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
            March 31, 2009




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)
            (I.R.S.
      Employer Identification No.)





100 Fifth Avenue, 4thFloor, New York, New York
            10011(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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).


[
] Yes     [ ] 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  [x]
No





Number of
outstanding shares of limited liability company interests of the
registrant on April 30, 2009 is 363,148.













ICON Leasing Fund Eleven, LLC
              Table
      of ContentsPagePART I - FINANCIAL INFORMATION
            1Item 1. Consolidated Financial
      Statements
            1Consolidated Balance Sheets
            1Consolidated Statements of
Operations
            2Consolidated Statement of Changes in
    Equity
            3Consolidated Statements of Cash Flows
            4Notes to Consolidated Financial
    Statements
            6Item 2. Manager’s Discussion and Analysis of Financial
      Condition and Results of Operations
            21Item 3. Quantitative and Qualitative Disclosures About
      Market Risk
            29Item 4T. Controls and Procedures
            29PART II – OTHER INFORMATION
            30Item 1. Legal Proceedings
            
            30Item 1A. Risk Factors
            
            30Item 2. Unregistered Sales of Equity Securities and Use of
      Proceeds
            30Item 3. Defaults Upon Senior
Securities
            30Item 4. Submission of Matters to a Vote of Security
      Holders
            30Item 5. Other Information
            
            30Item 6. Exhibits
            
            31Signatures
            
            32







Table of Contents





PART I – FINANCIAL INFORMATION
 
 Item 1.  Consolidated Financial
Statements


ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Consolidated
      Balance SheetsAssetsMarch
      31,2009
                    
                    
                    December
      31,(unaudited)
                    
                    
                    2008Current
      assets:Cash
      and cash equivalents
                    
                    $
                    6,388,162
                    
                    
                    $
                    7,670,929Current
      portion of net investment in finance leases
                    
                    
                    8,606,916
                    
                    
                    
                    7,576,361Accounts
      receivable
                    
                    
                    2,594,642
                    
                    
                    
                    1,787,007Restricted
      cash
                    
                    
                    236,067
                    
                    
                    
                    226,048Other
      current assets
                    
                    
                    1,886,709
                    
                    
                    
                    1,205,725Total
      current assets
                    
                    
                    19,712,496
                    
                    
                    
                    18,466,070Non-current
      assets:Net
      investment in finance leases, less current portion
                    
                    
                    21,827,304
                    
                    
                    
                    23,908,072Leased
      equipment at cost (less accumulated depreciation of$134,047,727
      and $120,637,537, respectively)
                    
                    
                    318,365,592
                    
                    
                    
                    333,224,351Mortgage
      note receivable
                    
                    
                    12,722,006
                    
                    
                    
                    12,722,006Investments
      in joint ventures
                    
                    
                    17,268,385
                    
                    
                    
                    18,659,329Deferred
      income taxes
                    
                    
                    62,280
                    
                    
                    
                    206,101Other
      non-current assets, net
                    
                    
                    817,367
                    
                    
                    
                    992,230Total
      non-current assets
                    
                    
                    371,062,934
                    
                    
                    
                    389,712,089Total
      Assets
                    
                    $
                    390,775,430
                    
                    
                    $
                    408,178,159Liabilities
      and EquityCurrent
      liabilities:Current
      portion of non-recourse long-term debt
                    
                    $
                    43,181,217
                    
                    
                    $
                    42,995,346Interest
      rate swap contracts
                    
                    
                    8,337,151
                    
                    
                    
                    9,257,854Revolving
      line of credit, recourse
                    
                    
                    5,600,000
                    
                    
                    
                    5,000,000Deferred
      revenue
                    
                    
                    4,129,401
                    
                    
                    
                    4,494,922Due
      to Manager and affiliates
                    
                    
                    415,940
                    
                    
                    
                    288,802Income
      taxes payable
                    
                    
                    154,332
                    
                    
                    
                    188,665Accrued
      expenses and other liabilities
                    
                    
                    945,725
                    
                    
                    
                    851,856Total
      current liabilities
                    
                    
                    62,763,766
                    
                    
                    
                    63,077,445Non-current
      liabilities:Non-recourse
      long-term debt, net of current portion
                    
                    
                    109,970,831
                    
                    
                    
                    120,454,287Total
      Liabilities
                    
                    
                    172,734,597
                    
                    
                    
                    183,531,732Commitments
      and contingencies (Note 13)Equity:Members'
      Equity :Additional
      members
                    
                    
                    211,681,580
                    
                    
                    
                    217,496,668Manager
                    
                    
                    (1,093,734
                    )
                    
                    
                    (1,035,608
                    )Accumulated
      other comprehensive loss
                    
                    
                    (5,972,299
                    )
                    
                    
                    (6,275,279
                    )Total
      Members' Equity
                    
                    
                    204,615,547
                    
                    
                    
                    210,185,781Noncontrolling
      Interests
                    
                    
                    13,425,286
                    
                    
                    
                    14,460,646Total
      Equity
                    
                    
                    218,040,833
                    
                    
                    
                    224,646,427Total
      Liabilities and Equity
                    
                    $
                    390,775,430
                    
                    
                    $
                    408,178,159






See
accompanying notes to consolidated financial statements.


1
 Table of Contents








ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Operations(unaudited)Three Months Ended March
31,2009
                
                
                2008Revenue:Rental
      income
                
                $
                19,757,260
                
                
                $
                27,506,275Finance
      income
                
                
                715,149
                
                
                
                1,911,039Income
      from investments in joint ventures
                
                
                678,032
                
                
                
                78,465Net
      gain on sales of  new equipment
                
                
                -
                
                
                
                177,727Net
      gain (loss) on sales of  leased equipment
                
                
                75,185
                
                
                
                (227,049
                )Interest
      and other income
                
                
                799,645
                
                
                
                758,246Total
      revenue
                
                
                22,025,271
                
                
                
                30,204,703Expenses:Management
      fees - Manager
                
                
                977,930
                
                
                
                1,811,388Administrative
      expense reimbursements - Manager
                
                
                549,204
                
                
                
                1,568,510General
      and administrative
                
                
                577,239
                
                
                
                801,561Interest
                
                
                2,628,428
                
                
                
                4,016,638Depreciation
      and amortization
                
                
                13,803,438
                
                
                
                20,405,123Loss
      on financial instruments
                
                
                5,782
                
                
                
                1,493,972Total
      expenses
                
                
                18,542,021
                
                
                
                30,097,192Income
      before income taxes
                
                
                3,483,250
                
                
                
                107,511Provision
      for income taxes
                
                
                388,116
                
                
                
                27,671Net
      income
                
                
                3,095,134
                
                
                
                79,840Less:
      Net income attributable to noncontrolling interests
                
                
                561,459
                
                
                
                448,414Net
      income (loss) attributable to Fund Eleven
                
                $
                2,533,675
                
                
                $
                (368,574
                )Net
      income (loss) attributable to Fund Eleven allocable to:Additional
      Members
                
                $
                2,508,338
                
                
                $
                (364,888
                )Manager
                
                
                25,337
                
                
                
                (3,686
                )$
                2,533,675
                
                
                $
                (368,574
                )Weighted
      average number of additional shares oflimited
      liability company interests outstanding
                
                
                363,188
                
                
                
                363,563Net
      income (loss) attributable to Fund Eleven per weightedaverage
      additional share of limited liability company interests
                
                $
                6.91
                
                
                $
                (1.00
                )








See
accompanying notes to consolidated financial statements.


2
 Table of Contents





ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statement of Changes in EquityMembers'
      EquityAdditional Shares of
                          
                          
                          
                          
                          
                          
                          
                          
                          Accumulated
      OtherLimited
      LiabilityCompany Interests
                          
                          
                          AdditionalMembers
                          
                          
                          Manager
                          
                          
                          Comprehensive Loss
                          
                          
                          TotalMembers'
      Equity
                          
                          
                          NoncontrollingInterests
                          
                          
                          TotalEquityBalance,
      December 31, 2008
                          
                          
                          363,256
                          
                          
                          $
                          217,496,668
                          
                          
                          $
                          (1,035,608
                          )
                          
                          $
                          (6,275,279
                          )
                          
                          $
                          210,185,781
                          
                          
                          $
                          14,460,646
                          
                          
                          $
                          224,646,427Comprehensive
      income:Net
      income
                          
                          
                          -
                          
                          
                          
                          2,508,338
                          
                          
                          
                          25,337
                          
                          
                          
                          -
                          
                          
                          
                          2,533,675
                          
                          
                          
                          561,459
                          
                          
                          
                          3,095,134Change
      in valuation of interest rate swap contracts
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,064,686
                          
                          
                          
                          1,064,686
                          
                          
                          
                          -
                          
                          
                          
                          1,064,686Currency
      translation adjustments
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (761,706
                          )
                          
                          
                          (761,706
                          )
                          
                          
                          -
                          
                          
                          
                          (761,706
                          )Total
      comprehensive income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          302,980
                          
                          
                          
                          2,836,655
                          
                          
                          
                          561,459
                          
                          
                          
                          3,398,114Repurchase
      of additional shares of limited liability company
interests
                          
                          
                          (82
                          )
                          
                          
                          (60,599
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (60,599
                          )
                          
                          
                          -
                          
                          
                          
                          (60,599
                          )Cash
      distributions to members and noncontrolling interests
                          
                          
                          -
                          
                          
                          
                          (8,262,827
                          )
                          
                          
                          (83,463
                          )
                          
                          
                          -
                          
                          
                          
                          (8,346,290
                          )
                          
                          
                          (1,596,819
                          )
                          
                          
                          (9,943,109
                          )Balance,
      March 31, 2009 (unaudited)
                          
                          
                          363,174
                          
                          
                          $
                          211,681,580
                          
                          
                          $
                          (1,093,734
                          )
                          
                          $
                          (5,972,299
                          )
                          
                          $
                          204,615,547
                          
                          
                          $
                          13,425,286
                          
                          
                          $
                          218,040,833







See
accompanying notes to consolidated financial statements.


3
 Table of Contents





ICON Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Cash Flows(unaudited)Three Months Ended March
31,2009
                
                
                2008Cash
      flows from operating activities:Net
      income
                
                $
                3,095,134
                
                
                $
                79,840Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Rental
      income paid directly to lenders by lessees
                
                
                (3,026,000
                )
                
                
                (3,502,983
                )Finance
      income
                
                
                (715,149
                )
                
                
                (1,911,039
                )Income
      from investments in joint ventures
                
                
                (678,032
                )
                
                
                (78,465
                )Net
      gain on sales of new equipment
                
                
                -
                
                
                
                (177,727
                )Net
      (gain) loss on sales of leased equipment
                
                
                (75,185
                )
                
                
                227,049Depreciation
      and amortization
                
                
                13,803,438
                
                
                
                20,405,123Interest
      expense on non-recourse financing paid directly to lenders by
      lessees
                
                
                937,104
                
                
                
                897,623Interest
      expense from amortization of debt financing costs
                
                
                76,777
                
                
                
                66,782Loss
      on financial instruments
                
                
                5,782
                
                
                
                1,493,972Deferred
      tax provision (benefit)
                
                
                140,054
                
                
                
                (78,372
                )Changes
      in operating assets and liabilities:Collection
      of finance leases
                
                
                1,709,196
                
                
                
                10,972,321Accounts
      receivable
                
                
                (836,444
                )
                
                
                (2,952,067
                )Other
      assets, net
                
                
                (75,108
                )
                
                
                748,276Payables,
      deferred revenue and other current liabilities
                
                
                (837,576
                )
                
                
                (8,985,953
                )Due
      to/from Manager and affiliates
                
                
                127,138
                
                
                
                (183,066
                )Distributions
      from joint ventures
                
                
                678,032
                
                
                
                105,406Net
      cash provided by operating activities
                
                
                14,329,161
                
                
                
                17,126,720Cash
      flows from investing activities:Investments
      in leased assets
                
                
                -
                
                
                
                (10,665,849
                )Proceeds
      from sales of new and leased equipment
                
                
                580,832
                
                
                
                4,707,677Investment
      in note receivable
                
                
                -
                
                
                
                (164,822
                )Change
      in restricted cash
                
                
                (10,019
                )
                
                
                371,885Distributions
      received from joint ventures in excess of profits
                
                
                1,390,944
                
                
                
                198,611Net
      cash provided by (used in) investing activities
                
                
                1,961,757
                
                
                
                (5,552,498
                )Cash
      flows from financing activities:Proceeds
      from non-recourse long-term debt
                
                
                -
                
                
                
                4,497,793Repayments
      of non-recourse long-term debt
                
                
                (8,130,000
                )
                
                
                (18,858,036
                )Proceeds
      from revolving line of credit, recourse
                
                
                600,000
                
                
                
                -Repurchase
      of additional shares of limited liability company
interests
                
                
                (60,599
                )
                
                
                (280,039
                )Cash
      distributions to members
                
                
                (8,346,290
                )
                
                
                (8,355,679
                )Distributions
      to noncontrolling interests
                
                
                (1,596,819
                )
                
                
                (1,270,385
                )Net
      cash used in financing activities
                
                
                (17,533,708
                )
                
                
                (24,266,346
                )Effects
      of exchange rates on cash and cash equivalents
                
                
                (39,977
                )
                
                
                (663,882
                )Net
      decrease in cash and cash equivalents
                
                
                (1,282,767
                )
                
                
                (13,356,006
                )Cash
      and cash equivalents, beginning of the period
                
                
                7,670,929
                
                
                
                42,339,549Cash
      and cash equivalents, end of the period
                
                $
                6,388,162
                
                
                $
                28,983,543








See
accompanying notes to consolidated financial statements.


4
 Table of Contents





ICON
      Leasing Fund Eleven, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Cash Flows(unaudited)Three Months Ended March
31,2009
                
                
                2008Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                
                $
                1,559,472
                
                
                $
                3,136,701Supplemental
      disclosure of non-cash investing and financing activities:Principal
      and interest paid on non-recourse long term debtdirectly
      to lenders by lessees
                
                $
                3,026,000
                
                
                $
                3,502,983








See
accompanying notes to consolidated financial statements.


5
 Table of Contents
 ICON Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)





(1)
            Organization





ICON
Leasing Fund Eleven, LLC (the “LLC”) was formed on December 2, 2004 as a
Delaware limited liability company. The LLC is engaged in one business
segment, the business of purchasing equipment and leasing it to third parties,
providing equipment and other financing, acquiring equipment subject to lease
and, to a lesser degree, acquiring ownership rights to items of leased equipment
at lease expiration. The LLC will continue until December 31, 2024, unless
terminated sooner.





The LLC’s
principal investment objective is to obtain the maximum economic return from its
investments for the benefit of its members.  To achieve this
objective, the LLC: (i) acquires a diversified portfolio by making investments
in leases and other financing transactions; (ii) makes monthly cash
distributions, at the Manager’s discretion, to its members commencing with each
member’s admission to the LLC, continuing until the end of the operating period;
(iii) reinvests substantially all undistributed cash from operations and cash
from sales of equipment and other financing transactions during the operating
period; and (iv) will dispose of its investments and distribute the excess cash
from such dispositions to its members beginning with the commencement of the
liquidation period.





The
manager of the LLC is ICON Capital Corp. (the “Manager”), a Delaware
corporation.  The Manager manages and controls the business affairs of
the LLC, including, but not limited to, the equipment leases and other financing
transactions that the LLC enters into pursuant to the terms of the LLC’s amended
and restated 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.





The LLC’s
offering period ended on April 20, 2007 and its operating period commenced on
April 21, 2007.





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 account to zero and (b) received other distributions and allocations
that would provide an 8% per year cumulative return on their outstanding
adjusted capital account. After such time, distributions will be allocated 90%
to the additional members and 10% to the Manager.








6
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)





(2)
            Summary
      of Significant Accounting Policies





Basis of
Presentation and Consolidation





The
accompanying consolidated financial statements of the LLC have been prepared in
accordance with U.S. generally accepted accounting principles (“US GAAP”) for
the interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission for Quarterly Reports on Form 10-Q. In
the opinion of the Manager, all adjustments considered necessary for a fair
presentation have been included. These 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, 2008.
The results for the interim period are not necessarily indicative of the results
for the full year.





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





The LLC
accounts for its 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 policy.





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





Effective
January 1, 2009, as a result of adopting Statement of Financial Accounting
Standards (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated
Financial Statements – an amendment of ARB No. 51” (“SFAS No.
160”), noncontrolling interests are reported as a separate component of
consolidated equity and income (loss) attributable to the noncontrolling
interest is included in consolidated net income (loss). The attribution of
income (loss) between controlling and noncontrolling interests is disclosed on
the accompanying consolidated statements of operations. Accordingly, the prior
year consolidated financial statements have been revised to conform to the
current year presentation.





Risks and
Uncertainties





In the
normal course of business, the LLC is exposed to two significant types of
economic risk: credit and market.  Credit risk is the risk of a
lessee, borrower or other counterparty’s inability or unwillingness to make
contractually required payments.  Concentrations of credit risk with
respect to lessees, borrowers or other counterparties are dispersed across
different industry segments within the United States of America and throughout
the world.  Although the LLC does not currently foresee a concentrated
credit risk associated with these customers, contractual payments are dependent
upon the financial stability of the industry segments in which they
operate.








7
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)





(2)
            Summary
      of Significant Accounting Policies -
continued





Market
risk reflects the change in the value of debt instruments, derivatives and
credit facilities due to changes in interest rate spreads or other market
factors.  The LLC believes that the carrying value of its investments
and derivative obligations are reasonable, taking into consideration these
risks, along with estimated collateral values, payment history and other
relevant information.





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 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 consolidated financial
statements in prior periods to conform to the current presentation.




Recent
Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Accounting for Fair Value Measurements” (“SFAS No.
157”).  SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and enhances fair value measurement disclosure. In
February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2,
“Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 delayed
the effective date of SFAS No. 157 for all non-financial assets and
non-financial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), for fiscal years beginning after November 15, 2008. The
measurement and disclosure requirements related to financial assets and
financial liabilities were adopted by the LLC on January 1, 2008. The LLC
adopted FSP 157-2 on January 1, 2009. The adoption of SFAS No. 157 and FSP 157-2
for financial and non-financial assets and financial and non-financial
liabilities did not have a significant impact on the LLC’s 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” (“SFAS No. 133”); 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 was required to provide such disclosures beginning with
the interim period ended March 31, 2009.





In April
2009, the FASB issued FSP No. 157-4, “Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability have Significantly Decreased and
Identifying Transactions that are Not Orderly” (“FSP 157-4”). FSP 157-4 provides
additional guidance for estimating fair value in accordance with SFAS No. 157
when the volume and level of activity for the asset or liability have
significantly decreased. Additionally, FSP 157-4 provides guidance on
identifying circumstances that indicate a transaction is not
orderly.   The FASB expanded the scope of FSP 157-4 to all assets
and liabilities measured at fair value.  FSP 157-4 is effective for
interim and annual reporting ending after June 15, 2009, and shall be applied
prospectively.  The Manager is currently evaluating the impact of FSP
157-4 on the LLC’s consolidated financial statements.








8
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)





(2)
            Summary
      of Significant Accounting Policies -
continued





In
April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board
(“APB”) 28-1, “Interim Disclosure about Fair Value of Financial Instruments”
(“FSP 107-1/APB 28-1”). FSP 107-1/APB 28-1 requires interim disclosures
regarding the fair values of financial instruments that are within the scope of
FAS 107, “Disclosures about the Fair Value of Financial Instruments.”
Additionally, FSP 107-1/APB 28-1 requires disclosure of the methods and
significant assumptions used to estimate the fair value of financial instruments
on an interim basis as well as changes of the methods and
significant assumptions from prior periods. FSP 107-1/APB 28-1 does not
change the accounting treatment for these financial instruments and is effective
for interim and annual reporting ending after June 15, 2009.




(3)
              Leasing
      Portfolio


On
March 7, 2006, the LLC acquired substantially the entire equipment leasing
portfolio (the “Leasing Portfolio”) of Clearlink Capital Corporation
(“Clearlink”), based in Mississauga, Ontario, Canada.  At the time of
the acquisition, the Leasing Portfolio consisted of approximately 1,100
equipment schedules originated by Clearlink with predominantly large, investment
grade quality lessees which were mainly comprised of information technology and
technology-related equipment, including personal computers and client/server
equipment that perform business-related functions such as database
inquiries.  This equipment was leased in both the United States of
America (approximately 20 separate lessees) and Canada (approximately 90
separate lessees).  The Leasing Portfolio had a weighted average
remaining lease term of approximately 18 months at the time of
acquisition.





The
Leasing Portfolio was acquired, effective as of March 1, 2006, by the LLC from
the Manager and ICON Canada, Inc., an affiliate of the Manager, for
approximately $144,591,000, which included a cash payment of approximately
$49,361,000 and the assumption of non-recourse debt and other assets and
liabilities related to the Leasing Portfolio of approximately
$95,230,000.  The Manager was paid an acquisition fee of approximately
$4,400,000 in connection with this transaction.





The LLC
assumed non-recourse debt as part of the Leasing Portfolio acquisition. The
non-recourse debt accrued interest at rates ranging from 4.75% to 8.05% per year
and matured at various dates through January 2012. A significant portion of the
Leasing Portfolio was financed with non-recourse debt. The rental payments
received from the lessees generally matched the repayment terms of the related
non-recourse debt and the leased equipment was generally pledged as collateral
for the non-recourse debt.





On May
19, 2008, the LLC sold substantially all of the remaining net assets in the
Leasing Portfolio (the “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 $11,684,000, bringing the net cash purchase price to
approximately $7,316,000.  The LLC recognized a book loss of
approximately $17,476,000, 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 $11,922,000 on the sale of the Remaining Net Assets during the
year ended December 31, 2008.




9
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)
 
 (4)
              Net
      Investment in Finance Leases


Net
investment in finance leases consisted of the following:





March
      31,2009
                
                
                December
      31,(unaudited)
                
                
                2008Minimum
      rents receivable
                
                $
                31,641,008
                
                
                $
                33,350,205Estimated
      residual values
                
                
                3,070,295
                
                
                
                3,070,295Initial
      direct costs, net
                
                
                514,899
                
                
                
                571,064Unearned
      income
                
                
                (4,791,982
                )
                
                
                (5,507,131
                )Net
      investment in finance leases
                
                
                30,434,220
                
                
                
                31,484,433Less:
      Current portion of net investment in finance leases
                
                
                8,606,916
                
                
                
                7,576,361Net
      investment in finance leases, less current portion
                
                $
                21,827,304
                
                
                $
                23,908,072





Telecommunications
Equipment





On
September 23, 2008, the LLC, through its wholly-owned subsidiary ICON Global
Crossing III, LLC (“ICON Global Crossing III”), acquired additional
telecommunications equipment for a purchase price of approximately
$3,991,000.  The equipment is subject to a 36-month lease with Global
Crossing Telecommunications, Inc. (“Global Crossing”), which expires on
September 30, 2010.  The LLC paid acquisition fees to the Manager of
approximately $120,000 in connection with this transaction.




(5)
              Leased
      Equipment at Cost


Leased
equipment at cost consisted of the following:





March
      31,2009
                
                
                December
      31,(unaudited)
                
                
                2008Marine
      vesselsContainer
      vessels
                
                $
                142,500,324
                
                
                $
                142,500,324Handymax
      product tankers
                
                
                115,097,430
                
                
                
                115,097,430Aframax
      product tankers
                
                
                90,798,632
                
                
                
                90,798,632Manufacturing
      equipment
                
                
                55,750,720
                
                
                
                57,199,289Telecommunications
      equipment
                
                
                48,266,213
                
                
                
                48,266,213452,413,319
                
                
                
                453,861,888Less:
      Accumulated depreciation
                
                
                (134,047,727
                )
                
                
                (120,637,537
                )$
                318,365,592
                
                
                $
                333,224,351





Depreciation
expense was $13,697,280 and $20,146,142 for the three months ended March 31,
2009 and 2008, respectively.







10
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)




(5)
                Leased
      Equipment at Cost -
continued


Manufacturing
Equipment





On June
30, 2008, the LLC and ICON Leasing Fund Twelve, LLC (“Fund Twelve”), an entity
also managed by the Manager, formed ICON Pliant, LLC (“ICON Pliant”), which
entered into an agreement with Pliant Corporation (“Pliant”) to acquire
manufacturing equipment for a purchase price of $12,115,000. On July 16, 2008,
ICON Pliant completed the acquisition of and simultaneously leased back the
manufacturing equipment to Pliant. The LLC and Fund Twelve have ownership
interests in ICON Pliant of 55% and 45%, respectively. The LLC paid an
acquisition fee to the Manager of approximately $363,000 in connection with this
transaction. The lease expires on September 30, 2013.





On
February 11, 2009, Pliant commenced a voluntary Chapter 11 proceeding in U.S.
Bankruptcy Court to eliminate all of its high-yield debt. In connection with
this action, Pliant submitted a financial restructuring plan to eliminate its
debt as part of a pre-negotiated package with its high yield creditors. ICON
Pliant’s lease is not currently subject to this proceeding. Pliant has
indicated that it will continue to operate in a business-as-usual manner during
the restructuring process, and to date have made all payments.





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 to Equipment Acquisition Resources, Inc.
(“EAR”) for approximately $6,348,000. The LLC paid an acquisition fee of
approximately $190,000 to the Manager in connection with this transaction. The
base lease term is 60 months and expires on June 30, 2013.





On
September 28, 2007, the LLC completed the acquisitions of and simultaneously
leased back substantially all of the machining and metal working equipment 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
these transactions.  The leases expires on December 31, 2012. On
December 10, 2007, the LLC completed the acquisitions of and simultaneously
leased back substantially all of the machining and metal working equipment 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. The
leases expires on December 31, 2012.





Simultaneously
with the closing of the transactions for W Forge, Scott, Gilco, General and AMI,
ICON Income Fund Ten, LLC (“Fund Ten”), an entity also managed by the Manger,
and Fund Twelve (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 lease (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 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 in proportion to their respective
capital investment. On June 9, 2008, the Participating Funds and IEMC Corp.
(“IEMC”), a subsidiary of the Manager, 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 the LLC. The terms of
the Forbearance Agreement include, among other things, additional collateral
being pledged and the grant of a warrant for the purchase of 300 Shares of
the capital stock of W Forge at an exercise price of $0.01 per share,
exercisable for a period of five years beginning June 9, 2008. On September 5,
2008, the Participating Funds and IEMC entered into a Forbearance Agreement with
MWU, W Forge, Scott, Gilco, General, AMI and four other subsidiaries of MWU to
cure certain non-payment related defaults under its 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 for the purchase
of 180 Shares of the capital stock of MWU at an exercise price of $0.01 per
share, exercisable for a period of five years beginning September 5, 2008. As of
March 31, 2009, the LLC’s proportionate share was 57.3% of the warrants issued
for the capital stock of MWU. At March 31, 2009, the Manager determined the fair
value of each of the W Forge and MWU warrants was $0.




11
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)
  (5)
                  Leased
      Equipment at Cost -
continued


On
January 26, 2009, the LLC sold the manufacturing equipment on lease to Gilco,
which had a net book value of approximately $506,000, for approximately $581,000
and recognized a gain on the sale of approximately $75,000.




On
February 2, 2009, the Participating Funds and IEMC Corp., a subsidiary
of the Manager (“IEMC”), entered into an amended Forbearance agreement
with MWU, W Forge, Scott, Gilco, General, AMI and four other subsidiaries of MWU
with respect to certain lease defaults. In consideration for restructuring W
Forge’s lease payment schedule the LLC received, among other things, a $200,000
arrangement fee payable at the conclusion of the lease term and warrants to
purchase 20% of the outstanding stock of W Forge, at an exercise price of $.01
per share exercisable for a period of five years from the grant date. At March
31, 2009, the Manager determined that the fair value of these warrants was
$0.





On March
30, 2007, the LLC, through its wholly-owned subsidiary, ICON French Equipment I,
LLC (“ICON French Equipment”), entered into a purchase and sale agreement (the
“Agreement”) with Heuliez SA (“HSA”) and Heuliez Investissements SNC (“Heuliez”)
to purchase certain auto parts manufacturing equipment from Heuliez.  In
connection with the Agreement, ICON French Equipment agreed to lease the
equipment back to HSA and Heuliez, respectively, for an initial term of 60
months.  The 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.
The leases expire on March 30, 2012. On October 26, 2007, HSA and Groupe
Henri Heuliez, the guarantor of the leases, filed for “procedure de sauvegarde,”
a procedure only available to a solvent company seeking to reorganize its
business affairs under French law.  HSA and Heuliez paid all amounts due
under the lease through January 1, 2008.  As of February 1, 2008,
ICON French Equipment entered into an agreement with the administrator of
the “procedure de sauvegarde” to accept reduced payments from HSA
and  Heuliez for the period beginning February 1, 2008 and ending June
30, 2008. On August 13, 2008, the administrator of the “procedure
de sauvegarde” confirmed a continuation plan for HSA, Heuliez and Groupe
Henri Heuliez. The terms of such plan include HSA and Heuliez making reduced
payments to ICON French Equipment until January 31, 2009.  Beginning
February 1, 2009, full payments under the lease resumed.  In addition,
the leases were extended for an additional year. During the one year extension,
HSA and Heuliez will make monthly payments to repay the shortfall resulting from
the reduced payments that ICON French Equipment received between February 1,
2008 and January 31, 2009.  The lease remains in full force and
effect.




12
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)
  (6)
                  Investments
      in Joint Ventures


ICON
EAR, LLC





On
December 11, 2007, the LLC and Fund Twelve formed ICON EAR, LLC (“ICON EAR”),
with ownership interests of 45% and 55%, respectively. On December 28, 2007,
ICON EAR completed the acquisition and simultaneously leased back semiconductor
manufacturing equipment from EAR for a purchase price of $6,935,000, of which
the LLC’s share was approximately $3,121,000. During June 2008, the LLC and Fund
Twelve made additional contributions to ICON EAR, which were used to complete
another acquisition from EAR and simultaneously leased back additional
semiconductor manufacturing equipment to EAR for a total purchase price of
approximately $8,795,000, 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 lease term for both
acquisitions commenced on July 1, 2008 and expires on June 30, 2013. The LLC
paid acquisition fees to the Manager of approximately $212,000 in connection
with these transactions.





ICON
Northern Leasing, LLC





On
November 25, 2008, ICON Northern Leasing, LLC ("ICON Northern Leasing"), a joint
venture among the LLC, Fund Ten and Fund Twelve, purchased four promissory notes
(the “Notes”) and received an assignment of the underlying Master Loan and
Security Agreement (the "MLSA"), dated July 28, 2006. The LLC, Fund Ten and Fund
Twelve have ownership interests of 35%, 12.25%, and 52.75%, respectively. The
aggregate purchase price for the Notes was approximately $31,573,000, net of a
discount of approximately $5,165,000. The Notes are secured by an underlying
pool of leases for credit card machines and
Northern Leasing Systems, Inc., the originator and servicer of the Notes,
provided a limited guaranty of the MLSA for payment deficiencies up to
approximately $5,748,000. The Notes accrue interest at rates ranging from
7.97% to 8.40% per year and require monthly payments ranging from approximately
$183,000 to $422,000.




The Notes
mature between October 15, 2010 and August 14, 2011 and require balloon payments
at the end of each note ranging from approximately $594,000 to $1,255,000. The
LLC’s share of the purchase price of the Notes was approximately $11,051,000 and
its share of the acquisition fee paid to the Manager was approximately $332,000
in connection with this transaction.


(7)
                  Revolving
      Line of Credit,
Recourse


The LLC
and certain of its affiliates (entities sponsored and organized by the Manager),
ICON Income Fund Eight B, L.P. (“Fund Eight B”), ICON Income Fund Nine, LLC,
Fund Ten and Fund Twelve (collectively, the “Borrowers”), are parties to a
Commercial Loan Agreement, as amended (the “Loan Agreement”), with California
Bank & Trust (“CB&T”). The Loan Agreement provides for a revolving line
of credit of up to $30,000,000 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. At March 31, 2009, no amounts were accrued related to the LLC’s joint
and several obligations 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 expires on April 30, 2010 and the Borrowers may request a one year
extension to the revolving line of credit within 390 days of the expiration
date, but CB&T has no obligation to extend. The interest rate for general
advances under the Facility is CB&T’s prime rate and the interest rate on up
to five separate advances that are permitted to be made under the Facility is
the rate at which U.S. dollar deposits can be acquired by CB&T in the London
Interbank Eurocurrency Market plus 2.5% per year. The interest rate at March 31,
2009 was 3.25%. In addition, the Borrowers are obligated to pay a quarterly
commitment fee of 0.25% on unused commitments under the Facility.








13
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)




(7)
                  Revolving
      Line of Credit, Recourse -
  continued





Aggregate
borrowings by all Borrowers under the Facility amounted to $6,785,000 at March
31, 2009. The balances of $1,185,000 and $5,600,000 were borrowed by Fund Eight
B and the LLC, respectively. , The borrowing of $5,600,000 by the LLC
includes a borrowing of $600,000 during the three months ended March 31, 2009.
Subsequent to March 31, 2009, Fund Eight B repaid $100,000, which
reduced Fund Eight B's outstanding loan balance to
$1,085,000.





Pursuant
to the Loan Agreement, the LLC is required to comply with certain covenants. At
March 31, 2009, the LLC was in compliance with all covenants.


(8)
                  Foreign
      Income Taxes


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 three months ended March 31, 2009,
the provision for income taxes was comprised of $248,062 in current taxes
and $140,054 in deferred taxes. The LLC’s Canadian subsidiaries, under the
laws of Canada, are subject to income tax examination from 2006 through 2008
periods.


(9)
                  Transactions
      with Related
Parties


In
accordance with the terms of the LLC Agreement, the LLC pays or paid the Manager
(i) management fees ranging from 1% to 7% based on a percentage of the rentals
and other contractual payments recognized either directly by the LLC or through
its joint ventures, and (ii) acquisition fees, through the end of the operating
period, of 3% of the financing amount of the LLC’s
investments.  In addition, the Manager is reimbursed for
administrative expenses incurred in connection with the LLC’s
operations.  The Manager had assigned its rights and obligations to
provide the LLC with administrative services and collect reimbursement for those
services relating to the Leasing Portfolio to the Manager’s Canadian affiliate,
ICON Funding ULC, pursuant to a management agreement between the Manager and
ICON Funding ULC.





The
Manager performs certain services relating to the management of the LLC’s
equipment leasing and other financing activities.  Such services
include, but are not limited to, 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 ensure 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.








14
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)




(9)
                    Transactions
      with Related Parties -
  continued


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 $83,463
for the three months ended March 31, 2009. The Manager’s interest in the
net income (loss) attributable to the LLC for the three months ended March 31,
2009 and 2008 was $25,337 and $(3,686), respectively.





Fees and
other expenses paid or accrued by the LLC to the Manager or its affiliates were
as follows:





Three
      Months Ended March 31,Entity
                          
                          Capacity
                          
                          Description
                          
                          2009
                          
                          
                          2008ICON
      Capital Corp.
                          
                          Manager
                          
                          Acquisition
      fees (1)
                          
                          $
                          -
                          
                          
                          $
                          286,951ICON
      Capital Corp.
                          
                          Manager
                          
                          Management
      fees (2)
                          
                          
                          977,930
                          
                          
                          
                          1,811,388ICON
      Capital Corp. and affiliate
                          
                          Manager
                          
                          Administrative
      fees (2)
                          
                          
                          549,204
                          
                          
                          
                          1,568,510Total
      fees paid to the Manager
                          
                          
                          
                          
                          
                          $
                          1,527,134
                          
                          
                          $
                          3,666,849(1) Capitalized
      and amortized to operations over the estimated service period in
      accordance with the LLC's accounting policies.(2) Charged
      directly to operations.




At March
31, 2009, the LLC had a payable of $415,940 due to the Manager and its
affiliates that consisted primarily of an accrual due to the Manager for
administrative expense reimbursements.


(10)
                    Derivative
      Financial
Instruments


The LLC
may enter into derivative transactions for purposes of hedging specific
financial exposures, including movements in foreign currency exchange rates and
changes in interest rates of its non-recourse long-term debt. The LLC enters
into these instruments only for hedging underlying exposures. The LLC does not
hold or issue derivative financial instruments for purposes other than hedging,
except for warrants, which are not hedges.  Certain derivatives may
not meet the established criteria to be designated as qualifying accounting
hedges, even though the LLC believes that these are effective economic
hedges.





The LLC
accounts for derivative financial instruments in accordance with SFAS No. 133,
which established accounting and reporting standards for derivative financial
instruments and SFAS No. 161, which the LLC adopted on January 1,
2009.  SFAS No. 133 requires the LLC to recognize all derivatives as
either assets or liabilities in the consolidated balance sheets and measure
those instruments at fair value. The LLC recognizes the fair value of all
derivatives as either assets or liabilities in the consolidated balance sheets
and changes in the fair value of such instruments are recognized immediately in
earnings unless certain accounting criteria established by SFAS No. 133 are met.
These criteria demonstrate that the derivative is expected to be highly
effective at offsetting changes in the fair value or expected cash flows of the
underlying exposure at both the inception of the hedging relationship and on an
ongoing basis and include an evaluation of the counterparty risk and the impact,
if any, on the effectiveness of the derivative. If these criteria are met, which
the LLC must document and assess at inception and on an ongoing basis, the LLC
recognizes the changes in fair value of such instruments in accumulated other
comprehensive income (loss) (‘AOCI”), a component of equity on the consolidated
balance sheets. Changes in the fair value of the ineffective portion of all
derivatives are recognized immediately in earnings.






15
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)
  (10)
                      Derivative
      Financial Instruments -
  continued





Interest
Rate Risk





The LLC’s
objectives in using interest rate derivatives are to add stability to interest
expense and to manage its exposure to interest rate movements. The LLC’s hedging
strategy to accomplish this objective is to match the projected future business
cash flows with the underlying debt service. Interest rate swaps designated as
cash flow hedges involve the receipt of floating-rate interest payments from a
counterparty in exchange for the LLC making fixed interest rate payments over
the life of the agreements without exchange of the underlying notional
amount.





As of
March 31, 2009, the LLC had eight floating-to-fixed interest rate swaps relating
to ICON Doubtless, LLC, ICON Faithful, LLC, ICON Spotless, LLC, Isomar Marine
Company Limited, ICON Senang, LLC, ICON Sebarok, LLC, ICON European Container,
LLC and ICON European Container II, LLC designated as cash flow hedges with
aggregate notional amounts of approximately $136,064,000. These interest rate
swaps have maturity dates from November 19, 2010 to April 11, 2012.





For these
derivatives, the LLC reports the gain or loss from the effective portion of
changes in the fair value of derivatives designated and qualifying as cash flow
hedges in AOCI and is subsequently reclassified into earnings in the period that
the hedged forecasted transaction affects earnings and within the same income
statement line item as the impact of the hedged transaction. During the three
months ended March 31, 2009, the LLC recorded no hedge ineffectiveness in
earnings. At March 31, 2009, the total unrealized loss recorded to AOCI
related to the change in fair value of these interest rate swaps was
approximately $5,368,000.





During
the twelve months ended March 31, 2010, the LLC estimates that an additional
$4,189,342 will be transferred from AOCI to interest expense.





Non-designated
Derivatives





Warrants
are the only derivatives that the LLC holds for purposes other than
hedging.  All changes in the fair value of the warrants are recorded
directly in earnings. As of March 31, 2009, the LLC had the following
outstanding derivatives that were not designated as hedges in qualifying hedging
relationships:




Product
                        
                        Number
      of Instruments
                        
                        Notional
      AmountWarrants
                        
                        3
                        
                        $55,798





16
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)
  (10)
                        Derivative
      Financial Instruments -
  continued


The table
below presents the fair value of the LLC’s derivative financial instruments as
well as the classification within the LLC’s consolidated balance sheet as
follows as of March 31, 2009:





Asset
      Derivatives
                            
                            Liability
      DerivativesBalance
      Sheet Location
                            
                            Fair
      Value
                            
                            Balance
      Sheet Location
                            
                            Fair
      ValueDerivatives
      designated as hedging
                              instruments
      under SFAS 133:Interest
      rate swaps
                            
                            
                            $
                            -
                            
                            Interest
      rate swap contracts
                            
                            $
                            8,337,151Derivatives
      not designated as hedging
                              instruments
      under SFAS 133:Warrants
                            Other
      non-current assets
                            
                            $
                            55,798
                            
                            
                            
                            $
                            -








The table
below presents the effect of the LLC’s derivative financial instruments under
SFAS No. 133 designated ascash
flow hedging instruments on the consolidated statement of operations for
the three months ended March 31, 2009:





Derivatives
                
                Amount
      of Gain (Loss) Recognized
                  in
      AOCI on Derivative (Effective Portion)
                
                Location
      of Gain (Loss) Reclassified
                  from
      AOCI into Income (Effective Portion)
                
                Gain
      (Loss) Reclassified from
                  AOCI
      into Income (Effective Portion)
                
                Location
      of Gain (Loss) Recognized in Income
                  on
      Derivative (Ineffective Portion and Amounts Excluded from Effectiveness
      Testing)
                
                Gain
      (Loss) Recognized in Income
                  on
      Derivative (Ineffective Portion and Amounts Excluded from Effectiveness
      Testing)Interest
      Rate Swaps
                
                
                76,655
                
                Interest
      Expense
                
                
                (988,031
                )
                Gain
      (Loss) on Financial Instruments
                
                
                -Total
                
                $
                76,655
                
                
                
                $
                (988,031
                )
                
                
                $
                -




The table
below presents the effect of the LLC’s derivative financial instruments not
designated as hedging instruments under SFAS No. 133on the
consolidated statement of operations for the three months ended March 31,
2009:





Derivatives
                          
                          Location
      of Derivative Gain (Loss)
                          
                          Gain
      (Loss) RecognizedWarrants
                          
                          Gain
      (Loss) on Financial Instruments
                          
                          $
                          (5,782
                          )Total
                          
                          
                          
                          $
                          (5,782
                          )


17
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)
  (10)
                          Derivative
      Financial Instruments -
  continued


Derivative
Risks





The LLC
manages exposure to possible defaults on derivative financial instruments by
monitoring the concentration of risk that the LLC has with any individual bank
and through the use of minimum credit quality standards for all counterparties.
The LLC does not require collateral or other security in relation to derivative
financial instruments. Since it is the LLC’s policy to only enter into
derivative contracts with banks of internationally acknowledged standing, the
LLC considers the counterparty risk to be remote.





As of
March 31, 2009, the fair value of the derivatives in a liability position
related to these agreements was $8,569,381. In the event that the LLC breaches
any of these provisions it would be required to settle its obligations under the
agreements at their termination value of $8,569,381.




(11)
                      Accumulated
      Other Comprehensive
Loss
  Accumulated
other comprehensive loss at March 31, 2009 includes unrealized losses on
derivative financial instruments and currency translation adjustments of
$5,368,127 and $604,172, respectively, at March 31, 2009 and accumulated
(loss) income on derivative financial instruments and currency translation
adjustments of $(6,432,813) and $157,534, respectively, at December 31,
2008.




(12)
                      Fair
      Value of Financial
Instruments
  SFAS
No. 157





Effective
January 1, 2008, the LLC adopted SFAS No. 157. 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 can 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 measurement. The Manager’s
assessment, on the LLC’s behalf, of the significance of a particular input to
the fair value measurement requires judgment, and may affect the valuation of
the assets and liabilities being measured and their placement within the fair
value hierarchy.






18
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)


(12)
                        Fair
      Value of Financial Instruments -
    continued


The
following table summarizes the valuation of the LLC’s material financial assets
and liabilities measured at fair value on a recurring basis as of March 31,
2009:





Level
      1 (1)
                    
                    
                    Level
      2 (2)
                    
                    
                    Level
      3 (3)
                    
                    
                    TotalAssets:Warrants
                    
                    $
                    -
                    
                    
                    $
                    55,798
                    
                    
                    $
                    -
                    
                    
                    $
                    55,798Liabilities:Derivative
      Liabilities
                    
                    $
                    -
                    
                    
                    $
                    8,337,151
                    
                    
                    $
                    -
                    
                    
                    $
                    8,337,151(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 assets and the derivative liabilities were
recorded in interest rate swap contracts within the consolidated balance
sheet.




(13)
                          Commitments
      and Contingencies and Off-Balance Sheet
      Transactions


At the
time the LLC acquires or divests of its interest in an equipment lease or
other financing transaction, the LLC may, under very limited circumstances,
agree to indemnify the seller or buyer for specific contingent
liabilities.  The Manager believes that any liability of the LLC that
may arise as a result of any such indemnification obligations will not have
a material adverse effect on the consolidated financial condition of the LLC
taken as a whole.




Each of
the Participating Funds has 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 in proportion to their respective
capital investment. The term of each credit support agreement matches that of
the lease agreement.  No amounts were accrued at March 31, 2009 and
the Manager cannot reasonably estimate at this time the maximum potential
amounts that may become payable under the credit support agreement, if
any.








19
 Table of Contents
 ICON
Leasing Fund Eleven, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 March 31,
2009
 (unaudited)




(14)
                          Subsequent
      Events


On April
8, 2009, the LLC completed a partial sale of the manufacturing equipment owned
by ICON EAR II, which had a net book value of approximately $883,000, for
approximately $967,000 and recognized a gain on the sale of approximately
$84,000.





On April
15, 2009, Groupe Henri Heuliez, HSA and Heuliez filed for “Redressment
Judiciare”, a proceeding similar to Chapter 11 reorganization under the U.S.
Bankruptcy Code. At this time it is not possible to determine the effect of the
filing on ICON French Equipment’s ability to collect the remaining rental
payments due under the leases.





On April
28, 2009, the LLC and W Forge entered into an amended lease agreement that will
allow W Forge to make reduced rental payments between December 1, 2008 and
December 31, 2009. From January 1, 2010 until December 31, 2012, W Forge will
make higher monthly rental payments to repay the shortfall resulting from the
reduced payments. The lease remains in full force and effect.







20
 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
consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q and the audited consolidated financial
statements and related notes included in our Annual Report on Form 10-K for the
year ended December 31, 2008. This discussion should also be read in conjunction
with the disclosure below regarding “Forward-Looking Statements” and the “Risk
Factors” set forth in Item 1A herein.





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 (“Fund Eleven”).





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,” “expect,” “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 in which the capital our members
invested is pooled together to make investments, pay fees and establish a small
reserve. We primarily engage in the business of purchasing equipment and leasing
it to third parties, providing equipment and other financing and, to a lesser
degree, acquiring ownership rights to items of leased equipment at lease
expiration. Some of our equipment leases are acquired for cash and are
expected to provide current cash flow, which we refer to as “income”
leases. For the other equipment leases, we finance the majority of the purchase
price. We refer to these leases as “growth” leases. These growth leases
generate little or no current cash flow because substantially all of the
rental payments received from the lessee are used to service the indebtedness
associated with acquiring or financing the lease. We anticipate that the
future value of the leased equipment will exceed our cash portion of the
purchase price.





Our
manager is ICON Capital Corp. (our “Manager”), a Delaware Corporation. Our
Manager manages and controls our business affairs, including, but not limited
to, our equipment leases and other financing transactions, under the terms
of our amended and restated limited liability company agreement (“LLC
Agreement”).




We
are currently in our operating period. During our operating period, additional
investments will continue to be made with the cash generated from our initial
investments and our additional investments to the extent that the cash is not
needed for expenses, reserves and distributions to members.  The investment
in additional equipment leases and other financing transactions in this manner
are called “reinvestment”.  We anticipate investing in equipment leases,
other financing transactions, and residual ownership rights in leased equipment
from time to time until April 2012, unless that date is extended, at our
Manager’s sole discretion, for up to an additional three years.







21
 Table of Contents





Recent
Significant Transactions





We
entered into the following recent significant transactions during the three
months ended March 31, 2009:





·
            On
      January 26, 2009, we sold the manufacturing equipment on lease to MW
      Gilco, LLC (“Gilco”), which had a net book value of approximately
      $506,000, for approximately $581,000 and recognized a gain on the sale of
      approximately $75,000.




·
            On
      February 2, 2009, ICON Income Fund Ten, LLC (“Fund Ten”) and ICON Leasing
      Fund Twelve, LLC (“Fund Twelve”), funds also managed by our Manager
      (together with us, the “Participating Funds”) and IEMC Corp., a subsidiary
      of our Manager, entered into an amended Forbearance agreement with MW
      Universal, Inc. (“MWU”) , W Forge Holdings Inc. (“W Forge”), MW Scott,
      Inc., Gilco, MW General, Inc., AMI Manchester, LLC and four other
      subsidiaries of MWU with respect to certain lease defaults. In
      consideration for restructuring W Forge’s lease payment schedule we
      received, among other things, a $200,000 arrangement fee payable at the
      conclusion of the lease term and warrants to purchase 20% of the
      outstanding stock of W Forge, at an exercise price of $.01 per share
      exercisable for a period of five years from the grant
  date.





·
            On
      February 11, 2009, Pliant Corporation (“Pliant”) commenced a voluntary
      Chapter 11 proceeding in U.S. Bankruptcy Court to eliminate all of its
      high yield debt.  In connection with this action, Pliant
      submitted a financial restructuring plan to eliminate its debt as
      part of a pre-negotiated package with its high yield debt
      creditors.  ICON Pliant, LLC’s (“ICON Pliant”) lease is not
      currently subject to this proceeding, which, if finalized as
      planned, we anticipate will benefit us. Pliant has indicated
      that it will continue to operate in a business-as-usual manner during the
      restructuring process, and in fact is making all
  payments.





Other
Significant Transactions





·
            On
      March 7, 2006, we acquired substantially the entire equipment leasing
      portfolio (the “Leasing Portfolio”) of Clearlink Capital Corporation,
      which was 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 $11,684,000, bringing
      the net cash purchase price to approximately $7,316,000.  We
      recognized a book loss of approximately $17,476,000, 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 $11,922,000 from the sale of the Remaining Net
      Assets during the year ended December 31,
  2008.




·
              On
      November 25, 2008, ICON Northern Leasing, LLC ("ICON Northern Leasing"), a
      joint venture among us, Fund Ten and Fund Twelve, purchased four
      promissory notes (the “Notes”) and received an assignment of the
      underlying Master Loan and Security Agreement (the "MLSA"), dated July 28,
      2006. We, Fund Ten and Fund Twelve have ownership interests of 35%,
      12.25%, and 52.75%, respectively. The aggregate purchase price for the
      Notes was approximately $31,573,000, net of a discount of approximately
      $5,165,000. The Notes are secured by an underlying pool of leases for
      credit card machines and Northern Leasing Systems, Inc., the originator
      and servicer of the Notes, provided a limited guaranty of the MLSA for
      payment deficiencies up to approximately $5,748,000. The Notes accrue
      interest at rates ranging from 7.97% to 8.40% per year and require monthly
      payments ranging from approximately $183,000 to $422,000. The
      Notes mature between October 15, 2010 and August 14, 2011 and require
      balloon payments at the end of each note ranging from approximately
      $594,000 to $1,255,000. Our share of the purchase price of the Notes was
      approximately $11,051,000 and our share of the acquisition fee paid
      to our Manager was approximately $332,000 in connection with this
      transaction.


Recent
Accounting Pronouncements





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, and
enhances fair value measurement disclosure. In February 2008, the FASB
issued FASB Staff Position (“FSP”) No. 157-2, “Effective Date of FASB
Statement No. 157” (“FSP 157-2”). FSP 157-2 delayed the effective date of
SFAS No. 157 for all non-financial assets and non-financial liabilities,
except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), for fiscal years
beginning after November 15, 2008. The measurement and disclosure requirements
related to financial assets and financial liabilities were adopted by us on
January 1, 2008. We adopted FSP 157-2 on January 1, 2009. The adoption of SFAS
No. 157 and FSP 157-2 for financial and non-financial assets and financial and
non-financial liabilities did not have a significant impact 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
were required to provide such disclosures beginning with the interim period
ended March 31, 2009.


In April
2009, the FASB issued FSP No. 157-4, “Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability have Significantly Decreased and
Identifying Transactions that are Not Orderly” (“FSP 157-4”). FSP 157-4 provides
additional guidance for estimating fair value in accordance with SFAS No. 157
when the volume and level of activity for the asset or liability have
significantly decreased. Additionally, FSP 157-4 provides guidance on
identifying circumstances that indicate a transaction is not orderly. The FASB
expanded the scope of FSP 157-4 to all assets and liabilities measured at fair
value. FSP 157-4 is effective for interim and annual reporting ending after June
15, 2009, and shall be applied prospectively. Our Manager is currently
evaluating the impact of FSP 157-4 on our consolidated financial
statements.





In
April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board
(“APB”) 28-1, “Interim Disclosure about Fair Value of Financial Instruments”
(“FSP 107-1/APB 28-1”). FSP 107-1/APB 28-1 requires interim disclosures
regarding the fair values of financial instruments that are within the scope of
FAS 107, “Disclosures about the Fair Value of Financial Instruments.”
Additionally, FSP 107-1/APB 28-1 requires disclosure of the methods and
significant assumptions used to estimate the fair value of financial instruments
on an interim basis as well as changes of the methods and
significant assumptions from prior periods. FSP 107-1/APB 28-1 does not
change the accounting treatment for these financial instruments and is effective
for interim and annual reporting ending after June 15, 2009.






22
 Table of Contents








Results
of Operations for the Three Months Ended March 31, 2009 (the “2009 Quarter”) and
2008 (the “2008 Quarter”)





Revenue
for the 2009 Quarter and 2008 Quarter are summarized as follows:





Three Months Ended March
31,2009
                
                
                2008
                
                
                ChangeRental
      income
                
                $
                19,757,260
                
                
                $
                27,506,275
                
                
                $
                (7,749,015
                )Finance
      income
                
                
                715,149
                
                
                
                1,911,039
                
                
                
                (1,195,890
                )Income
      from investments in joint ventures
                
                
                678,032
                
                
                
                78,465
                
                
                
                599,567Net
      gain on sales of  new equipment
                
                
                -
                
                
                
                177,727
                
                
                
                (177,727
                )Net
      gain (loss) on sales of  leased equipment
                
                
                75,185
                
                
                
                (227,049
                )
                
                
                302,234Interest
      and other income
                
                
                799,645
                
                
                
                758,246
                
                
                
                41,399Total
      revenue
                
                $
                22,025,271
                
                
                $
                30,204,703
                
                
                $
                (8,179,432
                )





Total
revenue for the 2009 Quarter decreased $8,179,432, or 27.1%, as compared to the
2008 Quarter. The decrease in total revenue was primarily due to the sale of the
Remaining Net Assets. The decrease in rental income was the result of (i) the
sale of the Remaining Net Assets, (ii) a twelve-month extension of the lease for
manufacturing equipment owned by ICON French Equipment I, LLC (“ICON French
Equipment”) and (iii) the amendment of the lease with W Forge that accounted for
a cumulative decrease of approximately $9,333,000. These decreases were
partially offset by an increase in rental income of approximately $1,584,000
related to (i) the manufacturing equipment owned by ICON EAR II, LLC (“ICON EAR
II”), which was acquired in April 2008, (ii) the telecommunications equipment
owned by ICON Global Crossing III, LLC (“ICON Global Crossing III”), which was
acquired in June 2008 and (iii) the manufacturing equipment owned by ICON
Pliant, which was acquired in June 2008. The decrease in finance income was
largely attributable to the sale of the Remaining Net Assets, which accounted
for approximately $1,199,000 of the decrease in finance income. The decrease was
partially offset by an increase in finance income of approximately $149,000
related to the telecommunications equipment owned by ICON Global Crossing III,
which was acquired in September 2008. The decrease in total revenue was
partially offset by an increase in income from investments in joint ventures and
a net gain on the sale of leased equipment during the 2009 Quarter as compared
with the net loss recognized on the sale of new and leased equipment recognized
during the 2008 Quarter. The increase in income from investments in joint
ventures was primarily due to approximately $573,000 of income generated
from our investments in ICON Northern Leasing and ICON EAR, LLC (“ICON EAR”).
The net gain recognized during the 2009 Quarter was a result of the sale of our
lease with Gilco for approximately $75,000. The net loss on the sale of new and
leased equipment recognized during the 2008 Quarter resulted from the operations
of the Leasing Portfolio.







23
 Table of Contents





Expenses
for the 2009 Quarter and 2008 Quarter are summarized as follows:





Three Months Ended March
31,2009
                
                
                2008
                
                
                ChangeManagement
      fees - Manager
                
                $
                977,930
                
                
                $
                1,811,388
                
                
                $
                (833,458
                )Administrative
      expense reimbursements - Manager
                
                
                549,204
                
                
                
                1,568,510
                
                
                
                (1,019,306
                )General
      and administrative
                
                
                577,239
                
                
                
                801,561
                
                
                
                (224,322
                )Interest
                
                
                2,628,428
                
                
                
                4,016,638
                
                
                
                (1,388,210
                )Depreciation
      and amortization
                
                
                13,803,438
                
                
                
                20,405,123
                
                
                
                (6,601,685
                )Loss
      on financial instruments
                
                
                5,782
                
                
                
                1,493,972
                
                
                
                (1,488,190
                )Total
      expenses
                
                $
                18,542,021
                
                
                $
                30,097,192
                
                
                $
                (11,555,171
                )





Total
expenses for the 2009 Quarter decreased $11,555,171, or 38.4%, as compared to
the 2008 Quarter. The decrease was primarily due to the sale of the Remaining
Net Assets, which resulted in an overall reduction in expenses and a decrease in
the loss on financial instruments recognized in the 2009 Quarter. The decrease
in depreciation and amortization expense was largely attributable to the sale of
the Remaining Net Assets, which resulted in a decrease of approximately
$7,464,000 in depreciation and amortization expense. This decrease was
partially offset by an increase in depreciation and amortization expense of
approximately $1,006,000 related to (i) the manufacturing equipment owned by
ICON EAR II, which was acquired in April 2008, (ii) the telecommunications
equipment owned by ICON Global Crossing III, which was acquired in June 2008,
and (iii) the manufacturing equipment owned by ICON Pliant, which was acquired
in June 2008. The decrease in interest expense was due to the continued
repayment of our non-recourse debt as well as the transfer of all of the
non-recourse debt outstanding related to and in connection with the sale of the
Remaining Net Assets.





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 2009
Quarter, the provision for income taxes was comprised of $248,062 in current
taxes and $140,054 in deferred taxes.





Noncontrolling
Interests





Noncontrolling
interests for the 2009 Quarter increased $113,045 as compared to the 2008
Quarter. The increase in the net income attributable to noncontrolling interests
was primarily due to our joint venture with Fund Twelve in ICON Pliant that
commenced during June 2008.





Net
Income Attributable to Fund Eleven





As a
result of the foregoing factors, the net income (loss) attributable to Fund
Eleven for the 2009 Quarter and 2008 Quarter was $2,533,675 and $(368,574),
respectively. The net income (loss) attributable to Fund Eleven per weighted
average additional share of limited liability company interests for the 2009
Quarter and 2008 Quarter was $6.91 and $(1.00), respectively.






24
 Table of Contents





Financial
Condition





This
section discusses the major balance sheet variances at March 31, 2009,
compared to December 31, 2008.





Total
Assets





Total
assets decreased $17,402,729, from $408,178,159 at December 31, 2008 to
$390,775,430 at March 31, 2009.  The decrease was primarily due
to (i) approximately $13,697,000 of continued depreciation of our leased
equipment, (ii) approximately $8,263,000 of cash distributions to our
additional members and (iii) approximately $8,130,000 of cash repayments of
non-recourse debt. These decreases were partially offset by an increase of
approximately $15,583,000 for the collection of rental payments from our
operating leases.





Current
Assets





Current
assets increased $1,246,426, from $18,466,070 at December 31, 2008 to
$19,712,496 at March 31, 2009.  The increase was primarily due to (i)
accrued interest receivable on our mortgage note receivable, (ii) unbilled
receivables classified in other current assets relating to the amendment of our
lease with W Forge and (iii) the collection of rental payments from our
operating leases. These increases were partially offset by cash paid for (i)
distributions made to our additional members, (ii) cash repayment of
non-recourse debt and (iii) interest accrued on our non-recourse
debt.





Total
Liabilities





Total
liabilities decreased $10,797,135, from $183,531,732 at December 31, 2008
to $172,734,597 at March 31, 2009. The decrease was primarily due to
approximately $10,298,000 of scheduled repayments of our non-recourse
debt.





Current
Liabilities





Current
liabilities decreased $313,679, from $63,077,445 at December 31, 2008 to
$62,763,766 at March 31, 2009. The decrease was primarily due to a decline of
approximately $921,000 in the value of our interest rate swap contracts,
partially offset by $600,000 in loan proceeds from our revolving line of
credit.





Equity





Equity
decreased $6,605,594, from $224,646,427 at December 31, 2008 to
$218,040,833 at March 31, 2009. The decrease was primarily due to distributions
to our members and the noncontrolling interests, partially offset by net income
recorded during the 2009 Quarter.








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 Table of Contents







Liquidity and Capital
Resources





Summary





At March
31, 2009 and December 31, 2008, we had cash and cash equivalents of $6,388,162
and $7,670,929, respectively. During our operating period, our main source of
cash has been from and will continue to be from operating activities. Our main
use of cash during our operating period has been in and will continue to be in
investing and financing activities.





Cash and
cash equivalents include cash in banks and highly liquid investments with
original maturity dates of three months or less. Our cash and cash equivalents
are held principally at two financial institutions and at times may exceed
insured limits. We have placed these funds in high quality institutions in order
to minimize risk relating to exceeding insured limits.





Pursuant
to the terms of our offering, we have established a cash reserve in the amount
of 0.5% of the gross offering proceeds. As of March 31, 2009, the cash reserve
is $1,825,993.




Cash
Flows




The
following table sets forth summary cash flow data:




Three Months Ended March
31,2009
                
                
                2008Net
      cash provided by (used in)Operating
      activities
                
                $
                14,329,161
                
                
                $
                17,126,720Investing
      activities
                
                
                1,961,757
                
                
                
                (5,552,498
                )Financing
      activities
                
                
                (17,533,708
                )
                
                
                (24,266,346
                )Effects
      of exchange rates on cash and cash equivalents
                
                
                (39,977
                )
                
                
                (663,882
                )Net
      decrease in cash and cash equivalents
                
                $
                (1,282,767
                )
                
                $
                (13,356,006
                )







Note:
See the Consolidated Statements of Cash Flows included in Item 1, “Consolidated
Financial Statements” of this Quarterly Report on Form 10-Q for
additional information.




Operating
Activities





Sources
of Cash





Sources
of cash from operating activities decreased $2,797,559 from $17,126,720 in the
2008 Quarter to $14,329,161 in the 2009 Quarter.  The decrease was
primarily due to the sale of the Remaining Net Assets (primarily a reduction in
the collection of rental and finance lease payments). This decrease was
partially offset by an increase in the collection of rental and finance lease
payments. The increased collection of rental and finance lease payments related
to the acquisition of leased equipment by ICON Global Crossing III, ICON EAR II
and ICON Pliant.





Investing
Activities





Sources
of Cash





Sources
of cash from investing activities decreased $3,306,397 from $5,278,173 in the
2008 Quarter to $1,971,776 in the 2009 Quarter. This decrease was primarily due
to a decline in the amount of proceeds we received from sales of equipment,
partially offset by an increase in the distributions we received from our joint
ventures. The decline in the amount of proceeds we received from sales of
equipment resulted from our sale of the Remaining Net Assets in May 2008, which
was our source of sales proceeds from the sale of new and leased equipment. The
increase in distributions we received from joint ventures was due to our
investment in ICON EAR and ICON Northern Leasing.






26
 Table of Contents





Uses
of Cash





Uses of
cash from investing activities decreased $10,820,652 from $10,830,671 in the
2008 Quarter to $10,019 in the 2009 Quarter. The decrease was primarily due to
the sale of the Remaining Net Assets in May 2008, as no new investments in
leased equipment were made during the 2009 Quarter.





Financing
Activities





Sources
of Cash





Sources
of cash from financing activities decreased $3,897,793 from $4,497,793 in the
2008 Quarter to $600,000 in the 2009 Quarter. The decrease was related to a
decrease in proceeds from non-recourse debt related to the sale of the
Remaining Net Assets in May 2008. This reduction was partially offset by loan
proceeds from our revolving line of credit.





Uses of Cash





Uses of
cash from financing activities decreased $10,630,431 from $28,764,139 in the
2008 Quarter to $18,133,708 in the 2009 Quarter. The decrease was primarily due
to a decrease in the amount of our repayment of non-recourse debt obligations
due to the sale of the Remaining Net Assets and the related non-recourse debt
obligations.





Sources
of Liquidity





Cash
generated by our operating activities continues to be our most significant
source of liquidity during our operating period. We believe that cash generated
from the expected results of our operations will be sufficient to finance our
liquidity requirements for the year ended December 31, 2009, including the
repayment of principal and interest on our non-recourse debt obligations,
repayment of our revolving line of credit, distributions to our members, general
and administrative expenses, new investment opportunities, management fees, and
administrative expense reimbursements. We anticipate that our liquidity
requirements for the years ending December 31, 2010 through December 31, 2013
will be financed by the expected results of operations, as well as cash received
from our investments at maturity. In addition, our revolving line of credit has
$23,215,000 available as of March 31, 2009 (see Note 7 to our consolidated
financial statements) for additional working capital needs or new investment
opportunities.





As
discussed above, we anticipate being able to meet our liquidity requirements
into the foreseeable future. However, our ability to generate cash in the future
is subject to general economic, financial, competitive, regulatory and other
factors that affect us and our lessees’ and borrowers’ businesses that are
beyond our control.





Non-Recourse
Long-Term Debt





We had
non-recourse long-term debt obligations at March 31, 2009 of $153,152,048. The
majority of our non-recourse long-term debt obligations consist of notes payable
in which the lender has a security interest in the equipment and an assignment
of the rental payments under the lease, in which case the lender is being paid
directly by the lessee.





Distributions





We, at
our Manager’s discretion, pay monthly distributions to our members and
noncontrolling interests starting with the first month after each member’s
admission and the commencement of our joint venture operations and we expect to
continue to pay such distributions until the end of our operating
period.  We paid distributions to our Manager, additional members and
noncontrolling interests of $83,463, $8,262,827 and $1,596,819, respectively,
for the three months ended March 31, 2009.






27
 Table of Contents




Commitments
and Contingencies and Off-Balance Sheet Transactions





Commitments
and Contingencies





At
March 31, 2009, we had non-recourse debt obligations. The lender has a security
interest in the equipment relating to each non-recourse debt instrument and an
assignment of the rental payments under the lease associated with the equipment.
In such cases, the lender is being paid directly by the lessee. If the lessee
defaults on the lease, the equipment would be returned to the lender in
extinguishment of the non-recourse debt. At March 31, 2009, our outstanding
non-recourse long-term indebtedness was $153,152,048. We had borrowings
outstanding of $5,600,000 under our revolving line of credit at March 31,
2009.





Each of
the Participating Funds has 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 in proportion to their respective
capital investment. The term of each credit support agreement matches that of
the lease agreement. No amounts were accrued at March 31, 2009 and our Manager
cannot reasonably estimate at this time the maximum potential amounts that may
become payable under the credit support agreement, if any.





Off-Balance
Sheet Transactions





None.





Subsequent
Events





On April
8, 2009, we completed a partial sale of the manufacturing equipment owned by
ICON EAR II, which had a net book value of approximately $883,000, for
approximately $967,000 and recognized a gain on the sale of approximately
$84,000.





On April
15, 2009, Groupe Henri Heuliez, Heuliez SA and Heuliez Investissements SNC filed
for “Redressment Judiciare”, a proceeding similar to Chapter 11 reorganization
under the U.S. Bankruptcy Code. At this time it is not possible to determine the
effect of the filing on ICON French Equipment’s ability to collect the remaining
rental payments due under the leases.





On April
28, 2009, we entered into an amended lease agreement with W Forge that will
allow W Forge to make reduced rental payments between December 1, 2008 and
December 31, 2009. From January 1, 2010 until December 31, 2012, W Forge will
make higher monthly rental payments to repay the shortfall resulting from the
reduced payments. The lease remains in full force and effect.






28
 Table of Contents





Item 3. Quantitative and Qualitative Disclosures About Market
Risk





There
have been no significant changes in our market risk sensitive instruments since
the filing of our Annual Report on Form 10-K for the year ended December 31,
2008 .





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
three months ended March 31, 2009, 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 the 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 the
three months ended March 31, 2009 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.






29
 Table of Contents







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.  We are not
aware of any material legal proceedings are currently pending 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,
2008.





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





Our
Manager consented to our repurchase of 82 shares of limited liability company
interests (“Shares”) during the 2009 Quarter. The repurchase amounts are
calculated according to a specified repurchase formula pursuant to the LLC
Agreement.  Repurchased Shares have no voting rights and do not
share in distributions with other members. Our LLC Agreement limits
the number of Shares that can be repurchased in any one year and repurchased
Shares may not be reissued. The following table details our Share
repurchases:





Total
      Number of
                
                
                Price
      PaidShares Repurchased
                
                
                Per ShareJanuary
      1, 2009 through January 31, 2009
                
                
                82
                
                
                $
                739.01February
      1, 2009 through February 28, 2009
                
                
                -
                
                
                $
                -March
      1, 2009 through March 31, 2009
                
                
                -
                
                
                $
                -




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 three months
ended March 31, 2009.




Item 5.  Other Information





Not
applicable.





30
 Table of Contents







Item 6. Exhibits





3.1
                Certificate
      of Formation of Registrant.  Exhibit 3.1 to Amendment No. 1 to
      the Registration Statement on Form S-1 filed with the SEC on February 15,
      2005 (File No. 333-121790), is incorporated herein by
      reference.4.1
                Amended
      and Restated Limited Liability Company Agreement of
      Registrant.  Exhibit A to Amendment No. 1 to the Registration
      Statement on Form S-1 filed with the SEC on June 29, 2006 (File No.
      333-133730), is incorporated herein by reference.4.2
                Amendment
      No. 1 to the Amended and Restated Limited Liability Company Agreement
      (Incorporated by Reference to Exhibit 4.3 to Registrant’s Quarterly Report
      on Form 10-Q for the period ended June 30, 2006, filed with the SEC on
      August 23, 2006).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, 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, dated December 26,
      2006 (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 May 19,
      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.







31
 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





May
14, 2009





/s/Mark
Gatto


Mark
Gatto


Co-Chief
Executive Officer and Co-President


(Co-Principal
Executive Officer)








May 14, 2009





/s/Michael A.
Reisner


Michael
A. Reisner


Co-Chief
Executive Officer and Co-President


(Co-Principal
Executive Officer)








May 14, 2009





/s/Anthony J.
Branca


Anthony
J. Branca


Chief
Financial Officer


(Principal
Accounting and Financial Officer)




32