Form 10K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                        |X|  Annual  report  pursuant  to section 13 or 15(d) of
                             the Securities  Exchange Act of 1934 (fee required)
                             For the Year Ended December 31, 1998
                                                            OR
                        |_|  Transition  report  pursuant to section 13 or 15(d)
                             of the  Securities  Exchange  Act of  1934  (no fee
                             required)  For the  transition  period from ____ to
                             ____

                        Commission File number 333-62477

                      ATEL Capital Equipment Fund VIII, LLC

California                                                            94-3307404
(State or other jurisdiction of                               (I. R. S. Employer
incorporation or organization)                               Identification No.)

                   235 Pine Street, 6th Floor, San Francisco,
                     California 94104 (Address of principal
                               executive offices)

        Registrant's telephone number, including area code (415) 989-8800
        Securities registered pursuant to section 12(b) of the Act: None
        Securities registered pursuant to section 12(g) of the Act: None

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|

State the aggregate market value of voting stock held by  non-affiliates  of the
registrant.
Inapplicable

                       DOCUMENTS INCORPORATED BY REFERENCE

Prospectus  dated December 7, 1998,  filed  pursuant to Rule 424(b)  (Commission
File No. 33-62477) is hereby incorporated by reference into Part IV hereof.


Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-K  (ss.229.405)  is not  contained  herein,  and  will  not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|


                          Index to Exhibits on Page 20


<PAGE>

                                     PART I

Item 1:  BUSINESS

General Development of Business

ATEL Capital  Equipment Fund VIII, LLC (the Company),  was formed under the laws
of the State of California in July 1998.  The Company was formed for the purpose
of acquiring equipment to engage in equipment leasing and sales activities.  The
Managing  Member  of  the  Company  is  ATEL  Financial  Corporation  (ATEL),  a
California corporation.

The Company is conducting a public  offering of 15,000,000 of Limited  Liability
Company Units (Units),  at a price of $10 per Unit. As of December 31, 1998, the
Company had received  subscriptions  for 77,900  ($779,000) Units in addition to
the Initial Members' Units. No Units, in addition to the Initial Members' Units,
were issued or outstanding as of December 31, 1998. At December 31, 1998, all of
the   subscriptions   received  were  held  in  escrow.  On  January  13,  1999,
subscriptions  for the minimum number of Units  (120,000,  $1,200,000)  had been
received and ATEL requested that the  subscriptions,  except those received from
Pennsylvania  investors (7,500 Units,  $75,000),  be released to the Company. On
that date, the Company  commenced  operations in its primary  business  (leasing
activities). As of February 18, 1999, the Company had received subscriptions for
775,777 Units ($7,757,770) and ATEL requested that the remaining funds in escrow
(from Pennsylvania investors) be released to the Company.

The Company's principal  objectives are to invest in a diversified  portfolio of
equipment  which will (i) preserve,  protect and return the  Company's  invested
capital;  (ii)  generate  regular  distributions  to the  partners  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 72 months after the end of the year in which the
Final Closing occurs 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).

Narrative Description of Business

The Company has acquired and intends to acquire  various  types of equipment and
to lease such equipment pursuant to "Operating" leases and "High Payout" leases,
where "Operating"  leases are defined as being leases in which the minimum lease
payments  during  the  initial  lease term do not  recover  the full cost of the
equipment and "High Payout"  leases recover at least 90% of such cost. It is the
intention of ATEL that a majority of the aggregate  purchase  price of equipment
will represent equipment leased under "High Payout" leases upon final investment
of the Net Proceeds of the  Offering and that no more than 20% of the  aggregate
purchase price of equipment will be invested in equipment acquired from a single
manufacturer.

The Company will only purchase equipment for which a lease exists or for which a
lease will be entered into at the time of the purchase.

As of  February  28,  1999,  the Company had  purchased  equipment  with a total
acquisition price of $4,039,115.

The Company's  objective is to lease a minimum of 75% of the equipment  acquired
with the net  proceeds of the  offering to lessees  which (i) have an  aggregate
credit rating by Moody's Investor service,  Inc. of Baa or better, or the credit
equivalent as determined by ATEL, with the aggregate  rating weighted to account
for the original  equipment cost for each item leased;  or (ii) are  established
hospitals with histories of profitability or municipalities.  The balance of the
original  equipment  portfolio may include  equipment  leased to lessees  which,
although  deemed  creditworthy  by the  Managing  Member,  would not satisfy the
general credit rating criteria for the portfolio.


<PAGE>

The equipment leasing industry is highly competitive.  Equipment  manufacturers,
corporations, partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms which vary widely depending on the
lease  term  and type of  equipment.  The  ability  of the  Company  to keep the
equipment leased and/or operating and the terms of the acquisitions,  leases and
dispositions  of equipment  depends on various factors (many of which are not in
the  control  of ATEL or the  Company),  such as  general  economic  conditions,
including the effects of inflation or recession,  and fluctuations in supply and
demand for various  types of  equipment  resulting  from,  among  other  things,
technological and economic obsolescence.

ATEL will seek to limit the amount invested in equipment to any single lessee to
not more than 20% of the aggregate purchase price of equipment owned at any time
during the reinvestment period.

The business of the Company is not seasonal.

The Company has no full time employees.


Item 2.  PROPERTIES

The  Company  does  not own or  lease  any real  property,  plant or  materially
important  physical  properties  other than the equipment  held for lease as set
forth in Item 1.


Item 3.  LEGAL PROCEEDINGS

Inapplicable.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Inapplicable.


                                                PART II

Item 5.  MARKET FOR REGISTRANT'S LIMITED LIABILITY COMPANY UNITS
              AND RELATED MATTERS

Market Information

The Units are transferable  subject to restrictions on transfers which have been
imposed under the securities  laws of certain  states.  However,  as a result of
such restrictions, the size of the Company and its investment objectives, to the
ATEL's knowledge,  no established  public secondary trading market has developed
and it is unlikely that a public trading market will develop in the future.

Holders

As of December 31, 1998, a total of two  investors  (the Initial  Members)  were
record holders of Units in the Company.

Dividends

The Company does not make dividend  distributions.  However,  the Members of the
Company are entitled to certain  distributions  as provided  under the Operating
Agreement.

ATEL shall have sole  discretion  in  determining  the amount of  distributions;
provided,  however, that the Managing Member will not reinvest in equipment, but
will  distribute,  subject to payment of any  obligations  of the Company,  such
available  cash from  operations  and cash from sales or  refinancing  as may be
necessary to cause total  distributions  to the Members for each year during the
reinvestment period to equal an as yet to be determined amount between $0.80 and
$1.00 per Unit.


<PAGE>

Information provided pursuant to ss. 228.701 (Item 701(f)) (formerly included in
Form SR):
<TABLE>
<CAPTION>

<S>                          <C>                                <C>           <C>                  <C>          <C>       
                             (1)  Effective  date of the  offering:  December 7,
                             1998;   File   Number:   333-62477   (2)   Offering
                             commenced:  December 7, 1998 (3) The  offering  did
                             not terminate  before any securities were sold. (4)
                             The offering has not been  terminated  prior to the
                             sale of all of the  securities.  (5)  The  managing
                             underwriter is ATEL Securities Corporation. (6) The
                             title  of the  registered  class of  securities  is
                             "Limited  Liability  Company  Units" (7)  Aggregate
                             amount and offering price of securities  registered
                             and sold as of February 28, 1999.

                                                                               Aggregate                       Aggregate
                                                                               price of                        price of
                                                                               offering                        offering
                                                                Amount          amount          Amount          amount
                             Title of Security                Registered      registered         sold            sold
                             Limited Liability Company
                                Units                           15,000,000    $ 150,000,000        966,081      $9,660,810

                             (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
                                                             member of the issuer or their
                                                                     associates; to persons owning
                                                               ten percent or more of any      Direct or
                                                             class of equity securities of     indirect
                                                             the issuer; and to affiliates of payments to
                                                              the issuer                        others           Total

                             Underwriting discounts and
                             commissions                         $ 122,525                       $ 795,252       $ 917,777

                             Other expenses                              -                         531,345         531,345

                                                             --------------                  --------------  --------------
                             Total expenses                      $ 122,525                      $1,326,597      $1,449,122
                                                             ==============                  ==============  ==============

                             (9) Net offering proceeds to the issuer after the total expenses in item 8:        $8,211,688

                             (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, general
                                                             partners of the issuer or their
                                                                 associates; to persons
                                                               owning ten percent or more      Direct or
                                                                 of any class of equity        indirect
                                                             securities of the issuer; and    payments to
                                                              to affiliates of the issuer       others           Total

                             Purchase and installation of
                             machinery and equipment                   $ -                      $8,163,384      $8,163,384

                             Working capital                             -                          48,304          48,304
                                                             --------------                  --------------  --------------
                                                                       $ -                      $8,211,688      $8,211,688
                                                             ==============                  ==============  ==============

                             (11)   The use of the  proceeds in Item 10 does not
                                    represent  a material  change in the uses of
                                    proceeds described in the prospectus.
</TABLE>
<PAGE>

Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Company at December
31, 1998.  This financial data should be read in conjunction  with the financial
statements and related notes included under Item 8 of this report.

Weighted average Units outstanding                         50

Total Assets                                            $ 600

Total Long-term Non-recourse Debt                        None

Total Members' Capital                                  $ 600


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS

Capital Resources and Liquidity

The Company commenced its offering on December 7, 1998. As of December 31, 1998,
all of the proceeds of the offering  were held by the escrow  agent.  During the
funding period and until the Company's  initial  portfolio of equipment has been
purchased,  funds which have been received, but which 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 provides
for a total maximum capitalization of $150,000,000.

During  the  funding  period,  the  Company's  primary  source of  liquidity  is
subscription  proceeds from the public  offering of Units.  The liquidity of the
Company will vary in the future, increasing to the extent cash flows from leases
and proceeds of asset sales exceed expenses,  and decreasing as lease assets are
acquired,  as  distributions  are made to the limited partners and to the extent
expenses exceed cash flows from leases and proceeds from asset sales.

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 ATEL's success in re-leasing or selling the equipment as it comes
off lease.

The  Company  participates  with  ATEL  and  certain  of  its  affiliates  in  a
$90,000,000  revolving line of credit with a financial institution that includes
certain financial covenants.  The line of credit expires on January 31, 2000. As
of  December  31,  1998,  ATEL  and  certain  of its  affiliates  have  borrowed
$51,011,790  under the warehouse  facility  (included in the $90,000,000 line of
credit) and used the proceeds to purchase assets under lease to several lessees.
At such time as any of these assets are transferred to the Company,  any related
borrowings  would be assumed by the Company.  At December 31, 1998,  $13,070,344
was available under the line of credit.

ATEL or an  Affiliate  may purchase  equipment  in its own name,  the name of an
Affiliate or the name of a nominee,  a trust or otherwise and hold title thereto
on a temporary or interim basis  (generally not in excess of six months) for the
purpose of  facilitating  the acquisition of such equipment or the completion of
manufacture of the equipment or for any other purpose related to the business of
the Company, provided, however that: (i) the transaction is in the best interest
of the Company;  (ii) such  equipment is purchased by the Company for a purchase
price no greater than the cost of such equipment to ATEL or Affiliate (including
any  out-of-pocket  carrying costs),  except for  compensation  permitted by the
Operating Agreement; (iii) there is no difference in interest terms of the loans
secured by the  equipment at the time acquired by ATEL or Affiliate and the time
acquired  by  the  Company;  (iv)  there  is no  benefit  arising  out  of  such
transaction  to ATEL or its  Affiliate  apart  from the  compensation  otherwise
permitted by the Operating  Agreement;  and (v) all income generated by, and all
expenses associated with, equipment so acquired shall be treated as belonging to
the Company.


<PAGE>

The Company currently has available adequate reserves to meet its immediate cash
requirements,  but in the event those reserves were found to be inadequate,  the
Company would likely be in a position to borrow against its current portfolio to
meet such  requirements.  ATEL  envisions  no such  requirements  for  operating
purposes.

ATEL expects that aggregate  borrowings in the future will be approximately  50%
of aggregate  equipment cost. In any event, the Operating  Agreement limits such
borrowings to 50% of the total cost of equipment, in aggregate.

The  Company  commenced  regular   distributions,   based  on  cash  flows  from
operations,  beginning with the month of January 1999. The distribution was made
in February 1999.

If  inflation  in the general  economy  becomes  significant,  it may affect the
Company  inasmuch as the residual  (resale) values and rates on re-leases of the
Company's  leased assets may increase as the costs of similar  assets  increase.
However, the Company's revenues from existing leases would not increase, as such
rates are generally  fixed for the terms of the leases  without  adjustment  for
inflation.

If interest rates increase  significantly,  the lease rates that the Company can
obtain on future leases will be expected to increase as the cost of capital is a
significant  factor in the pricing of lease financing.  Leases already in place,
for the most part, would not be affected by changes in interest rates.


Results of Operations

As of January 13,  1999,  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 activities). There
were no  operations  in 1998.  Because  of the  timing  of the  commencement  of
operations and the fact that the initial  portfolio  acquisitions  have not been
completed,  the results of  operations in 1999 are not expected to be comparable
to future  periods.  After the Company's  public  offering and its initial asset
acquisition  stage  terminate,  the results of operations are expected to change
significantly.

Substantially   all   employees  of  ATEL  track  time  incurred  in  performing
administrative  services on behalf of the Company.  ATEL 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.

Impact of the Year 2000

The year 2000 issue is the result of certain  computer  programs  being  written
using two digits  rather than four to define the  applicable  year. As a result,
these  programs are not designed to make the  transition to the year 2000.  This
computer  software problem is commonly referred to as the "year 2000" (or "Y2K")
issue. Computer programs with date-sensitive  applications may, if not modified,
fail or miscalculate  dates,  causing system failures,  the inability to process
transactions or other disruptions of operations.


<PAGE>

ATEL uses, and on behalf of the Company uses, primarily third party software and
is  communicating  with key software  vendors to ensure that the systems used by
ATEL and the Company are not impaired by the year 2000 issue. Currently,  all of
ATEL's critical software systems are believed by ATEL to be Y2K compliant except
one.  Compliance  of this final  system is  expected to be obtained in the first
quarter of 1999.  Based on discussions  with the Manager's  third party software
vendor,  ATEL believes that any cost to be incurred by the Company to bring this
system into compliance will not be material.  ATEL's third party software vendor
for the system in question has indicated  that it expects the cost of compliance
to be  included  in the annual  upgrade and  maintenance  cost for the  software
system,  and that the total  incremental  amount of such cost is  expected to be
minimal.  Any such cost would be  allocated by the Manager over the seven public
funds  (including the Company)  under its  management  which use or will use the
software.  This  allocation  would be based on the  relative  size of each  such
program,  and,  given the timing of the expense and the  formative  stage of the
Company at the time the expense is to be incurred, its proportionate  allocation
of the  expected  minimal  cost  will in  itself be  minimal.  In no event  will
offering  proceeds be required to be committed to any such  expenditure.  If any
cost is incurred by the Company,  it would be an operating expense funded out of
operating revenues.

The ultimate impact of the year 2000 issue on the Company will depend to a great
extent on the manner in which the issue is addressed by those  businesses  whose
operational capability is important to the Company.  Failure of these businesses
to be Y2K compliant may impact credit  quality or cause a delay in payments made
to the Company.  ATEL has contacted those businesses with which it currently has
material  relationships in order to request verification of Y2K compliance.  The
Manager  believes that each of those entities will have a material self interest
in resolving any year 2000 issue affecting its own operations.

Equipment to be purchased by the Company may include  technology  subject to the
year 2000  issue.  Potential  year 2000  issues  will be among the many  factors
considered   by  ATEL  and  its   affiliates  in  analyzing  and  pricing  lease
transactions  for acquisition by the Company.  The lessees of the equipment will
select  such  equipment  and  may be  expected  to  consider  year  2000  issues
themselves in determining the suitability of the equipment for the lessee's use.
Most equipment is expected to be subject to fixed term,  non-cancelable,  triple
net  leases.  In  addition,  new  equipment  may be  covered  by  manufacturer's
warranties. As a result of such triple net provisions and warranties, repairs or
modifications  necessary  to correct  year 2000  issues  will most likely be the
responsibility of the manufacturers or the lessees,  and the Company's rights to
lease  payments as a triple net lessor  will not be  affected by any  functional
issues  affecting  the  equipment.  It is expected that the lease terms for such
equipment will extend well beyond the year 2000.

As a result of the year 2000 issue,  the Company may experience  increased costs
resulting  from delayed  payments from lessees,  the costs  associated  with the
collection of those payments, or costs associated with manual processing efforts
in the event of a Y2K related system failure. In any event, ATEL does not expect
these  increased  costs to be  significant  or that  such  costs  will  have any
material  adverse  effect on the  operations of the Company.  Nevertheless,  the
impact of year 2000 issues  cannot be predicted  with  certainty and the Company
may be affected  both by the impact  these  issues have on parties with which it
has direct  contractual  and other  relationships  as well as by their impact on
financial  institutions and the national and  international  economy as a whole.
Accordingly, there can be no assurance that year 2000 issues might not have some
adverse impact on the operating results experienced by the Company.



<PAGE>

Item 7a.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company,  like most other  companies,  is exposed to certain  market  risks,
including primarily changes in interest rates. The Company believes its exposure
to other market risks including foreign currency  exchange rate risk,  commodity
risk and equity price risk will be insignificant to both its financial  position
and results of operations.

In general,  the Company expects to manage its exposure to interest rate risk by
obtaining  fixed rate debt which is  coterminous  with the Company's  fixed rate
lease receivables.  Furthermore, the Company expects to maintain a stable spread
between its cost of funds and lease yields in both periods of rising and falling
rates.  Nevertheless,  the Company expects to fund leases with its floating rate
line of credit and will therefore exposed to interest rate risk until fixed rate
financing is arranged.  As of December 31, 1998,  the Company had no outstanding
balances on the floating rate line of credit.

To hedge its interest rate risk related to any  outstanding  variable rate debt,
the Company may enter into  interest  rate swaps.  As of December 31,  1998,  no
swaps or other derivative  financial  instruments were held by the Company.  The
Company does not hold or issue derivative financial  instruments for speculative
purposes.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the  Report  of  Independent  Auditors,  Financial  Statements  and Notes to
Financial Statements attached hereto at pages 9 through 12.

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS






The Members
ATEL Capital Equipment Fund VIII, LLC


We have audited the  accompanying  balance sheet of ATEL Capital  Equipment Fund
VIII,  LLC as of December 31,  1998,  and the related  statements  of changes in
members'  capital and cash flows for the period  from July 31, 1998  (inception)
through December 31, 1998. These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  from  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of ATEL Capital  Equipment Fund
VIII,  LLC at December  31, 1998,  and its changes in members'  capital and cash
flows for the period from July 31, 1998  (inception)  through December 31, 1998,
in conformity with generally accepted accounting principles.



                                                               ERNST & YOUNG LLP
San Francisco, California
January 25, 1999




<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC
                        (A Development Stage Enterprise)

                                  BALANCE SHEET

                                DECEMBER 31, 1998


                                     ASSETS

Cash                                                                   $ 600
                                                               ==============


                        LIABILITIES AND MEMBERS' CAPITAL


Members' capital:
     Managing Member                                                   $ 100
     Initial Members                                                     500
                                                               --------------
Total members' capital                                                 $ 600
                                                               ==============




                    STATEMENT OF CHANGES IN MEMBERS' CAPITAL

                 FOR THE PERIOD FROM JULY 31, 1998 (INCEPTION)
                           THROUGH DECEMBER 31, 1998

                              Initial Members            Managing
                           Units          Amount          Member        Total

Capital contributions             50         $ 500          $ 100        $ 600
                       ============== ============= ==============  ===========




                            STATEMENT OF CASH FLOWS

                 FOR THE PERIOD FROM JULY 31, 1998 (INCEPTION)
                           THROUGH DECEMBER 31, 1998


Financing activities:
Capital contributions received                                           $ 600
                                                                 --------------
Net increase in cash                                                       600
                                                                 --------------
Cash at end of period                                                    $ 600
                                                                 ==============


                             See accompanying notes.


<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


1.  Organization and Limited Liability Company matters:

ATEL Capital  Equipment  Fund VIII,  LLC (a  development  stage  enterprise)(the
Company), was formed under the laws of the State of California on July 31, 1998,
for the purpose of acquiring  equipment to engage in equipment leasing and sales
activities.  The Company shall  continue  until  December 31, 2019. The Managing
Member  of the  Company  is ATEL  Financial  Corporation  (ATEL),  a  California
corporation.  Contributions  in the  amount  of $600  had  been  received  as of
December  31,  1998,  $100 of which  represented  the  Managing  Member's  (ATEL
Financial  Corporation's)  (ATEL's)  continuing  interest,  and  $500  of  which
represented the Initial  Members'  capital  investment.  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.

As of December 31, 1998,  the Company had not  commenced  operations  other than
those relating to organizational  matters. The Company, or ATEL on behalf of the
Company, will incur costs in connection with the organization,  registration and
issuance of the Limited  Liability  Company  Units  (Units).  The amount of such
costs to be borne by the Company is limited by certain provisions of the Limited
Liability Company Operating Agreement (Operating Agreement).


2.  Income taxes:

The Company  does not  provide for income  taxes since all income and losses are
the  liability of the  individual  members and are  allocated to the members for
inclusion in their individual tax returns.


3.  Members' capital:

As of December 31, 1998,  50 Units were issued and  outstanding.  The Company is
authorized to issue up to 15,000,000 additional Units.

The Company Net Income,  Net Losses, and Distributions are to be allocated 92.5%
to the Members and 7.5% to ATEL.


4. Commitments and management:

The terms of the Operating  Agreement  provide that ATEL and/or  affiliates  are
entitled to receive certain fees, in addition the allocations  described  above,
which are more fully  described  in Section 8 of the  Operating  Agreement.  The
additional fees to management include fees for equipment management and resale.

ATEL or an  Affiliate  may purchase  equipment  in its own name,  the name of an
Affiliate or the name of a nominee,  a trust or otherwise and hold title thereto
on a temporary or interim basis  (generally not in excess of six months) for the
purpose of  facilitating  the acquisition of such equipment or the completion of
manufacture of the equipment or for any other purpose related to the business of
the Company, provided, however that: (i) the transaction is in the best interest
of the Company;  (ii) such  equipment is purchased by the Company for a purchase
price no  greater  than the cost of such  equipment  to the  Managing  Member or
Affiliate (including any out-of-pocket  carrying costs), except for compensation
permitted by the Operating  Agreement;  (iii) there is no difference in interest
terms of the loans  secured by the  equipment  at the time  acquired  by ATEL or
Affiliate and the time acquired by the Company; (iv) there is no benefit arising
out of such  transaction  to ATEL or its Affiliate  apart from the  compensation
otherwise permitted by the Operating Agreement; and (v) all income generated by,
and all expenses  associated  with,  equipment  so acquired  shall be treated as
belonging to the Company.


<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


5.  Line of credit:

The  Company  participates  with  ATEL  and  certain  of  its  Affiliates  in  a
$90,000,000  revolving credit  agreement with a group of financial  institutions
which  expires on January  31,  2000.  The  agreement  includes  an  acquisition
facility and a warehouse facility which are used to provide bridge financing for
assets on leases.  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 Affiliates, the Company and the Managing Member.

The credit agreement  includes certain  financial  covenants  applicable to each
borrower.  The Company was in  compliance  with its covenants as of December 31,
1998. At December 31, 1998, $13,070,344 was available under this agreement.


6. Subsequent events:

As of February 28, 1999, the Company had received and accepted subscriptions for
966,081  Units  ($9,660,810),  in  addition  to the Units  issued to the Initial
Members.  As of that date,  the Company had purchased  assets with total cost of
$4,039,115.



<PAGE>

Item 9.  CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON
           ACCOUNTING AND FINANCIAL DISCLOSURES

Inapplicable.


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

The registrant is a Limited Liability Company and, therefore, has no officers or
directors.

All of the outstanding capital stock of ATEL Financial Corporation (the Managing
Member) is held by ATEL  Capital  Group  ("ACG"),  a holding  company  formed to
control  ATEL and  affiliated  companies  pursuant to a corporate  restructuring
completed in July 1994. The  outstanding  capital stock of ATEL Capital Group is
owned  75% by A.  J.  Batt  and  25% by  Dean  Cash,  and  was  obtained  in the
restructuring  in  exchange  for  their  capital  interests  in  ATEL  Financial
Corporation.

Each of ATEL Leasing Corporation  ("ALC"),  ATEL Equipment  Corporation ("AEC"),
ATEL  Investor  services  ("AIS") and ATEL  Financial  Corporation  ("AFC") 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 service are performed by
AEC,  investor  relations  and  communications  service are performed by AIS and
general  administrative  service  for the  Company are  performed  by AFC.  ATEL
Securities  Corporation ("ASC"), is a wholly-owned  subsidiary of ATEL Financial
Corporation.

The officers and directors of ATEL Capital Group, ATEL Financial Corporation and
their affiliates are as follows:

A. J. Batt                   Chairman of the Board of Directors of ACG, AFC, 
                             ALC, AEC, AIS and ASC; President and Chief 
                             Executive Officer of ACG, AFC and AEC

Dean L. Cash                 Director, Executive Vice President and Chief 
                             Operating Officer of ACG, AFC, and AEC; Director, 
                             President and Chief Executive Officer of ALC, AIS 
                             and ASC

Donald E. Carpenter          Vice President and Controller of ACG, AFC, ALC, AEC
                              and AIS; Chief Financial Officer of ASC

Vasco H. Morais              Senior Vice President, Secretary and General 
                             Counsel for ACG, AFC, ALC, AIS and AEC

William J. Bullock           Director of Asset Management of AEC

Carl W. Magnuson             Vice President - Syndication of ALC

Barbara F. Medwadowski       Vice President - Syndication of ALC

James A. Kamradt             Director of Pricing and Syndication of ALC

Thomas D. Sbordone           Senior Vice President - Marketing of ALC

Russell H. Wilder            Vice President - Credit of AEC

John P. Scarcella            Vice President of ASC


<PAGE>

A. J. Batt, age 62, founded ATEL in 1977 and has been its president and chairman
of the  board of  directors  since  its  inception.  From  1973 to 1977,  he was
employed by GATX  Leasing  Corporation  as  manager-data  processing  and equity
placement for the lease underwriting department, which was involved in equipment
financing  for  major  corporations.  From  1967 to 1973  Mr.  Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support  services for computer  time-sharing  applications  for corporations and
financial  institutions.  Prior to that time, he was employed by North  American
Aviation as an  engineer  involved in the Apollo  project.  Mr. Batt  received a
B.Sc.  degree with honors in  mathematics  and physics  from the  University  of
British Columbia in 1961.

Dean L. Cash,  age 48, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981,  executive vice president since 1983 and a director
since  1984.   Prior  to  joining  ATEL,   Mr.  Cash  was  a  senior   marketing
representative for Martin Marietta Corporation, data systems division, from 1979
to 1980.  From 1977 to 1979,  he was employed by General  Electric  Corporation,
where he was an applications  specialist in the medical  systems  division and a
marketing  representative in the information  services division.  Mr. Cash was a
systems  engineer  with  Electronic  Data  Systems  from  1975 to 1977,  and was
involved in maintaining and developing software for commercial applications. Mr.
Cash received a B.S.  degree in psychology and mathematics in 1972 and an M.B.A.
degree with a  concentration  in finance in 1975 from Florida State  University.
Mr. Cash is an arbitrator with the American Arbitration Association.

Donald E. Carpenter, age 50, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,  certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983,  Mr.  Carpenter  was an  audit  senior  with  Deloitte,  Haskins  & Sells,
certified public accountants,  in San Jose,  California.  From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter  received a
B.S. degree in mathematics  (magna cum laude) from California State  University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.

Vasco H. Morais, age 40, joined ATEL in 1989 as general counsel to provide legal
support in the  drafting  and  reviewing  of lease  documentation,  advising  on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989,  Mr.  Morais was  employed  by the  BankAmeriLease  Companies,  Bank of
America's  equipment leasing  subsidiaries,  providing in-house legal support on
the  documentation  of  tax-oriented  and non-tax  oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease  Companies,  Mr. Morais was with the Consolidated  Capital
Companies in the Corporate and Securities Legal Department  involved in drafting
and reviewing  contracts,  advising on corporate law matters and  securities law
issues.  Mr.  Morais  received  a B.A.  degree  in 1982 from the  University  of
California in Berkeley,  a J.D.  degree in 1986 from Golden Gate  University Law
School and an MBA (Finance) in 1997 from Golden Gate University.  Mr. Morais has
been an active member of the State Bar of California since 1986.

William J.  Bullock,  age 35,  joined  ATEL in 1991,  as the  director  of asset
management. He assumed responsibility for the disposition of off-lease equipment
and  residual  valuation  analysis on new lease  transactions.  Prior to joining
ATEL,  Mr.  Bullock  was a senior  member of the  equipment  group at  McDonnell
Douglas  Finance  Corporation  ("MDFC")  responsible for managing its $4 billion
portfolio of leases.  Mr. Bullock was involved in negotiating sales and renewals
as well as preparing and  inspecting  equipment.  Prior to joining MDFC in 1989,
Mr. Bullock was the Senior  Negotiator at Equitable  Leasing (a subsidiary of GE
Capital Equipment Corp.) in San Diego. At Equitable, he handled the end-of-lease
negotiations  and equipment  dispositions of a portfolio  comprised of equipment
leased primarily to Fortune 200 companies.  Mr. Bullock has been a member of the
Equipment Lessors  Association  ("ELA") since 1987 and has authored ELA industry
articles.  He  received a B.S.  degree in  Finance in 1987 from San Diego  State
University and is pursuing his M.B.A.


<PAGE>

Carl  W.  Magnuson,  age  55,  joined  ATEL in  1994  and is  Vice  President  -
Syndication for ALC. Mr. Magnuson is responsible for acquiring third party lease
transactions  and debt placement.  Prior to joining ATEL he was a Regional Group
Manager and Portfolio  Sales Manager for Bell  Atlantic  Systems  Leasing for 10
years.  From 1983 to 1984 he was Vice President and Chief  Financial  Officer of
the Handi-Kup  Company,  a plastics  manufacturer,  and from 1981 to 1982 he was
Controller for the Cyclotron  Corporation,  engaged in nuclear medicine research
and  development.  From 1978 to 1981 he was Executive  Vice President of Shannon
Financial Corporation, a middle market leasing corporation. From 1975 to 1978 he
was a Deputy Program Manager for the Watkins Johnson Company.  From 1968 to 1973
Mr.  Magnuson was an engineering  duty officer in the U. S. Navy.  Mr.  Magnuson
received a B.S. in Engineering  Science and an M.S. in Applied  Mathematics from
the Rensselaer Polytechnic Institute, an MS in Industrial Engineering/Operations
Research  from  Stanford  University,  and an  M.B.A.  from  the  University  of
California at Berkeley.

Barbara F.  Medwadowski,  age 59,  joined  ATEL in 1997 and is vice  president -
syndication  for ALC. Ms.  Medwadoski is responsible  for acquiring  third party
lease  transactions.  Prior to joining ATEL, she was a syndications  manager for
Mellon US Leasing  (successor to USL Capital and U.S.  Leasing  Corporation) for
nine  years.  From 1985 to 1987,  she was a vice  president  with Great  Western
Leasing where she acquired lease and loan transactions from intermediaries. From
1982 through 1984, she was a portfolio  manager with U.S.  Leasing  Corporation.
Ms. Medwadowski  received an M.B.A.  degree from the University of California at
Berkeley in 1982. From 1964 through 1979, she was a senior  researcher in lipids
and  lipoproteins  at the  University of California  at Berkeley.  In 1964,  she
earned  an  M.S.  degree  in  nutrition  and  in  1961 a B.S.  degree  in  child
development, each from the University of California at Berkeley

James A. Kamradt,  age 37,  Director of Pricing and  Syndication for ALC, joined
ATEL in 1997. Mr. Kamradt is involved in the pricing of lease  transactions  and
the placement of debt to leverage certain  transactions.  From 1985 to 1997, Mr.
Kamradt managed his own private consulting business,  providing underwriting and
operational services for numerous leasing companies.  Prior to that, Mr. Kamradt
was the National Operations Officer for the computer leasing division of Phoenix
American;  and Regional Credit Manager for Dana Commercial  Credit  Corporation.
Mr.  Kamradt  received  his  B.S.  from  Michigan   Technological   University's
Engineering  School of Business,  and his M.B.A. from Haas School of Business of
the University of California, Berkeley.

Thomas D.  Sbordone,  age 40, is Senior Vice  President - Marketing  for ALC. He
joined ATEL in 1993, as a regional  vice  president in the  northeastern  United
States.  Mr.  Sbordone is currently  responsible  for new  business  development
within the eastern  U.S.,  including  management  of filed sales  personnel  and
directly interfacing with ATEL's existing and prospective clients to achieve the
company's lease investment  objectives.  Prior to joining ATEL, Mr. Sbordone was
employed, from 1985, by American Finance Group, a Boston-based equipment lessor.
While there, Mr. Sbordone's various responsibilities  involved lease origination
of vendor finance  relationships.  Mr. Sbordone  earned a B.S., with honors,  in
finance and marketing from  Northeastern  University,  and has attended  Bentley
College Graduate School of Business.

Russell  H.  Wilder,  age 44,  joined  ATEL in  1992 as Vice  President  of ATEL
Business Credit, a wholly-owned  subsidiary of ACG. Immediately prior to joining
ATEL,  Mr.  Wilder was a personal  property  broker  specializing  in  equipment
leasing  and  financing  and an  outside  contractor  in the areas of credit and
collections.  From 1985 to 1990 he was Vice President and Manager of Leasing for
Fireside Thrift Co., a Teledyne subsidiary,  and was responsible for all aspects
of setting up and  managing  the  department,  which  operated as a small ticket
lease  funding  source.  From  1983 to  1985 he was  with  Wells  Fargo  Leasing
Corporation  as  Assistant  Vice  President  in the credit  department  where he
oversaw all credit analysis on  transactions in excess of $2 million.  From 1978
to 1983 he was District Credit Manager with  Westinghouse  Credit  Corporation's
Industrial Group and was responsible for all non-marketing operations of various
district offices. Mr. Wilder holds a B.S. with Honors in Agricultural  Economics
and Business  Management from the University of California at Davis. He has been
awarded the Certified Lease Professional  designation by the Western Association
of Equipment Lessors.


<PAGE>

John P. Scarcella,  age 37, joined ATEL Securities as vice president in 1992. He
is involved in the marketing of securities offered by ASC. Prior to joining ASC,
from 1987 to 1991,  he was  employed  by Lansing  Pacific  Fund,  a real  estate
investment  trust in San Mateo,  California  and acted as  director  of investor
relations.   From  1984  to  1987,   Mr.   Scarcella   acted  as  broker  dealer
representative  for Lansing  Capital  Corporation,  where he was involved in the
marketing of direct  participation  programs and REITs. Mr. Scarcella received a
B.S.C.  degree with emphasis in investment finance in 1983 and an M.B.A.  degree
with a concentration in marketing in 1991 from Santa Clara University.


Item 11.  EXECUTIVE COMPENSATION

The registrant is a Limited Liability Company and, therefore, has no officers or
directors.

Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to ATEL and their  affiliates.  As of December 31, 1998, no amounts have
been paid to ATEL by the Company.


Selling Commissions

The  Company  will  pay  selling  commissions  in the  amount  of 9.5% of  Gross
Proceeds, as defined, to ATEL Securities  Corporation,  an affiliate of ATEL. Of
this amount, the majority is expected to be reallowed to other broker/dealers.

Through  December 31, 1998, no such  commissions had been either accrued or paid
to ATEL or its affiliates.

Asset Management Fee

The Company will pay ATEL an Asset  Management Fee in an amount equal to 4.5% of
Operating Revenues,  which will include Gross Lease Revenues and Cash From Sales
or Refinancing.  The Asset  Management Fee will be paid on a monthly basis.  The
amount of the Asset  Management Fee payable in any year will be reduced for that
year to the extent it would otherwise  exceed the Asset Management Fee Limit, as
described below. The Asset Management Fee will be paid for services  rendered by
ATEL and its  Affiliates  in  determining  portfolio and  investment  strategies
(i.e.,  establishing and maintaining the composition of the Equipment  portfolio
as a whole and the Company's  overall debt structure) and generally  managing or
supervising the management of the Equipment.  ATEL will supervise performance of
among others activities,  collection of lease revenues, monitoring compliance by
lessees  with  the  lease  terms,  assuring  that  Equipment  is  being  used in
accordance  with  all  operative  contractual  arrangements,   paying  operating
expenses and arranging for necessary  maintenance and repair of Equipment in the
event a lessee fails to do so, monitoring property, sales and use tax compliance
and  preparation of operating  financial data. ATEL intends to delegate all or a
portion  of its  duties  and  the  Asset  Management  Fee to one or  more of its
Affiliates who are in the business of providing such services.

Asset Management Fee Limit:

The Asset  Management Fee will be subject to the Asset Management Fee Limit. The
Asset  Management  Fee Limit will be  calculated  each year during the Company's
term by  calculating  the total fees that would be paid to ATEL if the  Managing
Member were to be compensated on the basis of an  alternative  fee schedule,  to
include an Equipment  Management  Fee,  Incentive  Management Fee, and Equipment
Resale/Re-Leasing  Fee, plus ATEL's Carried Interest, as described below. To the
extent that the amount paid to ATEL as the Asset Management Fee plus its Carried
Interest for any year would exceed the aggregate amount of fees calculated under
this  alternative  fee schedule for the year,  the Asset  Management  Fee and/or
Carried  Interest  for that year will be reduced to equal the maximum  aggregate
fees  under  the  alternative  fee  schedule.  To the  extent  any such fees are
reduced,  the amount of such  reduction  will be accrued and deferred,  and such
accrued and deferred  compensation would be paid to ATEL in a subsequent period,
but only if and to the extent that such deferred  compensation  would be payable
within the Asset  Management Fee Limit for the subsequent  period.  Any deferred
fees which cannot be paid under the  applicable  limitations  in any  subsequent
period  through  the  date of  liquidation  would  be  forfeited  by  ATEL  upon
liquidation.


<PAGE>

Alternative Fee Schedule:

For purposes of the Asset  Management  Fee Limit,  the Company will calculate an
alternative schedule of fees, including a hypothetical Equipment Management Fee,
Incentive Management Fee, Equipment Resale/Re- Leasing Fee, and Carried Interest
as follows:

An Equipment  Management  Fee will be calculated to equal the lesser of (i) 3.5%
of annual Gross Revenues from  Operating  Leases and 2% of annual Gross Revenues
from Full Payout  Leases which contain Net Lease  Provisions),  or (ii) the fees
customarily  charged by others  rendering  similar services as an ongoing public
activity in the same geographic location and for similar types of equipment.  If
services with respect to certain Operating Leases are performed by nonaffiliated
persons under the active  supervision of ATEL or its Affiliate,  then the amount
so calculated shall be 1% of Gross Revenues from such Operating Leases.

An Incentive  Management Fee will be calculated to equal 4% of  Distributions of
Cash from  Operations  until  Holders have  received a return of their  Original
Invested Capital plus a Priority Distribution, and, thereafter, to equal a total
of 7.5%  of  Distributions  from  all  sources,  including  Sale or  Refinancing
Proceeds.  In  subordinating  the increase in the Incentive  Management Fee to a
cumulative  return of a  Holder's  Original  Invested  Capital  plus a  Priority
Distribution,  a Holder  would  be  deemed  to have  received  Distributions  of
Original  Invested  Capital only to the extent that  Distributions to the Holder
exceed the amount of the Priority Distribution.

An Equipment  Resale/Re-Leasing Fee will be calculated in an amount equal to the
lesser of (i) 3% of the sale price of the Equipment, or (ii) one-half the normal
competitive equipment sale commission charged by unaffiliated parties for resale
services.  Such fee would apply only after the Holders have received a return of
their Original Invested Capital plus a Priority Distribution. In connection with
the  releasing  of  Equipment to lessees  other than  previous  lessees or their
Affiliates,  the fee  would  be in an  amount  equal  to the  lesser  of (i) the
competitive rate for comparable  services for similar  equipment,  or (ii) 2% of
the gross rental payments  derived from the re-lease of such Equipment,  payable
out of each rental payment received by the Company from such re-lease.

A Carried  Interest equal to 7.5% of all  Distributions  of Cash from Operations
and Cash from Sales or Refinancing.


Managing Member's Interest in Operating Proceeds

Net income,  net loss and  investment  tax credits  are  allocated  92.5% to the
Members and 7.5% to ATEL. In 1998,  there were no operations  nor were there any
allocations of income or loss to either ATEL or the Members.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

At December 31, 1998 two investors (the Initial Members) held  beneficially more
than 5% of the issued and outstanding Units.


<PAGE>

Security Ownership of Management

The  shareholders  of ATEL are beneficial  owners of Limited  Liability  Company
Units as follows:
<TABLE>
<CAPTION>

            (1)                                   (2)                             (3)                             (4)
                                                  Name and Address of            Amount and Nature of           Percent
       Title of Class                              Beneficial Owner              Beneficial Ownership          of Class

<S>                                           <C>                           <C>                                  <C>     
Limited Liability Company Units                A. J. Batt                     Initial Limited Liability           50.0000%
                                              235 Pine Street, 6th Floor     Company Units
                                                San Francisco, CA 94104     25 Units ($250)
                                                                                   (owned by wife)

Limited Liability Company Units                Dean Cash                      Initial Limited Liability           50.0000%
                                              235 Pine Street, 6th Floor     Company Units
                                                San Francisco, CA 94104     25 Units ($250)
                                                                                   (owned by wife)
</TABLE>

Changes in Control

The Members have the right,  by vote of the Members  owning more than 50% of the
outstanding Limited Liability Company Units, to remove a Managing Member.

ATEL may at any time  call a meeting  of the  Members  or a vote of the  Members
without a meeting, on matters on which they are entitled to vote, and shall call
such  meeting  or for vote  without a  meeting  following  receipt  of a written
request  therefor  of  Limited  Partners  holding  10%  or  more  of  the  total
outstanding Limited Liability Company Units.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The   responses  to  Item  11  of  this  report  under  the  caption   Executive
Compensation, are hereby incorporated herein by reference.



<PAGE>

                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
               ON FORM 8-K

                         (a)Financial Statements and Schedules
                         1.  Financial Statements
                             Included in Part II of this report:
                             Report of Independent Auditors
                             Balance Sheet at December 31, 1998
                             Statement of Changes in  Members'  Capital  for the
                                period  from July 31, 1998  (inception)  through
                                December 31, 1998
                             Statement of Cash  Flows for the  period  from July
                                31, 1998 (inception) through December 31, 1998
                             Notes to Financial Statements

                         2.  Financial Statement Schedules
                             Allschedules  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.

                         (b)Reports on Form 8-K for the fourth quarter of 1998
                             None

                         (c)Exhibits
                             (3)and (4) Agreement of Limited Liability  Company,
                                included  as  Exhibit B to  Prospectus  (Exhibit
                                28.1)


                             (28)  Additional Exhibits

                                      28.1   Prospectus dated December 7, 1998


<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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:  3/26/1999

                      ATEL Capital Equipment Fund VIII, LLC
                                  (Registrant)


                        By:  ATEL Financial Corporation,
                             Managing Member of Registrant



                         By:   /s/  A. J. Batt
                               -----------------------------------------------
                               A. J. Batt,
                               President and Chief Executive Officer of
                               ATEL Financial Corporation (Managing Member)




                         By:    /s/ Dean Cash
                               -----------------------------------------------
                               Dean Cash,
                               Executive vice President of ATEL
                               Financial Corporation (Managing Member)




<PAGE>

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


         SIGNATURE                  CAPACITIES                           DATE



     /s/ A. J. Batt       President, chairman and chief executive      3/26/1999
------------------------  officer of ATEL Financial Corporation
       A. J. Batt        



      /s/ Dean Cash       Executive vice president and director of     3/26/1999
------------------------  ATEL Financial Corporation
       Dean Cash         



/s/ Donald E. Carpenter   Principal financial officer of registrant;   3/26/1999
------------------------  principal financial officer of ATEL 
  Donald E. Carpenter     Financial Corporation Principal accounting
                          officer of registrant; principal accounting 
                          officer of ATEL Financial Corporation



Supplemental  Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:

No proxy  materials  have been or will be sent to  security  holders.  An annual
report will be furnished to security  holders  subsequent  to the filing of this
report on Form 10-K, and copies thereof will be furnished  supplementally to the
Commission when forwarded to the security holders.

<PAGE>

                                INDEX TO EXHIBITS

       Index Number                             Exhibit

           3 & 4             Limited Liability Company Operating Agreement, 
                              included as Exhibit B to Prospectus

           28.1              Prospectus