~~925)

Net decrease in cash and cash equivalents		(~~819~~1,283)		(~~602~~973)
Cash at beginning of period		2,644		4,035
Cash at end of period	$	1,~~825~~361	$	3,~~433~~062

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	2231	$	3348
Cash paid during the period for taxes	$	1	$	13

Schedule of non-cash investing and financing transactions:
Distributions payable to Other Members at period-end	$	228	$	228

See accompanying notes.

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL 17, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on April 16, 2015 (“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 as provided in the ATEL 17, LLC limited liability operating agreement dated April 24, 2015 (the “Operating Agreement”). Contributions in the amount of $500 were received as of April 28, 2015, which represented the initial member’s capital investment. As a limited liability company, the liability of any individual member for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member.

The offering of the Company was granted effectiveness by the Securities and Exchange Commission as of January 5, 2016. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company units (Units) to the public reach $150 million. As of February 2, 2016, 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 2016. 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 July 6, 2016, at which time a request was processed to release the Pennsylvania escrowed amounts. The offering terminated on January 5, 2018.

As of ~~June~~September 30, 2023, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $25.7 million (inclusive of the $500 initial Member’s capital investment) have been received. As of the same date, 2,565,749 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 members, 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 have been sold or otherwise disposed.

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. (See Note 4, Related party transactions.) The Company is required to maintain reasonable cash reserves for working capital, for the repurchase of Units and for 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, 2022, filed with the Securities and Exchange Commission

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

2. Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (‘‘GAAP’’) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after ~~June~~September 30, 2023, 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 allowance for doubtful accounts on accounts receivable.

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 ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, 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 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

Accounts receivable:

Accounts receivable represent the amounts billed under operating lease contracts, and notes receivable 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 rights 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 $1911 thousand and $21 thousand of investment equity securities as of ~~June~~September 30, 2023 and December 31, 2022, respectively. All of such securities were publicly held and had readily determinable fair values. During the three months ended ~~June~~September 30, 2023 and 2022, the Company recorded unrealized losses of $68 thousand and $7210 thousand on its investment securities, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company recorded unrealized losses of $210 thousand and $~~256~~266 thousand, respectively. There were no sales of securities for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

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 was $~~136~~131 thousand and $138 thousand as of ~~June~~September 30, 2023 and December 31, 2022, respectively. ~~Changes~~The inCompany ~~fair~~recorded ~~value~~unrealized ~~for~~losses ~~the~~of ~~three~~$5 ~~months~~thousand ~~ended~~and ~~June 30, 2023 were deemed de minimus. By comparison, the Company recorded~~ unrealized gains of $1 thousand on fair valuation of its warrants for the three months ended ~~June~~September 30, 2023 and 2022, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company recorded unrealized losses of $27 thousand and unrealized gains of $23 thousand, respectively.

Options - short position

During the year ended December 31, 2021, the Company had sold options contracts on a publicly traded investment security. Such contracts were sold in two tranches as follows: 125 options at a premium of $3.00 and 75 options at $1.64 per share. Accordingly, the Company recorded a liability for the initial options value totaling $50 thousand. The options contracts both expired on January 21, 2022 with a strike price of $15.00 and $12.50, respectively. The Company realized gains totaling $1 thousand related to the expiration of the options during the first ~~six~~nine months of 2022.

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ATEL 17, LLC

NOTES TO THE 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, 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 receivable represent amounts due from lessees in various industries, related to equipment on operating leases.

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.

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

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ATEL 17, LLC

NOTES TO THE 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.

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 the 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.

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 markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

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 and distributions per Unit are based upon the weighted average number of members Units outstanding during the year.

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. The Company adopted this new accounting guidance on January 1, 2023. Such adoption had no material impact on the Company’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. The Company adopted this new accounting guidance on January 1, 2023. Such adoption had no material impact on the Company’s financial statements and disclosures.

3. Investment in equipment and leases, net:

The Company’s investment in equipment and leases consists of the following (in thousands):



	Balance		Additions/		Depreciation/		Balance
		December 31,	Dispositions/		Amortization			~~June~~September 30,
	2022		Reclassifications		Expense		2023
Equipment under operating leases, net	$	6,543	$	-	$	(~~682~~1,024)	$	5,~~861~~519
Initial direct costs, net		46		-		(1117)		3529
Total	$	6,589	$	-	$	(~~693~~1,041)	$	5,~~896~~548

Impairment of equipment:

As a result of impairment reviews, management determined that no impairment losses existed for the three- and ~~six~~nine- month periods ended ~~June~~September 30, 2023 and 2022.

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment under operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $~~341~~342 thousand and $~~342~~348 thousand for the respective three months ended ~~June~~September 30, 2023 and 2022; and was $~~682~~1.0 ~~thousand~~million ~~and~~for ~~$686~~each ~~thousand~~of ~~for~~ the ~~respective~~nine ~~six~~ months ended ~~June~~September 30, 2023 and 2022. Total depreciation for the prior year quarter included $7 thousand of additional depreciation recorded to reflect quarter-to-date changes in estimated residual values of certain equipment generating revenue under month-to-month extensions. Such estimated residual values of equipment associated with leases on month-to-month extensions are evaluated at least semi-annually, and depreciation recorded for the change in the estimated reduction in value. ~~There~~Additional ~~was~~depreciation norecorded ~~such~~during ~~adjustment~~the ~~recorded~~prior year nine-month period totaled $14 thousand. Adjustments for the current quarter and nine-month period were deemed deminimis.

IDC amortization expense related to the Company’s operating leases totaled $6 thousand ~~and~~for $8each ~~thousand~~of ~~for~~ the three months ended ~~June~~September 30, 2023 and 2022, ~~respectively,~~ and was $1117 thousand and $1521 thousand for of the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

All of the Company’s lease asset purchases and capital improvements were made during the years from 2016 through 2022.

Operating leases:

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


	Balance						Balance
	December 31,				Reclassifications		~~June~~September 30,
	2022		Additions		or Dispositions		2023
Construction	$	3,218	$	-	$	-	$	3,218
Mining		2,749		-		-		2,749
Aviation		2,327		-		-		2,327
Transportation, rail		1,723		-		-		1,723
Materials handling		1,249		-		-		1,249
Paper processing		1,058		-		-		1,058
Transportation, other		215		-		-		215
		12,539		-		-		12,539
Less accumulated depreciation		(5,996)		(~~682~~1,024)		-		(67,~~678~~020)
Total	$	6,543	$	(~~682~~1,024)	$	-	$	5,~~861~~519

The average estimated residual value for assets on operating leases was 27% of the assets’ original cost at ~~June~~September 30, 2023 and December 31, 2022. There were no operating leases in non-accrual status at ~~June~~September 30, 2023 and December 31, 2022.

At June 30, 2023, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):


	Operating
	Leases
Six months ending December 31, 2023	$	812
Year ending December 31, 2024		1,191
2025		536
2026		301
2027		233
Thereafter		78
	$	3,151

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

~~The~~At ~~useful~~September ~~lives for each category of leases is reviewed at a minimum of once per quarter. As of June~~ 30, 2023, the ~~respective~~aggregate ~~useful~~amounts ~~lives~~ of ~~each~~future ~~category~~minimum of lease ~~assets~~payments inreceivable ~~the Company’s portfolio~~ are as follows (in ~~years~~ thousands):


	Operating
	Leases
Three months ending December 31, 2023	$	397
Year ending December 31, 2024		1,191
2025		536
2026		301
2027		233
Thereafter		78
	$	2,736

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2023, 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
Aviation		15 - 20
Mining		10 - 15
Paper processing		10 - 15
Construction		7 - 10
Materials handling		7 - 10
Transportation, other		7 - 10

4. 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 six months ended June 30, 2023 and 2022 as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Administrative costs reimbursed to Managing Member and/or affiliates	$	68	$	76	$	151	$	156
Asset management fees to Managing Member		55		55		110		112
Acquisition and initial direct costs paid to Managing Member		-		-		-		2
	$	123	$	131	$	261	$	270

5. Non-recourse debt:

At June 30, 2023, non-recourse debt consists of notes payable to financial institutions. The note payments are due in monthly installments. Interest on the notes range from 3.82% to 4.66% per annum. The notes are secured by assignments

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

ofPursuant ~~lease~~to ~~payments~~the ~~and~~Operating ~~pledges of assets. At June 30~~Agreement, ~~2023,~~the ~~gross~~Managing ~~operating~~Member ~~lease~~and/or ~~rentals~~affiliates ~~totaled~~earned ~~approximately~~fees ~~$914 thousand over the remaining lease terms~~ and ~~the~~billed ~~carrying~~for ~~value~~reimbursements ofduring the ~~pledged~~three ~~assets~~and ~~was~~nine ~~$2.0~~months ~~million.~~ended ~~The~~September ~~notes~~30, ~~mature~~2023 ~~from~~and ~~2023~~2022 ~~through~~as ~~2028.~~follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Administrative costs reimbursed to Managing Member and/or affiliates	$	75	$	74	$	226	$	230
Asset management fees to Managing Member		55		53		165		165
Acquisition and initial direct costs paid to Managing Member		-		2		-		4
	$	130	$	129	$	391	$	399

5. Non-recourse debt:

At September 30, 2023, non-recourse debt consists of notes payable to financial institutions. The note payments are due in monthly installments. Interest on the notes range from 3.82% to 4.66% per annum. The notes are secured by assignments of lease payments and pledges of assets. At September 30, 2023, gross operating lease rentals totaled approximately $768 thousand over the remaining lease terms and the carrying value of the pledged assets was $1.9 million. The notes mature from 2023 through 2028.

The non-recourse debt does not contain any material financial covenants. The debt is secured by a lien granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific 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 lenders, 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
Six months ending December 31, 2023	$	254	$	16	$	270
Three months ending December 31, 2023	$	118	$	6	$	124
Year ending December 31, 2024		288		20		308
2025		73		13		86
2026		76		9		85
2027		80		6		86
Thereafter		77		2		79
	$	~~848~~712	$	6656	$	~~914~~768

6. Commitments and contingencies:

At ~~June~~September 30, 2023, there were no commitments to purchase lease assets or to fund investments in notes receivable.

7. Guarantees:

The Company enters into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

The Managing Member knows of no facts or circumstances that would make the Company’s contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Company’s similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability in accordance with GAAP.

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

7. Guarantees:

8. Members’ capital:

A total of 2,565,749 Units were issued and outstanding at both ~~June~~September 30, 2023 and December 31, 2022, 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 members. Commencing with the initial closing date, net income and net loss are to be allocated 99.99% to the Other Members and 0.01% to the Managing Member.

Fund distributions are to be allocated 0.01% to the Managing Member and 99.99% to the Other Members. The Company commenced periodic distributions in February 2016.

Distributions to the Other Members for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were as follows (in thousands except Units and per Unit data):


		Three Months Ended				~~Six~~Nine Months Ended
		~~June~~September 30,				~~June~~September 30,
	2023		2022		2023		2022
Distributions	$	513	$	513	$	1,~~026~~539	$	1,~~026~~539
Weighted average number of Units outstanding		2,565,749		2,565,749		2,565,749		2,565,749
Weighted average distributions per Unit	$	0.20	$	0.20	$	0.4060	$	0.4060

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 June 30, 2023 and December 31, 2022, the Company’s warrants and investments securities were measured at fair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis as of June 30, 2023 and December 31, 2022.

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

9. Fair value measurements:

At September 30, 2023 and December 31, 2022, the Company’s warrants and investment securities were measured at fair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2023 and December 31, 2022.

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 are determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, the time to maturity, and a risk free interest rate for the term(s) of the warrant exercise(s). As of ~~June~~September 30, 2023 and December 31, 2022, the calculated fair value of the Fund’s warrant portfolio approximated $~~136~~131 thousand and $138 thousand, respectively. Such valuations are classified within Level 3 of the valuation hierarchy.

The following table reconciles the beginning and ending balances of the Company’s Level 3 recurring assets for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 (in thousands):


	Three Months Ended				~~Six~~Nine Months Ended
	~~June~~September 30,				~~June~~September 30,
	2023		2022		2023		2022
Fair value of warrants at beginning of period	$	136	$	~~143~~144	$	138	$	142
Unrealized gain (loss) on fair value adjustment for warrants		-		1		(2)		2
Unrealized (loss) gain on fair value adjustment for warrants		(5)		1		(7)		3
Fair value of warrants at end of period	$	~~136~~131	$	~~144~~145	$	~~136~~131	$	~~144~~145

Investment in equity securities (recurring)

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. As of ~~June~~September 30, 2023 and December 31, 2022, the calculated fair value of the Fund’s investment securities approximated $1911 thousand and $21 thousand, respectively. Such valuations are classified within Level 1 of the valuation hierarchy.

The following table summarizes 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 June 30, 2023 and December 31, 2022:


June 30, 2023
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.01 - $11.71 ($0.07)
			Exercise price	$0.02 - $9.00 ($0.07)
			Time to maturity (in years)	4.41 - 8.45 (4.58)
			Annualized volatility	41.87% - 83.00% (52.34%)


December 31, 2022
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.01 - $11.71 ($0.07)
			Exercise price	$0.02 - $9.00 ($0.07)
			Time to maturity (in years)	4.91 - 8.94 (5.07)
			Annualized volatility	41.18% - 83.00% (51.34%)

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

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ATEL 17, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

~~requirements~~The offollowing ~~the~~table ~~Financial~~summarizes ~~Instruments~~the ~~Topic~~valuation techniques and ~~should~~significant beunobservable ~~read~~inputs inused ~~conjunction~~for ~~with~~ the Company’s ~~financial~~recurring ~~statements~~and non-recurring fair value calculation/adjustments categorized as Level 3 in the fair value hierarchy at September 30, 2023 and ~~related~~December ~~notes.~~31, 2022:


September 30, 2023
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.01 - $11.71 ($0.07)
			Exercise price	$0.02 - $9.00 ($0.07)
			Time to maturity (in years)	4.16 - 8.19 (4.33)
			Annualized volatility	41.52% - 83.00% (43.85%)


December 31, 2022
	Valuation	Valuation	Unobservable	Range of Input Values
Name	Frequency	Technique	Inputs	(Weighted Average)
Warrants	Recurring	Black-Scholes formulation	Stock price	$0.01 - $11.71 ($0.07)
			Exercise price	$0.02 - $9.00 ($0.07)
			Time to maturity (in years)	4.91 - 8.94 (5.07)
			Annualized volatility	41.18% - 83.00% (51.34%)

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 arranagements.

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.

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 June 30, 2023 and December 31, 2022 (in thousands):


	Fair Value Measurements at June 30, 2023
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	1,825	$	1,825	$	-	$	-	$	1,825
Investment in equity securities		19		19		-		-		19
Warrants, fair value		136		-		-		136		136
Financial liabilities:
Non-recourse debt		848		-		-		824		824

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ATEL 17, LLC

NOTES TO THE 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, 2023 and December 31, 2022 (in thousands):


	Fair Value Measurements at September 30, 2023
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	1,361	$	1,361	$	-	$	-	$	1,361
Investment in equity securities		11		11		-		-		11
Warrants, fair value		131		-		-		131		131
Financial liabilities:
Non-recourse debt		712		-		-		687		687


	Fair Value Measurements at December 31, 2022
	Carrying
	Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	2,644	$	2,644	$	-	$	-	$	2,644
Investment in equity securities		21		21		-		-		21
Warrants, fair value		138		-		-		138		138
Financial liabilities:
Non-recourse debt		1,115		-		-		1,086		1,086

1819

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

Overview

ATEL 17, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on April 16, 2015 for the purpose of raising capital and originating equipment financing transactions and acquiring equipment to engage in equipment leasing and sales activities. The offering of the Company was granted effectiveness by the Securities and Exchange Commission as of January 5, 2016.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. The offering will continue until the earlier of a period of two years from that date or until sales of the limited liability company Units to the public reach $150 million. As of February 2, 2016, 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. Pennsylvania subscriptions are subject to a separate escrow and will be released to the Fund only at such time as total subscription proceeds received by the Fund from all subscribers, including the escrowed Pennsylvania subscriptions, equal not less than $7.5 million in gross proceeds. Total contributions to the Fund exceeded $7.5 million on July 6, 2016. The offering was terminated on January 5, 2018.

Results of Operations

The three months ended ~~June~~September 30, 2023 versus the three months ended ~~June~~September 30, 2022

The Company had net losses of $98141 thousand and $~~202~~133 thousand for the three months ended ~~June~~September 30, 2023 and 2022, respectively. Compared to the prior year quarter, the results for the ~~second~~third quarter of 2023 reflect ~~decreases~~a decrease in ~~total~~ operating ~~expenses~~revenues and an increase in other losses related to the Fund’s equity securities and warrants~~, partially offset by a reduction in total operating revenues~~.

Revenues

Total operating revenues declined by $184 thousand, or 41%, primarily due to the ~~absence~~$11 ofthousand ~~gains~~decrease ~~realized~~in onoperating ~~asset~~lease ~~sales~~revenues partially offset by ana ~~increase~~$6 thousand reduction in losses realized from lease asset sales. The decrease in operating lease revenues was mainly attributable to lease run-off and dispositions of lease assets since September 30, 2022; while the reduction in losses realized from lease asset sales was due to the absence of lease asset sales during the current quarter. Such sales during the prior year period resulted in a $6 thousand loss.

During the prior year quarter, the Company realized gains totaling $27 thousand on sales of equipment. There were no lease asset sales during the current period. Partially offsetting such a decrease was a $12 thousand increase in operating lease revenues, which was a result of an increase in month-to-month rents. Such month-to-month rents are only recorded as revenues once received.Expenses

19Operating expenses totaled $563 thousand for each of the three months ended September 30, 2023 and 2022. At a detailed level, there were several increases and decreases in expenses of which the most notable are a $15 thousand increase in professional fees offset by an $8 thousand decline in other expense, a $6 thousand reduction in interest expense, and a $6 thousand decrease in depreciation expense. The increase in professional fees was primarily due to

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~~Expenses~~timing differences between receipt of services and billings. Other expense decreased primarily due to lower bank charges resulting from the termination of the Company’s participation in a revolving credit facility at the end of 2022. In addition, interest expense decreased due to the declining balance of the Company’s non-recourse debt, and depreciation expense declined primarily due to lease run-off.

Total operating expenses decreased by $57 thousand, or 10%, primarily due to a $39 thousand reduction in professional fees, which was attributable to period over period timing differences in receipt of services and billings. In addition, costs reimbursed to the Manager declined by $8 thousand as a result of lower allocated costs associated with the continued decline of the Fund’s asset base.

Other loss

During the three months ended ~~June~~September 30, 2023 and 2022, the Company recorded other losses totaling $613 thousand and $719 thousand, respectively, to reflect ~~both~~ unrealized ~~and realized~~ gains and losses on the Fund’s investment securities and warrants portfolio. The ~~favorable~~Company ~~change~~recorded inunrealized ~~such~~losses ~~other~~of ~~loss~~$8 ~~was~~thousand ~~mostly~~and ~~attributable~~$10 tothousand for the ~~significant~~respective ~~decline~~three inmonths ~~the~~ended ~~price~~September of30, ~~the~~2023 and 2022. The Company's ~~publicly~~recorded ~~traded~~an ~~securities~~unrealized ~~during~~loss of $5 thousand on its warrant portfolio for the ~~prior~~three ~~year~~months ~~period~~ended September 30, ~~which~~2023 ~~resulted~~compared into ~~losses~~an unrealized gain of $721 thousand in the prior year quarter. The ~~price~~increase ofin ~~such~~unrealized ~~securities~~losses ~~has~~was ~~since~~due ~~changed~~to atadverse achanges ~~substantially~~in ~~lower~~prices ~~rate~~of the underlying securities.

The ~~six~~nine months ended ~~June~~September 30, 2023 versus the ~~six~~nine months ended ~~June~~September 30, 2022

The Company had net losses of $~~229~~370 thousand and $~~279~~412 thousand for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The results for the first ~~six~~nine months of 2023 reflect decreases in ~~total operating expenses and~~ other losses related to the Fund’s equity securities and warrants, and in total operating expenses partially offset by a reduction in total operating revenues.

Revenues

Total operating revenues for the first ~~six~~nine months of 2023 declined by $~~250~~254 thousand, or 2216%, when compared to the prior year period. Such decrease was due to the absence of ~~gains~~asset ~~realized~~sales onduring ~~asset~~the ~~sales,~~current ~~and~~nine-month period coupled with reductions in both ~~other~~operating ~~revenue~~lease revenues and ~~operating~~other ~~lease~~ revenue.

~~During~~The ~~the~~absence ~~prior~~of ~~year~~lease ~~six-month~~asset ~~period,~~sales during the ~~Company~~current ~~realized~~nine-month ~~gains~~resulted ~~totaling~~in a $~~208~~202 thousand onunfavorable change in gains realized from asset sales ofas ~~equipment.~~the ~~There~~Company ~~were~~recognized nogains ~~lease~~of such amount from asset sales during the ~~current~~prior ~~six-month~~year period. In addition, operating lease revenues declined by $31 thousand mostly due to lease run-off, while other revenue decreased by $2221 thousand due to a decline in deferred maintenance fees related to excess wear and tear on returned equipment~~; and operating lease revenues declined by $20 thousand mostly due to lease run-off~~.

Expenses

Total operating expenses ~~had~~for athe ~~net~~first ~~decrease~~nine months of 2023 declined by $51 thousand, or 43%, when compared to the prior year period. Such decrease was ~~comprised~~primarily ofdue ~~offsetting~~to ~~changes,~~lower ofother ~~which~~expense, ~~the~~interest ~~most~~expense, ~~notable~~depreciation ~~were~~expense ~~reductions~~and in professional fees, ~~bank~~partially ~~charges~~offset ~~and~~by ~~interest expense, and~~ an increase in outside services.

~~Professional~~Other ~~fees~~expense ~~decreased~~declined by $2330 thousand due to ~~period~~lower ~~over~~bank ~~period timing differences in receipt of services and billings. Bank~~ charges ~~declined~~resulting byfrom ~~$12 thousand due to~~ the termination of the Company’s participation in a revolving credit facility at the end of 2022, and interest expense declined by $1117 thousand due to the declining balance of the Company’s non-recourse debt. Depreciation expense decreased by $10 thousand largely due to lease run-off and dispositions of lease assets; and professional fees decreased by $8 thousand due to period over period timing differences in receipt of services and billings. In contrast, outside services increased by $2226 thousand primarily due to costs related to consulting fees associated with a new accounting software, and Sarbanes-Oxley compliance.

Other loss

During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company recorded other losses totaling $417 thousand and $~~253~~262 thousand, respectively, to reflect both unrealized and realized gains and losses on the Fund’s investment securities and warrants portfolio. The favorable change in such other loss was mostly attributable to the significant decline in the price of the Company's publicly traded securities during the prior year period, which resulted in losses of $~~256~~266 thousand. The price of such securities has since steadied and changed at a substantially lower rate.

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Capital Resources and Liquidity

At ~~June~~September 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents totaled $1.84 million and $2.6 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 leases and other assets are acquired, as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

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 are found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements. The Managing Member envisions no such requirements for operating purposes.

Cash Flows

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


	~~Six~~Nine Months Ended
	~~June~~September 30,
	2023		2022
Net cash provided by (used in):
Operating activities	$	~~474~~659	$	~~385~~615
Investing activities		-		~~295~~337
Financing activities		(1,~~293~~942)		(1,~~282~~925)
Net decrease in cash and cash equivalents	$	(~~819~~1,283)	$	(~~602~~973)

During the respective ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company’s main source of liquidity was cash flows from its portfolio of operating lease contracts. During the prior year period, the Company also received $~~379~~420 thousand of proceeds from sales of lease assets and $50 thousand of proceeds from the sale of options – short position contracts. There were no such proceeds during the current period.

During the respective ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, cash was primarily used to pay distributions and repay borrowings under non-recourse debt. Cash used to pay distributions totaled $1.05 million for each of the ~~six~~nine-month periods ended ~~June~~September 30, 2023 and 2022; and repayments of non-recourse debt totaled $~~267~~403 thousand and $~~256~~386 thousand for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. In addition, during the prior year period, cash was used to acquire lease assets totaling $~~134~~133 thousand. There were no lease asset acquisitions during the current period. Cash was also used to pay invoices related to management fees and expenses, and other payables in both ~~six~~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 April 2016.

Cash distributions were paid by the Fund to Unitholders of record as of ~~May~~August 31, 2023, and paid through ~~June~~September 30, 2023. The distributions may be characterized for tax, accounting and economic purposes as a return of capital, a return on capital (including escrow interest) or a portion of each. Generally, the portion of each cash distribution by a company which exceeds its net income for the fiscal period would constitute a return of capital. The Fund is required by the terms of its Operating Agreement to distribute the net cash flow generated by its investments in certain minimum amounts during the Reinvestment Period before it can reinvest its operating cash flow in additional portfolio assets; see the discussion in the Prospectus under “Income, Losses and Distributions.” Accordingly, the amount of cash flow from Fund investments distributed to Unitholders will not be available for reinvestment in additional portfolio assets.

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

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~~The~~the ~~following~~future ~~table~~to ~~summarizes~~be, ~~distribution~~based ~~activity~~on ~~for~~ the Fund’s ~~from~~actual ~~inception~~and ~~through~~anticipated ~~June~~gross ~~30,~~revenues ~~2023~~to ~~(in~~be ~~thousands~~generated ~~except~~from ~~for~~the ~~Units~~binding ~~and~~initial ~~Per~~terms ~~Unit~~of ~~Data):~~the loans and investments funded.


											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
Feb 2016 - Nov 2016	Apr 2016 - Dec 2016	$	492		$	-		$	492		$	0.64	770,832
Dec 2016 - Nov 2017	Jan 2017 - Dec 2017		1,540			-			1,540			0.78	1,967,313
Dec 2017 - Nov 2018	Jan 2018 - Dec 2018		2,043			-			2,043			0.80	2,562,088
Dec 2018 - Nov 2019	Jan 2019 - Dec 2019		2,052			-			2,052			0.80	2,565,749
Dec 2019 - Nov 2020	Jan 2020 - Dec 2020		2,052			-			2,052			0.80	2,565,749
Dec 2020 - Nov 2021	Jan 2021 - Dec 2021		2,053			-			2,053			0.80	2,565,749
Dec 2021 - Nov 2022	Jan 2022 - Dec 2022		2,053			-			2,053			0.80	2,565,749
Dec 2022 - May 2023	Jan 2023 - Jun 2023		1,026			-			1,026			0.40	2,565,749

		$	13,311		$	-		$	13,311		$	5.82
Source of distributions
Lease and loan payments and sales proceeds received		$	13,311	100.00%	$	-	0.00%	$	13,311	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%

The following table summarizes distribution activity for the Fund from inception through September 30, 2023 (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
Feb 2016 - Nov 2016	Apr 2016 - Dec 2016	$	492		$	-		$	492		$	0.64	770,832
Dec 2016 - Nov 2017	Jan 2017 - Dec 2017		1,540			-			1,540			0.78	1,967,313
Dec 2017 - Nov 2018	Jan 2018 - Dec 2018		2,043			-			2,043			0.80	2,562,088
Dec 2018 - Nov 2019	Jan 2019 - Dec 2019		2,052			-			2,052			0.80	2,565,749
Dec 2019 - Nov 2020	Jan 2020 - Dec 2020		2,052			-			2,052			0.80	2,565,749
Dec 2020 - Nov 2021	Jan 2021 - Dec 2021		2,053			-			2,053			0.80	2,565,749
Dec 2021 - Nov 2022	Jan 2022 - Dec 2022		2,053			-			2,053			0.80	2,565,749
Dec 2022 - Aug 2023	Jan 2023 - Sept 2023		1,539			-			1,539			0.60	2,565,749

		$	13,824		$	-		$	13,824		$	6.02
Source of distributions
Lease and loan payments and sales proceeds received		$	13,824	100.00%	$	-	0.00%	$	13,824	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%

(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 period from February 2 - November 30, 2016, December 1, 2016 - November 30, 2017, December 1, 2017 - November 30, 2018, December 1, 2018 - November 30, 2019, December 1, 2019 - November 30, 2020, December 1, 2020 - November 30, 2021, December 1, 2021- November 30, 2022, and December 1, 2022 -August ~~May~~ 31, 2023, respectively.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At ~~June~~September 30, 2023, there were no commitments to purchase lease assets or to 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.

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, 2022. There have been no material changes to the Company’s significant accounting policies since December 31, 2022. 23

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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 Officer and Chief 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 ~~June~~September 30, 2023 that has materially affected, or is 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. Defaults Upon Senior Securities.

None.

Item 3. Mine Safety Disclosures.

Not Applicable.

Item 4. Other Information.

None.

Item 5. 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
		~~June~~September 30, 2023 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: ~~August~~November 14, 2023

ATEL 17, LLC

(Registrant)

By: ATEL Managing Member, LLCManaging 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 Senior Vice President, Fund Controller of ATEL ManagingMember, LLC (Managing Member)

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Filing Compare · ATEL 17, LLC