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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2008



| ̈ | 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
333-142034

ATEL 12, LLC

(Exact name of registrant as specified in its charter)



|                                                               |  |                                       
|-------------------------------------------------------------- |  | --------------------------------------
|California                                                     |  | 20-8712853                            
|(State or other jurisdiction of Incorporation or organization) |  | (I. R. S. Employer Identification No.)

600 California Street, 6th Floor, San Francisco, California 94108-2733

(Address of principal executive offices)

Registrants telephone number, including area code (415) 989-8800

Securities registered pursuant to section
12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Limited Liability Company Units

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

Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                           |  |                                               |  |                          |  |                             
|-------------------------- |  | --------------------------------------------- |  | ------------------------ |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈                          |  | Non-accelerated filer   ̈ |  | Smaller reporting company  x
|                           |  | (Do not check if a 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  x

The number of Limited Liability Company Units outstanding as of July 31, 2008 was 849,315.

DOCUMENTS INCORPORATED BY
REFERENCE

None.









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ATEL 12, LLC

Index



|         |  |                                                                                                                                                                          |  |   
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --
|Part I.  |  | Financial Information                                                                                                                                                    |  |   
|         |  |                                                                                                                                                                         
|Item 1.  |  | Financial Statements (Unaudited)                                                                                                                                         |  | 3 
|         |  |                                                                                                                                                                         
|         |  | Balance Sheets, June 30, 2008 and December 31, 2007                                                                                                                      |  | 3 
|         |  |                                                                                                                                                                         
|         |  | Statements of Operations for the three and six months ended June 30, 2008                                                                                                |  | 4 
|         |  |                                                                                                                                                                         
|         |  | Statements of Changes in Members Capital for the period from February 24, 2007 (date of inception) through December 31, 2007 and for the six months ended June 30, 2008 |  | 5 
|         |  |                                                                                                                                                                         
|         |  | Statements of Cash Flows for the three and six months ended June 30, 2008                                                                                                |  | 6 
|         |  |                                                                                                                                                                         
|         |  | Notes to the Financial Statements                                                                                                                                        |  | 7 
|         |  |                                                                                                                                                                         
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                    |  | 19
|         |  |                                                                                                                                                                         
|Item 4.  |  | Controls and Procedures                                                                                                                                                  |  | 22
|         |  |                                                                                                                                                                         
|Part II. |  | Other Information                                                                                                                                                        |  |   
|         |  |                                                                                                                                                                         
|Item 1.  |  | Legal Proceedings                                                                                                                                                        |  | 23
|         |  |                                                                                                                                                                         
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                              |  | 23
|         |  |                                                                                                                                                                         
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                                                          |  | 24
|         |  |                                                                                                                                                                         
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                                                                      |  | 24
|         |  |                                                                                                                                                                         
|Item 5.  |  | Other Information                                                                                                                                                        |  | 24
|         |  |                                                                                                                                                                         
|Item 6.  |  | Exhibits                                                                                                                                                                 |  | 24



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Part I. FINANCIAL INFORMATION



|Item 1. | Financial Statements (Unaudited).
|------- | ---------------------------------

ATEL 12, LLC

BALANCE SHEETS

JUNE 30, 2008 AND DECEMBER 31, 2007



|                                                                                                                                            |  |              |           |                  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ---------------- | - | -------- | -
|                                                                                                                                            |  | June 30,2008 |           | December 31,2007 |  
|                                                                                                                                            |  | (Unaudited)  |           |                  |  
|ASSETS                                                                                                                                      |  |              |           |                  |   |          |  
|Cash and cash equivalents                                                                                                                   |  | $            | 1,600,556 |                  | $ | 600      |  
|Accounts receivable                                                                                                                         |  |              | 31,901    |                  |   |         |  
|Notes receivable, net of unearned interest income of $258,697 and $0 at June 30, 2008 and December 31, 2007,
respectively                   |  |              | 1,259,456 |                  |   |         |  
|Investments in equipment and leases, net of accumulated depreciation of $70,659 and $0 at June 30, 2008 and December 31, 2007,
respectively |  |              | 2,669,373 |                  |   |         |  
|Other assets                                                                                                                                |  |              | 139       |                  |   |         |  
|                                                                                                                                            |  |              |           |                  |   |          |  
|Total assets                                                                                                                                |  | $            | 5,561,425 |                  | $ | 600      |  
|                                                                                                                                            |  |              |           |                  |   |          |  
|LIABILITIES AND MEMBERS CAPITAL (DEFICIT)                                                                                                  |  |              |           |                  |   |          |  
|Accounts payable and accrued liabilities:                                                                                                   |  |              |           |                  |   |          |  
|Managing Member                                                                                                                             |  | $            | 3,503     |                  | $ |         |  
|Affiliates                                                                                                                                  |  |              | 809,283   |                  |   | 904,688  |  
|Accrued distributions to Other Members                                                                                                      |  |              | 42,529    |                  |   |         |  
|Other                                                                                                                                       |  |              | 236,379   |                  |   | 1,000    |  
|                                                                                                                                            |  |              |           |                  |   |          |  
|Total liabilities                                                                                                                           |  |              | 1,091,694 |                  |   | 905,688  |  
|                                                                                                                                            |  |              |           |                  |   |          |  
|Commitments and contingencies                                                                                                               |  |              |           |                  |   |          |  
|Members capital (deficit):                                                                                                                 |  |              |           |                  |   |          |  
|Managing Member                                                                                                                             |  |              |          |                  |   | (12,320  | )
|Other Members                                                                                                                               |  |              | 4,469,731 |                  |   | (892,768 | )
|                                                                                                                                            |  |              |           |                  |   |          |  
|Total Members capital (deficit)                                                                                                            |  |              | 4,469,731 |                  |   | (905,088 | )
|                                                                                                                                            |  |              |           |                  |   |          |  
|Total liabilities and Members capital (deficit)                                                                                            |  | $            | 5,561,425 |                  | $ | 600      |  
|                                                                                                                                            |  |              |           |                  |   |          |  

See accompanying notes.



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ATEL 12, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008

(Unaudited)



|                                                            |  |                                 |          |   |                               |   |          |  
|----------------------------------------------------------- |  | ------------------------------- | -------- | - | ----------------------------- | - | -------- | -
|                                                            |  | Three months endedJune 30, 2008 |          |   | Six months endedJune 30, 2008 |  
|Revenues:                                                   |  |                                 |          |   |                               |   |          |  
|Operating lease income                                      |  | $                               | 47,740   |   |                               | $ | 75,660   |  
|Notes receivable interest income                            |  |                                 | 10,193   |   |                               |   | 10,193   |  
|Interest income                                             |  |                                 | 4,177    |   |                               |   | 7,077    |  
|Other                                                       |  |                                 | 5,200    |   |                               |   | 5,200    |  
|                                                            |  |                                 |          |   |                               |   |          |  
|Total revenues                                              |  |                                 | 67,310   |   |                               |   | 98,130   |  
|Expenses:                                                   |  |                                 |          |   |                               |   |          |  
|Depreciation of operating lease assets                      |  |                                 | 44,076   |   |                               |   | 70,659   |  
|Asset management fees to Managing Member                    |  |                                 | 1,579    |   |                               |   | 2,696    |  
|Acquisition expense                                         |  |                                 | 93,938   |   |                               |   | 143,588  |  
|Cost reimbursements to Managing Member and affiliates       |  |                                 | 20,748   |   |                               |   | 30,935   |  
|Amortization of initial direct costs                        |  |                                 | 451      |   |                               |   | 521      |  
|Interest expense                                            |  |                                 | 7,820    |   |                               |   | 11,101   |  
|Professional fees                                           |  |                                 | 12,443   |   |                               |   | 12,788   |  
|Outside services                                            |  |                                 | 1,029    |   |                               |   | 3,434    |  
|Other                                                       |  |                                 | 3,161    |   |                               |   | 3,605    |  
|                                                            |  |                                 |          |   |                               |   |          |  
|Total operating expenses                                    |  |                                 | 185,245  |   |                               |   | 279,327  |  
|                                                            |  |                                 |          |   |                               |   |          |  
|Net loss                                                    |  | $                               | (117,935 | ) |                               | $ | (181,197 | )
|                                                            |  |                                 |          |   |                               |   |          |  
|Net (loss) income:                                          |  |                                 |          |   |                               |   |          |  
|Managing Member                                             |  | $                               | 7,298    |   |                               | $ | 21,908   |  
|Other Members                                               |  |                                 | (125,233 | ) |                               |   | (203,105 | )
|                                                            |  |                                 |          |   |                               |   |          |  
|                                                            |  | $                               | (117,935 | ) |                               | $ | (181,197 | )
|                                                            |  |                                 |          |   |                               |   |          |  
|Net loss per Limited Liability Company Unit (Other Members) |  | $                               | (0.31    | ) |                               | $ | (0.74    | )
|Weighted average number of Units outstanding                |  |                                 | 399,771  |   |                               |   | 274,310  |  

See accompanying notes.



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ATEL 12, LLC

STATEMENTS OF CHANGES IN MEMBERS CAPITAL (DEFICIT)

FOR THE PERIOD FROM
FEBRUARY 24, 2007 (Date of Inception)

THROUGH DECEMBER 31, 2007

AND FOR THE SIX MONTHS ENDED

JUNE 30, 2008

(Unaudited)



|                                                             |  |               |  |        |                |   |  |       |         |   |  |   |           |  
|------------------------------------------------------------ |  | ------------- |  | ------ | -------------- | - |  | ----- | ------- | - |  | - | --------- | -
|                                                             |  | Other Members |  |        | ManagingMember |   |  | Total |        
|                                                             |  | Units         |  | Amount |                |   | 
|Members capital as of February 24, 2007 (date of inception) |  |              |  | $      |               |   |  | $     |        |   |  | $ |          |  
|Capital contributions                                        |  | 50            |  |        | 500            |   |  |       | 100     |   |  |   | 600       |  
|Less selling commissions to affiliates                       |  |              |  |        | (79,039        | ) |  |       |        |   |  |   | (79,039   | )
|Syndication costs                                            |  |              |  |        | (814,104       | ) |  |       |        |   |  |   | (814,104  | )
|Net loss                                                     |  |              |  |        | (125           | ) |  |       | (12,420 | ) |  |   | (12,545   | )
|                                                             |  |               |  |        |                |   |  |       |         |   |  |   |           |  
|Balance December 31, 2007                                    |  | 50            |  |        | (892,768       | ) |  |       | (12,320 | ) |  |   | (905,088  | )
|Capital contributions                                        |  | 661,765       |  |        | 6,617,650      |   |  |       |        |   |  |   | 6,617,650 |  
|Distributions to Other Members ($0.44 per Unit)              |  |              |  |        | (121,143       | ) |  |       |        |   |  |   | (121,143  | )
|Less selling commissions to affiliates                       |  |              |  |        | (516,550       | ) |  |       |        |   |  |   | (516,550  | )
|Syndication costs                                            |  |              |  |        | (414,353       | ) |  |       |        |   |  |   | (414,353  | )
|Distributions to Managing Member                             |  |              |  |        |               |   |  |       | (9,588  | ) |  |   | (9,588    | )
|Net (loss) income                                            |  |              |  |        | (203,105       | ) |  |       | 21,908  |   |  |   | (181,197  | )
|                                                             |  |               |  |        |                |   |  |       |         |   |  |   |           |  
|Balance June 30, 2008                                        |  | 661,815       |  | $      | 4,469,731      |   |  | $     |        |   |  | $ | 4,469,731 |  
|                                                             |  |               |  |        |                |   |  |       |         |   |  |   |           |  

See accompanying notes.



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ATEL 12, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008

(Unaudited)



|                                                                       |  |                                        |            |   |                                       |   |            |  
|---------------------------------------------------------------------- |  | -------------------------------------- | ---------- | - | ------------------------------------- | - | ---------- | -
|                                                                       |  | For the three monthsended June 30,2008 |            |   | For the six monthsended June 30, 2008 |  
|Operating activities:                                                  |  |                                        |            |   |                                       |   |            |  
|Net loss                                                               |  | $                                      | (117,935   | ) |                                       | $ | (181,197   | )
|Adjustment to reconcile net loss to cash used in operating activities: |  |                                        |            |   |                                       |   |            |  
|Depreciation of operating lease assets                                 |  |                                        | 44,076     |   |                                       |   | 70,659     |  
|Amortization of initial direct costs                                   |  |                                        | 451        |   |                                       |   | 521        |  
|Amortization of unearned income on notes receivable                    |  |                                        | (10,193    | ) |                                       |   | (10,193    | )
|Changes in operating assets and liabilities:                           |  |                                        |            |   |                                       |   |            |  
|Accounts receivable                                                    |  |                                        | (19,666    | ) |                                       |   | (31,901    | )
|Prepaid and other assets                                               |  |                                        | (139       | ) |                                       |   | (139       | )
|Accounts payable, Managing Member                                      |  |                                        | (526       | ) |                                       |   | 55         |  
|Accounts payable, other                                                |  |                                        | 232,192    |   |                                       |   | 235,379    |  
|Accrued liabilities, affiliates                                        |  |                                        | 1,097      |   |                                       |   | 26,350     |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Net cash provided by operating activities                              |  |                                        | 129,357    |   |                                       |   | 109,534    |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Investing activities:                                                  |  |                                        |            |   |                                       |   |            |  
|Purchases of equipment on operating leases                             |  |                                        | (1,765,423 | ) |                                       |   | (2,737,285 | )
|Payments of initial direct costs                                       |  |                                        | (5,182     | ) |                                       |   | (8,103     | )
|Note receivable advances                                               |  |                                        | (1,125,000 | ) |                                       |   | (1,250,000 | )
|Payments received on notes receivable                                  |  |                                        | 5,572      |   |                                       |   | 5,572      |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Net cash used in investing activities                                  |  |                                        | (2,890,033 | ) |                                       |   | (3,989,816 | )
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Financing activities:                                                  |  |                                        |            |   |                                       |   |            |  
|Selling commissions to affiliates                                      |  |                                        | (477,373   | ) |                                       |   | (595,589   | )
|Syndication costs paid to Managing Member                              |  |                                        | (261,037   | ) |                                       |   | (457,069   | )
|Distributions to Other Members                                         |  |                                        | (61,876    | ) |                                       |   | (78,614    | )
|Distributions to Managing Member                                       |  |                                        | (5,017     | ) |                                       |   | (6,140     | )
|Capital contributions                                                  |  |                                        | 4,425,930  |   |                                       |   | 6,617,650  |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Net cash provided by financing activities                              |  |                                        | 3,620,627  |   |                                       |   | 5,480,238  |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Net increase in cash and cash equivalents                              |  |                                        | 859,951    |   |                                       |   | 1,599,956  |  
|Cash and cash equivalents at beginning of period                       |  |                                        | 740,605    |   |                                       |   | 600        |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Cash and cash equivalents at end of period                             |  | $                                      | 1,600,556  |   |                                       | $ | 1,600,556  |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Supplemental disclosures of cash flow information:                     |  |                                        |            |   |                                       |   |            |  
|Cash paid during the period for interest                               |  | $                                      | 7,506      |   |                                       | $ | 10,787     |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Cash paid during the period for taxes                                  |  | $                                      | 1,600      |   |                                       | $ | 1,600      |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Schedule of non-cash transactions:                                     |  |                                        |            |   |                                       |   |            |  
|Distributions payable to Other Members at period-end                   |  | $                                      | 42,529     |   |                                       | $ | 42,529     |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Distributions payable to Managing Member at period-end                 |  | $                                      | 3,448      |   |                                       | $ | 3,448      |  
|                                                                       |  |                                        |            |   |                                       |   |            |  
|Syndication and organizational costs payable to affiliates             |  | $                                      | 121,755    |   |                                       | $ | 121,755    |  
|                                                                       |  |                                        |            |   |                                       |   |            |  

See accompanying notes.



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ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

1. Organization and Limited Liability Company matters:

ATEL 12, LLC (the Company or the Fund) was formed under the laws of the state of California on January 25, 2007 for the
purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities, as well as in real estate, growth capital investment activities and green technologies (the principal operations). The Managing
Member of the Company is ATEL Associates 12, LLC (the Managing Member), a Nevada limited liability corporation. The Fund may continue until December 31, 2030. As a limited liability company, the liability of any individual member
for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member. The offering of ATEL 12, LLC (the Company or the Fund) was granted effectiveness by the Securities and
Exchange Commission as of September 26, 2007. The offering will continue until the earlier of a period of two years from that date or until sales of Units to the public reach $200,000,000.

On January 24, 2008, subscriptions for the minimum number of Units (120,000, representing $1,200,000), excluding subscriptions from Pennsylvania investors, had been
received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations and continued in its development stage activities until transitioning to an operating enterprise during the
second quarter. Pennsylvania subscriptions are subject to a separate escrow and will be released to the Fund only when it has received aggregate subscriptions for all investors equal to not less than $7,500,000. As of June 30, 2008,
contributions totaling $6,618,250, inclusive of the $500 initial members capital investment, have been received and 661,815 Units were issued and outstanding. Further, as of such date, the Fund continues activities of raising investment
capital.

The Fund, or Managing Member and/or affiliates on behalf of the Fund, will incur costs in connection with the organization, registration and
issuance of the limited liability company units (Units). The amount of such costs to be borne by the Fund is limited by certain provisions of the ATEL 12, LLC Limited Liability Company Operating Agreement dated April 3, 2007 (the
Operating Agreement).

The Companys principal objectives are to invest in a diversified portfolio of investments that (i) preserves,
protects and returns the Companys invested capital; (ii) generates regular cash distributions to Unit holders, any balance remaining after required minimum distributions to be used to purchase additional investments during the
Reinvestment Period (ending six calendar years after the completion of the Companys public offering of Units) and (iii) provides additional cash distributions following the Reinvestment Period and until all investment portfolio assets has
been sold or otherwise disposed. The Company is governed by its Operating Agreement, as amended.

2. Summary of Significant Accounting Policies:

Basis of presentation:

The accompanying unaudited
financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with instructions to Form 10-Q and Article 8 of Regulation S-X. The unaudited
interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a
normal recurring nature. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that effect reported amounts in the financial statements and accompanying notes. Therefore, actual results
could differ from those estimates. Operating results for the three and six months ended June 30, 2008 are not necessarily indicative of the results for the year ending December 31, 2008.



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ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued):

Cash and cash equivalents:

Cash and cash equivalents include cash in
banks and cash equivalent investments with original maturities of ninety days or less.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management 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 reporting period. Actual results could differ from the estimates. Such estimates
primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowances for doubtful accounts and notes receivable.

Accounts receivable:

Accounts receivable represent the amounts
billed under operating lease contracts and notes receivable which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of
specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other
income in the period received.

Credit risk:

Financial
instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, direct finance lease receivables and accounts receivable. The Company places its cash deposits and temporary cash investments with
creditworthy, high quality financial institutions and therefore, believes that the concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts and notes receivable represent
amounts due from lessees or borrowers in various industries, related to equipment on operating leases or notes receivable.

Equipment on operating
leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is recognized on a straight-line method
over the terms of the related leases to the equipments estimated residual values at the end of the leases.

Operating lease revenue is recognized on
a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms
from 36 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet.

Notes receivable, unearned interest income and related revenue recognition:

The Company records all future payments of principal and
interest on notes as notes receivable, which are then offset by the amount of any related unearned interest income. For financial statement purposes, the Company reports only the net amount of principal due on the balance sheet. The unearned
interest is recognized over the term of the note and the income portion of each note payment is calculated so as to generate a constant rate of return on the net balance outstanding. Any fees or costs related to notes receivable are recorded as part
of the net investment in notes receivable and amortized over the term of the loan.



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ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued):

Allowances for losses on notes receivable are typically established based on historical charge off and collection experience and the collectability of specifically
identified borrowers and billed and unbilled receivables. Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.
Notes are charged off to the allowance as they are deemed uncollectible.

Notes 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, management periodically reviews the credit worthiness of companies with note payments outstanding less than 90 days. Based upon managements judgment, notes may be
placed in a non-accrual status. Notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable.

Initial direct costs:

The Company capitalizes initial direct costs
(IDC) associated with the origination and funding of lease assets and investments in notes receivable (as defined in Statement of Financial Accounting Standards (SFAS) No. 91 (SFAS No. 91)
Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases). IDC includes both internal costs (e.g., the costs of employees activities in connection with successful
lease and loan originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease (or note by note) basis based on actual lease term using a straight-line method for operating leases and the effective
interest rate method for direct finance leases and notes receivable. Upon disposal of the underlying lease assets and notes receivable, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases
or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition expense:

Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and
communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As
the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.

Asset valuation:

Recorded values of the Companys operating lease and equipment portfolio are periodically reviewed for impairment in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net book value. The estimated
undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the assets expected holding period and estimates of undiscounted future rents. The residual value assumes, among other things, that the asset
is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the market place 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. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows) of the asset and its carrying value on the
measurement date.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued):

Segment reporting:

The Company is organized into one operating
segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.

The Companys principal decision makers are the Managing Members Chief Executive Officer and its Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable
segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio;
c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment
lease financing; and e) the Company has not chosen to organize its business around geographic areas.

The primary geographic regions in which the Company
sought leasing opportunities were North America and Europe. Currently, 100% of the Companys operating revenues and long-lived assets are from customers domiciled in North America.

Warrants

From time to time, the Company receives warrants to purchase securities of its borrowers in connection with
lending arrangements. During the first quarter of 2008, the Company commenced funding of investments in notes receivables. Pursuant to the terms of certain of these investments, the Company received equity rights in the form of warrants. Such
warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried at an estimated fair value on the balance sheet at the end of the period, as determined by the Managing Member. The fair values of the
warrants are determined based either upon the Black-Scholes pricing model with borrowers who are in S-l registration with industry recognized investment bankers, or the price per share of subsequent private placements. Such determination of fair
value may be adjusted pursuant to other factors which include, but arc not limited to, available financial information, the terms and condition of subsequent placements, the issuers ability to meet its current obligations and indications of
the issuers subsequent ability to raise capital. The Managing Members estimate and assumption of fair value of the private securities may differ significantly from the values that would have been used had a ready market existed, and the
differences could be material. At June 30, 2008, the Managing Member estimated the fair value of the warrants to be nominal in amount. See note 11 for further discussion.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. Pursuant to the provisions of
Section 701 of the Internal Revenue Code, a partnership is not subject to federal income taxes. Accordingly, the Company has provided current franchise income taxes for only those states which levy income taxes on partnerships.

Per Unit data:

Net income (loss) and distributions per unit are
based upon the weighted average number of Other Members Units outstanding during the period.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued):

Recent accounting pronouncements:

In March 2008, the FASB issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), as an amendment to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 161 requires that
objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The fair value of derivative instruments and their gains and losses will need to be presented in tabular format in order to present a
more complete picture of the effects of using derivative instruments. SFAS 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact of adopting this
pronouncement.

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 141R, Business Combinations (SFAS 141R). SFAS 141R replaces SFAS 141 and establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial
effects of the business combination. This standard is effective for fiscal years beginning after December 15, 2008. The Company does not presently anticipate the adoption of SFAS 141R to significantly impact its financial position, results of
operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilitiesincluding an amendment of FASB Statement No. 115 (SFAS 159). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is
expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial instruments. Upon commencement of initial operations on January 24, 2008, the Company
adopted the provisions of SFAS 159. The adoption of SFAS 159 did not have a significant effect on the Companys financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). This standard clarifies the definition of fair value for financial reporting, establishes a framework
for measuring fair value and requires additional disclosures about the use of fair value measurements. The provisions of SFAS 157 were to be effective for fiscal years beginning after November 15, 2007. However, in February 2008, the FASB
issued FASB Staff Position (FSP) No. 157-2, which defers the effective date of SFAS 157 as it pertains to fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning after
November 15, 2008. Upon commencement of its principal operations on January 24, 2008, the Company adopted the provisions of SFAS 157 except as it applied to its investment in equipment and leases, and other nonfinancial assets and
nonfinancial liabilities as noted in FSP No. 157-2. The partial adoption of SFAS 157 did not have a significant effect on the Companys financial position, results of operations or cash flows.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

3. Notes receivable net:

At June 30, 2008, the Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. At June 30, 2008, the
original terms of the notes receivable are 36 months and bear interest at rates ranging from 11% to 12%. The notes are generally secured by the equipment financed. As of June 30, 2008, the minimum future payments receivable are as follows:



|                                                    |  |   |           |  
|--------------------------------------------------- |  | - | --------- | -
|Six months ending December 31, 2008                 |  | $ | 90,588    |  
|Year ending December 31,
2009                       |  |   | 536,827   |  
|2010                                                |  |   | 559,074   |  
|2011                                                |  |   | 326,829   |  
|                                                    |  |   |           |  
|                                                    |  |   | 1,513,318 |  
|Less: portion representing unearned interest income |  |   | (258,697  | )
|                                                    |  |   |           |  
|                                                    |  |   | 1,254,621 |  
|Unamortized indirect costs                          |  |   | 4,835     |  
|                                                    |  |   |           |  
|Notes receivable, net                               |  | $ | 1,259,456 |  
|                                                    |  |   |           |  

4. Investments in equipment and leases, net:

The Companys investment in leases consists of the following:



|                                   |  |                         |   |                                           |   |                                                          |  |   |                     |   |  |   |          
|---------------------------------- |  | ----------------------- | - | ----------------------------------------- | - | -------------------------------------------------------- |  | - | ------------------- | - |  | - | ---------
|                                   |  | BalanceDecember 31,2007 |   | Reclassifications&Additions
/Dispositions |   | Depreciation/AmortizationExpense orAmortizationof Leases |  |   | BalanceJune 30,2008
|Net investment in operating leases |  | $                       |  |                                           | $ | 2,737,285                                                |  | $ | (70,659             | ) |  | $ | 2,666,626
|Initial direct costs, net          |  |                         |  |                                           |   | 2,921                                                    |  |   | (174                | ) |  |   | 2,747    
|                                   |  |                         |   |                                           |   |                                                          |  |   |                     |   |  |   |          
|Total                              |  | $                       |  |                                           | $ | 2,740,206                                                |  | $ | (70,833             | ) |  | $ | 2,669,373
|                                   |  |                         |   |                                           |   |                                                          |  |   |                     |   |  |   |          

Additions to net investment in operating leases are stated at cost and include amounts accrued at June 30,
2008 related to asset purchase obligations.

Impairment of investments in leases and assets held for sale or lease:

Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. No impairment losses were recorded in the three and six
months ended June 30, 2008.

All of the Companys leased property was acquired during the first six months of 2008. Depreciation expense on
property subject to operating leases was $44,076 and $70,659 for the three and six months ended June 30, 2008, respectively.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

4. Investments in equipment and leases, net (continued):

Operating leases:

Property on operating leases consists of the
following:



|                              |  |                         |   |           |   |           |                                  |  |                     |   |  |   |           |  
|----------------------------- |  | ----------------------- | - | --------- | - | --------- | -------------------------------- |  | ------------------- | - |  | - | --------- | -
|                              |  | BalanceDecember 31,2007 |   | Additions |   |           | Reclassificationsor Dispositions |  | BalanceJune 30,2008 |  
|Construction                  |  | $                       |  |           | $ | 1,031,762 |                                  |  | $                   |  |  | $ | 1,031,762 |  
|Transportation                |  |                         |  |           |   | 1,542,367 |                                  |  |                     |  |  |   | 1,542,367 |  
|Material handling             |  |                         |  |           |   | 163,156   |                                  |  |                     |  |  |   | 163,156   |  
|                              |  |                         |   |           |   |           |                                  |  |                     |   |  |   |           |  
|                              |  |                         |  |           |   | 2,737,285 |                                  |  |                     |  |  |   | 2,737,285 |  
|Less accumulated depreciation |  |                         |  |           |   | (70,659   | )                                |  |                     |  |  |   | (70,659   | )
|                              |  |                         |   |           |   |           |                                  |  |                     |   |  |   |           |  
|Total                         |  | $                       |  |           | $ | 2,666,626 |                                  |  | $                   |  |  | $ | 2,666,626 |  
|                              |  |                         |   |           |   |           |                                  |  |                     |   |  |   |           |  

At June 30, 2008, the aggregate amounts of future minimum lease payments receivable are as follows:



|                                    |  |                 |          
|----------------------------------- |  | --------------- | ---------
|                                    |  | OperatingLeases
|Six months ending December 31, 2008 |  | $               | 197,182  
|Year ending December 31, 2009       |  |                 | 394,364  
|2010                                |  |                 | 394,364  
|2011                                |  |                 | 383,884  
|2012                                |  |                 | 368,579  
|2013                                |  |                 | 360,838  
|Thereafter                          |  |                 | 482,491  
|                                    |  |                 |          
|                                    |  | $               | 2,581,702
|                                    |  |                 |          

The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its
portfolio of lease transactions. The useful lives for all investment in leases currently range from seven to ten years.

5. Related party transactions:

The terms of the Operating Agreement provide that the Managing Member and/or affiliates are entitled to receive certain fees for equipment management
and resale and for management of the Company.

The Operating Agreement allows for the reimbursement of costs incurred by Managing Member and/or affiliates
for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. The Managing Member is not reimbursed for services whereby it
is entitled to receive a separate fee as compensation for such services, such as management of investments. Reimbursable costs incurred by the Managing Member and/or affiliates are allocated to the Company based upon estimated time incurred by
employees working on Company business and an allocation of rent and other costs based on utilization studies.

Each of ATEL Financial Services, LLC
(AFS), ATEL Leasing Corporation (ALC), ATEL Equipment Corporation (AEC) and ATEL Investor Services (AIS) is a wholly-owned subsidiary of ATEL Capital Group, Inc. and performs services for the Company
on behalf of the Managing Member. Acquisition services are performed for the Company by ALC, equipment management, lease administration and asset disposition services are performed by AEC, investor relations and communications services are performed
by AIS and general administrative services for the Company are performed by AFS.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

5. Related party transactions (continued):

Cost reimbursements to the Managing Member or its affiliates are based on its costs incurred in performing administrative services for the Company. These costs are
allocated to each managed entity based on certain criteria such as total assets, number of investors or contributed capital based upon the type of cost incurred. The Managing Member believes that the costs reimbursed are the lower of (i) actual
costs incurred on behalf of the Company or (ii) the amount the Company would be required to pay independent parties for comparable administrative services in the same geographic location.

The Managing Member and/or affiliates earned commissions and reimbursements, pursuant to the Operating Agreement, during the three and six months ended June 30,
2008 as follows:



|                                                                                                    |  |                                 |         |                               |   |          
|--------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | ----------------------------- | - | ---------
|                                                                                                    |  | Three months endedJune 30, 2008 |         | Six months endedJune 30, 2008
|Selling commissions, deducted from Other Members capital                                            |  | $                               | 398,334 |                               | $ | 516,550  
|Reimbursement of other syndication costs to AFS and affiliates, deducted from Other Members capital |  |                                 | 218,321 |                               |   | 414,353  
|Administrative costs reimbursed to Managing Member and/or affiliates                                |  |                                 | 20,748  |                               |   | 30,935   
|Asset management fees to Managing Member and/or affiliates                                          |  |                                 | 1,579   |                               |   | 2,696    
|Acquisition and initial direct costs paid to Managing Member                                        |  |                                 | 99,120  |                               |   | 151,691  
|                                                                                                    |  |                                 |         |                               |   |          
|                                                                                                    |  | $                               | 738,102 |                               | $ | 1,116,225
|                                                                                                    |  |                                 |         |                               |   |          

6. Syndication Costs:

Syndication costs are reflected as a reduction to Members capital at June 30, 2008 and as an incremental increase to Members deficit at December 31, 2007 as such costs are netted against the capital raised. The amount
shown is primarily comprised of selling commissions and fees pertaining to document preparation, regulatory filing fees, legal, and other direct costs associated with the Companys registration. Syndication costs totaled $616,655 and $930,903
for the three and six months ended June 30, 2008.

7. Borrowing facilities:

Effective June 28, 2007, the Company and the Managing Member were added as participants, with AFS and certain of its affiliates, in a financing arrangement with a group of financial institutions that includes
certain financial covenants. The financial arrangement is comprised of a working capital term loan facility to AFS, an acquisition facility and a warehouse facility to AFS, the Company and affiliates, and a venture facility available to an
affiliate. The facility is for $75,000,000 and expires in June 2009.

As of June 30, 2008 and December 31, 2007, outstanding borrowings and
availability under the facility were as follows:



|                                                                                                           |  |              |            |   |                  |   |            |  
|---------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                           |  | June 30,2008 |            |   | December 31,2007 |  
|Total available under the financing arrangement                                                            |  | $            | 75,000,000 |   |                  | $ | 75,000,000 |  
|Amount borrowed by the Company under the acquisition facility                                              |  |              |           |   |                  |   |           |  
|Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition facility |  |              | (3,509,555 | ) |                  |   | (8,625,000 | )
|                                                                                                           |  |              |            |   |                  |   |            |  
|Total remaining available under the acquisition and warehouse facilities                                   |  | $            | 71,490,445 |   |                  | $ | 66,375,000 |  
|                                                                                                           |  |              |            |   |                  |   |            |  

Under the terms of the acquisition facility agreement, the Company may only participate once its tangible net
worth, as therein defined, equals or exceeds $15 million.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

7. Borrowing facilities (continued):

The Company is contingently liable for principal payments under the warehouse facility as borrowings are recourse jointly and severally to the extent of the pro-rata
share of the Companys net worth as compared to the aggregate net worth of certain of the affiliated partnerships and limited liability companies of the Company and including the Managing Member, AFS and ALC (which latter three entities are
100% liable). The Company and its affiliates pay an annual commitment fee to have access to this line of credit. There were no borrowings under the warehouse facility as of June 30, 2008 and December 31, 2007.

The interest rate on the Master Terms Agreement is based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the
banks Prime rate, which re-prices daily. Principal amounts of loans made under the Master Terms Agreement that are prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Master Terms Agreement.

Draws on the acquisition facility by any affiliated partnership and/or limited liability company borrower are secured by a blanket lien on that borrowers assets,
including but not limited to equipment and related leases.

To manage the warehousing facility for the holding of assets prior to allocation to specific
investor programs, a Warehousing Trust Agreement has been entered into by the Company, the Managing Member, AFS, ALC, and certain of the affiliated partnerships and limited liability companies.

The warehousing facility is used to acquire and hold, on a short-term basis, certain lease transactions that meet the investment objectives of each of such entities.
Each of the leasing programs sponsored by the Managing Member, AFS and ALC currently in its acquisition stage is a pro rata participant in the Warehousing Trust Agreement, as described below. When a program no longer has a need for short term
financing provided by the warehousing facility, it is removed from participation, and as new leasing investment entities are formed by the Managing Member, AFS and ALC and commence their acquisition stages, these new entities are added. As of
June 30, 2008, the investment program participants were ATEL Capital Equipment Fund IX, LLC, ATEL Capital Equipment Fund X, LLC, ATEL Capital Equipment Fund XI, LLC and the Company. Pursuant to the Warehousing Trust Agreement, the benefit of
the lease transaction assets, and the corresponding liabilities under the warehouse borrowing facility, inure to each of such entities based upon each entitys pro-rata share in the warehousing trust estate. The pro-rata share is
calculated as a ratio of the net worth of each entity over the aggregate net worth of all entities benefiting from the warehouse trust estate, excepting that the trustees, the Managing Member, AFS and ALC, are liable for their pro-rata shares of the
obligations based on their respective net worth, and jointly liable for the pro rata portion of the obligations of each of the affiliated partnerships and limited liability companies participating under the borrowing facility. Transactions are
financed through this warehousing facility only until the transactions are allocated to a specific program for purchase or are otherwise disposed by the Managing Member, AFS and ALC. When a determination is made to allocate the transaction to a
specific program for purchase by the program, the purchaser repays the debt associated with the asset, either with cash or by means of the acquisition facility financing, the asset is removed from the warehouse facility collateral, and ownership of
the asset and any debt obligation associated with the asset are assumed solely by the purchasing entity.

As of June 30, 2008, the full amount
remaining available under the joint acquisition and warehouse facility is potentially available to the Company. However, as amounts are drawn on the facility by each of the Company and the affiliates who are borrowers under the facility, the amount
available to all is reduced. As the warehousing facility is a short term bridge facility, any amounts borrowed under the warehousing facility, and then repaid by the affiliated borrowers (including the Company) upon allocation of an acquisition to a
specific purchaser, become available under the warehouse facility for further short term borrowing.

The financing arrangement discussed above includes
certain financial and non-financial covenants applicable to each borrower. The Company and affiliates were in compliance with all covenants as of June 30, 2008.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

8. Commitments:

At June 30, 2008, there were commitments to purchase lease assets and fund investments in notes receivable totaling approximately $16,080,951 and $375,000, respectively. These amounts represent contract awards
which may be canceled by the prospective borrower/investee or may not be accepted by the Company.

9. Guarantees:

The Company enters into contracts that contain a variety of indemnifications. The Companys maximum exposure under these arrangements is unknown. However, the
Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. In the normal course of business, the Company enters into contracts of various types, including lease contracts, contracts for the sale
or purchase of lease assets, management contracts, loan agreements, credit lines and other debt facilities. It is prevalent industry practice for most contracts of any significant value to include provisions that each of the contracting parties - in
addition to assuming liability for breaches of the representations, warranties, and covenants that are part of the underlying contractual obligations - also assume an obligation to indemnify and hold the other contracting party harmless for such
breaches, for harm caused by such partys gross negligence and willful misconduct, including, in certain instances, certain costs and expenses arising from the contract. The Managing Member has substantial experience in managing similar leasing
programs subject to similar contractual commitments in similar transactions, and the losses and claims arising from these commitments have been insignificant, if any. Generally, to the extent these contracts are performed in the ordinary course of
business under the reasonable business judgment of the Managing Member, no liability will arise as a result of these provisions. The Managing Member has no reason to believe that the facts and circumstances relating to the Companys contractual
commitments differ from those it has entered into on behalf of the prior programs it has managed.

The Managing Member knows of no facts or circumstances
that would make the Companys contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary
course of business as part of standard commercial and industry practice, and that any potential liability under the Companys similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately
record and/or disclose such liability in accordance with GAAP.

10. Members Capital:

As of June 30, 2008, 661,815 Units were issued and outstanding. The Fund is authorized to issue up to 20,000,000 total Units.

The Funds net income or net losses are to be allocated 100% to the Members. From the commencement of the Fund until the initial closing date, as defined in the
Companys Operating Agreement, net income and net loss shall be allocated 99% to the Managing Member and 1% to the initial Other Members. Commencing with the initial closing date, net income and net loss shall be allocated 92.5% to the Other
Members and 7.5% to the Managing Member.

Fund distributions are to be allocated 7.5% to the Managing Member and 92.5% to the Other Members.

Distributions to the Other Members were as follows:



|                                             |  |                                 |         |                               |   |        
|-------------------------------------------- |  | ------------------------------- | ------- | ----------------------------- | - | -------
|                                             |  | Three Months EndedJune 30, 2008 |         | Six Months EndedJune 30, 2008
|Distributions declared                       |  | $                               | 90,018  |                               | $ | 121,143
|Weighted average number of Units outstanding |  |                                 | 399,771 |                               |   | 274,310
|                                             |  |                                 |         |                               |   |        
|Weighted average distributions per Unit      |  | $                               | 0.23    |                               | $ | 0.44   
|                                             |  |                                 |         |                               |   |        



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ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

11. Fair value of financial instruments:

During the second quarter of 2008, the Company adopted SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring
fair value and expands disclosure requirements for fair value measurements. The Company deferred the application of SFAS 157 for nonfinancial assets and nonfinancial liabilities as provided for by FSP No. 157-2, Effective Date of FASB
Statement No. 157. Issued in February 2008, FSP No. 157-2 defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for nonfinancial assets and
nonfinancial liabilities, except items that are recognized or disclosed at fair value in an entitys financial statements on a recurring basis (at least annually).

SFAS 157 defines the term fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A
fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or
liability.

SFAS 157 established a fair value hierarchy that prioritizes the inputs used to measure fair value into three broad levels, considering the
relative reliability of the inputs. The fair value hierarchy assigns the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). A
financial instruments categorization within the fair value hierarchy is based upon the lowest level of an input to the valuation that is significant to the fair value measurement.

The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1 
Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information
on an ongoing basis.

Level 2  Quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

Level 3  Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Companys own estimates of assumptions that market participants would use in pricing the asset
or liability.

Estimation of Fair Value

Fair value is
based on quoted prices in an active market when available. In certain cases where a quoted price for an asset or liability is not available, the Company estimates the fair value based on various factors which include original cost, the type and risk
characteristics of the asset or liability, expected cash flow and market volatilities. Such estimates of fair value cannot be determined with precision and may not be realized in an actual sale or transfer of the asset or liability in a current
market exchange.

The following is a description of the valuation methodologies used for warrants owned by the Company and its general classification
pursuant to the fair value hierarchy.

Warrants

Warrants owned by the Company are not registered for public sale. The fair values of the warrants are determined based either upon the Black-Scholes pricing model with borrowers who are in S-1 registration with industry recognized
investment bankers, or the price per share of subsequent private placements. Such determination of fair value may be adjusted pursuant to other factors which include, but are not limited to, available financial information, the terms and conditions
of subsequent placements, the issuers ability to meet its current obligations and indications of the issuers subsequent ability to raise capital.



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##### Table of Contents

ATEL 12, LLC

NOTES TO FINANCIAL STATEMENTS

Warrants on shares of borrowers who are in S-1 registration are generally classified
as Level 2 instruments. Warrants where fair value is based on subsequent private placements may involve unobservable inputs that reflect managements own assumptions and are classified as Level 3 instruments. At June 30, 2008, the Managing
Member estimated the fair value of the warrants to be nominal in amount.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Statements contained in this Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Form 10-Q, which are not historical facts, may be
forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, economic recession and changes in general economic conditions, including,
fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Companys
performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Companys performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by
the condition of the equipment, technological obsolescence and the market for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the
date of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, other
than as required by law.

Overview

The offering
of ATEL 12, LLC (the Company or the Fund) was granted effectiveness by the Securities and Exchange Commission as of September 26, 2007. The offering will continue until the earlier of a period of two years from that date
or until sales of Units to the public reach $200,000,000.

On January 24, 2008, subscriptions for the minimum number of Units (120,000, representing
$1,200,000), excluding subscriptions from Pennsylvania investors, had been received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations and continued in its development
stage activities until transitioning to an operating enterprise during the second quarter. Subsequent non-Pennsylvania capital contributions will be used to fund operations, invest in equipment and real estate, and provide growth capital financing
as described in the Companys S-1 Registration Statement. Pennsylvania subscriptions are subject to a separate escrow and will be released to the Fund only when it has received aggregate subscriptions for all investors equal to not less than
$7,500,000.

On January 29, 2008, the Fund made its first investment in a long-term operating lease. The investment totaled $763,553 and consisted of
transportation equipment leased to an operating subsidiary of a Fortune 100 company. The lease commenced on February 1, 2008 and has a term of 84 months. As of June 30, 2008, the Company has purchased a total of $2,737,285 of equipment for
long-term operating leases and funded investments in notes receivable totaling $1,250,000.

Capital Resources and Liquidity

During the funding period, the Companys primary source of liquidity will be subscription proceeds from the public offering of Units. As of June 30, 2008,
contributions totaling $6,618,250 have been received. The liquidity of the Company will vary in the future, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as
distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The Company is also
beginning to realize cash flow from contracts with lessees for fixed lease terms at fixed rental amounts.

Effective June 28, 2007, the Company and
the Managing Member were added as participants, with AFS and certain of its affiliates, in a financing arrangement with a group of financial institutions that includes certain financial covenants. The financial arrangement is comprised of a working
capital term loan facility to AFS, an acquisition facility and a warehouse facility to AFS, the Company and affiliates, and a venture facility available to an affiliate. The facility is for $75,000,000 and expires in June 2009.



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##### Table of Contents

As of June 30, 2008 and December 31, 2007, outstanding borrowings and availability under the facility were as
follows:



|                                                                                                           |  |              |            |   |                  |   |            |  
|---------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                           |  | June 30,2008 |            |   | December 31,2007 |  
|Total available under the financing arrangement                                                            |  | $            | 75,000,000 |   |                  | $ | 75,000,000 |  
|Amount borrowed by the Company under the acquisition facility                                              |  |              |           |   |                  |   |           |  
|Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition facility |  |              | (3,509,555 | ) |                  |   | (8,625,000 | )
|                                                                                                           |  |              |            |   |                  |   |            |  
|Total remaining available under the acquisition and warehouse facilities                                   |  | $            | 71,490,445 |   |                  | $ | 66,375,000 |  
|                                                                                                           |  |              |            |   |                  |   |            |  

Under the terms of the acquisition facility agreement, the Company may only participate once its tangible net
worth, as therein defined, equals or exceeds $15 million.

The Company is contingently liable for principal payments under the warehouse facility as
borrowings are recourse jointly and severally to the extent of the pro-rata share of the Companys net worth as compared to the aggregate net worth of certain of the affiliated partnerships and limited liability companies of the Company and
including the Managing Member, AFS and ALC (which latter three entities are 100% liable). The Company and its affiliates pay an annual commitment fee to have access to this line of credit. There were no borrowings under the warehouse facility as of
June 30, 2008 and December 31, 2007.

The interest rate on the Master Terms Agreement is based on either the LIBOR/Eurocurrency rate of 1-, 2-,
3- or 6-month maturity plus a lender designated spread, or the banks Prime rate, which re-prices daily. Principal amounts of loans made under the Master Terms Agreement that are prepaid may be re-borrowed on the terms and subject to the
conditions set forth under the Master Terms Agreement.

Draws on the acquisition facility by any affiliated partnership and/or limited liability company
borrower are secured by a blanket lien on that borrowers assets, including but not limited to equipment and related leases.

To manage the
warehousing facility for the holding of assets prior to allocation to specific investor programs, a Warehousing Trust Agreement has been entered into by the Company, the Managing Member, AFS, ALC, and certain of the affiliated partnerships and
limited liability companies.

The warehousing facility is used to acquire and hold, on a short-term basis, certain lease transactions that meet the
investment objectives of each of such entities. Each of the leasing programs sponsored by the Managing Member, AFS and ALC currently in its acquisition stage is a pro rata participant in the Warehousing Trust Agreement, as described below. When a
program no longer has a need for short term financing provided by the warehousing facility, it is removed from participation, and as new leasing investment entities are formed by the Managing Member, AFS and ALC and commence their acquisition
stages, these new entities are added. As of June 30, 2008, the investment program participants were ATEL Capital Equipment Fund IX, LLC, ATEL Capital Equipment Fund X, LLC, ATEL Capital Equipment Fund XI, LLC and the Company. Pursuant to the
Warehousing Trust Agreement, the benefit of the lease transaction assets, and the corresponding liabilities under the warehouse borrowing facility, inure to each of such entities based upon each entitys pro-rata share in the warehousing trust
estate. The pro-rata share is calculated as a ratio of the net worth of each entity over the aggregate net worth of all entities benefiting from the warehouse trust estate, excepting that the trustees, the Managing Member, AFS and ALC,
are liable for their pro-rata shares of the obligations based on their respective net worth, and jointly liable for the pro rata portion of the obligations of each of the affiliated partnerships and limited liability companies participating under
the borrowing facility. Transactions are financed through this warehousing facility only until the transactions are allocated to a specific program for purchase or are otherwise disposed by the Managing Member, AFS and ALC. When a determination is
made to allocate the transaction to a specific program for purchase by the program, the purchaser repays the debt associated with the asset, either with cash or by means of the acquisition facility financing, the asset is removed from the warehouse
facility collateral, and ownership of the asset and any debt obligation associated with the asset are assumed solely by the purchasing entity.

As of
June 30, 2008, the full amount remaining available under the joint acquisition and warehouse facility is potentially available to the Company. However, as amounts are drawn on the facility by each of the Company and the affiliates who are
borrowers under the facility, the amount available to all is reduced. As the warehousing facility is a short term bridge facility, any amounts borrowed under the warehousing facility, and then repaid by the affiliated borrowers (including the
Company) upon allocation of an acquisition to a specific purchaser, become available under the warehouse facility for further short term borrowing.

The
financing arrangement discussed above includes certain financial and non-financial covenants applicable to each borrower. The Company and affiliates were in compliance with all covenants as of June 30, 2008.



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##### Table of Contents

At June 30, 2008, there were commitments to purchase lease assets and fund investments in notes receivable totaling
approximately $2,875,282 and $375,000, respectively. These amounts represent contract awards which may be canceled by the prospective borrower/investee or may not be accepted by the Company.

Cash Flows

During the three and six months ended
June 30, 2008, the Companys main sources of cash were proceeds from its offering of Units. As of June 30, 2008, 661,815 Units have been sold. Capital contributions in the amount of $4,425,930 and $6,617,650 were received for the
three and six months ended June 30, 2008, respectively.

During the same period, the primary use of cash was to purchase leased assets and fund
investments in notes receivable. Year-to-date, $2,737,285 of leased assets have been purchased and $1,250,000 loans have been funded; of which $1,765,423 of leased assets and $1,125,000 of loans were originated and funded during the second quarter
of 2008.

In addition, cash was used to pay commissions and syndication costs associated with the offering - totaling a combined $616,655 and $930,903 for
the three and six months ended June 30, 2008, respectively, as well as to pay distributions to Other Members and the Managing Member, and invoices related to startup costs, acquisition expenses and management fees.

Results of Operations

The Company had a net loss of $117,935
for the second quarter of 2008 on revenues totaling $67,310 and expenses of $185,245. Year-to-date, the Company had a net loss of $181,197 on revenues of $98,130 and expenses totaling $279,327.

During both periods, a majority of the Companys revenues were derived from its investments in lease assets and notes receivable, all of which were purchased or
funded during the first six months of 2008. Combined, such revenues constituted approximately 86% and 87% of total revenues during the second quarter and the first six months of 2008, respectively. The remainder of the Companys revenues for
the second quarter and first six months of 2008, which totaled $9,377 and $12,277, respectively, were derived from interest earned on the Companys cash deposits and processing fees on notes receivable transactions.

Consistent with the growth of revenues resulting from the continued increase in the Companys lease asset portfolio, was an increase in expenses related to the
acquisition and depreciation of such assets. Acquisition and depreciation expenses made up approximately 75% and 77% of total expenses during the second quarter and first six months of 2008, respectively. The remainder of the Companys expenses
for the second quarter and first six months of 2008, which totaled $47,231 and $65,080, respectively, were largely related to startup costs, professional fees, management fees and other operational expenses.

As defined by ATEL 12, LLC Limited Liability Company Operating Agreement, acquisition expense shall mean expenses including, but not limited to, legal fees and expenses,
travel and communication expenses, costs of appraisals, accounting fees and expenses, and miscellaneous expenses relating to selection and acquisition or financing of portfolio assets, whether or not acquired.



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##### Table of Contents

|Item 4. | Controls and procedures.
|------- | ------------------------

Evaluation of disclosure
controls and procedures

The Companys Managing Members Chief Executive Officer, and Executive Vice President and Chief Financial Officer
and Chief Operating Officer (Management), evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based on the
evaluation of the Companys disclosure controls and procedures, the Chief Executive Officer and Executive Vice President and Chief Financial Officer and Chief Operating Officer concluded that as of the end of the period covered by this report,
the design and operation of these disclosure controls and procedures were effective.

The Company does not control the financial reporting process, and is
solely dependent on the Management of the Managing Member, who is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Members disclosure
controls and procedures, as it is applicable to the Company, were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States.

Changes in internal control

There were no changes in the Managing Members internal control over financial reporting, as it is applicable to the Company, during the quarter ended June 30,
2008 that have materially affected, or are reasonably likely to materially affect, the Managing Members internal control over financial reporting, as it is applicable to the Company.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

In the ordinary course of conducting
business, there may be certain claims, suits, and complaints filed against the Managing Member. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Managing Members financial position or
results of operations. No material legal proceedings are currently pending against the Company or against any of its assets.



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

Information provided pursuant to § 228.701 (Item 701(f)) (formerly included in Form SR):



| | (1) | Effective date of the offering: September 26, 2007; File Number: 333-142034
| | --- | ---------------------------------------------------------------------------



| | (2) | Offering commenced: September 26, 2007
| | --- | --------------------------------------



| | (3) | The offering did not terminate before any securities were sold.
| | --- | ---------------------------------------------------------------



| | (4) | The managing underwriter is ATEL Securities Corporation.
| | --- | --------------------------------------------------------



| | (5) | The title of the registered class of securities is Units of Limited Liability Company Interest.
| | --- | -------------------------------------------------------------------------------------------------



| | (6) | Aggregate amount and offering price of securities registered and sold as of June 30, 2008:
| | --- | ------------------------------------------------------------------------------------------



|                                  |  |                  |  |                                              |             |            |         |                                       |   |          
|--------------------------------- |  | ---------------- |  | -------------------------------------------- | ----------- | ---------- | ------- | ------------------------------------- | - | ---------
|Title of Security                 |  | AmountRegistered |  | Aggregate price of offeringamount registered |             | Units sold |         | Aggregate price ofoffering amountsold
|Units of Limited Company Interest |  | 20,000,000       |  | $                                            | 200,000,000 |            | 661,765 |                                       | $ | 6,617,650



| | (7) | Costs incurred for the issuers account in connection with the issuance and distribution of the securities registered for each category listed below:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                                                                                             |  |                                                                                                                                                                                                                       |           |                                      |   |           |  |   |          
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------------------------------------ | - | --------- |  | - | ---------
|                                                                                                                                                                             |  | Direct or indirect payments todirectors, officers, ManagingMember of the issuer or
itsassociates, to persons owningten percent or more of any classof equity securities of the issuer;and to affiliates of the issuer |           | Direct or indirectpayments to others |   | Total    
|Underwriting discounts and commissions                                                                                                                                       |  | $                                                                                                                                                                                                                     | 86,092    |                                      | $ | 430,458   |  | $ | 516,550  
|Other syndication costs                                                                                                                                                      |  |                                                                                                                                                                                                                       |          |                                      |   | 414,353   |  |   | 414,353  
|Other expenses                                                                                                                                                               |  |                                                                                                                                                                                                                       | 228,794   |                                      |   |          |  |   | 228,794  
|                                                                                                                                                                             |  |                                                                                                                                                                                                                       |           |                                      |   |           |  |   |          
|Total expenses                                                                                                                                                               |  | $                                                                                                                                                                                                                     | 314,886   |                                      | $ | 844,811   |  | $ | 1,159,697
|                                                                                                                                                                             |  |                                                                                                                                                                                                                       |           |                                      |   |           |  |   |          
|                                                                                                                                                                             | 
|(8)    Net offering proceeds to the issuer after the total expenses in item
7:  (9)    The amount of
net offering proceeds to the issuer used for each purpose listed below: |  | $                                                                                                                                                                                                                     | 5,457,953
|                                                                                                                                                                             |  |                                                                                                                                                                                                                       |          
|                                                                                                                                                                             |  | Direct or indirect payments todirectors, officers, ManagingMember of the issuer or
itsassociates, to persons owningten percent or more of any classof equity securities of the issuer;and to affiliates of the issuer |           | Direct or indirectpayments to others |   | Total    
|Purchase and installation of machinery and equipment                                                                                                                         |  | $                                                                                                                                                                                                                     | 2,921     |                                      | $ | 2,737,285 |  | $ | 2,740,206
|Investments in notes receivable                                                                                                                                              |  |                                                                                                                                                                                                                       | 5,182     |                                      |   | 1,250,000 |  |   | 1,255,182
|Distributions paid                                                                                                                                                           |  |                                                                                                                                                                                                                       | 6,140     |                                      |   | 78,614    |  |   | 84,754   
|                                                                                                                                                                             |  |                                                                                                                                                                                                                       |           |                                      |   |           |  |   |          
|                                                                                                                                                                             |  | $                                                                                                                                                                                                                     | 14,243    |                                      | $ | 4,065,899 |  | $ | 4,080,142
|                                                                                                                                                                             |  |                                                                                                                                                                                                                       |           |                                      |   |           |  |   |          



| | (10) | Net offering proceeds to the issuer after the total investments and distributions in item 9: $1,377,811
| | ---- | -------------------------------------------------------------------------------------------------------

Note: The distributions paid to others include interest on escrowed contributions totaling $2,886.



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##### Table of Contents

|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

None.



|Item 4. | Submission Of Matters To A Vote Of Security Holders.
|------- | ----------------------------------------------------

None.



|Item 5. | Other Information.
|------- | ------------------

None.



|Item 6. | Exhibits.
|------- | ---------

Documents filed as a part of this report:



| | 1. | Financial Statement Schedules
| | -- | -----------------------------

All other schedules for
which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable, and therefore have been omitted.



| | 2. | Other Exhibits
| | -- | --------------



|     |  |                                                                       
|---- |  | ----------------------------------------------------------------------
|31.1 |  | Rule 13a-14(a)/ 15d-14(a) Certification of Dean L. Cash               
|     | 
|31.2 |  | Rule 13a-14(a)/ 15d-14(a) Certification of Paritosh K. Choksi         
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash      
|     | 
|32.2 |  | Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi



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##### Table of Contents

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.

Date: August 8, 2008



| |  |                           |  |  |  |     |  |                                                      
| |  | ------------------------- |  |  |  | --- |  | -----------------------------------------------------
| |  | ATEL 12, LLC (Registrant)
| |  |                           |  | 
| |  |                           |  |  |  | By: |  | ATEL Associates 12, LLC Managing Member of Registrant



|    |  |                                                                                                                                        
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|By: |  | /s/ Dean L. Cash                                                                                                                       
|    |  | Dean L. Cash                                                                                                                           
|    |  | Chairman of the Board, President and Chief Executive Officer of ATEL Associates 12, LLC (Managing Member)                              
|    | 
|By: |  | /s/ Paritosh K. Choksi                                                                                                                 
|    |  | Paritosh K. Choksi                                                                                                                     
|    |  | Director, Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Associates 12, LLC (Managing Member)
|    | 
|By: |  | /s/ Samuel Schussler                                                                                                                   
|    |  | Samuel Schussler                                                                                                                       
|    |  | Vice President and Chief Accounting Officer of ATEL Associates 12, LLC (Managing Member)                                               



25