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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-QSB



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|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2007



| ̈ | 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



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ATEL Capital Equipment Fund XI,
LLC

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                       
|-------------------------------------------------------------- |  | --------------------------------------
|California                                                     |  | 20-1357935                            
|(State or other jurisdiction of Incorporation or organization) |  | (I. R. S. Employer Identification No.)

600 California Street, 6th Floor, San Francisco, California 94108

(Address of principal executive offices)

Registrants telephone number, including area code (415) 989-8800



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Securities registered pursuant to section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: None



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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes ̈No  x

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

The number of Limited Liability Company Units outstanding as of
May 31, 2007: 5,232,607

Transitional Small Business Disclosure Format (Check one):     Yes ̈No  x

DOCUMENTS INCORPORATED BY REFERENCE

None



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND XI, LLC

Index



|                                       |  |                                                                                                                              |  |   
|-------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | --
|                                       |  | Page                                                                                                                        
|Part I.          Financial Information |  | 3                                                                                                                           
|                                       |  |                                                                                                                             
|Item 1.                                |  | Financial Statements (Unaudited)                                                                                             |  | 3 
|                                       |  |                                                                                                                             
|                                       |  | Balance Sheet, March 31, 2007.                                                                                               |  | 3 
|                                       |  |                                                                                                                             
|                                       |  | Statements of Operations for the three months ended March 31, 2007 and 2006.                                                 |  | 4 
|                                       |  |                                                                                                                             
|                                       |  | Statement of Changes in Members Capital for the year ended December 31, 2006 and for the three months ended March 31, 2007. |  | 5 
|                                       |  |                                                                                                                             
|                                       |  | Statements of Cash Flows for the three months ended March 31, 2007 and 2006.                                                 |  | 6 
|                                       |  |                                                                                                                             
|                                       |  | Notes to the Financial Statements                                                                                            |  | 7 
|                                       |  |                                                                                                                             
|Item 2.                                |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                        |  | 19
|                                       |  |                                                                                                                             
|Item 3.                                |  | Controls and Procedures                                                                                                      |  | 23
|                                       | 
|Part II.        Other Information      |  | 24                                                                                                                          
|                                       |  |                                                                                                                             
|Item 1.                                |  | Legal Proceedings                                                                                                            |  | 24
|                                       |  |                                                                                                                             
|Item 2.                                |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |  | 24
|                                       |  |                                                                                                                             
|Item 3.                                |  | Defaults Upon Senior Securities                                                                                              |  | 25
|                                       |  |                                                                                                                             
|Item 4.                                |  | Submission of Matters to a Vote of Security Holders                                                                          |  | 25
|                                       |  |                                                                                                                             
|Item 5.                                |  | Other Information                                                                                                            |  | 25
|                                       |  |                                                                                                                             
|Item 6.                                |  | Exhibits                                                                                                                     |  | 25



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##### Table of Contents

Part I. FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

ATEL CAPITAL EQUIPMENT FUND XI, LLC

BALANCE SHEET

MARCH 31, 2007

(in thousands)

(Unaudited)



|                                                                               |  |               |       
|------------------------------------------------------------------------------ |  | ------------- | ------
|                                                                               |  | March 31,2007
|ASSETS                                                                         |  |               |       
|Cash and cash equivalents                                                      |  | $             | 1,449 
|Accounts receivable, net of allowance for doubtful accounts of $19             |  |               | 397   
|Notes receivable, net of unearned interest income of $1,606                    |  |               | 7,511 
|Investment in securities                                                       |  |               | 155   
|Investments in equipment and leases, net of accumulated depreciation of $7,032 |  |               | 40,669
|Other assets                                                                   |  |               | 10    
|                                                                               |  |               |       
|Total assets                                                                   |  | $             | 50,191
|                                                                               |  |               |       
|LIABILITIES AND MEMBERS CAPITAL                                               |  |               |       
|Accounts payable and accrued liabilities:                                      |  |               |       
|Managing Member                                                                |  | $             | 233   
|Accrued distributions to Other Members                                         |  |               | 554   
|Other                                                                          |  |               | 284   
|Non-recourse debt                                                              |  |               | 5,651 
|Acquisition facility obligation                                                |  |               | 6,000 
|Unearned operating lease income                                                |  |               | 1,006 
|                                                                               |  |               |       
|Total liabilities                                                              |  |               | 13,728
|Commitments and contingencies                                                  |  |               |       
|                                                                               | 
|Members capital:                                                              |  |               |       
|Managing Member                                                                |  |               |      
|Other Members                                                                  |  |               | 36,463
|                                                                               |  |               |       
|Total Members capital                                                         |  |               | 36,463
|                                                                               |  |               |       
|Total liabilities and Members capital                                         |  | $             | 50,191
|                                                                               |  |               |       

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED

MARCH 31, 2007
AND 2006

(in thousands, except per unit data)

(Unaudited)



|                                                            |  |                              |           |   |      |   |           |  
|----------------------------------------------------------- |  | ---------------------------- | --------- | - | ---- | - | --------- | -
|                                                            |  | Three Months Ended March 31, |          
|                                                            |  | 2007                         |           |   | 2006 |  
|Revenues:                                                   |  |                              |           |   |      |   |           |  
|Operating lease income                                      |  | $                            | 2,145     |   |      | $ | 1,011     |  
|Notes receivable interest income                            |  |                              | 203       |   |      |   | 172       |  
|Gain of sale of assets and early termination of notes       |  |                              | 112       |   |      |   |          |  
|Gain on sale of securities                                  |  |                              | 9         |   |      |   | 8         |  
|Interest income                                             |  |                              | 19        |   |      |   | 89        |  
|Other                                                       |  |                              | 14        |   |      |   | 5         |  
|                                                            |  |                              |           |   |      |   |           |  
|Total revenues                                              |  |                              | 2,502     |   |      |   | 1,285     |  
|                                                            |  |                             
|Expenses:                                                   |  |                              |           |   |      |   |           |  
|Depreciation of operating lease assets                      |  |                              | 1,799     |   |      |   | 841       |  
|Asset management fees to Managing Member                    |  |                              | 136       |   |      |   | 80        |  
|Acquisition expense                                         |  |                              | 265       |   |      |   | 489       |  
|Cost reimbursements to Managing Member                      |  |                              | 174       |   |      |   | 108       |  
|Provision for losses and doubtful accounts                  |  |                              | (12       | ) |      |   | 26        |  
|Amortization of initial direct costs                        |  |                              | 47        |   |      |   | 25        |  
|Interest expense                                            |  |                              | 181       |   |      |   |          |  
|Professional fees                                           |  |                              | 211       |   |      |   | 68        |  
|Outside services                                            |  |                              | 28        |   |      |   | 2         |  
|Other                                                       |  |                              | 39        |   |      |   | 18        |  
|                                                            |  |                              |           |   |      |   |           |  
|Total operating expenses                                    |  |                              | 2,868     |   |      |   | 1,657     |  
|Other income (loss), net                                    |  |                              | 35        |   |      |   | (2        | )
|                                                            |  |                              |           |   |      |   |           |  
|Net income (loss)                                           |  | $                            | (331      | ) |      | $ | (374      | )
|                                                            |  |                              |           |   |      |   |           |  
|Net income (loss):                                          |  |                              |           |   |      |   |           |  
|Managing Member                                             |  | $                            | 131       |   |      | $ | 96        |  
|Other Members                                               |  |                              | (462      | ) |      |   | (470      | )
|                                                            |  |                              |           |   |      |   |           |  
|                                                            |  | $                            | (331      | ) |      | $ | (374      | )
|                                                            |  |                              |           |   |      |   |           |  
|Net loss per Limited Liability Company Unit (Other Members) |  | $                            | (0.09     | ) |      | $ | (0.11     | )
|Weighted average number of Units outstanding                |  |                              | 5,232,607 |   |      |   | 4,381,652 |  

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

STATEMENT OF CHANGES IN MEMBERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2006

AND FOR THE

THREE MONTHS ENDED

MARCH 31, 2007

(in thousands, except per unit data)

(Unaudited)



|                                                          |  |               |   |  |                 |        |   |       |   |      |   |  |   |        |  
|--------------------------------------------------------- |  | ------------- | - |  | --------------- | ------ | - | ----- | - | ---- | - |  | - | ------ | -
|                                                          |  | Other Members |   |  | Managing Member |        |   | Total |  
|                                                          |  | Units         |   |  | Amount          |        |   |      
|Balance December 31, 2005                                 |  | 3,950,348     |   |  | $               | 32,728 |   |       | $ |     |   |  | $ | 32,728 |  
|Capital contributions                                     |  | 1,314,859     |   |  |                 | 13,149 |   |       |   |     |   |  |   | 13,149 |  
|Less selling commissions to affiliates                    |  |              |   |  |                 | (1,183 | ) |       |   |     |   |  |   | (1,183 | )
|Other syndication costs to Managing Member and affiliates |  |              |   |  |                 | (813   | ) |       |   |     |   |  |   | (813   | )
|Recissions of capital contributions                       |  | (32,600       | ) |  |                 | (312   | ) |       |   |     |   |  |   | (312   | )
|Distributions to Other Members ($.90 per unit)            |  |              |   |  |                 | (4,483 | ) |       |   |     |   |  |   | (4,483 | )
|Distributions to Managing Member                          |  |              |   |  |                 |       |   |       |   | (330 | ) |  |   | (330   | )
|Net income (loss)                                         |  |              |   |  |                 | (951   | ) |       |   | 330  |   |  |   | (621   | )
|                                                          |  |               |   |  |                 |        |   |       |   |      |   |  |   |        |  
|Balance December 31, 2006                                 |  | 5,232,607     |   |  |                 | 38,135 |   |       |   |     |   |  |   | 38,135 |  
|Distributions to Other Members ($.23 per unit)            |  |              |   |  |                 | (1,210 | ) |       |   |      |   |  |   | (1,210 | )
|Distributions to Managing Member                          |  |              |   |  |                 |       |   |       |   | (131 | ) |  |   | (131   | )
|Net income (loss)                                         |  |              |   |  |                 | (462   | ) |       |   | 131  |   |  |   | (331   | )
|                                                          |  |               |   |  |                 |        |   |       |   |      |   |  |   |        |  
|Balance March 31, 2007                                    |  | 5,232,607     |   |  | $               | 36,463 |   |       | $ |     |   |  | $ | 36,463 |  
|                                                          |  |               |   |  |                 |        |   |       |   |      |   |  |   |        |  

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED

MARCH 31, 2007
AND 2006

(in thousands)

(Unaudited)



|                                                                           |  |                              |        |   |      |   |         |  
|-------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------- | -
|                                                                           |  | Three Months Ended March 31, |       
|                                                                           |  | 2007                         |        |   | 2006 |  
|Operating activities:                                                      |  |                              |        |   |      |   |         |  
|Net loss                                                                   |  | $                            | (331   | ) |      | $ | (374    | )
|Adjustment to reconcile net loss to cash provided by operating activities: |  |                              |        |   |      |   |         |  
|Gain on sales of assets and early termination of notes                     |  |                              | (112   | ) |      |   |        |  
|Depreciation of operating lease assets                                     |  |                              | 1,799  |   |      |   | 841     |  
|Amortization of initial direct costs                                       |  |                              | 47     |   |      |   | 25      |  
|Provision for losses and doubtful accounts                                 |  |                              | (12    | ) |      |   | 26      |  
|Gain on sale of securities                                                 |  |                              | (9     | ) |      |   | (8      | )
|Changes in operating assets and liabilities:                               |  |                              |        |   |      |   |         |  
|Accounts receivable                                                        |  |                              | 159    |   |      |   | (653    | )
|Prepaids and other assets                                                  |  |                              | (9     | ) |      |   | 388     |  
|Accounts payable, Managing Member                                          |  |                              | 45     |   |      |   | 218     |  
|Accounts payable, other                                                    |  |                              | (1,427 | ) |      |   | 363     |  
|Accrued liabilities, affiliates                                            |  |                              |       |   |      |   | 27      |  
|Advances from Managing Member                                              |  |                              |       |   |      |   | (300    | )
|Unearned operating lease income                                            |  |                              | (107   | ) |      |   | 255     |  
|                                                                           |  |                              |        |   |      |   |         |  
|Net cash (used in) provided by operating activities                        |  |                              | 43     |   |      |   | 808     |  
|                                                                           |  |                              |        |   |      |   |         |  
|Investing activities:                                                      |  |                              |        |   |      |   |         |  
|Purchases of equipment on operating leases                                 |  |                              | (5,313 | ) |      |   | (12,164 | )
|Proceeds from early termination of notes receivable                        |  |                              | 1,191  |   |      |   |        |  
|Payments of initial direct costs                                           |  |                              | (27    | ) |      |   | (293    | )
|Reduction of net investment in direct financing leases                     |  |                              | 19     |   |      |   |        |  
|Note receivable advances                                                   |  |                              | (859   | ) |      |   | (168    | )
|Proceeds from sale of securities                                           |  |                              | 9      |   |      |   | 8       |  
|Payments and amortization of notes receivable                              |  |                              | 674    |   |      |   | 393     |  
|                                                                           |  |                              |        |   |      |   |         |  
|Net cash used in investing activities                                      |  |                              | (4,306 | ) |      |   | (12,224 | )
|                                                                           |  |                              |        |   |      |   |         |  
|Financing activities:                                                      |  |                              |        |   |      |   |         |  
|Borrowings under non-recourse debt                                         |  |                              | 5,745  |   |      |   |        |  
|Repayments under non-recourse debt                                         |  |                              | (94    | ) |      |   |        |  
|Borrowings under acquisition facility                                      |  |                              | 5,500  |   |      |   |        |  
|Repayments under acquisition facility                                      |  |                              | (9,000 | ) |      |   |        |  
|Syndication costs paid to Managing Member                                  |  |                              |       |   |      |   | (1,214  | )
|Distributions to Other Members                                             |  |                              | (1,210 | ) |      |   | (876    | )
|Distributions to Managing Member                                           |  |                              | (131   | ) |      |   | (97     | )
|Capital contributions                                                      |  |                              |       |   |      |   | 8,586   |  
|                                                                           |  |                              |        |   |      |   |         |  
|Net cash provided by financing activities                                  |  |                              | 810    |   |      |   | 6,399   |  
|                                                                           |  |                              |        |   |      |   |         |  
|Net decrease in cash and cash equivalents                                  |  |                              | (3,453 | ) |      |   | (5,017  | )
|Cash and cash equivalents at beginning of period                           |  |                              | 4,902  |   |      |   | 12,866  |  
|                                                                           |  |                              |        |   |      |   |         |  
|Cash and cash equivalents at end of period                                 |  | $                            | 1,449  |   |      | $ | 7,849   |  
|                                                                           |  |                              |        |   |      |   |         |  
|Supplemental disclosures of cash flow information:                         |  |                              |        |   |      |   |         |  
|Cash paid during the period for interest                                   |  | $                            | 150    |   |      | $ |        |  
|                                                                           |  |                              |        |   |      |   |         |  
|Schedule of non-cash transactions:                                         |  |                              |        |   |      |   |         |  
|Distributions payable to Other Members at period-end                       |  | $                            | 554    |   |      | $ | 413     |  
|                                                                           |  |                              |        |   |      |   |         |  

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS

1. Organization and Limited Liability Company matters:

ATEL Capital
Equipment Fund XI, LLC (the Company) was formed under the laws of the State of California on June 25, 2004. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing, lending and sales activities.
The Managing Member of the Company is ATEL Financial Services, LLC (AFS), a California limited liability company. The Company may continue until December 31, 2025. Each Members personal liability for obligations of the Company
generally will be limited to the amount of their respective contributions and rights to undistributed profits and assets of the Company. Contributions in the amount of $52.3 million were received as of March 31, 2007, consisting of
approximately $52.8 million in gross contributions from Other Members purchasing Units under the public offering less rescissions of $512 thousand.

The
Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. On May 31, 2005, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been
received and AFS requested that the subscriptions be released to the Company. On that date the Company commenced operations in its primary business (leasing and lending activities). Therefore, up through May 2005, the Company was a development stage
company and had no operations. As of July 13, 2005, the Company had received subscriptions for 958,274 Units ($9,582,740), thus exceeding the $7.5 million minimum requirement for Pennsylvania, and AFS requested that the remaining funds in
escrow (from Pennsylvania investors) be released to the Company. The Company terminated sales of Units effective April 30, 2006.

As of March 31,
2007, 5,232,607 Units were issued and outstanding.

The Companys principal objectives are to invest in a diversified portfolio of equipment that will
(i) preserve, protect and return the Companys invested capital; (ii) generate regular distributions to the Members of cash from operations and cash from sales or refinancing, with any balance remaining after certain minimum
distributions to be used to purchase additional equipment during the Reinvestment Period (ending six calendar years after the completion of the Companys public offering of Units) and (iii) provide additional distributions following the
Reinvestment Period and until all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement (Operating Agreement), as amended.

The Company, or AFS on behalf of the Company, has incurred costs in connection with the organization, registration and issuance of the Limited Liability Company Units (Note 5). The amount of such costs to be borne by
the Company is limited by certain provisions of the Operating Agreement. The Company will pay AFS and affiliates of AFS substantial fees which may result in a conflict of interest. The Company will pay substantial fees to AFS and its affiliates
before distributions are paid to investors even if the Company does not produce profits. Therefore, the financial position of the Company could change significantly.

2. Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim
financial information and with instructions to Form 10-QSB and Item 310(b) of Regulation S-B. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary to a fair statement of
financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. The preparation of financial statements in accordance with GAAP requires management to make estimates and
assumptions that effect reported amounts in the financial statements and accompanying notes. Therefore, actual results could differ from those estimates. Operating results for the three months ended March 31, 2007 are not necessarily indicative
of the results for the year ending December 31, 2007.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):



These unaudited interim financial statements should be read in conjunction with the financial
statements and notes thereto contained in the report on Form 10-KSB for the year ended December 31, 2006, filed with the Securities and Exchange Commission.

Certain prior period amounts have been reclassified to conform to the current period presentation. Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

Use of estimates:

The preparation of financial statements in
conformity with accounting principles generally accepted in the United States 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. Such estimates primarily relate to the determination of residual values at the end of
the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts and notes receivable.

Cash and cash equivalents:

Cash and cash equivalents include cash in banks and cash equivalent investments with original maturities of
ninety days or less.

Credit risk:

Financial
instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, direct finance lease receivables, notes receivable and accounts receivable. The Company places its cash deposits and temporary cash
investments with creditworthy, high quality financial institutions and, therefore, believes that such concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts receivable
represent amounts due from lessees in various industries, related to equipment on operating and direct financing leases.

Accounts receivable:

Accounts receivable represent the amounts billed under operating and direct financing lease contracts and currently due to the Company. Allowances for
doubtful accounts are typically established based on historical charge offs and collection experience and are usually determined by specifically identified lessees and invoiced amounts. Accounts receivable deemed uncollectible are charged off to the
allowance on specific identification basis. Amounts recovered that were previously written-off are recorded as other income in the period received.

Direct financing leases and related revenue recognition:

Income from direct financing lease transactions is reported using the financing
method of accounting, in which the Companys investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The interest income portion of each rental payment is calculated so as to
generate a constant rate of return on the net receivable outstanding.

Allowances for losses on direct financing leases are typically established based on
historical charge offs and collections experience and are usually determined by specifically identified lessees and unbilled receivables. Direct financing leases are charged off to the allowance as they are deemed uncollectible.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):



Direct financing leases are generally placed in a non-accrual status (i.e., no revenue is
recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the credit worthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon managements judgment, direct
finance lessees may be placed in a non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is
probable.

Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is being recognized on a straight-line method over the terms of the related leases to the equipments estimated residual values at the end of
the leases.

Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to
the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally from 36 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned
operating lease income on the balance sheet.

Notes receivable, unearned interest income and related revenue recognition:

The Company records all future payments of principal and interest on notes as notes receivable which is then offset by the amount of any related unearned interest income.
For financial statement purposes, the Company reports only the net amount of principal due on the balance sheet. The unearned interest is recognized over the term of the note and the income portion of each note payment is calculated so as to
generate a constant rate of return on the net balance outstanding. Any fees or costs related to notes receivable are recorded as part of the net investment in notes receivable and amortized over the term of the loan.

Allowances for losses on notes receivable are typically established based on historical charge offs and collections experience and are usually determined by specifically
identified borrowers and billed and unbilled receivables. Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.
Notes are charged off to the allowance as they are deemed uncollectible.

Notes receivable are generally placed in a non-accrual status (i.e., no revenue
is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the credit worthiness of companies with note payments outstanding less than 90 days. Based upon managements judgment, notes may be
placed in a non-accrual status. Notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable.

Initial direct costs:

The Company capitalizes initial direct costs
(IDC) associated with the origination and funding of lease assets and investments in notes receivable as defined in Statement of Financial Accounting Standards (SFAS) No. 91 (SFAS No. 91)
Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases. IDC includes both internal costs (e.g., labor and overhead) and external broker fees incurred with the
origination. The costs are amortized on a lease by lease (or note by note) basis based on actual contract term using a straight-line method for operating leases and the effective interest rate method for direct finance leases and notes receivable.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):



Upon disposal of the underlying lease assets, both the initial direct costs and the
associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition expense:

Acquisition expense represents costs which
include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to
the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.

Asset valuation:

Recorded values of the Companys asset portfolio are periodically reviewed for impairment in
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net
book value. The estimated undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the assets expected holding period and estimates of undiscounted future rents. The residual value assumes, among
other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the market place are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the
assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows) of the asset and its
carrying value on the measurement date.

Segment reporting:

The Company reports segment information in accordance with SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information. SFAS No. 131 establishes annual and interim standards for operating segments
of a company. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenue, and its major customers. The Company is not organized by multiple
operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.

The Companys chief operating decision makers are the Managing Members Chief Operating Officer and its Chief Executive Officer. The Company believes that its equipment leasing business operates as one
reportable segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the chief operating decision makers do not review information based on any operating segment other than the equipment leasing
transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and
services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):



The primary geographic regions in which the Company seeks leasing opportunities are North
America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Companys total revenues for the three months ended March 31, 2007 and 2006 and long-lived tangible assets as of
March 31, 2007 (in thousands).



|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|-------------------------- |  | ------------------------------------ | ------ | ---------- | --- | - | ---- | - | ---------- |  | --- | -
|                           |  | For the three months ended March 31, |       
|                           |  | 2007                                 |        | % of Total |     |   | 2006 |   | % of Total | 
|Revenue                    |  |                                      |        |            |     |   |      |   |            |  |     |  
|United States              |  | $                                    | 2,257  |            | 90  | % |      | $ | 1,130      |  | 88  | %
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|United Kingdom             |  |                                      | 245    |            | 10  | % |      |   | 155        |  | 12  | %
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|Total International        |  |                                      | 245    |            | 10  | % |      |   | 155        |  | 12  | %
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|Total                      |  | $                                    | 2,502  |            | 100 | % |      | $ | 1,285      |  | 100 | %
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|                           |  |                                      |        |           
|                           |  | As of March 31, 2007                 |        | % of Total |     |   |      |   |            | 
|Long-lived tangible assets |  |                                      |        |            |     |   |      |   |            |  |     |  
|United States              |  | $                                    | 36,670 |            | 90  | % |      |   |            |  |     |  
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|United Kingdom             |  |                                      | 3,999  |            | 10  | % |      |   |            |  |     |  
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|Total International        |  |                                      | 3,999  |            | 10  | % |      |   |            |  |     |  
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  
|Total                      |  | $                                    | 40,669 |            | 100 | % |      |   |            |  |     |  
|                           |  |                                      |        |            |     |   |      |   |            |  |     |  

Foreign currency transactions:

Foreign currency transaction gains and losses are reported in the results of operations as other income in the period in which they occur. Currently, the Company does not use derivative instruments to hedge its
economic exposure with respect to assets, liabilities and firm commitments as the foreign currency transactions and risks to date have not been significant. During the three months ended March 31, 2007 and 2006, the Company recognized a foreign
currency gain of $35 thousand and a foreign currency loss of $2 thousand, respectively.

Unearned operating lease income:

The Company records prepayments on operating leases as a liability, unearned operating lease income. The liability is recorded when the prepayments are received and
recognized as operating lease revenue ratably over the period to which the prepayments relate.

Income taxes:

The Company is treated as a partnership for federal income tax purposes. Pursuant to the provisions of Section 701 of the Internal Revenue Code, a partnership is not
subject to federal income taxes. Accordingly, the Company has provided current income taxes for only those states which levy income taxes on partnerships.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):



Other income (expense), net:

During the three months ended March 31, 2007 and 2006, other income (expense) consisted solely of gains and losses on foreign currency transactions. The Company
recorded other income of $35 thousand and other expense of $2 thousand for the three months ended March 31, 2007 and 2006, respectively.

Per unit
data:

Net income (loss) and distributions per unit are based upon the weighted average number of Other Members units outstanding during the
period.

Recent accounting pronouncements:

In February
2007, the Financial Accounting Standards Board (FASB) issued Statement No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115. This Statement permits
entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement
objectives for accounting for financial instruments. SFAS 159 is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007 (January 1, 2008). The standard is not applicable to direct financing and
operating leases. The Company does not presently anticipate any significant impact on its consolidated financial position, results of operations or cash flows.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). This standard clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. As of March 31, 2007, the Fund does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used
to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period.

In
June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FAS 109, Accounting for Income Taxes (FIN 48), to create a single model to address accounting for
uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on
deregulation, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of FIN 48 on
January 1, 2007. The adoption of FIN 48 did not have a significant effect on the Companys financial position and results of operations for the quarter ended March 31, 2007.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



3. Notes receivable:

The Company has various notes receivable from parties who have financed the purchase of equipment through the Company. The terms of the notes receivable generally are up to 120 months and bear interest at rates ranging from 8.5% to 17.4%.
The notes are secured by the equipment financed. There was one impaired note of $143 thousand at March 31, 2007, and the Company has established a 100% reserve against it. As of March 31, 2007, the minimum future payments receivable are as
follows (in thousands):



|                                                    |  |   |        |  
|--------------------------------------------------- |  | - | ------ | -
|Nine months ending December 31, 2007                |  | $ | 2,459  |  
|Year ending December 31, 2008                       |  |   | 3,030  |  
|2009                                                |  |   | 1,609  |  
|2010                                                |  |   | 478    |  
|2011                                                |  |   | 393    |  
|2012                                                |  |   | 393    |  
|Thereafter                                          |  |   | 870    |  
|                                                    |  |   |        |  
|                                                    |  |   | 9,232  |  
|Less: portion representing unearned interest income |  |   | (1,606 | )
|                                                    |  |   |        |  
|                                                    |  |   | 7,626  |  
|Unamortized initial direct costs                    |  |   | 28     |  
|Less: reserve for impairment                        |  |   | (143   | )
|                                                    |  |   |        |  
|Notes receivable, net                               |  | $ | 7,511  |  
|                                                    |  |   |        |  

For the respective three month periods ended March 31, 2007 and 2006, IDC amortization expense related to
notes receivable was $10 thousand and $7 thousand. Together with IDC amortization expense related to operating leases and direct finance leases (discussed in footnote 4) of $37 thousand and $18 thousand, respectively, total IDC amortization expense
was $47 thousand and $25 thousand for the three months ended March 31, 2007 and 2006, respectively.

4. Investment in equipment leases:

The Companys investment in leases consists of the following (in thousands):



|                                                                                                              |  |                         |        |                                            |   |       |                                                          |  |   |                      |   |  |   |       
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ------------------------------------------ | - | ----- | -------------------------------------------------------- |  | - | -------------------- | - |  | - | ------
|                                                                                                              |  | BalanceDecember 31,2006 |        | Reclassifications& Additions /Dispositions |   |       | Depreciation/AmortizationExpense orAmortizationof Leases |  |   | BalanceMarch 31,2007
|Net investment in operating leases                                                                            |  | $                       | 36,625 |                                            | $ | 5,313 |                                                          |  | $ | (1,799               | ) |  | $ | 40,139
|Net investment in direct financing leases                                                                     |  |                         | 55     |                                            |   | (19   | )                                                        |  |   |                     |   |  |   | 36    
|Assets held for sale or lease, net                                                                            |  |                         |       |                                            |   |      |                                                          |  |   |                     |   |  |   |      
|Initial direct costs, net of accumulated amortization of $150 at March 31, 2007 and $113 at December 31, 2006 |  |                         | 511    |                                            |   | 20    |                                                          |  |   | (37                  | ) |  |   | 494   
|                                                                                                              |  |                         |        |                                            |   |       |                                                          |  |   |                      |   |  |   |       
|Total                                                                                                         |  | $                       | 37,191 |                                            | $ | 5,314 |                                                          |  | $ | (1,836               | ) |  | $ | 40,669
|                                                                                                              |  |                         |        |                                            |   |       |                                                          |  |   |                      |   |  |   |       



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



4. Investment in equipment leases (continued):



For the respective three month periods ended March 31, 2007 and 2006, IDC amortization expense related to operating leases and direct
finance leases was $37 thousand and $18 thousand, respectively.

Impairment of investments in leases and assets held for sale or lease:

Impairment losses are recorded as an addition to accumulated depreciation of the impaired assets. Depreciation expense on property subject to operating leases and
property held for lease or sale was $1.8 million and $841 thousand for the three months ended March 31, 2007 and 2006, respectively. There were no impairment losses for the three months ended March 31, 2007 and 2006.

All of the leased property was acquired in years beginning with 2005 through 2007.

Operating leases:

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



|                              |  |                         |        |   |           |   |        |                                  |  |                      |   |  |   |        |  
|----------------------------- |  | ----------------------- | ------ | - | --------- | - | ------ | -------------------------------- |  | -------------------- | - |  | - | ------ | -
|                              |  | BalanceDecember 31,2006 |        |   | Additions |   |        | Reclassificationsor Dispositions |  | BalanceMarch 31,2007 |  
|Materials handling            |  | $                       | 14,749 |   |           | $ | 3,895  |                                  |  | $                    |  |  | $ | 18,644 |  
|Manufacturing                 |  |                         | 1,098  |   |           |   | 3      |                                  |  |                      |  |  |   | 1,101  |  
|Transportation                |  |                         | 20,302 |   |           |   | 1,415  |                                  |  |                      |  |  |   | 21,717 |  
|Construction                  |  |                         | 3,562  |   |           |   |       |                                  |  |                      |  |  |   | 3,562  |  
|Office furniture              |  |                         | 146    |   |           |   |       |                                  |  |                      |  |  |   | 146    |  
|Logging and lumber            |  |                         | 2,001  |   |           |   |       |                                  |  |                      |  |  |   | 2,001  |  
|                              |  |                         |        |   |           |   |        |                                  |  |                      |   |  |   |        |  
|                              |  |                         | 41,858 |   |           |   | 5,313  |                                  |  |                      |  |  |   | 47,171 |  
|Less accumulated depreciation |  |                         | (5,233 | ) |           |   | (1,799 | )                                |  |                      |  |  |   | (7,032 | )
|                              |  |                         |        |   |           |   |        |                                  |  |                      |   |  |   |        |  
|Total                         |  | $                       | 36,625 |   |           | $ | 3,514  |                                  |  | $                    |  |  | $ | 40,139 |  
|                              |  |                         |        |   |           |   |        |                                  |  |                      |   |  |   |        |  

Direct financing leases:

As of March 31, 2007, investment in direct financing leases consists of materials handling equipment and office furniture. The following lists the components of the Companys investment in direct financing
leases as of March 31, 2007 and December 31, 2006 (in thousands):



|                                                             |  |               |     |   |                  |   |     |  
|------------------------------------------------------------ |  | ------------- | --- | - | ---------------- | - | --- | -
|                                                             |  | March 31,2007 |     |   | December 31,2006 |  
|Total minimum lease payments receivable                      |  | $             | 54  |   |                  | $ | 56  |  
|Estimated residual values of leased equipment (unguaranteed) |  |               | 10  |   |                  |   | 10  |  
|                                                             |  |               |     |   |                  |   |     |  
|Investment in direct financing leases                        |  |               | 64  |   |                  |   | 66  |  
|Less unearned income                                         |  |               | (28 | ) |                  |   | (11 | )
|                                                             |  |               |     |   |                  |   |     |  
|Net investment in direct financing leases                    |  | $             | 36  |   |                  | $ | 55  |  
|                                                             |  |               |     |   |                  |   |     |  



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



4. Investment in equipment leases (continued):



At March 31, 2007, the aggregate amounts of future minimum lease payments to be received are as follows (in thousands):



|                                     |  |  |  |                 |        |                       |   |       |  |   |       
|------------------------------------ |  |  |  | --------------- | ------ | --------------------- | - | ----- |  | - | ------
|                                     |  |  |  | OperatingLeases |        | DirectFinancingLeases |   | Total
|Nine months ending December 31, 2007 |  |  |  | $               | 6,298  |                       | $ | 7     |  | $ | 6,305 
|Year ending December 31, 2008        |  |  |  |                 | 8,978  |                       |   | 9     |  |   | 8,987 
|2009                                 |  |  |  |                 | 7,001  |                       |   | 9     |  |   | 7,010 
|2010                                 |  |  |  |                 | 5,907  |                       |   | 10    |  |   | 5,917 
|2011                                 |  |  |  |                 | 3,091  |                       |   | 10    |  |   | 3,101 
|2012                                 |  |  |  |                 | 2,082  |                       |   | 9     |  |   | 2,091 
|Thereafter                           |  |  |  |                 | 3,032  |                       |   |      |  |   | 3,032 
|                                     |  |  |  |                 |        |                       |   |       |  |   |       
|                                     |  |  |  | $               | 36,389 |                       | $ | 54    |  | $ | 36,443
|                                     |  |  |  |                 |        |                       |   |       |  |   |       

The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its
portfolio of lease transactions. The useful lives for investment in leases by category are as follows (in years):



|                        |  |            
|----------------------- |  | -----------
|Equipment category      |  | Useful Life
|Mining                  |  | 30 - 40    
|Marine Vessels          |  | 20 - 30    
|Manufacturing           |  | 10 - 20    
|Materials Handling      |  | 7 - 10     
|Transportation          |  | 7 - 10     
|Natural Gas Compressors |  | 7 - 10     
|Office Furniture        |  | 7 - 10     
|Communications          |  | 3 - 5      

5. Related party transactions:

The terms of the Operating Agreement provide that AFS and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company.

The Operating Agreement allows for the reimbursement of costs incurred by AFS for providing administrative services to the Company. Administrative services provided
include Company accounting, investor relations, legal counsel and lease and equipment documentation. AFS is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of
equipment. Reimbursable costs incurred by AFS are allocated to the Company based upon estimated time incurred by employees working on Company business and an allocation of rent and other costs based on utilization studies.

Each of ATEL Leasing Corporation (ALC), ATEL Equipment Corporation (AEC), ATEL Investor Services (AIS) and AFS is a wholly-owned
subsidiary of ATEL Capital Group and performs services for the Company. Acquisition services are performed for the Company by ALC, equipment management, lease administration and asset disposition services are performed by AEC, investor relations and
communications services are performed by AIS and general administrative services for the Company are performed by AFS.

Cost reimbursements to the Managing
Member are based on costs incurred by AFS in performing administrative services for the Company that are allocated to each fund that AFS manages based on certain criteria such as existing or new leases, number of investors or equity depending on the
type of cost incurred. AFS believes that the costs reimbursed are the lower of (i) actual costs incurred on behalf of the Company or (ii) the amount the Company would be required to pay independent parties for comparable administrative
services in the same geographic location.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



5. Related party transactions (continued):



During the three months ended March 31, 2007 and 2006, AFS and/or affiliates earned fees, commissions and reimbursements, pursuant to
the Operating Agreement as follows (in thousands):



|                                                                                                                                   |  |                              |     |      |   |      
|---------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | --- | ---- | - | -----
|                                                                                                                                   |  | Three Months Ended March 31,
|                                                                                                                                   |  | 2007                         |     | 2006
|Selling commissions, equal to 9% of the selling price of the Limited Liability Company Units, deducted from Other Members
capital |  | $                            |    |      | $ | 773  
|Reimbursement of other syndication costs to AFS and affiliates, deducted from Other Members capital                               |  |                              |    |      |   | 441  
|Administrative costs reimbursed to Managing Member                                                                                 |  |                              | 174 |      |   | 108  
|Asset management fees to Managing Member                                                                                           |  |                              | 136 |      |   | 80   
|Acquisition and initial direct costs paid to Managing Member                                                                       |  |                              | 288 |      |   | 620  
|                                                                                                                                   |  |                              |     |      |   |      
|                                                                                                                                   |  | $                            | 598 |      | $ | 2,022
|                                                                                                                                   |  |                              |     |      |   |      

6. Non-recourse debt:

At March 31, 2007, non-recourse debt consists of notes payable to financial institutions. The notes are due in varying quarterly and semi-annual payments. Interest on the notes is at fixed rates ranging from 5.74% to 6.24%. The notes
are secured by assignments of lease payments and pledges of assets. At March 31, 2007, the carrying value of the pledged assets is approximately $6.6 million. The notes mature from 2008 through 2015.

Future minimum payments of non-recourse debt are as follows (in thousands):



|                              |  |  |  |           |       |          |   |       |  |   |      
|----------------------------- |  |  |  | --------- | ----- | -------- | - | ----- |  | - | -----
|                              |  |  |  | Principal |       | Interest |   | Total
|Nine Months December 31, 2007 |  |  |  | $         | 390   |          | $ | 245   |  | $ | 635  
|2008                          |  |  |  |           | 548   |          |   | 299   |  |   | 847  
|2009                          |  |  |  |           | 582   |          |   | 265   |  |   | 847  
|2010                          |  |  |  |           | 618   |          |   | 229   |  |   | 847  
|2011                          |  |  |  |           | 655   |          |   | 191   |  |   | 846  
|2012                          |  |  |  |           | 695   |          |   | 151   |  |   | 846  
|Thereafter                    |  |  |  |           | 2,163 |          |   | 189   |  |   | 2,352
|                              |  |  |  |           |       |          |   |       |  |   |      
|                              |  |  |  | $         | 5,651 |          | $ | 1,569 |  | $ | 7,220
|                              |  |  |  |           |       |          |   |       |  |   |      



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



7. Borrowing facilities:

The Company participates with AFS and certain of its affiliates in a financing arrangement (comprised of a term loan to AFS and a line of credit) with a group of financial institutions that includes certain financial covenants. The
financial arrangement is $75,000,000 and expires in June 2007. The Company is currently negotiating an extension to the credit facility and anticipates renewing the facility for an additional two years. The availability of borrowings to the Company
under this financing arrangement is reduced by the amount AFS has outstanding as a term loan. As of March 31, 2007, borrowings under the facility were as follows (in thousands):



|                                                                                                           |  |   |        |  
|---------------------------------------------------------------------------------------------------------- |  | - | ------ | -
|Total amount available under the financing arrangement                                                     |  | $ | 75,000 |  
|Amount borrowed by the Company under the acquisition facility                                              |  |   | (6,000 | )
|Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition facility |  |   | (6,000 | )
|                                                                                                           |  |   |        |  
|Total remaining available under the acquisition and warehouse facilities                                   |  | $ | 63,000 |  
|                                                                                                           |  |   |        |  

Draws on the acquisition facility by any individual borrower are secured only by that borrowers assets,
including equipment and related leases. Borrowings on the warehouse facility are recourse jointly to certain of the affiliated Memberships and limited liability companies, the Company and AFS. There were no borrowings under the warehouse facility as
of March 31, 2007.

The credit agreement includes certain financial covenants applicable to each borrower. The Company and affiliates were not in
compliance with non-financial covenants as of March 31, 2007. The Managing Member, on behalf of all borrowers, requested and received a waiver of this covenant from the lenders until July 15, 2007.

8. Commitments:

As of March 31, 2007, the Company had
outstanding commitments to purchase lease equipment of approximately $2.7 million which may be funded during 2007. This amount represents contract awards which may be cancelled by the prospective lessee or may not be accepted by the Company.

On March 31st, the Company executed an agreement with Park National Bank (PNB) for non-recourse debt in the amount of $6.6 million to
fund purchase transactions. The non-recourse debt consists of notes payable to financial institutions. Interest on the notes is at fixed rates ranging from 5.74% to 6.24%. The notes mature from 2008 through 2011. PNB funded the loan on April 2,
2007.



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ATEL CAPITAL EQUIPMENT FUND XI, LLC

NOTES TO FINANCIAL STATEMENTS



9. Guarantees:

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

In the normal course of business, the Company enters into contracts of various types, including lease contracts,
contracts for the sale or purchase of lease assets, management contracts, loan agreements, credit lines and other debt facilities. It is prevalent industry practice for most contracts of any significant value to include provisions that each of the
contracting partiesin addition to assuming liability for breaches of the representations, warranties, and covenants that are part of the underlying contractual obligationsalso assume an obligation to indemnify and hold the other
contracting party harmless for such breaches, for harm caused by such partys gross negligence and willful misconduct, including, in certain instances, certain costs and expenses arising from the contract. The Managing Member has substantial
experience in managing similar leasing programs subject to similar contractual commitments in similar transactions, and the losses and claims arising from these commitments have been insignificant, if any. Generally, to the extent these contracts
are performed in the ordinary course of business under the reasonable business judgment of the Managing Member, no liability will arise as a result of these provisions. The Managing Member has no reason to believe that the facts and circumstances
relating to the Companys contractual commitments differ from those it has entered into on behalf of the prior programs it has managed. The Managing Member knows of no facts or circumstances that would make the Companys contractual
commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard
commercial and industry practice, and that any potential liability under the Companys similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability
in accordance with GAAP.

10. Members capital:

As of March 31, 2007, 5,232,607 Units were issued and outstanding. The Fund was initially authorized to issue up to 15,000,000 Units. The Company terminated sales of Units effective April 30, 2006.

Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):



|                                             |  |                              |           |      |   |          
|-------------------------------------------- |  | ---------------------------- | --------- | ---- | - | ---------
|                                             |  | Three Months Ended March 31,
|                                             |  | 2007                         |           | 2006
|Distributions declared                       |  | $                            | 1,210     |      | $ | 876      
|Weighted average number of Units outstanding |  |                              | 5,232,607 |      |   | 4,381,652
|Weighted average distributions per Unit      |  | $                            | 0.23      |      | $ | 0.20     



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Statements contained in this Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Form 10-QSB, which are not historical facts, may
be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially form those projected. In particular, economic recession and changes in general economic conditions, including,
fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Companys
performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Companys performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by
the condition of the equipment, technological obsolescence and the market for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the
date of this Form 10-QSB. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-QSB or to reflect the occurrence of unanticipated events,
other than as required by law.

Capital Resources and Liquidity

The Company commenced its offering of Units on April 11, 2005. On May 31, 2005, the Company commenced operations in its primary business (leasing and lending activities). Until the Companys initial
portfolio of equipment has been purchased, funds that have been received, but that have not yet been invested in leased equipment, are invested in interest-bearing accounts or high-quality/short-term commercial paper. The Companys public
offering provided for a total maximum capitalization of $150 million. The Company terminated sales of Units effective April 30, 2006.

During the
funding period, the Companys primary source of liquidity was subscription proceeds from the public offering of Units. As of March 31, 2007, approximately $52.3 million had been contributed by Members purchasing Units under the public
offering, consisting of approximately $52.8 million in gross contributions less rescissions of $512 thousand. The liquidity of the Company will vary in the future, increasing to the extent proceeds from the offering, cash flows from leases and
proceeds of asset sales exceed expenses, and decreasing as lease assets are acquired, as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The Company participates with AFS and certain of its affiliates in a financing arrangement (comprised of a term loan to AFS and a line of credit) with a group of
financial institutions that includes certain financial covenants. The financial arrangement is $75,000,000 and expires in June 2007. The availability of borrowings to the Company under this financing arrangement is reduced by the amount AFS has
outstanding as a term loan. As of March 31, 2007, borrowings under the facility were as follows (in thousands):



|                                                                                                           |  |   |        |  
|---------------------------------------------------------------------------------------------------------- |  | - | ------ | -
|Total amount available under the financing arrangement                                                     |  | $ | 75,000 |  
|Amount borrowed by the Company under the acquisition facility                                              |  |   | (6,000 | )
|Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition facility |  |   | (6,000 | )
|                                                                                                           |  |   |        |  
|Total remaining available under the acquisition and warehouse facilities                                   |  | $ | 63,000 |  
|                                                                                                           |  |   |        |  

Draws on the acquisition facility by any individual borrower are secured only by that borrowers assets,
including equipment and related leases. Borrowings on the warehouse facility are recourse jointly to certain of the affiliated Memberships and limited liability companies, the Company and AFS. There were no borrowings under the warehouse facility as
of March 31, 2007.

As another source of liquidity, the Company is expected to have contractual obligations with a diversified group of lessees for
fixed lease terms at fixed rental amounts. As the initial lease terms expire, the Company will re-lease or sell the equipment. The future liquidity beyond the contractual minimum rentals will depend on AFSs success in re-leasing or selling the
equipment as it comes off lease.

Throughout the Reinvestment Period (as defined in the Limited Liability Company Operating Agreement), the Company
anticipates reinvesting a portion of lease payments from assets owned in new leasing transactions. Such reinvestment will occur only after the payment of all obligations, including debt service (both principal and interest), the payment of
management fees to AFS and providing for cash distributions to the Members.



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The Company also has access to certain sources of non-recourse debt financing, which the Company will use on a
transaction basis as a means of mitigating credit risk. During the first quarter of 2007, the Company utilized such sources of non-recourse debt financing and at March 31, 2007 had $5.7 million of non-recourse debt outstanding consisting of
notes payable to financial institutions.

As of March 31, 2007 the Company had outstanding commitments to purchase lease equipment of approximately
$2.7 million. This amount represents contract awards which may be cancelled by the prospective lessee or may not be accepted by the Company.

Cash
Flows

The three months ended March 31, 2007 versus the three months ended March 31, 2006

Operating Activities

The Companys primary source of cash from
operations is rents from operating leases. Additionally, the Companys cash flows are impacted by changes in certain assets and liabilities. Cash provided by operating activities totaled $43 thousand and $808 thousand for the three months ended
March 31, 2007 and 2006, respectively. Cash flow from operations decreased due to increased levels of payments made against accounts payable and accrued liabilities.

Company payments for accounts payable and accrued liabilities during the three months ended March 31, 2007 significantly increased compared to the three months ended March 31, 2006. Cash outflow related to
the increased payments were $1.4 million for the three months ended March 31, 2007 compared to a cash inflow of $608 thousand for the three months ended March 31, 2006 related to an incremental increase in accounts payable and accrued
liabilities.

Investing Activities

The main use of
cash in investing activities for the three months ended March 31, 2007 and 2006 has been the purchase of equipment and funding of investments in notes receivable. Cash used in investing activities was $4.3 million for the three months ended
March 31, 2007 compared to $12.2 million for the three months ended March 31, 2006. Cash flow increased primarily due to a decline in cash used for operating lease purchases and proceeds from the sale of assets, partially offset by an
increase in funding of investments in notes receivable.

Cash used to purchase operating leases declined from $12.2 million for the three months ended
March 31, 2006 to $5.3 million for the three months ended March 31, 2007, primarily due to the decline in acquisition phase activity following the termination of the sales of Units effective April 2006.

During the three months ended March 31, 2007, the Company recorded proceeds of $1.2 million related to an early termination of a note receivable in January 2007.
There were no assets sales or early termination of notes or leases during the first three months of 2006.

Cash used to fund investments in notes
receivable was $859 thousand for the three months ended March 31, 2007 compared to $168 thousand for the three months ended March 31, 2006. The increase represents a change in the business mix consistent with the Companys greater
focus on a financing model as opposed to a rental model.



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##### Table of Contents

Financing Activities

Cash provided by financing activities totaled $810 thousand and $6.4 million for the three months ended March 31, 2007 and 2006, respectively. Cash flow decreased as proceeds from the sale of Units ceased when the Company terminated
the offering in April 2006. Subsequently, the Company utilized its credit facilities to finance acquisition activities. During the three months ended March 31, 2007, the Company had gross borrowings of $11.2 million. The borrowings were offset
by repayments of $9.1 million during the same period. There were no borrowings during the three months ended March 31, 2006. Cash flow for the three months ended March 31, 2006 included $8.6 million of proceeds from the sale of Units.

Distributions to Other Members and Managing Member were $1.2 million and $131 thousand, respectively, for the three-months ended March 31, 2007, and
$876 thousand and $97 thousand, respectively, for the three months ended March 31, 2006.

Results of operations

As of May 31, 2005, subscriptions for the minimum amount of the offering ($1,200,000) had been received and accepted by the Company. As of that date, the Company
commenced operations in its primary business (leasing and lending activities). After the Companys public offering and its initial asset acquisition stage terminate, the results of operations are expected to change significantly.

Cost reimbursements to Managing Member are based on costs incurred by AFS in performing administrative services for the Company that are allocated to each
Company that AFS manages based on certain criteria such as existing or new leases, number of investors or equity depending on the type of cost incurred. AFS believes that the costs reimbursed are the lower of (i) actual costs incurred on behalf
of the Company or (ii) the amount the Company would be required to pay independent parties for comparable administrative services in the same geographic location.

The three months ended March 31, 2007 versus the three months ended March 31, 2006

The Company
incurred net losses of $331 thousand and $374 thousand for the three months ended March 31, 2007 and 2006, respectively. Results for the three months ended March 31, 2007 reflected increases in both total revenues and operating expenses
when compared with the three months ended March 31, 2006.

Revenues

Total revenues were $2.5 million for the three months ended March 31, 2007 compared to $1.3 million for the three months ended March 31, 2006. The increase was primarily due to the growth in operating lease
revenue and a gain on an early termination of a note during the first quarter of 2007.

Operating lease revenues was $2.1 million for the three months
ended March 31, 2007 compared to $1.0 million for the three months ended March 31, 2006. The increase was primarily due to revenues derived from lease assets purchased since March 31, 2006 totaling $20.2 million, including
approximately $5.3 million purchased during the three months ended March 31, 2007. Operating lease assets increased from $26.5 million at March 31, 2006 to $40.6 million at March 31, 2007.

During the three months ended March 31, 2007, the Company recognized $112 thousand gain related to an early termination of a note receivable in January 2007. There
were no assets sales or early termination of assets during the first three months of 2006.



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Expenses

Total
expenses were $2.9 million and $1.7 million for the three months ended March 31, 2007 and 2006, respectively. The increase in total expenses was primarily due to greater amounts of depreciation, interest expense, professional fees and outside
services, and costs reimbursed to AFS, partially offset by a decline in acquisition expense.

The Companys largest expense during the three months
ended March 31, 2007 and 2006 was depreciation, which is directly related to its acquisition of operating lease assets during its initial acquisition phase. Depreciation expense totaled $1.8 million for the three months ended March 31,
2007 compared to $841 thousand for the three months ended March 31, 2006. The increase in depreciation expense was primarily due to the increase in purchases of operating lease assets since March 31, 2006, and is also consistent with the
increase in operating lease revenue.

During the three months ended March 31, 2007, interest expense on the Companys borrowings totaled $181
thousand. The Company had approximately $18.2 million of outstanding debt at March 31, 2007. There was no outstanding debt or interest expense as of and for the three months ended March 31, 2006.

Asset management fees and costs reimbursed to AFS totaled $310 thousand and $188 thousand for the three months ended March 31, 2007 and 2006, respectively. The
increase was primarily due to the increase in the Companys asset portfolio.

Professional fees and outside services totaled $240 thousand for the
three months ended March 31, 2007 compared to $70 thousand for the three months ended March 31, 2006. The increase reflected costs related to the Companys restatement effort and the audit of prior period financial statements.

The cumulative increase in expenses discussed above was partially offset by a decline in acquisition expense. As defined by the Companys Operating
Agreement, acquisition expense shall mean expenses including, but not limited to, legal fees and expenses, travel and communication expenses, costs of appraisals, accounting fees and expenses, and miscellaneous expenses relating to selection and
acquisition of equipment, whether or not acquired. The decline in acquisition activity during the three months ended March 31, 2007 compared to the same period in 2006 resulted in a $224 thousand decrease in acquisition expense, which totaled
$265 thousand and $489 thousand for the three months ended March 31, 2007 and 2006, respectively.

Other

The Company records other income or expense which may include recoveries of amounts previously written off, gains and losses on interest rate swap contracts, or gains and
losses on foreign exchange transactions.

During the three months ended March 31, 2007 and 2006, other income (expense) consisted solely of gains and
losses on foreign currency transactions. The Company recorded other income of $35 thousand and other expense of $2 thousand for the three months ended March 31, 2007 and 2006, respectively.



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|Item 3. | Controls and Procedures.
|------- | ------------------------

Evaluation of disclosure
controls and procedures

The Companys Managing Members Chief Executive Officer, and Executive Vice President and Chief Financial and
Operating Officer, evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) during and as of the end of the period covered by this report. Based on this evaluation, the Chief
Executive Officer and Executive Vice President and Chief Financial and Operating Officer concluded that at March 31, 2007, certain material weaknesses existed in the Companys internal control over financial reporting.

The Company does not control the financial reporting process, and is dependent on the Managing Member, who is responsible for providing the Company with financial
statements in accordance with generally accepted accounting principles. The Managing Members disclosure controls and procedures over the: a) process of identifying and estimating liabilities in the correct period; and b) timeliness of the
financial statement close process were determined to be ineffective and constitute material weaknesses in internal control over financial reporting.

Changes in internal control

The Managing Member has reviewed the material weaknesses believes that the following corrective actions
taken as a whole will address the material weaknesses in its disclosure controls and procedures described above. These corrective actions are as follows:

With regard to identifying and estimating liabilities in the correct periods, the Managing Member has performed a detailed review to identify and record the liabilities, in the correct period. A standardized quarterly review process has
been implemented to ensure the identification and estimation of the liabilities.

The Managing Member has taken the following steps to mitigate the
weakness regarding its financial statement close process: a Chief Accounting Officer and an SEC reporting manager have been hired, and the controller position has been split into two separate roles to ensure proper management of the Managing Member
and the managed Funds accounting operations. Controls and job functions are being redesigned to increase the documentation of processes and transparency of procedures going forward.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

Inapplicable.



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

Information provided pursuant to § 228.701 (Item 701(f))(formerly included in Form SR):



| | (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 was terminated April 30, 2006.
| | --- | -------------------------------------------



| | (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 March 31, 2007:
| | --- | -------------------------------------------------------------------------------------------



|                                  |  |                  |  |                                               |         |            |           |                                        |   |       
|--------------------------------- |  | ---------------- |  | --------------------------------------------- | ------- | ---------- | --------- | -------------------------------------- | - | ------
|Title of Security                 |  | AmountRegistered |  | Aggregate price of offering amount registered |         | Units sold |           | Aggregate price of offering amountsold
|Units of Limited Company Interest |  | 15,000,000       |  | $                                             | 150,000 |            | 5,232,607 |                                        | $ | 52,326



| | (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 indirect payments to directors, officers, Managing Members of the issuer or their associates, to persons owning ten percent or more of any class of
equity securitiesof the issuer; and to affiliates of the issuer |       | Direct or Indirect payments to others |   | Total 
|Underwriting discounts and commissions                                              |  | $                                                                                                                                                                                                                             | 790   |                                       | $ | 3,949  |  | $ | 4,739
|Other expenses                                                                      |  |                                                                                                                                                                                                                               | 1,405 |                                       |   | 1,267  |  |   | 2,672
|                                                                                    |  |                                                                                                                                                                                                                               |       |                                       |   |        |  |   |      
|Total expenses                                                                      |  | $                                                                                                                                                                                                                             | 2,195 |                                       | $ | 5,216  |  | $ | 7,411
|                                                                                    |  |                                                                                                                                                                                                                               |       |                                       |   |        |  |   |      
|                                                                                    |  |                                                                                                                                                                                                                              
|(9)         Net offering proceeds to the issuer after the total expenses in item
8: |  |                                                                                                                                                                                                                               |       |                                       | $ | 44,915



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##### Table of Contents

| | (10) | The amount of net offering proceeds to the issuer used for each of the purposes listed below:
| | ---- | ---------------------------------------------------------------------------------------------



|                                                     |  |                                                                                                                                                                                                                               |     |                                       |   |        |  |   |       
|---------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ------------------------------------- | - | ------ |  | - | ------
|                                                     |  | Direct or indirect payments to directors, officers, Managing Members of the issuer or their associates, to persons owning ten percent or more of any class of equity securitiesof the issuer; and to affiliates of the issuer |     | Direct or Indirect payments to others |   | Total 
|Purchase and installation of machinery and equipment |  | $                                                                                                                                                                                                                             | 625 |                                       | $ | 33,476 |  | $ | 34,101
|Investments in notes receivable                      |  |                                                                                                                                                                                                                               | 68  |                                       |   | 10,746 |  |   | 10,814
|                                                     |  |                                                                                                                                                                                                                               |     |                                       |   |        |  |   |       
|                                                     |  | $                                                                                                                                                                                                                             | 693 |                                       | $ | 44,222 |  | $ | 44,915
|                                                     |  |                                                                                                                                                                                                                               |     |                                       |   |        |  |   |       



| | (11) | The use of the proceeds in Item 10 does not represent a material change in the uses of proceeds described in the prospectus.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

Inapplicable.



|Item 4. | Submission Of Matters To A Vote Of Security Holders.
|------- | ----------------------------------------------------

Inapplicable.



|Item 5. | Other Information.
|------- | ------------------

Inapplicable.



|Item 6. | Exhibits.
|------- | ---------

(a) Documents filed as a part of this report



| | 1. | Financial Statement Schedules
| | -- | -----------------------------

All other schedules for
which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.



| | 2. | Other Exhibits
| | -- | --------------



| | 31.1 | Certification of Dean L. Cash
| | ---- | -----------------------------



| | 31.2 | Certification of Paritosh K. Choksi
| | ---- | -----------------------------------



| | 32.1 | Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
| | ---- | ----------------------------------------------------------------



| | 32.2 | Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
| | ---- | ----------------------------------------------------------------------



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SIGNATURES

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

Date: June 15, 2007



|                                    |  |                                                          |  |     |  |                              
|----------------------------------- |  | -------------------------------------------------------- |  | --- |  | -----------------------------
|ATEL CAPITAL EQUIPMENT FUND XI, LLC
|(Registrant)                       
|                                    |  |                                                          | 
|                                    |  |                                                          |  | By: |  | ATEL Financial Services LLC  
|                                    |  |                                                          |  |     |  | Managing Member of Registrant
|By:                                 |  | /s/ Dean L. Cash                                         |  |     |  |                              
|                                    |  | Dean L. Cash                                             |  |     |  |                              
|                                    |  | President and Chief Executive Officer of Managing Member |  |     |  |                              
|                                    |  |                                                          | 
|By:                                 |  | /s/ Paritosh K. Choksi                                   |  |     |  |                              
|                                    |  | Paritosh K. Choksi                                       |  |     |  |                              
|                                    |  | Principal Financial Officer of Registrant                |  |     |  |                              



26