<PAGE>   1
                       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 SEPTEMBER 30, 1998

                                       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 0-21518

                            IEA INCOME FUND XII, L.P.
             (Exact name of registrant as specified in its charter)


           California                                            94-3143940
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

         444 Market Street, 15th Floor, San Francisco, California 94111
             (Address of principal executive offices)       (Zip Code)

                                 (415) 677-8990
              (Registrant'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 .


<PAGE>   2
                            IEA INCOME FUND XII, L.P.

                  REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
                            ENDED SEPTEMBER 30, 1998

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                              PAGE
PART I -- FINANCIAL INFORMATION
<S>      <C>                                                                                                  <C>

 Item 1. Financial Statements

         Balance Sheets - September 30, 1998 (unaudited) and December 31, 1997                                  4

         Statements of Operations for the three and nine months ended September 30, 1998 and 1997 (unaudited)   5

         Statements of Cash Flows for the nine months ended September 30, 1998 and 1997 (unaudited)             6 

         Notes to Financial Statements (unaudited)                                                              7

 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                 10

 Item 3. Quantitative and Qualitative Disclosures About Market Risk                                            12

PART II-- OTHER INFORMATION

 Item 1. Legal Proceedings                                                                                     13

 Item 3. Defaults Upon Senior Securities                                                                       14

 Item 5. Other Information                                                                                     14

 Item 6. Exhibits and Reports on Form 8-K                                                                      16
</TABLE>


                                       2
<PAGE>   3
                         PART I - FINANCIAL INFORMATION


 Item 1. Financial Statements

         Presented herein are the Registrant's balance sheets as of September
         30, 1998 and December 31, 1997, statements of operations for the three
         and nine months ended September 30, 1998 and 1997, and statements of
         cash flows for the nine months ended September 30, 1998 and 1997.


                                       3
<PAGE>   4
                            IEA INCOME FUND XII, L.P.

                                 BALANCE SHEETS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                      September 30,           December 31,
                                                                                          1998                   1997
                                                                                      -------------          -------------
<S>                                                                                   <C>                    <C>          
                        Assets

Current assets:
    Cash and cash equivalents, includes $2,255,192 at September 30, 1998 and
        $1,883,189 at December 31, 1997 in interest-bearing accounts                  $   2,255,292          $   1,883,389
    Net lease receivables due from Leasing Company
        (notes 1 and 2)                                                                     936,242              1,094,453
                                                                                      -------------          -------------

            Total current assets                                                          3,191,534              2,977,842
                                                                                      -------------          -------------

Container rental equipment, at cost                                                      62,825,287             63,162,608
    Less accumulated depreciation                                                        22,162,669             19,524,264
                                                                                      -------------          -------------
        Net container rental equipment                                                   40,662,618             43,638,344
                                                                                      -------------          -------------

                                                                                      $  43,854,152          $  46,616,186
                                                                                      =============          =============
                 Liabilities and Partners' Capital

Current liabilities:
    Accrued expenses                                                                  $     462,948          $     462,948
                                                                                      -------------          -------------

            Total current liabilities                                                       462,948                462,948
                                                                                      -------------          -------------

Partners' capital (deficit):
    General partner                                                                         (53,356)               (25,736)
    Limited partners                                                                     43,444,560             46,178,974
                                                                                      -------------          -------------

            Total partners' capital                                                      43,391,204             46,153,238
                                                                                      -------------          -------------

                                                                                      $  43,854,152          $  46,616,186
                                                                                      =============          =============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>   5



                            IEA INCOME FUND XII, L.P.

                            STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                Three Months Ended                     Nine Months Ended
                                                       -----------------------------------     -----------------------------------
                                                       September 30,         September 30,     September 30,         September 30,
                                                            1998                  1997              1998                  1997
                                                       -------------         -------------     -------------         -------------
<S>                                                    <C>                   <C>               <C>                   <C>          

Net lease revenue (notes 1 and 3)                      $   1,252,615         $   1,487,437     $   4,033,477         $   4,230,484

Other operating expenses:
    Depreciation and amortization                            916,386               943,944         2,758,518             2,902,907
    Other general and administrative expenses                 30,805                23,317            82,293                73,858
                                                       -------------         -------------     -------------         -------------
                                                             947,191               967,261         2,840,811             2,976,765
                                                       -------------         -------------     -------------         -------------

        Earnings from operations                             305,424               520,176         1,192,666             1,253,719

Other income (loss):
    Interest income                                           30,802                17,054            88,496                65,255
    Net gain (loss) on disposal of equipment                 (17,816)               25,372           (21,058)               34,074
                                                       -------------         -------------     -------------         -------------
                                                              12,986                42,426            67,438                99,329
                                                       -------------         -------------     -------------         -------------

        Net earnings                                   $     318,410         $     562,602     $   1,260,104         $   1,353,048
                                                       =============         =============     =============         =============

Allocation of net earnings:
    General partner                                    $      56,813         $      85,605     $     173,488         $     225,409
    Limited partners                                         261,597               476,997         1,086,616             1,127,639
                                                       -------------         -------------     -------------         -------------

                                                       $     318,410         $     562,602     $   1,260,104         $   1,353,048
                                                       =============         =============     =============         =============

Limited partners' per unit share of net earnings       $        0.08         $        0.13     $        0.31         $        0.32
                                                       =============         =============     =============         =============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>   6
                           IEA INCOME FUND XII, L.P.

                            STATEMENTS OF CASH FLOWS

                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              Nine Months Ended
                                                                     -----------------------------------
                                                                     September 30,         September 30,
                                                                          1998                  1997
                                                                     -------------         -------------
<S>                                                                  <C>                   <C>          

Net cash provided by operating activities                            $   4,008,452         $   4,312,021

Cash flows provided by (used in) investing activities:
    Proceeds from disposal of equipment                                    385,590               169,248
    Purchase of container rental equipment                                    --                (427,452)
    Acquisition fees paid to general partner                                  --                (246,373)
                                                                     -------------         -------------

        Net cash provided by (used in) investing activities                385,590              (504,577)
                                                                     -------------         -------------

Cash flows used in financing activities:
    Distribution to partners                                            (4,022,139)           (4,453,632)
                                                                     -------------         -------------


Net increase (decrease) in cash and cash equivalents                       371,903              (646,188)


Cash and cash equivalents at January 1                                   1,883,389             2,262,639
                                                                     -------------         -------------


Cash and cash equivalents at September 30                            $   2,255,292         $   1,616,451
                                                                     =============         =============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>   7
                            IEA INCOME FUND XII, L.P.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


(1)  Summary of Significant Accounting Policies

     (a) Nature of Operations

         IEA Income Fund XII, L.P. (the "Partnership") is a limited partnership
         organized under the laws of the State of California on August 28, 1991
         for the purpose of owning and leasing marine cargo containers. Cronos
         Capital Corp. ("CCC") is the general partner and, with its affiliate
         Cronos Containers Limited (the "Leasing Company"), manages and controls
         the business of the Partnership. The Partnership shall continue until
         December 31, 2011, unless sooner terminated upon the occurrence of
         certain events.

         The Partnership commenced operations on January 31, 1992, when the
         minimum subscription proceeds of $2,000,000 were obtained. As of
         September 30, 1998, the Partnership owned and operated 9,261
         twenty-foot, 5,250 forty-foot and 207 forty-foot high-cube marine dry
         cargo containers, as well as 198 twenty-foot and 305 forty-foot marine
         refrigerated cargo containers.

         The Partnership offered 3,750,000 units of limited partnership interest
         at $20 per unit, or $75,000,000. The offering terminated on November
         30, 1992, at which time 3,513,594 limited partnership units had been
         purchased.

     (b) Leasing Company and Leasing Agent Agreement

         The Partnership has entered into a Leasing Agent Agreement whereby the
         Leasing Company has the responsibility to manage the leasing operations
         of all equipment owned by the Partnership. Pursuant to the Agreement,
         the Leasing Company is responsible for leasing, managing and re-leasing
         the Partnership's containers to ocean carriers and has full discretion
         over which ocean carriers and suppliers of goods and services it may
         deal with. The Leasing Agent Agreement permits the Leasing Company to
         use the containers owned by the Partnership, together with other
         containers owned or managed by the Leasing Company and its affiliates,
         as part of a single fleet operated without regard to ownership. Since
         the Leasing Agent Agreement meets the definition of an operating lease
         in Statement of Financial Accounting Standards (SFAS) No. 13, it is
         accounted for as a lease under which the Partnership is lessor and the
         Leasing Company is lessee.

         The Leasing Agent Agreement generally provides that the Leasing Company
         will make payments to the Partnership based upon rentals collected from
         ocean carriers after deducting direct operating expenses and management
         fees to CCC and the Leasing Company. The Leasing Company leases
         containers to ocean carriers, generally under operating leases which
         are either master leases or term leases (mostly two to five years).
         Master leases do not specify the exact number of containers to be
         leased or the term that each container will remain on hire but allow
         the ocean carrier to pick up and drop off containers at various
         locations; rentals are based upon the number of containers used and the
         applicable per-diem rate. Accordingly, rentals under master leases are
         all variable and contingent upon the number of containers used. Most
         containers are leased to ocean carriers under master leases; leasing
         agreements with fixed payment terms are not material to the financial
         statements. Since there are no material minimum lease rentals, no
         disclosure of minimum lease rentals is provided in these financial
         statements.

     (c) Basis of Accounting

         The Partnership utilizes the accrual method of accounting. Net lease
         revenue is recorded by the Partnership in each period based upon its
         leasing agent agreement with the Leasing Company. Net lease revenue is
         generally dependent upon operating lease rentals from operating lease
         agreements between the Leasing Company and its various lessees, less
         direct operating expenses and management fees due in respect of the
         containers specified in each operating lease agreement.

                                                                     (Continued)


                                       7
<PAGE>   8
                            IEA INCOME FUND XII, L.P.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


     (d) Financial Statement Presentation

         These financial statements have been prepared without audit. Certain
         information and footnote disclosures normally included in financial
         statements prepared in accordance with generally accepted accounting
         procedures have been omitted. It is suggested that these financial
         statements be read in conjunction with the financial statements and
         accompanying notes in the Partnership's latest annual report on Form
         10-K.

         The preparation of financial statements in conformity with generally
         accepted accounting principles (GAAP) requires the Partnership to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenues and expenses during the reported period. Actual results could
         differ from those estimates.

         The interim financial statements presented herewith reflect all
         adjustments of a normal recurring nature which are, in the opinion of
         management, necessary to a fair statement of the financial condition
         and results of operations for the interim periods presented.


(2)  Net Lease Receivables Due from Leasing Company

     Net lease receivables due from the Leasing Company are determined by
     deducting direct operating payables and accrued expenses, base management
     fees payable, and reimbursed administrative expenses payable to CCC and its
     affiliates from the rental billings payable by the Leasing Company to the
     Partnership under operating leases to ocean carriers for the containers
     owned by the Partnership. Net lease receivables at September 30, 1998 and
     December 31, 1997 were as follows:


<TABLE>
<CAPTION>
                                                                             September 30,        December 31,
                                                                                  1998                1997
                                                                             -------------       -------------
<S>                                                                          <C>                 <C>          
         Lease receivables, net of doubtful accounts of $166,611
            at September 30, 1998 and $126,327 at December 31, 1997          $   1,858,402       $   2,117,313
         Less:
         Direct operating payables and accrued expenses                            480,400             512,846
         Damage protection reserve                                                 119,772             179,744
         Base management fees                                                      283,942             289,537
         Reimbursed administrative expenses                                         38,046              40,733
                                                                             -------------       -------------

                                                                             $     936,242       $   1,094,453
                                                                             =============       =============
</TABLE>

                                                                     (Continued)


                                       8
<PAGE>   9
                            IEA INCOME FUND XII, L.P.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


(3)  Net Lease Revenue

     Net lease revenue is determined by deducting direct operating expenses,
     base management fees and reimbursed administrative expenses to CCC and its
     affiliates from the rental revenue billed by the Leasing Company under
     operating leases to ocean carriers for the containers owned by the
     Partnership. Net lease revenue for the three and nine-month periods ended
     September 30, 1998 and 1997 was as follows:


<TABLE>
<CAPTION>
                                                             Three Months Ended                      Nine Months Ended
                                                      ---------------------------------       ---------------------------------
                                                      September 30,       September 30,       September 30,       September 30,
                                                           1998                1997                1998                1997
                                                      -------------       -------------       -------------       -------------
<S>                                                   <C>                 <C>                 <C>                 <C>          

         Rental revenue                               $   2,183,010       $   2,327,673       $   6,500,276       $   6,940,559
         Less:
         Rental equipment operating expenses                646,410             563,258           1,624,038           1,875,121
         Base management fees                               147,356             160,540             441,948             478,623
         Reimbursed administrative expenses                 136,629             116,438             400,813             356,331
                                                      -------------       -------------       -------------       -------------

                                                      $   1,252,615       $   1,487,437       $   4,033,477       $   4,230,484
                                                      =============       =============       =============       =============
</TABLE>


                                       9
<PAGE>   10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

It is suggested that the following discussion be read in conjunction with the
Registrant's most recent annual report on Form 10-K.


1)   Material changes in financial condition between September 30, 1998 and
     December 31, 1997.

     At September 30, 1998, the Registrant had $2,255,292 in cash and cash
     equivalents, an increase of $371,903 from the December 31, 1997 cash
     balances. At September 30, 1998, the Registrant had approximately $522,000
     in cash generated from equipment sales reserved as part of its cash
     balances.

     The Registrant's operating performance contributed to a 14% decline in net
     lease receivables at September 30, 1998 when compared to December 31, 1997.
     The Registrant's cash distribution from operations for the third quarter of
     1998 was 7.25% (annualized) of the limited partners' original capital
     contributions, unchanged from the second quarter of 1998. These
     distributions are directly related to the Registrant's results from
     operations and may fluctuate accordingly.

     During the third quarter of 1998, the economic troubles in Asia, as
     evidenced by devalued currencies, restricted credit, and negative economic
     growth, continued to impact the growth of containerized trade. Significant
     trade imbalances, combined with a drop in trade volumes in some locations,
     continued to challenge the container leasing industry, with a corresponding
     effect on the Registrant's operating performance. The devaluation of the
     Asian currencies has led to an increase in exports from Asia, creating a
     strong demand for containers in that area of the world. However, the
     devalued currencies, together with the effects of restricted credit, have
     also reduced the demand in Asia for imports from the West. This has
     resulted in lower demand for containers in Europe and North America. In
     addition, turmoil in other financial markets, such as Japan and Russia,
     threatens to spread to Latin America and other emerging markets. As a
     result of these factors, the Registrant does not foresee any significant
     change in market conditions in the near future. However, in response to the
     current market conditions, the Registrant has been repositioning containers
     from low to higher demand locations in order to reduce its idle inventory.
     The Registrant will selectively continue to reposition available equipment
     when it believes that the impact will have a positive effect on its
     operations.

2)   Material changes in the results of operations between the three and
     nine-month periods ended September 30, 1998 and the three and nine-month
     periods ended September 30, 1997.

     Net lease revenue for the three and nine-month periods ended September 30,
     1998 was $1,252,615 and $4,033,477, respectively, an increase of 16% and 5%
     from the respective three and nine-month periods in the prior year. Gross
     rental revenue (a component of net lease revenue) for the three and
     nine-month periods ended September 30, 1998 was $2,183,010 and $6,500,276,
     respectively, reflecting a decline of 6% from each of the respective
     periods in the prior year. Gross lease revenue was primarily impacted by
     lower per-diem rental rates and utilization levels. Average dry cargo
     container per-diem rental rates for the three and nine-month periods ended
     September 30, 1998 declined approximately 2% and 7%, respectively, when
     compared to the same periods in the prior year.


                                       10
<PAGE>   11
     The Registrant's average fleet size and utilization rates for the three and
     nine-month periods ended September 30, 1998 and 1997 were as follows:


<TABLE>
<CAPTION>
                                                                Three Months Ended               Nine Months Ended
                                                         ------------------------------    ------------------------------
                                                         September 30,    September 30,    September 30,    September 30,
                                                              1998             1997             1998             1997
                                                         -------------    -------------    -------------    -------------
<S>                                                      <C>              <C>              <C>              <C>   

         Average fleet size (measured in
            twenty-foot equivalent units (TEU))
               Dry cargo containers                             20,189           20,361           20,361           20,340
               Refrigerated containers                             808              811              808              811
         Average Utilization
               Dry cargo containers                                 75%              81%              82%              79%
               Refrigerated containers                              77%              83%              84%              84%
</TABLE>


     Rental equipment operating expenses were 30% and 25%, respectively, of the
     Registrant's gross lease revenue during the three and nine-month periods
     ended September 30, 1998, as compared to 24% and 27%, respectively, of the
     Registrant's gross lease revenue during the three and nine-month periods
     ended September 30, 1997. The increase reflected during the three
     month-period ended September 30, 1998 was largely attributable to an
     increase in costs associated with lower utilization levels, including
     handling, storage, and repositioning.

     The Registrant disposed of 14 twenty-foot, 13 forty-foot, and one
     forty-foot high-cube marine dry cargo containers during the third quarter
     of 1998, as compared to 40 twenty-foot and 12 forty-foot marine dry cargo
     containers during the same period in the prior year. The decision to repair
     or dispose of a container is made when it is returned by a lessee. This
     decision is influenced by various factors including the age, condition, and
     suitability for continued leasing, as well as the geographical location of
     the container when disposed. These factors also influence the amount of
     sales proceeds received and the related gain on container disposals.

     Year 2000

     The Registrant relies upon the financial and operational systems provided
     by the Leasing company and its affiliates, as well as the systems provided
     by other independent third parties to service the three primary areas of
     its business: investor processing/maintenance; container leasing/asset
     tracking; and accounting finance. The Registrant has received confirmation
     from its third-party investor processing/maintenance vendor that their
     system is Year 2000 compliant. The Registrant does not expect a material
     increase in its vendor servicing fee to reimburse Year 2000 costs.
     Container leasing/asset tracking and accounting/finance services are
     provided to the Registrant by CCC and its affiliate, Cronos Containers
     Limited (the "Leasing Company"), pursuant to the respective Limited
     Partnership Agreement and Leasing Agent Agreement. CCC and the Leasing
     Company have initiated a program to prepare their systems and applications
     for the Year 2000. Preliminary studies indicate that testing, conversion
     and upgrading of system applications is expected to cost CCC and the
     Leasing Company less than $500,000. Pursuant to the Limited Partnership
     Agreement, CCC or the Leasing Company, may not seek reimbursement of data
     processing costs associated with the Year 2000 program. The financial
     impact of making these required system changes is not expected to be
     material to the Registrant's financial position, results of operations or
     cash flows.


                                       11
<PAGE>   12
     Cautionary Statement

     This Quarterly Report on Form 10-Q contains statements relating to future
     results of the Registrant, including certain projections and business
     trends, that are "forward-looking statements" as defined in the Private
     Securities Litigation Reform Act of 1995. Actual results may differ
     materially from those projected as a result of certain risks and
     uncertainties, including but not limited to changes in: economic
     conditions; trade policies; demand for and market acceptance of leased
     marine cargo containers; competitive utilization and per-diem rental rate
     pressures; as well as other risks and uncertainties, including but not
     limited to those described in the above discussion of the marine container
     leasing business under Item 2., Management's Discussion and Analysis of
     Financial Condition and Results of Operations; and those detailed from time
     to time in the filings of Registrant with the Securities and Exchange
     Commission.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.


                                       12
<PAGE>   13
                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings

        As reported in the Registrant's Current Report on Form 8-K and Amendment
        No. 1 to Current Report on Form 8-K, filed with the Commission on
        February 7, 1997 and February 26, 1997, respectively, Arthur Andersen,
        London, England, resigned as auditors of the Cronos Group, a Luxembourg
        corporation headquartered in Orchard Lea, England (the "Parent
        Company"), on February 3, 1997.

        The Registrant retained a new auditor, Moore Stephens, P.C. on April 10,
        1997, as reported in its Current Report on Form 8-K, filed April 14,
        1997.

        In connection with its resignation, Arthur Andersen also prepared a
        report pursuant to Section 10A(b)(2) of the Securities Exchange Act of
        1934 as amended, for filing by the Parent Company with the Securities
        and Exchange Commission ("SEC") citing its inability to obtain what it
        considered to be adequate responses to its inquiries primarily regarding
        the payment of $1.5 million purportedly in respect of professional fees
        relating to a proposed strategic alliance. This sum was returned to the
        Parent Company in January 1997.

        Following the report of Arthur Andersen, the SEC, on February 10, 1997,
        commenced a private investigation of the Parent Company for the purpose
        of investigating the matters discussed in such report and related
        matters. The SEC's investigation can result in several types of civil or
        administrative sanctions against the Parent Company and individuals
        associated with the Parent Company, including the assessment of monetary
        penalties. Actions taken by the SEC do not preclude additional actions
        by any other federal, civil or criminal authorities or by other
        regulatory organizations or by third parties.

        The SEC's investigation is continuing, and some of the Parent Company's
        present and former officers and directors and others associated with the
        Parent Company have given testimony. However, no conclusion of any
        alleged wrongdoing by the Parent Company or any individual has been
        communicated to the Parent Company by the SEC.

        The Registrant does not believe that the focus of the SEC's
        investigation is upon the Registrant or CCC. CCC is unable to predict
        the outcome of the SEC's ongoing private investigation of the Parent
        Company.

        As reported in the Registrant's Current Report on Form 8-K, filed with
        the SEC on May 21, 1998, the Parent Company reported that its Chairman
        and CEO, Stefan M. Palatin, was suspended from his duties pending the
        investigation of fraud charges against him by Austrian government
        authorities. On June 8, 1998, the Parent Company's Board of Directors
        removed Mr. Palatin as Managing Director and Chief Executive Officer.
        Mr. Palatin resigned from the Board of Directors of the Parent Company
        on July 6, 1998. Mr. Rudolf J. Weissenberger has been appointed to
        replace Mr. Palatin as an executive director and Chief Executive
        Officer. Also, on June 8, 1998, the Board approved a proposal to add two
        independent directors to the Board. The Board engaged legal counsel to
        provide legal advice and commence legal action, if appropriate, against
        former officers or directors of the Parent Company (including Mr.
        Palatin) if it is determined that they engaged in any misfeasance or
        improper self-dealing.

        Mr. Palatin had been a director of CCC; he resigned from his position as
        director on April 23, 1998.

        CCC further understands that Austrian authorities have initiated
        investigations of persons in addition to Mr. Palatin, including Mr.
        Weissenberger and Dr. Axel Friedberg. The investigations which remain
        pending have not resulted in any action being taken against Mr.
        Weissenberger, and he has informed the Parent Company that he


                                       13
<PAGE>   14
        does not believe that there is any basis for any action to be taken
        against him. Dr. Friedberg has been a non-executive director of the
        Parent Company since 1997. In August 1998, charges were presented
        against Dr. Friedberg. Dr. Friedberg has denied any wrongdoing and, on
        September 14, 1998, filed objections to the charges against him.


Item 3. Defaults Upon Senior Securities

        See Item 5. Other Information.


Item 5. Other Information

        In 1993, the Parent Company negotiated a credit facility (hereinafter,
        the "Credit Facility") with several banks for the use of the Parent
        Company and its affiliates, including CCC. At December 31, 1996,
        approximately $73,500,000 in principal indebtedness was outstanding
        under the Credit Facility. As a party to the Credit Facility, CCC is
        jointly and severally liable for the repayment of all principal and
        interest owed under the Credit Facility. The obligations of CCC, and the
        five other subsidiaries of the Parent Company that are borrowers under
        the Credit Facility, are guaranteed by the Parent Company.

        Following negotiations in 1997 with the banks providing the Credit
        Facility, an Amended and Restated Credit Agreement was executed in June
        1997, subject to various actions being taken by the Parent Company and
        its subsidiaries, primarily relating to the provision of additional
        collateral. This Agreement was further amended in July 1997 and the
        provisions of the Agreement and its Amendment converted the facility to
        a term loan, payable in installments, with a final maturity date of May
        31, 1998. The terms of the Agreement and its Amendment also provided for
        additional security over shares in the subsidiary of the Parent Company
        that owns the head office of the Parent Company's container leasing
        operations. They also provided for the loans to the former Chairman of
        $5,900,000 and $3,700,000 to be restructured as obligations of the
        former Chairman to another subsidiary of the Parent Company (not CCC),
        together with the pledge to this subsidiary company of 2,030,303 Common
        Shares beneficially owned by him in the Parent Company as security for
        these loans. They further provided for the assignment of these loans to
        the lending banks, together with the pledge of 1,000,000 shares and the
        assignment of the rights of the Parent Company in respect of the other
        1,030,303 shares. Additionally, CCC granted the lending banks a security
        interest in the fees to which it is entitled for the services it renders
        to the container leasing partnerships of which it acts as general
        partner, including its fee income payable by the Registrant. The Parent
        Company did not repay the Credit Facility at the amended maturity date
        of May 31, 1998.

        On June 30, 1998, the Parent Company entered into a third amendment (the
        "Third Amendment") to the Credit Facility. The Third Amendment became
        effective as of that date, subject to the satisfaction thereafter of
        various conditions, including: the Parent Company must deliver its
        audited financial statements for 1997 by a specified date and; on or
        prior to July 30, 1998, the Parent Company must furnish proof that any
        defaults under any other indebtedness have been waived and must also
        furnish various legal opinions, officers' certificates and other loan
        documentation. All of these conditions were fulfilled by August 14,
        1998. Under the Third Amendment, the remaining principal amount of
        $36,800,000 will be amortized in varying monthly amounts commencing on
        July 31, 1998 with $26,950,000 due on September 30, 1998 and a final
        maturity date of January 8, 1999. The Parent Company did not repay the
        amount due on September 30, 1998. The directors of the Parent Company
        currently are holding discussions with the lenders to refinance or
        extend its debt that became due on September 30, 1998.

        The directors of the Parent Company also are pursuing alternative
        sources of financing to meet the amended repayment obligations under the
        Third Amendment. Failure to meet revised lending terms would constitute
        an event of default with the lenders. The declaration of an event of
        default would result in further defaults with other lenders under loan
        agreement cross-default provisions. Should a default of the term loans
        be enforced, the Parent Company and CCC may be unable to continue as
        going concerns.


                                       14
<PAGE>   15
        CCC is currently in discussions with the management of the Parent
        Company to provide assurance that the management of the container
        leasing partnerships managed by CCC, including the Registrant, is not
        disrupted pending a refinancing or reorganization of the indebtedness of
        the Parent Company and its affiliates.

        The Registrant is not a borrower under the Credit Facility, and neither
        the containers nor the other assets of the Registrant have been pledged
        as collateral under the Credit Facility.

        CCC is unable to determine the impact, if any, these concerns may have
        on the future operating results and financial condition of the
        Registrant or CCC and the Leasing Company's ability to manage the
        Registrant's fleet in subsequent periods.


                                       15
<PAGE>   16
Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

<TABLE>
<CAPTION>
         Exhibit
            No.                                 Description                                            Method of Filing
         -------                                -----------                                            ----------------
<S>                   <C>                                                                        <C>

            3(a)      Limited Partnership Agreement of the Registrant,  amended and restated     *
                      as of December 2, 1991

            3(b)      Certificate of Limited Partnership of the Registrant                       **

            10        Form of Leasing Agent Agreement with Cronos Containers Limited             ***

            27        Financial Data Schedule                                                    Filed with this document
</TABLE>


(b)  Reports on Form 8-K

     No reports on Form 8-K were filed by the Registrant during the quarter
     ended September 30, 1998.








-------------

*       Incorporated by reference to Exhibit "A" to the Prospectus of the
        Registrant dated December 2, 1991, included as part of Registration
        Statement on Form S-1 (No. 33-42697)

**      Incorporated by reference to Exhibit 3.2 to the Registration Statement
        on Form S-1 (No. 33-42697)

***     Incorporated by reference to Exhibit 10.2 to the Registration Statement
        on Form S-1 (No. 33-42697)


                                       16
<PAGE>   17
                                   SIGNATURES


        Pursuant to the requirements 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.




                             IEA INCOME FUND XII, L.P.


                             By   Cronos Capital Corp.
                                  The General Partner




                             By   /s/ Dennis J. Tietz
                                  ----------------------------------------------
                                  Dennis J. Tietz
                                  President and Director of Cronos Capital Corp.
                                  ("CCC") Principal Executive Officer of CCC




Date: November 13, 1998


                                       17
<PAGE>   18
\                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
         Exhibit
            No.                                 Description                                            Method of Filing
         -------                                -----------                                            ----------------
<S>                   <C>                                                                        <C>

            3(a)      Limited Partnership Agreement of the Registrant,  amended and restated     *
                      as of December 2, 1991

            3(b)      Certificate of Limited Partnership of the Registrant                       **

            10        Form of Leasing Agent Agreement with Cronos Containers Limited             ***

            27        Financial Data Schedule                                                    Filed with this document
</TABLE>







-------------

*       Incorporated by reference to Exhibit "A" to the Prospectus of the
        Registrant dated December 2, 1991, included as part of Registration
        Statement on Form S-1 (No. 33-42697)

**      Incorporated by reference to Exhibit 3.2 to the Registration Statement
        on Form S-1 (No. 33-42697)

***     Incorporated by reference to Exhibit 10.2 to the Registration Statement
        on Form S-1 (No. 33-42697)