UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

Washington, DC 20549

 

 

FORM 10-Q/A

 

Amendment No. 1

 

 

(Mark One)

x

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

 For the quarterly period ended March 31, 2016

 

OR

 

¨

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

Commission file number: 000-55610

 

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC 

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware		80-0872648
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

 

369 Lexington Avenue, Suite 312
New York, NY 10017 

Tel (646) 237-7884 

(Address, including zip code and telephone number, including area code, of registrants Principal Executive
Office)

 

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨

 

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

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

 

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

 

As of May 5, 2016, the registrant had 10,122,097 shares of common stock, $0.001 par value, outstanding.  

 

 

Explanatory Note

 

This Amendment No. 1 on Form 10-Q/A (this “Amendment”) amends the Quarterly Report on Form 10-Q for the period ended March 31, 2016 of Greenbacker Renewable Energy Company LLC (the “Company”), which was filed with the Securities and Exchange Commission on May 13, 2016 (the “Original Filing”). This Amendment is being filed solely to amend the certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 appended as Exhibits 31.1 and 31.2. Specifically, the Company is refiling these certifications solely to add certain required language concerning internal control over financial reporting that was inadvertently omitted from the Company’s certifications in the Original Filing. This Amendment does not alter or affect any other part or any other information originally set forth in the Original Filing. This Amendment does not reflect events that have occurred subsequent to the filing of the Original Filing or modify or update in any way disclosures made in the Original Filing.

 

 

TABLE OF CONTENTS

 

		PAGE
PART I.	FINANCIAL INFORMATION	4
Item 1.	Consolidated Financial Statements	4
	Consolidated Statements of Assets and Liabilities as of March 31, 2016 (unaudited) and December 31, 2015	4
	Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015 (unaudited)	5
	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2016 and 2015 (unaudited)	6
	Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)	8
	Consolidated Schedules of Investments as of March 31, 2016 (unaudited) and December 31, 2015	9
	Notes to Consolidated Financial Statements (unaudited)	11
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	32
Item 6.	Exhibits	32
Signatures		33

 

 

PART I

FINANCIAL INFORMATION

 

Item 1.      Consolidated Financial Statements

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

		March 31, 2016				December 31, 2015
		(unaudited)
ASSETS
Investments, at fair value (cost of $55,188,136 and $50,023,136, respectively)		$	55,985,519			$	51,454,566
Cash and cash equivalents			20,771,564				5,889,030
Shareholder receivable			585,903				190,725
Due from advisor, net			-				26,636
Deferred tax assets, net of allowance			2,816,000				650,000
Other assets			63,266				77,518
Total assets		$	80,222,252			$	58,288,475
LIABILITIES
Management fee payable		$	123,833			$	91,863
Accounts payable and accrued expenses			298,476				327,799
Shareholder distributions payable			221,088				156,985
Directors fees payable			23,704				23,750
Due to advisor, net			543,404				-
Payable for repurchases of common stock			51,679				-
Total liabilities		$	1,262,184			$	600,397
Commitments and contingencies (See Note 2, Note 5 and Note 8)
MEMBERS’ EQUITY (NET ASSETS)
Preferred stock, par value, $.001 per share, 50,000,000 authorized; none issued and outstanding			-				-
Common stock, par value, $.001 per share, 350,000,000 authorized; 9,205,050 and 6,721,967 shares issued and outstanding, respectively			9,205				6,722
Paid-in capital in excess of par value			78,693,937				57,520,925
Capital contribution from advisor			193,000				193,000
Accumulated deficit			(2,745,807	)			(1,591,014	)
Net unrealized appreciation on investments and foreign currency translation, net of deferred taxes			2,650,283				1,272,186
Total common stockholders’ equity			78,800,618				57,401,819
Special unitholder’s equity			159,450				286,259
Total members’ equity (net assets)			78,960,068				57,688,078
Total liabilities and equity (net assets)		$	80,222,252			$	58,288,475
Net assets, Class A (shares outstanding of 7,132,406 and 5,420,728, respectively)		$	61,057,569			$	46,289,968
Net assets, Class C (shares outstanding of 510,665 and 248,456, respectively)			4,371,594				2,121,675
Net assets, Class I (shares outstanding of 1,561,979 and 1,052,783, respectively)			13,371,455				8,990,176
Total common stockholders’ equity		$	78,800,618			$	57,401,819

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

		For the three months ended March 31, 2016				For the three months ended March 31, 2015
Investment income:
Dividend income		$	646,985			$	57,500
Interest income			9,581				715
Total investment income		$	656,566			$	58,215
Operating expenses:
Management fee expense			330,715				62,283
General and administration expenses			93,105				30,699
Audit expense			93,484				53,198
Insurance expense			20,309				22,078
Directors fees and expenses			24,117				23,250
Organizational expenses			35,188				25,002
Legal expenses			66,542				12,131
Other expenses			14,317				13,086
Operating expenses before expense waiver and reimbursement			677,777				241,727
Expense reimbursement from advisor			178,890				(65,029	)
Total expenses, net of expense waiver and reimbursement			856,667				176,698
Net investment income (loss) before taxes			(200,101	)			(118,483	)
Deferred tax benefit			280,665				-
Franchise tax expense			(57,432	)			-
Net investment income (loss)			23,132				(118,483	)
Net change in realized and unrealized gain
(loss) on investments, foreign currency translation and deferred tax assets:
Net change in unrealized appreciation (depreciation) on investments			(533,730	)			484,332
Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies			(100,317	)			(98,842	)
Change in benefit from deferred taxes on unrealized appreciation on investments			1,885,335				-
Net increase in net assets resulting from operations			1,274,420				267,007
Net increase (decrease) in net assets attributed to special unitholder			126,809				(77,099	)
Net increase in net assets attributed to common stockholders		$	1,401,229			$	189,908
Common stock per share information —basic and diluted:
Net investment income (loss)		$	0.00			$	(0.08	)
Net increase in net assets attributed to common stockholders		$	0.18			$	0.13
Weighted average common shares outstanding			7,865,104				1,474,248

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

For the three months ended March 31, 2016

(unaudited)

 

		Common Stockholders
		Shares				Par Value				Paid-in capital in excess of par value				Capital contribution from advisor				Accumulated deficit				Accumulated unrealized appreciation  (depreciation) on investments and foreign currency translation, net of deferred taxes				Common stockholders' equity				Special unitholder				Total members' equity (net assets)
Balances at December 31, 2015			6,721,967			$	6,722			$	57,520,925			$	193,000			$	(1,591,014	)		$	1,272,186			$	57,401,819			$	286,259			$	57,688,078
Proceeds from issuance of common stock, net			2,422,281				2,422				21,886,410				-				-				-				21,888,832				-				21,888,832
Issuance of common stock under distribution reinvestment plan			66,501				67				602,535				-				-				-				602,602				-				602,602
Repurchases of common stock			(5,699	)			(6	)			(51,673	)			-				-				-				(51,679	)			-				(51,679	)
Offering costs			-				-				(1,264,260	)			-				-				-				(1,264,260	)			-				(1,264,260	)
Shareholder distributions			-				-				-				-				(1,177,925	)			-				(1,177,925	)			-				(1,177,925	)
Net investment income			-				-				-				-				23,132				-				23,132				-				23,132
Net unrealized depreciation on investments			-				-				-				-				-				(406,921	)			(406,921	)			(126,809	)			(533,730	)
Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies			-				-				-				-				-				(100,317	)			(100,317	)			-				(100,317	)
Change in benefit from deferred taxes on unrealized appreciation on investments			-				-				-				-				-				1,885,335				1,885,335				-				1,885,335
Balances at March 31, 2016			9,205,050			$	9,205			$	78,693,937			$	193,000			$	(2,745,807	)		$	2,650,283			$	78,800,618			$	159,450			$	78,960,068

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

For the three months ended March 31, 2015

(unaudited)

 

		Common Stockholders
		Shares				Par Value				Paid-in capital in excess of par value				Capital contribution from advisor				Accumulated deficit				Accumulated unrealized appreciation (depreciation) on investments and foreign currency translation, net of deferred taxes				Common stockholders' equity				Special unitholder				Total members' equity (net assets)
Balances at December 31, 2014			1,236,345			$	1,236			$	10,609,460			$	193,000			$	(340,406	)		$	39,519			$	10,502,809			$	9,846			$	10,512,655
Proceeds from issuance of common stock, net			570,209				570				5,145,628				-				-				-				5,146,198				-				5,146,198
Issuance of common stock under distribution reinvestment plan			10,912				11				98,474				-				-				-				98,485				-				98,485
Offering costs			-				-				(274,420	)			-				-				-				(274,420	)			-				(274,420	)
Shareholder distributions			-				-				-				-				(216,716	)			-				(216,716	)			-				(216,716	)
Net investment loss			-				-				-				-				(118,483	)			-				(118,483	)			-				(118,483	)
Net unrealized appreciation on investments			-				-				-				-				-				407,233				407,233				77,099				484,332
Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies			-				-				-				-				-				(98,842	)			(98,842	)			-				(98,842	)
Balances at March 31, 2015			1,817,466			$	1,817			$	15,579,142			$	193,000			$	(675,605	)		$	347,910			$	15,446,264			$	86,945			$	15,533,209

 

The accompanying notes are an integral part of these consolidated financial statements.

  

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

 

		For the three months ended March 31, 2016				For the three months ended March 31, 2015
Operating activities:
Net increase in net assets from operations		$	1,274,420			$	267,007
Adjustments to reconcile net increase in net assets from
operations to net cash used in operating activities:
Purchase of investments			(5,165,000	)			(11,810,000	)
Net unrealized (appreciation) depreciation on investments			533,730				(484,332	)
Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies			100,317				98,842
(Increase) decrease in other assets:
Due from advisor, net			26,636				49,291
Deferred tax assets, net of allowance			(2,166,000	)			-
Other assets			14,252				(9,484	)
Increase in other liabilities:
Due to advisor, net			27,849				-
Management fee payable			31,970				9,047
Accounts payable and accrued expenses			(29,323	)			(38,438	)
Directors fees payable			(46	)			-
Net cash used in operating activities			(5,351,195	)			(11,918,067	)
Financing activities:
Proceeds from issuance of shares of common stock, net			21,493,651				5,281,827
Distributions paid			(511,220	)			(102,424	)
Offering costs			(1,264,260	)			(274,420	)
Due to advisor re: Offering costs			515,558				113,756
Proceeds from capital contribution from advisor			-				193,000
Net cash provided by financing activities			20,233,729				5,211,739
Net increase (decrease) in cash and cash equivalents			14,882,534				(6,706,328	)
Cash and cash equivalents, beginning of period			5,889,030				7,567,061
Cash and cash equivalents, end of period		$	20,771,564			$	860,733
Supplemental disclosure of cash flow information:
Shareholder distribution payable		$	221,088			$	46,720
Shareholder distributions reinvested in common stock		$	602,602			$	98,485
Payable for repurchases of common stock		$	51,679			$	-
Non cash financial activities
Shareholder receivable from sale of common stock		$	585,903			$	112,563

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2016

(unaudited)

 

Investments		Industry				Interest				Maturity				Shares or Principal Amount				Cost				Fair Value				Percentage of Net Assets (a)
United States:
Limited Liability Company Member Interests - Not readily marketable
Sunny Mountain Portfolio			Alternative Energy - Solar												100% Ownership			$	920,000			$	1,442,796				1.8	%
East to West Solar Portfolio			Alternative Energy - Solar												100% Ownership				19,815,000				20,171,888				25.5	%
Green Maple Portfolio			Alternative Energy - Solar												100% Ownership				11,500,000				9,889,579				12.5	%
Magnolia Sun Portfolio			Alternative Energy - Solar												100% Ownership				10,650,000				11,388,075				14.4	%
Six States Solar Portfolio			Alternative Energy - Solar												100% Ownership				2,300,000				2,564,053				3.2	%
Greenbacker Residential Solar Portfolio			Alternative Energy - Solar												100% Ownership				50,000				50,000				0.1	%
Greenbacker Wind Portfolio			Alternative Energy - Wind												100% Ownership				6,750,000				7,007,096				8.9	%
GREC Energy Efficiency Portfolio			Energy Efficiency - Lighting Replacement												100% Ownership				681,129				733,488				0.9	%
Total Limited Liability Company Member Interests - Not readily marketable: 67.3%																		$	52,666,129			$	53,246,975				67.3	%
Energy Efficiency Secured Loans - Not readily marketable
Renew AEC One, LLC			Energy Efficiency - Lighting Replacement				10.25	%(b)			2/24/2025			$	918,871				918,871				918,871				1.2	%
Total Energy Efficiency Secured Loans - Not readily marketable: 1.2%																		$	918,871			$	918,871				1.2	%
Total United States Investments: 68.5%																		$	53,585,000			$	54,165,846				68.5	%
Canada:
Capital Stock - Not readily marketable
Canadian Northern Lights Portfolio			Alternative Energy - Solar												100% Ownership			$	1,603,136			$	1,819,673				2.3	%
Total Canadian Investments: 2.3%																		$	1,603,136			$	1,819,673				2.3	%
INVESTMENTS: 70.8%																		$	55,188,136			$	55,985,519				70.8	%
OTHER ASSETS IN EXCESS OF LIABILITIES: 29.2%																							22,974,549				29.2	%
TOTAL NET ASSETS: 100.0%																						$	78,960,068				100.0	%

 

 

(a) Percentages are based on net assets of $78,960,068 as of March 31, 2016.

(b) Per the loan agreement, interest commenced on January 24, 2016.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2015

 

Investments		Industry				Interest				Fees (c)				Maturity				Maximum Commitment				Shares or Principal Amount				Cost				Fair Value				Percentage of Net Assets (a)
United States:
Limited Liability Company Member Interests - Not readily marketable
Sunny Mountain Portfolio			Alternative Energy - Solar																				100% Ownership			$	920,000			$	1,329,803				2.3	%
East to West Solar Portfolio			Alternative Energy - Solar																				100% Ownership				19,765,000				20,005,027				34.7	%
Green Maple Portfolio			Alternative Energy - Solar																				100% Ownership				9,500,000				9,577,290				16.6	%
Magnolia Sun Portfolio			Alternative Energy - Solar																				100% Ownership				7,550,000				7,542,723				13.1	%
Six States Solar Portfolio			Alternative Energy - Solar																				100% Ownership				2,300,000				2,685,597				4.7	%
Greenbacker Wind Portfolio			Alternative Energy - Wind																				100% Ownership				6,750,000				7,093,750				12.3	%
GREC Energy Efficiency Portfolio			Energy Efficiency - Lighting Replacement																				100% Ownership				451,705				474,114				0.7	%
Total Limited Liability Company Member Interests - Not readily marketable: 84.4%																										$	47,236,705			$	48,708,304				84.4	%
Energy Efficiency Secured Loans - Not readily marketable
LED Funding – Universidad Project			Energy Efficiency - Lighting Replacement				10.00	%			2.00	%			12/31/2015			$	185,000			$	97,787				97,787				97,787				0.2	%
Renew AEC One, LLC			Energy Efficiency - Lighting Replacement				10.25	%(b)			0.00	%			2/24/2025			$	1,100,000			$	1,085,508				1,085,508				1,085,508				1.9	%
Total Energy Efficiency Secured Loans - Not readily marketable: 2.1%																										$	1,183,295			$	1,183,295				2.1	%
Total United States Investments:86.5%																										$	48,420,000			$	49,891,599				86.5	%
Canada:
Capital Stock - Not readily marketable
Canadian Northern Lights Portfolio			Alternative Energy - Solar																				100% Ownership			$	1,603,136			$	1,562,967				2.7	%
Total Canadian Investments: 2.7%																										$	1,603,136			$	1,562,967				2.7	%
INVESTMENTS: 89.2%																										$	50,023,136			$	51,454,566				89.2	%
OTHER ASSETS IN EXCESS OF LIABILITIES: 10.8%																															6,233,512				10.8	%
TOTAL NET ASSETS: 100.0%																														$	57,688,078				100.0	%

 

 

(a) Percentages are based on net assets of $57,688,078 as of December 31, 2015.

(b) Interest commences the earlier of the Operational Date or January 24, 2016.

(c) Commitment fees payable on maturity of the loan.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016 (unaudited)

 

Note 1. Organization and Operations of the Company

 

Greenbacker Renewable Energy Company LLC (the “LLC”), a Delaware limited liability company, is an externally managed energy company that acquires and manages income-generating renewable energy and energy efficiency projects, and other energy-related businesses, as well as finances the construction and/or operation of these and sustainable development projects and businesses. The LLC plans to conduct substantially all of its operations through its wholly-owned subsidiary, Greenbacker Renewable Energy Corporation (“GREC”). GREC is a Maryland corporation formed in November 2011 and the LLC currently holds all of the outstanding shares of capital stock of GREC. The LLC and GREC (collectively “we”, “us”, “our”, and the “company”) are externally managed and advised by Greenbacker Capital Management LLC (the “advisor” or “GCM”), a renewable energy, energy efficiency and sustainability related project acquisition, consulting and development company. The LLC’s fiscal year end is December 31.

 

The company is offering up to $1,500,000,000 in shares of limited liability company interests, or the shares, including up to $250,000,000 pursuant to the distribution reinvestment plan, on a “best efforts” basis through SC Distributors, LLC, the dealer manager, meaning it is not required to sell any specific number or dollar amount of shares. The company is publicly offering three classes of shares: Class A shares, Class C shares and Class I shares in any combination with a dollar value up to the maximum offering amount. The share classes have different selling commissions, dealer manager fees and there is an ongoing distribution fee with respect to Class C shares. The company has adopted a distribution reinvestment plan pursuant to which a shareholder may elect to have the full amount of cash distributions reinvested in additional shares. The company reserves the right to reallocate the shares offered between Class A, Class C and Class I shares and between this offering and the distribution reinvestment plan.

 

Since the initial closing on April 25, 2014 and through November 4, 2015, the company sold shares on a continuous basis at a price of $10.00 per Class A share, $9.576 per Class C share and $9.186 per Class I share. For the period from November 5, 2015 through February 4, 2016, the company sold shares on a continuous basis at a price of $10.024 per Class A share, $9.599 per Class C share and $9.208 per Class I share. From February 5, 2016 through May 6, 2016, the company sold shares on a continuous basis at a price of $10.048 per Class A share, $9.621 per Class C share and $9.230 per Class I share. Since May 6, 2016, the company has been selling shares on a continuous basis at a price of $10.068 per Class A share, $9.640 per Class C share, and $9.248 per Class I share.

 

Each quarter, our advisor, utilizing the services of an independent valuation firm when necessary, reviews and approves the net asset value for each class of shares, subject to the oversight of the company’s board of directors. The company expects such determination will ordinarily be made within 30 days after each such completed fiscal quarter. To the extent that the net asset value per share on the most recent valuation date increases above or decreases below the net proceeds per share, the company will adjust the offering prices of all classes of shares. The adjustments to the per share offering prices, which will become effective five business days after such determination is published, will ensure that after the effective date of the new offering prices, the offering prices per share, after deduction of selling commissions, dealer manager fees and organization and offering expenses, are not above or below net asset value per share as of the most recent valuation date. The purchase price per share to be paid by each investor will be equal to the price that is in effect on the date such investor submits his or her completed subscription agreement to the dealer manager. The company’s shares are offered in the primary offering at a price based on the most recent valuation, plus related selling commissions, dealer manager fees and organization and offering expenses. Five days after the completion of each quarter end valuation, shares will be offered pursuant to the distribution reinvestment plan at a price equal to the current offering price per each class of shares, less the sales selling commissions and dealer manager fees associated with that class of shares in the primary offering.

 

 

An inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross revenue and income, and our flexibility to implement the company’s business plans as well as our ability to diversify the company’s investment and to make distributions could be adversely affected.

 

As of March 31, 2016, the company has issued 22,325 Class A shares to its advisor and 188,820 Class A shares to an affiliate of the advisor. As of December 31, 2015, the company issued 21,959 Class A shares to its advisor and 185,721 Class A shares to an affiliate of its advisor.

 

We had initially focused on solar energy and wind energy projects as well as energy efficiency projects. We believe solar energy projects generally offer more predictable power generation characteristics, due to the relative predictability of sunlight over the course of time compared to other renewable energy classes and therefore we expect they will provide more stable income streams. However, technological advances in wind turbines and other energy generation technologies, as well as government incentives make wind energy and other types of projects attractive as well. Solar energy projects provide maximum energy production during the middle of the day and in the summer months when days are longer and nights shorter. Generally, the demand for power in the United States tends to be higher at those times due to the use of air conditioning and as a result energy prices tend to be higher. Solar energy projects tend to have minimal environmental impact enabling such projects to be developed close to areas of dense population where electricity demand is highest. Solar technology is scalable and well- established and it is a relatively simple process to integrate new acquisitions and projects into our portfolio. Unlike solar energy projects, maximum wind power energy generation generally occurs in the winter months as the occurrence of wind is usually greater than in the summer months. Over time, we expect to broaden our strategy to include other types of renewable energy projects and energy efficiency projects and businesses, which may include hydropower assets, geothermal plants, biomass and biofuel assets, combined heat and power technology assets, fuel cell assets and other energy efficiency assets, among others, and to the extent we deem an opportunity attractive, other energy and sustainability related assets and businesses.

 

As of March 31, 2016, the company has made solar, wind and energy efficiency investments in nine portfolios, eight domiciled in the United States and one in Canada, as well as an energy efficiency secured loan in the United States (See Note 3). As of December 31, 2015, the company had made solar and wind investments in seven portfolios, six domiciled in the United States and one in Canada, as well as certain energy efficiency secured loans and leases in the United States.

 

Note 2. Significant Accounting Policies

 

Basis of Presentation

 

The company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties. Actual results could differ from those estimates, assumptions, and judgments. Significant items subject to such estimates will include determining the fair value of investments, revenue recognition, income tax uncertainties, and other contingencies. The consolidated financial statements of the company include the accounts of the LLC and its consolidated subsidiary, GREC. All intercompany accounts and transactions have been eliminated.

 

The company’s consolidated financial statements are prepared using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and carries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments. The company carries its liabilities at amounts payable, net of unamortized premiums or discounts. The company does not currently plan to elect to carry its non-investment liabilities at fair value. Net assets are calculated as the carrying amounts of assets, including the fair value of investments, less the carrying amounts of its liabilities.

 

The financial information associated with the March 31, 2016 consolidated financial statements has been prepared by management and, in the opinion of management, contains all adjustments and eliminations, consisting of only normal recurring adjustments, necessary for a fair presentation in accordance with GAAP. The March 31, 2016 financial information has not been audited by the independent registered public accounting firm and they do not express an opinion thereon.

 

 

Cash and Cash Equivalents

 

Cash consists of demand deposits at a financial institution. Such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limits. The company has not experienced any losses in any such accounts.

 

The company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Short-term investments that are cash equivalents are stated at cost, which approximates fair value. There are no restrictions on the use of the company’s cash as of March 31, 2016 and December 31, 2015.

 

Foreign Currency Translation

 

The accounting records of the company are maintained in U.S. Dollars. The fair value of investments and other assets and liabilities denominated in non-U.S. currencies are translated into U.S. Dollars using the exchange rate at the end of each reporting period. Amounts related to the purchases and sales of investments, investment income and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions.

 

Net unrealized currency gains and losses arising from valuing foreign currency denominated assets and liabilities at the current exchange rate are reflected as part of net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies.

 

Valuation of Investments at Fair Value

 

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (ASC Topic 820) defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value. The company recognizes and accounts for its investments at fair value. The fair value of the investments does not reflect transaction costs that may be incurred upon disposition of the investments.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is an exchange price notion under which fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability.

 

The advisor has established procedures to estimate the fair value of its investments which the company’s board of directors has reviewed and approved. The company will use observable market data to estimate the fair value of investments to the extent that market data is available. In the absence of quoted market prices in active markets, or quoted market prices for similar assets or in markets that are not active, the company will use the valuation methodologies described below with unobservable data based on the best available information in the circumstances, which incorporates the company’s assumptions about the factors that a market participant would use to value the asset.

 

For investments for which quoted market prices are not available, which will comprise most of our investment portfolio, fair value will be estimated by using the income or market approach. The income approach is based on the assumption that value is created by the expectation of future benefits discounted to a current value and the fair value estimate is the amount an investor would be willing to pay to receive those future benefits. The m approach compares recent comparable transactions to the investment. Adjustments are made for any dissimilarity between the comparable transactions and the investments. These valuation methodologies involve a significant degree of judgment on the part of our advisor.

 

In determining the appropriate fair value of an investment using these approaches, the most significant information and assumption may include, as applicable: available current market data, including relevant and applicable comparable market transactions, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the investment’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, the principal market and enterprise values, environmental factors, among other factors.

 

 

The estimated fair values will not necessarily represent the amounts that may be ultimately realized due to the occurrence or nonoccurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of the valuation of the investments, the estimate of fair values may differ significantly from the value that would have been used had a broader market for the investments existed.

 

The authoritative accounting guidance prioritizes the use of market-based inputs over entity-specific inputs and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation. The three levels of valuation hierarchy are defined as follows:

 

Level 1:

Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date. Valuation adjustments and block discounts are not applied to Level 1 measurements;

 

Level 2:

Valuations based on quoted prices in less active, dealer or broker markets. Fair values are primarily obtained from third-party pricing services or broker quotes for identical or comparable assets or liabilities;

 

Level 3:

Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not based on market, exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market and significant professional judgment in determining the fair value assigned to such assets or liabilities.

 

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls will be determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.

 

Calculation of Net Asset Value

 

Net asset value by class is calculated by subtracting total liabilities for each class from the total carrying amount of all assets for that class, which includes the fair value of investments. Net asset value per share is calculated by dividing net asset value for each class by the total number of outstanding common shares for that class on the reporting date.

 

Earnings (Loss) per Share

 

In accordance with the provisions of ASC Topic 260 — Earnings per Share (ASC Topic 260), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

 

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets attributed to common stockholders per share for the three months ended March 31, 2016 and March 31, 2015:

 

		For the three months ended March 31, 2016				For the three months ended March 31, 2015
Basic and diluted
Net increase in net assets attributed to common stockholders		$	1,401,229			$	189,908
Weighted average common shares outstanding			7,865,104				1,474,248
Net increase in net assets attributed to common stockholders per share		$	0.18			$	0.13

 

 

Revenue Recognition

 

Interest income is recorded on an accrual basis to the extent the company expects to collect such amounts. Interest receivable on loans and debt securities is not accrued for accounting purposes if there is reason to doubt an ability to collect such interest. Original issue discounts, market discounts or market premiums are accreted or amortized using the effective interest method as interest income. Prepayment premiums on loans and debt securities are recorded as interest income when received.

 

Loans are placed on non-accrual status when principal and interest are past due 90 days or more or when there is a reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are generally restored to accrual status when past due and principal and interest is paid and, in management’s judgment, is likely to remain current.

 

Dividend income is recorded (1) on the ex-dividend date for publicly issued securities and (2) when received from private investments.

 

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

 

Realized gains or losses will be measured as the difference between the net proceeds from the sale, repayment, or disposal of an asset and the adjusted cost basis of the asset, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

 

Payment-in-Kind Interest

 

For loans and debt securities with contractual payment-in-kind (PIK) interest, any interest will be added to the principal balance of such investments and be recorded as income, if the valuation indicates that such interest is collectible.

  

Distribution Policy

 

Distributions to members, if any, will be authorized and declared by our board of directors quarterly in advance and paid on a monthly basis. From time to time, we may also pay interim special distributions in the form of cash or shares, with the approval of our board of directors. Distributions will be made on all classes of shares at the same time. The cash distributions with respect to the Class C shares will be lower than the cash distributions with respect the company’s other share classes because of the distribution fee associated with the Class C shares, which will be allocated as a Class C specific expense. Amounts distributed to each class will be allocated among the holders of the shares in such class in proportion to their shares. Distributions declared by our board of directors are recognized as distribution liabilities on the ex-dividend date.

 

Organization and Offering Costs

 

Organization and offering costs (“O&O costs”), other than sales commissions and the dealer manager fee, are initially being paid by our advisor and/or dealer manager on behalf of the company. These O&O costs include all costs to be paid by the company in connection with its formation and the offering, including legal, accounting, printing, mailing and filing fees, charges of the company’s escrow holder, transfer agent fees, due diligence expense reimbursements to participating broker-dealers included in detailed and itemized invoices and costs in connection with administrative oversight of the offering and marketing process, and preparing supplemental sales materials, holding educational conferences, and attending retail seminars conducted by broker-dealers. While the total O&O costs shall be reasonable and shall in no event exceed an amount equal to 15% of the gross proceeds of this offering and the distribution reinvestment plan, the company is targeting no more than 1.5% of the gross proceeds for O&O costs other than sales commissions and dealer manager fees. The company anticipates that it will be obligated to reimburse our advisor for O&O costs that it may incur on behalf of the company, in accordance with the advisory agreement, but only to the extent that the reimbursement would not cause the selling commissions, the dealer manager fee and the other organization and offering expenses borne by the company to exceed 15% of gross offering proceeds as of the date of reimbursement.

 

 

The costs incurred by our advisor and/or dealer manager are recognized as a liability of the company to the extent that the company is obligated to reimburse our advisor and/or dealer manager, subject to the 15% of gross offering proceeds limitation described above. When recognized by the company, organizational costs will be expensed and offering costs, excluding selling commissions and dealer manager fees, will be recognized as a reduction of the proceeds from the offering.

 

As of March 31, 2016 and December 31, 2015, the advisor and the dealer manager incurred approximately $6,320,000 and $5,913,000, respectively, of O&O costs on behalf of the company of which approximately $4,440,000 and $3,577,000 had been reimbursed to the advisor as of March 31, 2016 and December 31, 2015, respectively. The O&O costs include $1,250,000 for formation services due to an affiliate of the advisor of which $250,000 was included in O&O costs at March 31, 2016 and December 31, 2015, respectively, but is not payable until the completion of the public offering. In addition, the dealer manager has incurred approximately $1,621,000 and $728,000 in O&O costs on behalf of the company as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016, no O&O costs have been reimbursed to the dealer manager.

 

Debt Issuance Costs

 

Debt issuance costs related to debt liabilities incurred by the company or GREC are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability.

 

Capital Gains Incentive Allocation and Distribution

 

Pursuant to the terms of the LLC’s amended and restated limited liability company agreement, a capital gains incentive distribution will be earned by an affiliate of our advisor on realized gains from the sale of investments from the company’s portfolio during operations prior to a liquidation of the company. While the terms of the advisory agreement neither include nor contemplate the inclusion of unrealized gains in the calculation of the capital gains incentive distribution, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, the company will include unrealized gains in the calculation of the capital gains incentive distribution expense and related capital gains incentive fee payable. This amount reflects the incentive distribution that would be payable if the company’s entire portfolio was liquidated at its fair value as of the consolidated statement of assets and liabilities date even though the advisor is not entitled to an incentive distribution with respect to unrealized gains unless and until such gains are actually realized. Thus on each date that net asset value is calculated, the company calculates for the capital gains incentive distribution by calculating such distribution as if it were due and payable as of the end of such period. As of March 31, 2016 and December 31, 2015, a capital gains incentive distribution allocation in the amount of $159,450 and $286,259 was recorded based upon unrealized gains, respectively.

 

Reclassifications

 

Certain prior year amounts have been reclassified to conform with current year presentation.

 

Derivative Instruments

 

The company may utilize interest rate swaps to modify interest rate characteristics of certain liabilities to manage its exposure to interest rate fluctuations. Changes in the fair value of the interest rate swaps during the period are recognized in the accompanying consolidated statements of operations where the company is the counterparty and in the change in fair value of investments if a subsidiary of the company is the counterparty.

 

While we are currently of the opinion that the currency fluctuation between the Canadian and U.S. dollar will not have a material impact on our operating results, we may in the future enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk if we believe not doing so would have a material impact our results of operations.

 

 

Income Taxes

 

The LLC intends to operate so that it will qualify to be treated as a partnership for U.S. federal income tax purposes under the Internal Revenue Code. As such, it will not be subject to any U.S. federal and state income taxes. In any particular year it is possible that the LLC will not meet the qualifying income exception and will not qualify to be treated as a partnership. If the LLC does not meet the qualifying income exception, the members would then be treated as stockholders in a corporation and the company would become taxable as a corporation for U.S. federal income tax purposes under the Internal Revenue Code. The LLC would be required to pay income tax at corporate rates on its net taxable income. Distributions to members from the LLC would constitute dividend income taxable to such members, to the extent of the company’s earnings and profits and the payment of the distributions would not be deductible by the LLC.

 

The LLC plans to conduct substantially all of its operations through its wholly-owned subsidiary, GREC, which is a corporation that is subject to U.S. federal, state and local income taxes. Accordingly, most of its operations will be subject to U.S. federal, state and local income taxes.

 

Income taxes are accounted for under the assets and liabilities method. Deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between items that are recognized in the consolidated financial statements and tax returns in different years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. For income tax benefits to be recognized including uncertain tax benefits, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of the benefit that is more likely than not to be realized upon ultimate settlement. A valuation allowance is established against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties associated with income taxes, if any, will be recognized in general and administrative expense.

 

The company does not consolidate its investments for financial statements, rather it accounts for its investments at fair value under the specialized accounting of ASC Topic 946. The tax attributes of the individual investments will be considered and incorporated in the company’s fair value estimates for those investments. The amounts recognized in the consolidated financial statements for unrealized appreciation and depreciation will result in a difference between the consolidated financial statements and the cost basis of the assets for tax purposes. These differences will be recognized as deferred tax assets and liabilities. Generally, the entities that hold the company’s investments will be included in the consolidated tax return of GREC and the differences between the amounts recognized for financial statement purposes and the tax return will be recognized as additional deferred tax assets and liabilities.

 

The company follows the authoritative guidance on accounting for uncertainty in income taxes and concluded it has no material uncertain tax positions to be recognized at this time.

 

The company assessed its tax positions for all open tax years as of March 31, 2016 for all U.S. federal and state tax jurisdictions for the years 2012 through 2015. The results of this assessment are included in the company’s tax provision and deferred tax assets as of March 31, 2016.

 

Recently Issued Accounting Pronouncements

 

Under the Jumpstart Our Business Startups Act (the “JOBS Act”), emerging growth companies can delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. The company is choosing not to take advantage of the extended transition period for complying with new or revised accounting standards.

 

 

In August 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments provide a definition of the term ‘substantial doubt’ and include principles for considering the mitigating effect of management’s plans. The amendments also require an evaluation every reporting period, including interim periods for a period of one year after the date that the financial statements are issued (or available to be issued), and certain disclosures when substantial doubt is alleviated or not alleviated. The amendments in this update are effective for reporting periods ending after December 15, 2016. Management is of the opinion that adopting this new accounting guidance will not have any material effect on the company’s consolidated financial statements.

 

Note 3. Investments

 

The composition of the company’s investments as of March 31, 2016, at cost and fair value, were as follows:

 

		Investments at Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
Alternative Energy - Solar:
Sunny Mountain Portfolio		$	920,000			$	1,442,796				2.6	%
East to West Solar Portfolio			19,815,000				20,171,888				36.0
Green Maple Portfolio			11,500,000				9,889,579				17.6
Magnolia Sun Portfolio			10,650,000				11,388,075				20.3
Canadian Northern Lights Portfolio			1,603,136				1,819,673				3.3
Six States Solar Portfolio			2,300,000				2,564,053				4.6
Greenbacker Residential Solar Portfolio			50,000				50,000				0.1
Subtotal		$	46,838,136			$	47,326,064				84.5	%
Alternative Energy - Wind:
Greenbacker Wind Portfolio			6,750,000				7,007,096				12.5	%
Subtotal		$	6,750,000			$	7,007,096				12.5	%
Energy Efficiency Secured Loans:
GREC Energy Efficiency LLC Portfolio		$	681,129			$	733,488				1.3	%
Renew AEC One, LLC			918,871				918,871				1.7
Subtotal		$	1,600,000			$	1,652,359				3.0	%
Total		$	55,188,136			$	55,985,519				100.0	%

 

 The composition of the company’s investments as of December 31, 2015, at cost and fair value, were as follows:

 

		Investments at Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
Alternative Energy - Solar:
Sunny Mountain Portfolio		$	920,000			$	1,329,803				2.6	%
East to West Solar Portfolio			19,765,000				20,005,027				38.9
Green Maple Portfolio			9,500,000				9,557,290				18.6
Magnolia Sun Portfolio			7,550,000				7,542,723				14.7
Canadian Northern Lights Portfolio			1,603,136				1,562,967				3.0
Six States Solar Portfolio			2,300,000				2,685,597				5.2
Subtotal		$	41,638,136			$	42,703,407				83.0	%
Alternative Energy - Wind:
Greenbacker Wind Portfolio		$	6,750,000			$	7,093,750				13.8	%
Subtotal		$	6,750,000			$	7,093,750				13.8	%
Energy Efficiency Secured Loans:
GREC Energy Efficiency LLC Portfolio		$	451,705				474,114				0.9	%
LED Funding – Universidad Project			97,787				97,787				0.2
Renew AEC One, LLC			1,085,508				1,085,508				2.1
Subtotal		$	1,635,000			$	1,657,409				3.2	%
Total		$	50,023,136			$	51,454,566				100.0	%

 

 

The counterparty to all the energy efficiency secured loans held by the company as of March 31, 2016 and December 31, 2015 is a related party (See Note 5).

 

The composition of the company’s investments as of March 31, 2016 by geographic region, at cost and fair value, were as follows:

 

		Investments at Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
United States:
South Region		$	28,193,936			$	29,288,086				52.2	%
East Region			13,008,950				11,460,497				20.5
Mountain Region			10,264,813				11,131,614				19.9
West Region			1,248,567				1,354,157				2.4
Mid-West Region			868,734				931,492				1.7
Total United States		$	53,585,000			$	54,165,846				96.7	%
Canada:			1,603,136				1,819,673				3.3
Total		$	55,188,136			$	55,985,519				100.0	%

  

The composition of the company’s investments as of December 31, 2015 by geographic region, at cost and fair value, were as follows:

 

		Investments at Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
United States:
South Region		$	24,919,749				25,139,147				48.9	%
Northeast Region			11,124,945				11,268,268				21.9
Mountain Region			10,259,953				11,133,946				21.6
West Region			1,247,582				1,396,242				2.7
Mid-West Region			867,771				953,996				1.9
Total United States		$	48,420,000				49,891,599				97.0	%
Canada:			1,603,136				1,562,967				3.0
Total		$	50,023,136				51,454,566				100.0	%

 

The composition of the company’s investments as of March 31, 2016 by industry, at cost and fair value, were as follows:

 

 

		Investments at Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
Alternative Energy - Solar		$	46,838,136				47,326,064				84.5	%
Alternative Energy - Wind			6,750,000				7,007,096				12.5
Energy Efficiency - Lighting Replacement			1,600,000				1,652,359				3.0
Total		$	55,188,136				55,985,519				100.0	%

 

The composition of the company’s investments as of December 31, 2015 by industry, at cost and fair value, were as follows:

  

		Investments at Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
Alternative Energy - Solar		$	41,638,136			$	42,703,407				83.0	%
Alternative Energy - Wind			6,750,000				7,093,750				13.8
Energy Efficiency - Lighting Replacement			1,635,000				1,657,409				3.2
Total		$	50,023,136			$	51,454,566				100.0	%

 

Investments held as of March 31, 2016 and December 31, 2015 are considered Control Investments, which is defined as investments in companies in which the company owns 25% or more of the voting securities of such company or have greater than 50% representation on such company’s board of directors or investments in limited liability companies for which the company serves managing member.

 

Note 4. Fair Value Measurements - Investment

 

The following table presents fair value measurements of investments, by major class, as of March 31, 2016, according to the fair value hierarchy:

 

		Valuation Inputs
		Level 1				Level 2				Level 3				Fair Value
Limited Liability Company Member Interests		$	—			$	—			$	53,246,975			$	53,246,975
Capital Stock			—				—				1,819,673				1,819,673
Energy Efficiency Secured Loans			—				—				918,871				918,871
Total		$	—			$	—			$	55,985,519			$	55,985,519

 

The following table presents fair value measurements of investments, by major class, as of December 31, 2015, according to the fair value hierarchy:

 

		Valuation Inputs
		Level 1				Level 2				Level 3				Fair Value
Limited Liability Company Member Interests		$	—			$	—			$	48,708,304			$	48,708,304
Capital Stock			—				—				1,562,967				1,562,967
Energy Efficiency Secured Loans			—				—				1,183,295				1,183,295
Total		$	—			$	—			$	51,454,566			$	51,454,566

 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended March 31, 2016:

 

 

		Balance as of December 31, 2015				Net change in unrealized appreciation (depreciation) on investments				Translation of assets and liabilities denominated in foreign currencies				Purchases and other adjustments to cost (1)				Repayments of investments				Transfer  in/(out)				Balance as of March 31, 2016
Limited Liability Company Member Interests		$	48,708,304			$	(890,753	)		$	—			$	5,165,000			$	—			$	264,424			$	53,246,975
Capital Stock			1,562,967				357,023				(100,317	)			—				—								1,819,673
Energy Efficiency Secured Loans			1,183,295				—				—				—				—				(264,424	)			918,871
Total		$	51,454,566			$	(533,730	)		$	(100,317	)		$	5,165,000			$	—			$	—			$	55,985,519

 

 

(1)

Includes purchases of new investments, capitalized deal costs, effects of purchase price adjustments, return of capital and additional investments in existing investment, if any.

 

The total change in unrealized depreciation included in the consolidated statements of operations within net change in unrealized depreciation on investments for the three months ended March 31, 2016 attributable to Level 3 investments still held at March 31, 2016 was $533,730. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 as of the beginning of the period which the reclassifications occur.

 

Net change in unrealized depreciation on investments at fair value for the three months ended March 31, 2016 was $533,730 included within net change in unrealized depreciation on investments in the consolidated statements of operations. There were no net realized gains or losses on investments at fair value for the three months ended March 31, 2016.

 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended March 31, 2015:

 

		Balance as of December 31, 2014				Net change in unrealized appreciation on investments				Translation of assets and liabilities denominated in foreign currencies				Purchases and other adjustments to cost (1)				Repayments of investments				Balance as of March 31, 2015
Limited Liability Company Member Interests		$	1,688,792			$	457,976			$	—			$	11,800,000			$	—			$	13,946,768
Capital Stock			1,048,709				26,356				(98,842	)			10,000								986,223
Total		$	2,737,501			$	484,332			$	(98,842	)		$	11,810,000			$	—			$	14,932,991

 

(1)

Include purchases of new investment, capitalized deal costs and effects of purchase price adjustments, if any.

 

The total change in unrealized appreciation included in the consolidated statements of operations within net change in unrealized appreciation on investment for the three months ended March 31, 2015 attributable to Level 3 investments still held at March 31, 2015 was $484,332. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 during the three months ended March 31, 2015.

 

 

Net change in unrealized appreciation on investments at fair value for the three months ended March 31, 2015 was $484,332 included within net change in unrealized appreciation on investments in the consolidated statements of operations. There was no net realized gains or losses on investments at fair value for the three months ended March 31, 2015.

 

As of March 31, 2016, all of the company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the company’s investments as of March 31, 2016:

 

		Fair Value				Valuation Techniques		Unobservable Inputs		Rates/Assumptions
Alternative Energy - Solar		$	47,326,064			Income, cost and market approach		Discount rate, future kWh Production, and estimated remaining useful life		7.0% - 8.30%, 0.50% annual degradation in production, 32.3 years
Alternative Energy – Wind		$	7,007,096			Income and cost approach		Discount rate, future kWh Production, and estimated remaining useful life		7.75%, 0.50% annual degradation in production, 33.3 years
Energy Efficiency- Secured Loans and Leases– Lighting Replacement		$	1,652,359			Income and collateral based approach		Market yields and value of collateral		10.25% - 21.31%

  

As of December 31, 2015, all of the company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the company’s investments as of December 31, 2015:

 

		Fair Value				Valuation Techniques		Unobservable Inputs		Rates/Assumptions
Alternative Energy - Solar		$	42,703,407			Income, cost and market approach		Discount rate, future kWh Production, and estimated remaining useful life		7.0% - 8.30%, 0. 50% annual degradation in production, 32.3 years
Alternative Energy – Wind		$	7,093,750			Cost approach		—		—
Energy Efficiency- Secured Loans and Leases – Lighting Replacement		$	1,657,409			Income and collateral based approach		Market yields and value of collateral		10.25% - 12.0%

 

The significant unobservable inputs used in the fair value measurement of the company’s limited liability company member interests are discount rates and estimates related to the future production of electricity. Significant increases in the discount rate used or actual kWh production meaningfully less than projected production would result in a significantly lower fair value measurement.

  

 

Note 5. Related Party Agreements And Transactions Agreements

 

The company has executed advisory and administration agreements with the advisor and Greenbacker Administration, LLC, our administrator, respectively, as well as a dealer manager agreement with the dealer manager, which entitles the advisor, certain affiliates of the advisor, and the dealer manager to specified fees upon the provision of certain services with regard to the offering and the ongoing management of the company as well as reimbursement of O&O costs incurred by the advisor and the dealer manager on behalf of the company (as discussed in Note 2) and certain other operating costs incurred by the advisor on behalf of the company. The term “Special Unitholder” refers to GREC Advisors, LLC, a Delaware limited liability company, which is a subsidiary of our advisor and “special unit”, refers to the special unit of limited liability company interest in GREC entitling the Special Unitholder to an incentive allocation and distribution. In addition, the company and the advisor entered into an expense reimbursement agreement whereby the advisor agrees to reimburse the company for certain expenses above certain limits and be repaid when the company’s expenses are reduced below that threshold. The fees and reimbursement obligations are as follows:

  

Type of Compensation and Recipient		Determination of Amount
Selling Commissions — Dealer Manager		7% of gross offering proceeds from the sale of Class A shares and up to 3% of gross offering proceeds from the sale of Class C shares. No selling commission will be paid with respect to Class I shares or for sales pursuant to the dividend reinvestment plan. All of its selling commissions are expected to be re-allowed to participating broker- dealers.
Dealer Manager Fee — Dealer Manager		2.75% of gross offering proceeds from the sale of Class A and Class C shares, and 1.75% of gross offering proceeds from the sale of Class I shares. No dealer manager fee will be paid for sales pursuant to the dividend reinvestment plan. The dealer manager may re-allow a portion of its dealer manager fee to selected broker- dealers.
Distribution Fee — Dealer Manager		With respect to Class C shares only, the company will pay the dealer manager a distribution fee that accrues daily in an amount equal to 1/366th  of 0.80% of the amount of the net asset value for the Class C shares for such day on a continuous basis from year to year. The company will stop paying distribution fees at the earlier of a listing of the Class C shares on a national securities exchange, following the completion of this offering, total underwriting compensation in this offering equals 10% of the gross proceeds from the primary offering or Class C shares are no longer outstanding. The dealer manager may re-allow all or a portion of the distribution fee to participating broker-dealers and servicing broker dealers.
O&O costs — Advisor		The company will reimburse the advisor for the O&O costs (other than selling commissions and dealer manager fees) it has incurred on the company’s behalf only to the extent that the reimbursement would not cause the selling commissions, dealer manager fee and the other O&O costs borne by the company to exceed 15.0% of the gross offering proceeds as the amount of proceeds increases. While the company has targeted an offering expense ratio of 1.5% for O&O costs over the term of the offering, 5.0% has been charged since inception.

 

 

Base Management Fees — Advisor		The base management fee payable to GCM will be calculated at a monthly rate of 0.167% (2.00% annually) of our gross assets (including amounts borrowed). For services rendered under the advisory agreement, the base management fee will be payable monthly in arrears. The base management fee will be calculated based on the average of the values of our gross assets for each day of the prior month. Base management fees for any partial period will be appropriately pro-rated. The base management fee may be deferred or waived, in whole or part, at the election of the advisor. All or any part of the deferred base management fee not taken as to any period shall be deferred without interest and may be taken in any period prior to the occurrence of a liquidity event as the advisor shall determine in its sole discretion.
Incentive Allocation and Distribution — Special Unitholder		The incentive distribution to which the Special Unitholder may be entitled to will be calculated and payable quarterly in arrears based on the pre-incentive distribution net investment income for the immediately preceding fiscal quarter. For this purpose, pre-incentive distribution net investment income means interest income, dividend and distribution income from equity investments (excluding that portion of distributions that are treated as return of capital) and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive, but excluding any fees for providing managerial assistance) accrued during the fiscal quarter, minus the operating expenses for the fiscal quarter (including the base management fee, expenses payable under the administration agreement with the company’s Administrator, and any interest expense and distributions paid on any issued and outstanding indebtedness and preferred units of limited liability company interest, but excluding the incentive distribution). Pre-incentive distribution net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation or depreciation or any accrued income taxes and other taxes including, but not limited to, franchise, property, and sales taxes.
		Pre-incentive distribution net investment income, expressed as a rate of return on the value of the company’s average adjusted capital at the end of the immediately preceding fiscal quarter, will be compared to a “hurdle rate” of 1.75% per fiscal quarter (7.00% annualized). Adjusted capital shall mean: cumulative gross proceeds before sales and commission and dealer fees, generated from sales of the company’s shares and preferred units of limited liability company interests (including the DRP) reduced for distributions to members of proceeds from non-liquidation dispositions of asset and amount paid for share repurchases pursuant to the Share Repurchase Program. Average adjusted capital shall mean: the average value of the adjusted capital for the two most recently completed fiscal quarters. The Special Unitholder shall receive an incentive distribution with respect to the pre-incentive distribution net investment income in each fiscal quarter as follows:

 

 

		·      no incentive distribution in any fiscal quarter in which the pre-incentive distribution net investment income does not exceed the “hurdle rate” of 1.75%;
		·      100% of the pre-incentive distribution net investment income with respect to that portion of such pre-incentive distribution net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any fiscal quarter (8.75% annualized with a 7% annualized hurdle rate). The company refers to this portion of the pre-incentive distribution net investment income (which exceeds the hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide the advisor with 20% of the pre-incentive distribution net investment income as if a hurdle did not apply if the net investment income exceeds 2.1875% in any fiscal quarter; and
		·      20% of the amount of the pre-incentive distribution net investment income, if any, that exceeds 2.1875% in any fiscal quarter (8.75% annualized with a 7% annualized hurdle rate) is payable to the Special Unitholder (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive distribution investment income thereafter is allocated to the Special Unitholder).
Capital Gains Incentive Distribution — Special Unitholder		The capital gains incentive distribution will be determined and payable to the Special Unitholder in arrears as of the end of each fiscal quarter (or upon termination of the advisory agreement, as of the termination date) to the Special Unitholder, and will equal 20.0% of the company’s realized capital gains, if any, on a cumulative basis from inception through the end of each fiscal quarter, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any capital gain incentive distributions.
Liquidation Incentive Distribution — Special Unitholder		The liquidation incentive distribution payable to the Special Unitholder will equal 20.0% of the net proceeds from a liquidation of the company (other than in connection with a listing, as described below) in excess of adjusted capital, as measured immediately prior to liquidation. Adjusted capital shall mean: cumulative gross proceeds generated from sales of shares (including the DRP) reduced for distributions to members of proceeds from non-liquidation dispositions of our assets and amounts paid for share repurchases pursuant to the Share Repurchase Program. In the event of any liquidity event that involves a listing of the company’s shares, or a transaction in which the company’s members receive shares of a company that is listed, on a national securities exchange, the liquidation incentive distribution will equal 20% of the amount, if any, by which the company’s listing value following such liquidity event exceeds the adjusted capital, as calculated immediately prior to such listing (the “listing premium”). Any such listing premium and related liquidation incentive distribution will be determined and payable in arrears 30 days after the commencement of trading following such liquidity event.

 

 

Operating Expense and Expense Assumption and Reimbursement Agreement

The company will reimburse the advisor’s cost of providing administrative services, legal, accounting and printing. The company will not reimburse the advisor for the salaries and benefits to be paid to the named executive officers. For the period beginning with the company’s breaking of escrow and beginning operations on April 25, 2014, and ending December 31, 2014, advisor assumed operating expenses for the company in an amount sufficient to keep total annual operating expenses (exclusive of interest, taxes dividend expense, borrowing costs, organizational and extraordinary expenses) of the company (“Expenses”) at percentages of average net assets of such class for any calculation period no higher than 5.0% for Class A Class C and Class I shares (the “Maximum Rates”), and (ii) the company shall reimburse advisor, within 30 days of delivery of a request in proper form, for such Expenses, provided that such repayments do not cause the total Expenses attributable to a share class during the year of repayment to exceed the Maximum Rates. The expense reimbursement agreement was amended in December 2014 and again in November 2015 to continue until the earlier of December 31, 2016 or the end of the offering. No repayments by the company to advisor shall be permitted after the earlier of (i) the company’s offering has expired or is terminated or (ii) December 31, 2016. Furthermore, if the advisory agreement is terminated or not renewed, the advisor will have no further obligation to limit expenses per the expense reimbursement agreement and the company will not have any further obligation to reimburse the advisor for expenses not reimbursed as of the date of the termination.

 

For the three months ended March 31, 2016 and March 31, 2015, the company incurred $677,777 and $241,727, respectively, in operating expenses, including the management fees earned by the advisor. Since January 1, 2015, the advisor has elected to limit the company’s operating expenses to no higher than 5% annually of the company’s average net assets. While the advisor has assumed responsibility for $880,545 of the company’s operating expenses under the expense reimbursement agreement since inception, as of March 31, 2016, the company had reimbursed the advisor $345,000 of previously assumed expenses, subject to the restrictions of the Maximum Rates. Since average annual expenses were less than 5% for the three months ended March 31, 2016, the company recorded a net $178,890 payable to the advisor as reimbursement for assumption of past operating expenses. For the three months ended March 31, 2015, the advisor assumed responsibility for $65,029 of the company’s operating expenses under the expense reimbursement agreement

 

 

For the three months ended March 31, 2016 and March 31, 2015, the advisor earned $330,715 and $62,283, respectively, in management fees. While there were no incentive allocations earned to date by the advisor, the consolidated financial statements reflect a $126,809 decrease in incentive allocation for the three months ended March 31, 2016 and a $77,099 incentive allocation for the three months ended March 31, 2015, based upon net unrealized gains.

  

As of March 31, 2016, due to advisor on the consolidated statement of assets and liabilities in the amount of $543,404 is comprised of $27,846 due to the advisor in connection with the expense reimbursement agreement combined with a payable to the advisor for reimbursable Organization and Offering Costs in the amount of $515,558. As of December 31, 2015, due from advisor on the consolidated statement of assets and liabilities in the amount of $26,636 is comprised of $106,044 due from the advisor in connection with the expense reimbursement agreement combined with a payable to the advisor for reimbursable Organization and Offering Costs in the amount of $79,408. The company and advisor plan to cash settle any amounts due to / from advisor on a quarterly basis.

 

For the three months ended March 31, 2016 and March 31, 2015, the company paid $404,044 and $85,142, respectively, in dealer manager fees and $1,448,434 and $230,780, respectively, in selling commission to the company’s dealer manager, SC Distributors. These fees and commissions were paid in connection with the sales of the company’s shares to investors and, as such, were recorded against the proceeds from the issuance of shares and are not reflected in the company’s consolidated statements of operations.

  

For the three months ended March 31, 2016, Greenbacker Administration LLC invoiced the company $24,024 for expenses, at cost, for services related to asset management and accounting services related to the company’s investments.

 

Transactions

  

The company entered into secured loans to finance the purchase and installation of energy efficient lighting with LED Funding LLC and Renew AEC One LLC (“AEC Companies”). Certain of the loans with LED Funding LLC, an AEC Company, converted to an operating lease on the day the energy efficiency upgrades became operational. AEC Companies are considered related parties as the members of these entities own an indirect, non-controlling ownership interest in the company’s advisor. The loans outstanding between the AEC Companies and the company, and the subsequent operating leases, were negotiated at an arm’s length and contain standard terms and conditions that would be included in third party lending agreements including required security and collateral, interest rates based upon risk of the specific loan, and term of the loan. As of March 31, 2016, all loans and operating leases are considered current per their terms.

 

The company may originate additional energy efficiency loans and operating leases with the AEC Companies in the future as long as the terms and conditions are at or better than market standards.

  

Note 6. Members’ Equity

  

General

  

Pursuant to the terms of the LLC Agreement, the LLC may issue up to 400,000,000 shares, of which 350,000,000 shares are designated as Class A, Class C, and Class I shares (collectively, common shares), and 50,000,000 are designated as preferred shares and one special unit. Each class of common shares will have the same voting rights.

 

The following are the commissions and fees for each common share class:

  

 

Class A: Each Class A share issued in the primary offering will be subject to a selling commission of up to 7.00% per share and a dealer manager fee of up to 2.75% per share. No selling commissions or dealer manager fees will be paid for sales pursuant to the dividend reinvestment plan.

 

Class C: Each Class C share issued in the primary offering will be subject to a selling commission of up to 3.00% per share and a dealer manager fee of up to 2.75% per share. In addition, with respect to Class C shares, the company will pay the dealer manager on a monthly basis a distribution fee, or “distribution fee”, that accrues daily equal to 1/366^th of 0.80% of the amount of the daily net asset value for the Class C shares on a continuous basis from year to year. No selling commissions or dealer manager fees will be paid for sales pursuant to the dividend reinvestment plan.

 

Class I: No selling commission or distribution fee will be paid for sales of any Class I shares. Each Class I share will be subject to a dealer manager fee of up to 1.75% per share.

  

The following table is a summary of the shares issued and repurchased during the period and outstanding as of March 31, 2016:

 

		Shares Outstanding as of December 31, 2015				Shares Issued  During the  Period				Shares Repurchased During the Period				Shares Outstanding as of March 31, 2016
Class A shares			5,420,728				1,711,678				—				7,132,406
Class C shares			248,456				262,209				—				510,665
Class I shares			1,052,783				514,895				(5,699	)			1,561,979
Total			6,721,967				2,488,782				(5,699	)			9,205,050

 

The following table is a summary of the shares issued during the period and outstanding as of December 31, 2015:

 

		Shares Outstanding as of December 31, 2014				Shares Issued  During the Period				Shares Repurchased During the Period				Shares Outstanding as of December 31, 2015
Class A shares			1,097,844				4,337,884				(15,000	)			5,420,728
Class C shares			84,964				163,492				—				248,456
Class I shares			53,537				999,246				—				1,052,783
Total			1,236,345				5,500,622				(15,000	)			6,721,967

 

As of March 31, 2016 and December 31, 2015, none of the LLC’s preferred shares were issued and outstanding.

  

The LLC Agreement authorizes the board of directors, without approval of any of the members, to increase the number of shares the company is authorized to issue and to classify and reclassify any authorized but unissued class or series of shares into any other class or series of shares having such designations, preferences, right, power and duties as may be specified by the board of directors. The LLC Agreement also authorizes the board of directors, without approval of any of the members, to issue additional shares of any class or series for the consideration and on the terms and conditions established by the board of directors. In addition, the company may also issue additional limited liability company interests that have designations, preferences, right, powers and duties that are different from, and may be senior to, those applicable to the common shares. The Special Unitholder will hold the special unit in the company. Refer to Note 5 for the terms of the special unit.

  

 

Distribution Reinvestment Plan

 

The company adopted a distribution reinvestment plan (“DRP”) through which the company’s shareholders may elect to purchase additional shares with distributions from the company rather than receiving the cash distributions. The board of directors may reallocate the shares between the offering and the DRP. Shares issued pursuant to the DRP will have the same voting rights as shares offered pursuant to the offering. As of March 31, 2016 and December 31, 2015, 50,000,000 in shares were allocated for use in the DRP. During this offering, the purchase price of shares purchased through the DRP will be at a price equal to the then current net offering price per share. No dealer manager fees, selling commissions or other sales charges will be paid with respect to shares purchased pursuant to the DRP except for distribution fees on Class C shares issued under the DRP. At its discretion, the board of directors may amend, suspend, or terminate the DRP. A participant may terminate participation in the DRP by written notice to the plan administrator, received by the plan administrator at least 10 days prior to the distribution payment date.

  

As of March 31, 2016 and December 31, 2015, 185,458 and 118,957 shares, respectively, were issued under the DRP.

  

Share Repurchase Program

  

During the quarter ended September 30, 2015, the company commenced a share repurchase program, or “share repurchase program”, pursuant to which quarterly share repurchases will be conducted, on up to approximately 5% of the weighted average number of outstanding shares in any 12-month period, to allow members who hold Class A, Class C or Class I shares to sell shares back to the company at a price equal to the then current offering price less the selling commissions and dealer manager fees associated with that class of shares. The company is not obligated to repurchase shares and the board of directors may terminate the share repurchase program at its sole discretion. The share repurchase program includes numerous restrictions that will limit a shareholders ability to sell shares. Unless the board of directors determines otherwise, the company limits the number of shares to be repurchased during any calendar year to the number of shares the company can repurchase with the proceeds received from the sale of shares under the distribution reinvestment plan. At the sole discretion of the board of directors, the company may also use cash on hand, cash available from borrowings and cash from liquidation of investments to repurchase shares. In addition, the company plans to limit repurchases in each fiscal quarter to 1.25% of the weighted average number of shares outstanding in the prior four fiscal quarters. For the quarter ended March 31, 2016, the company repurchased 5,699 Class I shares at a total purchase price of $51,679, pursuant to the company’s share repurchase program.

 

We have received an order for our repurchase program from the SEC under Rule 102(a) of Regulation M under the Exchange Act. In addition, our repurchase program is substantially similar to repurchase programs for which the SEC has stated it will not recommend enforcement action under Rule 13e-4 and Regulation 14E under the Exchange Act.

 

Note 7. Distributions

  

On January 29, 2016, February 29, 2016 and March 31, 2016, with the authorization of the company’s board of directors, the company declared distributions on each outstanding Class A, C and I share. These distributions were calculated based on shareholders of record for each day in an amount equal to $0.0016478 per share per day for the period January 1, 2016 through January 31, 2016 and an amount equal to $0.00165512 per share per day for the period February 1, 2016 through March 31, 2016 (less the distribution fee with respect to Class C shares).

  

The following table reflects the distributions declared during the three months ended March 31, 2016:

  

Pay Date		Paid in Cash				Value of Shares Issued under DRP				Total
February 1, 2016		$	171,410			$	185,680			$	357,090
March 1, 2016			182,825				195,193				378,018
April 1, 2016			221,088				221,729				442,817
Total		$	575,323			$	602,602			$	1,177,925

 

The following table reflects the distributions declared during the three months ended March 31, 2015:

 

 

Pay Date		Paid in Cash				Value of Shares Issued under DRP				Total
February 2, 2015		$	35,820			$	30,024			$	65,844
March 2, 2015			35,691				30,341				66,032
April 1, 2015			46,720				38,120				84,840
Total		$	118,231			$	98,485			$	216,716

 

Note 8. Commitments and Contingencies

 

Commitments: Pursuant to separate engineering, procurement and construction contracts (“EPC Contracts”), the company, subject to certain conditions, has committed to construct nine solar power facilities that comprise the Green Maple Portfolio as of March 31, 2016. While the remaining costs to complete all locations under the nine EPC Contracts is approximately $2,842,000, the company has firm loan commitments in place to fund approximately $840,000 of these costs as of March 31, 2016. Thus, the net commitment to complete construction of these nine facilities is approximately $2,002,000.

  

Legal proceedings: The company may become involved in legal proceedings, administrative proceedings, claims and other litigation that arise in the ordinary course of business. Individuals and interest groups may sue to challenge the issuance of a permit for a renewable energy project or seek to enjoin construction of a wind energy project. In addition, we may be subject to legal proceedings or claims contesting the construction or operation of our renewable energy projects. In defending ourselves in these proceedings, we may incur significant expenses in legal fees and other related expenses, regardless of the outcome of such proceedings. Unfavorable outcomes or developments relating to these proceedings, such as judgments for monetary damages, injunctions or denial or revocation of permits, could have a material adverse effect on our business, financial condition and results of operations. In addition, settlement of claims could adversely affect our financial condition and results of operations. As of March 31, 2016, management is not aware of any legal proceedings that might have a significant adverse impact on the company.

  

Pledge of collateral and unsecured guarantee of loans to subsidiaries: Pursuant to loan agreements between the operating subsidiaries of East to West Solar LLC, Green Maple LLC and Greenbacker Wind LLC and various lenders (financial institutions and the Vermont Economic Development Authority), the operating entities have pledged all solar operating assets as well as the membership interests in various operating subsidiaries as collateral for the term loans with maturity dates ranging from February 2018 through March 2028. In addition to GREC and the company, East to West Solar LLC and Green Maple LLC (the “Guarantors”) have provided an unsecured guaranty on approximately $10,167,000 and $4,310,000, respectively, of the term loans as of March 31, 2016. The guarantors would only have to perform under the guarantee if the cash flow or the liquidation of collateral at the operating subsidiaries was inadequate to fully liquidate the remaining loan balance.

 

Note 9. Financial Highlights

 

The following is a schedule of financial highlights of the company attributed to common stockholders for the three months ended March 31, 2016 and March 31, 2015. The company’s income and expense is allocated pro-rata across the outstanding Class A, Class C and Class I shares as applicable, and, therefore, the financial highlights are equal for each of the outstanding classes.  

 

		For the three months ended March 31, 2016				For the three months ended March 31, 2015
Per share data attributed to common shares (1):
Net Asset Value at beginning of period		$	8.54				8.50
Net investment income (loss) and realized loss on foreign currency translation			—				(0.08	)
Net unrealized appreciation / (depreciation) on investments			(0.07	)			0.33
Change in translation of assets and liabilities denominated in foreign currencies			(0.01	)			(0.07	)
Change in benefit from deferred taxes on unrealized appreciation on investments			0.24				—
Net increase in net assets resulting from operations			0.16				0.18
Shareholder distributions			(0.15	)			(0.15	)
Other (2)			0.01				(0.03	)
Net increase in members’ equity attributed to common shares			0.02				—
Net asset value for common shares at end of period		$	8.56			$	8.50
Total return attributed to common shares based on net asset value (3)			1.92	%			1.70	%
Common shareholders’ equity at end of period		$	78,800,618			$	15,446,264
Common shares outstanding at end of period			9,205,050				1,817,466
Ratio/Supplemental data for common shares (annualized) (3):
Ratio of net investment income (loss) to average net assets			0.14	%			(3.89	)%
Ratio of operating expenses to average net assets			5.20	%			5.80	%
Portfolio turnover rate			N/A				N/A

 

 

	(1)	The per share data was derived by using the weighted average shares outstanding during the three months ended March 31, 2016 and March 31, 2015, which was 7,865,104 and 1,474,248, respectively.

(2)

Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and organizational costs which are not included in operating expenses nor subject to the expense reimbursement agreement and the impact of shares at a price other than the net asset value.

(3)

Total return, ratio of net investment income and ratio of operating expenses to average net assets for the three months ended March 31, 2016, prior to the effect of the expense reimbursement agreement were 2.15%, 1.23% and 4.11%, respectively. Total return, ratio of net investment loss and ratio of operating expenses to average net assets for the three months ended March 31, 2015, prior to the effect of the expense assumption and reimbursement agreement and the management fee waiver were (6.22)%, (6.02)% and 7.93%, respectively. Allocation of net assets to special unitholder has not been included in determining net investment income or operating expenses used in the ratio calculations.

 

Note 10. Subsequent Events

  

The company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements. There have been no subsequent events that occurred during such period that would require disclosure in the consolidated financial statements or would be required to be recognized in the consolidated financial statements as of and for the three months ended March 31, 2016 (unaudited).

  

 

Item 4. Controls and Procedures

 

Disclosure Controls

 

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that the disclosure controls and procedures are effective. Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act are recorded, processed and summarized and reported within the time period specified in the applicable rules and forms.

 

Change in Internal Control Over Financial Reporting

 

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the period ended March 31, 2016, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the Effectiveness of Controls

 

Any control system, no matter how well designed and operated, can only provide reasonable (but not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

 

PART II

OTHER INFORMATION

 

Item 6.    Exhibits

 

Exhibit Number		Description of Document
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended
32.1		Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes- Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes- Oxley Act of 2002

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: June 14, 2016	By	/s/ Charles Wheeler
		Charles Wheeler
		Chief Executive Officer and Director
		(Principal Executive Officer)
		Greenbacker Renewable Energy Company LLC
Date: June 14, 2016	By	/s/ Richard C. Butt
		Richard C. Butt
		Chief Financial Officer and Principal Accounting Officer
		(Principal Financial and Accounting Officer)
		Greenbacker Renewable Energy Company LLC