ICON LEASING FUND ELEVEN, LLC - FORM 10-K/A - April 13, 2012

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EX-32.2 - ICON LEASING FUND ELEVEN, LLCex32-2.htm
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EX-32.1 - ICON LEASING FUND ELEVEN, LLCex32-1.htm
 

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

FORM 10-K/A
(Amendment No. 1)

þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
   
 
For the fiscal year ended December 31, 2011
   
 
OR
   
o
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.)
     
3 Park Avenue, 36th Floor
New York, New York
  
 
10016
(Address of principal executive offices)
  
(Zip Code)

(212) 418-4700
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:  None
 
Securities registered pursuant to Section 12(g) of the Act:  Shares of Limited Liability Company Interests
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes     No þ
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes     No þ
 
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 þ    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 þ    No 

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

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 þ     Smaller reporting company 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
   Yes     No þ
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:  Not applicable.  There is no established market for shares of limited liability company interests of the registrant.
 
Number of outstanding shares of limited liability company interests of the registrant on March 16, 2012 is 362,656.

DOCUMENTS INCORPORATED BY REFERENCE
None.
 
 
 
 
 
 

Explanatory Note
 
ICON Leasing Fund Eleven, LLC (“Fund Eleven”) is filing this Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on March 30, 2012 (the “Original Filing”) solely for the purpose of amending Item 15. Exhibits, Financial Statement Schedules.  For ease of reference, the Amendment contains the complete text of Item 15.  Except as stated in this Explanatory Note, no other information contained in any Item of the Original Filing is being amended, updated or otherwise revised.  This Amendment speaks as of the filing date of the Original Filing and does not reflect any events that may have occurred subsequent to such date.

 
 
 
 
 
 
PART IV
 
Item 15. Exhibits, Financial Statement Schedules

(a)
1. Financial Statements
   
 
See index to consolidated financial statements included as Item 8 to the Original Filing.
   
 
2. Financial Statement Schedules
 
 
 
Financial Statement Schedule II – Valuation and Qualifying Accounts is filed with the Original Filing. Schedules not listed above have been omitted because they are not applicable or the information required to be set forth therein is included in the financial statements or notes thereto included in the Original Filing.
   
 
3. Exhibits:
   
 
3.1    Certificate of Formation of Registrant (Incorporated by reference to 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)).
   
 
4.1    Amended and Restated Limited Liability Company Agreement of Registrant (Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registration Statement on Form S-1 filed with the SEC on June 29, 2006 (File No. 333-133730)).
   
 
4.2    Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of Registrant (Incorporated by reference to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, filed August 23, 2006).
   
 
10.1   Commercial Loan Agreement, dated as of August 31, 2005, by and between California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated August 31, 2005).
   
 
10.2   Loan Modification Agreement, dated as of December 26, 2006, by and between California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 26, 2006).
   
 
10.3   Loan Modification Agreement, dated as of June 20, 2007, by and between California Bank & Trust and 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 for the quarterly period ended September 30, 2009, filed November 16, 2009).
   
 
10.4   Third Loan Modification Agreement, dated as of May 1, 2008, by and between California Bank & Trust and 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 for the quarterly period ended March 31, 2008, filed June 6, 2008).
   
 
10.5  Fourth Loan Modification Agreement, dated as of August 12, 2009, by and between California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC, ICON Leasing Fund Twelve, LLC and ICON Equipment and Corporate Infrastructure Fund Fourteen, L.P. (Incorporated by reference to Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, filed August 14, 2009).
   
 
10.6  Termination of Commercial Loan Agreement, by and among California Bank & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC, ICON Leasing Fund Twelve, LLC and ICON Equipment and Corporate Infrastructure Fund Fourteen, L.P., dated as of May 10, 2011 (Incorporated by reference to Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, filed May 16, 2011).
   
 
10.7  Commercial Loan Agreement, by and between California Bank & Trust and ICON Leasing Fund Eleven, LLC, dated as of May 10, 2011 (Incorporated by reference to Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, filed May 16, 2011).
   
 
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 Principal Accounting and 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 Principal Accounting and Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
 (b) 1. Financial Statements of ICON EAR, LLC. 
   
 
 
 
1
 
 

ICON EAR, LLC
(A Delaware Limited Liability Company)


Table of Contents
 

 
2
 

 

The Members
ICON EAR, LLC

We have audited the accompanying balance sheet of ICON EAR, LLC (the “Company”) as of December 31, 2010, and the related statements of operations, changes in members’ equity, and cash flows for the year ended December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ICON EAR, LLC at December 31, 2010, and the results of its operations and its cash flows for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

March 31, 2011
New York, New York

 
 
3
 
 
 
 
(A Delaware Limited Liability Company)
  
Balance Sheets
  
   
Assets
  
   
   
   
December 31,
  
   
2011
    
2010
  
   
(unaudited)
        
 Current assets:
            
 Cash
   $ 27,787     $ 45,231  
 Assets held for sale, net
     290,366       2,448,263  
                 
 Total Assets
   $ 318,153     $ 2,493,494  
   
   
Members’ Equity
  
   
 
  
 Members’ Equity:
                
 Total Members’ Equity     318,153       2,493,494  
                 
 Total Members’ Equity
   $ 318,153     $ 2,493,494  
 
 
See accompanying notes to financial statements.
 
4
 
 
 
(A Delaware Limited Liability Company)
  
Statements of Operations
  
   
   
   
Year Ended
    
Year Ended
    
Year Ended
  
   
December 31, 2011
    
December 31, 2010
    
December 31, 2009
  
   
(unaudited)
          
(unaudited)
  
                   
 Revenue:
                  
 Rental and other income
   $ -     $ 2,000     $ 2,691,322  
 Loss on sales of assets held for sale
     -       (297,864 )     -  
                         
 Total revenue
     -       (295,864 )     2,691,322  
                         
 Expenses:
                        
 General and administrative
     17,616       18,177       253,254  
 Depreciation
     -       -       1,778,975  
 Impairment loss
     1,158,171       5,696,859       3,429,316  
 Bad debt expense
     -       -       572,721  
 Total expenses
     1,175,787       5,715,036       6,034,266  
                         
 Net loss
   $ (1,175,787 )   $ (6,010,900 )   $ (3,342,944 )


See accompanying notes to financial statements.
 
5
 
 
 
 
(A Delaware Limited Liability Company)
  
Statements of Changes in Members’ Equity
  
   
   
   
   
Members’ Equity
  
       
 Balance, December 31, 2009 (unaudited)
     9,042,762  
         
 Net loss
     (6,010,900 )
 Cash distributions
     (538,368 )
         
 Balance, December 31, 2010
     2,493,494  
         
 Net loss
     (1,175,787 )
 Cash distributions
     (999,554 )
         
 Balance, December 31, 2011 (unaudited)
   $ 318,153  

 
See accompanying notes to financial statements.
 
6
 
 
 
 
(A Delaware Limited Liability Company)
  
Statements of Cash Flows
  
   
   
   
   
Year Ended
    
Year Ended
    
Year Ended
  
   
December 31, 2011
    
December 31, 2010
    
December 31, 2009
  
   
(unaudited)
          
(unaudited)
  
 Cash flows from operating activities:
                  
 Net loss
   $ (1,175,787 )   $ (6,010,900 )   $ (3,342,944 )
Adjustments to reconcile net loss to net cash
                        
  (used in) provided by operating activities:
                        
     Net loss on sales of assets held for sale
     -       297,864       -  
     Depreciation
     -       -       1,778,975  
     Impairment loss
     1,158,171       5,696,859       3,429,316  
     Bad debt expense
     -       -       572,721  
 Changes in operating assets and liabilities:
                        
     Other assets
     -       -       (323,850 )
     Accrued expenses and other liabilities
     -       -       (475 )
                         
 Net cash (used in) provided by operating activities
     (17,616 )     (16,177 )     2,113,743  
                         
 Cash flows from investing activities:
                        
Proceeds from sales of assets held for sale
     999,726       539,368       -  
                         
 Net cash provided by investing activities
     999,726       539,368       -  
                         
 Cash flows from financing activities:
                        
 Cash distributions to members
     (999,554 )     (538,368 )     (2,092,025 )
                         
 Net cash used in financing activities
     (999,554 )     (538,368 )     (2,092,025 )
                         
 Net (decrease) increase in cash
     (17,444 )     (15,177 )     21,718  
 Cash, beginning of period
     45,231       60,408       38,690  
                         
 Cash, end of period
   $ 27,787     $ 45,231     $ 60,408  

 
See accompanying notes to financial statements.
 
7
 
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2011
(unaudited with respect to the years ended December 31, 2011 and December 31, 2009)

(1)
Organization
 
ICON EAR, LLC (the “LLC”) was formed on December 11, 2007, as a Delaware limited liability company, for the purpose of investing in semiconductor manufacturing equipment from Equipment Acquisition Resources, Inc. (“EAR”).  The LLC is a joint venture between two affiliated entities, ICON Leasing Fund Twelve, LLC (“Fund Twelve”) and ICON Leasing Fund Eleven, LLC (“Fund Eleven”) (collectively, the LLC’s “Members”). Fund Twelve and Fund Eleven have a 55% and 45% ownership percentage, respectively, in the LLC’s profits, losses and cash distributions.
 
The LLC is engaged in one business segment, the business of purchasing business essential equipment and corporate infrastructure and leasing to businesses.

The Manager of the LLC’s Members is ICON Capital Corp., a Delaware corporation (the “Manager”). The Manager manages and controls the business affairs of the LLC, including, but not limited to, the financing transactions that the LLC entered into pursuant to the terms of the respective limited partnership or limited liability company agreement of each of the LLC’s Members.

(2)
Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements of the LLC have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”).  In the opinion of the Manager, all adjustments considered necessary for a fair presentation have been included.

Cash

The LLC’s cash is held principally at one financial institution and at times may exceed insured limits. The LLC has placed these funds in a high quality institution in order to minimize risk relating to exceeding insured limits.
 
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.  

Market risk reflects the change in the value of investments due to changes in interest rate spreads or other market factors. The LLC believes that the carrying value of its investments is reasonable, taking into consideration these risks, along with estimated collateral values, payment history and other relevant information.
 
 
 
8
 
ICON EAR, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2011
(unaudited with respect to the years ended December 31, 2011 and December 31, 2009)
 
 
(2)
Summary of Significant Accounting Policies - continued
 
Leased Equipment at Cost

Investments in leased equipment are stated at cost less accumulated depreciation. Leased equipment is depreciated on a straight-line basis over the lease term, which typically ranges from 3 to 8 years, to the asset’s residual value.
 
The Manager has an investment committee that approves each new equipment lease and other financing transaction. As part of its process, the investment committee determines the residual value, if any, to be used once the investment has been approved. The factors considered in determining the residual value include, but are not limited to, the creditworthiness of the potential lessee, the type of equipment considered, how the equipment is integrated into the potential lessee’s business, the length of the lease and the industry in which the potential lessee operates. Residual values are reviewed for impairment in accordance with the LLC’s impairment review policy.
 
The residual value assumes, among other things, that the asset would be utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. The residual value is calculated using information from various external sources, such as trade publications, auction data, equipment dealers, wholesalers and industry experts, as well as inspection of the physical asset and other economic indicators. At December 31, 2009, the LLC reclassified leased equipment at cost to assets held for sale
 
Asset Impairments

The significant assets in the LLC’s portfolio are periodically reviewed, no less frequently than annually or when indicators of impairment exist, to determine whether events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss will be recognized only if the carrying value of a long-lived asset is not recoverable and exceeds its fair market value.  If there is an indication of impairment, the LLC will estimate the future cash flows (undiscounted and without interest charges) expected from the use of the asset and its eventual disposition. Future cash flows are the future cash inflows expected to be generated by an asset less the future outflows expected to be necessary to obtain those inflows.  If an impairment is determined to exist, the impairment loss will be measured as the amount by which the carrying value of a long-lived asset exceeds its fair value and recorded in the consolidated statement of operations in the period the determination is made.

The events or changes in circumstances that generally indicate that an asset may be impaired are (i) the estimated fair value of the underlying equipment is less than its carrying value or (ii) the lessee is experiencing financial difficulties and it does not appear likely that the estimated proceeds from the disposition of the asset will be sufficient to satisfy the residual position in the asset and, if applicable, the remaining obligation to the non-recourse lender.  Generally in the latter situation, the residual position relates to equipment subject to third-party non-recourse debt where the lessee remits its rental payments directly to the lender and the LLC does not recover its residual position until the non-recourse debt is repaid in full. The preparation of the undiscounted cash flows requires the use of assumptions and estimates, including the level of future rents, the residual value expected to be realized upon disposition of the asset, estimated downtime between re-leasing events and the amount of re-leasing costs. The Manager’s review for impairment includes a consideration of the existence of impairment indicators including third-party appraisals, published values for similar assets, recent transactions for similar assets, adverse changes in market conditions for specific asset types and the occurrence of significant adverse changes in general industry and market conditions that could affect the fair value of the asset.
  

 
 
9
 
ICON EAR, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2011
(unaudited with respect to the years ended December 31, 2011 and December 31, 2009)
 
 
(2)
Summary of Significant Accounting Policies - continued
 
Allowance for Doubtful Accounts

When evaluating the adequacy of the allowance for doubtful accounts, the LLC estimates the uncollectibility of receivables by analyzing lessee, borrower and other counterparty concentrations, creditworthiness and current economic trends. The LLC records an allowance for doubtful accounts when the analysis indicates that the probability of full collection is unlikely. Accounts receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due.  Additionally, the LLC periodically reviews the creditworthiness of companies with payments outstanding less than 90 days.  Based upon the Manager’s judgment, accounts may be placed in a non-accrual status.  Accounts on a non-accrual status are only returned to an accrual status when the account has been brought current and the LLC believes recovery of the remaining unpaid receivable is probable. Revenue on non-accrual accounts is recognized only when cash has been received. No allowance was deemed necessary at December 31, 2011 and 2010.
 
Acquisition Fees
 
Pursuant to the LLC Agreement, the LLC pays acquisition fees to the Manager equal to 3% of the purchase price of the LLC’s investments. These fees are capitalized and included in the cost of the investment in the LLC’s balance sheets.
 
Income Taxes

The LLC is taxed as a partnership for federal and State income tax purposes.  No provision for income taxes has been recorded since the liability for such taxes is that of each of the members of the LLC’s Members rather than the LLC. The LLC’s income tax returns are subject to examination by the federal and State taxing authorities, and changes, if any, could adjust the individual income tax of the members of the LLC’s Members.

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 financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates primarily include the determination of allowance for doubtful accounts, depreciation and impairment losses.  Actual results could differ from those estimates.
 
(3)
Assets Held for Sale
 
Between December 2007 and June 2008, the LLC purchased and simultaneously leased back semiconductor manufacturing equipment to EAR for approximately $15,730,000. The lease term commenced on July 1, 2008 and was to expire on June 30, 2013.  As additional security for the purchase and lease, the LLC received mortgages on certain parcels of real property located in Jackson Hole, Wyoming.

In October 2009, certain facts came to light that led the Manager to believe that EAR was perpetrating a fraud against EAR’s lenders, including the LLC.  On October 23, 2009, EAR filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The LLC had a net accounts receivable balance outstanding of approximately $573,000, which was charged to bad debt expense during the year ended December 31, 2009. Subsequent to the filing of the bankruptcy petition, EAR disclaimed any right to its equipment and the equipment became the subject of an Illinois State Court proceeding.  Such equipment was subsequently sold as part of the Illinois State Court proceeding.  In addition, on June 7, 2010, the LLC received judgments in New York State Supreme Court against two principals of EAR who had guaranteed EAR’s lease obligations.  The LLC has had the New York State Supreme Court judgments recognized in Illinois, where the principals live, but does not currently anticipate collecting on such judgments. 

During 2009, the LLC, in connection with a wholly-owned subsidiary of Fund Eleven, foreclosed on the property that was received as additional security under the lease with EAR.  On June 2, 2010, the LLC, in connection with a wholly-owned subsidiary of Fund Eleven, sold a parcel of real property in Jackson Hole, Wyoming that was received as additional security under the respective leases with EAR for approximately $757,000.  As a result, the LLC recognized a loss of approximately $298,000.
 
 
 
10
 
ICON EAR, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2011
(unaudited with respect to the years ended December 31, 2011 and December 31, 2009)
 
 
(3)
Assets Held for Sale  - continued
 
In light of developments surrounding the semiconductor manufacturing equipment on lease to EAR and in light of the sale of certain parcels of real property located in Jackson Hole, Wyoming on June 2, 2010 and March 16, 2011, the Manager determined that the net book value of such equipment and real property may not be recoverable.  Based on the Manager’s review, the net book value of the semiconductor manufacturing equipment and real property, in the aggregate, exceeded the undiscounted cash flows and exceeded the fair value and, as a result, the LLC recognized impairment charges of approximately $1,158,000, $5,697,000 and $3,429,000 during the years ended December 31, 2011, 2010 and 2009, respectively. 

On March 7, 2012, one of the creditor’s in the Illinois State Court proceeding won a summary judgment motion filed against the LLC thereby dismissing the LLC’s claims to the proceeds resulting from the sale of the EAR equipment. The basis of the court’s decision centered on the fact that the LLC was made whole from the foreclosure of the property in Wyoming.  The LLC is appealing the decision. At December 31, 2011, the only remaining asset owned by the LLC was real property held for sale, with a carrying value of approximately $290,000.
 
(4)
Fair Value Measurements
 
The LLC accounts for the fair value of financial instruments in accordance with the accounting pronouncements, which require assets and liabilities carried at fair value to 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 cannot 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.

 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The LLC is required, on a nonrecurring basis, to adjust the carrying value or provide valuation allowances for certain assets and liabilities using fair value measurements.  The LLC’s non-financial assets, such as leased equipment at cost, are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.

 
 
11
 
ICON EAR, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2011
(unaudited with respect to the years ended December 31, 2011 and December 31, 2009)
 
 
(4)
Fair Value Measurements - continued
 
The following table summarizes the valuation of the LLC’s material non-financial assets and liabilities measured at fair value on a nonrecurring basis for the year ended December 31, 2011:
 
   
December 31, 2011
    
Level 1
    
Level 2
    
Level 3
    
Total Impairment Loss
  
Assets held for sale, net
   $ 290,366     $ -     $ -     $ 290,366     $ 1,158,171  
 
The following table summarizes the valuation of the LLC’s material non-financial assets and liabilities measured at fair value on a nonrecurring basis for the year ended December 31, 2010:
 
   
December 31, 2010
    
Level 1
    
Level 2
    
Level 3
    
Total Impairment Loss
  
Assets held for sale, net
   $ 2,448,263     $ -     $ -     $ 2,448,263     $ 5,696,859  
 
The LLC’s non-financial assets are valued using inputs that are generally unobservable and cannot be corroborated by market data and are classified within Level 3. As permitted by the accounting pronouncements, the LLC uses projected cash flows for fair value measurements of its non-financial assets.
 
(5)
Commitments and Contingencies and Off-Balance Sheet Transactions
 
Commitments and Contingencies

On October 21, 2011, the Chapter 11 bankruptcy trustee for EAR filed an adversary complaint against the LLC seeking the recovery of the lease payments that the trustee alleges were fraudulently transferred from EAR to the LLC.  The complaint also seeks the recovery of payments made by EAR to the LLC during the 90-day period preceding EAR’s bankruptcy filing, alleging that those payments constituted a preference under the U.S. Bankruptcy Code.  Additionally, the complaint seeks the imposition of a constructive trust over certain real property and the proceeds from the sale the LLC received as security in connection with its investment.  The Manager believes these claims are frivolous and intends to vigorously defend this action.  At this time, the LLC is unable to predict the outcome of this action or loss therefrom, if any.

 
 
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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
ICON Leasing Fund Eleven, LLC
(Registrant)

By: ICON Capital Corp.
      (Manager of the Registrant)

April 13, 2012
 
By: /s/ Michael A. Reisner
      Michael A. Reisner
      Co-Chief Executive Officer and Co-President
      (Co-Principal Executive Officer)
 
By: /s/ Mark Gatto 
      Mark Gatto
      Co-Chief Executive Officer and Co-President
      (Co-Principal Executive Officer)
 
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 capacities and on the dates indicated.

ICON Leasing Fund Eleven, LLC
(Registrant)

By: ICON Capital Corp.
      (Manager of the Registrant)

April 13, 2012
 
By: /s/ Michael A. Reisner
      Michael A. Reisner
      Co-Chief Executive Officer, Co-President and Director
      (Co-Principal Executive Officer)
 
By: /s/ Mark Gatto
      Mark Gatto
      Co-Chief Executive Officer, Co-President and Director
      (Co-Principal Executive Officer)
 
By: /s/ Keith S. Franz
       Keith S. Franz
       Managing Director
       (Principal Accounting and Financial Officer)

 
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ICON LEASING FUND ELEVEN, LLC Reports