UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

FORM 10-K/A
AMENDMENT NO. 1

 

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2016

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

Commission File Number 814-01136

 

Terra Income Fund 6, Inc.

(Exact name of registrant as specified in its charter)

 

Maryland		46-2865244
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

805 Third Avenue, 8^th Floor
New York, New York 10022

(Address of principal executive offices)

(212) 753-5100

(Registrant’s telephone number, including area code)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No þ

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 þ No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer     o		Accelerated filer              o
Non-accelerated filer      þ		Smaller Reporting Company    o
(Do not check if a 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 o No þ

As of December 7, 2016, the registrant had 4,615,672 shares of common stock, $0.001 par value, outstanding.

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EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) is being filed to amend the Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (the “Original Filing”) of Terra Income Fund 6, Inc. (the “Company”), which was filed with the Securities and Exchange Commission (the “SEC”) on November 22, 2016 (the “Original Filing Date”). This Amendment No. 1 is filed solely for the purposes of inserting (i) the report of BDO USA, LLP dated December 24, 2015, on the Company’s statement of assets and liabilities for the year ended September 30, 2015 and the related statements of operations, changes in net assets and cash flows for each of the years in the two-year period ended September 30, 2015 (the “BDO Report”), as a new page immediately following the KPMG LLP’s report on the Company’s audited financial statements for the year ended September 30, 2016 (the “Financial Statements”) that had appeared on F-2, and (ii) the revised report of KPMG LLP dated November 21, 2016 (the “KPMG Report”), which removed the reference to the report of other independent registered accountants with respect to the audit of the financial statements for the years ended September 30, 2015 and 2014 previously included therein (the “Financial Statements”).

The full Financial Statements, including the KPMG Report and the BDO Report, each as amended, are set forth on the following page of this Amendment No. 1. In accordance with Rule 12b-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is including all information called for by Item 15 of Form 10-K in its entirety. Other than the changes specified above, the Financial Statements have not been altered in any way since the Original Filing.

This Amendment No. 1 is limited in scope to the item identified above and should be read in conjunction with the Original Filing and our other filings with the SEC. Except as described above, no changes have been made to the Original Filing and this Amendment No. 1 does not modify, amend or update in any way any of the financial or other information contained in the Original Filing. This Amendment No. 1 does not reflect events that may have occurred subsequent to the Original Filing Date.

Pursuant to Rule 12b-15 under the Exchange Act, this Amendment No. 1 also contains new certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, which are attached hereto.

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INDEX TO FINANCIAL STATEMENTS

		Page
Reports of Independent Registered Public Accounting Firm			F-2
Financial Statements:
Statements of Assets and Liabilities as of September 30, 2016 and September 30, 2015			F-4
Statements of Operations for the years ended September 30, 2016, 2015 and 2014			F-5
Statements of Changes in Net Assets for the years ended September 30, 2016, 2015 and 2014			F-6
Statements of Cash Flows for the years ended September 30, 2016, 2015 and 2014			F-7
Schedules of Investments as of September 30, 2016 and 2015			F-8
Notes to Financial Statements			F-10

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Terra Income Fund 6, Inc.:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Terra Income Fund 6, Inc. (the Company) as of September 30, 2016, and the related statements of operations, changes in net assets, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2016, by correspondence with the custodian, portfolio companies or agents. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Terra Income Fund 6, Inc. as of September 30, 2016, and the results of its operations, changes in net assets and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP
 
New York, New York
November 21, 2016

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Terra Income Fund 6, Inc.
New York, New York

We have audited the accompanying statements of assets and liabilities of Terra Income Fund 6, Inc. (the “Company”), as of September 30, 2015 and 2014, including the schedule of investments as of September 30, 2015, and the related statements of operations, changes in net assets, and cash flows for the years ended September 30, 2015 and 2014, and the financial highlights for the period June 24, 2015 (the date the Company raised the Minimum Offering Requirement) to September 30, 2015. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the investment owned as of September 30, 2015 by correspondence with the portfolio company and the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Terra Secured Income Fund 6 Inc. at September 30, 2015 and 2014, and the results of its operations, changes in its net assets and its cash flows for the years then ended, and the financial highlights for period June 24, 2015 (the date the Company raised the Minimum Offering Requirement) to September 30, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP
BDO USA, LLP

New York, New York
December 24, 2015

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Terra Income Fund 6, Inc.
 
Statements of Assets and Liabilities

		September 30,
		2016				2015
Assets
Investments, at fair value – non-controlled (cost of $26,554,524 and $0, respectively)		$	26,723,922			$	—
Investment through participation interest, at fair value – non-controlled (cost of $2,000,000 and $2,000,000, respectively) (Note 4)			2,022,814				2,000,000
Cash and cash equivalents			31,634,296				8,248,797
Cash, restricted			836,434				—
Deferred offering costs			361,482				1,038,951
Interest receivable			278,424				20,000
Prepaid expenses and other assets			274,851				31,404
Total assets			62,132,223				11,339,152
Liabilities
Obligations under participation agreements, at fair value (proceeds of $14,508,034 and $0, respectively) (Note 4)			14,560,606				—
Distribution fee payable			2,191,734				—
Due to Adviser, net			1,498,808				608,423
Interest reserve and other deposits held on investments			836,434				—
Accrued expenses			218,360				172,593
Interest payable from obligations under participation agreements			144,575				—
Directors’ fee payable			5,625				—
Payable for unsettled stock subscriptions			—				316,000
Other liabilities			201,333				81,064
Total liabilities			19,657,475				1,178,080
Net assets		$	42,474,748			$	10,161,072
Commitments and contingencies (See Note 5)
Components of net assets:
Common stock, $0.001 par value, 450,000,000 shares authorized, and 4,222,358 and 926,357 shares issued and outstanding, respectively		$	4,222			$	926
Capital in excess of par			42,537,764				10,186,628
Accumulated net investment loss			(206,878	)			(26,482	)
Net increase in unrealized appreciation on investments			192,212				—
Net increase in unrealized appreciation on obligations under participation agreements			(52,572	)			—
Net assets		$	42,474,748			$	10,161,072
Net asset value per share		$	10.06			$	10.97

 
 
See notes to financial statements.

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Terra Income Fund 6, Inc.
 
Statements of Operations

		Years ended September 30,
		2016				2015				2014
Investment income
Interest income		$	3,003,645			$	65,341			$	—
Other fee income			13,054				1,481				—
Total investment income			3,016,699				66,822				—
Operating expenses
Interest expense from obligations under participation agreements			1,598,976				—				—
Amortization of deferred offering costs			1,312,811				383,182				—
Professional fees			981,038				378,192				—
Marketing expenses			876,877				596,865				—
Base management fees			552,011				30,058				—
Operating expense reimbursement to Adviser			318,550				17,753				—
Insurance expense			219,715				127,630				—
Directors’ fees			123,125				74,250				—
Incentive fees on capital gains(1)			27,928				—				—
General and administrative expenses			38,223				12,534				—
Organization expenses			—				130,464				32,676
Total operating expenses			6,049,254				1,750,928				32,676
Less: Expense reimbursement from Adviser			(576,755	)			(1,690,300	)			—
Net operating expenses			5,472,499				60,628				32,676
Net investment (loss) income			(2,455,800	)			6,194				(32,676	)
Net increase in unrealized appreciation on investments			192,212				—				—
Net increase in unrealized appreciation on obligations under participation agreements			(52,572	)			—				—
Net (decrease) increase in net assets resulting from operations		$	(2,316,160	)		$	6,194			$	(32,676	)
Per common share data(2):
Net investment (loss) income per share		$	(0.99	)		$	0.01				N/A
Net (decrease) increase in net assets resulting from operations per share		$	(0.93	)		$	0.01				N/A
Weighted average common shares outstanding(3)			2,478,624				462,038				N/A

 
 
See notes to financial statements.

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Terra Income Fund 6, Inc.
 
Statements of Changes in Net Assets

		Years ended September 30,
		2016				2015				2014
Operations
Net investment (loss) income		$	(2,455,800	)		$	6,194			$	(32,676	)
Net increase in unrealized appreciation on investments			192,212				—				—
Net increase in unrealized appreciation on obligations under participation agreements			(52,572	)			—				—
Net (decrease) increase in net assets resulting from operations			(2,316,160	)			6,194				(32,676	)
Shareholder distributions
Return of capital			(2,474,642	)			(125,140	)			—
Net decrease in net assets resulting from shareholder distributions			(2,474,642	)			(125,140	)			—
Capital share transactions
Issuance of common stock			39,878,132				11,234,309				125,000
Reinvestment of shareholder distributions			910,904				33,601				—
Selling commissions and dealer manager fees			(3,647,210	)			(968,547	)			—
Offering costs			(37,348	)			(111,669	)			—
Net increase in net assets resulting from capital share transactions			37,104,478				10,187,694				125,000
Net increase in net assets			32,313,676				10,068,748				92,324
Net assets, at beginning of year			10,161,072				92,324				—
Net assets, at end of year		$	42,474,748			$	10,161,072			$	92,324
Accumulated net investment loss		$	(206,878	)		$	(26,482	)		$	(32,676	)
Capital share activity
Shares outstanding, at beginning of year			926,357				11,111				—
Shares issued from subscriptions			3,219,293				912,416				11,111
Shares issued from reinvestment of shareholder distributions			76,708				2,830				—
Shares outstanding, at end of year			4,222,358				926,357				11,111

 
 
See notes to financial statements.

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Terra Income Fund 6, Inc.
 
Statements of Cash Flows

		Years ended September 30,
		2016				2015				2014
Cash flows from operating activities:
Net (decrease) increase in net assets resulting from operations		$	(2,316,160	)		$	6,194			$	(32,676	)
Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash used in operating activities:
Net increase in unrealized appreciation on investments			(192,212	)			—				—
Net increase in unrealized appreciation on obligations under participation agreements			52,572				—				—
Amortization of deferred offering costs			1,312,811				383,182				—
Amortization of discount on investments			(4,286	)			—				—
Paid-in-kind interest, net			(42,534	)			—				—
Purchases of investments			(26,299,670	)			(2,000,000	)			—
Proceeds from obligations under participation agreements			14,300,000				—				—
Changes in operating assets and liabilities:
Cash, restricted			(836,434	)			—				—
Deferred offering costs			(635,342	)			(848,940	)			(573,193	)
Prepaid expenses and other assets			(243,447	)			(31,404	)			—
Interest receivable			(258,424	)			(20,000	)			—
Due to Adviser, net			890,385				2,554				605,869
Interest reserve and other deposits held on investments			836,434				—				—
Accrued expenses			45,767				172,593				—
Interest payable from obligations under participation agreements			144,575				—				—
Directors' fees payable			5,625				—				—
Payable for unsettled stock subscriptions			(316,000	)			316,000				—
Other liabilities			120,269				17,336				—
Net cash used in operating activities			(13,436,071	)			(2,002,485	)			—
Cash flows from financing activities:
Issuance of common stock			39,878,132				11,234,309				125,000
Payments of selling commissions, dealer manager fees and distribution fees			(2,752,353	)			(904,819	)			—
Reimbursement of selling commissions and dealer manager fees			1,296,877				—				—
Payments of offering costs			(37,348	)			(111,669	)			—
Payments of shareholder distributions			(1,563,738	)			(91,539	)			—
Net cash provided by financing activities			36,821,570				10,126,282				125,000
Net increase in cash and cash equivalents			23,385,499				8,123,797				125,000
Cash and cash equivalents, at beginning of year			8,248,797				125,000				—
Cash and cash equivalents, at end of year		$	31,634,296			$	8,248,797			$	125,000
Supplemental disclosure of cash flow information:
Interest paid on obligations under participation agreements		$	1,246,367			$	—			$	—
Supplemental non-cash information:
Reinvestment of shareholder distributions		$	910,904			$	33,601			$	—

 
 
See notes to financial statements.

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Terra Income Fund 6, Inc.
 
Schedule of Investments
September 30, 2016

Portfolio Company(1)		Structure				Collateral Location				Property Type				Interest Rate				Acquisition Date				Maturity Date				Principal				Amortized Cost				Fair Value(2)				% of Net Assets(3)
Investments – non-controlled:
KOP Hotel XXXI Mezz LP.(4)(5)			Mezzanine loan				US – PA				Hotel				13.00	%			11/24/2015				12/06/2022			$	5,800,000			$	5,800,000			$	5,969,398				14.1	%
QPT 24th Street Mezz LLC(4)(5)(6)			Mezzanine loan				US – NY				Land				12.00% Current/ 2% PIK				12/15/2015				6/15/2017				15,250,567				15,250,567				15,250,567				35.9	%
Hertz Clinton One Mezzanine, LLC			Mezzanine loan				US – MS				Office				12.00	%			3/18/2016				1/1/2025				2,500,000				2,429,286				2,429,286				5.7	%
GAHC3 Lakeview IN Medical Plaza, LLC(7)			B-Note				US – IN				Office				11.60% + LIBOR				6/17/2016				1/21/2019				3,074,671				3,074,671				3,074,671				7.2	%
Total investments –  non-controlled																														$	26,554,524			$	26,723,922				62.9	%
Loans through participation interest – non-controlled:
TSG-Parcel 1, LLC(4)			Participation in First Mortgage	(8)			US – CA				Land				12.00	%			7/10/2015				1/10/2017			$	2,000,000			$	2,000,000			$	2,022,814				4.8	%
Total Loans through participation interest –  non-controlled																														$	2,000,000			$	2,022,814				4.8	%
Total Investments																														$	28,554,524			$	28,746,736				67.7	%

 
 
See notes to financial statements.

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Terra Income Fund 6, Inc.
 
Schedule of Investments
September 30, 2015

Portfolio Company(1)		Structure				Collateral Location				Property Type				Interest Rate				Acquisition Date				Maturity Date				Principal				Amortized Cost				Fair Value(2)				% of Net Assets(3)
Loans through participation interest – non-controlled:
TSG-Parcel 1, LLC(4)			Participation in First Mortgage	(5)			US – CA				Land				12.00	%			7/10/2015				7/10/2016			$	2,000,000			$	2,000,000			$	2,000,000				19.7	%
Total Loans through participation interest –  non-controlled																														$	2,000,000			$	2,000,000				19.7	%
Total Investments through participation interest –  non-controlled																														$	2,000,000			$	2,000,000				19.7	%

 
 
See notes to financial statements.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 1. Principal Business and Organization

Terra Income Fund 6, Inc. (the “Company”) was incorporated under the general corporation laws of the State of Maryland on May 15, 2013. On March 2, 2015, the Company filed a public registration statement on Form N-2 (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) to offer a minimum of 160,000 shares of common stock and a maximum of 80,000,000 shares of common stock in a continuous public offering (the “Offering”). The Company formally commenced operations on June 24, 2015, upon raising gross proceeds in excess of $2.0 million (the “Minimum Offering Requirement”) from sales of shares of its common stock in the Offering, including sales to persons who are affiliated with the Company or its adviser, Terra Income Advisors, LLC (“Terra Income Advisors”). Since commencing the Offering and through September 30, 2016, the Company has sold 4,142,820 shares of common stock, including shares purchased by Terra Capital Partners, LLC, the Company’s sponsor, and excluding shares sold through the distribution reinvestment plan (“DRIP”), in both an initial private placement and from the Offering, for gross proceeds of approximately $51.2 million. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be taxed for federal income tax purposes, and to qualify annually thereafter, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).The Company’s investment activities are externally managed by Terra Income Advisors, a private investment firm affiliated with the Company, pursuant to an investment advisory and administrative services agreement (the “Investment Advisory Agreement”), under the oversight of the Company’s board of directors (the “Board”), a majority of whom are independent directors. Terra Income Advisors is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (see Note 4).

The Company has retained Terra Capital Markets, LLC (“Terra Capital Markets”), an affiliate of Terra Income Advisors, to serve as the dealer manager of the Offering. As dealer manager, Terra Capital Markets is responsible for marketing the Company’s shares being offered pursuant to the Offering. The Company intends to file post-effective amendments to the Registration Statement that are subject to SEC review to allow it to continue the Offering for at least two years from the date of the effectiveness of the Registration Statement.

The Company’s primary investment objectives are to pay attractive and stable cash distributions and to preserve, protect and return capital contributions to stockholders. The Company’s investment strategy is to use substantially all of the proceeds of the Offering to originate and manage a diversified portfolio consisting of (i) commercial real estate loans to U.S. companies qualifying as “eligible portfolio companies” under the 1940 Act, including mezzanine loans, first and second lien mortgage loans, subordinated mortgage loans, bridge loans and other commercial real estate-related loans related to or secured by high-quality commercial real estate in the United States and (ii) preferred equity real estate investments in U.S. companies qualifying as “eligible portfolio companies” under the 1940 Act. The Company may also purchase select commercial real estate-related debt securities, such as commercial mortgage-backed securities or collateralized debt obligations; provided, however, that the Company will select all investments after considering its ability to maintain its qualification to be taxed as a RIC. The Company intends to either directly or through an affiliate, structure, underwrite and originate most of its investments, as it believes that doing so will provide it with the best opportunity to invest in loans that satisfy its standards, establish a direct relationship with the borrower and optimize the terms of its investments. The Company may hold its investments until their scheduled maturity dates or may sell them if able to command favorable terms for their disposition.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation:  The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Articles 6 or 10 of Regulation S-X. The Company is an investment company, as defined under

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies  – (continued)

U.S. GAAP, and applies accounting and reporting guidance in accordance with Financial Accounting Standards Board (“FASB”) ASC Top 946, Financial Services — Investment Companies.

Cash and Cash Equivalents:  The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents held at financial institutions, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”).

Restricted Cash:  Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments for the purpose of such borrowers making interest and property-related operating payments. There is a corresponding liability of the same amount on the statements of assets and liabilities called “Interest reserve and other deposits held on investments.”

Organization and Offering Expenses:  Organization expenses are expensed on the Company’s statements of operations. All offering costs incurred during the offering period are recorded as deferred charge and amortized over twelve months from the date the cost is incurred, with the exception of those costs that were incurred prior to the commencement of operations on June 24, 2015, which were amortized over a 12-month period from that date forward. The Company accrues all organization and offering expenses paid by Terra Income Advisors on behalf of the Company as the Company believes they are probable of repayment (see Note 4).

Investment Transactions and Investment Income (Expense):  The Company records investment transactions on the trade date. Realized gains or losses on dispositions of investments represent the difference between the amortized cost of the investment, based on the specific identification method, and the proceeds received from the sale or maturity (exclusive of any prepayment penalties). Realized gains and losses and changes in unrealized gains and losses are recognized in the statements of operations. Interest income is accrued based upon the outstanding principal amount and contractual terms of the debt instruments and preferred equity investments. Interest is accrued on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective investment using the effective yield method, and are included in interest income in the statements of operations. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premiums on investments. Loan origination fees are capitalized and the Company then amortizes such amounts using the effective interest method as interest income over the life of the investment. As prepayment(s) or payment(s), partial or full, occurs on an investment, prepayment and exit fee income, respectively, are recognized. All other income is recognized when earned.

The Company holds a debt investment in its portfolio that contains PIK interest provision. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis.

Participation Interests:  The Company follows the guidance in ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”), when accounting for loan participations. Such guidance requires participations interests meet certain criteria in order for the interest transaction to be recorded as a sale. Loan participations from the Company which do not qualify for sale treatment remain on the Company’s statements of assets and liabilities and the proceeds are recorded as obligations under participation agreements. For the investments which participation has been granted, the interest earned on the entire loan balance is recorded within “interest income” and the interest related to the participation interest is recorded within “interest expense from obligations under participation agreements” in the accompanying statements of operations. See “Obligations under Participation Agreements” in Note 3 for additional information.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies  – (continued)

Valuation of Investments:  The Company determines the value of its investments on a quarterly basis in accordance with fair value accounting guidance promulgated under U.S. GAAP, which establishes a three-tier hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. These tiers include:

Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices, generally, will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires subjective judgment and consideration of factors specific to the investment. The fair values of the Company’s investments are determined in good faith by the Board pursuant to the Company’s valuation policy and consistently applied valuation process. It is expected that the Company’s investments will primarily be classified as Level 3 investments.

Distribution Fee Payable:  The Company pays Terra Capital Markets a total distribution fee of 4.5% of the gross proceeds from the sale of shares in the Offering, excluding shares sold through the DRIP. The distribution fee is recorded as a liability on the date of shareholder admittance with a corresponding reduction to equity and is payable annually at a rate of 1.125% of gross proceeds with respect to each share sold in the Offering on the first, second, third and fourth anniversaries of the month of purchase. The Company will no longer incur the distribution fee after the Offering is terminated or sooner if total underwriting compensation incurred in respect of the Offering reaches 10.0% of the gross offering proceeds.

Stockholder Dividends and Distributions:  Dividends and distributions to stockholders, which are determined in accordance with federal income tax regulations, are recorded on the record date. The amount to be paid out as a dividend or distribution is approved by the Board. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually. The Company adopted an “opt in” distribution reinvestment plan pursuant to which stockholders may elect to have the full amount of stockholders cash distributions reinvested in additional shares of common stock. Participants in the DRIP are free to elect to participate or terminate participation in the plan within a reasonable time as specified in the plan. For stockholders who have opted in to the DRIP, they will have their cash distributions reinvested in additional shares of common stock, rather than receiving the cash distributions. The Company expects to coordinate distribution payment dates so that the same price that is used for the semimonthly closing date immediately

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies  – (continued)

following such distribution payment date will be used to calculate the purchase price for purchasers under the DRIP. In such case, a stockholder’s reinvested distributions will be used to purchase shares at a price equal to 95% of the price that shares are sold in the offering at the semi-monthly closing immediately following the distribution payment date and such price may represent a premium to net asset value (“NAV”) per share.

Incentive Fee on Capital Gains:  Pursuant to the terms of the Investment Advisory Agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement). This fee equals 20.0% of the Company’s incentive fee on capital gains, which equals the realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, the Company accrues (but not pay) for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period. While the Investment Advisory Agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute of Certified Public Accountants Technical Practice Aid for investment companies, the Company accrues for this incentive fee to include unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to Terra Income Advisors if the Company’s entire portfolio were liquidated at its fair value as of the balance sheet date even though Terra Income Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Income Taxes:  The Company has elected to operate so as to qualify to be taxed as a RIC as defined under Subchapter M of the Code. Generally, a RIC is not required to pay corporate-level federal income tax on income and gains distributed to stockholders, provided that it distributes at least 90.0% of “investment company taxable income,” as defined in the Code, each year and meets specified source-of-income and asset diversification requirements. Dividends paid up to one year after the current tax year can be carried back to the prior tax year for determining the dividends paid in such tax year. The Company intends to distribute sufficient dividends to maintain its RIC status each year. The Company will also be subject to nondeductible federal excise taxes of 4.0% on undistributed income if it does not distribute an amount at least equal to the sum of (i) 98.0% of its ordinary income for the calendar year; (ii) 98.2% of its capital gain net income for the one-year period ending on October 31 of the calendar year; and (iii) any ordinary income and capital gain net income for the preceding year that were not distributed during such year and on which it paid no federal income tax.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes, nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its statements of operations. For the years ended September 30, 2016, 2015 and 2014, the Company did not incur any interest or penalties. Although the Company files federal and state tax returns, its major tax jurisdiction is federal. The Company’s inception-to-date federal tax years remain subject to examination by the Internal Revenue Service and the state department of revenue.

Use of Estimates:  The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of income, expenses and gains and losses during the reporting period. Actual results could differ from those estimates, and those differences could be material.

The financial statements include investments at fair value of approximately $28.7 million and $2.0 million at September 30, 2016 and 2015, respectively, and obligations under participation agreements at fair value of approximately $14.6 million at September 30, 2016. The Company did not have any obligations

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies  – (continued)

under participation agreements at September 30, 2015. These fair values have been determined in good faith by the Board. Because of the inherent uncertainty of valuation, the determined values may differ significantly from the values that would have been used had a ready market existed for the investments and obligations under participation agreements, and the differences could be material.

Reclassification of Prior Year Presentation:  Certain prior year amounts have been reclassified to conform to the current period presentation. For the year ended September 30, 2016, the Company concluded that it was appropriate to classify shareholder distributions as a deduction from capital in excess of par. Previously, such shareholder distributions were reported as a reduction of accumulated net investment loss. This reclassification does not materially affect previously reported cash flows from operations or from financing activities in the statements of cash flows, and had no effect on the previously reported statements of operations. Approximately $0.1 million of shareholder distributions were reclassified as of September 30, 2015. Additionally, the Company determined that it has the right to offset amounts due from and due to Adviser. As a result, the Company reclassified approximately $0.9 million from Due from Adviser to Due to Adviser, net on the statement of assets and liabilities as of September 30, 2015 (See “Due to/Due from Adviser” in Note 4). This reclassification has no impact on the previously reported statement of operations, statement of changes in net assets and statement of cash flows.

Recent Accounting Pronouncements:  In August 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 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. The Company elected to early adopt ASU 2014-15 beginning October 1, 2015. The adoption of ASU 2014-15 did not have a material impact on its financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (ASC Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 significantly changes the consolidation analysis required under U.S. GAAP and ends the deferral granted to investment companies from applying the variable interest entity guidance. ASU 2015-02 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015 and early adoption is permitted. The Company elected to early adopt ASU 2015-02 beginning October 1, 2015. The adoption of ASU 2015-02 did not have a material impact on its financial statements and disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. ASU 2015-03 is effective for fiscal years that begin after December 15, 2015 and early adoption is permitted. The Company elected to early adopt ASU 2015-03 beginning October 1, 2015. The adoption of ASU 2015-03 did not have a material impact on its financial statements and disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (i) the classification and measurement of investments in

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 2. Summary of Significant Accounting Policies  – (continued)

equity securities and (ii) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. Management is currently evaluating the impact these changes will have on the Company’s financial statements and disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB’s Emerging Issues Task Force (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. Management is currently evaluating the impact these changes will have on the Company’s financial statements and disclosures.

Note 3. Investments

The following tables show the composition of the investment portfolio, at amortized cost and fair value at September 30, 2016 and 2015, respectively (with corresponding percentage of total portfolio investments):

		September 30, 2016
		Investments at Amortized Cost				Percentage of Amortized Cost				Investments at Fair Value				Percentage of Fair Value
Loans(1)		$	26,554,524				93.0	%		$	26,723,922				93.0	%
Loan through participation interest (Note 4)			2,000,000				7.0	%			2,022,814				7.0	%
Total		$	28,554,524				100.0	%		$	28,746,736				100.0	%

		September 30, 2015
		Investments at Amortized Cost				Percentage of Amortized Cost				Investments at Fair Value				Percentage of Fair Value
Loan through participation interest (Note 4)		$	2,000,000				100.0	%		$	2,000,000				100.0	%
Total		$	2,000,000				100.0	%		$	2,000,000				100.0	%

Obligations under Participation Agreements

The Company has elected the fair value option under ASC Topic 825 — Financial Instruments relating to accounting for debt obligations at their fair value for its obligations under participation agreements which arose due to partial loan sales which did not meet the criteria for sale treatment under ASC Topic 860. The Company employs the same yield approach valuation methodology used for the real estate-related loan investments on the Company’s obligations under participation agreements. As of September 30, 2016, obligations under participation agreements at fair value totaled approximately $14.6 million and the fair value of the loans that are associated with these obligations under participation agreements was approximately $21.2 million (See “Participation Agreements” in Note 4). As of September 30, 2015, the Company did not have any obligations under participation agreements. For the year ended September 30, 2016, there were no repayments on obligations under participation agreements. The weighted average interest rate on the obligations under participation agreements was approximately 13.9% as of September 30, 2016.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 3. Investments  – (continued)

Significant Risk Factors

In the normal course of business, the Company enters into transactions in various financial instruments. The Company’s financial instruments are subject to, but are not limited to, the following risks:

Market Risk

The Company’s investments are highly illiquid and there is no assurance that the Company will achieve its investment objectives, including targeted returns. Due to the illiquidity of the investments, valuation of the investments may be difficult, as there generally will be no established markets for these investments. As the Company’s investments are carried at fair value with fair value changes recognized in the statements of operations, all changes in market conditions will directly affect the Company’s net asset value.

Credit Risk

Credit risk represents the potential loss that the Company would incur if the borrowers failed to perform pursuant to the terms of their obligations to the Company. The Company minimizes its exposure to credit risk by limiting exposure to any one individual borrower and any one asset class. Additionally, the Company employs an asset management approach and monitors the portfolio of investments, through, at a minimum, quarterly financial review of property performance including net operating income, loan-to-value, debt service coverage ratio (“DSCR”) and the debt yield. The Company also requires certain borrowers to establish a cash reserve, as a form of additional collateral, for the purpose of providing for future interest or property-related operating payments.

Mezzanine loans and preferred equity investments are subordinate to senior mortgage loans and, therefore, involve a higher degree of risk. In the event of a default, mezzanine loans and preferred equity investments will be satisfied only after the senior lender’s investment is fully recovered. As a result, in the event of a default, the Company may not recover any or all of its investment.

The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the FDIC.

Concentration Risk

The Company holds real estate related investments. Thus, the investment portfolio of the Company may be subject to a more rapid change in value than would be the case if the Company were required to maintain a wide diversification among industries, companies and types of investments. The result of such concentration in real estate assets is that a loss in such investments could materially reduce the Company’s capital.

Liquidity Risk

Liquidity risk represents the possibility that the Company may not be able to sell its positions at a reasonable price in times of low trading volume, high volatility and financial stress.

Interest Rate Risk

Interest rate risk represents the effect from a change in interest rates, which could result in an adverse change in the fair value of the Company’s interest-bearing financial instruments.

Prepayment Risk

Prepayments can either positively or adversely affect the yields on investments. Prepayments on debt instruments, where permitted under the debt documents, are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond the Company’s control, and consequently, such prepayment rates cannot be predicted with certainty. If the Company does not collect a prepayment fee in connection with a prepayment or is unable to invest the proceeds of such prepayments received, the yield on the portfolio will decline. In addition, the Company may acquire assets at a discount or premium and if the asset does not repay when expected, the anticipated yield may be impacted. Under certain interest rate and prepayment scenarios the Company may fail to recoup fully its cost of acquisition of certain investments.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 3. Investments  – (continued)

Use of Leverage

As part of the Company’s investment strategy, the Company may borrow and utilize leverage; however, the Company currently does not utilize leverage in connection with originating or acquiring real estate related loans. The Company may do so in the future if Terra Income Advisors determines that utilizing leverage is in the best interest of the Company’s stockholders. While borrowing and leverage present opportunities for increasing total return, they may have the effect of potentially creating or increasing losses. For purposes of calculating the asset coverage ratio per unit, the Company considers the obligations under the participation agreements to be senior security. As of September 30, 2016, the asset coverage per unit was $3,917. Asset coverage per unit is the ratio of the carrying value of the Company’s total assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

Valuation Methodology

Market quotations are not readily available for the Company’s real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, and therefore these investments are valued utilizing a yield approach, i.e. a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield. In following this methodology, investments are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of the Company’s investments, relevant factors, including available current market data on applicable yields of comparable debt/preferred equity instruments, market credit spreads and yield curves, the investment’s yield, covenants of the investment, including prepayment provisions, the portfolio company’s ability to make payments, its net operating income, DSCR, the nature, quality, and realizable value of any collateral (and loan-to-value ratio), the forces that influence the local markets in which the asset (the collateral) is purchased and sold, such as capitalization rates, occupancy rates, rental rates, replacement costs and the anticipated duration of each real estate-related loan investment.

These valuation techniques are applied in a consistent and verifiable manner to all investments that are categorized within Level 3 of the fair value hierarchy and Terra Income Advisors provides the valuation committee of the Board (which is made up exclusively of independent directors) with portfolio security valuations that are based on this discounted cash flow methodology. Valuations are prepared quarterly, or more frequently as needed, with each asset in the portfolio subject to a valuation prepared by a third-party valuation service at a minimum of once during every 12-month period. The valuation committee reviews the preliminary valuation with Terra Income Advisors and, together with an independent valuation firm, if applicable, responds and supplements the preliminary valuation to reflect any comments provided by the valuation committee. The Board discusses valuations and determines the fair value of each investment in the portfolio in good faith based on various statistical and other factors, including the input and recommendation provided by Terra Income Advisors, the valuation committee and any third-party valuation firm, if applicable.

The following tables present fair value measurements of investments, by major class, as of September 30, 2016 and 2015, according to the fair value hierarchy:

		September 30, 2016
		Fair Value Measurements
		Level 1				Level 2				Level 3				Total
Investments:
Loans		$	—			$	—			$	26,723,922			$	26,723,922
Loan through participation interest			—				—				2,022,814				2,022,814
Total Investments		$	—			$	—			$	28,746,736			$	28,746,736
Obligations under Participation Agreements		$	—			$	—			$	14,560,606			$	14,560,606

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 3. Investments  – (continued)

		September 30, 2015
		Fair Value Measurements
		Level 1				Level 2				Level 3				Total
Loan through participation interest		$	—			$	—			$	2,000,000			$	2,000,000
Total		$	—			$	—			$	2,000,000			$	2,000,000

Changes in Level 3 investments for the years ended September 30, 2016 and 2015 were as follows:

		Year Ended September 30, 2016
		Loans				Loan Through Participation				Total Investments				Obligations under Participation Agreements
Balance as of October 1, 2015		$	—			$	2,000,000			$	2,000,000			$	—
Purchases			26,299,670				—				26,299,670				—
Net increase in unrealized appreciation on investments			169,398				22,814				192,212				—
PIK interest income			250,568				—				250,568				—
Amortization of discount on investments			4,286				—				4,286				—
Net increase in unrealized appreciation on obligations under participation agreements			—				—				—				52,572
Proceeds from obligations under participation agreements			—				—				—				14,300,000
PIK interest expense			—				—				—				208,034
Balance as of September 30, 2016		$	26,723,922			$	2,022,814			$	28,746,736			$	14,560,606
Unrealized appreciation for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net increase in unrealized appreciation on investments and obligations under participation agreements		$	169,398			$	22,814			$	192,212			$	52,572

		Year Ended September 30, 2015
		Loan Through Participation				Total Investments
Balance as of October 1, 2014		$	—			$	—
Purchase of participation interest and other adjustments to cost			2,000,000				2,000,000
Balance as of September 30, 2015		$	2,000,000			$	2,000,000
Unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized appreciation (depreciation) on investments		$	—			$	—

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

Transfers between levels, if any, are recognized at the beginning of the period in which transfers occur. For the years ended September 30, 2016 and 2015, there were no transfers.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 3. Investments  – (continued)

Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used by the Company to value the Level 3 investments as of September 30, 2016 and 2015. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

September 30, 2016
		Fair Value				Primary Valuation Technique				Unobservable Input				Range								Weighted Average
Asset Category														Minimum				Maximum
Assets:
Loans		$	26,723,922				Discounted cash flow				Discount rate				10.29	%			13.82	%			12.88	%
Loan through participation interest		$	2,022,814				Discounted cash flow				Discount rate				9.09	%			9.09	%			9.09	%
Total Level 3 Assets		$	28,746,736
Liabilities:
Obligations under Participation Agreements		$	14,560,606				Discounted cash flow				Discount rate				11.90	%			13.82	%			13.58	%

September 30, 2015
		Fair Value				Primary Valuation Technique				Unobservable Input				Range								Weighted Average
Asset Category														Minimum				Maximum
Loan through participation interest		$	2,000,000				Discounted cash flow				Discount rate				8.67	%			8.67	%			8.67	%

Note 4. Related Party Transactions

The Company entered into various agreements with Terra Income Advisors whereby the Company pays and reimburses Terra Income Advisors for certain fees and expenses, and Terra Income Advisor reimburses the Company for excess operating expenses. Additionally, the Company pays Terra Capital Markets certain fees in connection with its Offering. The following table presents a summary of such fees and reimbursements in accordance with the terms of the related agreements:

		Years ended September 30,
		2016				2015
Amounts Included in the Statements of Operations
Base management fees		$	552,011			$	30,058
Incentive fees on capital gains(1)			27,928				—
Operating expense reimbursement to Adviser(2)			318,550				17,753
Expense reimbursement from Adviser			(576,755	)			(1,690,300	)
Commissions, dealer manager and distributions fee incurred
Commissions, dealer manager and distribution fees(3)		$	3,647,210			$	968,547

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 4. Related Party Transactions  – (continued)

Due to/Due from Adviser

The Company determined that it has the right of offset on the amounts due to and due from Terra Income Advisor under the guidance in ASC Topic 210 — Balance Sheet. As such, the net amount is presented as Due to Adviser, net on the statements of assets and liabilities. The following table presents a summary of Due to Adviser, net as of September 30, 2016 and 2015:

		September 30, 2016				September 30, 2015
Due to Adviser:
Organization and offering costs		$	2,051,479			$	1,538,661
Reimbursable costs – marketing and other operating expense			863,012				712,946
Base management fee and expense reimbursement payable			823,444				47,116
Incentive fees on capital gains			27,928				—
			3,765,863				2,298,723
Due from Adviser:
Expense support payments			2,267,055				1,690,300
Due to Adviser, net		$	1,498,808			$	608,423

Management and Incentive Fee Compensation to Adviser

On April 20, 2015, the Company entered into the Investment Advisory Agreement with Terra Income Advisors, a subsidiary of the Terra Capital Partners, the Company’s sponsor. Terra Income Advisors is responsible for the Company’s day-to-day operations. Pursuant to the Investment Advisory Agreement, Terra Income Advisors is paid for its services in two components — a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 2.0% of the Company’s average gross assets. The base management fee is payable quarterly in arrears and calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters.

The incentive fee consists of two parts. The first part, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based upon the Company’s “pre-incentive fee net investment income” for the immediately preceding quarter. The subordinated incentive fee on income is subject to a quarterly hurdle rate, expressed as a rate of return on adjusted capital at the beginning of the most recently completed calendar quarter, of 2.0% (8.0% annualized), subject to a “catch-up” feature. For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses reimbursed to Terra Income Advisors under the Investment Advisory Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The calculation of the subordinated incentive fee on income for each quarter is as follows:

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 4. Related Party Transactions  – (continued)

The second part of the incentive fee, which is referred to as the incentive fee on capital gains, is an incentive fee on capital gains earned on liquidated investments from the portfolio and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). This fee equals 20% of the Company’s incentive fee on capital gains, which equals the realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, the Company accrues (but does not pay) for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

The services provided by Terra Income Advisors include, but are not limited to, accounting and administrative services. The Company is expected to reimburse Terra Income Advisors for the costs incurred by Terra Income Advisors to provide these services.

Operating Expenses

The Company reimburses Terra Income Advisors for operating expenses incurred in connection with administrative services provided to the Company, including compensation to administrative personnel. The Company does not reimburse Terra Income Advisors for personnel costs in connection with services for which Terra Income Advisors receives a separate fee. In addition, the Company does not reimburse the Terra Income Advisors for (i) rent or depreciation, capital equipment or other costs of its own administrative items, or (ii) salaries, fringe benefits, travel expenses and other administrative items incurred or allocated to any controlling person of Terra Income Advisors.

Organization and Offering Expenses

For the year ended September 30, 2016, Terra Income Advisors did not incur organization costs on behalf of the Company. For the year ended September 30, 2015, Terra Income Advisors incurred organization costs of approximately $0.1 million on behalf of the Company.

As of September 30, 2016 and September 30, 2015, Terra Income Advisors incurred cumulative organization costs of approximately $0.2 million and $0.2 million, respectively, and cumulative offering costs of approximately $2.2 million and $1.5 million, respectively, on behalf of the Company. Offering expenses consist of costs paid by Terra Income Advisors that are directly related to the registration and offering of the Company’s shares, including registration fees, legal fees and printing costs. Organization costs include those expenses paid by Terra Income Advisors for the legal organization, drafting and filing of the Company’s charter and other governance documents and include, but are not limited to, legal, accounting and filing fees.

Upon meeting the Minimum Offering Requirement, Terra Income Advisors is responsible for the payment of the Company’s cumulative organization and offering expenses to the extent such expenses exceed 1.5% of the gross proceeds from the Offering, without recourse against or reimbursement by the Company. As a result,

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 4. Related Party Transactions  – (continued)

Terra Income Advisors will bear all organization and offering expenses in excess of 1.5% of the gross proceeds from the Offering. Through September 30, 2016, the Company believes that it is highly likely that it will raise sufficient funds to reimburse Terra Income Advisors in full for all cumulative organization and offering expenses incurred to date and has accrued those expenses and costs. As of September 30, 2016 and September 30, 2015, the unreimbursed amount in excess of the 1.5% threshold was approximately $1.6 million and $1.5 million, respectively, and is included in Due to Adviser, net on the statements of assets and liabilities. For the years ended September 30, 2016 and 2015, the Company made reimbursement payments of approximately $0.1 million and $0.2 million, respectively, to Terra Income Advisors for offering costs incurred on behalf of the Company.

Dealer Manager Agreement

On April 20, 2015, the Company entered into a dealer manager agreement (the “Dealer Manager Agreement”) with Terra Capital Markets, an affiliate of Terra Income Advisors, to serve as the dealer manager of the Offering. As dealer manager, Terra Capital Markets is responsible for marketing the Company’s shares being offered pursuant to the Offering. In this role, it manages a group of selling dealers, including other unaffiliated broker-dealers who enter into Selected Dealer Arrangements with Terra Capital Markets. Terra Capital Markets received selling commissions of 6.0% of gross proceeds from the Offering, dealer manager fees of up to 3.0% of gross proceeds from the Offering, and broker-dealer fees of up to 1.0% of gross proceeds from the Offering for reimbursement of marketing and expenses, in connection with the sale of shares of common stock in the Offering, all or a portion of which may be re-allowed to selected broker-dealers.

On April 19, 2016, the Board approved an amended and restated dealer manager agreement (the “Amended Dealer Manager Agreement”), which the Company adopted on April 27, 2016. Under the terms of the Amended Dealer Manager Agreement, Terra Capital Markets receives selling commissions of 3.0% of gross proceeds from the Offering, dealer manager fees of up to 1.5% of the gross proceeds from the Offering, and broker-dealer fees of up to 1.0% of gross proceeds from the Offering for reimbursement of marketing and expenses, in connection with the sale of shares of the Company’s common stock in the Offering, all or a portion of which may be re-allowed to selected broker-dealers. In addition, Terra Capital Markets receives a distribution fee at an annual rate of 1.125% of gross offering proceeds, excluding shares sold through the DRIP, all or a portion of which may be re-allowed to selected broker-dealers for services performed in connection with the distribution of the Company’s shares. The distribution fee is payable annually with respect to each share sold in the primary offering on the first, second, third and fourth anniversaries of the month of purchase. In connection with the adoption of the Amended Dealer Manager Agreement, Terra Capital Markets reimbursed the Company approximately $1.3 million for commissions and dealer manager fees the Company paid related to the shares sold on and prior to February 20, 2016, the last shareholder admittance date prior to the adoption of the Amended Dealer Manager Agreement. The reimbursement amount will be paid back to Terra Capital Markets on the first, second, third and fourth anniversaries of the months of purchase. As of September 30, 2016, total distribution fee payable was approximately $2.2 million, as reflected on the statements of assets and liabilities.

Expense Support Agreement

On June 30, 2015, the Company entered into an expense support agreement (the “Expense Support Agreement”) with Terra Income Advisors, whereby Terra Income Advisors may pay up to 100% of the Company’s costs and expenses, including all fees payable to Terra Income Advisors pursuant to the Investment Advisory Agreement from inception until the Company and Terra Income Advisors mutually agree otherwise. This payment (the “Expense Support Payment”) for any month shall be paid by Terra Income Advisors to the Company in any combination of cash or other immediately available funds, and/or offsets against amounts due from the Company to Terra Income Advisors. The purpose of the Expense Support Payment is to reduce offering and operating expenses until the Company has achieved economies of scale

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 4. Related Party Transactions  – (continued)

sufficient to ensure that the Company is able to bear a reasonable level of expense in relation to investment income. Operating expenses subject to the Expense Support Agreement include expenses as defined by U.S. GAAP, including, without limitation, fees payable to Terra Income Advisors and interest on indebtedness for such period, if any.

Pursuant to the terms of the Expense Support Agreement, the Company has agreed to reimburse Terra Income Advisors for each Expense Support Payment within three years after such Expense Support Payment is made by Terra Income Advisors. Reimbursement shall be made as promptly as possible on a date mutually agreed to by the Company and Terra Income Advisors provided that (i) the operating expense ratio, defined as operating expenses excluding organization and offering expenses, base management fee, incentive fee and any interest expense attributable to indebtedness by the Company (“Net Operating Expenses”) expressed as a percentage of the Company’s net assets on the relevant measurement date, as of such Reimbursement Date is equal to or less than the operating expense ratio as of the Expense Support Payment date attributable to such specified Expense Support Payment, (ii) the annualized distribution rate as of such Reimbursement Date is equal to or greater than the annualized distribution rate as of the Expense Support Payment date attributable to such specified Expense Support Payment; (iii) such Reimbursement Date is not later than three years following such specified Expense Support Payment date; and (iv) the Expense Support Payment does not cause the Company’s Net Operating Expenses to exceed 1.5% of the Company’s net assets attributable to common shares, after taking such reimbursement into account. Terra Income Advisors is entitled to reimbursement of all previously unreimbursed Expense Support Payments in the event of termination of the Expense Support Agreement.

The following table provides information regarding the expenses that the parties to the agreement determined would be incurred by Terra Income Advisors pursuant to the Expense Support Agreement:

Three months ended		Amount of Expense Reimbursement Payment				Annualized Operating Expense Ratio as of the Date of Expense Reimbursement Payment				Annualized Rate of Distributions Per Share(1)				Reimbursement Eligibility Expiration
June 30, 2015		$	515,813				24.53	%			8.00	%			June 30, 2018
September 30, 2015			1,174,487				66.63	%			8.00	%			September 30, 2018
December 31, 2015(2)			576,755				15.60	%			8.00	%			November 30, 2018

Participation Agreements

The Company may enter into participation agreements with related parties, primarily other affiliated funds of Terra Income Advisors. The purpose of the participation agreements is to allow the Company and an affiliate to originate a specified investment when, individually, the Company does not have the liquidity to do so or to achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other participants or it may be a participant to an investment held by another entity.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 4. Related Party Transactions  – (continued)

ASC 860, Transfers and Servicing, establishes accounting and reporting standards for transfers of financial assets. ASC 860-10 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has determined that the participation agreements it enters into are accounted for as secured borrowings under ASC 860 (see “Participation Interests” in Note 2 and “Obligations under Participation Agreements” in Note 3).

Participation interest purchased by the Company:  As of September 30, 2016 and 2015, the Company held an 11.11% participating interest (or $2.0 million face value) in a loan to TSG-Parcel 1, LLC. This investment is held in the name of Terra Property Trust, Inc., but the Company’s rights and obligations, including interest income and other income (e.g., exit fee and prepayment income) and related fees/expenses are based upon its respective pro rata participation interest in such investment, as specified in the respective Participation Agreement (the “PA”). The Company’s share of the investment is repayable only from the proceeds received from the related borrower/issuer of the investment, and therefore the Company is also subject to the credit risk (i.e., risk of default by the underlying borrower/issuer).

Pursuant to the PA, the affiliated fund receives and allocates the interest income and other related investment incomes in respect of the investment to the Company. The Company pays related expenses (i.e., the base management fee) directly to Terra Income Advisors.

Transfers of participation interests by the Company:  The following table summarizes the investments that were subject to PAs with investment partnerships affiliated with Terra Income Advisors as of September 30, 2016:

		Principal				Fair Value				Transfers treated as obligations under participation agreements
										% Transferred				Principal				Fair Value
KOP Hotel XXXI Mezz, LP		$	5,800,000			$	5,969,398				31.0	%		$	1,800,000			$	1,852,572
QPT 24th Street Mezz, LLC(1)			15,250,568				15,250,567				83.3	%			12,708,034				12,708,034
Total		$	21,050,568			$	21,219,965							$	14,508,034			$	14,560,606

As of September 30, 2015, the Company did not have transfers of participation interests with affiliated entities.

As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, the Company may be prohibited under the 1940 Act from knowingly participating in certain transactions with its affiliates without the prior approval of its Board who are not interested persons and, in some cases, prior approval by the SEC. Specifically, the Company generally is not permitted to co-invest with certain entities affiliated with Terra Income Advisors in transactions originated by Terra Income Advisors or its affiliates unless the Company obtains an exemptive order from the SEC or co-invest alongside Terra Income Advisors or its respective affiliates in accordance with existing regulatory guidance and the allocation policies of Terra Income Advisors and its affiliates, as applicable. However, the Company is permitted to, and may, co-invest in syndicated deals and secondary loan market transactions where price is the only negotiated point. The SEC has granted the Company exemptive relief permitting it, subject to satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of Terra Income Advisors, including the Terra Income Funds, Terra Property Trust, and any future BDC or closed-end management investment company that is registered under the 1940 Act and is advised by Terra Income Advisors or its affiliated investment advisers (the “Co-Investment Affiliates”). However, the Company will be prohibited from engaging in certain transactions with its affiliates even under the terms of this exemptive

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 4. Related Party Transactions  – (continued)

order. The Company believes this relief will not only enhance its ability to further its investment objectives and strategy, but may also increase favorable investment opportunities for the Company, in part by allowing the Company to participate in larger investments, together with its Co-Investment Affiliates, than would be available to the Company if it had not obtained such relief.

Note 5. Commitments and Contingencies

In the ordinary course of business, the Company may enter into future funding commitments. As of September 30, 2016, the Company had approximately $0.4 million of unfunded commitments. The Company maintains sufficient cash on hand to fund such unfunded commitments. As of September 30, 2015, the Company did not have any unfunded commitments.

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of Terra Income Advisors has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations.

See “Note 4. Related Party Transactions”, for a discussion of the Company’s commitments to Terra Income Advisors and its affiliates.

Note 6. Income Taxes

The Company has elected to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, is not subject to federal income tax on the portion of taxable income distributed to stockholders.

To qualify as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90% of its investment company taxable income, as defined by the Code. Because federal income tax regulations differ from U.S. GAAP, distributions in accordance with tax regulations may differ from net investment for financial reporting purposes. Differences may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

Taxable income generally differs from net increase (decrease) in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses and generally excludes unrealized appreciation (depreciation) on investments as investment gains and losses are not included in taxable income until they are realized.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 6. Income Taxes  – (continued)

The following table reconciles net decrease in net assets resulting from operations to taxable loss:

		Years ended September 30,
		2016				2015				2014
Net investment (loss) income		$	(2,316,160	)		$	6,194			$	(32,676	)
Net increase in unrealized appreciation on investments			(192,212	)			—				—
Net increase in unrealized appreciation on obligations under participation agreements			52,572				—				—
Amortization of deferred offering costs			1,312,811				383,182				—
Expense reimbursement from Adviser			(576,755	)			(1,690,300	)			—
Incentive fees on capital gains			27,928				—				—
Other temporary differences			3,045				143,229				32,676
Total taxable loss		$	(1,688,771	)		$	(1,157,695	)		$	—

The following table reflects, for tax purposes, the estimated sources of the cash distributions that the Company has paid on its common stock during the years ended September 30, 2016, 2015 and 2014:

Source of Distribution		Years ended September 30,
		2016								2015								2014
		Distribution Amount(1)				Percentage				Distribution Amount				Percentage				Distribution Amount				Percentage
Return of capital		$	2,474,642				100.0	%		$	125,140				100.0	%		$	—				—	%
Ordinary income			—				—				—				—				—				—
Distributions on a tax basis:		$	2,474,642				100.0	%		$	125,140				100.0	%		$	—				—	%

The Company makes certain adjustments to the classification of stockholders’ equity as a result of permanent book-to-tax differences, which include disallowed net operating loss carryforwards, amortization of deferred offering expenses and expense reimbursement from Adviser. To the extent these differences are permanent, they are charged or credited to capital in excess of par or accumulated net investment loss, as appropriate.

For the year ended September 31, 2016, permanent differences were related to approximately $2.8 million of disallowed net operating loss carryforwards, $1.7 million of amortization of deferred offering expenses and $2.3 million of expense reimbursement from Adviser.

As of September 30, 2016, the Company did not have differences between book basis and tax basis cost of investments.

Note 7. Directors’ Fees

The Company’s directors who do not serve in an executive officer capacity for the Company or Terra Income Advisors are entitled to receive annual cash retainer fees, fees for attending Board and committee meetings and annual fees for serving as a committee chairperson. These directors receive an annual fee of $20,000, plus $2,500 for each board meeting attended in person, $1,000 for each Board meeting attended via teleconference and $1,000 for each committee meeting attended. In addition, the chairman of the audit committee receives an annual fee of $7,500 and the chairman of each of the nominating and corporate

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 7. Directors’ Fees  – (continued)

governance and the valuation committees, and any other committee, receives an annual fee of $2,500 for their additional services. For the years ended September 30, 2016 and 2015, the Company recorded approximately $0.12 million and $0.07 million for directors’ fees expense, respectively.

The Company will also reimburse each of the above directors for all reasonable and authorized business expenses in accordance with the Company policies as in effect from time to time, including reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting and each committee meeting not held concurrently with a board meeting.

The Company does not pay compensation to the directors who also serve in an executive officer capacity for the Company or Terra Income Advisors.

Note 8. Capital

The Company entered into a stock purchase agreement with Terra Capital Partners, the Company’s sponsor. On September 19, 2014, pursuant to a private placement, Terra Capital Partners contributed cash consideration of $125,000 to purchase approximately 11,111 shares of common stock at $11.25 per share. On October 20, 2014, pursuant to a private placement, Terra Capital Partners contributed an additional $50,000 in cash to purchase approximately 4,445 additional shares of common stock at $11.25 per share. As of September 30, 2016, the Company had 4,222,358 shares of common stock outstanding.

On February 25, 2015, the Board determined to change the initial offering price from $10.00 per share to $12.50 per share. As a result, on February 26, 2015, the Company effected a reverse stock split to account for the change in the Company’s offering price since the initial investment by Terra Capital Partners. As such, all share references reflect this reverse stock split.

On May 1, 2015, Terra Capital Partners contributed cash of $275,000 to purchase approximately 24,444 additional shares from the Offering at a per share price of $11.25, which price represents the public offering price of $12.50 per share, net of selling commissions, broker-dealer fees and dealer manager fees. This contribution, in addition to the initial capital contributions, fulfilled Terra Capital Partners’ commitment to contribute total seed capitalization of $450,000.

On November 11, 2015, and effective December 1, 2015, the Board approved a change to a certain aspect of the Company’s share pricing policy such that, once it raised gross offering proceeds in excess of $125 million, or prior to then in the sole discretion of the Board, in the event of a material decline in NAV per share, which the Company’s considers to be a 2.5% decrease below the then-current net offering price, the Company will reduce the offering price to establish a new net offering price not more than 2.5% above the NAV per share.

Note 9. Net Increase in Net Assets

Earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of September 30, 2016 and 2015, there were no dilutive shares.

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 9. Net Increase in Net Assets  – (continued)

The following information sets forth the computation of the weighted average net increase in net assets per share from operations for the years ended September 30, 2016, 2015 and 2014:

Basic		Years ended September 30,
		2016				2015				2014
Net (decrease) increase in net assets resulting from operations		$	(2,316,160	)		$	6,194			$	(32,676	)
Weighted average common shares outstanding(1)			2,478,624				462,038				N/A
Net (decrease) increase in net assets per share resulting from operations		$	(0.93	)		$	0.01			$	N/A

Note 10. Distributions

Dividends from net investment income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which differ from U.S. GAAP.

The following table reflects the Company’s distributions for the years ended September 30, 2016 and 2015 (there were no distributions in 2014):

Record Date		Payment Date				Per Share Per Day				Distributions Paid in Cash				Distributions Paid through the DRIP				Total Distributions Paid/Accrued
October 20, 2015			October 31, 2015			$	0.002740			$	56,467			$	27,330			$	83,797
November 20, 2015			November 30, 2015			$	0.002740				66,042				37,026				103,068
December 20, 2015			December 31, 2015			$	0.002740				85,246				49,294				134,540
January 20, 2016			January 31, 2016			$	0.002733				104,209				61,892				166,101
February 20, 2016			February 29, 2016			$	0.002733				109,923				66,508				176,431
March 20, 2016			March 31, 2016			$	0.002733				122,410				74,913				197,323
April 20, 2016			April 30, 2016			$	0.002733				120,402				71,051				191,453
May 20, 2016			May 31, 2016			$	0.002733				137,203				80,646				217,849
June 20, 2016			June 30, 2016			$	0.002733				164,498				96,964				261,462
July 20, 2016			July 31, 2016			$	0.002733				186,208				112,114				298,322
August 20, 2016			August 31, 2016			$	0.002733				201,876				116,537				318,413
September 20, 2016			September 30, 2016			$	0.002733				209,254				116,629				325,883
										$	1,563,738			$	910,904			$	2,474,642

Record Date		Payment Date				Per Share Per Day				Distributions Paid in Cash				Distributions Paid through the DRIP				Total Distributions Paid/Accrued
July 20, 2015			July 31, 2015			$	0.002740			$	21,319			$	4,764			$	26,083
August 24, 2015			August 31, 2015			$	0.002740				27,463				8,554				36,017
September 24, 2015			September 30, 2015			$	0.002740				42,757				20,283				63,040
										$	91,539			$	33,601			$	125,140

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 11. Financial Highlights

The following is a schedule of financial highlights for the year ended September 30, 2016 and for the period from June 24, 2015 (date that the Minimum Offering Requirement was met) through September 30, 2015:

		Year Ended September 30, 2016				For the period from June 24, 2015 (date the Minimum Offering Requirement was met) through September 30, 2015
Per share data:
Net asset value at beginning of period		$	10.97			$	10.97
Results of operations(1):
Net investment (loss) income			(0.99	)			0.05
Net increase in unrealized appreciation on investments			0.08				—
Net increase in unrealized appreciation on obligations under participation agreements			(0.02	)			—
Net (decrease) increase in net assets resulting from operations			(0.93	)			0.05
Shareholder distributions(2):
Dividends declared from return of capital			(1.00	)			(0.27	)
Net decrease in net assets resulting from shareholder distributions			(1.00	)			(0.27	)
Capital share transactions:
Other(3)			1.02				0.22
Net increase in net assets resulting from capital share transactions			1.02				0.22
Net asset value, end of period		$	10.06			$	10.97
Shares outstanding at end of period			4,222,358				926,357
Total return(4)			(0.26	)%			(10.36	)%
Ratio/Supplemental data:
Net assets, end of period		$	42,474,748			$	10,161,072
Ratio of net investment (loss) income to average net assets(5)			(9.30	)%			1.33	%
Ratio of operating expenses to average net assets(5)			20.73	%			2.81	%
Portfolio turnover			—				—

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 11. Financial Highlights  – (continued)

Note 12. Selected Quarterly Financial Data (unaudited)

		Three Months Ended
		September 30, 2016				June 30, 2016				March 31, 2016				December 31, 2015
Total investment income		$	1,027,797			$	915,997			$	828,358			$	244,547
Total operating expenses			1,415,041				1,774,705				1,612,647				1,246,861
Less: Expense Reimbursement from Adviser			—				—				—				(576,755	)
Net operating expenses			1,415,041				1,774,705				1,612,647				670,106
Net investment loss			(387,244	)			(858,708	)			(784,289	)			(425,559	)
Net (decrease) increase in unrealized appreciation on investments			(347,642	)			539,854				—				—
Net (decrease) increase in unrealized appreciation on obligations under participation agreements			275,872				(328,444	)			—				—
Net decrease in net assets resulting from operations		$	(459,014	)		$	(647,298	)		$	(784,289	)		$	(425,559	)
Net investment loss per share		$	(0.10	)		$	(0.32	)		$	(0.36	)		$	(0.33	)
Net decrease in net assets resulting from operations per share		$	(0.12	)		$	(0.24	)		$	(0.36	)		$	(0.33	)
Net asset value per share at period end		$	10.06			$	10.19			$	10.24			$	10.71

		Three Months Ended
		September 30, 2015				June 30, 2015				March 31, 2015(1)				December 31, 2014(1)
Total investment income		$	66,077			$	96			$	311			$	338
Total operating expenses			1,234,064				268,625				209,655				38,584
Less: Expense Reimbursement from Adviser			(1,174,487	)			(515,813	)			—				—
Net operating expenses			59,577				(247,188	)			209,655				38,584
Net investment income (loss)			6,500				247,284				(209,344	)			(38,246	)
Net (decrease) increase in unrealized appreciation on investments			—				—				—				—
Net (decrease) increase in unrealized appreciation on obligations under participation agreements			—				—				—				—
Net increase (decrease) in net assets resulting from operations		$	6,500			$	247,284			$	(209,344	)		$	(38,246	)
Net investment income per share		$	0.01			$	1.44				N/A				N/A
Net increase in net assets resulting from operations per share		$	0.01			$	1.44				N/A				N/A
Net asset value per share at period end		$	10.97			$	11.06				N/A				N/A

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Terra Income Fund 6, Inc.
 
Notes to Financial Statements

Note 12. Selected Quarterly Financial Data (unaudited)  – (continued)

During the three months ended September 30, 2015, the Company identified approximately $0.3 million of marketing expenses that had previously been recorded as deferred offering costs as of June 30, 2015. This amount, if presented as of June 30, 2015 would have been offset by an additional expense reimbursement by the advisor of approximately $0.3 million. As a result, the Company recorded adjustments of approximately $0.3 million each to its marketing expenses and expense reimbursement in the three months ended September 30, 2015 to correct the error. The Company did not consider these adjustments to be material to the three and nine months ended June 30, 2015.

Note 13. Subsequent Events

The management of the Company has evaluated events and transactions through November 21, 2016, the date the financial statements were issued, and has determined that there are no material events that would require adjustment to or disclosure in the Company’s financial statements other than those listed below.

From October 1, 2016 through November 21, 2016, the Company has issued 291,745 shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were approximately 3.7 million.

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PART IV

ITEM 15. Exhibits and Financial Statement Schedules

(3) Exhibits

Exhibit No.		Description
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.

TERRA INCOME FUND 6, INC.

Date: December 7, 2016		By: /s/ Bruce D Batkin Bruce D. Batkin Chief Executive Officer (Principal Executive Officer)
		By: /s/ Gregory M. Pinkus Gregory M. Pinkus Chief Financial Officer, Chief Operating Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ Simon J. Mildé Simon J. Mildé		Chairman and Director		December 7, 2016
/s/ Bruce D. Batkin Bruce D. Batkin		Director and Chief Executive Officer (Principal Executive Officer)		December 7, 2016
/s/ Gregory M. Pinkus Gregory M. Pinkus		Chief Financial Officer, Chief Operating Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)		December 7, 2016
/s/ Jeffrey M. Altman Jeffrey M. Altman		Director		December 7, 2016
/s/ Michael L. Evans Michael L. Evans		Director		December 7, 2016
/s/ Robert E. Marks Robert E. Marks		Director		December 7, 2016