FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017



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

For the transition period from ___________ to ______________

Commission file number 814-00799

Venture Lending & Leasing VI, Inc.

(Exact Name of Registrant as specified in its charter)



Maryland	27-1682622
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

104 La Mesa Drive, Suite 102	Portola Valley, CA 94028
(Address of principal executive offices)	(Zip Code)

(650) 234-4300

(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]

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



Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [x]	Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [x]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:



Class		Outstanding as of May 15, 2017
Common Stock, $.001 par value		100,000

VENTURE LENDING & LEASING VI, INC.

INDEX



PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Statements of Assets and Liabilities (Unaudited)
	As of March 31, 2017 and December 31, 2016

	Condensed Statements of Operations (Unaudited)
	For the three months ended March 31, 2017 and 2016

	Condensed Statements of Changes in Net Assets (Unaudited)
	For the three months ended March 31, 2017 and 2016

	Condensed Statements of Cash Flows (Unaudited)
	For the three months ended March 31, 2017 and 2016

	Notes to Condensed Financial Statements (Unaudited)

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Item 4.	Controls and Procedures

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings

Item 1A.	Risk Factors

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

Item 3.	Defaults Upon Senior Securities

Item 4.	Mine Safety Issues

Item 5.	Other Information

Item 6.	Exhibits

SIGNATURES

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

AS OF MARCH 31, 2017 AND DECEMBER 31, 2016



	March 31, 2017			December 31, 2016
ASSETS
Investments:
Loans, at estimated fair value
(Cost of $29,665,124 and $37,628,445)	$	16,897,985		$	24,246,739
Interest Rate Caps (Cost of $0 and $23,000)	—			1,489
Total Investments (Cost of $29,665,124 and $37,651,445)	16,897,985			24,248,228
Cash and cash equivalents	5,336,997			2,927,861
Other assets	464,854			492,013

Total assets	22,699,836			27,668,102

LIABILITIES
Accrued management fees	141,874			172,926
Accounts payable and other accrued liabilities	303,614			352,442

Total liabilities	445,488			525,368

NET ASSETS	$	22,254,348		$	27,142,734

Analysis of Net Assets:

Capital paid in on shares of capital stock	$	241,525,000		$	241,525,000
Unrealized depreciation on investments	(12,767,139		)	(13,403,217		)
Distribution in excess of net investment income	(206,503,513		)	(200,979,049		)
Net assets (equivalent to $222.54 and $271.43 per share based on 100,000 shares of capital stock outstanding - See Note 6)	$	22,254,348		$	27,142,734

See notes to condensed financial statements.

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016



	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016

INVESTMENT INCOME:
Interest on loans	$	1,242,478		$	3,102,628
Other interest and other income	8,064			3,722
Total investment income	1,250,542			3,106,350

EXPENSES:
Management fees	141,874			460,152
Interest expense	23,000			340,074
Banking and professional fees	137,128			88,232
Other operating expenses	28,180			24,598
Total expenses	330,182			913,056
Net investment income	920,360			2,193,294

Net realized loss from investments	(443,798		)	(1,042,091		)
Net change in unrealized gain (loss) from investments	636,078			(160,266		)
Net realized and change in unrealized gain (loss) from investments	192,280			(1,202,357		)

Net increase in net assets resulting from operations	$	1,112,640		$	990,937
Net increase in net assets resulting from operations per share	$	11.13		$	9.91
Weighted average shares outstanding	100,000			100,000

See notes to condensed financial statements.

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016



	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016
Net increase in net assets resulting from operations:
Net investment income	$	920,360		$	2,193,294
Net realized loss from investments	(443,798		)	(1,042,091		)
Net change in unrealized gain (loss) from investments	636,078			(160,266		)

Net increase in net assets resulting from operations	1,112,640			990,937

Distributions of income to shareholder	(476,562		)	(1,151,205		)
Return of capital to shareholder	(5,524,464		)	(14,855,224		)
Decrease in capital transactions	(6,001,026		)	(16,006,429		)

Total decrease in net assets	(4,888,386		)	(15,015,492		)

Net assets
Beginning of period	27,142,734			58,505,200

End of period (undistributed net investment income of $0 and $0)	$	22,254,348		$	43,489,708

See notes to condensed financial statements.

VENTURE LENDING & LEASING VI, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016



	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations	$	1,112,640		$	990,937
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Net realized loss from investments	443,798			1,042,091
Net change in unrealized (gain) loss from investments	(636,078		)	160,266
Amortization of deferred costs related to borrowing facility	23,000			56,998
Net decrease in other assets	27,159			163,404
Net decrease in accounts payable, other accrued liabilities, and accrued management fees	(79,880		)	(201,037		)
Origination of loans				—
Principal payments on loans	7,517,112			24,881,132
Acquisition of equity securities				—
Net cash provided by operating activities	8,407,751			27,093,791
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distribution to shareholder	(6,000,000		)	(16,000,000		)
Payment received from interest rate caps	1,385			—
Repayment of debt facility	—			(10,800,000		)
Net cash used in financing activities	(5,998,615		)	(26,800,000		)
Net increase in cash and cash equivalents	2,409,136			293,791
CASH AND CASH EQUIVALENTS:
Beginning of period	2,927,861			2,646,011
End of period	$	5,336,997		$	2,939,802
SUPPLEMENTAL DISCLOSURES:
CASH PAID DURING THE PERIOD:
Interest	$	—		$	328,794
NON-CASH OPERATING AND FINANCING ACTIVITIES:
Distributions of equity securities to shareholder	$	1,026		$	6,429
Receipt of equity securities as repayment of loans	$	1,026		$	6,429

See notes to condensed financial statements.

VENTURE LENDING & LEASING VI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)


1.	ORGANIZATION AND OPERATIONS OF THE FUND

Venture Lending & Leasing VI, Inc. (the “Fund”), was incorporated in Maryland on January 11, 2010 as a non-diversified closed-end management investment company electing status as a business development company (“BDC”) under the Investment Company Act of 1940, as amended ("1940 Act") and is managed by Westech Investment Advisors, LLC, formerly known as Westech Investment Advisors, Inc. (“Manager” or “Management”). The Fund will be dissolved on December 31, 2020 unless an election is made to dissolve earlier by the Board of Directors of the Fund (the “Board”). One hundred percent of the stock of the Fund is held by Venture Lending & Leasing VI, LLC (the “Company”). Prior to commencing its operations on June 29, 2010, the Fund had no operations other than the sale to the Company of 100,000 shares of common stock, $0.001 par value for $25,000 in January 2010. This issuance of stock was a requirement to apply for a finance lender's license from the California Commissioner of Corporations, which was obtained on April 13, 2010.

In the Manager's opinion, the accompanying condensed interim financial statements (hereafter referred to as “financial statements”) include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of financial position and results of operations for interim periods. Certain information and note disclosures normally included in audited annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted; however, the Fund believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three months ended March 31, 2017 are not necessarily indicative of what the results would be for a full year. These financial statements should be read in conjunction with the financial statements and the notes included in the Fund's Annual Report on Form 10-K for the year ended December 31, 2016.


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior period financial information to conform with the current period presentation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and cash equivalents with maturities of 90 days or less. Included in this are money market mutual funds which are valued at the most recently traded price prior to the valuation date. Within cash and cash equivalents, as of March 31, 2017, the Fund held $5,336,997 units in Blackrock Treasury Trust Institutional Fund valued at $1 per unit at a yield of 0.42%, which represents 23.98% of the net assets of the Fund.

Interest Income

Interest income on loans is recognized using the effective interest method including amounts from the amortization of discounts attributable to equity securities received as part of the loan transaction. Additionally, fees received as part of the transaction are added to the loan discount and amortized over the life of the loan.

Investment Valuation Procedures

The Fund accounts for loans at fair value in accordance with the “Valuation Methods” below. All valuations are determined under the direction of the Manager, in accordance with the Valuation Methods.

The Fund's loans are valued in connection with the issuance of its periodic financial statements, the issuance or repurchase of the Fund's shares at a price equivalent to the current net asset value per share, and at such other times as required by law. On a quarterly basis, Management submits to the Board a “Valuation Report” and "Valuation Notes" which detail the rationale for the valuation of investments.

As of March 31, 2017 and December 31, 2016, the financial statements include nonmarketable investments of $16.9 million and $24.2 million, respectively (or 74% and 88% of total assets, respectively), with fair values determined by the Manager in the absence of readily determinable market values. Because of the inherent uncertainty of these valuations, estimated fair values of such investments may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Below is the information used by the Manager in making these estimates.

Loans

The Fund defines fair value as the price that would be received to sell an asset or paid to lower a liability in an orderly transaction between market participants at the measurement date. Because there is no secondary market for the loans made by the Fund to borrowers, Management determines fair value based on hypothetical markets. Venture loans are generally held to maturity and are recorded at their estimated fair value. The determination of fair value is based on a number of factors including the amount for which an investment could be exchanged in a current sale, which assumes an orderly disposition over a reasonable period other than in a forced sale. Management, in determining if adjustments to the estimated fair value of a loan are necessary, considers the fact that no ready market exists for substantially all of the investments held by the Fund along with a number of other factors including but not limited to the borrower's payment history, available cash and “burn rate,” revenues, net income or loss, the likelihood that the borrower will be able to secure additional financing in the future, as well as an evaluation of the general interest rate environment. In determining the valuation adjustment amount, Management performs a liquidation analysis based upon an analysis of the borrower’s credit and the expected recovery from such borrower, which considers several factors such as the nature and quality of the Fund's security interests in collateral, the estimated value of the Fund's collateral, the size of the loan, and the estimated time that will elapse before the Fund achieves a recovery. Management has evaluated these factors and has concluded that the effect of deterioration in the quality of the underlying collateral, the increase in the estimated time to recovery, and the increase in the hypothetical market coupon rate would have the effect of lowering the value of the current portfolio of loans.

Non-accrual Loans

The Fund's policy is to place a loan on non-accrual status when the portfolio company is delinquent for three months on its monthly loan payment or ceases or, in the opinion of Management, drastically curtails its operations and Management deems that it is unlikely that the loan will return to performing status. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed for the quarter in which the loan was placed on non-accrual status. Any uncollected interest related to quarters prior to when the loan was placed on non-accrual status is added to the principal balance, and the aggregate balance of the principal and interest is evaluated in accordance with the policy for valuation of loans in determining Management's best estimate of fair value. Interest received by the Fund on non-accrual loans will be recognized as interest income if and when the interest received exceeds the book value of the loans.

If a borrower of a non-accrual loan resumes making regular payments and is deemed by Management to have the ability to service the loan on a sustainable basis, the loan is re-classified back to accrual or performing status. Interest that would have been accrued during the non-accrual status will be added back to the remaining payment schedule, and thus changing the effective interest rate.

As of March 31, 2017, loans with a cost basis of $17.9 million and a fair value of $5.2 million, have been classified as non-accrual. As of December 31, 2016, loans with a cost basis of $20.5 million and a fair value of $7.1 million, have been classified as non-accrual.

Warrants and Stock

Warrants and stock that are received in connection with loan transactions generally will be assigned a fair value at the time of acquisition. These securities are then distributed by the Fund to its shareholder at the assigned value. Warrants are valued based on a modified Black-Scholes option pricing model which takes into account factors underlying stock value, expected term, volatility and the risk-free interest rate, among other factors.

Underlying asset value is estimated based on information available, including information regarding recent rounds of funding of the portfolio company, or the publicly-quoted stock price at the end of the financial reporting period for warrants for comparable publicly-quoted securities.

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on an index of publicly traded companies grouped by industry and which are similar in nature to the underlying portfolio companies issuing the warrant (“Industry Index”). The volatility assumption for each Industry Index is based on the average volatility for individual public companies within the portfolio company's industry for a period of time approximating the expected life of the warrants. A hypothetical increase in the volatility of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The remaining expected lives of warrants are based on historical experience of the average life of the warrants, as warrants are often exercised in the event of acquisitions, mergers, or initial public offerings and terminated due to events such as bankruptcies, restructuring activities, or additional financings. These events cause the expected term to be less than the remaining contractual term of the warrants. For the three months ended March 31, 2017 and March 31, 2016, the Fund assumed the average duration of a warrant is 3.5 years. The effect of a hypothetical increase in the estimated initial term of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The risk-free interest rate is derived from the constant maturity tables issued by the U.S. Treasury Department. The effect of a hypothetical increase in the estimated risk-free rate used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The Fund engages an independent valuation company to provide valuation assistance with respect to the warrants received as part of loan consideration, including the evaluations of the Fund's valuation methodology and the reasonableness of the assumptions used from the perspective of a market participant. The independent valuation company calculates several of the inputs used such as volatility and risk-free rate.

Other Assets and Liabilities

For the year ended December 31, 2016, Other Assets include costs incurred in conjunction with borrowings under the Fund's debt facility and are stated at initial cost. The costs were amortized over the term of the facility, which was paid off on August 5, 2016.

As of March 31, 2017 and December 31, 2016, the fair values of Other Assets and Liabilities are estimated at their carrying values because of the short-term nature of these assets or liabilities.

Commitment Fees

Unearned income and commitment fees on loans are recognized as additional interest on loans using the effective interest method over the term of the loan. When the first draw was made, the fee was treated as unearned income and is recognized as described above.

Deferred Bank Fees

The deferred bank fees and costs associated with the debt facility have been amortized over the estimated life of the facility, which was originally determined to be until January 2014. However, under the amendment in October 2011, the estimated life of the facility changed to September 2014. The debt facility was amended again on September 23, 2014 and then on September 30, 2014 with estimated life through March 23, 2017. Deferred bank fees and costs associated with the renewal of the debt facility were amortized over the estimated life of the renewed facility, but were fully recognized on August 5, 2016 when the debt facility was terminated. The deferred bank fees are included in Other Assets in the Condensed Statements of Assets and Liabilities. The amortization of these costs was recorded as interest expense in the Condensed Statements of Operations (see Note 7).

Interest Rate Cap Agreements

On September 30, 2014, the Fund entered into interest rate cap agreements which are primarily valued on the basis of the future expected interest rates on the notional principal balance remaining, which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value and other factors underlying cap instruments. The contracts are recorded at fair value in interest rate caps in the Condensed Statements of Assets and Liabilities. The changes in fair value are recorded in Net change in unrealized gain (loss) from investments in the Condensed Statements of Operations. The interest received on the interest rate cap contracts, if any, is recorded in Net realized gain (loss) from investments in the Condensed Statements of Operations. Certain prior year amounts have been reclassified to conform to the current year presentation. As of March 31, 2017, no interest rate cap agreements remain outstanding.

Recent Accounting Pronouncements

In December 2016, the FASB released an accounting standards update (ASU) that makes technical changes to various sections of the ASC, including Topic 820, Fair Value Measurement. The changes to Topic 820 are intended to clarify the difference between a valuation approach and a valuation technique. The changes to ASC 820-10-50-2 require a reporting entity to disclose, for Level 2 and Level 3 fair value measurements, a change in either or both a valuation approach and a valuation technique and the reason(s) for the change. The changes to Topic 820 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. As of March 31, 2017, there was no change in either or both a valuation approach and a valuation technique in the portfolio loan investments of the Fund. Management does not believe that the adoption of this guidance to have a significant impact on the Funds financial statements.


3.	SCHEDULES OF INVESTMENTS

As of March 31, 2017, all loans were made to non-affiliates as follows (unaudited):



	Percentage		Estimated Fair		Par Value	Final
Borrower	of Net Assets	Value 3/31/2017		Value 3/31/2017		Maturity Date
Computers & Storage
HyperGrid, Inc.		$	167,291	$	167,291	6/1/2017
Subtotal:	0.7%		167,291		167,291



	Percentage		Estimated Fair		Par Value	Final
Borrower	of Net Assets	Value 3/31/2017		Value 3/31/2017		Maturity Date
Internet
Cowboy Analytics, LLC		$	488,187	$	488,187
CustomMade Ventures Corp.			687,276		687,276	*
Digital Caddies, Inc. **			0		987,584	*
FanBridge, Inc.			300,000		340,140	*
Giddy Apps, Inc.			10,000		999,454	*
Kiwi Crate, Inc.			445,941		445,941	4/1/2018
Leading Ed Inc.			0		2,735	*
Lightside Games, Inc.			0		109,230	*
Monetate, Inc.			1,289,749		1,289,749	6/1/2018
Playstudios, Inc.			978,651		978,651	6/1/2018
Quantcast Corp.			237,550		237,550	4/1/2017
Quri, Inc.			781,776		781,776	6/1/2018
Radius Intelligence, Inc.			440,713		440,713	10/1/2017
Rivet Games, Inc.			7,500		95,082	*
THECLYMB			496,463		496,463	10/1/2017
WHI, Inc.			593,999		1,200,999	*
YouDocs Beauty, Inc.			1,192,024		1,192,024	*
Subtotal:	35.7%	$	7,949,829	$	10,773,554

Medical Devices
AxioMed, Inc.		$	14,238	$	14,238	*
MimOSA, Inc.			0		203,213	*
Redox Medical, Inc.			0		3,388,382	*
Subtotal:	0.1%	$	14,238	$	3,605,833

Other Healthcare
Cogito Corporation		$	15,034	$	15,034	4/1/2017
Hi.Q, Inc.			631,959		631,959	6/1/2018
Physician Software Systems, LLC			9,000		154,044	*
Therapydia, Inc.			50,238		50,238	10/1/2017
Subtotal:	3.2%	$	706,231	$	851,275

Other Technology
Beeline Bikes, Inc.		$	16,714	$	16,714	6/1/2017
Daylight Solutions, Inc.			368,710		368,710	8/1/2017
InsideTrack, Inc.			176,450		176,450	4/7/2017
Lumo BodyTech, Inc.			402,640		402,640	12/1/2017
Neuehouse, LLC			372,421		372,421	7/1/2017
nWay, Inc.			243,297		675,010	*
Pinnacle Engines, Inc.			274,686		274,686	12/1/2017
Prana Holdings, Inc.			162,500		945,066	*
Zeachem			0		2,759,807	*
Subtotal:	9.0%	$	2,017,418	$	5,991,504

Security
Guardian Analytics, Inc.		$	1,962,394	$	1,962,394	2/1/2019
Subtotal:	8.8%	$	1,962,394	$	1,962,394
Software
Appconomy, Inc.		$	0	$	1,839,362	*



	Percentage		Estimated Fair		Par Value	Final
Borrower	of Net Assets	Value 3/31/2017		Value 3/31/2017		Maturity Date
Atigeo Corporation			870,000		1,170,880	*
Beanstock Media, Inc.			0		1,181,367	*
Corduro, Inc.			7,500		64,712	*
gloStream, Inc.			575,086		842,566	*
Mintigo, Inc.**			453,101		453,101	1/1/2018
Nectar Holdings, Inc.			219,161		219,161	12/1/2017
OrderGroove, Inc.			296,687		296,687	12/1/2017
SoundHound, Inc.			292,279		292,279	5/1/2017
StreetLight Data, Inc.			28,424		28,424	4/1/2017
ZeroTurnaround USA, Inc.**			677,664		677,664	6/1/2018
Subtotal:	15.4%	$	3,419,902	$	7,066,203

Technology Services
Akademos, Inc.***		$	126,704	$	126,704	6/1/2017
Blue Technologies Limited			83,139		83,139	6/1/2017
BountyJobs, Inc.			97,529		97,529	10/1/2017
FSA Store, Inc.			281,332		281,332	9/1/2017
TiqIQ, Inc.			55,783		55,783	7/1/2017
Subtotal:	2.9%	$	644,487	$	644,487

Wireless
Azumio, Inc.		$	16,195	$	341,108	*
Kicksend Holdings			0		61,475	*
Subtotal:	0.1%	$	16,195	$	402,583

Total Loan (Cost of $29,665,124):	75.9%		16,897,985		31,465,124

*As of March 31, 2017, loans with a cost basis of $17.9 million and a fair value of $5.2 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems "non-qualifying assets” under section 55(a) of the 1940 Act, as amended. Qualifying assets must represent at least 70% of the Fund’s total assets at the time of acquisition of any additional non-qualifying assets. As of March 31, 2017, 5.5% of the Fund’s assets represented non-qualifying assets. As part of this calculation, the numerator consists of all eligible portfolio companies as defined in Section 2(a)(46) and denominator consists of total assets less the assets described in Section 55(a)(7).

*** Indicates assets that are not senior loans.

As of December 31, 2016, all loans were made to non-affiliates as follows:



	Percentage		Estimated Fair		Par Value	Final
Borrower	of Net Assets		Value 12/31/2016		Value 12/31/2016	Maturity Date
Computers & Storage
D-Wave Systems, Inc. **		$	197,224	$	197,224	2/1/2017
HyperGrid, Inc.			328,221		328,221	6/1/2017
Subtotal:	1.9%	$	525,445	$	525,445



	Percentage		Estimated Fair		Par Value	Final
Borrower	of Net Assets		Value 12/31/2016		Value 12/31/2016	Maturity Date
Internet
Cowboy Analytics, LLC		$	544,092	$	544,092
CustomMade Ventures Corp.			687,276		687,276	*
Digital Caddies, Inc. **			0		987,584	*
FanBridge, Inc.			300,000		340,140	*
Giddy Apps, Inc.			10,000		999,454	*
Giveforward, Inc.			0		346,472	*
Kiwi Crate, Inc.			535,822		535,822	4/1/2018
Leading Ed Inc.			2,735		2,735	*
Lightside Games, Inc.			0		109,230	*
Monetate, Inc.			1,546,197		1,546,197	6/1/2018
Pixalate, Inc.			27,919		27,919	3/1/2017
Playstudios, Inc.			1,213,425		1,213,425	6/1/2018
Quantcast Corp.			929,202		929,202	4/1/2017
Quri, Inc.			976,446		976,446	6/1/2018
Radius Intelligence, Inc.			617,379		617,379	10/1/2017
Rivet Games, Inc.			8,582		102,582	*
THECLYMB			618,808		618,808	10/1/2017
WHI, Inc.			593,999		1,200,999	*
YouDocs Beauty, Inc.			1,192,024		1,192,024	*
Subtotal:	36.1%	$	9,803,906	$	12,977,786

Medical Devices
AxioMed, Inc.			14,238		14,238	*
MimOSA, Inc.			49,706		209,706	*
Redox Medical, Inc.			195,000		3,602,382	*
Subtotal:	1.0%	$	258,944	$	3,826,326

Other Healthcare
Cogito Corporation			63,307		63,307	4/1/2017
Hi.Q, Inc.			745,642		745,642	6/1/2018
Physician Software Systems, LLC			75,000		158,223	*
Therapydia, Inc.			96,428		96,428	10/1/2017
Subtotal:	3.6%	$	980,377	$	1,063,600

Other Technology
Beeline Bikes, Inc.		$	32,635	$	32,635	6/1/2017
Daylight Solutions, Inc.			578,454		578,454	8/1/2017
InsideTrack, Inc.			348,324		348,324	9/1/2017
Lumo BodyTech, Inc.			527,793		527,793	12/1/2017
Neuehouse, LLC			861,755		861,755	7/1/2017
nWay, Inc.			259,194		690,907	*
Pinnacle Engines, Inc.			404,280		404,280	12/1/2017
Prana Holdings, Inc.			256,816		1,188,816	*
Scoot Networks, Inc.			55,920		55,920	3/1/2017
Skully, Inc.			12,925		128,667	*
Zeachem			0		2,759,807	*
Subtotal:	12.3%	$	3,338,096	$	7,577,358



	Percentage		Estimated Fair		Par Value	Final
Borrower	of Net Assets		Value 12/31/2016		Value 12/31/2016	Maturity Date
Security
Agari Data, Inc.		$	336,977	$	336,977	9/1/2017
Guardian Analytics, Inc.			2,171,055		2,171,055	2/1/2019
Subtotal:	9.2%	$	2,508,032	$	2,508,032

Software
Appconomy, Inc.		$	0	$	1,839,362	*
Atigeo Corporation			870,000		1,170,880	*
Beanstock Media, Inc.			100,000		1,322,744	*
Corduro			7,500		72,212	*
gloStream, Inc.			607,581		895,066	*
Mintigo, Inc.**			579,953		579,953	1/1/2018
Nectar Holdings, Inc.			381,833		381,833	12/1/2017
OrderGroove, Inc.			386,343		386,343	12/1/2017
SoundHound, Inc.			607,933		607,933	5/1/2017
StreetLight Data, Inc.			86,096		86,096	4/1/2017
ZeroTurnaround USA, Inc.**			800,381		800,381	6/1/2018
Subtotal:	16.3%	$	4,427,620	$	8,142,803

Technology Services
Akademos, Inc.***		$	232,217	$	232,217	6/1/2017
Blue Technologies Limited			163,071		163,071	6/1/2017
BountyJobs, Inc.			148,292		148,292	10/1/2017
FSA Store, Inc.			398,418		398,418	9/1/2017
Rated People, Ltd.**			1,296,739		1,296,739	*
TiqIQ, Inc.			80,696		80,696	7/1/2017
Subtotal:	8.5%	$	2,319,433	$	2,319,433

Wireless
Azumio, Inc.		$	16,000	$	357,301	*
Kicksend Holdings			0		61,475	*
InfoReach, Inc.			68,886		68,886	3/1/2017
Subtotal:	0.3%	$	84,886	$	487,662

Total Loan (Cost of $37,628,445):	89.3%	$	24,246,739	$	39,428,445
Interest Rate Caps (Cost of $23,000)	0.0%		1,489		23,000

Total Investment (Cost of $37,651,445)	89.3%	$	24,248,228	$	39,451,445

*As of December 31, 2016, loans with a cost basis of $20.5 million and a fair value of $7.1 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems "non-qualifying assets” under section 55(a) of the 1940 Act, as amended. Qualifying assets must represent at least 70% of the Fund’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2016, 11.2% of the Fund’s assets represented non-qualifying assets. As part of this calculation, the numerator consists of all eligible portfolio companies as defined in Section 2(a)(46) and denominator consists of total assets less the assets described in Section 55(a)(7).

*** Indicates assets that are not senior loans.

4. FAIR VALUE DISCLOSURES

Loans generally are made to borrowers pursuant to commitments whereby the Fund agrees to finance assets and provide working or growth capital up to a specified amount for the term of the commitment, upon the terms and subject to the conditions specified by such commitment. As of March 31, 2017, the Fund's investments in loans were primarily to companies based within the United States and were diversified among borrowers in the industry segments shown below. The percentage of net assets that each industry group represents is shown with the industry totals below (the sum of the percentages does not equal 100 percent because the percentages are based on net assets as opposed to total loans). All loans are senior to unsecured creditors and and other secured creditors, except as indicated in the Schedule above. Loans to Akademos, Inc. are subordinated to other secured creditors.

The Fund provides asset-based financing primarily to start-up and emerging growth venture-capital-backed companies. Therefore, even though these loans are generally secured by the assets of the borrowers, the Fund in most cases

is subject to the credit risk of such companies.

The Fund defines fair value as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale.

Loan balances are summarized by borrower. Typically a borrower's balance will be composed of several loans drawn under a commitment made by the Fund with the interest rate on each loan fixed at the time each loan is funded. Each loan drawn under a commitment may have a different maturity date and amount. For the three months ended March 31, 2017 and March 31, 2016, the weighted-average interest rate on the performing loans was 15.55% and 15.46%, respectively. These rates were inclusive of both cash and non-cash interest income. For the three months ended March 31, 2017 and March 31, 2016, the weighted-average interest rate on the cash portion of the interest income was 11.86% and 11.51%, respectively. Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants and new loans funded during the period.

The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and loan as described in our loan accounting policy. Such changes result in the fair value adjustment made to the individual loans. Where the risk profile is consistent with the original underwriting, which is primarily the case for this loan portfolio, the par value of the loan will approximate fair value.

As of March 31, 2017 and December 31, 2016, the Fund had no unexpired unfunded commitments to borrowers.

Valuation Hierarchy

In accordance with FASB Accounting Standards Codification (“ASC”) 820-10 Fair Value Measurement, the Fund categorizes its fair value measurements in three-level hierarchy, which prioritizes the inputs used by the Fund's valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:



Level 1		Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
Level 2		Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3		Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Transfers of investments between levels of the fair value hierarchy are recorded on the actual date of the event or

change in circumstances that caused the transfer. There were no transfers in and out of Level 1, 2, and 3 during the

period ended March 31, 2017 and March 31, 2016.

The Fund's cash equivalents were valued at the traded net asset value of the money market mutual fund. As a result, these measurements are classified as Level 1. The Fund's investments in the interest rate cap are based on quotes from the market makers that derive fair values from market data, and therefore, are classified as Level 2. The Fund uses estimated exit values when determining the value of its investments. Because loan transactions are individually negotiated and unique, and there is no market in which these assets trade, the inputs for these assets, which are discussed in the Valuation Methods listed above, are classified as Level 3.

The following tables provide quantitative information about the Fund's Level 3 fair value measurements of its investments as of March 31, 2017 and December 31, 2016. In addition to the techniques and inputs noted in the tables below, the Fund may also use other valuation techniques and methodologies when determining its fair value measurements.



Investment Type
- Level 3	Fair Value at		Valuation Techniques/		Weighted Average/
Debt Investments	3/31/2017		Methodologies	Unobservable Input	Amount/Range

Internet	$	7,949,829	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
			Liquidation	Investment Collateral	$0- $1,192,024

Medical Devices	$	14,238	Liquidation	Investment Collateral	$0- $14,238

Other Healthcare	$	706,231	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	14%
			Liquidation	Investment Collateral	$9,000

Other Technology	$	2,017,418	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	15%
			Liquidation	Investment Collateral	$0-$243,297


Software	$	3,419,902	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	17%
			Liquidation	Investment Collateral	$0-$870,000

Technology Services	$	644,487	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	15%

Wireless	$	16,195	Liquidation	Investment Collateral	$0- $16,195

Other (*)	$	2,129,685	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	18%


Total	$16,897,985

(*) Other loans are comprised of companies in Computer Storage and Securities industries.



Investment Type
- Level 3	Fair Value at	Valuation Techniques/		Weighted Average/
Debt Investments	12/31/2016	Methodologies	Unobservable Input	Amount/Range

Computer & Storage	525,445	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	21%

Internet	$9,803,906	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$0 - $1,192,024

Medical Devices	$258,944	Liquidation	Investment Collateral	$14,238 - $195,000

Other Healthcare	980,377	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	14%
		Liquidation	Investment Collateral	$75,000

Other Technology	3,338,096	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$0 - $259,194

Security	2,508,032	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	18%

Software	$4,427,620	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	17
		Liquidation	Investment Collateral	$0 - $870,000

Technology Services	2,319,433	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$1,296,739

Wireless	84,886	Hypothetical Market Analysis	Hypothetical Market Coupon Rate	16%
		Liquidation	Investment Collateral	$0 - $16,000


Total	24,246,739

The following table presents the balances of assets as of March 31, 2017 and December 31, 2016 measured at fair value on a recurring basis:



As of March 31, 2017	Level 1		Level 2		Level 3		Total
ASSETS:
Loans*			$	—	$	16,897,985	$	16,897,985
Interest Rate Caps	—		—		—		—
Cash equivalents	5,336,997		—		—		5,336,997
Total	$	5,336,997	$	—	$	16,897,985	$	22,234,982



As of December 31, 2016	Level 1		Level 2		Level 3		Total
ASSETS:
Loans*	$	—	$	—	$	24,246,739	$	24,246,739
Interest Rate Caps	—		1,489		—		1,489
Cash equivalents	2,927,861		—		—		2,927,861
Total	$	2,927,861	$	1,489	$	24,246,739	$	27,176,089

*For a detailed listing of borrowers comprising this amount please refer to Note 3, Schedules of Investments.

The following table provides a summary of changes in Level 3 assets measured at fair value on a recurring basis:



	For the Three Months Ended March 31, 2017
	Loans			Stock
Beginning balance	$	24,246,739		$	—
Acquisitions and originations	—			1,026
Principal reductions	(7,518,138		)	—
Distribution to shareholder	—			(1,026		)
Net change in unrealized gain from investments	614,567			—
Net realized loss from investments	(445,183		)	—
Ending balance	$	16,897,985		$	—
Net change in unrealized loss on investments relating to investments still held at March 31, 2017	$	152,352



	For the Three Months Ended March 31, 2016
	Loans			Warrants
Beginning balance	$	95,005,982		$	—
Acquisitions and originations	—			6,429
Principal reductions	(24,887,561		)	—
Distribution to shareholder	—			(6,429		)
Net change in unrealized loss from investments	(164,659		)	—
Net realized loss from investments	(1,042,091		)	—
Ending balance	$	68,911,671		$	—
Net change in unrealized loss on investments relating to investments still held at March 31, 2016	$	(1,866,985	)

Net change in unrealized loss from investments and Net realized loss from investments described above are recorded in Net change in unrealized loss from investments and Net realized loss from investments in the Statement of Operations.


5.	EARNINGS PER SHARE

Basic earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average common shares outstanding. Diluted earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average common shares outstanding, including the dilutive effects of potential common shares (e.g., stock options). The Fund held no instruments that would be potential common shares; thus, reported basic and diluted earnings per share are the same.


6.	CAPITAL STOCK

As of March 31, 2017 and December 31, 2016, the Fund had 10,000,000 shares of $0.001 par value common stock authorized, and 100,000 shares issued and outstanding. Total committed capital of the Company, as of March 31, 2017, was $294.0 million. Total contributed capital to the Company through March 31, 2017 and December 31, 2016

was $279.3 million, of which $241.5 million was contributed to the Fund. The remaining $14.7 million in committed capital expired on June 29, 2015 as the five year anniversary passed. No further capital can be called.

The chart below shows the distributions of the Fund for the three months ended March 31, 2017 and 2016.



	For the Three Months Ended March 31, 2017		For the Three Months Ended March 31, 2016
Cash distributions	$	6,000,000	$	16,000,000
Distributions of equity securities	1,026		6,429

Total distributions to shareholder	$	6,001,026	$	16,006,429

Final classification of the distributions as either a return of capital or a distribution of income is an annual determination made at the end of each year dependent upon the Fund's current year and cumulative earnings and profits.

7. DEBT FACILITY

The Fund established a secured revolving loan facility in an amount of up to $160 million with Union Bank, N.A., Wells Fargo Bank, N.A. and Bank Leumi USA on September 23, 2011 (the "Loan Agreement"). Borrowings under the Loan Agreement are collateralized all assets of the Fund. The Fund paid interest on its borrowings, and paid a fee on the unused portion of the facility.

The Loan Agreement was extended on September 23, 2014 and then amended and restated in its entirety on September 30, 2014, reducing the size to $120 million, and securing an initial 12-month revolving loan and a subsequent 18-month amortized repayment plan. The size of the facility was reduced to $84 million on April 15, 2015, $74 million on June 12, 2015, $64 million on July 21, 2015 and $54 million on August 20, 2015, and by $3 million per month from October 23, 2015 to April 23, 2016, by $10 million on May 18, 2016, by $2.1 million on May 23, 2016 and June 23, 2016. The facility was paid off and the Fund terminated the facility on August 5, 2016.

Amounts borrowed under the Loan Agreement may be, at the option of the Fund, either Reference Rate Loans or LIBOR loans at an annual rate of either LIBOR plus 2.75% or the Reference Rate plus 1.75%. A Reference Rate Loan is defined as a Loan bearing interest at the highest of: (a) the Federal Funds Rate for such day plus one percent (1.0%), and (b) the rate most recently announced by Union Bank, N.A at its corporate headquarters as the “Union Bank, N.A. Reference Rate”. A LIBOR Rate Loan is defined as a Loan bearing interest at the prevailing LIBOR rate determined by Union Bank, N.A. to be the per annum rate (rounded upward to the nearest one-hundredth of one percent (1/100%)) at which Dollar deposits in immediately available funds and in lawful money of the United States would be offered to Union Bank, N.A., on behalf of Union Bank, N.A., Wells Fargo Bank, N.A. and Bank Leumi USA, outside of the United States at approximately 11:00 a.m. (LIBOR time) three (3) Business Days before the first day of such LIBOR Loan Period, in an amount approximately equal to the principal amount of, and for a length of time approximately equal to the LIBOR Loan Period for, the LIBOR Loan sought by the Fund.

Bank fees of $280,000 and legal fees of $59,983 were incurred in connection with the renewal of the facility on September 30, 2014. The bank fees and other costs incurred were capitalized and amortized to interest expense on a straight line basis over the expected life of the facility. Fees and costs that were incurred under the facility were fully amortized over the life of the facility, which was terminated on August 5, 2016. The quarter ended March 31, 2017 does not reflect any amortized fees or costs incurred under the facility.

8. INTEREST RATE CAP AGREEMENT

The Fund originates loans with fixed interest rates but borrows on a floating rate basis. Therefore, management utilized interest rate caps to manage a portion of interest rate risk should such rates rise during the period the Fund had portfolio loans outstanding. On September 30, 2014, the Fund entered into two interest rate cap contracts, one each

with MUFG Union Bank, N.A. and Wells Fargo Bank, N.A to cap floating interest rates at 0.7%. The interest rate cap contracts were terminated as of March 23, 2017. During the life of the cap, the notional principal amount decreases as the expected outstanding balance under the debt facility decreases. The Fund paid upfront fees of $230,000 for the caps which were amortized on a straight-line basis over the life of the instrument. Under the cap agreement, the Fund was entitled to receive a payment of interest from the counterparty for amounts above the 0.7% cap based on 30-day LIBOR. Counterparty payments, if necessary were received monthly.

The average notional amount outstanding was $8.0 million and $29.5 million for the three months ended March 31, 2017 and March 31, 2016.

As of March 31, 2017 and December 31, 2016, the fair value of the Fund's derivative financial instruments was as follows:



	Asset Derivatives
	March 31, 2017		December 31, 2016
Derivatives:	Condensed Statement of Assets and Liabilities	Fair Value	Condensed Statement of Assets and Liabilities	Fair Value
Interest rate cap agreement	Interest Rate Caps	$—	Interest Rate Caps	$1,489

For the three months ended March 31, 2017 and 2016, the derivative financial instruments had the following effect on the Condensed Statements of Operations:



		For the three months ended
Derivatives	Condensed Statements of Operations	March 31, 2017	March 31, 2016
Interest rate cap agreement	Net change in unrealized gain from investments	$0	$4,393

9. TAX STATUS

The Fund has elected to be treated as a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) and operates in a manner so as to qualify for the tax treatment applicable to RICs. Failing to maintain at least 70% of total assets in “qualifying assets” will result in the loss of BDC status, resulting in losing its favorable tax treatment as a RIC. As of March 31, 2017, the Fund has met the BDC and RIC requirements.

To qualify for favorable tax treatment as a RIC, the Fund is required to distribute annually to its shareholder at least 90% of its investment company taxable income, as defined by the Code. To avoid federal excise taxes, the Fund must distribute annually at least 98% of its ordinary income and 98.2% of net capital gains from the current year and any undistributed ordinary income and net capital gains from the preceding years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If the Fund chooses to do so, all other things being equal, this would increase expenses and reduce the amount available to be distributed to shareholder. The Fund will accrue excise tax on estimated undistributed taxable income as required. Below is a table summarizing the cost (on GAAP and tax basis) and the appreciation and depreciation of the investments reported on the Schedule of Investments in Note 3 below.

As of March 31, 2017:



Asset	Cost		Unrealized Appreciation		Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Loans	$	29,665,124	$	—	$	(12,767,139	)	$	(12,767,139	)	$	16,897,985


Total	$	29,665,124	$	—	$	(12,767,139	)	$	(12,767,139	)	$	16,897,985

As of December 31, 2016:



Asset	Cost		Unrealized Appreciation		Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Loans	$	37,628,445	$	—	$	(13,381,706	)	$	(13,381,706	)	$	24,246,739
Interest Rate Caps	23,000		—		(21,511		)	(21,511		)	1,489


Total	$	37,651,445	$	—	$	(13,403,217	)	$	(13,403,217	)	$	24,248,228

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with GAAP. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Fund's annual RIC tax return.

Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are reclassified among the Fund's capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP.

Through March 31, 2017, the Fund had no undistributed earnings. Additionally, for the three months ended March 31, 2017, distributions were made in excess of distributable earnings by approximately $ 5.5 million. The Fund may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the shareholder's tax basis in its shares. As of March 31, 2017, the Fund had no uncertain tax positions. As of March 31, 2017, the Fund had no capital loss carry forwards.

The Fund's tax years are open to examination by federal tax authorities for the years 2013 and forward and California tax authorities for the years 2012 and forward.

10. FINANCIAL HIGHLIGHTS

GAAP requires disclosure of financial highlights of the Fund for the periods presented, the three months ended March 31, 2017 and 2016. The total rate of return is defined as the return based on the change in value during the period of a theoretical investment made at the beginning of the period. The total rate of return assumes a constant rate of return for the Fund during the period reported and weights each cash flow by the amount of time held in the Fund. This required methodology differs from an internal rate of return.

The ratios of expenses and net investment income to average net assets, calculated below, are annualized and are computed based upon the aggregate weighted average net assets of the Fund for the periods presented. Net investment income is inclusive of all investment income net of expenses, and excludes realized or unrealized gains and losses.

Beginning and ending net asset values per share are based on the beginning and ending number of shares outstanding.

Other per share information is calculated based upon the aggregate weighted average net assets of the Fund for the periods presented.

The following per share data and ratios have been derived from the information provided in the financial statements:



	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016

Total return **	4.14		%	1.79		%

Per share amounts:
Net asset value, beginning of period	$	271.43		$	585.05
Net investment income	9.20			21.94
Net realized and change in unrealized gain
(loss) from investments and hedging activities	1.92			(12.03		)
Net increase in net assets from operations	11.12			9.91
Distributions of income to shareholder	(4.77		)	(11.51		)
Return of capital to shareholder	(55.24		)	(148.55		)

Net asset value, end of period	$	222.54		$	434.90

Net assets, end of period	$	22,254,348		$	43,489,708

Ratios to average net assets:

Expenses*	4.90		%	6.54		%
Net investment income*	13.65		%	15.71		%
Portfolio turnover rate	0		%	0		%
Average debt outstanding	$	0		$	34,525,000
* Annualized
** Total return amounts presented above are not annualized.

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

In addition to the historical information contained herein, the information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of Venture Lending & Leasing VI, Inc. (the “Fund”) with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond the Fund's control. All statements, other than statements of historical facts included in this report, regarding the strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Fund are forward-looking statements. When used in this report, the words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements speak only as of the date of this report.

The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Fund's actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments and competition, macro-economic changes including inflation, interest rate expectations, among other factors. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Fund's business. The Fund does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

The Fund is 100% owned by Venture Lending & Leasing VI, LLC (the “Company”). The Fund's shares of Common Stock, at $0.001 par value, were sold to its shareholder, the Company, under a stock purchase agreement. The Fund has issued 100,000 of the Fund's 10,000,000 authorized shares. The Company will not make additional capital contributions to the Fund.

The Fund is a financial services company primarily providing financing and advisory services to a variety of carefully selected venture-backed companies primarily located throughout the United States with a focus on growth-oriented companies. The Fund's portfolio is well diversified and consists of companies in the communications, information services, media, and technology, including software and technology-enabled business services, bio-technology, and medical devices industry sectors, among others. The Fund's capital is generally used by our portfolio companies to finance acquisitions of fixed assets and/or for working capital. On June 29, 2010, the Fund completed its first closing of capital contributions, made its first investments, and became a non-diversified, closed-end investment company that elected to be treated as a business development company under the Investment Company Act of 1940. The Fund elected to be treated for federal income tax purposes as a Regulated Investment Company ("RIC") under the Internal Revenue Code with the filing of its federal corporate income tax return for 2010. Pursuant to this election, the Fund generally will not have to pay corporate-level taxes on any income it distributes to the Company as dividends, allowing the Company to substantially reduce or eliminate its corporate-level tax liability.

The Fund will seek to meet the ongoing requirements, including the diversification requirements, to qualify as a RIC under the Internal Revenue Code. If the Fund fails to meet these requirements, it would be taxed as an ordinary corporation on its taxable income for that year (even if that income were distributed to the Company) and all distributions out of its earnings and profits would be taxable to the Members of the Company as ordinary income; thus, such income would be subject to a double layer of tax. There is no assurance that the Fund will meet the ongoing requirements to qualify as a RIC for tax purposes.

The Fund's investment objective is to achieve superior risk adjusted investment returns. The Fund seeks to achieve its investment objective by providing debt financing to portfolio companies. Since inception, the Fund's investing activities have focused primarily on private debt securities. The Fund generally receives warrants to

acquire equity securities in connection with its portfolio investments. It is anticipated that such warrants will be distributed by the Fund to the Company simultaneously with, or shortly following, their acquisition. The Fund also has guidelines for the percentages of total assets which will be invested in different types of assets.

The portfolio investments of the Fund primarily consist of debt financing to venture capital backed companies. The borrower's ability to repay its loans may be adversely impacted by a number of factors, and as a result, the loan may not fully be repaid. Furthermore, the Fund's security interest in any collateral over the borrower's assets may be insufficient to make up any shortfall in payments.

Transactions with Venture Lending & Leasing V, Inc. (“Fund V”)

The Manager also served as investment manager for Fund V, which was dissolved on August 6, 2014 and no longer funded any commitments. However, prior to the dissolution of Fund V, the Fund's Board of Directors determined that so long as Fund V has capital available to invest in loan transactions with final maturities earlier than December 31, 2015 (the date on which Fund V was planned to be dissolved), the Fund will invest in each portfolio company in which Fund V invests (“Investments”). Initially the amount of each Investment was allocated 50% to the Fund and 50% to Fund V so long as Fund V had capital available to invest. After February 2011, Fund V was no longer permitted to enter into new commitments to borrowers. The Fund commenced its investment period on June 29, 2010 and after June 29, 2014, the Fund was no longer permitted to enter into new commitments to borrowers. All commitments by the Fund to borrowers are now expired.

Transactions with Venture Lending & Leasing VII, Inc. (“Fund VII”)

The Manager also serves as investment manager for Fund VII. The Fund's Board of Directors determined that so long as the Fund has capital available to invest in loan transactions with final maturities earlier than December 31, 2020 (the date on which the Fund will be dissolved), the Fund had invested in each portfolio company in which Fund VII invested (“Investments”). Initially the amount of each Investment had been allocated 50% to the Fund and 50% to Fund VII so long as the Fund has capital available to invest. The Fund commenced its investment period on June 29, 2010 and after June 29, 2014, the Fund was no longer permitted to enter into new commitments to borrowers. All commitments by the Fund to borrowers are now expired.

Critical Accounting Policies

Critical Accounting Policies and Practices are those accounting policies and practices that are both the most important to the portrayal of the Fund’s net assets and results of operations and require the most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting estimates are accounting estimates where the nature of the estimates are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates of the net assets or operating performance is material.

The Manager has identified the most critical accounting policies and estimates to be the estimate of the fair value of the Fund’s loan investments. The Fund defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale. There is no secondary market for the loans made by the Fund to borrowers, hence Management determines fair value based on hypothetical market and the estimates are subject to high levels of judgment and uncertainty. The Fund’s loan investments are considered Level 3 fair value measurements in the fair value hierarchy due to the lack of observability over many of the important inputs used in determining fair value.

Critical judgments and inputs in determining the fair value of a loan include payment history, available cash and “burn rate,” revenues, net income or loss, operating results, financial strength of borrower, prospects for the borrower's raising future equity rounds, likelihood of sale or acquisition of the borrower, length of expected holding period of the loan, collateral position, the timing and amount of liquidation of collateral for loans that are

experiencing significant credit deterioration and collection becomes collateral dependent as well as an evaluation of the general interest rate environment. Management has evaluated these factors and has concluded that the effect of a deterioration in the quality of the underlying collateral, increase in the size of the loan, increase in the estimated time to recovery, and increase in the hypothetical market coupon rate would have the effect of decreasing the fair value of loan investments. The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and the loan. Such changes result in the fair value being adjusted from par value of the individual loan. Where the risk profile is consistent with the original underwriting, the par value of the loan often approximates fair value.

The actual value of the loans may differ from management’s estimates, which would affect net change in net assets resulting from operations as well as assets.

Results of Operations - For the Three Months Ended March 31, 2017 and 2016

Total investment income for the three months ended March 31, 2017 and 2016 was $1.3 million and $3.1 million, respectively, which primarily consisted of interest on the venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash, forfeited commitment fees, and fees earned from waivers to loan agreements. The decrease in investment income was due to the decrease in the average loans outstanding from $76.0 million for the three months ended March 31, 2016 to 14.5 million for the three months ended March 31, 2017.

Management fees for the three months ended March 31, 2017 and 2016 were $0.1 million and $0.5 million, respectively. Management fees are calculated as 2.5 percent of the Fund's total assets. Management fees decreased because assets under management as of March 31, 2017 were lower than assets as of March 31, 2016.

Total interest expense was less than $0.1 million and $0.3 million for the three months ended March 31, 2017 and 2016, respectively. Interest expense decreased primarily due to the debt facility payoff in August 2016. The average borrowings decreased from $34.5 million for the three months ended March 31, 2016 to $0 million for the three months ended March 31, 2017. Interest expense for the three months ended March 31, 2017 pertains to the amortization of the remaining interest cap fee.

Total banking and professional fees were $0.1 million for the three months ended March 31, 2017 and 2016. The banking and professional fees were comprised of legal, audit, banking and other professional fees. The decrease was primarily due to lower accounting and legal fees.

Total other operating expenses were less than $0.1 million for the three months ended March 31, 2017 and 2016.

Net investment income for the three months ended March 31, 2017 and 2016, was $0.9 million and $2.2 million, respectively.

Net realized loss from investments was $0.4 million and $1.0 million for the three months ended March 31, 2017 and 2016, respectively.

Net change in unrealized gain (loss) from investments was $0.6 million and $(0.2) million for the three months ended March 31, 2017 and 2016, respectively. The unrealized loss consists of fair market value adjustments to loans and interest rate cap agreements. On September 30, 2014, the Fund entered into interest rate cap contracts with Union Bank, N.A and with Wells Fargo Bank, N.A. to cap the floating rate liabilities under the loan at a fixed rate (see Note 8 in the Fund's financial statements).

The net increase in net assets resulting from operations for the three months ended March 31, 2017 and 2016 was $1.1 million and $1.0 million, respectively. On a per share basis, the net increase in net assets resulting from operations was $11.13 and $9.91 for the three months ended March 31, 2017 and 2016, respectively.

Liquidity and Capital Resources – March 31, 2017 and December 31, 2016

Total capital contributed to the Fund was $241.5 million, prior to distribution of capital, as of March 31, 2017. Committed capital to the Company at March 31, 2017 was $294.0 million, of which $279.3 million had been called. The remaining $14.7 million in committed capital expired in June 2015 after the Fund's five year anniversary. As such, there were no unexpired, unfunded commitments as of March 31, 2017. No further capital can be called.

As of March 31, 2017 and December 31, 2016, 24% and 11%, respectively, of the Fund's assets consisted of cash and cash equivalents. The Fund invested its assets in venture loans during the three months ended March 31, 2017. No loans were disbursed during the three months ended March 31, 2017. Net loan amounts outstanding after amortization and fair market adjustment decreased by approximately $7.3 million for the same period. There were no unexpired, unfunded commitments as of March 31, 2017.




As of	Cumulative Amount Disbursed	Principal Reductions and Fair Market Adjustments	Balance Outstanding - Fair Value	Unexpired Unfunded Commitments
March 31, 2017	$715.4 million	$698.5 million	$16.9 million	$0 million
December 31, 2016	$715.4 million	$691.2 million	$24.2 million	$0 million

The Fund seeks to meet the requirements to qualify for the special pass-through status available to RICs under the Internal Revenue Code, and thus to be relieved of federal income tax on that part of its net investment income and realized capital gains that it distributes to the Company. To qualify as a RIC, the Fund must distribute to the Company for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income and net short-term capital gain) (“Distribution Requirement”). To the extent that the terms of the Fund's venture loans provide for the receipt by the Fund of additional interest at the end of the loan term or provide for the receipt by the Fund of a purchase price for the asset at the end of the loan term (“residual income”), the Fund would be required to accrue such residual income over the life of the loan, and to include such accrued income in its gross income for each taxable year even if it receives no portion of such residual income in that year. Thus, to meet the Distribution Requirement and avoid payment of income taxes or an excise tax on undistributed income, the Fund may be required in a particular year to distribute as a dividend an amount in excess of the total amount of income it actually receives. Those distributions will be made from the Fund's cash assets, from amounts received through amortization of loans or from borrowed funds.

Because the loans are privately negotiated transactions and because there is no active secondary market for these assets, they are relatively illiquid and, therefore, would be difficult to sell. Consequently, the fund relies on loan repayments and capital contributions from its parent for liquidity. The Fund has adequate cash reserves sufficient to meet the operational expenses of the Fund over the next year and, in addition, expects to receive approximately $10.9 million in scheduled receivable payments over the next twelve months. Since the Fund is no longer making new commitments, liquidity demands will continue to decrease.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Fund's business activities contain elements of risk. The Fund considers the principal types of market risk to be interest rate risk and credit risk. The Fund considers the management of risk essential to conducting its business and to maintaining profitability. Accordingly, the Fund's risk management procedures are designed to identify and analyze the Fund's risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.

The Fund manages its market risk by maintaining a portfolio that is diverse by industry, size of investment, stage of development, and borrower. The Fund has limited exposure to public market price fluctuations as the Fund primarily invests in private business enterprises and the Fund distributes all equity investments upon receipt to the Company.

The Fund's investments are subject to market risk based on several factors, including, but not limited to, the borrower's credit history, available cash, support of the borrower's underlying investors, available liquidity, "burn rate", revenue income, security interest, secondary markets for collateral, the size of the loan, term of the loan, and the ability to exit via Initial Public Offering or Merger and Acquisition.

The Fund's sensitivity to changes in interest rates is regularly monitored and analyzed by measuring the characteristics of assets and liabilities. The Fund utilizes various methods to assess interest rate risk in terms of the potential effect on interest income net of interest expense, the value of net assets and the value at risk in an effort to ensure that the Fund is insulated from any significant adverse effects from changes in interest rates.

Because the Fund paid off its loan facility on August 5, 2016 and does not plan to borrow in the future, a significant change in market interest rates will not have a material effect on the Fund’s future interest expenses.

The Fund does not take into consideration potential changes in the credit market, credit quality, size and composition of the assets in the portfolio. It also does not assume any repayments from borrowers or defaults on borrowings. Accordingly, no assurances can be given that actual results would not differ materially from the table above.

Item 4. Controls and Procedures:

Evaluation of Disclosure Controls and Procedures:

As of the end of the period covered by this quarterly report on Form 10-Q, the Fund's chief executive officer and chief financial officer conducted an evaluation of the Fund's disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934). Based upon this evaluation, the Fund's chief executive officer and chief financial officer concluded that the Fund's disclosure controls and procedures were effective in timely alerting them of any material information relating to the Fund that is required to be disclosed by the Fund in the reports it files or submits under the Securities Exchange Act of 1934.

Changes in Internal Controls:

There were no changes in the Fund's internal controls or in other factors that could materially affect these controls during the period covered by this quarterly report on Form 10-Q.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The Fund may become party to certain lawsuits from time to time in the normal course of business. While the outcome of any legal proceedings cannot at this time be predicted with certainty, the Fund does not expect any such proceedings will have a material effect upon the Fund's financial condition or results of operation. Management is not aware of any pending legal proceedings involving the Fund.

Item 1A. Risk Factors

See item 1A - 'Risk Factors' in the Fund's 2016 Annual Report on Form 10-K for a detailed description of the risks attendant to the Fund and its business. There were no material changes to these factors during the three months ended March 31, 2017.

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

Prior to the Fund's commencement of operations on June 29, 2010, the Fund sold 100,000 shares to the Fund's sole shareholder, the Company, for $25,000 in January 2010. No other shares of the Fund have been sold; however, the Fund received an additional $241.5 million of paid in capital during the period from June 29, 2010 through March 31, 2017 which was used to acquire venture loans and fund operations.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Issues

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number	Description
3(i)	Articles of Incorporation of the Fund as filed with the Maryland Secretary of State on January 11, 2010, incorporated by reference to the Fund's Form 10 filed with the Securities and Exchange Commission on February 9, 2010.
3(ii)	Bylaws of the Fund, incorporated by reference to the Fund's Form 10 filed with the Securities and Exchange Commission on February 9, 2010.
4.1	Form of Purchase Agreement between the Fund and the Company, incorporated by reference to the Fund's Registration Statement on Form 10 filed with the Securities and Exchange Commission on February 9, 2010.
31.1-32.2	Certifications pursuant to The Sarbanes-Oxley Act of 2002 (Rule 13a-14 and Section 1350 Certifications).

SIGNATURES

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

VENTURE LENDING & LEASING VI, INC.

(Registrant)



By:	/s/ Maurice C. Werdegar	By:	/s/ Martin D. Eng
Maurice C. Werdegar		Martin D. Eng
President and Chief Executive Officer		Chief Financial Officer
Date:	May 15, 2017	Date:	May 15, 2017

EXHIBIT INDEX



Exhibit Number	Description
31.1-32.2	Certifications pursuant to The Sarbanes-Oxley Act of 2002.

Venture Lending & Leasing VI, Inc. 10-Q