UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





[x]         Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the





quarterly
      period ended
            June 30, 2008


or


[  ]         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
            000-51916





ICON Leasing Fund Eleven,
    LLC(Exact
      name of registrant as specified in its
charter)





Delaware
            20-1979428(State
      or other jurisdiction of incorporation or organization)
            (IRS
      Employer Identification Number)





100 Fifth Avenue, 4thFloor, New York, New York
            10011-1505(Address
      of principal executive offices)
            (Zip
      code)





(212) 418-4700Registrant's
      telephone number, including area
code





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





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


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





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





Number of
outstanding limited liability company shares of the registrant on July 31, 2008
is 363,333.













ICON Leasing Fund Eleven, LLC
              Table
      of ContentsPART I - FINANCIAL INFORMATION
            PageItem 1.  Condensed Consolidated Financial
      StatementsCondensed Consolidated Balance Sheets
            1Condensed Consolidated Statement of
      Operations
            2Condensed Consolidated Statement of Changes in Members’
      Equity
            3Condensed Consolidated Statement of Cash
      Flows
            4Notes to Condensed Consolidated Financial
      Statements
            6Item 2. Manager’s Discussion and Analysis of Financial
      Condition and Results of Operations
            22Item 3. Quantitative and Qualitative Disclosures About
      Market Risk
            34Item 4T. Controls and Procedures
            34PART II – OTHER INFORMATIONItem 1. Legal Proceedings
            
            35Item 1A.   Risk
Factors
            
            35Item 2. Unregistered Sales of Equity Securities and Use of
      Proceeds
            35Item 3. Defaults Upon Senior
Securities
            35Item 4. Submission of Matters to a Vote of Security
      Holders
            35Item 5. Other Information
            
            35Item 6. Exhibits
            
            36Signatures
            
            37







Table of Contents





PART I – FINANCIAL INFORMATION





Item 1.  Condensed Consolidated Financial
Statements





ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Condensed
      Consolidated Balance SheetsAssetsJune
      30,2008
            
            
            December
      31,(unaudited)
            
            
            2007Current
      assetsCash
      and cash equivalents
            
            $
            22,563,412
            
            
            $
            42,339,549Current
      portion of net investment in finance leases
            
            
            5,713,973
            
            
            
            10,442,124Accounts
      receivable (net of allowancefor
      doubtful accounts of $0 and $73,321, respectively)
            
            
            1,452,486
            
            
            
            4,087,034Restricted
      cash
            
            
            265,630
            
            
            
            1,426,170Equipment
      held for sale or lease, net
            
            
            -
            
            
            
            2,226,905Prepaid
      expenses
            
            
            404,738
            
            
            
            953,451Deferred
      income taxes
            
            
            112,875
            
            
            
            -Income
      tax receivable
            
            
            4,654,675
            
            
            
            2,037,851Other
      current assets
            
            
            892,806
            
            
            
            651,516Total
      current assets
            
            
            36,060,595
            
            
            
            64,164,600Non-current
      assetsNet
      investment in finance leases, less current portion
            
            
            24,760,077
            
            
            
            89,080,301Leased
      equipment at cost (less accumulated depreciation of$93,411,259
      and $109,756,923, respectively)
            
            
            349,554,923
            
            
            
            417,738,629Note
      receivable on financing facility, net
            
            
            4,252,390
            
            
            
            4,087,568Mortgage
      note receivable
            
            
            12,722,006
            
            
            
            12,722,006Investments
      in joint ventures
            
            
            8,326,229
            
            
            
            4,638,393Deferred
      income taxes
            
            
            1,342,040
            
            
            
            963,595Other
      non-current assets, net
            
            
            2,112,572
            
            
            
            2,356,913Total
      non-current assets
            
            
            403,070,237
            
            
            
            531,587,405Total
      Assets
            
            $
            439,130,832
            
            
            $
            595,752,005Liabilities
      and Members' EquityCurrent
      liabilitiesCurrent
      portion of non-recourse long-term debt
            
            $
            41,778,053
            
            
            $
            79,084,120Interest
      rate swap contracts
            
            
            5,064,759
            
            
            
            4,556,116Deferred
      revenue
            
            
            4,764,951
            
            
            
            11,869,874Current
      portion of leasing payables and other lease liabilities
            
            
            -
            
            
            
            5,253,451Due
      to Manager and affiliates, net
            
            
            651,712
            
            
            
            296,476Income
      taxes payable
            
            
            378,777
            
            
            
            139,310Accrued
      expenses and other current liabilities
            
            
            1,521,575
            
            
            
            3,995,256Total
      current liabilities
            
            
            54,159,827
            
            
            
            105,194,603Non-current
      liabilitiesNon-recourse
      long-term debt, net of current portion
            
            
            142,401,216
            
            
            
            206,410,288Leasing
      payables and other lease liabilities, net of current
    portion
            
            
            -
            
            
            
            10,533,826Total
      non-current liabilities
            
            
            142,401,216
            
            
            
            216,944,114Total
      Liabilities
            
            
            196,561,043
            
            
            
            322,138,717Minority
      Interest
            
            
            10,750,788
            
            
            
            12,389,412Commitments
      and contingencies (Note 13)Members'
      EquityManager
            
            
            (868,053
            )
            
            
            (643,560
            )Additional
      Members
            
            
            234,204,500
            
            
            
            256,754,095Accumulated
      other comprehensive (loss) income
            
            
            (1,517,446
            )
            
            
            5,113,341Total
      Members' Equity
            
            
            231,819,001
            
            
            
            261,223,876Total
      Liabilities and Members' Equity
            
            $
            439,130,832
            
            
            $
            595,752,005




See
accompanying notes to condensed consolidated financial
statements.


1
 Table of Contents





ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Condensed
      Consolidated Statements of Operations(unaudited)Three Months Ended June 30,
            
            
            Six Months Ended June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Revenue:Rental
      income
            
            $
            22,714,161
            
            
            $
            26,393,233
            
            
            $
            50,220,436
            
            
            $
            49,211,323Finance
      income
            
            
            1,318,469
            
            
            
            1,646,045
            
            
            
            3,229,508
            
            
            
            3,978,255Income
      (loss) from investments in joint ventures
            
            
            1,315,520
            
            
            
            (14,748
            )
            
            
            1,393,985
            
            
            
            20,932Net
      gain on sales of  new equipment
            
            
            100,355
            
            
            
            362,452
            
            
            
            278,082
            
            
            
            551,708Net
      loss on sales of  leased equipment
            
            
            (493,336
            )
            
            
            (129,815
            )
            
            
            (720,385
            )
            
            
            (47,054
            )Net
      loss on sale of portfolio
            
            
            (11,649,797
            )
            
            
            -
            
            
            
            (11,649,797
            )
            
            
            -Interest
      and other income
            
            
            762,364
            
            
            
            1,233,270
            
            
            
            1,520,610
            
            
            
            2,648,842Total
      revenue
            
            
            14,067,736
            
            
            
            29,490,437
            
            
            
            44,272,439
            
            
            
            56,364,006Expenses:Management
      fees - Manager
            
            
            1,367,798
            
            
            
            1,673,428
            
            
            
            3,179,186
            
            
            
            3,155,492Administrative
      expense reimbursements - Manager
            
            
            1,041,373
            
            
            
            1,288,944
            
            
            
            2,609,883
            
            
            
            2,989,827General
      and administrative
            
            
            1,240,035
            
            
            
            411,812
            
            
            
            2,041,596
            
            
            
            1,132,803Interest
            
            
            2,779,456
            
            
            
            4,843,051
            
            
            
            6,796,094
            
            
            
            8,440,141Depreciation
      and amortization
            
            
            16,974,589
            
            
            
            20,872,352
            
            
            
            37,379,712
            
            
            
            40,403,616(Gain)
      loss on derivative instruments
            
            
            (1,303,652
            )
            
            
            (794,516
            )
            
            
            190,320
            
            
            
            (433,926
            )Total
      expenses
            
            
            22,099,599
            
            
            
            28,295,071
            
            
            
            52,196,791
            
            
            
            55,687,953(Loss)
      income before minority interest
            
            
            (8,031,863
            )
            
            
            1,195,366
            
            
            
            (7,924,352
            )
            
            
            676,053Minority
      interest
            
            
            (428,034
            )
            
            
            (254,317
            )
            
            
            (876,448
            )
            
            
            (515,650
            )(Loss)
      income before income taxes
            
            
            (8,459,897
            )
            
            
            941,049
            
            
            
            (8,800,800
            )
            
            
            160,403Benefit
      for income taxes
            
            
            (3,072,525
            )
            
            
            (1,205,109
            )
            
            
            (3,044,854
            )
            
            
            (503,252
            )Net
      (loss) income
            
            $
            (5,387,372
            )
            
            $
            2,146,158
            
            
            $
            (5,755,946
            )
            
            $
            663,655Net
      (loss) income allocable to:Additional
      Members
            
            $
            (5,333,498
            )
            
            $
            2,124,696
            
            
            $
            (5,698,386
            )
            
            $
            657,018Manager
            
            
            (53,874
            )
            
            
            21,462
            
            
            
            (57,560
            )
            
            
            6,637$
            (5,387,372
            )
            
            $
            2,146,158
            
            
            $
            (5,755,946
            )
            
            $
            663,655Weighted
      average number of additionalmember
      shares outstanding
            
            
            363,486
            
            
            
            362,176
            
            
            
            363,518
            
            
            
            340,290Net
      (loss) income per weighted averageadditional
      member share outstanding
            
            $
            (14.67
            )
            
            $
            5.87
            
            
            $
            (15.68
            )
            
            $
            1.93






See
accompanying notes to condensed consolidated financial
statements.


2
 Table of Contents








ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Condensed
      Consolidated Statements of Changes in Members' EquityAccumulatedOther
            
            
            TotalAdditional
            
            
            Additional
            
            
            
            
            
            Comprehensive
            
            
            Members'Member Shares
            
            
            Members
            
            
            Manager
            
            
            Income/(Loss)
            
            
            EquityBalance,
      December 31, 2007
            
            
            363,859
            
            
            $
            256,754,095
            
            
            $
            (643,560
            )
            
            $
            5,113,341
            
            
            $
            261,223,876Net
      loss
            
            
            -
            
            
            
            (364,888
            )
            
            
            (3,686
            )
            
            
            -
            
            
            
            (368,574
            )Change
      in valuation of interest rate swap contracts
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,253,516
            )
            
            
            (3,253,516
            )Foreign
      exchange translation adjustments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (123,652
            )
            
            
            (123,652
            )Comprehensive
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,745,742
            )Additional
      member shares redeemed
            
            
            (355
            )
            
            
            (280,039
            )
            
            
            -
            
            
            
            -
            
            
            
            (280,039
            )Cash
      distributions to members
            
            
            -
            
            
            
            (8,272,273
            )
            
            
            (83,406
            )
            
            
            -
            
            
            
            (8,355,679
            )Period
      ended March 31, 2008 (unaudited)
            
            
            363,504
            
            
            $
            247,836,895
            
            
            $
            (730,652
            )
            
            $
            1,736,173
            
            
            $
            248,842,416Net
      loss
            
            
            -
            
            
            
            (5,333,498
            )
            
            
            (53,874
            )
            
            
            
            
            
            
            (5,387,372
            )Change
      in valuation of interest rate swap contracts
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,785,260
            
            
            
            2,785,260Foreign
      exchange translation adjustments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (6,038,879
            )
            
            
            (6,038,879
            )Comprehensive
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (8,640,991
            )Additional
      member shares redeemed
            
            
            (36
            )
            
            
            (29,734
            )
            
            
            
            
            
            
            -
            
            
            
            (29,734
            )Cash
      distributions to members
            
            
            -
            
            
            
            (8,269,163
            )
            
            
            (83,527
            )
            
            
            -
            
            
            
            (8,352,690
            )Period
      ended June 30, 2008 (unaudited)
            
            
            363,468
            
            
            $
            234,204,500
            
            
            $
            (868,053
            )
            
            $
            (1,517,446
            )
            
            $
            231,819,001




See
accompanying notes to condensed consolidated financial
statements.


3
 Table of Contents





ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Condensed
      Consolidated Statements of Cash Flows(unaudited)Six Months Ended June 30,2008
            
            
            2007Cash
      flows from operating activities:Net
      (loss) income
            
            $
            (5,755,946
            )
            
            $
            663,655Adjustments
      to reconcile net (loss) income to net cashprovided
      by operating activities:Rental
      income paid directly to lenders by lessees
            
            
            (6,710,051
            )
            
            
            (4,351,952
            )Finance
      income
            
            
            (3,229,508
            )
            
            
            (3,978,255
            )Income
      from investments in joint ventures
            
            
            (1,393,985
            )
            
            
            (20,932
            )Net
      loss (gain) on sales of new and leased equipment
            
            
            442,303
            
            
            
            (504,654
            )Net
      loss on sale of portfolio
            
            
            11,649,797
            
            
            
            -Depreciation
      and amortization
            
            
            37,379,712
            
            
            
            40,403,616Interest
      expense on non-recourse financing paid directly to lenders by
      lessees
            
            
            1,960,434
            
            
            
            683,773Change
      in fair value of interest swap contract
            
            
            190,320
            
            
            
            (433,926
            )Minority
      interest
            
            
            876,448
            
            
            
            515,650Other
      financial gain
            
            
            3,058
            
            
            
            -Deferred
      tax provision
            
            
            (532,813
            )
            
            
            (762,088
            )Distributions
      to/from minority interest holders and joint ventures
            
            
            (662,979
            )
            
            
            (454,802
            )Changes
      in operating assets and liabilities:Collection
      of finance leases
            
            
            15,290,420
            
            
            
            14,600,087Accounts
      receivable
            
            
            (2,005,122
            )
            
            
            (2,586,496
            )Other
      assets, net
            
            
            (3,366,564
            )
            
            
            (8,957,781
            )Payables,
      deferred revenue and other current liabilities
            
            
            (8,605,806
            )
            
            
            1,608,596Due
      to/from Manager and affiliates, net
            
            
            638,007
            
            
            
            (362,775
            )Net
      cash provided by operating activities
            
            
            36,167,725
            
            
            
            36,061,716Cash
      flows from investing activities:Investments
      in leased assets, net of cash received
            
            
            (27,923,361
            )
            
            
            (82,889,767
            )Proceeds
      from sales of new and leased equipment
            
            
            7,315,211
            
            
            
            15,697,288Proceeds
      from sale of portfolio
            
            
            7,588,206
            
            
            
            -Investment
      in financing facility
            
            
            (164,822
            )
            
            
            -Investment
      in mortgage note receivable
            
            
            -
            
            
            
            (3,636,052
            )Proceeds
      from mortgage note receivable
            
            
            -
            
            
            
            1,137,594Investments
      in joint ventures, net of cash acquired
            
            
            (4,056,373
            )
            
            
            -Change
      in restricted cash
            
            
            447,294
            
            
            
            726,716Distributions
      received from joint ventures in excess of profits
            
            
            398,017
            
            
            
            9,834,397Other
      assets, net
            
            
            -
            
            
            
            568,131Net
      cash used in investing activities
            
            
            (16,395,828
            )
            
            
            (58,561,693
            )Cash
      flows from financing activities:Proceeds
      from notes payable - non-recourse
            
            
            14,534,777
            
            
            
            21,952,395Repayments
      of notes payable - non-recourse
            
            
            (35,468,853
            )
            
            
            (37,722,046
            )Issuance
      of additional member shares, net of sales and offering expenses
      paid
            
            
            -
            
            
            
            64,589,307Redemption
      of additional member shares
            
            
            (311,831
            )
            
            
            (1,021,815
            )Due
      to Manager and affiliates, net
            
            
            -
            
            
            
            (94,636
            )Cash
      distributions to members
            
            
            (16,708,369
            )
            
            
            (20,800,755
            )Distributions
      to minority interest holders in joint ventures
            
            
            (1,638,624
            )
            
            
            (895,126
            )Net
      cash (used in) provided by financing activities
            
            
            (39,592,900
            )
            
            
            26,007,324Effects
      of exchange rates on cash and cash equivalents
            
            
            44,866
            
            
            
            1,826,359Net
      (decrease) increase in cash and cash equivalents
            
            
            (19,776,137
            )
            
            
            5,333,706Cash
      and cash equivalents, beginning of the period
            
            
            42,339,549
            
            
            
            61,200,675Cash
      and cash equivalents, end of the period
            
            $
            22,563,412
            
            
            $
            66,534,381







See
accompanying notes to condensed consolidated financial
statements.


4
 Table of Contents








ICON
      Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Condensed
      Consolidated Statements of Cash Flows(unaudited)Six Months Ended June 30,2008
            
            
            2007Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
            
            $
            5,112,397
            
            
            $
            7,219,393Supplemental
      disclosure of non-cash investing and financing activities:Principal
      and interest paid on non-recourse long term debtdirectly
      to lenders by lessees
            
            $
            6,596,983
            
            
            $
            2,361,441Transfer
      of non-recourse debt in connection with the saleof
      the Leasing Portfolio
            
            $
            73,187,369
            
            
            $
            -







See
accompanying notes to condensed consolidated financial
statements.


5
 Table of Contents
 ICON Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(1)
            Basis
      of Presentation and Consolidation





The
accompanying condensed consolidated financial statements of ICON Leasing Fund
Eleven, LLC (the “LLC”) have been prepared in accordance with U.S. generally
accepted accounting principles (“US GAAP”) for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange Commission
for Quarterly Reports on Form 10-Q.  Accordingly, they do not include
all of the information and footnotes required by US GAAP for complete financial
statements.  In the opinion of ICON Capital Corp. (the “Manager”), all
adjustments considered necessary for a fair presentation have been
included.  These condensed consolidated financial statements should be
read together with the consolidated financial statements and notes included in
the LLC’s Annual Report on Form 10-K for the year ended December 31,
2007.  The results for the interim period are not necessarily
indicative of the results for the full year.





The
condensed consolidated financial statements include the accounts of the LLC and
its majority-owned subsidiaries. All intercompany accounts and transactions have
been eliminated in consolidation.





The LLC
accounts for its noncontrolling interests in joint ventures where the LLC has
influence over financial and operational matters, generally 50% or less
ownership interest, under the equity method of accounting. In such cases, the
LLC's original investments are recorded at cost and adjusted for its share of
earnings, losses and distributions.  The LLC accounts for investments
in joint ventures where the LLC has virtually no influence over financial and
operational matters using the cost method of accounting.  In such
cases, the LLC's original investments are recorded at cost and any distributions
received are recorded as revenue.  All of the LLC's investments in
joint ventures are subject to its impairment review policies.





In joint
ventures where the LLC’s interest is majority owned, the financial condition and
results of operations of the joint venture are consolidated.  Minority
interest represents the minority owner’s proportionate share of its equity in
the joint venture. The minority interest is adjusted for the minority owner’s
share of the earnings, losses and distributions of the joint
venture.





(2)
            Organization





The LLC
was formed on December 2, 2004 as a Delaware limited liability company and
commenced operations on May 6,2005
when the LLC admitted its first additional members.  Additional
members represent all members other than the Manager.  The LLC is
engaged in one business segment, the business of purchasing equipment and
leasing it to third-party end users, providing equipment and other financing,
acquiring equipment subject to lease and, to a lesser degree, acquiring
ownership rights to leased equipment at lease expiration.  From time
to time, the LLC also purchases equipment and sells it to its leasing
customers.  The LLC will continue until December 31, 2024, unless
terminated sooner.





The
Manager of the LLC is a Delaware corporation. The Manager manages and controls
the business affairs of the LLC, including, but not limited to, the equipment
leases and financing transactions that the LLC enters into pursuant to the terms
of the LLC’s limited liability company agreement (the “LLC
Agreement”).  Additionally, the Manager has a 1% interest in the
profits, losses, cash distributions and liquidation proceeds of the
LLC.







6
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(2)
            Organization
      - continued





The LLC’s
offering period ended on April 20, 2007 and its operating period
commenced.  The LLC invests most of the net proceeds from its offering
in equipment subject to lease. After the net offering proceeds are fully
invested, additional investments will be made with the cash generated from the
LLC’s initial investments, to the extent that cash is not needed for expenses,
reserves, or distributions to members. The investment in additional equipment in
this manner is called “reinvestment.” The LLC currently anticipates purchasing
equipment from time to time until approximately April 2012, unless that date is
extended, at the Manager’s sole discretion, for up to an additional three years.
After the reinvestment period, the LLC will then sell its assets in the ordinary
course of business, a time frame called the “liquidation period.”





Members’
capital accounts are increased for their initial capital contribution plus their
proportionate share of earnings and decreased by their proportionate share of
losses and distributions. Profits, losses, cash distributions and liquidation
proceeds are allocated 99% to the additional members and 1% to the Manager until
each additional member has (a) received cash distributions and liquidation
proceeds sufficient to reduce their adjusted capital contribution account to
zero and (b) received, in addition, other distributions and allocations that
would provide an 8% per year cumulative return on their outstanding adjusted
capital contribution account. After such time, the distributions will be
allocated 90% to the additional members and 10% to the Manager.





(3)
            Summary
      of Significant Accounting Policies





Use of
Estimates





The
preparation of financial statements in conformity with US GAAP requires the
Manager to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities as
of the date of the condensed consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Significant
estimates primarily include the determination of allowance for doubtful
accounts, depreciation and amortization, impairment losses, estimated useful
lives and residual values. Actual results could differ from those
estimates.





Reclassifications





Certain
reclassifications have been made to the accompanying condensed consolidated
financial statements in prior periods to conform to the current period
presentation.








7
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)




(3)
            Summary
      of Significant Accounting Policies –
continued





Derivative
Financial Instruments





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, “Accounting
for Fair Value Measurements” (“SFAS No. 157”).  SFAS No. 157 defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles and establishes a hierarchy that categorizes and
prioritizes the sources to be used to estimate fair value. SFAS No. 157 also
expands financial statement disclosures about fair value measurements. On
February 12, 2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 157-2
(“FSP 157-2”), which delayed the effective date of SFAS No. 157 for one year,
for all non-financial assets and non-financial liabilities, except those that
are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually).  On February 14, 2008, the FASB
issued FSP No. 157-1, which amended SFAS No. 157 to exclude SFAS No. 13,
“Accounting for Leases” and other accounting pronouncements that address fair
value measurements of leases from the provisions of SFAS No.
157.  SFAS No. 157 and FSP 157-2 are effective for the LLC’s financial
statements beginning January 1, 2008.  The LLC adopted the provisions
of SFAS No. 157 beginning January 1, 2008 for all financial assets and financial
liabilities that are recognized at fair value.





Additionally
for all non-financial assets and non-financial liabilities that are recognized
at fair value in the financial statements on a nonrecurring basis, the LLC has
adopted the provisions of FSP 157-2 and delayed the effective date of SFAS No.
157 until January 1, 2009.  The Manager believes that the impact of
partially adopting SFAS No. 157 effective January 1, 2008 is not material to the
condensed consolidated financial statements.





SFAS No.
157 requires that assets and liabilities carried at fair value be classified and
disclosed in one of the following three categories:





·
            Level
      1:  Quoted market prices available in active markets for
      identical assets or liabilities as of the reporting
  date.


·
            Level
      2:  Pricing inputs other than quoted prices in active markets
      included in Level 1, which are either directly or indirectly observable as
      of the reporting date.


·
            Level
      3:  Pricing inputs that are generally unobservable and may not
      be corroborated by market data.





Financial
assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurements. The LLC’s
assessment of the significance of a particular input to the fair value
measurements requires judgment, and may affect the valuation of the assets and
liabilities being measured and their placement within the fair value
hierarchy.








8
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)




(3)
            Summary
      of Significant Accounting Policies –
continued





The
following table summarizes the valuation of the LLC’s material financial assets
and financial liabilities measured at fair value on a recurring basis as of June
30, 2008:








Level
      1(1)
            
            
            Level
      2(2)
            
            
            Level
      3(3)
            
            
            TotalAssets:Warrants
            
            $
            -
            
            
            $
            86,583
            
            
            $
            -
            
            
            $
            86,583Liabilities:Derivative
      Liabilities
            
            $
            -
            
            
            $
            5,064,759
            
            
            $
            -
            
            
            $
            5,064,759(1) quoted
      prices in active markets for identical assets or
    liabilities(2) observable
      inputs other than quoted prices in active markets for identical assets and
      liabilities(3) no
      observable pricing inputs in the market








The LLC’s
derivative contracts, including interest rate swaps and warrants, are valued
using models based on readily observable market parameters for all substantial
terms of the LLC’s derivative contracts and are classified within Level
2.  As permitted by SFAS No. 157, the LLC uses market prices and
pricing models for fair value measurements of its derivative
instruments.  The fair value of the warrants was recorded in other
non-current assets and the derivative liabilities are recorded in derivative
instruments.





Recent
Accounting Pronouncements





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities — including an Amendment of SFAS No.
115” (“SFAS No. 159”), which permits but does not require the LLC to measure
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected are
reported in earnings. The LLC has not elected to fair value any of its financial
instruments under the provisions of SFAS No. 159.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an Amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the retained interest and gain
or loss when a subsidiary is deconsolidated. This statement is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 with earlier adoption prohibited. The Manager is
currently evaluating the impact of SFAS No. 160 on the LLC’s consolidated
financial statements.








9
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(3)
            Summary
      of Significant Accounting Policies –
continued





On March
19, 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities — an Amendment of SFAS No. 133” (“SFAS No.
161”). SFAS No. 161 enhances required disclosures regarding derivatives and
hedging activities, including enhanced disclosures regarding how: (a) an entity
uses derivative instruments; (b) derivative instruments and related hedged items
are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and
Hedging Activities;” and (c) derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows.
SFAS No. 161 is effective for fiscal years and interim periods beginning after
November 15, 2008 and, therefore, the LLC will be required to provide such
disclosures beginning with the interim period ended March 31, 2009.





(4)
            Leasing
      Portfolio





On March
7, 2006, the LLC acquired substantially the entire equipment leasing portfolio
(the “Leasing Portfolio”) of Clearlink Capital Corporation based in Mississauga,
Ontario Canada.





On May
19, 2008, the LLC sold substantially all of the remaining net assets in the
Leasing Portfolio (“Remaining Net Assets”) to affiliates of U.S. Micro
Corporation (“U.S. Micro”), an unaffiliated third party.  The gross
cash purchase price was $19,000,000 and was subject to post-closing adjustments
of approximately $11,412,000, bringing the net cash purchase price to
approximately $7,588,000.  The LLC recognized a book loss of
approximately $17,204,000, which was offset by a realized foreign currency gain
of approximately $5,593,000 less an insignificant intercompany
settlement.  As a result, the LLC recognized a net book loss of
approximately $11,650,000 on the sale of the Remaining Net Assets.





(5)
            Net
      Investment in Finance Leases





Net
investment in finance leases consisted of the following at June 30, 2008 and
December 31, 2007:





June
      30,2008
            
            
            December
      31,(unaudited)
            
            
            2007Minimum
      rents receivable
            
            $
            32,704,267
            
            
            $
            104,858,623Estimated
      residual values
            
            
            3,070,291
            
            
            
            7,440,417Initial
      direct costs, net
            
            
            553,515
            
            
            
            2,583,319Unearned
      income
            
            
            (5,854,023
            )
            
            
            (15,359,934
            )Net
      investment in finance leases
            
            
            30,474,050
            
            
            
            99,522,425Less:
      Current portion of net investment in finance leases
            
            
            5,713,973
            
            
            
            10,442,124Net
      investment in finance leases, less current portion
            
            $
            24,760,077
            
            
            $
            89,080,301







10
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(5)
            Net
      Investment in Finance Leases -
continued





On
December 20, 2007, the LLC, along with ICON Income Fund Ten, LLC (“Fund Ten”),
an entity also managed by the Manager, formed ICON Global Crossing V, LLC (“ICON
Global Crossing V”) with interests of 55% and 45%, respectively, to purchase
telecommunications equipment from various vendors for approximately $12,982,000
in cash. This equipment is subject to a lease with Global Crossing
Telecommunications, Inc. (“Global Crossing”).  The base lease term is
36 months and the lease commenced on January 1, 2008. The total capital
contributions made to ICON Global Crossing V were approximately $12,982,000, of
which the LLC’s share was approximately $7,140,000.  The LLC paid an
acquisition fee to the Manager of approximately $214,000 relating to this
transaction.





As
discussed in Note 4, on May 19, 2008, the LLC sold the Remaining Net Assets in
the Leasing Portfolio, which included approximately $60,520,000 of net
investment in finance leases.





Non-cancelable
minimum annual amounts due on investment in finance leases over the next five
years were as follows at June 30, 2008:





Year
      EndingDecember 31,For
      July 1 to December 31, 2008
            
            $
            3,983,6372009
            
            
            8,226,1812010
            
            
            8,571,3882011
            
            
            4,033,6022012
            
            
            4,378,809Thereafter
            
            
            3,510,650$
            32,704,267





(6)
            Leased
      Equipment at Cost





Leased
equipment at cost consisted of the following at June 30, 2008 and December 31,
2007:





June
      30,2008
            
            
            December
      31,(unaudited)
            
            
            2007Container
      vessels
            
            $
            142,500,324
            
            
            $
            142,500,324Tanker
      vessels
            
            
            115,097,430
            
            
            
            115,097,430Product
      tankers
            
            
            90,798,632
            
            
            
            90,798,632Auto
      parts manufacturing equipment
            
            
            14,700,915
            
            
            
            13,705,284Information
      technology equipment
            
            
            48,266,213
            
            
            
            42,686,715Manufacturing
      equipment
            
            
            31,602,668
            
            
            
            25,064,743Other
            
            
            -
            
            
            
            97,642,424442,966,182
            
            
            
            527,495,552Less:
      Accumulated depreciation
            
            
            (93,411,259
            )
            
            
            (109,756,923
            )$
            349,554,923
            
            
            $
            417,738,629







11
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(6)
            Leased
      Equipment at Cost - continued





Depreciation
expense was $16,794,157 and $20,840,019 for the three months ended June 30, 2008
and 2007, respectively.  Depreciation expense was $36,935,338 and
$40,296,429 for the six months ended June 30, 2008 and 2007,
respectively.





ICON
Senang and ICON Sebarok





On April
11, 2007, the LLC, through its wholly-owned subsidiaries, ICON Senang, LLC and
ICON Sebarok, LLC (the “Teekay Purchasers”), acquired two Aframax 95,649 DWT
product tankers, the Senang Spirit and the Sebarok Spirit (collectively, the
“Teekay Vessels”), from an affiliate of Teekay Corporation (“Teekay”). The
purchase price for the Teekay Vessels was approximately $88,000,000, comprised
of (i) a cash payment of approximately $21,300,000 funded in the form of a
capital contribution and (ii) borrowings of approximately $66,700,000 of
non-recourse debt under a secured loan agreement with Fortis Capital Corp. The
LLC paid an acquisition fee to the Manager of approximately $2,640,000 in
connection with this transaction.  Simultaneously with the closing of
the purchase of the Teekay Vessels, two bareboat charters were entered into by
an affiliate of Teekay for a term of 60 months.  The charters commenced on
April 11, 2007.





MW
Universal





On
September 28, 2007, the LLC completed the acquisitions of and simultaneously
leased back all of the manufacturing assets of W Forge Holdings, Inc. (“W
Forge”), MW Scott, Inc. (“Scott”), and MW Gilco, LLC (“Gilco”), wholly-owned
subsidiaries of MW Universal, Inc. (“MWU”), for purchase prices of $21,000,000,
$600,000 and $600,000, respectively.  The LLC paid acquisition fees to
the Manager for W Forge, Scott, and Gilco of approximately $630,000, $18,000 and
$18,000, respectively in connection with this transaction.  Each lease
commenced on January 1, 2008 and continues for a period of 60
months.





On
December 10, 2007, the LLC completed the acquisitions of and simultaneously
leased back substantially all of the manufacturing assets of MW General, Inc.
(“General”) and AMI Manchester, LLC (“AMI”), wholly-owned subsidiaries of MWU,
for purchase prices of $400,000 and $1,700,000, respectively.  The LLC
paid acquisition fees to the Manager for General and AMI of approximately
$12,000 and $51,000, respectively in connection with this
transaction.  Each lease commenced on January 1, 2008 and continues
for a period of 60 months.





Simultaneously
with the closing of the transactions for W Forge, Scott, Gilco, General and AMI,
Fund Ten and ICON Leasing Fund Twelve, LLC (“Fund Twelve”), an entity also
managed by the Manager (together with the LLC, the “Participating Funds”)
completed similar acquisitions with four other subsidiaries of MWU pursuant to
which the respective funds purchased substantially all of the machining and
metal working equipment of each subsidiary.  Each subsidiary’s
obligations under its respective leases (including those of W Forge, Scott,
Gilco, General and AMI) are cross-collateralized, cross-defaulted, and all
subsidiaries’ obligations are guaranteed by MWU.  Each of the
Participating Funds have also entered into a credit support agreement, pursuant
to which losses incurred by a Participating Fund with respect to any MWU
subsidiary are shared among the Participating Funds proportionately based on the
amount of capital invested.





On June
9, 2008, the Participating Funds entered into a Forbearance Agreement with MWU,
W Forge, Scott, Gilco, General, AMI and four other subsidiaries of MWU to cure
certain defaults under is lease covenants with the LLC.  The terms of
the Forbearance Agreement include, among other things, additional
collateral being pledged and the grant of a warrant to the LLC to purchase 300
shares of the capital stock of W Forge for a purchase price of $0.01 per share,
exercisable for a period of five years beginning June 9, 2008.






12
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(6)
            Leased
      Equipment at Cost - continued




ICON
French Equipment I





On March
30, 2007, the LLC, through its wholly-owned subsidiary, ICON French Equipment I,
LLC (“ICON Heuliez”), entered into a purchase and sale agreement (the
“Agreement”) with Heuliez SA (“HSA”) and Heuliez Investissements SNC (“HI”) to
purchase certain auto parts manufacturing equipment from HSA and HI.  In
connection with the Agreement, ICON Heuliez agreed to lease the equipment to HSA
and HI, respectively, for an initial term of 60 months.  The aggregate
purchase price for the equipment was approximately $11,994,000 (€9,000,000) at
March 30, 2007.  The LLC incurred professional fees of approximately
$42,000 and paid an acquisition fee to the Manager of approximately $360,000 in
connection with this transaction.  These fees were capitalized as part
of the acquisition cost of the equipment.  The leases commenced on April 1,
2007.





On
October 26, 2007, HSA and Groupe Henri Heuliez, the guarantor of the leases with
ICON Heuliez, filed for “procedure de sauvegarde,” a procedure only available to
a solvent company seeking to reorganize its business affairs under French
law.  HSA and HI paid all amounts due under the lease through January 1,
2008.  As of February 1, 2008 ICON Heuliez entered into an agreement
with the administrator of the “procedure de sauvegarde” to accept reduced
payments from HSA and HI for the period beginning February 1, 2008 and ending
July 31, 2008. On August 13, 2008, the administrator of the “procedure de
sauvegarde” confirmed a continuation plan for HSA, HI and Groupe Henri Heuliez.
The terms of such plan include HSA and HI making reduced payments to ICON
Heuliez until January 31, 2009.  Beginning February 1, 2009, full
payments under the lease will resume.  In addition, each lease with
ICON Heuliez will be extended one year.  During the one year
extension, HSA and HI will make monthly payments to repay the shortfall
resulting from the reduced payments ICON Heuliez received between February 1,
2008 and January 31, 2009.  The lease remains in full force and
effect.





ICON EAR
II





On April
24, 2008, the LLC, through its wholly-owned subsidiary ICON EAR II, LLC (“ICON
EAR II”), completed the acquisition of and simultaneously leased back
semiconductor manufacturing equipment from Equipment Acquisition Resources, Inc.
(“EAR”) for approximately $6,348,000.  The LLC paid acquisition fees
of approximately $190,000 to the Manager in connection with this transaction.
The base lease term is 60 months and commenced on July 1, 2008.





Other





For the
six months ended June 30, 2008 and 2007, the LLC purchased approximately
$7,954,000 and $18,905,000 of new equipment related to the Leasing Portfolio,
respectively.





As
discussed in Note 4, on May 19, 2008, the LLC sold the Remaining Net Assets in
the Leasing Portfolio, which included approximately $45,403,000 of leased
equipment at cost, net of accumulated depreciation.







13
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(6)
            Leased
      Equipment at Cost - continued





ICON
Global Crossing III, LLC





On June 26, 2008 and June 27, 2008, the
LLC, through its wholly-owned subsidiary ICON Global Crossing III, LLC, acquired
additional telecommunications equipment for an aggregate purchase price of
approximately $5,417,000.  The equipment is subject to a lease with
Global Crossing Telecommunications, Inc.  The base lease terms are 36
months and commenced on July 1, 2008.  The LLC paid acquisition fees
to the Manager of approximately $163,000 in connection with this
transaction.





ICON
Pliant





On June
30, 2008, the LLC and Fund Twelve formed ICON Pliant, LLC (“ICON Pliant”), with
interests of 55% and 45%, respectively. ICON Pliant entered into an agreement
with Pliant Corporation (“Pliant”) to acquire manufacturing equipment. Total
acquisition fees accrued were approximately $363,000, of which the LLC’s portion
was approximately $200,000.





On July
16, 2008, ICON Pliant completed the acquisition of and simultaneously leased
back the manufacturing equipment to Pliant. The total acquisition price was
$12,115,000, of which the LLC paid approximately $6,663,000.  The base
lease term is 60 months and commences on October 1, 2008. ICON Pliant will
receive payments on a quarterly basis.





Aggregate
annual minimum future rentals receivable from each of the LLC’s non-cancelable
operating leases over the next five years consisted of the following at June 30,
2008:





Year
      EndingDecember 31,For
      July 1 to December 31, 2008
            
            $
            37,593,5522009
            
            $
            74,789,5052010
            
            $
            66,231,7932011
            
            $
            26,738,5762012
            
            $
            10,065,047


(7)
              Note
      Receivable on Financing Facility,
net


On August
13, 2007, the LLC, along with a consortium of other lenders, entered into an
equipment financing facility with Solyndra, Inc. (“Solyndra”), a privately-held
manufacturer of solar panels, for the building of a new production
facility.  The financing facility was to mature on June 30, 2013 and
was secured by the equipment as well as all other assets of
Solyndra.  The LLC was to receive principal payments starting in
October 2008.  In the interim period, interest was paid on a quarterly
basis using a range of rates from 6.20% to 6.74%.  In connection with
the transaction, the LLC received warrants to purchase up to 40,290 shares of
Solyndra common stock at an exercise price of $4.96 per share. The fair value of
these warrants was approximately $115,000 on the transaction date and has been
reflected as a discount on the face amount of the notes receivable.








14
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)




(7)
              Note
      Receivable on Financing Facility, net -
  continued


At June
30, 2008, the Manager determined, based on the Black-Scholes option pricing
model, that the aggregate fair value of the warrants was $86,583.  The
assumptions used for the Black-Scholes option pricing model were as follows:
strike price $4.96, share price $2.15, expiration date of April 6, 2014, a
volatility of 300%, and the risk free interest rate of 2.17%.  The
volatility percentage was determined by taking a sampling of six similar
businesses from their initial public offering date to present and placing a
percentage based on the performance of the share price of this
sampling.





The
financing facility was for a maximum amount of $93,500,000, of which the LLC
committed to invest up to $5,000,000.  At June 30, 2008, the LLC had
loaned approximately $4,367,000. The LLC paid acquisition fees of approximately
$131,000 to the Manager in relation to this financing facility.





(8)
            Investments
      in Joint Ventures





ICON
AeroTV, LLC





The LLC
has a 50% interest in ICON AeroTV, LLC (“ICON AeroTV”).  ICON AeroTV’s
sole purpose was to own equipment leased to AeroTV Ltd (“AeroTV”). In February
2007, AeroTV’s customer, the largest scheduled bus line in Europe, terminated
its service agreement with AeroTV. Shortly thereafter, AeroTV notified the
Manager of its inability to pay certain rent owed to ICON AeroTV and
subsequently filed for insolvency protection in the United Kingdom. In February
2007, ICON AeroTV sent a notice to AeroTV terminating the master lease
agreement. Shortly thereafter, certain facts came to light that gave the Manager
serious concerns regarding the propriety of AeroTV's actions during and after
the execution of the lease with AeroTV. On April 18, 2007, ICON AeroTV filed a
lawsuit in the United Kingdom’s High Court of Justice, Queen’s Bench Division,
against AeroTV and one of its directors for fraud. ICON AeroTV obtained a
default judgment against the AeroTV director, which was subsequently set aside.
On April 17, 2008, the judgment was reinstated. At this time, it is not possible
to determine ICON AeroTV’s ability to collect the judgment.





Information
as to the results of operations of ICON AeroTV is summarized below:





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,(unaudited)
            
            
            (unaudited)2008
            
            
            2007
            
            
            2008
            
            
            2007Net
      income
            
            $
            -
            
            
            $
            75,661
            
            
            $
            -
            
            
            $
            40,691LLC's
      share of net income
            
            $
            -
            
            
            $
            37,831
            
            
            $
            -
            
            
            $
            20,346





ICON EAM,
LLC





The LLC
has a 50% interest in ICON EAM, LLC (“ICON EAM”), a joint venture with Fund Ten,
whose sole purpose is to lease gas meters and accompanying data gathering
equipment to EAM Assets Ltd. (“EAM”).  All amounts funded by ICON EAM
in anticipation of purchasing the industrial gas meters and accompanying data
gathering equipment were deposited into an interest-bearing escrow account
controlled by ICON EAM's legal counsel.  In May 2007, ICON EAM’s
initial investment and all accrued interest of approximately $13,695,000 were
returned to the LLC and Fund Ten, of which the LLC’s share was approximately
$6,848,000.








15
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(8)
            Investments
      in Joint Ventures - continued





Information
as to the results of operations of ICON EAM is summarized below:





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,(unaudited)
            
            
            (unaudited)2008
            
            
            2007
            
            
            2008
            
            
            2007Net
      income
            
            $
            -
            
            
            $
            89,324
            
            
            $
            -
            
            
            $
            186,713LLC's
      share of net income
            
            $
            -
            
            
            $
            44,662
            
            
            $
            -
            
            
            $
            93,357





ICON
Global Crossing II, LLC





The LLC
has a 13.3% interest in ICON Global Crossing II, LLC (“ICON Global Crossing
II”), whose sole purpose is to lease telecommunications equipment to Global
Crossing and Global Crossing North American Networks, Inc.




Information
as to the results of operations of ICON Global Crossing II is summarized
below:





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,(unaudited)
            
            
            (unaudited)2008
            
            
            2007
            
            
            2008
            
            
            2007Net
      income
            
            $
            272,861
            
            
            $
            271,751
            
            
            $
            573,137
            
            
            $
            458,883LLC's
      share of net income
            
            $
            36,181
            
            
            $
            36,034
            
            
            $
            75,998
            
            
            $
            60,848





ICON EAR,
LLC





On
December 28, 2007, the LLC and Fund Twelve formed ICON EAR, LLC (“ICON EAR”),
with interests of 45% and 55%, respectively.  ICON EAR completed the
acquisition of and simultaneously leased back semiconductor manufacturing
equipment from EAR for an initial acquisition price of $6,935,000, of which the
LLC’s share was approximately $3,121,000.  The LLC paid acquisition
fees of approximately $94,000 to the Manager in connection with this
transaction.  The base lease term is 60 months and commenced on July
1, 2008.





During
June 2008, ICON EAR completed the acquisition of and simultaneously leased back
additional semiconductor manufacturing equipment from EAR for a total purchase
price of $8,794,500, of which the LLC’s share was approximately $3,958,000. The
LLC and Fund Twelve retained ownership interests of 45% and 55%, respectively,
subsequent to this transaction.  The LLC incurred acquisition fees to
the Manager of approximately $119,000 in connection with this transaction. The
base lease terms are 60 months and commenced on July 1, 2008.





(9)
            Non-Recourse
      Long-Term Debt





Containership
Vessels





On June
21, 2006, the LLC, through its wholly-owned subsidiaries ICON European
Container, LLC and ICON European Container II, LLC, acquired four container
vessels (collectively, the “ZIM Vessels”).  The ZIM Vessels are owned
by two Norwegian limited partnerships, European Container KS and European
Container KS II (collectively, the “KS Companies”).




16
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(9)
            Non-Recourse
      Long-Term Debt - continued





In
connection with the acquisition of the ZIM Vessels, the LLC assumed
approximately $93,325,000 of senior non-recourse debt.  Pursuant to
the terms of the loan agreement with HSH Nordbank AG (“HSH”), there are two
separate portions to the senior non-recourse debt obligation.  HSH has
first priority security interest in the ZIM Vessels.  The KS Companies
are jointly and severally liable for the obligations under the loan agreement
and the ZIM Vessels are cross-collateralized.





The
portion of the senior non-recourse debt obligation relating to the acquisition
of the M/V ZIM Japan and M/V Adaman Sea (f/k/a ZIM America) (collectively,
“Portion I”) matures on November 18, 2010 and accrues interest at the London
Interbank Offered Rate (“LIBOR”) plus 1.25% per year.  The LLC may, at
its discretion, make periodic prepayments of the outstanding principal balance
without penalty. On February 18, 2008, the LLC prepaid $400,000, which was
applied against the outstanding principal balance and reduced the balloon
payment due on the maturity date.





The
portion of the senior non-recourse debt obligation relating to the acquisition
of the M/V ZIM Hong Kong and M/V ZIM Israel (collectively, “Portion II”) matures
on January 27, 2011 and accrues interest at LIBOR plus 1.25% per
year.  On January 27, 2011, a balloon payment of approximately
$14,000,000 was originally due.  On February 4, 2008, the LLC prepaid
$300,000 which was applied against the outstanding principal balance and reduced
the balloon payment due on the maturity date.





On April
24, 2008, the LLC amended the loan agreement with HSH changing the payment terms
from quarterly payments to monthly payments.  As a result of this
amendment, Portion I has a balloon payment on November 18, 2010 of approximately
$7,300,000 and Portion II has a balloon payment on January 27, 2011 of
approximately $13,900,000.





As part
of the acquisition of the ZIM Vessels, the LLC assumed three interest rate swap
contracts. These interest rate swap contracts were established in order to fix
the variable interest rates on the senior non-recourse debt obligation and
minimize the LLC’s risk of interest rate fluctuations.  The interest
rate swap contracts have a fixed interest rate of 4.16% for M/V ZIM Japan, 4.72%
for M/V Adaman Sea (f/k/a ZIM America), and 4.74% for M/V ZIM Hong Kong and M/V
ZIM Israel.





On April
28, 2008 the LLC terminated these three interest rate swap contracts and entered
into two new interest rate swaps.  These transactions resulted in a
gain of approximately $160,000.  The two interest rate swaps had
notional amounts of approximately $26,620,000 and $33,190,000 with fixed
interest rates of 4.50% and 4.74%, respectively.  As of June 6, 2008,
the LLC designated these interest rate swaps as cash flow hedges with the M/V
ZIM Hong Kong and M/V ZIM Israel and M/Z ZIM Japan and M/V Adaman Sea senior
non-recourse debt obligations, respectively to fix the variable interest
rates.  The LLC recognized approximately $186,000 of ineffectiveness
as of June 30, 2008.





Leasing
Portfolio





The
Leasing Portfolio had non-recourse debt obligations, which accrued interest at
rates ranging from 4.30% to 8.09% per year.  On May 19, 2008, the
non-recourse debt obligations of approximately $73,187,000 were assumed by U.S.
Micro in conjunction with the sale of the Remaining Net Assets.








17
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(9)
            Non-Recourse
      Long-Term Debt - continued





The
aggregate maturities of non-recourse long-term debt over the next five years
were as follows at June 30, 2008:





Year
      EndingDecember 31,For
      July 1 to December 31, 2008
            
            $
            20,858,5222009
            
            
            42,995,3462010
            
            
            55,161,0592011
            
            
            43,453,6422012
            
            
            21,710,700$
            184,179,269





(10)
            Revolving
      Line of Credit, Recourse





The LLC,
along with ICON Income Fund Eight B, L.P. (“Fund Eight B”), ICON Income Fund
Nine, LLC, Fund Ten and Fund Twelve (entities sponsored and organized by the
Manager) (collectively, the “Borrowers”), are parties to a Commercial Loan
Agreement (the “Loan Agreement”) with California Bank & Trust (the
“Lender”). The Loan Agreement originally provided for a revolving line of credit
of up to $17,000,000 pursuant to a senior secured revolving loan facility (the
“Facility”), which is secured by all assets of the Borrowers not subject to a
first priority lien, as defined in the Loan Agreement. Each of the Borrowers is
jointly and severally liable for all amounts borrowed under the Facility.
Amounts available under the Facility are subject to a borrowing base that is
determined, subject to certain limitations, on the present value of the future
receivables under certain lease agreements in which the Borrowers have a
beneficial interest.





The
Facility was originally to expire on September 30, 2008 and established (i) the
interest rate for advances under the Facility at the Lender’s prime rate and
(ii) the interest rate on the five separate advances that are permitted to be
made under the Facility at which United States dollar deposits can be acquired
by the Lender at the London Interbank Eurocurrency Market Rate plus 2.5%.
The interest rate at June 30, 2008 was 5%.





On May 1,
2008, the Borrowers entered into a Loan Modification Agreement. The agreement
increased the revolving line of credit up to $30,000,000 and extended the
expiration date to April 30, 2010. The Borrowers may request a one year
extension to the revolving line of credit within 390 days of the expiration
date, but the Lender has no obligation to extend. The quarterly unused
commitment fee of 0.5% was reduced to 0.25% on unused commitments under the
Facility.





The
Borrowers were in compliance with the covenants under the Loan Agreement at
June 30, 2008.





Aggregate
borrowings by all Borrowers under the Facility amounted to $1,255,000 at June
30, 2008, all of which was borrowed by Fund Eight B.








18
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(11)
            Income
      Tax





Certain
of the LLC’s direct and indirect wholly-owned subsidiaries are unlimited
liability companies and are taxed as corporations under the laws of
Canada.  Other indirect wholly-owned subsidiaries are taxed as
corporations in Barbados.  For the six months ended June 30, 2008,
the benefit for income taxes was comprised of $2,512,041 in current taxes
and $532,813 in deferred taxes.  The LLC’s subsidiaries, under the
laws of Canada, are subject to income tax examination from 2006 through 2007
periods.





As a
result of the sale of the Leasing Portfolio, the LLC elected to carry back
certain cumulative net operating losses to prior periods, and accordingly,
recognized an income tax receivable of approximately $2,700,000 during the
period ended June 30, 2008.  The LLC has a deferred tax asset of
approximately $3,000,000, which includes the loss on sale of the Leasing
Portfolio, that has a valuation allowance of $2,412,000.  The
remaining deferred tax asset of approximately $588,000 is expected to be
utilized in 2009.





(12)
            Transactions
      with Related Parties





The
Manager performs certain services relating to the management of the LLC’s
equipment leasing activities.  Such services include the collection of
lease payments from the lessees of the equipment, re-leasing services in
connection with equipment which is off-lease, inspections of the equipment,
liaising with and general supervision of lessees to assure that the equipment is
being properly operated and maintained, monitoring performance by the lessees of
their obligations under the leases and the payment of operating
expenses.





Administrative
expense reimbursements are costs incurred by the Manager or its affiliates that
are necessary to the LLC’s operations.  These costs include the Manager’s
and its affiliates’ legal, accounting, investor relations and operations
personnel, as well as professional fees and other costs that are charged to the
LLC based upon the percentage of time such personnel dedicate to the LLC. 
Excluded are salaries and related costs, travel expenses and other
administrative costs incurred by individuals with a controlling interest in the
Manager.





The
Manager also has a 1% interest in the LLC’s profits, losses, cash distributions
and liquidation proceeds. The LLC paid distributions to the Manager of $166,933
for the six months ended June 30, 2008.  The Manager’s interest in the
LLC’s net (loss) income for the three months ended June 30, 2008 and 2007 was
$(53,874) and $21,462, respectively.  The Manager’s interest in the
LLC’s net (loss) income for the six months ended June 30, 2008 and 2007 was
$(57,560) and $6,637, respectively.








19
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(12)
            Transactions
      with Related Parties - continued





Fees and
other expenses paid or accrued by the LLC to the Manager or its affiliates for
the three and six months ended June 30, 2008 and 2007, were as
follows:





Three
      Months Ended
            
            
            Six
      Months EndedJune
      30,
            
            
            June
      30,(unaudited)
            
            
            (unaudited)Entity
            Capacity
            Description
            
            2008
            
            
            2007
            
            
            2008
            
            
            2007ICON
      Capital Corp.
            Manager
            Organization
      andoffering
      expenses (1)
            
            $
            -
            
            
            $
            238,066
            
            
            $
            -
            
            
            $
            1,095,103ICON
      Securities Corp.
            Managing
      broker-dealer
            Underwriting
      fees (1)
            
            
            -
            
            
            
            317,421
            
            
            
            -
            
            
            
            1,460,137ICON
      Capital Corp.
            Manager
            Acquisition
      fees (2)
            
            
            753,150
            
            
            
            1,557,705
            
            
            
            1,040,101
            
            
            
            4,380,612ICON
      Capital Corp.
            Manager
            Management
      fees (3)
            
            
            1,367,798
            
            
            
            1,673,428
            
            
            
            3,179,186
            
            
            
            3,155,492ICON
      Capital Corp. and affiliate
            Manager
            Administrative
      fees (3)
            
            
            1,041,373
            
            
            
            1,288,944
            
            
            
            2,609,883
            
            
            
            2,989,827Total
      fees paid to the Manager and its affiliates
            
            
            $
            3,162,321
            
            
            $
            5,075,564
            
            
            $
            6,829,170
            
            
            $
            13,081,171(1) Charged
      directly to members' equity.(2) Capitalized
      and amortized to operations over the estimated service period in
      accordance with the LLC's accounting policies.(3) Charged
      directly to operations.




At June
30, 2008, the LLC had a net payable due to its Manager and certain of the
Manager’s affiliates that consisted primarily of accruals due to the Manager for
acquisition fees, administrative expense reimbursements and management fees of
$651,712.





(13)
            Commitments
      and Contingencies and Off Balance Sheet
Risk





On
September 28, 2007 and December 10, 2007, the LLC completed the acquisitions of
and simultaneously leased back substantially all of the machining and metal
working equipment of W Forge, Scott, Gilco, General and AMI, wholly-owned
subsidiaries of MWU.  Simultaneously with the closing of the
transactions with W Forge, Scott, Gilco, General and AMI, Fund Ten and Fund
Twelve completed similar acquisitions with four other subsidiaries of MWU
pursuant to which the respective funds purchased substantially all of the
machining and metal working equipment of each subsidiary.  Each
subsidiary’s obligations under its respective leases (including those of W
Forge, Scott, Gilco, General and AMI) are cross-collateralized and
cross-defaulted, and all subsidiaries’ obligations are guaranteed by
MWU.  Each of the Participating Funds has also entered into a credit
support agreement, pursuant to which losses incurred by a Participating Fund
with respect to any MWU subsidiary are shared among the Participating Funds
proportionately based on the amount of capital invested.  The term of
each credit support agreement matches that of the lease
agreements.  No amounts were accrued at June 30, 2008 and management
cannot reasonably estimate at this time the maximum potential amounts that may
become payable under the credit support agreement, if any.





The LLC
and Fund Twelve, through its joint venture ICON Pliant, entered into a contract
with Pliant to acquire manufacturing equipment for an aggregate purchase price
of $12,115,000. Pursuant to the terms of the contract, the LLC and Fund Twelve
purchased and simultaneously leased back the equipment on July 16,
2008.








20
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (unaudited)





(14)
            Subsequent
      Event





On July
27, 2008, Solyndra repaid in full the outstanding note receivable and the entire
financing facility was terminated.  The LLC received approximately
$4,437,000 in connection with the repayment, which consisted of principal and
interest receivable as of such date.  As a result of the repayment,
the LLC will record an insignificant loss in the third quarter of
2008.  The repayment does not affect the warrants held by the LLC, and
the LLC retains its rights thereunder.






21
 Table of Contents







Item 2.  Manager’s Discussion and Analysis of Financial
Condition and Results of Operations





The
following is a discussion of our results of operations and current financial
position.  This discussion should be read together with our unaudited
condensed consolidated financial statements and related notes included elsewhere
in this Quarterly Report, Part II, Item 1A. Risk Factors and the audited
consolidated financial statements and related notes included in our Annual
Report on Form 10-K for the year ended December 31, 2007.





As used
in this Quarterly Report on Form 10-Q, references to “we,” “us,” “our” or
similar terms include ICON Leasing Fund Eleven, LLC and its consolidated
subsidiaries.





Forward-Looking
Statements





Certain
statements within this Quarterly Report on Form 10-Q may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (“PSLRA”).  These statements are being
made pursuant to the PSLRA, with the intention of obtaining the benefits of the
“safe harbor” provisions of the PSLRA, and, other than as required by law, we
assume no obligation to update or supplement such
statements.  Forward-looking statements are those that do not relate
solely to historical fact.  They include, but are not limited to, any
statement that may predict, forecast, indicate or imply future results,
performance, achievements or events.  You can identify these
statements by the use of words such as “may,” “will,” “could,” “anticipate,”
“believe,” “estimate,” “expects,” “continue,” “further,” “plan,” “seek,”
“intend,” “predict” or “project” and variations of these words or comparable
words or phrases of similar meaning.  These forward-looking statements
reflect our current beliefs and expectations with respect to future events and
are based on assumptions and are subject to risks and uncertainties and other
factors outside our control that may cause actual results to differ materially
from those projected. We undertake no obligation to update publicly or review
any forward-looking statement, whether as a result of new information, future
developments or otherwise.





Overview





We
operate as an equipment leasing program formed on December 2,
2004.  We began active operations on May 6, 2005.  We
primarily engage in the business of purchasing equipment and leasing it to
third-party end users, equipment financing, acquiring equipment subject to lease
and, to a lesser degree, acquiring ownership rights to leased equipment at lease
expiration. Some of our equipment leases will be acquired for cash and are
expected to provide current cash flow, which we refer to as "income"
leases.  The majority of the purchase price of our other equipment
leases will be financed, so these leases will generate little or no current cash
flow because substantially all of the rental payments received from the lessees
will be paid to lenders. For these leases, we anticipate that the future value
of the leased equipment will exceed the cash portion of the purchase
price.





We intend
to invest most of the net proceeds from our offering in equipment subject to
lease. After the net offering proceeds have been invested, it is anticipated
that additional investments will be made with the cash generated from our
initial investments to the extent that cash is not needed for expenses, reserves
and distributions to members. The investment in additional equipment in this
manner is called “reinvestment.” We anticipate purchasing equipment from time to
time for the next five years. This time frame is called the “operating period,”
and may be extended, at the sole discretion of our Manager, for up to an
additional three years.  After the operating period, we will then sell
our assets in the ordinary course of business during a time frame called the
“liquidation period.”







22
 Table of Contents







Lease
and Other Significant Transactions





At June
30, 2008, our portfolio, which we hold either directly or through joint venture
investments with affiliates, consisted primarily of the following equipment
subject to lease:





Lumber
Processing Equipment





We own
equipment, plant and machinery, which is subject to a lease with The Teal Jones
Group and Teal Jones Lumber Services, Inc.  The lease expires in
November 2013.





Marine
Vessels





Containership
Vessels





On June
21, 2006, we acquired, through our wholly-owned subsidiaries ICON European
Container, LLC (“EC I”) and ICON European Container II, LLC (“EC
II”) (collectively, the “ZIM Purchasers”), four container vessels from Old
Course Investments, LLC (“Old Course”).  The M/V Adaman Sea (f/k/a ZIM
America) and the M/V ZIM Japan (both owned by EC I) are subject to bareboat
charters that expire in November 2010.  The M/V ZIM Hong Kong and the
M/V ZIM Israel (both owned by EC II) are subject to bareboat charters that
expire in January 2011.  These vessels (collectively, the “ZIM
Vessels”) are subject to bareboat charters with ZIM Integrated Shipping Services
Ltd. (“ZIM”).





The
purchase price for the ZIM Vessels was approximately $142,500,000, comprised of
(i) a cash payment of approximately $35,900,000, (ii) the assumption of
approximately $93,300,000 of non-recourse indebtedness under a secured loan
agreement with HSH Nordbank AG (the “HSH Loan Agreement”), (iii) the assumption
of approximately $12,000,000 of non-recourse indebtedness, secured by a second
priority mortgage over the ZIM Vessels in favor of ZIM and (iv) less the
acquisition of related assets of approximately $3,300,000.  The
obligations under the HSH Loan Agreement are secured by a first priority
mortgage over the ZIM Vessels.  We incurred professional fees of
approximately $300,000 and paid our Manager an acquisition fee of approximately
$4,200,000 relating to this transaction.  These fees were capitalized
as part of the acquisition cost of the ZIM Vessels.





Tanker
Vessels





On April
11, 2007, we acquired, through our wholly-owned subsidiaries, ICON Senang,
LLC and ICON Sebarok, LLC, two Aframax 95,649 DWT product tankers, the
Senang Spirit and the Sebarok Spirit (collectively, the “Teekay Vessels”). The
purchase price for the Teekay Vessels was approximately $88,000,000, comprised
of (i) a cash payment of approximately $21,300,000 funded in the form of a
capital contribution and (ii) borrowings of approximately $66,700,000 of
non-recourse debt under a secured loan agreement with Fortis Capital
Corp.  We paid an acquisition fee to our Manager of approximately
$2,640,000 relating to this transaction.  Simultaneously with the
closing of the purchase of the Teekay Vessels, a bareboat charter was entered
into by an affiliate of Teekay Corporation for a term of 60 months.  The
charter commenced on April 11, 2007.





We own
four product carrying vessels, the M/T Doubtless, the M/T Faithful, the M/T
Spotless, and the M/T Vanguard, which are subject to bareboat charters with
subsidiaries of Top Ships, Inc. (“Top Ships”) that will expire in February
2011.







23
 Table of Contents





Auto
Parts Manufacturing Equipment





On March
30, 2007, we, through our wholly-owned subsidiary, ICON French Equipment I, LLC
(“ICON Heuliez”), entered into a purchase and sale agreement (the “Agreement”)
with Heuliez SA (“HSA”) and Heuliez Investissements SNC (“HI”) to purchase
certain auto parts manufacturing equipment from HSA and HI.  In connection
with the Agreement, ICON Heuliez agreed to lease back the equipment to HSA and
HI, respectively, for an initial term of 60 months.  The aggregate
purchase price for the equipment was approximately $11,994,000 (€9,000,000) at
March 30, 2007.  We incurred professional fees of approximately
$42,000 and paid an acquisition fee to our Manager of approximately $360,000
relating to this transaction.  These fees were capitalized as part of
the acquisition cost of the equipment.    The leases commenced on
April 1, 2007.





On
October 26, 2007, HSA and Groupe Henri Heuliez, the guarantor of the leases with
ICON Heuliez, filed for “procedure de sauvegarde,” a procedure only available to
a solvent company seeking to reorganize its business affairs under French
law.  HSA and HI paid all amounts due under the lease through January 1,
2008.  As of February 1, 2008, ICON Heuliez entered into an agreement
with the administrator of the “procedure de sauvegarde” to accept reduced
payments from HSA and HI for the period beginning February 1, 2008 and ending
July 31, 2008. On August 13, 2008, the administrator of the “procedure de
sauvegarde” confirmed a continuation plan for HSA, HI and Groupe Henri Heuliez.
The terms of such plan include HSA and HI making reduced payments to ICON
Heuliez until January 31, 2009.  Beginning February 1, 2009, full
payments under the lease will resume.  In addition, each lease with
ICON Heuliez will be extended a year.  During the one year extension
HSA and HI will make monthly payments to repay the shortfall resulting from the
reduced payments ICON Heuliez received between February 1, 2008 and January 31,
2009.  The lease remains in full force and effect.





Information
Technology and Technology-Related Equipment





On March
7, 2006, we acquired substantially the entire equipment leasing portfolio (the
“Leasing Portfolio”) of Clearlink Capital Corporation (“Clearlink”), based in
Mississauga, Ontario, Canada.  The Leasing Portfolio was acquired by
us from our Manager and ICON Canada, Inc., an affiliate of our
Manager.





On May
19, 2008, we sold substantially all of our net assets in the Leasing Portfolio
(“Remaining Net Assets”) to affiliates of U.S. Micro Corporation (“U.S. Micro”),
an unaffiliated third party.  The gross cash purchase price was
$19,000,000 and was subject to post-closing adjustments of approximately
$11,412,000, bringing the net cash purchase price to approximately
$7,588,000.  We recognized a book loss of approximately $17,204,000,
which was offset by a realized foreign currency gain of approximately $5,593,000
less an insignificant intercompany settlement. As a result, we recognized a net
book loss of approximately $11,650,000 from the sale of the Remaining Net
Assets.  The non-recourse debt obligations were assumed by U.S. Micro
upon the sale of the Remaining Net Assets.  Although we recorded a net
book loss on the sale of the Remaining Net Assets, our aggregate investment in
the Leasing Portfolio yielded a gross cash on cash return in excess of
110%.  We calculated the cash on cash return by dividing the total amount
of the equity invested in the acquisition of the Leasing Portfolio, plus all
subsequent equity investments in the Leasing Portfolio by the total amount of
cash received from the Leasing Portfolio from rental proceeds, financing
proceeds, residual proceeds, and the cash received in connection with the sale
of the Remaining Assets.





Telecommunications
Equipment





We have a
61.4% interest in ICON Global Crossing, LLC (“ICON Global Crossing”), which
purchased telecommunications equipment from various vendors and which was then
leased to Global Crossing Telecommunications, Inc. (“Global Crossing”). The
lease expires on March 31, 2010.





We have a
13.3% interest in ICON Global Crossing II, LLC (“ICON Global Crossing II”),
which purchased telecommunications equipment from various vendors and which was
then leased to Global Crossing and Global Crossing North American Networks, Inc.
(“Global Crossing Group”).  The lease expires on October 31,
2010.






24
 Table of Contents





We own,
through our wholly-owned subsidiary ICON Global Crossing III, LLC (“ICON Global
Crossing III”), telecommunications equipment on lease to Global Crossing.
 On June 27, 2008, we acquired additional telecommunications equipment from
various vendors for an aggregate purchase price of approximately $5,417,000,
which was then leased to Global Crossing.  The base lease terms are 36
months and commenced on July 1, 2008.  We paid acquisition fees to our
Manager of approximately $163,000 in connection with this
transaction.





On
December 20, 2007, we, along with ICON Income Fund Ten, LLC (“Fund Ten”), an
entity also managed by our Manager, formed ICON Global Crossing V, LLC (“ICON
Global Crossing V”), with interests of 55% and 45%, respectively, to purchase
telecommunications equipment from various vendors for approximately $12,982,000
in cash. This equipment is subject to a lease with Global Crossing. The term of
the lease is 36 months and the lease commenced on January 1, 2008. The total
capital contributions made to ICON Global Crossing V were approximately
$12,982,000, of which our share was approximately $7,140,000.  We paid
an acquisition fee to our Manager of approximately $214,000 in connection with
this transaction.





Manufacturing
Equipment





On
September 28, 2007, we completed the acquisitions of and simultaneously leased
back all of the manufacturing assets of W Forge Holdings, Inc. (“W Forge”), MW
Scott, Inc. (“Scott”), and MW Gilco, LLC (“Gilco”), wholly-owned subsidiaries of
MW Universal, Inc. (“MWU”), for purchase prices of $21,000,000, $600,000 and
$600,000, respectively.  We paid to our Manager acquisition fees for W
Forge, Scott, and Gilco of approximately $630,000, $18,000 and $18,000,
respectively, in connection with this transaction.





On
December 10, 2007, we completed the acquisitions of and simultaneously leased
back substantially all of the manufacturing assets of MW General, Inc.
(“General”), and AMI Manchester, LLC (“AMI”), wholly-owned subsidiaries of MWU,
for purchase prices of $400,000 and $1,700,000, respectively.  We paid
acquisition fees to our Manager for General and AMI of approximately $12,000 and
$51,000, respectively, in connection with this transaction.





On June
9, 2008, we, along with Fund Ten and ICON Leasing Fund Twelve, LLC (“Fund
Twelve”) (collectively, the “Participating Funds”) entered into a Forbearance
Agreement with MWU, W Forge, Scott, Gilco, General, AMI and four other
subsidiaries of MWU to cure certain defaults under the lease covenants with
us.  The terms of the Forbearance Agreement include, among other
things, additional collateral being pledged and the grant of a warrant
to us to purchase 300 shares of the capital stock of W Forge for a purchase
price of $0.01 per share, exercisable for a period of five years beginning June
9, 2008.





We have a
45% interest in ICON EAR, LLC (“ICON EAR”).  ICON EAR owns certain
semiconductor manufacturing equipment, which was purchased from and leased back
to Equipment Acquisition Resources, Inc. (“EAR”).





On April
24, 2008, we, through our wholly-owned subsidiary ICON EAR II, LLC (“ICON EAR
II”), completed the acquisition of and simultaneously leased back semiconductor
manufacturing equipment to EAR for a purchase price of approximately
$6,348,000.  We paid an acquisition fee of approximately $190,000 to
our Manager in connection with this transaction.  The equipment is
subject to a 60 month lease and commenced on July 1, 2008.





On June
30, 2008, we and Fund Twelve formed ICON Pliant, LLC (“ICON Pliant”), with
interests of 55% and 45%, respectively.  ICON Pliant entered into an
agreement with Pliant Corporation (“Pliant”) to acquire manufacturing equipment.
Total acquisition fees accrued were approximately $363,000, of which our portion
was approximately $200,000.





On July
16, 2008, ICON Pliant completed the acquisition of and simultaneously leased
back the manufacturing equipment to Pliant. The total acquisition price was
$12,115,000, of which our share was approximately $6,663,000. The base lease
term is 60 months and commences on October 1, 2008.  ICON Pliant will
receive payments on a quarterly basis.






25
 Table of Contents





Financing
Facility





On August
13, 2007, we completed a participation investment in an equipment financing
facility with Solyndra, Inc. (“Solyndra”), a privately-held manufacturer of
solar panels for the building of a new production facility.  The
financing facility was set to mature on June 30, 2013 and was secured by the
equipment as well as all other assets of Solyndra.  The equipment was
comprised of two fully-automated manufacturing lines that combine glass tubes
and thin film semiconductors to produce solar panels.  Included as
part of the consideration in the acquisition are warrants to purchase 40,290
shares of Solyndra common stock at an exercise price of $4.96 per
share.  The warrants are set to expire on April 6, 2014.





Digital
Audio/Visual Entertainment Systems





We have a
50% interest in ICON AeroTV, LLC (“ICON AeroTV”), whose sole purpose was owning
equipment leased to AeroTV Ltd (“AeroTV”).   On February 13, 2007,
AeroTV’s customer, the largest scheduled bus line in Europe, terminated its
service agreement with AeroTV. Shortly thereafter, AeroTV notified our Manager
of its inability to pay certain rent owed to ICON AeroTV and subsequently filed
for insolvency protection in the United Kingdom. In February 2007, ICON AeroTV
sent a notice to AeroTV terminating the master lease agreement. Shortly
thereafter, certain facts came to light that gave our Manager serious
concerns regarding the propriety of AeroTV's actions during and after the
execution of the lease with AeroTV. On April 18, 2007, ICON AeroTV filed a
lawsuit in the United Kingdom’s High Court of Justice, Queen’s Bench Division
against AeroTV and one of its directors for fraud. ICON AeroTV obtained a
default judgment against the AeroTV director, which was subsequently set aside.
On April 17, 2008, the judgment was reinstated. At this time, it is not possible
to determine ICON AeroTV’s ability to collect the judgment.





Recent
Accounting Pronouncements





In
February 2007, the Financial Accounting Standard Board (“FASB”) issued Statement
of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities — including an Amendment of SFAS No.
115” (“SFAS No. 159”), which permits but does not require us to measure
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected are
reported in earnings, as we did not elect to fair value any of our financial
instruments under the provisions of SFAS No. 159.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an Amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the retained interest and gain
or loss when a subsidiary is deconsolidated. This statement is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 with earlier adoption prohibited. Our Manager is
currently evaluating the impact of SFAS No. 160 on our consolidated financial
statements.





On March
19, 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities — an Amendment of SFAS No. 133” (“SFAS No.
161”). SFAS No. 161 enhances required disclosures regarding derivatives and
hedging activities, including enhanced disclosures regarding how: (a) an entity
uses derivative instruments; (b) derivative instruments and related hedged items
are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and
Hedging Activities;” and (c) derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows.
SFAS No. 161 is effective for fiscal years and interim periods beginning after
November 15, 2008 and, therefore, we will be required to provide such
disclosures beginning with the interim period ended March 31, 2009.






26
 Table of Contents





Results
of Operations for the Three Months Ended June 30, 2008 (the “2008 Quarter”) and
2007 (the “2007 Quarter”)





Revenue
for the 2008 Quarter and the 2007 Quarter are summarized as
follows:





Three
      Months Ended June 30,(unaudited)2008
            
            
            2007
            
            
            ChangeRental
      income
            
            $
            22,714,161
            
            
            $
            26,393,233
            
            
            $
            (3,679,072
            )Finance
      income
            
            
            1,318,469
            
            
            
            1,646,045
            
            
            
            (327,576
            )Income
      (loss) from investments in joint ventures
            
            
            1,315,520
            
            
            
            (14,748
            )
            
            
            1,330,268Net
      gain on sales of  new equipment
            
            
            100,355
            
            
            
            362,452
            
            
            
            (262,097
            )Net
      loss on sales of  leased equipment
            
            
            (493,336
            )
            
            
            (129,815
            )
            
            
            (363,521
            )Net
      loss on sale of portfolio
            
            
            (11,649,797
            )
            
            
            -
            
            
            
            (11,649,797
            )Interest
      and other income
            
            
            762,364
            
            
            
            1,233,270
            
            
            
            (470,906
            )Total
      revenue
            
            $
            14,067,736
            
            
            $
            29,490,437
            
            
            $
            (15,422,701
            )





Total
revenue for the 2008 Quarter decreased $15,422,701, or 52.3%, as compared to the
2007 Quarter.  The decrease in total revenue was primarily due to the
sale of the Leasing Portfolio on May 19, 2008, which resulted in a net loss of
$11,649,797 in the 2008 Quarter. The decrease in rental income was largely
attributable to the sale of the Leasing Portfolio, which accounted for
approximately $5,906,000 of the decrease in rental income.  This
decrease was partially offset by an increase in rental income of approximately
$2,087,000 related to (i) the leases with the subsidiaries of MWU, which were
entered into during the second half of 2007, (ii) the Teekay Vessels, which were
acquired in April 2007, and (iii) the assets owned by ICON EAR II, which were
acquired in April 2008.  The decrease in total revenue was partly
offset by an increase in income from investments in joint ventures, which was
predominantly due to the recognition of a gain on foreign currency translation
of approximately $1,147,000 in the 2008 Quarter.





Expenses
for the 2008 Quarter and the 2007 Quarter are summarized as
follows:





Three
      Months Ended June 30,(unaudited)2008
            
            
            2007
            
            
            ChangeManagement
      fees - Manager
            
            $
            1,367,798
            
            
            $
            1,673,428
            
            
            $
            (305,630
            )Administrative
      expense reimbursements - Manager
            
            
            1,041,373
            
            
            
            1,288,944
            
            
            
            (247,571
            )General
      and administrative
            
            
            1,240,035
            
            
            
            411,812
            
            
            
            828,223Interest
            
            
            2,779,456
            
            
            
            4,843,051
            
            
            
            (2,063,595
            )Depreciation
      and amortization
            
            
            16,974,589
            
            
            
            20,872,352
            
            
            
            (3,897,763
            )Gain
      on derivative instruments
            
            
            (1,303,652
            )
            
            
            (794,516
            )
            
            
            (509,136
            )Total
      expenses
            
            $
            22,099,599
            
            
            $
            28,295,071
            
            
            $
            (6,195,472
            )





Total
expenses for the 2008 Quarter decreased $6,195,472, or 21.9%, as compared to the
2007 Quarter.  The decrease was primarily due to the sale of the
Leasing Portfolio, which resulted in an overall reduction in expenses, and a
gain on derivative instruments recognized in the 2008 Quarter.  The
decrease in depreciation and amortization was largely attributable to the sale
of the Leasing Portfolio, which resulted in a decrease of approximately
$5,121,000 in depreciation and amortization expense.  This decrease
was partially offset by an increase in depreciation and amortization expense of
approximately $1,048,000 related to (i) the leases with the subsidiaries of MWU,
which were entered into during the second half of 2007 and (ii) the assets owned
by ICON EAR II, which were acquired in April 2008.  The decrease in
interest expense was predominantly due to a reduction in the balance of
the non-recourse debt outstanding resulting from the sale of the Leasing
Portfolio.  The decrease in total expense was partly offset by an
increase in general and administrative expense primarily related to professional
fees.






27
 Table of Contents





Minority
Interest





The
increase in minority interest for the 2008 Quarter primarily related to the
investment by Fund Ten in ICON Global Crossing V during December
2007.





Provision
for Income Taxes





Certain
of our direct and indirect wholly-owned subsidiaries are unlimited liability
companies and are taxed as corporations under the laws of
Canada.  Other indirect wholly-owned subsidiaries are taxed as
corporations in Barbados.  For the 2008 Quarter, the benefit for
income taxes was comprised of $2,618,084 in current taxes and $454,441 in
deferred taxes predominately due to the sale of the Leasing
Portfolio.





Net
(Loss) Income





As a
result of the foregoing factors, net (loss) income for the 2008 Quarter and 2007
Quarter was $(5,387,372) and $2,146,158, respectively.  The net (loss)
income per weighted average number of additional member shares outstanding for
the 2008 Quarter and 2007 Quarter was $(14.67) and $5.87,
respectively.





Results
of Operations for the Six Months Ended June 30, 2008 (the “2008 Period”) and
2007 (the “2007 Period”)





Revenue
for the 2008 Period and the 2007 Period are summarized as follows:





Six
      Months Ended June 30,(unaudited)2008
            
            
            2007
            
            
            ChangeRental
      income
            
            $
            50,220,436
            
            
            $
            49,211,323
            
            
            $
            1,009,113Finance
      income
            
            
            3,229,508
            
            
            
            3,978,255
            
            
            
            (748,747
            )Income
      from investments in joint ventures
            
            
            1,393,985
            
            
            
            20,932
            
            
            
            1,373,053Net
      gain on sales of  new equipment
            
            
            278,082
            
            
            
            551,708
            
            
            
            (273,626
            )Net
      loss on sales of  leased equipment
            
            
            (720,385
            )
            
            
            (47,054
            )
            
            
            (673,331
            )Net
      loss on sale of portfolio
            
            
            (11,649,797
            )
            
            
            -
            
            
            
            (11,649,797
            )Interest
      and other income
            
            
            1,520,610
            
            
            
            2,648,842
            
            
            
            (1,128,232
            )Total
      revenue
            
            $
            44,272,439
            
            
            $
            56,364,006
            
            
            $
            (12,091,567
            )





Total
revenue for the 2008 Period decreased $12,091,567, or 21.5%, as compared to
the 2007 Period.  The decrease in total revenue was primarily due to
the sale of the Leasing Portfolio on May 19, 2008, which resulted in a net loss
of $11,649,797 in the 2008 Period. The decrease in interest and other
income was largely attributable to (i) lower cash balances in interest-bearing
accounts during the 2008 Period and (ii) the sale of the Leasing
Portfolio.  The decrease in total revenue was partially offset by
increases in income from investments in joint ventures and rental
income.  The increase in income from investments in joint ventures was
primarily due to the recognition of a gain on foreign currency translation of
approximately $1,147,000 during the 2008 Period; no gain was recognized during
the 2007 Period.  The increase in rental income was largely
attributable to (i) the leases with the subsidiaries of MWU, which were entered
into during the second half of 2007, (ii) the Teekay Vessels, which were
acquired in April 2007, (iii) the assets owned by ICON Heuliez, which were
acquired in March 2007, and (iv) the assets owned by ICON EAR II, which were
acquired in April 2008.  An increase in rental income of approximately
$7,583,000 generated from these leases was partly offset by a decrease in rental
income of approximately $6,853,000 resulting from the sale of the Leasing
Portfolio.







28
 Table of Contents





Expenses
for the 2008 Period and the 2007 Period are summarized as follows:





Six
      Months Ended June 30,(unaudited)2008
            
            
            2007
            
            
            ChangeManagement
      fees - Manager
            
            $
            3,179,186
            
            
            $
            3,155,492
            
            
            $
            23,694Administrative
      expense reimbursements - Manager
            
            
            2,609,883
            
            
            
            2,989,827
            
            
            
            (379,944
            )General
      and administrative
            
            
            2,041,596
            
            
            
            1,132,803
            
            
            
            908,793Interest
            
            
            6,796,094
            
            
            
            8,440,141
            
            
            
            (1,644,047
            )Depreciation
      and amortization
            
            
            37,379,712
            
            
            
            40,403,616
            
            
            
            (3,023,904
            )Loss
      (gain) on derivative instruments
            
            
            190,320
            
            
            
            (433,926
            )
            
            
            624,246Total
      expenses
            
            $
            52,196,791
            
            
            $
            55,687,953
            
            
            $
            (3,491,162
            )




Total
expenses for the 2008 Period decreased $3,491,162, or 6.3%, as compared to
the 2007 Period. The decrease was primarily due to the sale of the Leasing
Portfolio, which resulted in an overall reduction in expenses.  The
decrease in depreciation and amortization was largely attributable to the sale
of the Leasing Portfolio, which resulted in a decrease of approximately
$7,499,000 in depreciation and amortization expense.  This decrease
was partially offset by an increase in depreciation and amortization
expense of approximately $3,868,000 related to (i) the leases with the
subsidiaries of MWU, which were entered into during the second half of 2007,
(ii) the Teekay Vessels, which were acquired in April 2007, and (iii) the assets
owned by ICON Heuliez, which were acquired in March 2007.  The
decrease in interest expense was mainly due to a reduction in the balance of the
non-recourse debt outstanding resulting from the sale of the Leasing
Portfolio.  The decrease in total expense was partly offset by an
increase in general and administrative expense predominantly related to
professional fees.





Minority
Interest





The
increase in minority interest for the 2008 Period primarily related to the
investment by Fund Ten in ICON Global Crossing V during December
2007.





Provision
for Income Taxes





Certain
of our direct and indirect wholly-owned subsidiaries are unlimited
liability companies and are taxed as corporations under the laws of
Canada.  Other indirect wholly-owned subsidiaries are taxed as
corporations in Barbados.  For the 2008 Period, the benefit for
income taxes was comprised of $2,512,041 in current taxes and $532,813 in
deferred taxes predominately due to the sale of the Leasing
Portfolio.





Net
(Loss) Income





As a
result of the foregoing factors, net (loss) income for the 2008 Period and 2007
Period was $(5,755,946) and $663,655, respectively.  The net (loss) income
per weighted average number of additional member shares outstanding for the 2008
Period and 2007 Period was $(15.68) and $1.93, respectively.







29
 Table of Contents





Financial
Condition





This
section discusses the major balance sheet variances at June 30, 2008 compared to
December 31, 2007.





Total Assets





Total
assets decreased $156,621,173 from $595,752,005 at December 31, 2007
to $439,130,832 at June 30, 2008.  The decrease was primarily due to
the sale of the Leasing Portfolio, the depreciation of our leased equipment, and
cash distributions to our additional members during the 2008
Period.  This decrease was partially offset by an increase in the
income tax receivable and leased equipment due to the acquisitions completed by
ICON Global Crossing III and ICON EAR II.





Current
Assets





Current
assets decreased $28,104,005 from $64,164,600 at December 31, 2007 to
$36,060,595 at June 30, 2008.  The decrease was mainly due to cash
distributions to our additional members and the sale of the Leasing Portfolio,
which reduced our net investment in finance leases.





Total
Liabilities





Total
liabilities decreased $125,577,674 from $322,138,717 at December 31, 2007
to $196,561,043 at June 30, 2008. The decrease was predominantly due to the sale
of the Leasing Portfolio.





Current
Liabilities





Current
liabilities decreased $51,034,776 from $105,194,603 at December 31, 2007 to
$54,159,827 at June 30, 2008. The decrease was largely attributable to the
sale of the Leasing Portfolio and the continued reduction in our non-recourse
debt obligations related to the normal course of business.





Members’
Equity





Members’
Equity decreased $29,404,875 from $261,223,876 at December 31, 2007 to
$231,819,001 at June 30, 2008. The decrease resulted primarily from
distributions to our additional members and foreign currency translation
adjustments.  We also recorded a loss during the 2008
Quarter.





Liquidity
and Capital Resources





Sources
and Uses of Cash





At June
30, 2008 and December 31, 2007, we had cash and cash equivalents of $22,563,412
and $42,339,549, respectively.  During our offering period, our main source
of cash was from financing activities and our main use of cash was from
investing activities.  During our operating period, we anticipate our
main source of cash will be from investing activities and our main use of cash
will be from financing activities, which we expect will continue during our
liquidation period.  Our offering period ended on April 20, 2007 and
our operating period commenced.





The
majority of our investments will be the purchase of equipment that will be
subject to lease.  From this type of investment, we will be legally
entitled to receive rental payments from leasing the equipment and, as owner of
the equipment, may sell or re-lease it at lease expiration.  We will
purchase equipment subject to lease either directly or through subsidiary
entities.  We may, in some cases, jointly purchase equipment with
other businesses our Manager sponsors and manages or with unaffiliated third
parties.  In such cases, we may co-own a joint venture with other
parties.






30
 Table of Contents





We will
seek to acquire a portfolio of equipment leases that is comprised of both (a)
transactions that provide current cash flow in the form of rental payments made
directly to us, and (b) transactions where the cash flow in the form of rental
payments has been pledged or assigned, in whole or in part, to a lender. We
refer to current cash flow leases which we acquire for cash as income
leases.  We call leases where a substantial portion of the cash flow
(and perhaps a portion of the expected residual value of the equipment) has been
pledged or assigned to a lender as growth leases (also known within the
equipment leasing industry as leveraged leases). We expect that most of the
indebtedness incurred by us to pay a portion of the purchase price for growth
leases will be non-recourse to our other assets, meaning that in the event the
lender is not paid, our other assets would not be at risk as a source of
payment; only the particular item or items of financed equipment would be at
risk.





Unanticipated
or greater than anticipated operating costs or losses (including a lessee’s
inability to make timely lease payments) would adversely affect our liquidity.
To the extent that working capital reserves may be insufficient to satisfy our
cash requirements, we anticipate that we would fund our operations from cash
flow generated by operating and financing activities.  In addition, we
may use a portion of cash on hand to re-establish working capital
reserves.





Operating
Activities




Sources
of Cash




Our main
source of cash from operating activities in the 2008 Period and 2007 Period was
from the collection of our non-leveraged finance leases and the rental income
from our operating leases.





Investing
Activities




Sources
of Cash




Sources of cash from investing
activities decreased $12,215,398 from $27,964,126 in the 2007 Period to
$15,748,728 in the 2008 Period. The decrease in sources of cash resulted from a
reduction in the distributions from our joint venture investments of $9,834,397
in the 2007 Period to $398,017 in the 2008 Period.  This was
predominantly due to the liquidation of our JV interest in ICON AeroTV and ICON
EAM, LLC in the 2007 Period. Additionally, the decrease in sources of cash was
from sales of new and leased equipment of $7,315,211 in the 2008 Period as
compared to $15,697,288 in the 2007 Period.  These reductions were offset
by the proceeds from the sale of the Leasing Portfolio in the 2008 Period
which was $7,588,206.




Uses
of Cash




Uses of
cash from investing activities decreased $54,381,263 from $86,525,819 in the
2007 Period to $32,144,556 in the 2008 Period.  The decrease was
predominantly due to a reduction in the total number of acquisitions during the
2008 Period.  During the 2008 Period and 2007 Period, we purchased
$27,923,361 and $82,889,767 in leased assets, respectively.




Financing
Activities




Sources
of Cash




Sources
of cash from financing activities decreased $72,006,925 from $86,541,702 in the
2007 Period to $14,534,777 in the 2008 Period.  The decrease was
primarily due to the absence of any issuance of additional member shares during
the 2008 Period since our offering period ended in April 2007.  During
the 2007 Period, we sold 72,982 additional member shares, which provided net
proceeds of $64,589,307.  In addition, we had a decrease in proceeds
from non-recourse long-term debt.  During the 2008 Period and 2007
Period, we received proceeds from non-recourse long-term debt of $14,534,777 and
$21,952,395, respectively.







31
 Table of Contents





Uses
of Cash




Uses of
cash from financing activities decreased $6,406,701 from $60,534,378 in the 2007
Period to $54,127,677 in the 2008 Period.  The decrease was mainly due
to a reduction in distributions paid to our members.  During the 2008
Period and 2007 Period, we paid distributions to our members of $16,708,369 and
$20,800,755, respectively.  In addition, the repayments on our
non-recourse debt obligations were lower in the 2008 Period by approximately
$2,253,000.




Financings
and Borrowings





Non-Recourse
Long-Term Debt





We had
non-recourse long-term debt obligations at June 30, 2008 and December 31, 2007
of $184,179,269 and $285,494,408, respectively.  All of our
non-recourse long-term debt consisted of debt in which the lender has a security
interest in an asset.  In addition to the security interest, the
lender has an assignment of the rental payments under certain
leases.  In such cases, the lender is being paid directly by the
lessees.  In other cases, we receive the rental payments and remit to
the lender.





Leasing
Portfolio





The
Leasing Portfolio had non-recourse debt obligations, which accrued interest at
rates ranging from 4.30% to 8.09% per year.  On May 19, 2008, the
non-recourse debt obligations of approximately $73,187,000 were assumed by U.S.
Micro in conjunction with the sale of the Remaining Net Assets.





Revolving
Line of Credit, Recourse





We, along
with ICON Income Fund Eight B, L.P. (“Fund Eight B”), ICON Income Fund
Nine, LLC, Fund Ten and Fund Twelve (entities sponsored and organized by our
Manager) (collectively, the “Borrowers”), are parties to a Commercial Loan
Agreement (the “Loan Agreement”) with California Bank & Trust (the
“Lender”). The Loan Agreement originally provided for a revolving line of credit
of up to $17,000,000 pursuant to a senior secured revolving loan facility (the
“Facility”), which is secured by all assets of the Borrowers not subject to a
first priority lien, as defined in the Loan Agreement. Each of the Borrowers is
jointly and severally liable for all amounts borrowed under the Facility.
Amounts available under the Facility are subject to a borrowing base that is
determined, subject to certain limitations, on the present value of the future
receivables under certain lease agreements in which the Borrowers have a
beneficial interest.





The
Facility was originally set to expire on September 30, 2008 and established (i)
the interest rate for advances under the Facility at the Lender’s prime rate and
(ii) the interest rate on the five separate advances that are permitted to be
made under the Facility at which United States dollar deposits can be acquired
by the Lender at the London Interbank Eurocurrency Market Rate plus 2.5%. The
interest rate at June 30, 2008 was 5.0%.





On May 1,
2008, the Borrowers entered into a Loan Modification Agreement. The agreement
increased the revolving line of credit up to $30,000,000 and extended the
expiration date to April 30, 2010. The Borrowers may request a one year
extension to the revolving line of credit within 390 days of the expiration
date, but the Lender has no obligation to extend. The quarterly unused
commitment fee of 0.5% was reduced to 0.25% on unused commitments under the
Facility.





The
Borrowers were in compliance with the covenants under the Loan Agreement at June
30, 2008.





Aggregate
borrowings by all Borrowers under the Facility amounted to $1,255,000 at June
30, 2008, all of which was borrowed by Fund Eight B.







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Distributions





We pay
monthly distributions to our members starting with the first month after the
additional members’ admission and continue to pay such distributions until the
termination of the operating period.  We paid distributions to our
additional members and to our Manager of $16,541,436 and $166,933, respectively,
in the 2008 Period.





Contractual
Obligations and Commitments





Contractual
Obligations





At June
30, 2008, we had non-recourse long-term debt obligations. The lenders have
security interests in the equipment relating to each non-recourse long-term debt
instrument and, in some cases, an assignment of the rental payments under the
leases associated with the equipment.  In such cases, the lender is
being paid directly by the lessees.  In other cases, we receive the
rental payments and pay the lender.  If the lessees were to default on
the non-recourse long-term debt, the equipment would be returned to the lender
in extinguishment of the non-recourse long-term debt. At June 30, 2008, our
outstanding non-recourse long-term debt obligations were
$184,179,269.  We are a party to the Facility, as discussed in the
financing and borrowings section above. We had no borrowings outstanding under
the Facility at June 30, 2008.





Commitments





On
September 28, 2007 and December 10, 2007, we completed the acquisitions of and
simultaneously leased back substantially all of the machining and metal working
equipment of W Forge, Scott, Gilco, General and AMI, wholly-owned subsidiaries
of MWU.  Simultaneously with the closing of the transactions with W
Forge, Scott, Gilco, General and AMI, Fund Ten and Fund Twelve completed similar
acquisitions with four other subsidiaries of MWU pursuant to which the
respective funds purchased substantially all of the machining and metal working
equipment of each subsidiary.  Each subsidiary’s obligations under its
respective leases (including those of W Forge, Scott, Gilco, General and AMI)
are cross-collateralized and cross-defaulted, and all subsidiaries’ obligations
are guaranteed by MWU.  Each of the Participating Funds has also
entered into a credit support agreement, pursuant to which losses incurred by a
Participating Fund with respect to any MWU subsidiary are shared among the
Participating Funds proportionately based on the amount of capital
invested.  The term of each credit support agreement matches that of
the lease agreements.  No amounts were accrued at June 30, 2008 and
management cannot reasonably estimate at this time the maximum potential amounts
that may become payable under the credit support agreement, if any.





We and
Fund Twelve, through our joint venture ICON Pliant, entered into a contract with
Pliant to acquire manufacturing equipment for an aggregate purchase price of
$12,115,000. Pursuant to the terms of the contract, we and Fund Twelve purchased
and simultaneously leased back the equipment on July 16, 2008.





Subsequent
Event





On July
27, 2008, Solyndra repaid in full the outstanding note receivable and the entire
facility was terminated. We received approximately $4,437,000 in connection with
the repayment, which consisted of principal and interest receivable as of such
date. As a result of the repayment, we will record an insignificant loss in the
third quarter of 2008.  The repayment does not affect the warrants
held by us, and we retains its rights thereunder.







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Item 3.  Quantitative and Qualitative Disclosures About
Market Risk





We, like
most other companies, are exposed to certain market risks, which include changes
in interest rates and the demand for equipment (and the related residuals) owned
by us.  We believe that our exposure to other market risks, including
foreign currency exchange rate risk, commodity risk and equity price risk, are
insignificant, at this time, to both our financial position and our results of
operations.  There were no other material changes to the disclosure
related to these items since the filing of our Annual Report on Form 10-K for
the year ended December 31, 2007.





Item 4T. Controls and Procedures





Evaluation of disclosure controls
and procedures





In
connection with the preparation of this Quarterly Report on Form 10-Q for the
period ended June 30, 2008, as well as the financial statements for our Manager,
our Manager carried out an evaluation, under the supervision and with the
participation of the management of our Manager, including its Co-Chief Executive
Officers and Chief Financial Officer, of the effectiveness of the design and
operation of our Manager’s disclosure controls and procedures as of the end of
the period covered by this Report pursuant to the Securities Exchange Act of
1934. Based on the foregoing evaluation, the Co-Chief Executive Officers and the
Chief Financial Officer concluded that our Manager’s disclosure controls and
procedures were effective.





In
designing and evaluating our Manager’s disclosure controls and procedures, our
Manager recognized that disclosure controls and procedures, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the disclosure controls and procedures are met. Our
Manager’s disclosure controls and procedures have been designed to meet
reasonable assurance standards. Disclosure controls and procedures cannot detect
or prevent all error and fraud. Some inherent limitations in disclosure controls
and procedures include costs of implementation, faulty decision-making, simple
error and mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is based, in
part, upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all anticipated and unanticipated future conditions. Over time, controls
may become inadequate because of changes in conditions, or the degree of
compliance with established policies or procedures.





Evaluation of internal control over
financial reporting





There
have been no changes in our internal control over financial reporting during our
most recently completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.







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PART II - OTHER INFORMATION





Item 1.  Legal Proceedings





In the
ordinary course of conducting our business, there may be certain claims, suits
and complaints filed against us.  In the opinion of management, the
outcome of such matters, if any, will not have a material impact on our
consolidated financial position or results of operations.  No material
legal proceedings are currently pending or threatened, to our knowledge, against
us or against any of our assets.





Item 1A.  Risk Factors





There
have been no material changes from the risk factors disclosed in “Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the year ended December 31,
2007.





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





Our
Manager consented to us redeeming 391 additional member shares during the
2008 Period. The redemption amounts are calculated according to a specified
redemption formula in accordance with our LLC agreement.  Redeemed
additional member shares have no voting rights and do not share in
distributions.  Our agreement limits the number of additional member
shares which can be redeemed in any one year and redeemed additional member
shares may not be reissued. The following table details our additional member
redemptions:





Total
      Number ofAdditional
                MemberShares
      Redeemed
            
            
            Price
      Paid PerAdditional
                MemberShareJanuary
      1, 2008 through January 31, 2008
            
            
            355
            
            
            $
            788.84February
      1, 2008 through February 29, 2008
            
            
            -
            
            
            $
            -March
      1, 2008 through March 31, 2008
            
            
            -
            
            
            $
            -April
      1, 2008 through April 30, 2008
            
            
            36
            
            
            $
            825.94May
      1, 2008 through May 31, 2008
            
            
            -
            
            
            $
            -June
      1, 2008 through June 30, 2008
            
            
            -
            
            
            $
            -





Item 3.  Defaults Upon Senior Securities





Not
applicable.





Item 4.  Submission of Matters to a Vote of Security
Holders





No
matters were submitted to a vote of security holders during the 2008
Quarter.





Item 5.  Other Information





Not
applicable.






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 Table of Contents





Item 6. Exhibits





3.1
            Certificate
      of Formation of ICON Leasing Fund Eleven, LLC (Incorporated by reference
      to Exhibit 3.1 to Amendment No. 1 to Registrants Registration Statement on
      Form S-1 filed with the SEC on February 15, 2005 (File No.
      333-121790)).4.1
            ICON
      Leasing Fund Eleven, LLC Amended and Restated Limited Liability Company
      Agreement (Incorporated by reference to Exhibit A to Amendment No. 1
      to Registrant’s Registration Statement on Form S-1 filed with the SEC on
      June 29, 2006 (File No. 333-133730)).10.1
            Commercial
      Loan Agreement, by and between California Bank & Trust, ICON Income
      Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten,
      LLC and ICON Leasing Fund Eleven, LLC, dated August 31, 2005 (Incorporated
      by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K
      dated September 7, 2005).10.2
            Loan
      Modification Agreement, dated as of December 26, 2006, by and between
      California Bank & Trust and ICON Income Fund Eight B L.P., ICON
      Income Fund Nine, LLC, ICON Income Fund Ten, LLC and ICON Leasing Fund
      Eleven, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s
      Current Report on Form 8-K dated December 29, 2006).10.3
            Loan
      Modification Agreement dated as of May 1, 2008 between California
      Bank & Trust, ICON Income Fund Eight B L.P., ICON Income Fund
      Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC and
      ICON Leasing Fund Twelve, LLC (Incorporated by reference to Exhibit 10.3
      to Registrant’s Quarterly Report on Form 10-Q dated June 6,
      2008).31.1
            Rule
      13a-14(a)/15d-14(a). Certification of Co-Chief Executive
      Officer.31.2
            Rule
      13a-14(a)/15d-14(a). Certification of Co-Chief Executive
      Officer.31.3
            Rule
      13a-14(a)/15d-14(a). Certification of Chief Financial
      Officer.32.1
            Certification
      of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2
            Certification
      of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.3
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.







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 Table of Contents







SIGNATURES





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





File No.
000-51916


ICON
Capital Corp.


Manager
of the Registrant





August
27, 2008





/s/Mark Gatto___


Mark
Gatto


Co-Chief
Executive Officer and Co-President


(Co-Principal
Executive Officer)








August
27, 2008





/s/Michael A.
Reisner___


Michael
A. Reisner


Co-Chief
Executive Officer and Co-President


(Co-Principal
Executive Officer)








August
27, 2008





/s/Anthony J.
Branca__


Anthony
J. Branca


Chief
Financial Officer


(Principal
Accounting and Financial Officer)




37