##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-KSB
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
 For the year ended December 31, 2005
 o
    
    Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
 For the transition period from  to
 Commission File number 000-51858
 ATEL Capital Equipment Fund XI, LLC
  California
    
    20-1357935(State or other jurisdiction of
    
    (I. R. S. Employerincorporation or organization)
    
    Identification No.)
 600 California Street, 6th Floor, San Francisco, California 94108
 (415) 989-8800
 None
 Limited Liability Company Units
 o
 þ o
 þ
 o o þ
 o þ
  
  DOCUMENTS INCORPORATED BY REFERENCE
  o þ




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TABLE OF CONTENTS  PART IItem 1. BUSINESSItem 2. PROPERTIESItem 3. LEGAL PROCEEDINGSItem 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIItem 5. MARKET FOR COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIESItem 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 7. FINANCIAL STATEMENTSItem 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURESItem 8A. CONTROLS AND PROCEDURESPART IIIItem 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACTItem 10. EXECUTIVE COMPENSATIONItem 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSItem 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSItem 13.EXHIBITSItem 14. PRINCIPAL ACCOUNTING FEES AND SERVICESSIGNATURESEXHIBIT 14.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents  
 PART I
 
 Item 1. BUSINESS
 General Development of Business
       Narrative Description of Business
     2




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##### Table of Contents



Type ofLessee
    
    Equipment
    
    2005Union Pacific
    
    Transportation
    
    
    61
    %
     Geographic area
    
    2005United States
    
    
    98
    %Europe
    
    
    2
    %
   Equipment Leasing Activities
  Purchase Price
    
    
    Percentage ofExcluding
    
    
    TotalAsset Types
    
    Acquisition Fees
    
    
    AcquisitionsTransportation
    
    $
    10,215,638
    
    
    
    68
    %Materials handling
    
    
    4,132,141
    
    
    
    28
    %Manufacturing
    
    
    622,892
    
    
    
    4
    %$
    14,970,671
    
    
    
    100
    %
 3




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##### Table of Contents



Purchase Price
    
    
    Percentage ofExcluding
    
    
    TotalIndustry of Lessee
    
    Acquisition Fees
    
    
    AcquisitionsRail
    
    $
    7,466,942
    
    
    
    50
    %Health Care
    
    
    2,748,696
    
    
    
    18
    %Manufacturing
    
    
    4,755,033
    
    
    
    32
    %$
    14,970,671
    
    
    
    100.
    %
  Notes Receivable Activities
  % of TotalAsset Types
    
    Loan Amount
    
    
    FundingsEquipment and other assets
    
    $
    4,128,105
    
    
    
    61
    %Computer equipment
    
    
    2,131,644
    
    
    
    32
    %Manufacturing
    
    
    465,773
    
    
    
    7
    %$
    6,725,522
    
    
    
    100
    %
 % of TotalIndustry of Borrower
    
    Loan Amount
    
    
    FundingsManufacturing
    
    $
    2,503,105
    
    
    
    37
    %Health services
    
    
    1,625,000
    
    
    
    24
    %Business services  technology
    
    
    1,315,391
    
    
    
    20
    %Communications
    
    
    816,253
    
    
    
    12
    %Electronics
    
    
    465,773
    
    
    
    7
    %$
    6,725,522
    
    
    
    100
    %
  
 Item 2. PROPERTIES
  
 Item 3. LEGAL PROCEEDINGS
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  4




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PART II
 
 Item 5.
    
    MARKET FOR COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES
 Market Information
  Holders
  Distributions
     2005Net loss per Unit, based on weighted average Units
outstanding
    
    $
    (0.27
    )Return of investment
    
    
    0.82Distributions
declared per Other Members Limited Liability Unit, based on weighted average Units
outstanding
    
    
    0.55Differences due to timing of distributions
    
    
    (0.15
    )Actual distribution rates per Unit
    
    $
    0.40
 Use of Proceeds from Registered Securities
  (1)
    
    Effective date of the offering: April 11, 2005; File Number: 333-120276(2)
    
    Offering commenced: April 11, 2005(3)
    
    The offering did not terminate before any securities were sold.(4)
    
    The offering has not been terminated prior to the sale of all of the
securities.(5)
    
    The managing underwriter is ATEL Securities Corporation.(6)
    
    The title of the registered class of securities is Units of Limited Liability
Company interest.(7)
    
    Aggregate amount and offering price of securities registered and sold as of
December 31, 2005:
 5




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Aggregateprice ofoffering
    
    
    
    
    
    Net aggregateAmount
    
    amount
    
    
    
    
    
    price of offeringTitle of Security
    
    Registered
    
    registered
    
    Net Units sold
    
    amount soldUnits of Limited
Liability Company
interest
    
    
    15,000,000
    
    
    $
    150,000,000
    
    
    
    3,950,348
    
    
    $
    39,503,480
 (8)
    
    Costs incurred for the issuers account in connection with the issuance and
distribution of the securities registered for each category listed below:
 Direct or indirectpayments to directors,officers, ManagingMember of the issueror their associates; topersons owning tenpercent or more of anyclass of equitysecurities of the issuer;and to affiliates of the
    
    
    Direct or indirectissuer
    
    
    payments to others
    
    
    TotalUnderwriting
discounts and
commissions
    
    $
    592,545
    
    
    $
    2,962,723
    
    
    $
    3,555,268Other expenses
    
    
    689,508
    
    
    
    1,169,719
    
    
    
    1,859,227Total expenses
    
    $
    1,282,053
    
    
    $
    4,132,442
    
    
    $
    5,414,495
 (9)
    
    The amount of net offering proceeds to the issuer used for each of the purposes listed
below:
 Direct or indirectpayments to directors,officers, ManagingMember of the issueror their associates; topersons owning tenpercent or more of anyclass of equitysecurities of the issuer;and to affiliates of the
    
    
    Direct or indirectissuer
    
    
    payments to others
    
    
    TotalPurchase and installation of
machinery and equipment
    
    $
    170,697
    
    
    $
    14,970,671
    
    
    $
    15,141,368Investment in notes receivable
    
    
    44,854
    
    
    
    6,725,522
    
    
    
    6,770,376Working capital
    
    
    
    
    
    
    12,177,241
    
    
    
    12,177,241$
    215,551
    
    
    $
    33,873,434
    
    
    $
    34,088,985
 (10)
    
    The use of the proceeds in Item 10 does not represent a material change
in the uses of proceeds described in the prospectus.
 6




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Item 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Capital Resources and Liquidity
      Total amount available under the financing arrangement
    
    $
    75,000,000Amounts borrowed by affiliated partnerships and limited
liability companies under the acquisition facility
    
    
    (12,500,000
    )Total available under the above mentioned facilities
    
    $
    62,500,000   7




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8




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Cash Flows
 2005 vs. 2004
     Results of Operations
    2005Rail
    
    
    50
    %Health Care
    
    
    18
    %Manufacturing
    
    
    32
    %
  Utilization of equipment purchased byyear
    
    20052005
    
    
    100
    %
  9




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Recent Accounting Pronouncements
 Accounting Changes and Error Corrections Accounting Changes Reporting Changes in Interim Financial Statements
 Critical Accounting Policies
  10




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Equipment on operating leases:
  Initial direct costs related to operating lease assets:
 Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases)
 Initial direct costs related to notes receivable:
  Unearned operating lease income:
  Use of estimates:
  Asset valuation:
 Accounting for
the Impairment or Disposal of Long-Lived Assets
 Notes receivable and unearned interest income:
    11




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Investment securities  warrants
  
 Item 7. FINANCIAL STATEMENTS
  12




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13




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 BALANCE SHEET
 DECEMBER 31, 2005
 2005ASSETSCash and cash equivalents
    
    $
    12,865,675Accounts receivable
    
    
    104,829Notes receivable, net
    
    
    6,557,971Other assets
    
    
    447,614Investments in equipment and leases, net
    
    
    14,926,446Total assets
    
    $
    34,902,535LIABILITIES AND MEMBERS CAPITALAccounts payable:Trade
    
    $
    779Managing Member
    
    
    11,814Accrued liabilities:Other
    
    
    654,808Managing Member
    
    
    438,031Affiliates
    
    
    141,753Advances from Managing Member
    
    
    300,000Unearned operating lease income
    
    
    627,568Total liabilities
    
    
    2,174,753Commitments and contingenciesMembers capital:Managing Member
    
    
    Other Members
    
    
    32,727,782Total Members capital
    
    
    32,727,782Total liabilities and Members capital
    
    $
    34,902,535
  14




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 STATEMENTS OF OPERATIONS
 FOR THE YEAR ENDED DECEMBER 31, 2005
AND FOR THE PERIOD FROM
JUNE 25, 2004 (INCEPTION)
THROUGH DECEMBER 31, 2004
 2005
    
    
    2004Revenues:Leasing activities:Operating leases
    
    $
    276,461
    
    
    $
    Interest:Interest earned on cash and cash equivalents
    
    
    260,057
    
    
    
    Interest earned on notes receivable
    
    
    68,047
    
    
    
    Total revenues
    
    
    604,565
    
    
    
    Expenses:Depreciation of operating lease assets
    
    
    211,977
    
    
    
    Acquisition expense
    
    
    359,651
    
    
    
    Amortization of initial direct costs
    
    
    7,777
    
    
    
    Asset management fees to Managing Member
    
    
    19,895
    
    
    
    Cost reimbursements to Managing Member
    
    
    74,733
    
    
    
    Professional fees
    
    
    112,150
    
    
    
    Taxes on income and franchise fees
    
    
    42,157
    
    
    
    Other
    
    
    39,480
    
    
    
    Total expenses
    
    
    867,820
    
    
    
    Net loss
    
    $
    (263,255
    )
    
    $
    Net loss:Managing Member
    
    $
    82,234
    
    
    $
    Other Members
    
    
    (345,489
    )
    
    
    $
    (263,255
    )
    
    $
    Net loss per
Other Members Limited Liability Company Unit
    
    $
    (0.27
    )
    
    $
    Weighted
average number of Other Members Units outstanding
    
    
    1,268,991
    
    
    
    
  15




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 STATEMENTS OF CHANGES IN MEMBERS CAPITAL
 FOR THE YEAR ENDED DECEMBER 31, 2005
AND FOR THE PERIOD FROM
JUNE 25, 2004 (INCEPTION)
THROUGH DECEMBER 31, 2004
 Other Members
    
    
    ManagingUnits
    
    
    Amount
    
    
    Member
    
    
    TotalMembers capital as of June 25, 2004 (inception)
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Initial capital contributions
    
    
    50
    
    
    
    500
    
    
    
    100
    
    
    
    600Balance December 31, 2004
    
    
    50
    
    
    
    500
    
    
    
    100
    
    
    
    600Capital contributions
    
    
    3,970,298
    
    
    
    39,702,980
    
    
    
    
    
    
    
    39,702,980Less selling commissions to affiliates
    
    
    
    
    
    
    (3,555,268
    )
    
    
    
    
    
    
    (3,555,268
    )Other
syndication costs to Managing Member and affiliates
    
    
    
    
    
    
    (1,859,227
    )
    
    
    
    
    
    
    (1,859,227
    )Rescissions of capital contributions
    
    
    (20,000
    )
    
    
    (200,000
    )
    
    
    
    
    
    
    (200,000
    )Distributions to other members ($0.40 per unit)
    
    
    
    
    
    
    (1,015,714
    )
    
    
    
    
    
    
    (1,015,714
    )Distributions to managing member
    
    
    
    
    
    
    
    
    
    
    (82,334
    )
    
    
    (82,334
    )Net income (loss)
    
    
    
    
    
    
    (345,489
    )
    
    
    82,234
    
    
    
    (263,255
    )Balance December 31, 2005
    
    
    3,950,348
    
    
    $
    32,727,782
    
    
    $
    
    
    
    $
    32,727,782
  16




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 STATEMENTS OF CASH FLOWS
 FOR THE YEAR ENDED DECEMBER 31, 2005
AND FOR THE PERIOD FROM
JUNE 25, 2004 (INCEPTION)
THROUGH DECEMBER 31, 2004
 2005
    
    
    2004Operating activities:Net loss
    
    $
    (263,255
    )
    
    $
    Adjustments to reconcile net loss to cash provided
by operating activities:Depreciation
    
    
    211,977Amortization of initial direct costs
    
    
    7,777Recognition of unearned interest income
    
    
    (68,047
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (104,829
    )Other assets
    
    
    (447,614
    )Accounts payable, Managing Member
    
    
    11,814Accounts payable, Trade
    
    
    779Accrued liabilities, Managing Member
    
    
    438,031Accrued liabilities, affiliates
    
    
    141,753Accrued
liabilities, other
    
    
    654,808Advances from Managing Member
    
    
    300,000Unearned fee income related to notes receivable
    
    
    13,220Unearned operating lease income
    
    
    627,568
    
    
    
    Net cash provided by operating activities
    
    
    1,523,982
    
    
    
    Investing activities:Investment in operating leases
    
    
    (14,970,671
    )Note receivable advances
    
    
    (6,725,522
    )Payments received on notes receivable
    
    
    262,401Payments of initial direct costs
    
    
    (215,551
    )
    
    
    Net cash used in investing activities
    
    
    (21,649,343
    )
    
    
    Financing activities:Capital contributions received
    
    
    39,702,980
    
    
    
    600Payment of
syndication costs to Managing Member and affiliates
    
    
    (5,414,495
    )Rescissions of capital contributions
    
    
    (200,000
    )Distributions to Other Members
    
    
    (701,370
    )Distributions to Managing Member
    
    
    (56,846
    )Distributions declared and payable
    
    
    (339,833
    )Net cash provided by financing activities
    
    
    32,990,436
    
    
    
    Net increase in cash and cash equivalents
    
    
    12,865,075
    
    
    
    600Cash and cash equivalents at beginning of year
    
    
    600
    
    
    
    Cash and cash equivalents at end of year
    
    $
    12,865,675
    
    
    $
    600
  17




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 1. Organization and Limited Liability Company matters:
      2. Summary of significant accounting policies:
 Basis of presentation:
  Use of estimates:
  Cash and cash equivalents:
  Accounts receivable:
  18




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 2. Summary of significant accounting policies (continued):
 Equipment on operating leases:
  Initial direct costs related to operating lease assets:
 Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases
 Initial direct costs related to notes receivable:
  Unearned operating lease income:
  Operating lease terms:
  Notes receivable terms:
 .
 Income taxes:
   2005
    
    
    2004Financial statement basis of net assets
    
    $
    32,727,782
    
    
    $
    600Tax basis of net assets (unaudited)
    
    
    38,797,729
    
    
    
    600Difference
    
    $
    6,069,947
    
    
    $
    
  19




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 2. Summary of significant accounting policies (continued):
  Net loss per financial statements
    
    $
    (263,255
    )Tax adjustments (unaudited):Adjustment to depreciation expense
    
    
    (452,478
    )Adjustments to revenues
    
    
    341,526Other adjustments
    
    
    43,565Net loss per federal tax return (unaudited)
    
    $
    (330,642
    )
 Per unit data:
  Asset valuation:
 Accounting for the
Impairment or Disposal of Long-Lived Assets
 Segment reporting:
 Disclosures about Segments of an Enterprise
and Related Information
   Geographic area
    
    2005United States
    
    
    98
    %Europe
    
    
    2
    %
 20




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 2. Summary of significant accounting policies (continued):
 Credit risk:
  Notes receivable and unearned interest income:
    Revenue recognition:
 Operating leases
  Interest income from notes receivable
  Organization and Offering Expenses.
  21




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 2. Summary of significant accounting policies (continued):
 Recent accounting pronouncements:
 Accounting Changes and Error Corrections Accounting Changes Reporting Changes in Interim Financial Statements
 3. Investments in equipment and leases, net:
  Depreciation/AmortizationExpense orBalance
    
    
    
    
    
    
    Amortization of
    
    
    Reclassi-December 31,
    
    
    Additions,
    
    
    Direct Financing
    
    
    fications or
    
    
    December 31,2004
    
    
    at Cost
    
    
    Leases
    
    
    Dispositions
    
    
    2005Net investment in operating leases
    
    $
    
    
    
    $
    14,970,671
    
    
    $
    (211,977
    )
    
    $
    
    
    
    $
    14,758,694Initial direct costs
    
    
    
    
    
    
    170,697
    
    
    
    (2,945
    )
    
    
    
    
    
    
    167,752$
    
    
    
    $
    15,141,368
    
    
    $
    (214,922
    )
    
    $
    
    
    
    $
    14,926,446
 Impairment of investments in leases and assets held for lease:
   22




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 3. Investments in equipment and leases, net (continued):
 Operating leases:
  Balance
    
    
    
    
    
    
    
    
    
    
    Reclassi-
    
    
    Net BalanceDecember 31,
    
    
    Additions,
    
    
    Depreciation
    
    
    fications or
    
    
    December 31,2004
    
    
    at Cost
    
    
    Expense
    
    
    Dispositions
    
    
    2005Manufacturing
    
    $
    
    
    
    $
    622,892
    
    
    $
    (27,364
    )
    
    $
    
    
    
    $
    595,528Materials handling
    
    
    
    
    
    
    4,132,141
    
    
    
    (25,181
    )
    
    
    
    
    
    
    4,106,960Transportation
    
    
    
    
    
    
    10,215,638
    
    
    
    (159,432
    )
    
    
    
    
    
    
    10,056,206Total
    
    $
    
    
    
    $
    14,970,671
    
    
    $
    (211,977
    )
    
    $
    
    
    
    $
    14,758,694
  Equipment category
    
    Useful LifeRail and other transportation
    
    
    7-35Manufacturing
    
    
    320Materials Handling
    
    
    7-10
  Year ending December 31,
    
    Amount2006
    
    $
    2,685,7322007
    
    
    2,692,1772008
    
    
    2,666,6302009
    
    
    1,802,7272010
    
    
    1,685,188Thereafter
    
    
    4,051,427Total payments
    
    $
    15,583,881
 4. Notes receivable:
   Year ending December 31,
    
    Amount2006
    
    $
    2,108,4382007
    
    
    1,988,4972008
    
    
    1,714,0822009
    
    
    541,4902010
    
    
    393,128Thereafter
    
    
    1,655,773Gross notes receivable
    
    
    8,401,408Less portion representing interest
    
    
    (1,883,459
    )Subtotal
    
    
    6,517,949Initial direct costs paid to Managing Member, net
    
    
    40,022$
    6,557,971
 23




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 5. Related Party Transactions:
    2005Selling commissions (equal to 9% of the selling price of the Limited Liability
Company Units, deducted from Other Members capital)
    
    $
    3,555,268Reimbursement of
other syndication costs to AFS and affiliates, deducted from Other Members
capital
    
    
    1,859,227Asset management fees to AFS
    
    
    19,895Costs reimbursed to AFS
    
    
    552,989Distributions
paid to AFS
    
    
    56,846$
    6,043,849
   6. Members capital:
  7. Commitments:
  8. Concentration of credit risk and major customers:
  24




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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 8. Concentration of credit risk and major customers (continued):
  2005Rail
    
    
    50
    %Manufacturing
    
    
    32
    %Health Care
    
    
    18
    %
  Type ofLessee
    
    Equipment
    
    2005Union Pacific
    
    Transportation
    
    
    61
    %
  % ofIndustry
of Borrower
    

Loan
Amount
    

Total
FundingsManufacturing
    
    $  2,503,105
    
    
    37
    %Health
services
    
    1,625,000
    
    
    24
    %Business
services-technology
    
    1,315,391
    
    
    20
    %Communication
    
    816,253
    
    
    12
    %Electronics
    
    465,773
    
    
    7
    %$  6,725,522
    
    
    100
    %
  9. Borrowing facilities:
   Total amount available under the financing arrangement
    
    $
    75,000,000Amounts borrowed by affiliated partnerships and
limited liability companies under the acquisition
facility
    
    
    (12,500,000
    )Total available under the above mentioned facilities
    
    $
    62,500,000
     25




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##### Table of Contents



ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 9. Borrowing facilities (continued):
   10. Fair value of financial instruments:
   11. Reserves, impairment losses and provisions for doubtful accounts:
  12. Guarantees:
   26




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##### Table of Contents



ATEL CAPITAL EQUIPMENT FUND XI, LLC
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 13. Investment securities  warrants:
 
 14. Other assets and other liabilities:
  15. Subsequent event:
 
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##### Table of Contents



Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
  
 Item 8A. CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures
   Changes in internal control
       28




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##### Table of Contents



PART III
 
 Item 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
     Dean L. Cash
    
    President and Chief Executive Officer of
ATEL Financial Services, LLC (Managing Member)Paritosh K. Choksi
    
    Executive Vice President and Chief Financial and Operating Officer of
ATEL Financial Services, LLC (Managing Member)Vasco H. Morais
    
    Senior Vice President, Secretary and General Counsel
of ATEL Financial Services, LLC (Managing Member)
    29




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##### Table of Contents



Audit Committee
  Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  
 Item 10. EXECUTIVE COMPENSATION
   Selling Commissions
   Asset Management Fee and Carried Interest
    Limitations on Fees
  30




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##### Table of Contents



31




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##### Table of Contents



Managing Members Interest in Operating Proceeds
  
 Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Security Ownership of Certain Beneficial Owners
  Security Ownership of Management
  (1)
    
    (2)
    
    (3)
    
    (4)Name and Address of
    
    Amount and Nature of
    
    PercentTitle of Class
    
    Beneficial Owner
    
    Beneficial Ownership
    
    of ClassLimited Liability Company Units
    
    ATEL Capital Group
    
    Initial Limited Liability
    
    
    0.0011
    %600 California Street, 6th Floor
San Francisco, CA 94108
    
    Company Units
50 Units ($500)
 Changes in Control
   
 Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 32




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##### Table of Contents



Item 13. EXHIBITS
  Exhibit Number
    
    Description of Exhibit3.1, 4.1
    
    Amended and Restated Limited Liability Company Agreement, included as Exhibit B to the
Prospectus included in the registrants registration statement on form S-1 effective April 11,
2005, (File Number 333- 120276) is hereby incorporated as Exhibits 3.1 and 4.1 to this report by
this reference.14.1
    
    Code of Ethics31.1
    
    Rule 13a-14(a)/ 15d-14(a) Certification of Paritosh K. Choksi31.2
    
    Rule 13a-14(a)/ 15d-14(a) Certification of Dean L. Cash32.1
    
    Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash32.2
    
    Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
 
 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  2005
    
    
    2004Audit fees
    
    $
    78,353
    
    
    $
    46,118Audit related fees
    
    
    
    
    
    
    Tax fees
    
    
    18,100
    
    
    
    Other
    
    
    
    
    
    
    $
    96,453
    
    
    $
    46,118
  33




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##### Table of Contents



SIGNATURES
   
 By:
    
    ATEL Financial CorporationManaging Member of Registrant
 By:
    
    /s/ Dean Cash

Dean Cash,President and Chief Executive Officer ofATEL Financial Services, LLC (Managing Member)By:
    
    /s/ Paritosh K. Choksi

Paritosh K. Choksi,Executive Vice President and Chief Financial and Operating Officer ofATEL Financial Services, LLC (Managing Member)
  SIGNATURE
    
    CAPACITIES
    
    DATE/s/ Dean L. Cash

Dean Cash
    
    President and Chief Executive
Officer of ATEL Financial
Services, LLC (Managing Member)
    
    June 2, 2006/s/ Paritosh K. Choksi

Paritosh K. Choksi
    
    Executive Vice President and
Chief Financial and Operating
Officer of ATEL Financial
Services, LLC (Managing Member)
    
    June 2, 2006
  34