UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2000

                                       OR

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934

                       (Commission File Number 333-40495)

                               ICG FUNDING, LLC
            (Exact name of registrant as specified in its charter)

                Delaware                           84-1434980
     (State or other jurisdiction      (I.R.S.Employer Identification No.)
            of organization)

                            161 Inverness Drive West
                            Englewood, Colorado 80112
                        (888) 424-1144 or (303) 414-5000
 (Address of principal executive offices and registrant's telephone numbers,
                            including area codes)


      ICG Funding,  LLC has no securities  registered pursuant to Sections 12(b)
or 12(g) of the Act.

      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 __

      All of the issued and outstanding  common  securities of ICG Funding,  LLC
are owned by ICG Communications, Inc.


<PAGE>


                                TABLE OF CONTENTS




PART I ...................................................................... 3
      ITEM 1.   FINANCIAL STATEMENTS ........................................ 3
                Balance Sheets as of December 31, 1999 and September 30, 2000
                 (unaudited)................................................. 3
                Statements of Operations for the Three and Nine Months Ended
                 September 30, 1999 and 2000 (unaudited)..................... 4
                Statement of Member's Equity  (Deficit) for the Nine Months
                 Ended September 30, 2000 (unaudited)........................ 5
                Statements of Cash Flows  for the Nine Months Ended September
                 30, 1999 and 2000 (unaudited)..............................  6
                Notes to Financial Statements (unaudited)...................  7
      ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS.........................  9
      ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.. 15

PART II .................................................................... 16
      ITEM 1.   LEGAL PROCEEDINGS .......................................... 16
      ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS .................. 16
      ITEM 3.   DEFAULTS UPON SENIOR SECURITIES AND USE OF PROCEEDS......... 16
      ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........ 16
      ITEM 5.   OTHER INFORMATION .......................................... 16
      ITEM 6.   EXHIBIT AND REPORT ON FORM 8-K ............................. 16
                Exhibit .................................................... 16
                Report on Form 8-K.......................................... 16




                                       2
<PAGE>



                                ICG FUNDING, LLC

                                 Balance Sheets
             December 31, 1999 and September 30, 2000 (unaudited)

                                                  December 31,     September 30,
                                                      1999              2000
                                                  -------------    -------------
                                                        (in thousands)
Assets

Current assets:
  Dividends receivable (note 4)                    $      927                 -
   Restricted cash                                      8,697             2,223
                                                  -------------    -------------

     Total current assets                               9,624             2,223
                                                  -------------    -------------

Investment in ICG Communications Preferred
  Stock (note 4)                                      124,661                 -
                                                  -------------    -------------

     Total assets                                  $  134,285             2,223
                                                  =============    =============

Liabilities and Member's Equity (Deficit)

Current liability - dividends payable              $    1,116             1,116

Due to ICG Communications                               4,699             4,699
                                                  -------------    -------------

     Total liabilities                                  5,815             5,815
                                                  -------------    -------------

Redeemable preferred securities ($133.4 million
   liquidation value at December 31, 1999 and
   September 30, 2000)                                128,428           128,719

Member's equity (deficit):
   Additional paid-in capital                           3,385             3,385
   Accumulated deficit                                 (3,343)         (135,696)
                                                  -------------    -------------
     Total member's equity (deficit)                       42          (132,311)
                                                  -------------    -------------

Bankruptcy proceedings (note 1)

     Total liabilities and member's equity
       (deficit)                                   $  134,285             2,223
                                                  =============    =============

               See accompanying notes to financial statements.



                                       3
<PAGE>



                                ICG FUNDING, LLC

                            Statements of Operations
     Three and Nine Months Ended September 30, 1999 and 2000 (unaudited)

                                     Three months ended        Nine months ended
                                        September 30,             September 30,
                                     --------------------    -------------------
                                       1999         2000       1999      2000
                                     --------- ----------    --------- ---------
                                                      (in thousands)

Provision for impairment of
   long-lived assets (note 4)               -   (131,281)           -  (131,281)
                                     --------- ----------    --------- ---------

     Operating Loss                         -   (131,281)           -  (131,281)
                                     --------- ----------    --------- ---------

Interest income                           164         44          578       221
Dividend income                         1,815      1,925        5,365     5,691
                                     --------- ----------    --------- ---------

     Net income (loss)                  1,979   (129,312)       5,943  (125,369)
                                     --------- ----------    --------- ---------

Preferred dividends on redeemable
   preferred securities, including
   accretion of offering costs         (2,328)    (2,328)      (6,984)   (6,984)
                                     --------- ----------    --------- ---------

        Net loss available to
          common member                  (349)  (131,640)      (1,041) (132,353)
                                     ========= ==========    ========= =========

               See accompanying notes to financial statements.


                                       4
<PAGE>



                                ICG FUNDING, LLC

                     Statement of Member's Equity (Deficit)
               Nine Months Ended September 30, 2000 (unaudited)

                                                                      Total
                                       Additional                    member's
                                        paid-in      Accumulated      equity
                                        capital       deficit       (deficit)
                                       -----------  ------------  -------------
                                                   (in thousands)

Balances at January 1, 2000            $    3,385       (3,343)            42

  Net loss                                      -     (125,369)      (125,369)
  Preferred dividends on redeemable
    preferred securities, including
    accretion of offering costs                 -       (6,984)        (6,984)
                                       -----------  ------------  -------------
Balances at September 30, 2000         $    3,385     (135,696)      (132,311)
                                       ===========  ============  =============

                  See accompanying notes to financial statements.



                                       5
<PAGE>



                                ICG FUNDING, LLC

                            Statements of Cash Flows
          Nine Months Ended September 30, 1999 and 2000 (unaudited)

                                                         Nine months ended
                                                           September 30,
                                                     ---------------------------
                                                         1999           2000
                                                     -------------  ------------
                                                            (in thousands)

Cash flows from operating activities:
   Net income (loss)                                 $      5,943      (125,369)

   Adjustment  to  reconcile  net  income
     to net  cash  provided  by  operating
     activities:
       Provision for impairment of long-lived assets            -       131,281
       Noncash preferred dividends earned on ICG
         Preferred Stock                                   (5,365)       (5,691)
                                                     -------------  ------------
            Net cash provided by operating
              activities                                      578           221
                                                     -------------  ------------
Cash flows from investing activities:
   Decrease in restricted cash                              6,117         6,474
                                                     -------------  ------------

     Net cash provided by investing activities              6,117         6,474
                                                     -------------  ------------

Cash flows from financing activities:
   Payment of preferred dividends on redeemable
     preferred securities                                  (6,695)       (6,695)
                                                     -------------  ------------

       Net cash used in financing activities               (6,695)       (6,695)
                                                     -------------  ------------

Cash and cash equivalents at December 31, 1999 and
   September 30, 2000                                $          -             -
                                                     =============  ============

               See accompanying notes to financial statements.



                                       6
<PAGE>


                                ICG FUNDING, LLC

                          Notes to Financial Statements
             December 31, 1999 and September 30, 2000 (unaudited)

 (1)  Bankruptcy Proceedings

     During  the  quarter  ended  September  30,  2000  and  subsequent  to  the
     quarter-end,  a series  of  financial  and  operational  events  materially
     impacted  ICG  Communications,  Inc.  and  its  subsidiaries  ("ICG"),  and
     consequently,  ICG Funding, LLC (the "Company"). These events reduced ICG's
     expected  revenue and cash flow  generation  for the  remainder of 2000 and
     2001, which in turn  jeopardized  ICG's ability to comply with its existing
     bank credit  facility.  As a result,  on November  14, 2000 (the  "Petition
     Date"),  ICG and most of its  subsidiaries,  including  the Company,  filed
     voluntary  petitions for  protection  under Chapter 11 of the United States
     Bankruptcy Code in the Federal  District of Delaware in order to facilitate
     the  restructuring  of ICG's  long-term debt,  trade  liabilities and other
     obligations.  ICG and its bankruptcy filing subsidiaries  (collectively the
     "Debtors")  are  currently  operating  as  debtors-in-possession  under the
     supervision  of the  United  States  District  Court  for the  District  of
     Delaware. The bankruptcy petitions were filed in order to preserve cash and
     to give ICG the opportunity to restructure their debt.

     Under the  Bankruptcy  Code,  the  rights  and  treatment  of  pre-petition
     creditors and shareholders are expected to be substantially  altered.  As a
     result of bankruptcy proceedings, substantially all liabilities, litigation
     and claims against the Debtors in existence at the Petition Date are stayed
     unless  the stay is  modified  or  lifted  or  payment  has been  otherwise
     authorized  by the  Bankruptcy  Court.  At this time, it is not possible to
     predict  the  outcome of the  Chapter 11 cases in general or the effects of
     such  cases  on  ICG's  business,  or on  the  interest  of  creditors  and
     shareholders.  As a result of the  bankruptcy  filing,  all of the Debtor's
     liabilities  incurred prior to the Petition Date, including certain secured
     debt, are subject to compromise. No assurance can be given that ICG will be
     successful  in  reorganizing  its affairs  within the Chapter 11 bankruptcy
     proceedings.

     Further,  due to the  bankruptcy  filing and  related  events,  there is no
     assurance  that the  carrying  amounts of assets  will be  realized or that
     liabilities  will be  liquidated  or settled for the amounts  recorded.  In
     addition, a plan of reorganization,  or rejection thereof, could change the
     amounts  reported  in the  financial  statements.  As a  result,  there  is
     substantial  doubt  about the  Company's  ability  to  continue  as a going
     concern  and  its  ability  to  pay  dividends  and  redeem  the  Preferred
     Securities.  The ability of the  Company to continue as a going  concern is
     dependent upon, but not limited to, formulation, approval, and confirmation
     of a plan of  reorganization.



                                       7
<PAGE>



                                ICG FUNDING, LLC

                   Notes to Financial Statements, Continued

 (2)  Organization and Nature of Business

      ICG Funding,  LLC, a Delaware limited  liability  company (the "Company"),
      was formed on September 17, 1997 as a special  purpose  limited  liability
      company  existing for the  exclusive  purposes of: (i) issuing  common and
      preferred  interests  in the  Company;  (ii) using at least 85% of the net
      proceeds of such  issuances and related  capital  contributions  (the "Net
      Proceeds") to purchase  shares of preferred  stock of ICG  Communications,
      Inc.  ("ICG") ("ICG Preferred  Stock") in a private  placement;  and (iii)
      investing  a  portion  of the  remaining  Net  Proceeds  in U.S.  Treasury
      securities,  to be held in escrow in an amount sufficient to fund the cash
      payments  of the  first  thirteen  quarterly  dividends  on the  Company's
      preferred  interests  (the  "Redeemable  Preferred  Securities").   Unless
      previously dissolved,  the Company's term will continue until December 31,
      2050.

      ICG is the sole common member of the Company.  The business and affairs of
      the  Company  are  conducted  by ICG and  ICG  pays  all of the  Company's
      administrative expenses, which are insignificant.

(3)   Significant Accounting Policies

      Basis of Presentation

      These  financial  statements  should  be  read  in  conjunction  with  the
      Company's Annual Report on Form 10-K for the year ended December 31, 1999,
      as certain information and note disclosures normally included in financial
      statements  prepared in  accordance  with  generally  accepted  accounting
      principles  have  been  condensed  or  omitted  pursuant  to the rules and
      regulations of the United States Securities and Exchange  Commission.  The
      interim  financial  statements  reflect all adjustments  which are, in the
      opinion of  management,  necessary  for a fair  presentation  of financial
      position,  results of operations  and cash flows as of and for the interim
      periods  presented.  Such  adjustments are of a normal  recurring  nature.
      Operating  results for the nine months  ended  September  30, 2000 are not
      necessarily  indicative  of the results  that may be expected for the year
      ending December 31, 2000.

(4)   Provision for Impairment of Long-Lived Assets

      Due to the  bankruptcy  proceedings  discussed  in  note  1,  the  Company
      determined that the ICG Preferred  Securities and dividend receivable were
      impaired in accordance  with Statement of Financial  Accounting  Standards
      (SFAS) No. 121,  "Accounting  for the Impairment of Long-Lived  Assets and
      for  Long-Lived  Assets to be Disposed of" and would  therefore may not be
      recoverable.  Accordingly,  the Company  recorded an impairment  charge of
      $130.3 million and $1.0 million to write off the ICG Preferred  Securities
      and the related dividend  receivable,  respectively.  Not withstanding the
      accounting treatment, the stock may have some economic value.



                                       8
<PAGE>



ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS

      The following discussion includes certain  forward-looking  statements and
information  that is based on the beliefs of management  as well as  assumptions
made by management based on information currently available to the Company. When
used in  this  document,  the  words  "anticipate",  "believe",  "estimate"  and
"expect"  and  similar  expressions,  as  they  relate  to  the  Company  or its
management,   are  intended  to  identify  forward-looking   statements.   These
forward-looking  statements  are  intended  to  qualify  as  safe  harbors  from
liability as  established  by the Private  Securities  Litigation  Reform Act of
1995. Such  statements  reflect the current views of the Company with respect to
future events and are subject to certain risks,  uncertainties  and assumptions.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying assumptions prove incorrect,  actual results may vary materially from
those described in this document. These forward-looking  statements are affected
by important factors, including, but not limited to the following:

o     The  uncertainty  of the  Company's  future as a result  of  filing  for
      protection under bankruptcy law;
o     The  redemption  of  the  Redeemable  Preferred  Securities  by ICG as a
      result of ICG's filing for protection under bankruptcy law;
o     The  declaration and payment of preferred stock dividends to the Company
      by ICG; and
o     The ability of ICG to pay the administrative expenses of the Company.

      These  forward-looking  statements  speak  only  as of the  date  of  this
Quarterly  Report.  The Company does not undertake  any  obligation to update or
revise  publicly  any  forward-looking  statements,  whether  as a result of new
information,  future events or otherwise. Although the Company believes that its
plans,   intentions   and   expectations   reflected  in  or  suggested  by  the
forward-looking  statements made in this Quarterly Report are reasonable,  there
is no assurance that such plans, intentions or expectations will be achieved.

      The results of  operations  for the three and nine months ended  September
30, 1999 and 2000 represent the consolidated  operating  results of the Company.
(See the  unaudited  consolidated  financial  statements  of the Company for the
three and nine months ended September 30, 2000 included elsewhere herein.)

Company Overview

General

      The Company was formed on September 17, 1997 as a special  purpose limited
liability company existing for the exclusive purposes of: (i) issuing common and
preferred interests in the Company;  (ii) using at least 85% of the Net Proceeds
of such  issuances  and related  capital  contributions  to  purchase  shares of
preferred stock of ICG ("ICG  Preferred  Stock") in a private  placement;  (iii)
investing a portion of the remaining net proceeds in U.S.  Treasury  securities,
to be held in escrow in an amount  sufficient  to fund the cash  payments of the
first  thirteen  quarterly  dividends  on  the  Company's  Redeemable  Preferred
Securities and (iv) purchasing U.S. Treasury  Securities pending the purchase of
shares of ICG Preferred Stock.

                                       9
<PAGE>


Bankruptcy Proceedings

     During  the  quarter  ended  September  30,  2000  and  subsequent  to  the
quarter-end,  a series of financial and operational  events materially  impacted
ICG Communications,  Inc. and its subsidiaries  ("ICG"),  and consequently,  ICG
Funding,  LLC (the  "Company").  These events reduced ICG's expected revenue and
cash  flow  generation  for  the  remainder  of 2000  and  2001,  which  in turn
jeopardized ICG's ability to comply with its existing bank credit facility. As a
result,  on  November  14,  2000  (the  "Petition  Date"),  ICG and  most of its
subsidiaries,  including the Company,  filed voluntary  petitions for protection
under Chapter 11 of the United States Bankruptcy Code in the Federal District of
Delaware in order to facilitate the restructuring of ICG's long-term debt, trade
liabilities and other  obligations.  ICG and its bankruptcy filing  subsidiaries
(collectively  the "Debtors") are currently  operating as  debtors-in-possession
under the  supervision  of the United States  District Court for the District of
Delaware.  The bankruptcy  petitions were filed in order to preserve cash and to
give ICG the opportunity to restructure their debt.

     Under the  Bankruptcy  Code,  the  rights  and  treatment  of  pre-petition
creditors and shareholders may be  substantially  altered.  As a result of these
bankruptcy  proceedings,  substantially  all liabilities,  litigation and claims
against the Debtors in existence at the Petition Date are stayed unless the stay
is modified or lifted or payment has been otherwise authorized by the Bankruptcy
Court. At this time, it is not possible to predict the outcome of the Chapter 11
cases in general  or the  effects  of such  cases on ICG's  business,  or on the
interest of creditors and  shareholders.  As a result of the bankruptcy  filing,
all of the Debtor's  liabilities  incurred prior to the Petition Date, including
certain secured debt, are subject to compromise.  No assurance can be given that
ICG will be  successful  in  reorganizing  its  affairs  within  the  Chapter 11
bankruptcy proceedings.

     Further,  due to the  bankruptcy  filing and  related  events,  there is no
assurance  that  the  carrying  amounts  of  assets  will  be  realized  or that
liabilities will be liquidated or settled for the amounts recorded. In addition,
a plan of  reorganization,  or  rejection  thereof,  could  change  the  amounts
reported in the financial  statements.  As a result,  there is substantial doubt
about the  Company's  ability to continue as a going  concern and its ability to
pay dividends and redeem the Preferred Securities. The ability of the Company to
continue as a going concern is dependent upon, but not limited to,  formulation,
approval,  and  confirmation of a plan of  reorganization,  adequate  sources of
capital,  customer and employee  retention,  the ability to provide high quality
services  and the ability to sustain  positive  results of  operations  and cash
flows sufficient to continue to operate.

                                       10
<PAGE>


Significant Transactions

      On  September  24 and  October 3, 1997,  the  Company  completed a private
placement of 6 3/4% Exchangeable  Limited Liability Company Preferred Securities
Mandatorily  Redeemable 2009 (the "Redeemable  Preferred  Securities") for gross
proceeds of $132.25  million.  Net proceeds  from the private  placement,  after
offering costs of approximately $4.7 million advanced by ICG, were approximately
$127.6 million.  Restricted cash at September 30, 2000 of $2.2 million  consists
of the remaining  proceeds from the private  placement  which are designated for
the payment of cash dividends on the  Redeemable  Preferred  Securities  through
November 15, 2000. However,  ICG's directors did not declare or pay the dividend
that was otherwise payable on November 15, 2000.

      The  Redeemable  Preferred  Securities  consist of 2,645,000  exchangeable
preferred  securities of the Company that bear a cumulative dividend at the rate
of 6 3/4% per annum. The dividend is paid quarterly in arrears each February 15,
May 15, August 15 and November 15, and commenced November 15, 1997. The dividend
is payable in cash through November 15, 2000 and, thereafter,  in cash or shares
of common stock of ICG, $0.01 par value ("ICG Common  Stock"),  at the option of
the Company.  As a result of filing for  protection  under  bankruptcy  law, the
Company believes it is not currently  permitted to pay any of the dividends that
are outstanding as of November 14, 2000. The Redeemable Preferred Securities are
exchangeable,  at the option of the holder,  at any time prior to  November  15,
2009 into  shares of ICG Common  Stock at a rate of 2.0812  shares of ICG Common
Stock per preferred security,  or $24.025 per share, subject to adjustment.  The
Company may, at its option,  redeem the Redeemable  Preferred  Securities at any
time on or after  November 18, 2000.  Prior to that time, the Company may redeem
the  Redeemable  Preferred  Securities if the current market value of ICG Common
Stock equals or exceeds the  exchange  price by 150% for at least 20 days of any
consecutive  30-day  trading  period  through  November 15, 2000. The Redeemable
Preferred Securities are subject to mandatory redemption on November 15, 2009.

      On February 13, 1998,  ICG made a  contribution  of 126,750  shares of ICG
Common  Stock to the  Company.  Immediately  thereafter,  the  Company  sold the
contributed shares to unrelated third parties for proceeds of approximately $3.4
million.  The  Company  recorded  the  contribution  of the ICG Common  Stock as
additional paid-in capital at the then fair market value and,  consequently,  no
gain or loss was recorded by the Company on the subsequent sale of those shares.

     Also, on February 13, 1998,  the Company used the  remaining  proceeds from
the private  placement of the Redeemable  Preferred  Securities,  which were not
restricted for the payment of cash  dividends,  along with the proceeds from the
sale of the  contributed  ICG  Common  Stock to  purchase  approximately  $112.4
million of ICG Preferred  Stock which pays  dividends  each February 15, May 15,
August 15 and November 15 in additional  shares of ICG  Preferred  Stock through
November  15,  2000.  Subsequent  to November  15,  2000,  dividends  on the ICG
Preferred Stock are payable in cash or shares of ICG Common Stock, at the option
of ICG. For the November 15, 2000 dividend  payment date ICG has not declared or
paid  a  dividend  in  either  cash  or  stock.   The  ICG  Preferred  Stock  is
exchangeable,  at the option of the  Company,  at any time prior to November 15,
2009 into shares of ICG Common  Stock at an exchange  rate based on the exchange
rate of the Redeemable Preferred

                                       11
<PAGE>


Securities.  The ICG  Preferred  Stock is subject  to  mandatory  redemption  on
November 15, 2009.

Results of Operations

      The following  table  provides the  components of the Company's net income
and net loss available to common member for each of the periods presented.

                                     Three months ended        Nine months ended
                                        September 30,             September 30,
                                     --------------------    -------------------
                                       1999         2000       1999      2000
                                     --------- ----------    --------- ---------
                                                      (in thousands)

Provision for impairment of
   long-lived assets                 $      -   (131,281)           -  (131,281)
                                     --------- ----------    --------- ---------
     Operating Loss                         -   (131,281)           -  (131,281)
                                     --------- ----------    --------- ---------

Interest income                           164         44          578       221
Dividend income                         1,815      1,925        5,365     5,691
                                     --------- ----------    --------- ---------
     Net income (loss)                  1,979   (129,312)       5,943  (125,369)
                                     --------- ----------    --------- ---------
Preferred dividends on redeemable
   preferred securities, including
   accretion of offering costs         (2,328)    (2,328)      (6,984)   (6,984)
                                     --------- ----------    --------- ---------
        Net loss available to
        common member                $   (349)  (131,640)      (1,041) (132,353)
                                     ========= ==========    ========= =========
Other Data:
Net cash provided by operating
   activities                        $    164         44          578       221
Net cash provided by investing
   activities                            2,067     2,187        6,117     6,474
Net cash used in financing
   activities                           (2,231)   (2,231)      (6,695)   (6,695)

Three Months Ended  September 30, 2000 Compared to Three Months Ended  September
30, 1999

     Provision for impairment of long-lived assets.  Provision for impairment of
long-lived  assets of $131.3  million for the three months ended  September  30,
2000  consists of the  write-off of the  investment  in ICG  Preferred  Stock of
$130.3  million  and  the  dividends  receivable  of  $1.0  million,  due to the
bankruptcy proceedings of ICG and its filing subsidiaries.

     Interest  income.  Interest income of $0.2 million and $0.1 million for the
three months ended September 30, 1999 and 2000, respectively, consists of income
earned on restricted cash.  Interest income has decreased due to the decrease in
the restricted cash balance.

     Dividend  income.  Dividend income of $1.8 million and $1.9 million for the
three  months  ended  September  30,  1999 and 2000,  respectively,  consists of
preferred dividends earned on the ICG Preferred Stock, which dividends were paid
with additional shares of ICG Preferred Stock.

                                       12
<PAGE>


     Net income  (loss).  The Company's net loss of $129.3 million for the three
months  ended  September  30, 2000 is  primarily  due to the  impairment  of our
investment in the ICG Preferred Securities.

     Preferred dividends on redeemable preferred securities, including accretion
of offering  costs.  Preferred  dividends on  redeemable  preferred  securities,
including accretion of offering costs was $2.3 million for both the three months
ended  September  30, 1999 and 2000 and includes  approximately  $2.2 million of
preferred  security  dividends  paid and accrued  during both  periods,  and the
accretion  of  offering  costs  from the  private  placement  of the  Redeemable
Preferred Securities of approximately $0.1 million for both periods.

Nine Months Ended September 30, 2000 Compared To Nine Months Ended September 30,
1999

     Provision for impairment of long-lived assets.  Provision for impairment of
long-lived assets of $131.3 million for the nine months ended September 30, 2000
consists of the write-off of the  investment  in ICG  Preferred  Stock of $130.3
million and the  dividends  receivable of $1.0  million,  due to the  bankruptcy
proceedings of ICG and its subsidiaries.

     Interest  income.  Interest income of $0.6 million and $0.2 million for the
nine months ended September 30, 1999 and 2000, respectively,  consists of income
earned on restricted cash.. Interest income has decreased due to the decrease in
the restricted cash balance.

     Dividend  income.  Dividend income of $5.4 million and $5.7 million for the
nine  months  ended  September  30,  1999 and 2000,  respectively,  consists  of
preferred dividends earned on the ICG Preferred Stock, which dividends were paid
with additional shares of ICG Preferred Stock.

     Net income  (loss).  The Company's net loss of $125.4  million for the nine
months ended  September 30, 2000 is substantially  due to the  impairment of our
investment in the ICG Preferred Securities.

     Preferred dividends on redeemable preferred securities, including accretion
of offering  costs.  Preferred  dividends on  redeemable  preferred  securities,
including  accretion of offering costs was $7.0 million for both the nine months
ended  September 30, 1999 and 2000, and includes  approximately  $6.7 million of
preferred  security  dividends  paid and  accrued  during  both  periods and the
accretion  of  offering  costs  from the  private  placement  of the  Redeemable
Preferred Securities of approximately $0.3 million for both periods.

Liquidity and Capital Resources

     The Company's  operations  consist  entirely of effecting the  transactions
required by the terms of the Redeemable Preferred Securities issued in September
and October 1997. To date, the Company's operations have been funded through the
proceeds from the issuance of the Redeemable  Preferred  Securities and the sale
of ICG Common Stock which was contributed to the Company by ICG. As of September
30, 2000, the Company has assets of approximately  $2.2 million which consist of
the  Company's  restricted  cash  invested  in  U.S.  Treasury  securities.  The


                                       13
<PAGE>


Company's  liabilities at September 30, 2000 include  approximately $1.1 million
in  preferred  dividends  accrued on the  Redeemable  Preferred  Securities  and
approximately  $4.7  million  due to ICG for  advances  for the  offering  costs
associated with the issuance of the Redeemable Preferred Securities.

     As a result  of ICG's  and the  Company's  Chapter  11  bankruptcy  filings
described in the "Company Overview",  the Company does not expect to receive any
dividend income on the ICG Preferred Stock.

     At September  30, 2000,  the Company had  approximately  $128.7  million of
mandatorily redeemable preferred securities. The Redeemable Preferred Securities
require  payments of dividends to be made in cash.  At September  30, 2000,  the
Company has cash dividend  obligations on the Redeemable Preferred Securities of
approximately   $2.2  million  remaining  in  2000.  The  Redeemable   Preferred
Securities have a liquidation  preference of $50 per security,  plus accrued and
unpaid dividends, and are mandatorily redeemable in 2009.

     As a result of filing for protection  under bankruptcy law, the Company has
not declared or paid the cash dividend  which was otherwise  payable on November
15, 2000. In addition,  future payments are subject to court approval and may be
discharged  in whole  or in part in  bankruptcy  with  proceeds  from the  court
approved plan of reorganization  or liquidation of the Company.  There can be no
assurance  that any amounts  owed to  unsecured  creditors  will be paid or that
secured creditors will be paid in full.

     ICG  has   obtained   a   commitment   letter   which  will   provide   ICG
debtor-in-possession  financing  which for a  minimum  of $200  million  and the
potential  for an  additional  $150 million if certain  criteria  are met.  This
debtor-in-possession  financing is subject to customary  pre-closing  conditions
and is contingent upon Bankruptcy  Court approval.  As of mid November 2000, ICG
is continuing operations and developing a formal plan of reorganization.

     In the event that plans or  assumptions  change or prove to be  inaccurate,
significant  unexpected expenses are incurred, or cash resources,  together with
borrowings under the  debtor-in-possession  financing  arrangement,  prove to be
insufficient to fund operations,  ICG may be required to seek additional sources
of capital (or seek additional capital sooner than currently anticipated). There
can be no  guarantee,  however,  that  additional  capital  will be available on
reasonable terms, or at all.

     ICG is a Delaware  corporation  that files  annual,  quarterly  and current
reports with the Securities and Exchange Commission.  Its Commission File Number
is 1-11965.

Net Cash Provided By Operating Activities

     Net cash provided by operating  activities was  approximately  $0.6 million
and  $0.2  million  for the nine  months  ended  September  30,  1999 and  2000,
respectively, and consists of the provision for impairment of long-lived assets,
partially offset by noncash preferred dividends earned on ICG Preferred Stock.

                                       14
<PAGE>


Net Cash Provided By Investing Activities

     The Company's investing activities provided  approximately $6.1 million and
$6.5  million  for  the  nine  months  ended   September   30,  1999  and  2000,
respectively.  Cash  provided by investing  activities  for both the nine months
ended September 30, 1999 and 2000 consists of the decrease in restricted cash.

Net Cash Used In Financing Activities

     Financing  activities  used  approximately  $6.7  million for both the nine
months ended September 30, 1999 and 2000. Cash used in financing  activities for
both periods consists of payments of cash dividends on the Redeemable  Preferred
Securities.  The Company  expects  cash used by financing  activities  in future
periods to include only payments of cash dividends on, and the redemption  price
of, the Redeemable Preferred Securities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  Company's  restricted  cash balances are invested in fixed income U.S.
Treasury  securities  with staggered  maturities  matching the dividend  payment
dates of the Redeemable  Preferred  Securities.  Accordingly,  changes in market
interest rates have no effect on the Company's liquidity, financial condition or
results of operations.




                                       15
<PAGE>



                                    PART II


ITEM 1.   LEGAL PROCEEDINGS

          On  November  14,  2000 the  Company  filed a voluntary  petition  for
          protection  under Chapter 11 of the United States  Bankruptcy  Code in
          the Federal District of Delaware.  The Company is currently  operating
          as  debtors-in-possession  under  the  supervision  of the  Bankruptcy
          Court. The bankruptcy petition was filed in order to preserve cash and
          give the Company the opportunity to restructure its debt.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES AND USE OF PROCEEDS

          Due to the bankruptcy proceedings discussed in note 1 to the Company's
          unaudited  consolidated financial statements for the nine months ended
          September  30, 2000,  the Company is currently in default  under the 6
          3/4% Redeemable Preferred Securities.

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

          Effective  August 3, 2000,  ICG, Sole Common Member and Manager of the
          Company,  caused the Company to declare a cash  dividend in the amount
          of $0.84 per Redeemable Preferred Security to holders of record at the
          close of  business  on August 1,  2000,  which was paid on August  15,
          2000.

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBIT AND REPORT ON FORM 8-K

          (A) Exhibit.

              (27) Financial Data Schedule.

                    27.1:  Financial  Data Schedule of ICG Funding,  LLC for the
                    Nine Months Ended September 30, 2000.

          (B) Report on Form 8-K.

              (i)   Current  Report  on  Form  8-K  dated  September  18,  2000,
                    regarding the  announcement of a revised business plan.

              (ii)  Current  Report  on  Form  8-K  dated  September  19,  2000,
                    announcing the resignation of James  Washington as Executive
                    Vice President of Network Services  effective  September 13,
                    2000.

                                       16
<PAGE>

              (iii) Current  Report  on  Form  8-K  dated  September  19,  2000,
                    announcing  the  resignation of Carl E. Vogel as Chairman of
                    the  Board of  Directors  and  Chief  Executive  Officer  on
                    September 18, 2000.


                                       17
<PAGE>


              INDEX TO EXHIBITS SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.20549


<PAGE>

                                    EXHIBIT

  27.1: Financial Data Schedule of ICG Funding, LLC for the Nine Months Ended
                              September 30, 2000.


<PAGE>

                                  EXHIBIT 27.1


      Financial Data Schedule of ICG Funding, LLC for the Nine Months Ended
                               September 30, 2000.

<PAGE>

                                   SIGNATURE

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on November 20, 2000.


                                                   ICG Funding, LLC


                                                   By: ICG Communications, Inc.
                                                       Common Member and Manager


                                                   By: /s/ Randall Curran
                                                       -------------------------
                                                       Randall Curran
                                                       Chief Executive Officer