SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





þ
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the fiscal year ended December 31,
    2008ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934





Commission
file number: 000-53189




ICON
Leasing Fund Twelve, LLC


(Exact
name of registrant as specified in its charter)




Delaware
            
            20-5651009(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)100
      Fifth Avenue, 4th
      Floor
              New
      York, New York
            
            10011(Address
      of principal executive offices)
            
            (Zip
      Code)





(212)
418-4700


(Registrant’s
telephone number, including area code)




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




Securities
registered pursuant to Section 12(g) of the Act: Shares of Limited Liability Company
Interests




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes     No þ




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes     No
þ




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




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




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes     No þ




State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last day of the registrant’s most recently completed second fiscal
quarter:  Not
applicable.




There is
no established market for shares of the registrant.




Number of
outstanding shares of limited liability company interests of the
Registrant on February 28, 2009 is 301,217.





DOCUMENTS
INCORPORATED BY REFERENCE


None.







Table of ContentsPagePART I
              1Item 1. Business
              1Item 1A. Risk Factors
              5Item 1B. Unresolved Staff Comments
              23Item 2. Properties
              23Item 3. Legal Proceedings
              23Item 4. Submission of Matters to a Vote of Security
      Holders
              23PART II
              24Item 5. Market for the Registrant's Securities, Related
      Security Holder Matters and Issuer Purchases of Equity
      Securities
              24Item 6. Selected Financial Data
              26Item 7. Manager's Discussion and Analysis of Financial
      Condition and Results of Operations
              27Item 7A. Quantitative and Qualitative Disclosures About
      Market Risk
              44Item 8. Consolidated Financial Statements and Supplementary
      Data
              46Item 9. Changes in and Disagreements with Accountants
      on Accounting and Financial Disclosure
              80Item 9A(T). Controls and Procedures
              81Item 9B. Other Information
              82PART III
              83Item 10. Directors, Executive Officers of the Registrant's
      Manager and Corporate Governance
              83Item 11. Executive Compensation
              85Item 12. Security Ownership of Certain Beneficial Owners
      and the Manager and Related Security Holder
    Matters
              86Item 13. Certain Relationships and Related Transactions,
      and Director Independence
              86Item 14. Principal Accounting Fees and
      Services
              86PART IV
              87Item 15. Exhibits, Financial Statement
      Schedules
              87SIGNATURES
              88





Table of Contents





PART I





Forward-Looking
Statements





Certain
statements within this Annual Report on Form 10-K may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (“PSLRA”).  These statements are being made pursuant to the
PSLRA, with the intention of obtaining the benefits of the “safe harbor”
provisions of the PSLRA, and, other than as required by law, we assume no
obligation to update or supplement such statements.  Forward-looking
statements are those that do not relate solely to historical
fact.  They include, but are not limited to, any statement that may
predict, forecast, indicate or imply future results, performance, achievements
or events.  You can identify these statements by the use of words such
as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expect,”
“continue,” “further,” “plan,” “seek,” “intend,” “predict” or “project” and
variations of these words or comparable words or phrases of similar
meaning.  These forward-looking statements reflect our current beliefs
and expectations with respect to future events and are based on assumptions and
are subject to risks and uncertainties and other factors outside our control
that may cause actual results to differ materially from those
projected.  We undertake no obligation to update publicly or review
any forward-looking statement, whether as a result of new information, future
developments or otherwise.





Item 1. Business





Our
History





ICON
Leasing Fund Twelve, LLC (the “LLC”) was formed on October 3, 2006 as a Delaware
limited liability company.  The LLC will continue until December 31,
2026, unless terminated sooner.  When used in this Annual Report on
Form 10-K, the terms “we,” “us,” “our” or similar terms refer to the LLC and its
consolidated subsidiaries.





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





We are
currently in our offering period, which commenced on May 7, 2007 and is
anticipated to end in May 2009. We are currently in the process of raising
capital and making investments. When the offering period ends, we will enter our
operating period. Our initial capitalization was $2,000, which consisted of
contributions of $1,000 from our Manager and $1,000 from an officer of our
Manager. We are offering shares of limited liability company interests
(“Shares”) on a “best efforts” basis with the intention of raising up to
$410,800,000 of capital, consisting of 400,000 Shares at a purchase price of
$1,000 and an additional 12,000 Shares, which have been reserved for issuances
pursuant to our Distribution Reinvestment Plan.  The Distribution
Reinvestment Plan allows investors to purchase additional Shares with
distributions received from us and certain other funds managed by our Manager at
a discounted share price of $900.  As of December 31, 2008,
approximately 8,634 Shares have been issued in connection with our Distribution
Reinvestment Plan.  Upon raising the minimum of $1,200,000, additional
members were admitted.  Additional members represent all members other
than our Manager.








1
 Table of Contents





Our
Business





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





We divide
the life of the program into three distinct phases:





(1)
      Offering Period:
      We expect to invest most of the net proceeds from the sale of Shares in
      equipment leases and other financing
  transactions.





(2)
      Operating Period:
      After the close of the offering period, we expect to continue to reinvest
      the cash generated from our initial investments to the extent that cash is
      not needed for our expenses, reserves and distributions to members. We
      anticipate that the operating period will end five years from the end of
      our offering period.  However, our Manager may, at its sole
      discretion, extend the operating period for up to an additional three
      years.





(3)
      Liquidation
      Period: After the operating period, we will then sell our assets in
      the ordinary course of business. Our goal is to complete the liquidation
      period within three years from the end of the operating period, but it may
      take longer to do so.





At
December 31, 2008 and 2007, we had total assets of $439,493,664 and
$114,242,189, respectively. For the year ended December 31, 2008, we had three
lessees that accounted for approximately 55.0% of our total rental and finance
income of $26,635,823. We had net income for the year ended December 31,
2008 of $5,942,580. For the year ended December 31, 2007, four lessees accounted
for approximately 99.6% of our total rental and finance income of
$4,508,242. We had net income for the year ended December 31, 2007 of
$116,852.




Our
initial closing date was May 25, 2007 (the “Commencement of Operations”), the
date at which we raised $1,200,000.  From the Commencement of
Operations to December 31, 2008, we sold 273,990 Shares, representing
$273,127,131 of capital contributions and admitted 6,503 additional members. In
addition, pursuant to the terms of our offering, we have established a reserve
in the amount of 0.5% of the gross offering proceeds. As of December 31, 2008,
the reserve is in the amount of $1,365,636, or 0.5% of the gross offering
proceeds of $273,127,131 raised as of December 31, 2008. Beginning with the
Commencement of Operations, we have been paying sales commissions to third
parties. We have also been making payments to our Manager and its affiliates for
various fees.  These sales commissions and fees paid to our Manager
and its affiliates are recorded as a reduction to our equity.  Through
December 31, 2008, we have paid or accrued $21,228,770 of sales commissions to
third parties, $5,115,631 of organizational and offering expenses to our Manager
and $5,307,193 of underwriting fees to ICON Securities Corp., the
dealer-manager of our offering and a wholly-owned subsidiary of our
Manager (“ICON Securities”).








2
 Table of Contents







At
December 31, 2008, our portfolio, which we hold either directly or through a
joint venture, consisted primarily of the following investments:





Telecommunications
Equipment





·
            We,
      through our wholly-owned subsidiary, ICON Global Crossing IV, LLC (“ICON
      Global Crossing IV”), purchased telecommunications equipment that is
      subject to a lease with Global Crossing Telecommunications, Inc. (“Global
      Crossing”). The lease expires on November 30, 2011. On March 11,
      2008, we, through ICON Global Crossing IV, purchased additional
      telecommunications equipment that is also subject to a lease with Global
      Crossing.  The lease expires on March 31,
  2011.





Marine
Vessels





·
            We
      have a 51% ownership interest in ICON Mayon, LLC (“ICON Mayon”), which
      purchased an Aframax product tanker, the Mayon Spirit, from an affiliate
      of the Teekay Corporation (“Teekay”) on July 24, 2007.  The
      Mayon Spirit has a bareboat charter that expires on July 23,
      2011.





·
            We
      own two 1,500 TEU containership vessels that we acquired from Vroon Group
      B.V. (“Vroon”), through our wholly-owned subsidiaries ICON Arabian
      Express, LLC (“ICON Arabian”) and ICON Aegean Express, LLC (“ICON Aegean”)
      on April 24, 2008. The vessels are subject to bareboat charters with
      subsidiaries of Vroon that expire on April 23,
  2014.





·
            We
      own two Aframax product tankers that we acquired from Aframax Tanker
      I AS through our wholly-owned subsidiary, ICON Eagle Holdings, LLC (“ICON
      Eagle Holdings”). On November 18, 2008, ICON Eagle Auriga Pte. Ltd. (“ICON
      Eagle Auriga”), a wholly-owned subsidiary of ICON Eagle Holdings,
      purchased the M/V Eagle Auriga (the “Eagle Auriga”). On November 21,
      2008, ICON Eagle Centaurus Pte. Ltd. (“ICON Eagle Centaurus”), also a
      wholly-owned subsidiary of ICON Eagle Holdings, purchased the M/V Eagle
      Centaurus (the “Eagle Centaurus”). The Eagle Auriga and the Eagle
      Centaurus are subject to 84-month bareboat charters with AET, Inc. Limited
      (“AET”) that expire on November 14, 2013 and November 13, 2013,
      respectively.





·
            We
      have a 64.3% ownership interest in ICON Eagle Carina Holdings, LLC (“ICON
      Carina Holdings”), which owns ICON Eagle Carina Pte. Ltd. (“ICON Eagle
      Carina”). On December 18, 2008, ICON Eagle Carina purchased the Aframax
      product tanker M/V Eagle Carina (the “Eagle Carina”) from Aframax Tanker
      II AS. The Eagle Carina is subject to an 84-month bareboat charter with
      AET that expires on November 14,
2013.





·
            We
      have a 64.3% ownership interest in ICON Eagle Corona Holdings, LLC (“ICON
      Corona Holdings”), which owns ICON Eagle Corona Pte. Ltd. (“ICON Eagle
      Corona”). On December 31, 2008, ICON Eagle Corona purchased the Aframax
      product tanker M/V Eagle Corona (the “Eagle Corona”) from Aframax Tanker
      II AS. The Eagle Corona is subject to an 84-month bareboat charter with
      AET that expires on November 14,
2013.







3
 Table of Contents







Manufacturing
Equipment





·
            We
      own machining and metal working equipment of and subject to lease
      with LC Manufacturing, LLC (“LC Manufacturing”) and MW Crow, Inc.
      (“Crow”), both of which are wholly-owned subsidiaries of MW Universal,
      Inc. (“MWU”). The leases expire on December 31,
  2012.





·
            We
      have a 55% ownership interest in ICON EAR, LLC (“ICON EAR”), which
      purchased semiconductor manufacturing equipment from and leased back to
      Equipment Acquisition Resources, Inc. (“EAR”). The lease expires on
      June 30, 2013.





·
            We,
      through our wholly-owned subsidiary, ICON French Equipment II, LLC (“ICON
      French Equipment II”), own auto parts manufacturing equipment on lease to
      Sealynx Automotive Transieres SAS (“Sealynx”). The lease expires on
      February 2, 2013.





·
            We
      have a 45% ownership interest in ICON Pliant, LLC (“ICON Pliant”), which
      purchased manufacturing equipment from and simultaneously leased it back
      to Pliant Corporation (“Pliant”). The lease expires on September 30,
      2013.





Coal-Mining
Equipment





·
            We,
      through our wholly-owned subsidiary, ICON Magnum, LLC (“ICON Magnum”),
      acquired a Bucyrus Erie model 1570 Dragline (the “Dragline”) from Magnum
      Coal Company. The Dragline is subject to a lease that expires on May
      31, 2013.





Note
Receivable Secured by a Machine Paper Coating Manufacturing Line





·
            We,
      through our wholly-owned subsidiary, ICON Appleton, LLC (“ICON Appleton”),
      provided a secured term loan to Appleton Papers, Inc. that matures on
      December 1, 2013. The loan is secured by a machine paper coating
      manufacturing line.




Notes Receivable Secured by Credit
Card Machines




·
            We
      have a 52.75% ownership interest in ICON Northern Leasing, LLC (“ICON
      Northern Leasing”), which in November 2008, purchased four promissory
      notes (the “Notes”) made by Northern Capital Associates XIV, L.P., as
      borrower, in favor of Merrill Lynch Commercial Finance Corp. The Notes are
      secured by an underlying pool of leases for credit card
      machines.





For a
discussion of our lease and other significant transactions for the years ended
December 31, 2008 and 2007, please refer to “Item 7. Manager’s Discussion and
Analysis of Financial Condition and Results of Operations.”





Segment
Information





We have
only one operating segment: the business of purchasing equipment and leasing it
to third-party end users, providing equipment and other financing, acquiring
equipment subject to lease and, to a lesser degree, acquiring ownership rights
to items of leased equipment at lease expiration.







4
 Table of Contents







Competition





The
commercial leasing and financing industry is highly competitive and is
characterized by competitive factors that vary based upon product and geographic
region. When we made our current investments and as we seek to make new
investments, we competed and compete with a variety of competitors including
other equipment leasing and finance funds, hedge funds, captive and independent
finance companies, commercial and industrial banks, manufacturers and vendors.
Competition from both traditional competitors and new market entrants has
intensified in recent years due to growing marketplace liquidity and increasing
recognition of the attractiveness of the commercial leasing and finance
industry.  Our competitors may have been and/or are in a position to
offer equipment to prospective customers on financial terms that were more
favorable than those that we could offer or that we can currently offer, which
may have affected our ability to make our current investments and may affect our
ability to make future investments, in each case, in a manner that would enable
us to achieve our investment objectives. For additional information about
our competition and other risks related to our operations, please see “Risk
Factors” in Item 1A.





Employees





We have
no direct employees.  Our Manager has full and exclusive control over
our management and operations.





Available
Information




Our
Annual Report on Form 10-K, our most recent Quarterly Reports on Form 10-Q and
amendments to those reports, if any, and our Current Reports on Form 8-K and any
amendments to those reports are available free of charge on our Manager’s
internet website at http://www.iconcapital.com as soon as reasonably practicable
after such reports are electronically filed with or furnished to the Securities
and Exchange Commission (the “SEC”). The information contained on our Manager’s
website is not deemed part of this Annual Report on Form 10-K. Our Reports are
also available on the SEC’s website at http://www.sec.gov.





Financial
Information Regarding Geographic Areas




We have
long-lived assets, which include finance leases, operating leases and
revenues in geographic areas outside of the United States. For additional
information, see Note 14 to our consolidated financial statements.





Item 1A. Risk Factors





We are
subject to a number of risks.  Careful consideration should be given
to the following risk factors, in addition to the other information included in
this Annual Report. The risks and uncertainties described below are not the only
ones we may face.  Each of these risk factors could adversely affect
our business operating results and/or financial condition, as well as adversely
affect the value of an investment in our Shares.  In addition to the
following disclosures, please refer to the other information contained in this
report including the consolidated financial statements and the related
notes.







5
 Table of Contents







General
Investment Risks





All
or a substantial portion of your distributions may be a return of capital and
not a return on capital, which will not necessarily be indicative of our
performance.





The
portion of total distributions that is a return of capital and the portion that
is economic return will depend upon a number of factors that cannot be
determined until all of our investments have been sold or otherwise matured. At
that time, you will be able to compare the total amount of all cash
distributions you receive to your total capital invested in order to determine
your economic return.





The
Internal Revenue Service may deem the majority of your distributions to be a
return of capital for tax purposes during our early years. Distributions would
be deemed to be a return of capital for tax purposes to the extent that we are
distributing cash in an amount greater than our taxable income. The fact that
the Internal Revenue Service deems distributions to be a return of capital in
part and we report an adjusted tax basis to you on Form K-1 is not an indication
that we are performing greater than or less than expectations and cannot be
utilized to forecast what your final return might be.





Your
ability to resell your Shares is limited by the absence of a public trading
market and, therefore, you should be prepared to hold your Shares for the life
of the fund, which is anticipated to be at least 10 years.





We do not
anticipate that a public market will develop for our Shares, our Shares will not
be listed on any national securities exchange at any time, and we will take
steps to assure that no public trading market develops for our Shares. In
addition, our LLC Agreement imposes significant restrictions on your right to
transfer your Shares.  We have established these restrictions to
comply with federal and State securities laws and so that we will not be
considered to be a publicly traded partnership that is taxed as a corporation
for federal income tax purposes. Your ability to sell or otherwise transfer your
Shares is extremely limited and will depend on your ability to identify a buyer.
Thus, you will probably not be able to sell or otherwise liquidate your Shares
in the event of an emergency and if you were able to arrange a sale, the price
you receive would likely be at a substantial discount to the price you paid for
your Shares.  As a result, you must view your investment in our Shares
as a long-term, illiquid investment that may last for at least 10
years.





If
you choose to request that we repurchase your Shares, you may receive
significantly less than you would receive if you were to hold your Shares for
the life of the fund.





After you
have been admitted as a member and have held your Shares for at least one year,
you may request that we repurchase up to all of your Shares. We are under no
obligation to do so, however, and will only have limited cash available for this
purpose. If we repurchase your Shares, the repurchase price has been
unilaterally set and, depending upon when you request repurchase, the repurchase
price may be less than the unreturned amount of your investment. If your Shares
are repurchased, the repurchase price may provide you a significantly lower
value than the value you would realize by retaining your Shares for the duration
of the fund.





You
may not receive cash distributions every month and, therefore, you should not
rely on any income from your Shares.





You
should not rely on the cash distributions from your Shares as a source of
income. While we intend to make monthly cash distributions, our Manager may
determine it is in our best interest to periodically change the amount of the
cash distributions you receive or not make any distributions in some months.
Losses from our operations of the types described in these risk factors and
unexpected liabilities could result in a reduced level of distributions to you.
Additionally, during the liquidation period, although we expect that lump sums
will be distributed from time to time if and when financially significant assets
are sold, regularly scheduled distributions will decrease because there will be
fewer investments available to generate cash flow.






6
 Table of Contents






Your
Shares may be diluted.





Some
investors, including our Manager and its officers, directors and other
affiliates, may have purchased and/or may purchase Shares in the future at
discounted prices and generally will share in our revenues and distributions
based on the number of Shares that they purchase, rather than the discounted
subscription price paid by them for their Shares. As a result, investors who pay
discounted prices for their investments will receive higher returns on their
investments in us as compared to investors who pay the entire $1,000 per
Share.





Our
assets may be plan assets for ERISA purposes, which could subject our Manager to
additional restrictions on its ability to operate our business.





ERISA and
the Internal Revenue Code may apply what is known as the look-through rule to an
investment in our Shares. Under that rule, the assets of an entity in which a
qualified plan or IRA has made an equity investment may constitute assets of the
qualified plan or IRA. If you are a fiduciary of a qualified plan or IRA, you
should consult with your advisors and carefully consider the effect of that
treatment if that were to occur. If the look-through rule were to apply, our
Manager may be viewed as an additional fiduciary with respect to the qualified
plan or IRA to the extent of any decisions relating to the undivided interest in
our assets represented by the Shares held by such qualified plan or IRA. This
could result in some restriction on our Manager’s willingness to engage in
transactions that might otherwise be in the best interest of all Share holders
due to the strict rules of ERISA regarding fiduciary actions.





An
investment in our Shares may not satisfy the requirements of ERISA or other
applicable laws.





When
considering an investment in our Shares, an individual with investment
discretion over assets of any pension plan, profit-sharing plan, retirement
plan, IRA or other employee benefit plan covered by ERISA or other applicable
laws should consider whether the investment satisfies the requirements of
Section 404 of ERISA or other applicable laws. In particular, attention should
be paid to the diversification requirements of Section 404(a)(1)(C) of ERISA in
light of all the facts and circumstances, including the portion of the plan’s
portfolio of which the investment will be a part. All plan investors should also
consider whether the investment is prudent and meets plan liquidity requirements
as there are significant restrictions on the ability to sell or otherwise
dispose of our Shares, and whether the investment is permissible under the
plan’s governing instrument. We have not, and will not, evaluate whether an
investment in our Shares is suitable for any particular plan. Rather, we will
accept subscribers as members if a subscriber otherwise meets our suitability
standards. In addition, we can provide no assurance that any statements of
estimated value of our Shares will not be subject to challenge by the Internal
Revenue Service if used for any tax (income, estate, gift or otherwise)
valuation purposes as an indicator of the fair value of the Shares.







7
 Table of Contents






The
statements of value that we will include in our Annual Reports on Form 10-K and
that we will send to fiduciaries of plans subject to ERISA and to certain others
parties is only an estimate and may not reflect the actual value of our
Shares.





The
statements of estimated value are based on the estimated value of each Share (i)
as of the close of our fiscal year, for the annual statements included in our
Annual Reports on Form 10-K and (ii) as of September 30 of each fiscal year, for
annual statements sent to fiduciaries of plans subject to ERISA and certain
other parties. Management, in part, will rely upon third-party sources and
advice in arriving at this estimated value. No independent appraisals on the
particular value of our Shares will be obtained and the value will be based upon
an estimated fair market value as of the referenced date for such value. Because
this is only an estimate, we may subsequently revise any valuation that is
provided. We cannot assure that:





·
            this
      estimate of value could actually be realized by us or by our members upon
      liquidation;


·
            members
      could realize this estimate of value if they were to attempt to sell their
      Shares;


·
            this
      estimate of value reflects the price or prices that our Shares would or
      could trade at if they were listed on a national stock exchange or
      included for quotation on a national market system, because no such market
      exists or is likely to develop; or


·
            the
      statement of value, or the method used to establish value, complies with
      any reporting and disclosure or valuation requirements under ERISA,
      Internal Revenue Code requirements or other applicable
  law.





You
have limited voting rights and are required to rely on our Manager to make all
of our investment decisions and achieve our investment objectives.





Our
Manager will make all of our investment decisions, including determining the
investments we made and the dispositions we will make in the future. Our success
will depend upon the quality of the investment decisions our Manager makes,
particularly relating to our investments in equipment and the realization of
such investments. You are not permitted to take part in managing, establishing
or changing our investment objectives or policies. Accordingly, you should not
invest unless you are willing to entrust all aspects of our management to our
Manager.







8
 Table of Contents








The
decisions of our Manager may be subject to conflicts of interest.





The
decisions of our Manager may be subject to various conflicts of interest arising
out of its relationship to us and our affiliates. Our Manager could be
confronted with decisions in which it will, directly or indirectly, have an
economic incentive to place its respective interests or the interests of our
affiliates above ours. As of December 31, 2008, our Manager, sponsored, and is
currently managing, six other equipment leasing and finance funds. See “Item 13.
Certain Relationships and Related Transactions, and Director
Independence.”  These conflicts may include, but are not limited
to:





·
            our
      Manager may receive more fees for making investments in which we incur
      indebtedness to fund these investments than if indebtedness is not
      incurred;


·
            our
      LLC Agreement does not prohibit our Manager or any of our affiliates from
      competing with us for investments and engaging in other types of
      business;


·
            our
      Manager may have opportunities to earn fees for referring a prospective
      investment opportunity to others;


·
            the
      dealer-manager, which is an affiliate of our Manager and not an
      independent securities firm, reviewed and performed due and will continue
      to review and perform due diligence on us and the information in our
      prospectus and thus its review cannot be considered an independent review
      and may not be as meaningful as a review conducted by an unaffiliated
      broker-dealer;


·
            the
      lack of separate legal representation for us and our Manager and lack of
      arm’s-length negotiations regarding compensation payable to our
      Manager;


·
            our
      Manager is our tax matters partner and is able to negotiate with the IRS
      to settle tax disputes that would bind us and our members that might not
      be in your best interest given your individual tax situation;
      and


·
            our
      Manager can make decisions as to when and whether to sell a jointly-owned
      asset when the co-owner is another business it
  manages.





The
Investment Committee of our Manager is not independent.





Any
conflicts in determining and allocating investments between us and our Manager,
or between us and another fund managed by our Manager, are resolved by our
Manager’s investment committee, which also serves as the investment committee
for other funds sponsored and managed by our Manager. Since all of the members
of our Manager’s investment committee are officers of our Manager and are not
independent, matters determined by such investment committee, including
conflicts of interest between us and our Manager and our affiliates involving
investment opportunities may not be as favorable to you and our other investors
as they would be if independent members were on the committee. Generally, if an
investment is appropriate for more than one fund our Manager’s investment
committee will allocate the investment to a fund (which includes us) after
taking into consideration at least the following factors:





·
            whether
      the fund has the cash required for the investment;·
            whether
      the amount of debt to be incurred with respect to the investment is
      acceptable for the fund;


·
            the
      effect the investment would have on the fund’s cash
  flow;


·
            whether
      the investment would further diversify, or unduly concentrate, the fund’s
      investments in a particular lessee/borrower, class or type of equipment,
      location, industry, etc.;


·
            whether
      the term of the investment is within the term of the fund;
    and


·
            which
      fund has been seeking investments for the longest period of
      time.





Notwithstanding
the foregoing, our Manager’s investment committee may make exceptions to these
general policies when, in our Manager’s judgment, other circumstances make
application of these policies inequitable or economically undesirable. In
addition, our LLC Agreement permits our Manager and our affiliates to engage in
equipment acquisitions, financing secured loans, refinancing, leasing and
releasing opportunities on their own behalf or on behalf of other funds even if
they compete with us.






9
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Our
Manager’s officers and employees manage other businesses and will not devote
their time exclusively to managing us and our business.





We do not
and will not employ our own full-time officers, managers or employees. Instead,
our Manager will supervise and control our business affairs. Our Manager’s
officers and employees will also be spending time supervising the affairs of
other equipment leasing and finance funds it manages. Therefore, such officers
and employees devoted and will devote the amount of time that they think is
necessary to conduct our business, which may not be the same amount of time that
would be devoted to us if we had separate officers and employees.





Our
Manager and its affiliates will receive expense reimbursements and substantial
fees from us and those reimbursements and fees are likely to exceed the income
portion of distributions made to you during our early years.





Before
making any distributions to you and our members, we will reimburse our Manager
and its affiliates for expenses incurred on our behalf, and pay our Manager and
its affiliates substantial fees, for our organization, selling our Shares
and acquiring, managing, and realizing our investments for us. The expense
reimbursements and fees of our Manager and its affiliates were established by
our Manager in compliance with the NASAA Guidelines (the North American
Securities Administrators Association guidelines for publicly offered,
finite-life equipment leasing and finance funds) in effect on the date of our
prospectus, are not based on arm’s-length negotiations, but are subject to the
limitations set forth in our LLC Agreement. Nevertheless, the amount of these
expense reimbursements and fees is likely to exceed the income portion of
distributions made to you in our early years.





In
general, expense reimbursements and fees are paid without regard to the amount
of our cash distributions to you and our other members, and regardless of the
success or profitability of our operations. Some of those fees and expense
reimbursements will be required to be paid as we acquire our portfolio and we
may pay other expenses, such as accounting and interest expenses, costs for
supplies, etc., even though we may not yet have begun to receive revenues from
all of our investments. This lag between the time when we must pay fees and
expenses and the time when we receive revenues may result in losses to us during
our early years, which our Manager believes is typical for a start-up company
such as us.





Furthermore,
we are likely to borrow a significant portion of the purchase price of our
investments. This use of indebtedness should permit us to make more investments
than if borrowings were not utilized. As a consequence, we will pay greater fees
to our Manager than if no indebtedness were incurred because management and
acquisition fees are based upon the gross payments earned or receivable from, or
the purchase price (including any indebtedness incurred) of, our investments.
Also, our Manager will determine the amount of cash reserves that we will
maintain for future expenses, contingencies or investments. The reimbursement of
expenses, payment of fees or creation of reserves could adversely affect our
ability to make distributions to you and our other members.







10
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Our
Manager may have difficulty managing its growth, which may divert its resources
and limit its ability to expand its operations successfully.





The
amount of assets that our Manager manages has grown substantially since our
Manager was formed in 1985 and our Manager and its affiliates intend to continue
to sponsor and manage, as applicable, funds similar to us that may be concurrent
with us and they expect to experience further growth in their respective assets
under management. Our Manager’s future success will depend on the ability of its
and its affiliates’ officers and key employees to implement and improve their
operational, financial and management controls, reporting systems and
procedures, and manage a growing number of assets and investment funds. They,
however, may not implement improvements to their management information and
control systems in an efficient or timely manner and they may discover
deficiencies in their existing systems and controls. Thus, our Manager’s
anticipated growth may place a strain on its administrative and operations
infrastructure, which could increase its costs and reduce its efficiency and
could negatively impact our operations, business and financial
condition.





Operational risks may disrupt our
business and result in losses.





We may
face operational risk from errors made in the execution, confirmation or
settlement of transactions. We may also face operational risk from our
transactions not being properly recorded, evaluated or accounted for. We rely
heavily on our Manager’s financial, accounting, and other software systems. If
any of these systems fail to operate properly or become disabled, we could
suffer financial loss and a disruption of our business.  In addition,
we are highly dependent on our Manager’s information systems and technology.
There can be no assurance that these information systems and technology will be
able to accommodate our Manager’s growth or that the cost of maintaining such
systems will not increase from its current level. Such a failure to accommodate
growth, or an increase in costs related to such information systems, could also
negatively affect our liquidity and cash flows, and could negatively affect our
profitability.  Furthermore, we depend on the headquarters of our
Manager, which is located in New York City, for the operation of our business. A
disaster or a disruption in the infrastructure that supports our businesses,
including a disruption involving electronic communications or other services
used by us or third parties with whom we conduct business, or directly affecting
our headquarters, may have an adverse impact on our ability to continue to
operate our business without interruption that could have a material adverse
effect on us. Although we have disaster recovery programs in place, there can be
no assurance that these will be sufficient to mitigate the harm that may result
from such a disaster or disruption. In addition, insurance and other safeguards
might only partially reimburse us for any losses.  Finally, we rely on
third-party service providers for certain aspects of our business, including
certain accounting and financial services. Any interruption or deterioration in
the performance of these third parties could impair the quality of our
operations and could adversely affect our business and result in
losses.





Our
internal controls over financial reporting may not be effective or our
independent registered public accounting firm may not be able to certify as to
their effectiveness, which could have a significant and adverse effect on our
business.





Our
Manager is required to evaluate our internal controls over financial reporting
in order to allow management to report on, and if and when required, our
independent registered public accounting firm to attest to, our internal
controls over financial reporting, as required by Section 404 of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations of the SEC
thereunder, which we refer to as “Section 404.” During the course of testing,
our Manager may identify deficiencies that it may not be able to remediate in
time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with
the requirements of Section 404. In addition, if we fail to achieve and maintain
the adequacy of our internal controls, as such standards are modified,
supplemented or amended from time to time, we may not be able to ensure that we
can conclude on an ongoing basis that we have effective internal controls over
financial reporting in accordance with Section 404. We cannot be certain as to
the timing of completion of our evaluation, testing and any remediation actions
or the impact of the same on our operations. If we are not able to implement the
requirements of Section 404 in a timely manner or with adequate compliance, we
may be subject to sanctions or investigation by regulatory authorities, such as
the SEC. As a result, we may be required to incur costs in improving our
internal control system and the hiring of additional personnel. Any such action
could negatively affect our results of operations and the achievement of our
investment objectives.






11
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We
are subject to certain reporting requirements and are required to file certain
periodic reports with the SEC.





We are
subject to reporting requirements under the Securities Exchange Act of 1934,
including the filing of quarterly and annual reports. Prior public funds
sponsored by our Manager have been and are subject to the same requirements.
Some of these funds have been required to amend previously filed reports to,
among other things, restate the audited or unaudited financial statements filed
in such reports. As a result, the prior funds have been delinquent in filing
subsequent quarterly and annual reports when they became due. If we experience
delays in the filing of our reports, our investors may not have access to timely
information concerning us, our operations, and our financial
results.





Your
ability to institute a cause of action against our Manager and its affiliates is
limited by our LLC Agreement.





Our LLC
Agreement provides that neither our Manager nor any of its affiliates will have
any liability to us for any loss we suffer arising out of any action or inaction
of our Manager or an affiliate if our Manager or affiliate determined, in good
faith, that the course of conduct was in our best interests and did not
constitute negligence or misconduct. As a result of these provisions in our LLC
Agreement, your right to institute a cause of action against our Manager may be
more limited than it would be without these provisions.





Business
Risks





Our
business could be hurt by economic downturns.





Our
business is affected by a number of economic factors, including the level of
economic activity in the markets in which we operate. A decline in economic
activity in the United States or internationally could materially affect our
financial condition and results of operations. The equipment leasing and
financing industry is influenced by factors such as interest rates, inflation,
employment rates and other macroeconomic factors over which we have no control.
Any decline in economic activity as a result of these factors typically results
in a decrease in the number of transactions in which we participate and in our
profitability.





Uncertainties
associated with the equipment leasing and financing industry may have an adverse
effect on our business and may adversely affect our ability to give you any
economic return from our Shares or a complete return of your
capital.





There are
a number of uncertainties associated with the equipment leasing and financing
industry that may have an adverse effect on our business and may adversely
affect our ability to make cash distributions to you that will, in total, be
equal to a return of all of your capital, or provide for any economic return
from our Shares. These include:





·
            fluctuations
      in demand for equipment and fluctuations in interest rates and inflation
      rates;


·
            fluctuations
      in the availability and cost of credit for us to borrow to make and/or
      realize on some of our investments;


·
            the
      continuing economic life and value of equipment at the time our
      investments mature;


·
            the
      technological and economic obsolescence of
  equipment;


·
            potential
      defaults by lessees, borrowers or other
  counterparties;


·
            supervision
      and regulation by governmental authorities;
and


·
            increases
      in our expenses, including taxes and insurance
  expenses.






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The
risks and uncertainties associated with the industries of our lessees,
borrowers, and other counterparties may indirectly affect our business,
operating results and financial condition.





We are
indirectly subject to a number of uncertainties associated with the industries
of our lessees, borrowers, and other counterparties. We invest in a pool of
equipment by, among other things, acquiring equipment subject to lease,
purchasing equipment and leasing equipment to third-party end users, financing
equipment for third-party end users, acquiring ownership rights to items of
leased equipment at lease expiration, and acquiring interests or options to
purchase interests in the residual value of equipment. The lessees, borrowers,
and other counterparties to these transactions operate in a variety of
industries. As such, we are indirectly subject to the various risks and
uncertainties that affect our lessees’, borrowers’, and other counterparties’
businesses and operations. If such risks or uncertainties were to affect our
lessees, borrowers, or other counterparties, we may indirectly suffer a loss on
our investment, lose future revenues or experience adverse consequences to our
business, operating results and financial condition.





Instability
in the credit markets could have a material adverse effect on our results of
operations, financial condition and ability to meet our investment
objectives.





If debt
financing is not available on terms and conditions we find acceptable, we may
not be able to obtain financing for some of our investments. Recently, domestic
and international financial markets have experienced unusual volatility and
uncertainty. If this volatility and uncertainty persists, our ability to borrow
to finance the acquisition of some of our investments could be significantly
impacted. If we are unable to borrow on terms and conditions that we find
acceptable, we may have to reduce the number of and possibly limit the type of
investments we will make, and the return on some of the investments we do make
could be lower. All of these events could have a material adverse effect on our
results of operations, financial condition and ability to meet our investment
objectives.





Because
we borrowed and may in the future borrow money to make our investments, losses
as a result of lessee, borrower or other counterparty defaults may be greater
than if such borrowings were not incurred.





Although
we acquired some of our investments for cash, we borrowed and may in the future
borrow a substantial portion of the purchase price of certain of our
investments. While we believe the use of leverage will result in us being able
to make more investments with less risk than if leverage is not utilized, there
can be no assurance that the benefits of greater size and diversification of our
portfolio will offset the heightened risk of loss in an individual investment
using leverage.  With respect to non-recourse borrowings, if we are
unable to pay our debt service obligations because a lessee, borrower or other
counterparty defaults, a lender could foreclose on the investment securing the
non-recourse indebtedness. This could cause us to lose all or part of our
investment or could force us to meet debt service payment obligations so as to
protect our investment subject to such indebtedness and prevent it from being
subject to repossession.  Additionally, while the majority of our
borrowings are non-recourse, we are jointly and severally liable for recourse
indebtedness incurred under a revolving line of credit facility with California
Bank & Trust (“CB&T”) that is secured by certain of our assets that are
not otherwise pledged to other lenders. CB&T has a security interest in such
assets and the right to sell those assets to pay off the indebtedness if we
default on our payment obligations.  This recourse indebtedness may
increase our risk of loss because we must meet the debt service payment
obligations regardless of the revenue we receive from the investment that is
subject to such secured indebtedness.







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Restrictions
imposed by the terms of our indebtedness may limit our financial
flexibility.





We,
together with certain of our affiliates (entities sponsored and organized by our
Manager), ICON Income Fund Eight B L.P. (“Fund Eight B”), ICON Income Fund Nine,
LLC (“Fund Nine”), ICON Income Fund Ten, LLC (“Fund Ten”) and ICON Leasing Fund
Eleven, LLC (“Fund Eleven”), are party to the revolving line of credit agreement
with CB&T.  The terms of that agreement could restrict us from
paying distributions to our members if such payments would cause us not to be in
compliance with our financial covenants in that agreement. For additional
information on the terms of our credit agreement, see “Item 7. Manager’s
Discussion and Analysis of Financial Condition and Results of Operations –
Liquidity and Capital Resources.”





Guarantees
made by the guarantors of some of our lessees, borrowers and other
counterparties may be voided under certain circumstances and we may be required
to return payments received from such guarantors.





Under
federal bankruptcy law and comparable provisions of State fraudulent transfer
laws, a guarantee could be voided, or claims in respect of a guarantee could be
subordinated to all other debts of that guarantor if, among other things, the
guarantor, at the time it incurred the indebtedness evidenced by its
guarantee:





·
            received
      less than reasonably equivalent value or fair consideration for the
      incurrence of such guarantee; and


·
            was
      insolvent or rendered insolvent by reason of such incurrence;
      or


·
            was
      engaged in a business or transaction for which the guarantor’s remaining
      assets constituted unreasonably small capital;
  or


·
            intended
      to incur, or believed that it would incur, debts beyond its ability to pay
      such debts as they mature.





In
addition, any payment by that guarantor pursuant to its guarantee could be
voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.





The
measures of insolvency for purposes of these fraudulent transfer laws will vary
depending upon the law applied in any proceeding to determine whether a
fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:





·
            the
      sum of its debts, including contingent liabilities, was greater than the
      fair saleable value of all of its
assets;


·
            if
      the present fair saleable value of its assets was less than the amount
      that would be required to pay its probable liability on its existing
      debts, including contingent liabilities, as they become absolute and
      mature; or


·
            it
      could not pay its debts as they become
due.





We cannot
assure you as to what standard a court would apply in making these
determinations or that a court would agree with our conclusions in this regard.
We also can not make any assurances as to the standards that courts in foreign
jurisdictions may use or that courts in foreign jurisdictions will take a
position similar to that taken in the United States.







14
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If
the value of our investments declines more rapidly than we anticipate, our
financial performance may be adversely affected.





A
significant part of the value of a significant portion of the equipment that we
invest in is expected to be the potential value of the equipment once the lease
term expires (with respect to leased equipment) or when our interests in or
options to purchase interests in the residual value of equipment mature.
Generally, equipment is expected to decline in value over its useful life. In
making these types of investments, we assume a residual value for the equipment
at the end of the lease or other investment that, at maturity, is expected to be
enough to return the cost of our investment in the equipment and provide a rate
of return despite the expected decline in the value of the equipment over the
term of the investment. However, the actual residual value of the equipment at
maturity and whether that value meets our expectations will depend to a
significant extent upon the following factors, many of which are beyond our
control:





·
            our
      ability to acquire or enter into agreements that preserve or enhance the
      relative value of the equipment;


·
            our
      ability to maximize the value of the equipment at maturity of our
      investment;


·
            market
      conditions prevailing at maturity;


·
            the
      cost of new equipment at the time we are remarketing used
      equipment;


·
            the
      extent to which technological or regulatory developments reduce the market
      for such used equipment;


·
            the
      strength of the economy; and


·
            the condition of the equipment at
      maturity.





We cannot
assure you that our assumptions with respect to value will be accurate or that
the equipment will not lose value more rapidly than we anticipate.





If
equipment is not properly maintained, its residual value may be less than
expected.





If a
lessee or other counterparty fails to maintain equipment in accordance with the
terms of our agreements, we may have to make unanticipated expenditures to
repair the equipment in order to protect our investment. In addition, some of
the equipment we invest in is used equipment. While we plan to inspect most used
equipment prior to making an investment, there is no assurance that an
inspection of used equipment prior to purchasing it will reveal any or all
defects and problems with the equipment that may occur after it is acquired by
us.





We
typically obtain representations from the sellers and lessees of used equipment
that:





·
            the
      equipment has been maintained in compliance with the terms of applicable
      agreements;


·
            that
      neither the seller nor the lessee, is in violation of any material terms
      of such agreements; and


·
            the
      equipment is in good operating condition and repair and that, with respect
      to leases, the lessee has no defenses to the payment of rent for the
      equipment as a result of the condition of such
  equipment.





We would
have rights against the seller of equipment for any losses arising from a breach
of representations made to us and against the lessee for a default under the
lease. However, we cannot assure you that these rights will make us whole with
respect to our entire investment in the equipment or our expected returns on the
equipment, including legal costs, costs of repair and lost revenue from the
delay in being able to sell or re-lease the equipment due to undetected problems
or issues. These costs and lost revenue could negatively affect our liquidity
and cash flows, and could negatively affect our profitability if we are unable
to recoup such costs from the lessee or other third parties.







15
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If
a lessee, borrower or other counterparty defaults on its obligations to us, we
could incur losses.





We enter
into transactions with parties that have senior debt rated below investment
grade or no credit rating. We do not require such parties to have a minimum
credit rating. Lessees, borrowers, and other counterparties with such lower or
no credit ratings may default on payments to us more frequently than lessees,
borrowers or other counterparties with higher credit ratings. For example, if a
lessee does not make lease payments to us or to a lender on our behalf or a
borrower does not make loan payments to us when due, or violates the terms of
its contract in another important way, we may be forced to terminate our
agreements with such parties and attempt to recover the equipment. We may do
this at a time when we may not be able to arrange for a new lease or to sell our
investment right away, if at all. We would then lose the expected revenues and
might not be able to recover the entire amount or any of our original
investment. The costs of recovering equipment upon a lessee’s or borrower’s
default, enforcing the obligations under the contract, and transporting,
storing, repairing, and finding a new lessee or purchaser for the equipment may
be high and may negatively affect the value of our investment in the equipment.
These costs could also negatively affect our liquidity and cash flows, and could
negatively affect our profitability.





If
a lessee, borrower or other counterparty files for bankruptcy, we may have
difficulty enforcing the terms of the contract and may incur
losses.





If a lessee, borrower or other
counterparty files for protection under the bankruptcy laws, the remaining term
of the lease, loan or other financing contract could be shortened or the
contract could be rejected by the bankruptcy court, which could result in, among
other things, any unpaid pre-bankruptcy lease, loan or other contractual
payments being cancelled as part of the bankruptcy proceeding. We may also
experience difficulties and delays in recovering equipment from a bankrupt
lessee or borrower that is involved in a bankruptcy proceeding or has been
declared bankrupt by a bankruptcy court. If a contract is rejected in a
bankruptcy, we would bear the cost of retrieving and storing the equipment and
then have to remarket such equipment. In addition, the bankruptcy court would
treat us as an unsecured creditor for any amounts due under the lease, loan or
other contract. These costs and lost revenues could also negatively affect our
liquidity and cash flows and could negatively affect our
profitability.





We
may invest in options to purchase equipment that could become worthless if the
option grantor files for bankruptcy.





We may
acquire options to purchase equipment, usually for a fixed price at a future
date. In the event of a bankruptcy by the party granting the option, we might be
unable to enforce the option or recover the option price paid, which could
negatively affect our profitability.





Investing
in equipment in foreign countries may be riskier than domestic investments and
may result in losses.





We made
and may in the future make investments in equipment for use by domestic or
foreign parties outside of the United States. We may have difficulty enforcing
our rights under foreign transaction documents. In addition, we may have
difficulty repossessing equipment if a foreign party defaults and enforcement of
our rights outside the United States could be more expensive. Moreover, foreign
jurisdictions may confiscate our equipment. Use of equipment in a foreign
country will be subject to that country’s tax laws, which may impose
unanticipated taxes. While we seek to require lessees, borrowers, and other
counterparties to reimburse us for all taxes imposed on the use of the equipment
and require them to maintain insurance covering the risks of confiscation of the
equipment, we cannot assure you that we will be successful in doing so or that
insurance reimbursements will be adequate to allow for recovery of and a return
on foreign investments.






16
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In
addition, we invest in equipment that may travel to or between locations outside
of the United States. Regulations in foreign countries may adversely affect our
interest in equipment in those countries. Foreign courts may not recognize
judgments obtained in U.S. courts and different accounting or financial
reporting practices may make it difficult to judge the financial viability of a
lessee, borrower or other counterparty, heightening the risk of default and the
loss of our investment in such equipment, which could have a material adverse
effect on our results of operations and financial condition.





In
addition to business uncertainties, our investments may be affected by
political, social, and economic uncertainty affecting a country or region. Many
financial markets are not as developed or as efficient as those in the U.S. and,
as a result, liquidity may be reduced and price volatility may be higher. The
legal and regulatory environment may also be different, particularly with
respect to bankruptcy and reorganization. Financial accounting standards and
practices may also differ and there may be less publicly available information
with respect to such companies. While our Manager considers these factors when
making investment decisions, no assurance can be given that we will be able to
fully avoid these risks or generate sufficient risk-adjusted
returns.





We
could incur losses as a result of foreign currency fluctuations.





We have
the ability to invest in equipment where payments to us are not made in U.S.
dollars. In these cases, we may then enter into a contract to protect these
payments from fluctuations in the currency exchange rate. These contracts, known
as hedge contracts, would allow us to receive a fixed number of U.S. dollars for
any fixed, periodic payments due under the transactional documents even if the
exchange rate between the U.S. dollar and the currency of the transaction
changes over time. If the payments to us were disrupted due to default by the
lessee, borrower or other counterparty, we would try to continue to meet our
obligations under the hedge contract by acquiring the foreign currency
equivalent of the missed payments, which may be available at unfavorable
exchange rates. If a transaction is denominated in a major foreign currency such
as the pound sterling, which historically has had a stable relationship with the
U.S. dollar, we may consider hedging to be unnecessary to protect the value of
the payments to us, but our assumptions concerning currency stability may turn
out to be incorrect. Our investment returns could be reduced in the event of
unfavorable currency fluctuation when payments to us are not made in U.S.
dollars.





Furthermore,
when we acquire a residual interest in foreign equipment, we may not be able to
hedge our foreign currency exposure with respect to the value of such residual
interests because the terms and conditions of such hedge contracts might not be
in the best interests of our limited partners. Even with transactions requiring
payments in U.S. dollars, the equipment may be sold at maturity for an amount
that cannot be pre-determined to a buyer paying in a foreign currency. This
could positively or negatively affect our income from such a transaction when
the proceeds are converted into U.S. dollars.





Sellers
of leased equipment could use their knowledge of the lease terms for gain at our
expense.





We may
acquire equipment subject to lease from leasing companies that have an ongoing
relationship with the lessees. A seller could use its knowledge of the terms of
the lease, particularly the end of lease options and date the lease ends, to
compete with us. In particular, a seller may approach a lessee with an offer to
substitute similar equipment at lease end for lower rental amounts. This may
adversely affect our opportunity to maximize the residual value of the equipment
and potentially negatively affect our profitability.








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Investment
in joint ventures may subject us to risks relating to our co-investors that
could adversely impact the financial results of such joint
ventures.





We have
the ability to invest in joint ventures with other businesses our Manager
sponsors and manages, as well as with unrelated third parties. Investing in
joint ventures involves additional risks not present when acquiring leased
equipment that will be wholly owned by us. These risks include the possibility
that our co-investors might become bankrupt or otherwise fail to meet financial
commitments, thereby obligating us to pay all of the debt associated with the
joint venture, as each party to a joint venture may be required to guarantee all
of the joint venture’s obligations. Alternatively, the co-investors may have
economic or business interests or goals that are inconsistent with our
investment objectives and want to manage the joint venture in ways that do not
maximize our return. Among other things, actions by a co-investor might subject
leases that are owned by the joint venture to liabilities greater than those
contemplated by the joint venture agreement. Also, when none of the joint owners
control a joint venture, there might be a stalemate on decisions, including when
to sell the equipment or the prices or terms of a lease. Finally, while we
typically have the right to buy out the other joint owner’s interest in the
equipment in the event of the sale, we may not have the resources available to
do so. These risks could negatively affect our profitability and could result in
legal and other costs, which would negatively affect our liquidity and cash
flows.





We
may not be able to obtain insurance for certain risks and would have to bear the
cost of losses from non-insurable risks.





Equipment
may be damaged or lost. Fire, weather, accidents, theft or other events can
cause damage or loss of equipment. While our transaction documents generally
require lessees and borrowers to have comprehensive insurance and assume the
risk of loss, some losses, such as from acts of war, terrorism or earthquakes
may either be uninsurable or not economically feasible to insure. Furthermore,
not all possible liability claims or contingencies affecting equipment can be
anticipated or insured against, and, if insured, the insurance proceeds may not
be sufficient to cover a loss. If such a disaster occurs to the equipment, we
could suffer a total loss of any investment in the affected equipment. In
investing in some types of equipment, we may have been exposed to environmental
tort liability. Although we use our best efforts to minimize the possibility and
exposure of such liability including by means of attempting to obtain insurance,
we cannot assure you that our assets will be protected against any such claims.
These risks could negatively affect our profitability and could result in legal
and other costs, which would negatively affect our liquidity and cash
flows.





We
could suffer losses from failure to maintain our equipment registration and from
unexpected regulatory compliance costs.





Many
types of transportation assets are subject to registration requirements by U.S.
governmental agencies, as well as foreign governments if such equipment is to be
used outside of the United States. Failing to register the equipment, or losing
such registration, could result in substantial penalties, forced liquidation of
the equipment and/or the inability to operate and lease the equipment.
Governmental agencies may also require changes or improvements to equipment and
we may have to spend our own funds to comply if the lessee, borrower or other
counterparty is not required to do so under the transaction documents. These
changes could force the equipment to be removed from service for a period of
time. The terms of the transaction documents may provide for payment reductions
if the equipment must remain out of service for an extended period of time or
are removed from service. We may then have reduced income from our investment
for this equipment. If we do not have the funds to make a required change, we
might be required to sell the affected equipment. If so, we could suffer a loss
on our investment, lose future revenues and experience adverse tax
consequences.







18
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If
any of our investments become subject to usury laws, we could have reduced
revenues or possibly a loss on such investments.





In
addition to credit risks, we may be subject to other risks in equipment
financing transactions in which we are deemed to be a lender. For example,
equipment leases have sometimes been held by U.S. courts to be loan transactions
subject to State usury laws, which limit the interest rate that can be charged.
Uncertainties in the application of some laws may result in inadvertent
violations that could result in reduced investment returns or, possibly, loss on
our investment in the affected equipment. Although part of our business strategy
is to enter into or acquire leases that we believe are structured so that they
avoid being deemed loans, and would therefore not be subject to usury laws, we
cannot assure you that we will be successful in doing so. If an equipment lease
is held to be a loan with a usurious rate of interest, the amount of the lease
payment could be reduced and adversely affect our revenue.





State
laws determine what rates of interest are deemed usurious, when the applicable
rate of interest is determined, and how it is calculated. In addition, some U.S.
courts have also held that certain lease features, such as equity interests,
constitute additional interest. Although we generally seek assurances and/or
opinions to the effect that our transactions do not violate applicable usury
laws, a finding that our transactions violate usury laws, the interest
obligation to us could be declared void and we could be liable for damages and
penalties under applicable law. We cannot assure you as to what standard a court
would apply in making these determinations or that a court would agree with our
conclusions in this regard. We also cannot make any assurances as to the
standards that courts in foreign jurisdictions may use or that courts in foreign
jurisdictions will take a position similar to that taken in the United
States.





We
compete with a variety of financing sources for our investments, which may
affect our ability to achieve our investment objectives.





The
commercial leasing and financing industry is highly competitive and is
characterized by competitive factors that vary based upon product and geographic
region. Our competitors are varied and include other equipment leasing and
finance funds, hedge funds, captive and independent finance companies,
commercial and industrial banks, manufacturers and vendors. Competition from
both traditional competitors and new market entrants has intensified in recent
years due to growing marketplace liquidity and increasing recognition of the
attractiveness of the commercial leasing and finance industry.  We
compete primarily on the basis of pricing, terms and structure.  To
the extent that our competitors compete aggressively on any combination of those
factors, we could fail to achieve our investment objectives.





Some of
our competitors are substantially larger and have considerably greater
financial, technical and marketing resources than either we or our Manager and
its affiliates have.  For example, some competitors may have a lower
cost of funds and access to funding sources that are not available to
us.  A lower cost of funds could enable a competitor to offer
financing at rates that are less than ours, potentially forcing us to lower our
rates or lose potential lessees, borrowers or other
counterparties.  In addition, our competitors may have been and/or are
in a position to offer equipment to prospective customers on other terms that
are more favorable than those that we can offer or that we will be able to offer
when liquidating our portfolio, which may affect our ability to make investments
and may affect our ability to liquidate our portfolio, in each case, in a manner
that would enable us to achieve our investment objectives.







19
 Table of Contents








General
Tax Risks





If
the IRS classifies us as a corporation rather than a partnership, your
distributions would be reduced under current tax law.





We did
not and will not apply for an IRS ruling that we will be classified as a
partnership for federal income tax purposes. Although counsel rendered an
opinion to us that we will be taxed as a partnership and not as a corporation,
that opinion is not binding on the IRS and the IRS has not ruled on any federal
income tax issue relating to us. If the IRS successfully contends that we should
be treated as a corporation for federal income tax purposes rather than as a
partnership, then:





·
            our
      realized losses would not be passed through to
  you;


·
            our
      income would be taxed at tax rates applicable to corporations, thereby
      reducing our cash available to distribute to you;
  and


·
            your
      distributions would be taxed as dividend income to the extent of current
      and accumulated earnings and
profits.





In
addition, we could be taxed as a corporation if we are treated as a publicly
traded partnership by the IRS. To minimize this possibility, our LLC Agreement
places significant restrictions on your ability to transfer our
Shares.





We
could lose cost recovery or depreciation deductions if the IRS treats our leases
as sales or financings.





We expect
that, for federal income tax purposes, we will be treated as the owner and
lessor of the equipment that we lease. However, the IRS may challenge the leases
and instead assert that they are sales or financings. If the IRS determines that
we are not the owner of our leased equipment, we would not be entitled to cost
recovery, depreciation or amortization deductions, and our leasing income might
be deemed to be portfolio income instead of passive activity income. The denial
of such cost recovery or amortization deductions could cause your tax
liabilities to increase.





Our
investments in secured loans will not give rise to depreciation or cost recovery
deductions and may not be offset against our passive activity
losses.





We expect
that, for federal income tax purposes, we will not be treated as the owner and
lessor of the equipment that we invest in through our lending activities. Based
on our expected level of activity with respect to these types of financings, we
expect that the IRS will treat us as being in the trade or business of lending.
Generally, trade or business income can be considered passive activity income.
However, because we expect that the source of funds we lend to others will be
the capital contributed by our members and the funds generated from our
operations (rather than money we borrow from others), you may not be able to
offset your share of our passive activity losses from our leasing activities
with your share of our interest income from our lending activities. Instead,
your share of our interest income from our lending activities would be taxed as
portfolio income.





You
may incur tax liability in excess of the cash distributions you receive in a
particular year.





In any
particular year, your tax liability from owning our Shares may exceed the cash
distributions you receive from this investment. While we expect that your net
taxable income from owning our Shares for most years will be less than your cash
distributions in those years, to the extent any of our debt is repaid with
income or proceeds from equipment sales, taxable income could exceed the amount
of cash distributions you receive in those years. Additionally, a sale of our
investments may result in taxes in any year that are greater than the amount of
cash from the sale, resulting in a tax liability in excess of cash
distributions. Additionally, due to the operation of the various loss
disallowance rules, in a given tax year you may have taxable income when, on a
net basis, we have a loss, or you may recognize a greater amount of taxable
income than our net income because, due to a loss disallowance, income from some
of our activities cannot be offset by losses from some of our other
activities.






20
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You
may be subject to greater income tax obligations than originally anticipated due
to special depreciation rules.





We may
acquire equipment subject to lease that the Internal Revenue Code requires us to
depreciate over a longer period than the standard depreciation period.
Similarly, some of the equipment that we purchase may not be eligible for
accelerated depreciation under the Modified Accelerated Costs Recovery System,
which was established by the Tax Reform Act of 1986 to set forth the guidelines
for accelerated depreciation under the Internal Revenue Code. Further, if we
acquire equipment that the Internal Revenue Code deems to be tax-exempt use
property and the leases do not satisfy certain requirements, losses attributable
to such equipment are suspended and may be deducted only against income we
receive from such equipment or when we dispose of such equipment. Depending on
the equipment that we acquire and its eligibility for accelerated depreciation
under the Internal Revenue Code, we may have less depreciation deductions to
offset gross lease revenue, thereby increasing our taxable income.





There
are limitations on your ability to deduct our losses.





Your
ability to deduct your share of our losses is limited to the amounts that you
have at risk from owning our Shares. This is generally the amount of your
investment, plus any profit allocations and minus any loss allocation and
distributions. This determination is further limited by a tax rule that applies
the at-risk-rules on an activity by activity basis, further limiting losses from
a specific activity to the amount at risk in that activity. Based on the tax
rules, we expect that we will have multiple activities for purposes of the
at-risk rules. Specifically, our lending activities must be analyzed separately
from our leasing activities, and our leasing activities must be further divided
into separate year-by-year groups according to the tax year the equipment is
placed in service. As such, you cannot aggregate income and loss from our
separate activities for purposes of determining your ability to deduct your
share of our losses under the at-risk rules.





Additionally,
your ability to deduct losses attributable to passive activities is restricted.
Some of our operations will constitute passive activities and you can only use
our losses from such activities to offset passive activity income in calculating
tax liability. Furthermore, passive activity losses may not be used to offset
portfolio income. As stated above, we expect our lending activities to generate
portfolio income from the interest we receive, even though we expect the income
to be attributable to a lending trade or business. However, we expect any gains
or losses we recognize from those lending activities to be associated with a
trade or business and generally allowable as either passive activity income or
loss, as applicable.





The
IRS may allocate more taxable income to you than our LLC Agreement
provides.





The IRS
might successfully challenge our allocations of taxable income or losses. If so,
the IRS would require reallocation of our taxable income and loss, resulting in
an allocation of more taxable income or less loss to you than our LLC Agreement
allocates.





If
you are a tax-exempt organization, you will have unrelated business taxable
income from this investment.





Tax-exempt
organizations are subject to income tax on unrelated business taxable income
(“UBTI”). Such organizations are required to file federal income tax returns if
they have UBTI from all sources in excess of $1,000 per year. Our leasing income
will constitute UBTI. Furthermore, tax-exempt organizations in the form of
charitable remainder trusts will be subject to an excise tax equal to 100% of
their UBTI. Thus, an investment in our Shares may not be appropriate for a
charitable remainder trust and such entities should consult their own tax
advisors with respect to an investment in our Shares.






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To the
extent that we borrow money in order to finance our lending activities, a
portion of our income from such activities will be treated as attributable to
debt-financed property and, to the extent so attributable, will constitute UBTI.
We presently do not expect to finance our lending activities with borrowed
funds. Nevertheless, the debt-financed UBTI rules are broad and there is much
uncertainty in determining when, and to the extent which, property should be
considered debt-financed. Thus, the IRS might assert that a portion of the
assets we acquire as part of our lending activities are debt-financed property
generating UBTI, especially with regard to any indebtedness we incur to fund
working capital at a time when we hold loans we have acquired or made to others.
If the IRS were to successfully assert that debt we believed should have been
attributed to our leasing activities should instead be attributed to our lending
activities, the amount of our income that constitutes UBTI would be
increased.





This
investment may cause you to pay additional taxes.





You may
be required to pay alternative minimum tax in connection with owning our Shares,
since you will be allocated a proportionate share of our tax preference items.
Our Manager’s operation of our business affairs may lead to other adjustments
that could also increase your alternative minimum tax. In addition, the IRS
could take the position that all or a portion of our lending activities are not
a trade or business, but rather an investment activity. If all or a portion of
our lending activities are not considered to be a trade or business, then a
portion of our management fees could be considered investment expenses rather
than trade or business expenses. To the extent that a portion of our fees are
considered investment expenses, they are not deductible for alternative minimum
tax purposes and are subject to a limitation for regular tax purposes.
Alternative minimum tax is treated in the same manner as the regular income tax
for purposes of making estimated tax payments.





You
may incur State tax and foreign tax liabilities and have an obligation to file
State or foreign tax returns.





You may
be required to file tax returns and pay foreign, State or local taxes, such as
income, franchise or personal property taxes, as a result of an investment in
our Shares, depending upon the laws of the jurisdictions in which the equipment
that we own is located.





Any
adjustment to our tax return as a result of an audit by the IRS may result in
adjustment to your tax return.





If we
adjust our tax return as a result of an IRS audit, such adjustment may result in
an examination of other items in your returns unrelated to us, or an examination
of your tax returns for prior years. You could incur substantial legal and
accounting costs in contesting any challenge by the IRS, regardless of the
outcome. Further, because you will be treated for federal income tax purposes as
a partner in a partnership by investing in our Shares, an audit of our tax
return could potentially lead to an audit of your individual tax return.
Finally, under certain circumstances, the IRS may automatically adjust your
personal return without the opportunity for a hearing if it adjusts our tax
return.





Some
of the distributions on our Shares will be a return of capital, in whole or in
part, which will complicate your tax reporting and could cause unexpected tax
consequences at liquidation.





As we
depreciate our investments in leased equipment over the term of our existence
and/or borrowers repay the loans we make to them, it is very likely that a
portion of each distribution to you will be considered a return of capital,
rather than income. Therefore, the dollar amount of each distribution should not
be considered as necessarily being all income to you. As your capital in our
Shares is reduced for tax purposes over the life of your investment, you will
not receive a lump sum distribution upon liquidation that equals the purchase
price you paid for our Shares, such as you might expect if you had purchased a
bond. Also, payments made upon our liquidation will be taxable to the extent
that such payments are not a return of capital.






22
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As you
receive distributions throughout the life of your investment, you will not know
at the time of the distribution what portion of the distribution represents a
return of capital and what portion represents income. The Schedule K-1 statement
you received and continue to receive from us each year will specify the amounts
of capital and income you received throughout the prior year.








Item 1B. Unresolved Staff Comments


None.





Item 2. Properties





We
neither own nor lease office space or any other real property in our business at
the present time.





Item 3. Legal Proceedings





In the
ordinary course of conducting our business, we may be subject to certain claims,
suits, and complaints filed against us.  In our Manager’s opinion, the
outcome of such matters, if any, will not have a material impact on our
consolidated financial position or results of operations.  We are not
aware of any material legal proceedings that are currently pending against us or
against any of our assets.





Item 4. Submission of Matters to a Vote of Security
Holders





No
matters were submitted to a vote of security holders during the fourth quarter
of 2008.








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 Table of Contents








PART II




Item 5. Market for the Registrant's Securities, Related Security
Holder Matters and Issuer Purchases of Equity Securities





Our
Shares are not publicly traded and there is no public market for our Shares. It
is unlikely that any such market will develop.





Number
      of MembersTitle of Class
                          
                          as of February 28, 2009Manager
      (as a member)
                          
                          1Additional
      members
                          
                          7,097





We, at
our Manager’s discretion, pay monthly distributions to each of our members
beginning the first month after each member is admitted through the end of our
operating period, which we currently anticipate will be in May
2014.  We paid distributions to additional members totaling
$18,112,606 for the period from the Commencement of Operations through December
31, 2008.  Additionally, we paid our Manager distributions of $183,001
for the period from the Commencement of Operations through December 31, 2008.
The terms of our loan agreement with CB&T could restrict us from paying cash
distributions to our members if such payment would cause us to not be in
compliance with our financial covenants. See “Item 7. Manager’s Discussion and
Analysis of Financial Condition and Results of Operations – Liquidity and
Capital Resources.”





In order
for Financial Industry Regulatory Authority, Inc. (“FINRA”) members and their
associated persons to participate in the offering and sale of Shares pursuant to
the offering or to participate in any future offering of our Shares, we are
required pursuant to FINRA Rule 2810(b)(5) to disclose in each annual report
distributed to our members a per Share estimated value of our Shares, the method
by which we developed the estimated value, and the date used to develop the
estimated value. In addition, our Manager prepares statements of our estimated
Share values to assist fiduciaries of retirement plans subject to the annual
reporting requirements of the Employee Retirement Income Security Act (“ERISA”)
in the preparation of their reports relating to an investment in our
Shares.  For these purposes, the estimated value of our Shares is
deemed to be $1,000 per Share as of December 31, 2008.  This estimated
value is provided to assist plan fiduciaries in fulfilling their annual
valuation and reporting responsibilities and should not be used for any other
purpose.  Because this is only an estimate, we may subsequently revise
this valuation.





During
the offering of our Shares, the value of our Shares is estimated to be the
offering price of $1,000 per Share (without regard to purchase price discounts
for certain categories of purchasers), as adjusted for any special distribution
of net sales proceeds.  Our Shares are currently being offered and no
special distribution of net sales proceeds has been made, therefore, the value
of our Shares is estimated to be $1,000 per Share.





Following
the termination of the offering of our Shares, the estimated value of our Shares
is based on the estimated amount that a holder of a Share would receive if all
of our assets were sold in an orderly liquidation as of the close of our fiscal
year and all proceeds from such sales, without reduction for transaction costs
and expenses, together with any cash held by us, were distributed to the members
upon liquidation.  To estimate the amount that our members would
receive upon such liquidation, we calculated the sum of:  (i) the
unpaid finance lease and note receivable payments on our existing finance leases
and notes receivable, discounted at the implicit yield for each such
transaction, (ii) the fair market value of our operating leases, equipment held
for sale or lease, and other assets, as determined by the most recent
third-party appraisals we have obtained for certain assets or our
Manager’s  estimated values of certain other assets, as applicable,
and (iii) our cash on hand.  From this amount, we then subtracted our
total debt outstanding and then divided that sum by the total number of Shares
outstanding.






24
 Table of Contents





The
foregoing valuation is an estimate only.  The appraisals that we
obtained and the methodology utilized by our management in estimating our per
Share value were subject to various limitations and were based on a number of
assumptions and estimates that may or may not be accurate or complete. No
liquidity discounts or discounts relating to the fact that we are currently
externally managed were applied to our estimated per Share valuation, and no
attempt was made to value us as an enterprise.





As noted
above, the foregoing valuation was performed solely for the ERISA and FINRA
purposes described above and was based solely on our Manager’s perception of
market conditions and the types and amounts of our assets as of the reference
date for such valuation and should not be viewed as an accurate reflection of
our Shares or our assets. Except for independent third-party appraisals of
certain assets, no independent valuation was sought. In addition, as stated
above, as there is no significant public trading market for our Shares at this
time and none is expected to develop, there can be no assurance that members
could receive $1,000 per Share if such a market did exist and they sold their
Shares or that they will be able to receive such amount for their Shares in the
future. Furthermore, there can be no assurance:





·
            as
      to the amount members may actually receive if and when we seek to
      liquidate our assets or the amount of lease and note receivable payments
      and asset disposition proceeds we will actually receive over our remaining
      term; the total amount of distributions our members may receive may be
      less than $1,000 per Share primarily due to the fact that the funds
      initially available for investment were reduced from the gross offering
      proceeds in order to pay selling commissions, underwriting fees,
      organizational and offering expenses, and acquisition or formation
      fees;


·
            that
      the foregoing valuation, or the method used to establish value, will
      satisfy the technical requirements imposed on plan fiduciaries under
      ERISA; or


·
            that
      the foregoing valuation, or the method used to establish value, will not
      be subject to challenge by the Internal Revenue Services if used for any
      tax (income, estate, gift or otherwise) valuation purposes as an indicator
      of the current value of the Shares.





The
repurchase price we offer in our repurchase plan utilizes a different
methodology than that which we use to determine the current value of our Shares
for the ERISA and FINRA purposes described above and, therefore, the $1,000 per
Share does not reflect the amount that a member would currently receive under
our repurchase plan.  In addition, there can be no assurance that you
will be able to redeem your Shares under our repurchase plan.








25
 Table of Contents





Item 6. Selected Financial Data





The
selected financial data should be read in conjunction with the consolidated
financial statements and related notes included in “Item 8. Consolidated
Financial Statements and Supplementary Data” contained elsewhere in this Annual
Report on Form 10-K.





Years Ended December 31,2008
                                                          
                                                          
                                                          2007Total
      revenue (a)
                                                          
                                                          $
                                                          29,346,502
                                                          
                                                          
                                                          $
                                                          4,830,315Net
      income (b)
                                                          
                                                          $
                                                          5,942,580
                                                          
                                                          
                                                          $
                                                          116,852Net
      income allocable to the additional members
                                                          
                                                          $
                                                          5,883,154
                                                          
                                                          
                                                          $
                                                          115,683Net
      income allocable to the Manager
                                                          
                                                          $
                                                          59,426
                                                          
                                                          
                                                          $
                                                          1,169Weighted
      average number of additional shares oflimited
      liability company interests outstanding
                                                          
                                                          
                                                          181,777
                                                          
                                                          
                                                          
                                                          47,186Net
      income per weighted average additional share oflimited
      liability company interests
                                                          
                                                          $
                                                          32.36
                                                          
                                                          
                                                          $
                                                          2.45Distributions
      to additional members
                                                          
                                                          $
                                                          16,072,151
                                                          
                                                          
                                                          $
                                                          2,040,455Distributions
      per weighted average additional share oflimited
      liability company interests
                                                          
                                                          $
                                                          88.42
                                                          
                                                          
                                                          $
                                                          43.24Distributions
      to the Manager
                                                          
                                                          $
                                                          162,440
                                                          
                                                          
                                                          $
                                                          20,561December 31,2008
                                                          
                                                          
                                                          2007
                                                          
                                                          
                                                          2006Total
      assets (c)
                                                          
                                                          $
                                                          439,493,664
                                                          
                                                          
                                                          $
                                                          114,242,189
                                                          
                                                          
                                                          $
                                                          2,000Notes
      payable (d)
                                                          
                                                          $
                                                          162,575,068
                                                          
                                                          
                                                          $
                                                          22,480,270
                                                          
                                                          
                                                          $
                                                          -Members'
      equity (e)
                                                          
                                                          $
                                                          223,487,730
                                                          
                                                          
                                                          $
                                                          79,289,609
                                                          
                                                          
                                                          $
                                                          2,000(a)
                                                          In
      2008, our total revenue increased $24,516,187 from 2007 primarily because
      of our acquisitions of the marine vessels, telecommunications equipment,
      coal-mining equipment and manufacturing equipment, which resulted in an
      increase in total rental and finance income of approximately $12,094,000.
      Contributing to this increase was the full-year recognition of rental and
      finance income of approximately $10,033,000 from our 2007 acquisitions of
      our interest in a marine vessel and telecommunications
      equipment.(b)
                                                          In
      2008, our net income increased $5,825,728 from 2007 because of the
      increase in rental and finance income resulting from our acquisitions of
      marine vessels, telecommunications equipment, coal-mining equipment and
      manufacturing equipment, which was primarily offset by the recognition of
      depreciation and amortization expense associated with the assets
      acquired.(c)
                                                          In
      2008, our total assets increased $325,251,475 from 2007 primarily because
      of our acquisitions of marine vessels, telecommunications equipment,
      coal-mining equipment and manufacturing equipment of approximately
      $248,825,000. In addition, we invested in two notes receivable
      transactions for approximately $53,539,000.(d)
                                                          In
      2008, our non-recourse debt increased $140,094,798 from 2007 because of
      the non-recourse debt agreements entered into in connection with our
      acquisitions of marine vessels for approximately $148,700,000, which was
      partially offset by approximately $8,605,000 in repayment.(e)
                                                          In
      2008, our members' equity increased $144,198,121 from 2007 primarily
      because of the net proceeds received from our equity raise of
      approximately $159,892,000, which was partially offset by distributions
      paid to our members of approximately $16,235,000 .






26
 Table of Contents





Item 7. Manager's Discussion and Analysis of Financial Condition and
Results of Operations





Our Manager’s Discussion and
Analysis of Financial Condition and Results of Operations relates to our
Consolidated Financial Statements and should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Annual Report
on Form 10-K.  Statements made in this section may be considered
forward-looking.  These statements are not guarantees of future
performance and are based on current expectations and assumptions that are
subject to risks and uncertainties.  Actual results could differ
materially because of these risks and assumptions, including, among other
things, factors discussed in “Part I. Forward-Looking Statements” and “Item 1A.
Risk Factors” located elsewhere in this Annual Report on Form
10-K.





Overview





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





Our
Manager manages and controls our business affairs, including, but not limited
to, our equipment leases and other financing transactions, under the terms of
our LLC Agreement. We are currently in our offering period.  The
minimum offering of $1,200,000 was achieved on May 25, 2007, the Commencement of
Operations. From the Commencement of Operations through December 31, 2008, we
have raised total equity of $273,127,131. Investors from the Commonwealth of
Pennsylvania could not be admitted until we raised total equity of $20,000,000.
The $20,000,000 minimum offering for Pennsylvania was achieved on July 13, 2007.
We expect to invest most of the net proceeds from our offering in equipment
leases and other financing transactions. After the close of our offering
period, we will enter our operating period, during which we will make additional
investments from the cash generated from our initial investments to the extent
that the cash is not needed for expenses, reserves and distributions to
members.





Current
Business Environment and Outlook




As
discussed in “Competition” in Item 1 above, the commercial leasing and financing
industry is highly competitive and is characterized by competitive factors
that vary based upon product and geographic region.  We compete primarily
on the basis of pricing, terms and structure, particularly on structuring
flexible, responsive, and customized financing solutions for our customers.
Our investments are often made directly rather than through competition in
the open market. This approach limits the competition for our
typical investment, which may enhance returns. We believe our investment
model may represent the best way for individual investors to participate in
investing in business-essential equipment. Nevertheless, to the extent that
our competitors compete aggressively on any combination of the foregoing
factors, we could fail to achieve our investment objectives.




In the
second half of the twentieth century, financing became one of the most popular
methods by which domestic and many global businesses satisfied their capital
equipment needs.  We believe that domestic and, as global finance
markets continue to develop, global equipment leasing and financing volume is
correlated to overall business investments in equipment. According to the 2007 − 2008 U.S. Equipment Finance
Market Study, which was prepared by Global Insight, Inc., a global
forecasting company, and the Equipment Leasing and Finance Foundation, a
non-profit foundation dedicated to providing research regarding the equipment
leasing and finance industry, total domestic business investment in
equipment and software has increased annually from approximately $868
billion in 2002 to approximately $1,088 billion in 2006, with total investments
of approximately $1,106 billion estimated for 2007. Similarly, during the
same period, total domestic equipment leasing and financing volume
increased from approximately $483 billion in 2002 to approximately
$598 billion in 2006, with financing volume of approximately $625 billion
estimated for 2007. In 2008, domestic business investment in equipment and
software is forecasted to reach an estimated $1,159 billion with
a corresponding increase in equipment leasing and finance volume to an
estimated $657 billion.






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As
illustrated above, approximately 53% to 57% of all domestic business
investment in equipment and software was financed. Global Insight estimates
that approximately 56.5% of such investment during 2007 was financed, up
from approximately 55% during 2006. In particular, Global Insight estimates,
based on the latest full year information available, that lease
financing represented approximately 17% and term loans represented
approximately 9% of equipment and software financing in 2007, while line of
credit financing represented approximately 29% of equipment and
software financing in 2007, of which more than 50% was interim
financing.




According
to the World Leasing Yearbook
2009, which was published by Euromoney Institutional Investor PLC, global
equipment leasing volume has increased annually from approximately $462 billion
in 2002 to approximately $760 billion in 2007.  The most significant
source of that increase was due to increased volume in Europe, Asia, and South
America.  For example, during the same period, total equipment leasing
volume in Europe increased from approximately $162 billion in 2002 to
approximately $367 billion in 2007, total equipment leasing volume in Asia
increased from approximately $71 billion in 2002 to approximately $119 billion
in 2007, and total equipment leasing volume in South America increased from
approximately $3 billion in 2002 to approximately $41 billion in
2007.  We believe that global business investment in equipment, and
global equipment financing volume, has increased as well during the same
period.




The
volume of equipment financing typically reflects general economic conditions. As
the economy slows or builds momentum, the demand for productive equipment
generally slows or builds and equipment financing volume generally
decreases or increases. The economy in the United States experienced a downturn
from 2001 through 2003, resulting in a decrease in equipment leasing and
financing volume during that period. Since then, the economy in the United
States, including business investment in equipment and equipment leasing
financing volume, had recovered as noted above.




In
general, the global credit markets have deteriorated significantly over the past
year.  The U.S. economy entered into a recession in December 2007 and
the global credit markets continue to experience dislocation and
tightening.  Recent statistical data on the domestic leasing market
provided by the Equipment Leasing and Finance Association, a trade association
representing financial services companies and manufacturers in the U.S.
equipment finance sector and an affiliate of the Equipment Leasing and Finance
Foundation, indicates that domestic equipment leasing volume has generally
deteriorated over the past year.




A
significant portion of the statistical data regarding the equipment leasing
market’s performance, however, is provided by the leasing divisions of
commercial and industrial banks, large independent leasing and finance
companies, and captive and vendor leasing and finance companies. These
institutions (i) generally provide financing to companies seeking to lease small
ticket and micro ticket equipment, (ii) use credit scoring methodologies to
underwrite a lessee’s creditworthiness, and (iii) rely heavily on the issuance
of commercial paper and/or lines of credit from other financial institutions to
finance new business. Our investment objectives and strategy, on the other hand,
(i) focus on financing middle- to large-ticket, business-essential equipment and
other capital assets, (ii) we generally underwrite and structure such
financing in a manner similar to providers of senior indebtedness (i.e., our
underwriting includes both creditworthiness and asset due diligence and
considerations and our structuring often includes guarantees, equity pledges,
warrants, liens on related assets, etc.), and (iii) we are not reliant on
receiving outside financing through the issuance of commercial paper or from
lines of credit to finance new business or meet our investment objectives.
Accordingly, the performance of the overall equipment leasing market is not
directly correlated to our performance and our Manager does not expect that
there will be any material adverse impact on the demand for equipment (and the
related residuals) that we own or will in the future acquire or invest in.
Moreover, in light of the tightening of the credit markets, our Manager has
reviewed and expects to continue to review more potential financing
opportunities than it has in its history.






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Other
factors that may negatively affect the leasing and financing industry are: (i)
the proposed legal and regulatory changes that may affect tax benefits of
leasing, and (ii) the continued misperception by potential lessees, stemming
from published issues at Enron, WorldCom and others, that leasing should not
play a central role as a financing alternative. However, as companies tend to
preserve cash and lease or otherwise finance (rather than purchase) equipment in
recessionary economies, we are optimistic that equipment leasing and finance
volume will continue to increase over the long term.




Lease and Other
Significant Transactions




We
entered into the following leases and other significant transactions during the
years ended December 31, 2008 and 2007:





Telecommunications
Equipment





During
2007, we, through our wholly-owned subsidiary, ICON Global Crossing IV,
purchased telecommunications equipment for approximately $21,294,000 that is
subject to a lease with Global Crossing. The lease expires on November 30, 2011.
We incurred professional fees of approximately $149,000 and paid acquisition
fees to our Manager of approximately $639,000 relating to this transaction. On
March 11, 2008, ICON Global Crossing IV purchased additional telecommunications
equipment for approximately $5,939,000 that is also subject to a lease with
Global Crossing. The lease expires on March 31, 2011. We paid an acquisition fee
to our Manager of approximately $178,000 relating to this
transaction.





Marine
Vessels





On
December 3, 2008, ICON Eagle Carina, a Singapore corporation wholly-owned by
ICON Carina Holdings, a Marshall Islands limited liability company owned
64.3% by us and 35.7% by Fund Ten, executed a Memorandum of Agreement to
purchase a 95,639 DWT Aframax product tanker, the Eagle Carina, from
Aframax Tanker II AS. On December 18, 2008, the Eagle Carina was purchased for
$39,010,000, of which $27,000,000 of non-recourse debt was borrowed from Fortis
Bank NV/SA (“Fortis”) and DVB Bank SE (“DVB”).  The Eagle Carina is subject
to an 84-month bareboat charter with AET that expires on November 14, 2013.
 ICON Carina Holdings paid an acquisition fee to our Manager of
approximately $1,170,000 relating to this transaction, of which our share was
approximately $752,000.





On
December 3, 2008, ICON Eagle Corona, a Singapore corporation wholly-owned by
ICON Corona Holdings, a Marshall Islands limited liability companyowned 64.3%
by us and 35.7% by Fund Ten, executed a Memorandum of Agreement to purchase
a 95,634 DWT Aframax product tanker, the Eagle Corona, from Aframax
Tanker II AS.  On December 31, 2008, the Eagle Corona was purchased
for $41,270,000, of which $28,000,000 of non-recourse debt was borrowed
from Fortis and DVB.  The Eagle Corona is subject to an 84-month
bareboat charter with AET that expires on November 14, 2013. ICON Corona
Holdings paid an acquisition fee to our Manager of approximately $1,238,000
relating to this transaction, of which our share was approximately
$796,000.





On November 18, 2008, ICON Eagle
Auriga, a wholly-owned subsidiary of ICON Eagle Holdings, purchased a 102,352
DWT Aframax product tanker, the Eagle Auriga, from Aframax Tanker I AS for
$42,000,000, of which $28,000,000 of non-recourse debt was borrowed from Fortis
and DVB. ICON Eagle Holdings is our wholly-owned subsidiary. On November 21,
2008, ICON Eagle Centaurus, also a wholly-owned subsidiary of ICON Eagle
Holdings, purchased a 95,644 DWT Aframax product tanker, the Eagle Centaurus,
for $40,500,000, of which $27,000,000 of non-recourse debt was borrowed from
Fortis and DVB. The Eagle Auriga and the Eagle Centaurus are subject to 84-month
bareboat charters with AET that expire on November 14, 2013 and November 13,
2013, respectively. We paid an acquisition fee to our Manager of $2,475,000
relating to this transaction.






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On April
24, 2008, we, through our wholly-owned subsidiaries, ICON Arabian and ICON
Aegean, acquired two 1,500 TEU containership vessels from Vroon - the Aegean
Express and the Arabian Express (collectively, the “Vessels”) - for an aggregate
purchase price of $51,000,000, of which $38,700,000 of non-recourse debt
was borrowed from Fortis. Simultaneously with the purchase, the Vessels were
bareboat chartered back to the subsidiary of Vroon for a period of 72 months. We
paid approximately $2,082,000 in transaction-related costs, including $1,530,000
in acquisition fees paid to our Manager.





On June
26, 2007, we and Fund Ten formed ICON Mayon, with ownership interests of 51% and
49%, respectively. On July 24, 2007, ICON Mayon purchased a 98,507 DWT Aframax
product tanker, the Mayon Spirit, from an affiliate of Teekay. The purchase
price for the Mayon Spirit was approximately $40,250,000, with approximately
$15,312,000 funded in the form of a capital contribution to ICON Mayon and
borrowings of approximately $24,938,000 of non-recourse debt borrowed from
Fortis Capital Corp. Simultaneously with the closing of the purchase of the
Mayon Spirit, the Mayon Spirit was bareboat chartered back to Teekay for a term
of 48 months.  The charter commenced on July 24, 2007. The total capital
contributions made to ICON Mayon were approximately $16,020,000, of which our
share was approximately $8,472,000. We paid approximately $845,000 in
transaction-related costs, which included approximately $616,000 of acquisition
fees paid to our Manager.





Manufacturing
Equipment





On June
30, 2008, we and Fund Eleven formed ICON Pliant, which entered into an agreement
with Pliant to acquire manufacturing equipment for a purchase price of
$12,115,000 of which we paid approximately $5,452,000. On July 16, 2008, we and
Fund Eleven completed the acquisition of and simultaneously leased back
manufacturing equipment to Pliant. We and Fund Eleven have ownership interests
in ICON Pliant of 45% and 55%, respectively. The lease expires on September 30,
2013. ICON Pliant paid an acquisition fee to our Manager of approximately
$363,000, of which our share was approximately $163,000.





On March
3, 2008, we, through our wholly-owned subsidiary, ICON French Equipment II,
purchased auto parts manufacturing equipment and simultaneously leased back the
equipment to Sealynx. The purchase price was approximately $11,626,000
(€7,638,400). The lease term commenced on March 3, 2008 and continues for a
period of 60 months. We paid an acquisition fee to our Manager of approximately
$350,000 (€229,152) relating to this transaction. As additional security for
Sealynx’s obligations under the lease, we were granted a lien on property owned
by Sealynx in France, valued at €3,746,400 at the acquisition date, and a
guaranty from Sealynx’s parent company, Sealynx Automotive Holding.





On
December 11, 2007, we and Fund Eleven formed ICON EAR, with ownership interests
of 55% and 45%, respectively. On December 28, 2007, ICON EAR completed the
acquisition of and simultaneously leased back semiconductor manufacturing
equipment to EAR for a purchase price of $6,935,000, of which our share was
approximately $3,814,000.  During June 2008, we and Fund Eleven made
additional contributions to ICON EAR, which were used to complete another
acquisition from EAR and simultaneously leased back additional semiconductor
manufacturing equipment to EAR for a total purchase price of approximately
$8,795,000, of which our share was approximately $4,837,000. We and Fund Eleven
retained ownership interests of 55% and 45%, respectively, subsequent to this
transaction. The lease term for both acquisitions commenced on July 1, 2008 and
expires on June 30, 2013. We paid acquisition fees to our Manager of
approximately $259,000 relating to these transactions.





On
September 28, 2007, we completed the acquisition of and simultaneously leased
back substantially all of the machining and metal working equipment of LC
Manufacturing, a wholly-owned subsidiary of MWU, for a purchase price of
$14,890,000. The lease term commenced on January 1, 2008 and continues for a
period of 60 months. We paid an acquisition fee to our Manager of approximately
$447,000. On December 10, 2007, we completed the acquisition of and
simultaneously leased back substantially all of  the machining and
metal working equipment of Crow, a wholly-owned subsidiary of MWU, for a
purchase price of $4,100,000.  The lease term commenced on January 1,
2008 and continues for a period of 60 months. We paid an acquisition fee to our
Manager of $123,000.






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Simultaneously
with the closing of the transactions with LC Manufacturing and Crow, Fund Ten
and Fund Eleven (together with us, the “Participating Funds”), completed similar
acquisitions with seven other subsidiaries of MWU pursuant to which the
respective funds purchased substantially all of the machining and metal working
equipment of each subsidiary. Each subsidiary’s obligations under its respective
leases (including those of LC Manufacturing and Crow) are
cross-collateralized and cross-defaulted, and all subsidiaries’ obligations
are guaranteed by MWU. Each of the Participating Funds has also entered into a
credit support agreement pursuant to which losses incurred by a Participating
Fund with respect to any MWU subsidiary are shared among the Participating Funds
in proportion to their respective capital investment. On September 5, 2008, the
Participating Funds and IEMC Corp., a subsidiary of our Manager (“IEMC”),
entered into a Forbearance Agreement with MWU, LC Manufacturing, Crow and seven
other subsidiaries of MWU to cure certain non-payment related defaults under its
lease covenants with us. The terms of the Forbearance Agreement include, among
other things, additional collateral being pledged and the grant of a warrant for
the purchase of 180 shares of the capital stock of MWU at an exercise price of
$0.01 per share, exercisable for a period of five years beginning September 5,
2008. As of December 31, 2008, our current proportionate share of the warrants
was 35.3% of the warrants issued for the capital stock of MWU. At December 31,
2008, our Manager determined that the fair value of these warrants was $0. On
February 2, 2009, the Participating Funds and IEMC entered into an amended
Forbearance Agreement with MWU, LC Manufacturing, Crow and seven other
subsidiaries of MWU with respect to certain lease defaults. In consideration for
restructuring LC Manufacturing’s lease payment schedule, we received, among
other things, a warrant to purchase 10% of the outstanding stock of LC
Manufacturing, at an exercise price of $0.01 per share, exercisable for a period
of five years from the grant date. At December 31, 2008, our Manager determined
that the fair value of the warrant was $0.





Coal-Mining
Equipment





On May 5,
2008, we, through our wholly-owned subsidiary, ICON Magnum, purchased the
Dragline from Magnum Coal Company for a purchase price of approximately
$12,461,000.  The Dragline was simultaneously leased back to Magnum Coal
Company and its subsidiaries. The lease term commenced on June 1, 2008 and
continues for a period of 60 months. We paid an acquisition fee to our Manager
of approximately $374,000 relating to this transaction.




Note Receivable
on Financing Facility








Note Receivable Secured by a Machine
Paper Coating Manufacturing Line




On
November 7, 2008, we, through our wholly-owned subsidiary, ICON Appleton, made a
secured term loan to Appleton in the amount of $22,000,000. The loan is secured
by a machine paper coating manufacturing line. Interest on the term note accrues
at 12.5% per year and is payable monthly in arrears in accordance with the
promissory note for a period of 60 months. We paid an acquisition fee to our
Manager of $660,000 relating to this transaction.






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  Notes Receivable
Secured by Crdit Cards Machines


Recent
Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157,
“Accounting for Fair Value Measurements” (“SFAS No. 157”).  SFAS No.
157 defines fair value, establishes a framework for measuring fair value, and
enhances fair value measurement disclosure. In February 2008, the FASB
issued FASB Staff Position (“FSP”) No. 157-2, “Effective Date of FASB
Statement No. 157” (“FSP 157-2”). FSP 157-2 delays the effective date of
SFAS No. 157 for all non-financial assets and non-financial liabilities,
except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), until the
beginning of the first quarter of 2009. The measurement and disclosure
requirements related to financial assets and financial liabilities were
effective for us beginning in the first quarter of 2008. The adoption of SFAS
No. 157 for financial assets and financial liabilities did not have a
significant impact on our consolidated financial statements. Our Manager is
currently evaluating the impact that SFAS No. 157 will have on our consolidated
financial statements when it is applied to non-financial assets and
non-financial liabilities beginning in the first quarter of 2009. The resulting
fair values calculated under SFAS No. 157 after adoption may be different from
the fair values that would have been calculated under previous
guidance.





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 No. 159”), which permits but does not require us to
measure financial instruments and certain other items at fair value. Unrealized
gains and losses on items for which the fair value option has been elected are
reported in earnings. This statement was effective for financial statements
issued for fiscal years beginning after November 15, 2007. As we did not elect
to fair value any of our financial instruments under the provisions of SFAS
No. 159, the adoption of this statement effective January 1, 2008 did not have
an impact on our consolidated financial statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the retained interest and gain
or loss when a subsidiary is deconsolidated. This statement is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 with earlier adoption prohibited. Our Manager is
currently evaluating the impact of SFAS No. 160 on our consolidated financial
statements.






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In
March 2008, the FASB issued SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities - an amendment of FASB Statement
No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced
disclosures about an entity’s derivative and hedging activities, and is
effective for financial statements issued for reporting periods beginning after
November 15, 2008, with early application encouraged. Since
SFAS No. 161 requires only additional disclosures concerning
derivatives and hedging activities, adoption of SFAS No. 161 will not
affect our financial condition, results of operations or cash
flows.





Critical
Accounting Policies





An
understanding of our critical accounting policies is necessary to understand our
financial results. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires our Manager to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities as of the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Significant estimates primarily
include the determination of allowance for doubtful accounts, depreciation and
amortization, impairment losses, estimated useful lives and residual
values.  Actual results could differ from those estimates. We applied
our critical accounting policies and estimation methods consistently in all
periods presented.  We consider the following accounting policies to be
critical to our business:





·
            Lease
      classification and revenue
recognition;


·
            Asset
      impairments;


·
            Depreciation;


·
            Notes
      receivable;


·
            Initial
      direct costs;


·
            Acquisition
      fees;


·
            Foreign
      currency translation;


·
            Warrants;
      and


·
            Derivative
      financial instruments.




Lease
Classification and Revenue Recognition





Each
equipment lease we enter into is classified either as a finance or an
operating lease, which is determined based upon the terms of each lease. 
For a finance lease, initial direct costs are capitalized and amortized over the
lease term.  For an operating lease, initial direct costs are included
as a component of the cost of the equipment and depreciated over the estimated
useful life of the equipment.





For
finance leases, we record, at lease inception, the total minimum lease payments
receivable from the lessee, the estimated unguaranteed residual value of the
equipment at lease termination, the initial direct costs related to the lease
and the related unearned income.  Unearned income represents the difference
between the sum of the minimum lease payments receivable, plus the estimated
unguaranteed residual value, minus the cost of the leased equipment.
 Unearned income is recognized as finance income over the term of the lease
using the effective interest rate method.




For
operating leases, rental income is recognized on a straight-line basis
over the lease term.  Billed operating lease receivables are included
in accounts receivable until collected. Deferred revenue is the difference
between the timing of the receivables billed and the income recognized on a
straight-line basis.






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Our
Manager has an investment committee that approves each new equipment lease and
other financing transaction. As part of its process, it determines the
residual value, if any, to be used once the investment has been
approved.  The factors considered in determining the residual value
include, but are not limited to, the creditworthiness of the potential lessee,
the type of equipment considered, how the equipment is integrated into the
potential lessee’s business, the length of the lease and the industry in which
the potential lessee operates.  Residual values are reviewed for
impairment in accordance with our impairment review policy.





The
residual value assumes, among other things, that the asset would be utilized
normally in an open, unrestricted and stable market. Short-term fluctuations in
the marketplace are disregarded and it is assumed that there is no necessity
either to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  The residual value
is calculated using information from various external sources, such as trade
publications, auction data, equipment dealers, wholesalers and industry experts,
as well as inspection of the physical asset and other economic
indicators.





For notes
receivable, we use the interest method to recognize interest income, which
produces a constant periodic rate of return on the investment, when
earned.





Asset
Impairments





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





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





Depreciation





We record
depreciation expense on leased equipment classified as an operating lease. 
In order to calculate depreciation, we first determine the depreciable equipment
cost, which is the cost less the estimated residual value.  The estimated
residual value is our estimate of the value of the equipment at lease
termination.  Depreciation expense is recorded by applying the
straight-line method of depreciation to the depreciable equipment cost over the
lease term.






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Notes
Receivable





Notes
receivable are reported at the outstanding principal balance net of any
unamortized deferred fees, premiums or discounts on purchased loans. Costs on
originated loans are reported as other current and other non-current assets.
Unearned income, discounts and premiums are amortized to income using the
effective interest method.  Any interest receivable related to the
unpaid principal is recorded separately from the outstanding
balance.





Initial
Direct Costs





We
capitalize initial direct costs associated with the origination and funding of
leased assets and other financing transactions in accordance with SFAS
No. 91 “Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Leases.” The costs
are amortized on a lease by lease basis based on the actual lease term using a
straight-line method for operating leases and the effective interest rate method
for finance leases and notes receivable. Costs related to leases or other
financing transactions that are not consummated are expensed as an acquisition
expense.





Acquisition
Fees





Pursuant
to our LLC Agreement, we pay acquisition fees to our Manager equal to 3% of
the purchase price for our investments. These fees are capitalized and included
in the cost of the investment.





Foreign
Currency Translation





Assets
and liabilities having non-U.S. dollar functional currencies are translated at
month-end exchange rates. Contributed capital accounts are translated at the
historical rate of exchange when the capital was contributed or distributed.
Revenues, expenses and cash flow items are translated at weighted average
exchange rates for the period. Resulting translation adjustments are recorded as
a separate component of accumulated other comprehensive income or
loss.




Warrants





Warrants
held by us are revalued on a quarterly basis.  The revaluation of
warrants is calculated using the Black-Scholes option pricing
model.  The assumptions utilized in the Black-Scholes model include
share price, strike price, expiration date, risk-free rate and the volatility
percentage.  The change in the fair value of warrants is recognized in
the consolidated statements of operations.





Derivative
Financial Instruments





We may
enter into derivative transactions for purposes of reducing hedging specific
financial exposures, including movements in foreign currency exchange rates and
changes in interest rates. These instruments are entered into only for hedging
underlying exposures. We do not hold or issue derivative financial instruments
for purposes other than hedging, except for warrants, which are not hedges.
Certain derivatives may not meet the established criteria to be designated as
qualifying accounting hedges, even though we believe that these are effective
economic hedges.






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We
account for derivative financial instruments in accordance with SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”),
which established accounting and reporting standards for derivative financial
instruments.  SFAS No. 133, as amended, requires us to recognize all
derivatives as either assets or liabilities in the consolidated balance sheets
and measure those instruments at fair value. We recognize the fair value of all
derivatives as either assets or liabilities in the consolidated balance sheets
and changes in the fair value of such instruments are recognized immediately in
earnings unless certain accounting criteria established by SFAS No. 133 are
met.  These criteria demonstrate that the derivative is expected to be
highly effective at offsetting changes in the fair value or expected cash flows
of the underlying exposure at both the inception of the hedging relationship and
on an ongoing basis and include an evaluation of the counterparty risk and the
impact, if any, on the effectiveness of the derivative.  If these
criteria are met, which we must document and assess at inception and on an
ongoing basis, we recognize the changes in fair value of such instruments in
accumulated other comprehensive income, a component of members’ equity on the
consolidated balance sheets.  Changes in the fair value of the
ineffective portion of all derivatives are recognized immediately in
earnings.





Results
of Operations for the Years Ended December 31, 2008 (“2008”) and 2007
(“2007”)





We are
currently in our offering period and are in the process of raising capital and
making investments. With most of the net proceeds from our offering, we expect
to invest in equipment leases and other financing transactions.  After
the close of the offering period, we will enter our operating period. During our
operating period, we will continue to make investments with the cash generated
from our initial investments and our additional investments to the extent that
the cash is not needed for expenses, reserves and distributions to members. As
our investments mature, we may reinvest the proceeds in additional investments
in equipment. We anticipate incurring gains or losses on our investments during
our operating period. Additionally, we expect to see our rental income and
finance income increase, as well as related expenses such as depreciation and
amortization expense and interest expense. We anticipate that the fees we pay
our Manager to operate and manage our business portfolio will increase during
this period as our Manager will be spending a greater portion of its time
managing our portfolio.




Revenue
for 2008 and 2007 are summarized as follows:





Years Ended December 31,2008
                
                
                2007
                
                
                ChangeRental
      income
                
                $
                22,940,645
                
                
                $
                3,745,463
                
                
                $
                19,195,182Finance
      income
                
                
                3,695,178
                
                
                
                762,779
                
                
                
                2,932,399Income
      from investment in joint venture
                
                
                325,235
                
                
                
                -
                
                
                
                325,235Interest
      and other income
                
                
                2,385,444
                
                
                
                322,073
                
                
                
                2,063,371Total
      revenue
                
                $
                29,346,502
                
                
                $
                4,830,315
                
                
                $
                24,516,187





Total revenue for 2008 increased
$24,516,187 as compared to 2007. The increase in total revenue was primarily
attributable to increases in rental income due to current year acquisitions of
approximately $10,585,000 of (i) additional equipment by ICON Global Crossing IV
in March 2008, (ii) the Vessels owned by ICON Aegean and ICON Arabian in April
2008, (iii) the Dragline owned by ICON Magnum in May 2008, (iv) additional
equipment by ICON EAR prior to June 30, 2008, (v) the vessels owned by ICON
Eagle Holdings in November 2008 and (vi) the vessels owned by ICON Carina
Holdings and ICON Corona Holdings in December 2008. In addition, we recognized a
full year of rental income for 2007 acquisitions of (i) the vessel owned by ICON
Mayon in July 2007, (ii) the equipment acquired from LC Manufacturing in
September 2007, (iii) the equipment owned by ICON Global Crossing after the
second quarter of 2007 and (iv) the equipment owned by ICON EAR and the
equipment acquired from Crow in December 2007, which resulted in an increase of
approximately $8,611,000.  The increase in finance income was from
ICON French Equipment II’s investment in a finance lease with Sealynx in March
2008 and Global Crossing IV’s investment in a finance lease with Global Crossing
after the second quarter of 2007, which resulted in increases of approximately
$1,510,000 and $1,422,000, respectively.  The increase in interest
income was due to the interest received on our money market account as well as
the notes receivable with Solyndra, Appleton and Northern.






36
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Expenses
for 2008 and 2007 are summarized as follows:





Years Ended December 31,2008
                
                
                2007
                
                
                ChangeManagement
      fees - Manager
                
                $
                1,474,993
                
                
                $
                178,289
                
                
                $
                1,296,704Administrative
      expense reimbursements - Manager
                
                
                2,705,118
                
                
                
                1,346,866
                
                
                
                1,358,252General
      and administrative
                
                
                1,350,134
                
                
                
                161,497
                
                
                
                1,188,637Interest
                
                
                3,086,275
                
                
                
                704,418
                
                
                
                2,381,857Loss
      on financial instruments
                
                
                27,433
                
                
                
                -
                
                
                
                27,433Other
      financial loss
                
                
                28,062
                
                
                
                25,024
                
                
                
                3,038Depreciation
      and amortization
                
                
                12,875,095
                
                
                
                1,860,863
                
                
                
                11,014,232Total
      expenses
                
                $
                21,547,110
                
                
                $
                4,276,957
                
                
                $
                17,270,153





Total
expenses for 2008 increased $17,270,153 as compared to 2007. The increase in
total expenses was primarily attributable to increases in depreciation and
amortization expense due to current year acquisitions of approximately
$6,089,000 of (i) additional equipment by ICON Global Crossing IV in March 2008,
(ii) the equipment owned by ICON French Equipment II in March 2008, (iii) the
Vessels owned by ICON Aegean and ICON Arabian in April 2008, (iv) the equipment
owned by ICON Magnum in May 2008, (v) the additional equipment acquired by ICON
EAR prior to June 30, 2008, (vi) the vessels owned by ICON Eagle Holdings and
the notes receivable invested in by ICON Appleton and ICON Northern Leasing in
November 2008 and (vii) the vessels owned by ICON Carina Holdings and ICON
Corona Holdings in December 2008. In addition, we recognized a full year of
depreciation for 2007 acquisitions of (i) the vessel owned by ICON Mayon in July
2007, (ii) the equipment acquired from LC Manufacturing in September 2007, (iii)
the equipment owned by ICON Global Crossing after the second quarter of 2007 and
(iv) the equipment owned by ICON EAR and the equipment acquired from Crow in
December 2007, which resulted in an increase of approximately $4,925,000. The
increase in interest expense was primarily due to the interest incurred on the
non-recourse debt owed by ICON Aegean, ICON Arabian and ICON Mayon. The increase
in Management fees – Manager resulted from our increased investment in leased
assets in 2008. Administrative expense reimbursements - Manager are costs
incurred by our Manager that are necessary to our operations.  These costs
include our Manager’s legal, accounting, investor relations and operations
personnel, as well as professional fees and other costs, that are charged to us
based upon the percentage of time such personnel dedicate to our operations.
Both Management fees – Manager and Administrative expense reimbursements –
Manager are expected to increase as we make more investments. The increase in
general and administrative expenses was primarily due to the increase in
professional fees during 2008.





Minority
Interest





Minority
interest expense for 2008 increased $1,420,306 as compared to 2007. The increase
in minority interest expense was primarily due to our investments in ICON Carina
Holdings, ICON Corona Holdings and ICON Northern Leasing in 2008. Fund Ten has a
minority interest in ICON Carina Holdings, ICON Corona Holdings and ICON
Northern Leasing, which resulted in the increase in minority interest expense.
Also contributing to the increase was the full year impact of Fund Ten’s
minority interest in ICON Mayon, which acquired the Mayon Spirit in July 2007.
The increase in minority interest expense was also due to the minority interest
that Fund Eleven has in ICON Northern Leasing, which was acquired in 2008 and
the full year impact of Fund Eleven’s minority interest in ICON EAR, which was
acquired in December 2007.





Net
Income





As a
result of the foregoing changes from 2007 to 2008, net income for 2008 was
$5,942,580, as compared to net income for 2007 of $116,852.  The
net income per weighted average additional Share for 2008 and 2007 was
$32.36 and $2.45, respectively.






37
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Financial
Condition


This
section discusses the major balance sheet variances from 2008 compared to
2007.





Total Assets





Total
assets increased $325,251,475, from $114,242,189 at December 31, 2007 to
$439,493,664 at December 31, 2008.  The increase was primarily due to
our investments in marine vessels, telecommunications equipment, coal-mining
equipment and manufacturing equipment during 2008, which account for the
increase in our leased equipment at cost. The increase in notes receivable was
due to our investments in notes receivable with Appleton and Northern, which was
partially offset by the repayment of the notes receivable with Solyndra during
2008. The increase in net investments in finance leases resulted from our
investment in auto parts manufacturing equipment during 2008.





Current Assets





Current
assets increased $44,432,950, from $26,295,256 at December 31, 2007 to
$70,728,206 at December 31, 2008, primarily from cash proceeds received from our
equity raise and our investments in notes receivable with Appleton and
Northern.





Total
Liabilities





Total
liabilities increased $151,811,370, from $24,089,822 at December 31, 2007 to
$175,901,192 at December 31, 2008.  The increase was primarily due to
non-recourse debt incurred in connection with our various marine vessel
investments during 2008. The increase in deferred revenue resulting from our
investments made during 2008 accounted for the remaining increase in total
liabilities.




Members’ Equity





Members’
equity increased $144,198,121, from $79,289,609 at December 31, 2007 to
$223,487,730 at December 31, 2008. The majority of this balance is associated
with our equity raise which was partially offset by the distributions paid to
our members, the organizational and offering fees, sales commissions to third
parties and underwriting fees paid to ICON Securities. There also was a decrease
in accumulated other comprehensive loss as a result of the change in fair
values of our effective hedges.








Liquidity
and Capital Resources


Summary





At
December 31, 2008 and 2007, we had cash and cash equivalents of $45,408,378 and
$22,154,903, respectively. During our offering period, our main source of cash
has been from financing activities and our main use of cash has been in
investing activities. During our operating period, our main source of cash is
anticipated to be from operating activities. Our main use of cash during our
operating period is anticipated to be in investing and financing
activities.






38
 Table of Contents





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





Cash
Flows




The
following table sets forth summary cash flow data:




Years Ended December 31,2008
                
                
                2007Net
      cash provided by (used in)Operating
      activities
                
                $
                12,903,947
                
                
                $
                983,164Investing
      activities
                
                
                (159,142,765
                )
                
                
                (58,350,968
                )Financing
      activities
                
                
                169,493,778
                
                
                
                79,520,707Effects
      of exchange rates on cash and cash equivalents
                
                
                (1,485
                )
                
                
                -Net
      increase in cash and cash equivalents
                
                $
                23,253,475
                
                
                $
                22,152,903







Note:
See the Consolidated Statements of Cash Flows included in Item 8, “Consolidated
Financial Statements and Supplementary Data”  of this Annual Report on
Form 10-K for additional information.




Operating
Activities




Sources
of cash




Sources
of cash from operating activities increased $11,920,783, from $983,164 in 2007
to $12,903,947 in 2008. The increase was primarily related to the collection of
an additional $8,101,693 in receivables from our finance leases, primarily from
our investment in ICON French Equipment II in March 2008.







39
 Table of Contents





Investing
Activities




Sources
of Cash





Sources
of cash from investing activities increased $5,938,710 in 2008, from $0 in 2007.
The increase primarily related to the repayment of approximately $4,367,000 of
the outstanding note receivable on the financing facility we had with Solyndra
and approximately $1,331,000 of repayment of the Notes made by
Northern.





Uses
of cash




Uses of
cash from investing activities increased $106,730,507, from $58,350,968 in 2007
to $165,081,475 in 2008. During our offering period, we expect to invest most of
the net proceeds from the sale of Shares in equipment leases and other financing
transactions.





We
invested in nine equipment leases and four other financing transactions during
2008 as compared to four equipment leases and two financing transactions during
2007. In 2008, we made an investment in ICON French Equipment II in March 2008
and purchased telecommunications equipment from Global Crossing in March 2008,
containership vessels from Vroon in April 2008, the Dragline in May 2008,
semiconductor manufacturing equipment from EAR in June 2008 and the product
tankers from AET in November 2008 and December 2008. In addition, we invested in
notes receivable with Northern and Appleton in November 2008 and in ICON Pliant,
our joint venture, in June 2008.  In 2007, we made an investment in
ICON Global Crossing IV after the second quarter of 2007 and purchased the
marine vessel from Teekay in July 2007, manufacturing equipment acquired from LC
Manufacturing in September 2007 and manufacturing equipment acquired from Crow
and EAR in December 2007. Additionally, we invested in the financing facility
with Solyndra.





Financing
Activities




Sources
of cash




Sources
of cash from financing activities increased $105,310,091, from $81,581,723 in
2007 to $186,891,814 in 2008, as we are currently in the process of raising
capital during our offering period.





We raised
an additional net capital of approximately $159,892,000 during 2008 as compared
to approximately $81,582,000 during 2007, as we raised equity for eight months
in 2007 as compared to a full year in 2008. In 2008, the increase in the sources
of cash was primarily related to the issuance of additional Shares, net of sales
and offering expenses. In addition, we incurred non-recourse debt in connection
with our purchase of the Eagle Centaurus in November 2008. Our sole source of
cash from financing activities in 2007 was related to the issuance of Shares,
which commenced in May 2007.





In
connection with the Commencement of Operations, a portion of our financing
activities relate to our offering. The proceeds from our offering are reduced by
sales commissions to third parties, organizational and offering expense
allowances to our Manager, and underwriting fees to ICON
Securities.





The
proceeds from our offering were lower for 2007 as compared to 2008 because we
did not commence the offering of Shares until May 7, 2007.





Uses
of cash




Uses of
cash from financing activities increased $15,337,020, from $2,061,016 in 2007 to
$17,398,036 in 2008. The increase was primarily related to the cash
distributions paid to our members. Since our Commencement of Operations we
recorded eight months of distributions during 2007, whereas during 2008 we
recorded a full year of distributions.






40
 Table of Contents




Sources
of Liquidity





Cash
generated by our financing activities continues to be our most significant
source of liquidity during our offering period. We believe that cash generated
from our financing activities, as well as the expected results of our
operations, will be sufficient to finance our liquidity requirements for the
year ending December 31, 2009, including the repayment of principal and interest
on our non-recourse debt obligations, distributions to our members, general and
administrative expenses, new investment opportunities, management fees and
administrative expense reimbursements. We anticipate that our liquidity
requirements for the years ending December 31, 2010 through December 31, 2013
will be financed by the expected results of operations, as well as cash received
from our investments at maturity. In addition, our revolving line of credit has
$23,815,000 available as of December 31, 2008 for additional working capital
needs or new investment opportunities. Our revolving line of credit is discussed
in further detail in the Financings and Borrowings section below.





As
discussed above, we anticipate being able to meet our liquidity requirements
into the foreseeable future. However, our ability to generate cash in the future
is subject to general economic, financial, competitive, regulatory and other
factors that affect us and our lessees’ and borrowers’ businesses that are
beyond our control.  See Item 1A. “Risk Factors.”





Financings
and Borrowings





Non-Recourse
Long-Term Debt





We had
non-recourse long-term debt obligations at December 31, 2008 of
$162,575,068.  All of our non-recourse long-term debt obligations
consist of notes payable in which the lender has a security interest in the
equipment and an assignment of the rental payments under the
lease,  in which case the lender is being paid directly by the
lessee.





Revolving
Line of Credit, Recourse





We, along
with Fund Eight B, Fund Nine, Fund Ten and Fund Eleven (entities sponsored and
managed by our Manager) (collectively, the “Borrowers”), are parties to a
Commercial Loan Agreement, as amended (the “Loan Agreement”), with CB&T. The
Loan Agreement provides for a revolving line of credit of up to $30,000,000
pursuant to a senior secured revolving loan facility (the “Facility”), which is
secured by all assets of the Borrowers not subject to a first priority lien, as
defined in the Loan Agreement. Each of the Borrowers is jointly and severally
liable for all amounts borrowed under the Facility. Amounts available under the
Facility are subject to a borrowing base that is determined, subject to certain
limitations, on the present value of the future receivables under certain lease
agreements in which the Borrowers have a beneficial interest.





The
Facility expires on April 30, 2010 and the Borrowers may request a one year
extension to the revolving line of credit within 390 days of the expiration
date, but CB&T has no obligation to extend. The interest rate for general
advances under the Facility is CB&T’s prime rate and the interest rate on up
to five separate advances that are permitted to be made under the Facility is
the rate at which U.S. dollar deposits can be acquired by CB&T in the London
Interbank Eurocurrency Market plus 2.5% per year. The interest rate at December
31, 2008 was 3.25%. In addition, the Borrowers are obligated to pay a quarterly
commitment fee of 0.25% on unused commitments under the Facility.





Aggregate
borrowings by all Borrowers under the Facility amounted to $6,185,000 at
December 31, 2008. We had no borrowings outstanding under the Facility as of
such date. The balances of $1,185,000 and $5,000,000 were borrowed by Fund Eight
B and Fund Eleven, respectively. On February 26, 2009, Fund Eleven borrowed an
additional $600,000 under the Facility. For additional information, see Note 8
to our consolidated financial statements.








41
 Table of Contents








Distributions





We, at
our Manager’s discretion, pay monthly distributions to our members starting with
the first month after each member’s admission and we expect to continue to pay
such distributions until the end of our operating period.  We paid
distributions to our additional members of $16,072,151 and $2,040,455,
respectively, for the years ended December 31, 2008 and 2007.  We paid
distributions to our Manager of $162,440 and $20,561, respectively, for the
years ended December 31, 2008 and 2007.





Commitments
and Contingencies and Off-Balance Sheet Transactions





Commitments
and Contingencies





At
December 31, 2008, we had non-recourse debt obligations. The lender has a
security interest in the equipment relating to each non-recourse debt instrument
and an assignment of the rental payments under the lease associated with the
equipment. In such cases, the lender is being paid directly by the
lessee.  If the lessee defaults on the lease, the equipment would be
returned to the lender in extinguishment of the non-recourse debt. At December
31, 2008, our outstanding non-recourse long-term indebtedness was
$162,575,068.  We are a party to the Facility, as discussed in the
Financing and Borrowings section above. We had no borrowings under the Facility
at December 31, 2008.





Principal
and interest maturities of our debt and related interest consisted of the
following at December 31, 2008:





Payments
      Due by PeriodLess
      Than 1
                    
                    
                    1 -
      3
                    
                    
                    4
      -5Total
                    
                    
                    Year
                    
                    
                    Years
                    
                    
                    YearsNon-recourse
      debt
                    
                    $
                    162,575,068
                    
                    
                    $
                    29,073,897
                    
                    
                    $
                    62,921,480
                    
                    
                    $
                    70,579,691Non-recourse
      interest
                    
                    
                    21,689,382
                    
                    
                    
                    7,062,374
                    
                    
                    
                    10,112,063
                    
                    
                    
                    4,514,945$
                    184,264,450
                    
                    
                    $
                    36,136,271
                    
                    
                    $
                    73,033,543
                    
                    
                    $
                    75,094,636





On
September 28, 2007 and December 10, 2007, we completed our simultaneous
acquisitions and leasing back of substantially all of the machining and metal
working equipment of LC Manufacturing and Crow.  Simultaneously with
the closing of the transactions with LC Manufacturing and Crow, the
Participating Funds completed similar acquisitions with seven other subsidiaries
of MWU pursuant to which the respective funds purchased the machining and metal
working equipment of each subsidiary.  Each subsidary’s obligations
under its respective lease (including those of LC Manufacturing and Crow) are
cross-collateralized and cross-defaulted, and all subsidiaries’ obligations are
guaranteed by MWU.  Each of the Participating Funds has also entered
into a credit support agreement, pursuant to which losses incurred by a
Participating Fund with respect to any MWU subsidiary are shared among the
Participating Funds in proportion to their respective capital
investment.  The term of each credit support agreement matches that of
the lease agreement.  No amounts were accrued at December 31, 2008 and
our Manager cannot reasonably estimate at this time the maximum potential
amounts that may become payable under the credit support agreement, if
any.





In
connection with the acquisitions of the Eagle Auriga, the Eagle Centaurus, the
Eagle Carina and the Eagle Corona, we, through ICON Eagle Holdings, ICON Carina
Holdings and ICON Corona Holdings, maintain four restricted cash accounts with
Fortis. These restricted cash accounts consist of the free cash balances that
result from the difference between the bareboat charter payments from AET and
the repayments on the non-recourse long-term debt to Fortis and DVB. The account
of ICON Eagle Holdings is cross-collateralized and the free cash remains in
the restricted cash account until a cumulative amount of $500,000 is funded
into the account. Thereafter, all free cash in excess of $500,000 can be
distributed. The free cash for ICON Carina Holdings and ICON Corona Holdings
remain in the restricted cash accounts until $500,000 is funded into each
account. Thereafter, all free cash in excess of $500,000 can be distributed from
the respective accounts. As of December 31, 2008, no amounts were deposited into
the restricted cash accounts.






42
 Table of Contents





Off-Balance
Sheet Transactions





On
November 25, 2008, we, through ICON Northern Leasing, purchased the Notes and
received an assignment of the MLSA. The Notes are secured by an underlying pool
of leases for credit card machines and Northern Leasing Systems, Inc., the
originator and servicer of the Notes, provided a limited guaranty of the MLSA
for payment deficiencies up to approximately $6,355,000.








Subsequent
Events


On
January 5, 2009, we, through ICON Corona Holdings, entered into an interest rate
swap contract with Fortis in order to hedge the variable interest rate on its
non-recourse long-term debt.








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




On
February 17, 2009, Appleton notified us that it was in breach of a financial
covenant contained in its secured term loans. As a result of this breach, the
parties agreed to increase the interest on the term note from 12.5% per year to
14.25% per year beginning with the payment due on March 1,
2009.




On
February 18, 2009, we, through our wholly-owned subsidiary, ICON Murray, LLC,
purchased mining equipment for approximately $3,348,000 that is subject to lease
with American Energy Corporation and Ohio American Energy, Incorporated. The
lease expires on March 31, 2011.




On March
9, 2009, we, through our wholly-owned subsidiary, ICON Global Crossing IV,
purchased telecommunications equipment for approximately $2,694,000 that is
subject to a lease with Global Crossing. The lease expires on March 31,
2012.








On March
24, 2009, we, through our wholly-owned subsidiary, ICON Victorious, LLC (“ICON
Victorious”), purchased an interest in an Accommodation and Work Barge (the
“Barge”), Swiber Victorious, from Swiber Engineering Ltd. (“Swiber”) for the
purchase price of $42,500,000.  The purchase price was funded by (i) a
contribution by ICON Victorious of cash in the amount of $19,125,000 to
Victorious, LLC (“Victorious”), a Marshall Islands limited liability company, in
exchange for a senior, controlling equity interest in and all management rights
with respect to Victorious, (ii) the contribution of the Barge from Swiber in
exchange for a subordinate, non-controlling equity interest in Victorious, and
(iii) the assumption by Victorious of $5,000,000 of subordinated indebtedness in
favor of Swiber that bears interest at the rate of 3.5% per annum and is payable
quarterly in arrears. The Barge is subject to an eight year bareboat charter
with Swiber Offshore Marine Pte. Ltd. (the “Charterer”) beginning April 1,
2009.  At the conclusion of the charter, the Charterer has an option to
purchase the Barge for $21,000,000.  The obligations of the various Swiber
entities that are parties to the transaction are guaranteed by Swiber’s parent
company, Swiber Holdings Limited.





43
 Table of Contents









Inflation
and Interest Rates


The
potential effects of inflation on us are difficult to predict. If the general
economy experiences significant rates of inflation, however, it could affect us
in a number of ways.  We do not currently have or expect to have rent
escalation clauses tied to inflation in our leases. The anticipated residual
values to be realized upon the sale or re-lease of equipment upon lease
terminations (and thus the overall cash flow from our leases) may increase with
inflation as the cost of similar new and used equipment increases.





If
interest rates increase significantly, leases already in place would generally
not be affected.










Item 7A.  Quantitative and Qualitative Disclosures About
Market Risk


We, like
most other companies, are exposed to certain market risks, which includes
changes in interest rates and the demand for equipment (and the related
residuals) owned by us.  We believe that our exposure to other market
risks, including foreign currency exchange rate risk, commodity risk and equity
price risk, are insignificant, at this time, to both our financial position and
our results of operations.





We
currently have eight outstanding notes payable, of which seven are
non-recourse debt and the other is associated with our recourse revolving line
of credit.  With respect to the non-recourse debt that is subject to
variable interest, the interest rate for each non-recourse debt obligation is
fixed pursuant to an interest rate swap to allow us to mitigate interest rate
fluctuations.  As a result, we consider this a fixed position and,
therefore, the conditions in the credit markets as of December 31, 2008 have not
had any impact on us.  In addition, we have considered the risk of
counterparty performance of our interest rate swaps by considering, among other
things, the credit agency ratings of our counterparties.  Based on
this assessment, we believe that the risk of counterparty non-performance is
minimal.  With respect to our revolving line of credit, which is
subject to variable interest and, under which we have no outstanding borrowings,
our Manager has evaluated the impact of the condition of the credit markets on
our future cash flows and we do not expect any adverse impact on our cash flows
should credit conditions in general remain the same or deteriorate
further.





We lease
equipment for use by domestic and foreign lessees outside of the United States.
Although certain of our transactions are denominated in Euros, substantially all
of our transactions are denominated in the U.S. dollar, therefore reducing our
risk to currency translation exposures. In addition, to further reduce this
risk, we currently have foreign currency hedges to reduce our risk to currency
translation exposure on our Euro denominated transactions. To date, our exposure
to exchange rate volatility has not been significant.  We have also
considered the risk of counterparty performance on our foreign currency hedges
by considering, among other things, the credit ratings of our counterparty.
Nevertheless, there can be no assurance that currency translation exposures will
not have a material impact on our financial position, results of operations or
cash flow in the future.





To hedge
our variable interest rate risk, we have and may in the future enter into
interest rate swap contracts that will effectively convert the underlying
floating interest rates to a fixed interest rate. In general, these swap
agreements will reduce our interest rate risk associated with variable interest
rate borrowings.  However, we will be exposed to and manage credit
risk associated with our counterparties to our swap agreement by dealing only
with institutions our Manager considers financially sound.





On July
24, 2007, we entered into an interest rate swap contract with Fortis in order to
fix the variable interest rate on our non-recourse debt obligation related to
the Mayon Spirit and to minimize our risk for interest rate fluctuations. After
giving effect to the swap agreement, we have a fixed interest rate of 6.35% per
year.








44
 Table of Contents








On April
24, 2008, we entered into interest rate swap contracts with Fortis in order
to fix the variable interest rate on our non-recourse debt
obligations related to the Vessels and to minimize our risk for interest
rate fluctuations. After giving effect to the swap agreements, we have a fixed
interest rate of 3.93% per year.





We
entered into interest rate swap contracts with Fortis and DVB in order to fix
the variable interest rates on our non-recourse debt obligations related to
the Eagle Auriga on November 18, 2008, the Eagle Centaurus on November 12, 2008
and the Eagle Carina on December 4, 2008 and to minimize our risk for
interest rate fluctuations. After giving effect to the swap agreements, we have
fixed interest rates of 4.94%, 4.63% and 3.85% with respect to the
non-recourse debt obligations of the Eagle Auriga, the Eagle Centaurus and for
the Eagle Carina, respectively.





We manage
our exposure to equipment and residual risk by monitoring the markets our
equipment is in and maximizing remarketing proceeds through the re-lease or sale
of equipment.





45
 Table of Contents






Item 8. Consolidated Financial Statements and Supplementary
Data








PageReports of Independent Register Public Accounting
      Firms
            47Consolidated Balance Sheets
            49Consolidated Statements of Operations
            50Consolidated Statements of Changes in Members’
      Equity
            51Consolidated Statements of Cash Flows
            52Notes to Consolidated Financial Statements
            54







46
 Table of Contents







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM









The
Members


ICON
Leasing Fund Twelve, LLC







We have
audited the accompanying consolidated balance sheets of ICON Leasing Fund
Twelve, LLC (the “Company”) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, changes in partners' equity, and cash
flows for each of the two years in the period ended December 31, 2008. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company’s internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ICON Leasing Fund
Twelve, LLC at December 31, 2008 and 2007, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2008,
in conformity with U.S. generally accepted accounting
principles.









/s/ Ernst
& Young, LLP





March 30,
2009


New York,
New York










47
 Table of Contents







The
Members of
 ICON
Leasing Fund Twelve, LLC
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 We have
audited the balance sheet of ICON Leasing Fund Twelve, LLC (a Delaware limited
liability Company) as of December 31, 2006.  The financial
statement is the responsibility of the Company’s management.  Our
responsibility is to express an opinion on the financial statement based on our
audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.
 
 In our
opinion, the financial statement referred to above presents fairly, in all
material respects, the financial position of ICON Leasing Fund Twelve, LLC as of
December 31, 2006, in conformity with accounting principles generally
accepted in the United States of America.
 
 
 /s/ Hays
& Company LLP
 
 
 March 8,
2007
 New York,
New York










48
 Table of Contents







ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Balance SheetsAssetsDecember 31,2008
                        
                        
                        2007Current
      assetsCash
      and cash equivalents
                        
                        $
                        45,408,378
                        
                        
                        $
                        22,154,903Current
      portion of net investment in finance leases
                        
                        
                        6,175,219
                        
                        
                        
                        4,011,408Current
      portion of notes receivable
                        
                        
                        17,058,414
                        
                        
                        
                        -Other
      current assets
                        
                        
                        2,086,195
                        
                        
                        
                        128,945Total
      current assets
                        
                        
                        70,728,206
                        
                        
                        
                        26,295,256Non-current
      assetsNet
      investment in finance leases, less current portion
                        
                        
                        20,723,514
                        
                        
                        
                        17,610,522Leased
      equipment at cost (less accumulated depreciation of$14,178,194
      and $1,823,881, respectively)
                        
                        
                        302,253,674
                        
                        
                        
                        65,809,766Notes
      receivable
                        
                        
                        35,641,940
                        
                        
                        
                        4,087,568Investment
      in joint venture
                        
                        
                        5,374,899
                        
                        
                        
                        -Derivative
      instrument
                        
                        
                        92,388
                        
                        
                        
                        -Due
      from Manager and affiliates
                        
                        
                        1,919,144
                        
                        
                        
                        -Other
      non-current assets, net
                        
                        
                        2,759,899
                        
                        
                        
                        439,077Total
      non-current assets
                        
                        
                        368,765,458
                        
                        
                        
                        87,946,933Total
      Assets
                        
                        $
                        439,493,664
                        
                        
                        $
                        114,242,189Liabilities
      and Members' EquityCurrent
      liabilitiesCurrent
      portion of non-recourse long-term debt
                        
                        $
                        29,073,897
                        
                        
                        $
                        4,913,501Derivative
      instruments
                        
                        
                        5,431,968
                        
                        
                        
                        686,176Deferred
      revenue
                        
                        
                        4,239,257
                        
                        
                        
                        541,830Due
      to Manager and affiliates
                        
                        
                        1,608,556
                        
                        
                        
                        246,926Accrued
      expenses and other current liabilities
                        
                        
                        2,046,343
                        
                        
                        
                        134,620Total
      current liabilities
                        
                        
                        42,400,021
                        
                        
                        
                        6,523,053Non-current
      liabilitiesNon-recourse
      long-term debt, less current portion
                        
                        
                        133,501,171
                        
                        
                        
                        17,566,769Total
      Liabilities
                        
                        
                        175,901,192
                        
                        
                        
                        24,089,822Minority
      Interest
                        
                        
                        40,104,742
                        
                        
                        
                        10,862,758Commitments
      and contingencies (Note 16)Members'
      EquityManager
                        
                        
                        (121,406
                        )
                        
                        
                        (18,392
                        )Additional
      Members
                        
                        
                        229,360,768
                        
                        
                        
                        79,657,951Accumulated
      other comprehensive loss
                        
                        
                        (5,751,632
                        )
                        
                        
                        (349,950
                        )Total
      Members' Equity
                        
                        
                        223,487,730
                        
                        
                        
                        79,289,609Total
      Liabilities and Members' Equity
                        
                        $
                        439,493,664
                        
                        
                        $
                        114,242,189






See
accompanying notes to the consolidated financial statements.
 49
 Table of Contents








ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of OperationsYears Ended December 31,2008
                        
                        
                        2007Revenue:Rental
      income
                        
                        $
                        22,940,645
                        
                        
                        $
                        3,745,463Finance
      income
                        
                        
                        3,695,178
                        
                        
                        
                        762,779Income
      from investment in joint venture
                        
                        
                        325,235
                        
                        
                        
                        -Interest
      and other income
                        
                        
                        2,385,444
                        
                        
                        
                        322,073Total
      revenue
                        
                        
                        29,346,502
                        
                        
                        
                        4,830,315Expenses:Management
      fees - Manager
                        
                        
                        1,474,993
                        
                        
                        
                        178,289Administrative
      expense reimbursements - Manager
                        
                        
                        2,705,118
                        
                        
                        
                        1,346,866General
      and administrative
                        
                        
                        1,350,134
                        
                        
                        
                        161,497Interest
                        
                        
                        3,086,275
                        
                        
                        
                        704,418Loss
      on financial instruments
                        
                        
                        27,433
                        
                        
                        
                        -Other
      financial loss
                        
                        
                        28,062
                        
                        
                        
                        25,024Depreciation
      and amortization
                        
                        
                        12,875,095
                        
                        
                        
                        1,860,863Total
      expenses
                        
                        
                        21,547,110
                        
                        
                        
                        4,276,957Income
      before minority interest
                        
                        
                        7,799,392
                        
                        
                        
                        553,358Minority
      interest
                        
                        
                        (1,856,812
                        )
                        
                        
                        (436,506
                        )Net
      income
                        
                        $
                        5,942,580
                        
                        
                        $
                        116,852Net
      income allocable to:Additional
      Members
                        
                        $
                        5,883,154
                        
                        
                        $
                        115,683Manager
                        
                        
                        59,426
                        
                        
                        
                        1,169$
                        5,942,580
                        
                        
                        $
                        116,852Weighted
      average number of additional shares oflimited
      liability company interests outstanding
                        
                        
                        181,777
                        
                        
                        
                        47,186Net
      income per weighted average additional share oflimited
      liability company interests
                        
                        $
                        32.36
                        
                        
                        $
                        2.45




See
accompanying notes to the consolidated financial statements.
 50
 Table of Contents





ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Changes in Members' EquityAdditional
      Shares of
                        
                        
                        
                        
                        
                        
                        
                        
                        AccumulatedLimited
      Liability Company
                        
                        
                        Additional
                        
                        
                        
                        
                        
                        OtherComprehensive
                        
                        
                        Total
      Members'Interests
                        
                        
                        Members
                        
                        
                        Manager
                        
                        
                        Loss
                        
                        
                        EquityOpening
      balance, October 3, 2006
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Proceeds
      from issuance of additional sharesof
      limited liability company interests
                        
                        
                        1
                        
                        
                        
                        1,000
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,000Proceeds
      from issuance of share of limitedliability
      company interests to the Manager
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,000
                        
                        
                        
                        -
                        
                        
                        
                        1,000Balance,
      December 31, 2006
                        
                        
                        1
                        
                        
                        
                        1,000
                        
                        
                        
                        1,000
                        
                        
                        
                        -
                        
                        
                        
                        2,000Net
      income
                        
                        
                        
                        
                        
                        
                        115,683
                        
                        
                        
                        1,169
                        
                        
                        
                        
                        
                        
                        
                        116,852Change
      in valuation ofinterest
      rate swap contracts
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (349,950
                        )
                        
                        
                        (349,950
                        )Comprehensive
      loss
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (233,098
                        )Proceeds
      from issuance of additional sharesof
      limited liability company interests
                        
                        
                        93,805
                        
                        
                        
                        93,670,295
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        93,670,295Redemption
      of additional shareof
      limited liability company interests
                        
                        
                        (1
                        )
                        
                        
                        (1,000
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,000
                        )Sales
      and offering expenses
                        
                        
                        -
                        
                        
                        
                        (12,087,572
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (12,087,572
                        )Cash
      distributions to members
                        
                        
                        -
                        
                        
                        
                        (2,040,455
                        )
                        
                        
                        (20,561
                        )
                        
                        
                        -
                        
                        
                        
                        (2,061,016
                        )Balance,
      December 31, 2007
                        
                        
                        93,805
                        
                        
                        
                        79,657,951
                        
                        
                        
                        (18,392
                        )
                        
                        
                        (349,950
                        )
                        
                        
                        79,289,609Net
      income
                        
                        
                        
                        
                        
                        
                        5,883,154
                        
                        
                        
                        59,426
                        
                        
                        
                        -
                        
                        
                        
                        5,942,580Change
      in valuation ofderivative
      instruments
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (4,455,706
                        )
                        
                        
                        (4,455,706
                        )Currency
      translation adjustment
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (945,976
                        )
                        
                        
                        (945,976
                        )Comprehensive
      income
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        540,898Proceeds
      from issuance of additional sharesof
      limited liability company interests
                        
                        
                        180,184
                        
                        
                        
                        179,455,836
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        179,455,836Sales
      and offering expenses
                        
                        
                        
                        
                        
                        
                        (19,564,022
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (19,564,022
                        )Cash
      distributions to members
                        
                        
                        -
                        
                        
                        
                        (16,072,151
                        )
                        
                        
                        (162,440
                        )
                        
                        
                        -
                        
                        
                        
                        (16,234,591
                        )Balance,
      December 31, 2008
                        
                        
                        273,989
                        
                        
                        $
                        229,360,768
                        
                        
                        $
                        (121,406
                        )
                        
                        $
                        (5,751,632
                        )
                        
                        $
                        223,487,730


See
accompanying notes to the consolidated financial statements.
 51
 Table of Contents








ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Cash FlowsYears Ended December 31,2008
                
                
                2007Cash
      flows from operating activities:Net
      income
                
                $
                5,942,580
                
                
                $
                116,852Adjustments
      to reconcile net income to net cash provided byoperating
      activities:Rental
      income paid directly to lenders by lessees
                
                
                (11,314,201
                )
                
                
                (3,261,468
                )Finance
      income
                
                
                (3,695,178
                )
                
                
                (762,779
                )Income
      from investment in joint venture
                
                
                (325,235
                )
                
                
                -Depreciation
      and amortization
                
                
                12,875,095
                
                
                
                1,860,863Interest
      expense on non-recourse financing paid directlyto
      lenders by lessees
                
                
                2,944,076
                
                
                
                674,781Interest
      expense from amortization of debt financing costs
                
                
                142,199
                
                
                
                18,436Other
      income
                
                
                18,375
                
                
                
                -Minority
      interest
                
                
                1,856,812
                
                
                
                436,506Loss
      on financial instruments
                
                
                55,495
                
                
                
                -Changes
      in operating assets and liabilities:Collection
      of finance leases
                
                
                9,244,453
                
                
                
                1,142,760Other
      assets, net
                
                
                (4,636,009
                )
                
                
                (164,163
                )Accrued
      expenses and other current liabilities
                
                
                1,194,823
                
                
                
                132,620Deferred
      revenue
                
                
                (1,342,076
                )
                
                
                541,830Due
      to/from Manager and affiliates, net
                
                
                397,763
                
                
                
                246,926Distributions
      to/from minority interest holders and joint venture
                
                
                (455,025
                )
                
                
                -Net
      cash provided by operating activities
                
                
                12,903,947
                
                
                
                983,164Cash
      flows from investing activities:Purchase
      of equipment
                
                
                (120,866,253
                )
                
                
                (53,198,793
                )Investment
      in joint venture
                
                
                (5,615,735
                )
                
                
                -Distributions
      received from joint venture
                
                
                240,836
                
                
                
                -Investment
      in leases and equipment to be leased
                
                
                -
                
                
                
                (823,875
                )Investment
      in notes receivable
                
                
                (38,599,487
                )
                
                
                (4,328,300
                )Repayment
      of note receivable
                
                
                5,697,874
                
                
                
                -Net
      cash used in investing activities
                
                
                (159,142,765
                )
                
                
                (58,350,968
                )Cash
      flows from financing activities:Proceeds
      from non-recourse long-term debt
                
                
                27,000,000
                
                
                
                -Issuance
      of additional shares of limited liability company
    interests,net
      of sales and offering expenses
                
                
                159,891,814
                
                
                
                81,581,723Distributions
      to minority interest holders and joint ventures
                
                
                (1,163,445
                )
                
                
                -Cash
      distributions to members
                
                
                (16,234,591
                )
                
                
                (2,061,016
                )Net
      cash provided by financing activities
                
                
                169,493,778
                
                
                
                79,520,707Effects
      of exchange rates on cash and cash equivalents
                
                
                (1,485
                )
                
                
                -Net
      increase in cash and cash equivalents
                
                
                23,253,475
                
                
                
                22,152,903Cash
      and cash equivalents, beginning of the year
                
                
                22,154,903
                
                
                
                2,000Cash
      and cash equivalents, end of the year
                
                $
                45,408,378
                
                
                $
                22,154,903


See
accompanying notes to the consolidated financial statements.
 52
 Table of Contents








ICON
      Leasing Fund Twelve LLC(A
      Delaware Limited Partnership)Consolidated
      Statements of Cash FlowsYears Ended December 31,2008
                
                
                2007Supplemental
      disclosure of non-cash investing and financing activities:Principal
      and interest paid on non-recourse long-term debtpaid
      directly to lenders by lessees
                
                $
                11,314,201
                
                
                $
                3,128,000Equipment
      purchased with non-recourse long-term debt paid directly by
      lender
                
                $
                121,699,640
                
                
                $
                24,938,433Minority
      interest contributions in joint ventures
                
                $
                28,548,220
                
                
                $
                10,762,478





See
accompanying notes to the consolidated financial statements.
 53
 Table of Contents
 ICON Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008





(1)
            Organization





ICON
Leasing Fund Twelve, LLC (the “LLC”) was formed on October 3, 2006 as a Delaware
limited liability company.  The LLC’s initial closing date was May 25,
2007 (the “Commencement of Operations”), the date at which the LLC had raised
$1,200,000.  Accordingly, there is no statement of operations for the
year ended December 31, 2006.  The LLC is engaged in one business
segment, the business of purchasing equipment and leasing it to third-party end
users, providing equipment and other financing, acquiring equipment subject to
lease and, to a lesser degree, acquiring ownership rights to items of leased
equipment at lease expiration.  The LLC will continue until December
31, 2026, unless terminated sooner.





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





The
manager of the LLC is ICON Capital Corp. (the “Manager”), a Delaware
corporation.  The Manager manages and controls the business affairs of
the LLC, including, but not limited to, the equipment leases and other financing
transactions that the LLC enters into pursuant to the terms of the LLC’s limited
liability company agreement (the “LLC Agreement”).  Additionally, the
Manager has a 1% interest in the profits, losses, cash distributions and
liquidation proceeds of the LLC.





The LLC
is currently in its offering period, which commenced on May 7, 2007 and is
anticipated to end in May 2009. The LLC is currently in the process of raising
capital and making investments.  When the offering period ends, the
LLC will enter its operating period. The initial capitalization of the LLC was
$2,000, which consisted of contributions of $1,000 from the Manager and $1,000
from an officer of the Manager. The LLC is offering shares of limited liability
company interests (“Shares”) on a “best efforts” basis with the intention of
raising up to $410,800,000 of capital, consisting of 400,000 issuances pursuant
to Shares at a purchase price of $1,000 and an additional 12,000 Shares,
which  have been reserved for the LLC’s Distribution Reinvestment
Plan. The Distribution Reinvestment Plan allows investors to purchase
additional Shares with distributions received from the LLC and certain other
funds managed by the Manager at a discounted share price of $900.  As
of December 31, 2008, approximately 8,634 Shares have been issued in
connection with the LLC’s Distribution Reinvestment Plan.  Upon
raising the minimum of $1,200,000, additional members were
admitted.  Additional members represent all members other than the
Manager.





From the
Commencement of Operations to December 31, 2008, the LLC sold
273,990 Shares, representing $273,127,131 of capital contributions and
admitted 6,503 additional members.  Beginning with the
Commencement of Operations, the LLC has been paying sales commissions to third
parties. The LLC has also been making payments to the Manager and its affiliates
for various fees.  These sales commissions and fees paid to the
Manager and its affiliates are recorded as a reduction to the LLC’s
equity.  Through December 31, 2008, the LLC has paid or accrued
$21,228,770 of sales commissions to third parties, $5,115,631 of
organizational and offering expenses to the Manager and $5,307,193 of
underwriting fees to ICON Securities Corp. (“ICON Securities”), a wholly-owned
subsidiary of the Manager, the dealer-manager of the LLC’s
offering.





54
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 
 (1)
              Organization
      - continued
  The LLC
expects to invest most of the net proceeds from its offering in equipment leases
and financing transactions. After the close of its offering period, the LLC will
enter its operating period, during which it will make additional investments
from the cash generated from its initial investments to the extent that the cash
is not needed for expenses, reserves and distributions to
members.





Members’
capital accounts are increased for their initial capital contribution plus their
proportionate share of earnings and decreased by their proportionate share of
losses and distributions. Profits, losses, cash distributions and liquidation
proceeds are allocated 99% to the additional members and 1% to the Manager until
each additional member has (a) received cash distributions and liquidation
proceeds sufficient to reduce their adjusted capital account to zero and (b)
received, in addition, other distributions and allocations that would provide an
8% per year cumulative return on their outstanding adjusted capital account.
After such time, distributions will be allocated 90% to the additional members
and 10% to the Manager.


(2)
              Summary
      of Significant Accounting Policies


Basis of
Presentation and Consolidation





The
accompanying consolidated financial statements of the LLC have been prepared in
accordance with U.S. generally accepted accounting principles (“US
GAAP”).





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





The LLC
accounts for its noncontrolling interests in joint ventures where the LLC has
influence over financial and operational matters, generally 50% or less
ownership interest, under the equity method of accounting. In such cases, the
LLC’s original investments are recorded at cost and adjusted for its share of
earnings, losses and distributions.  The LLC accounts for investments
in joint ventures where the LLC has virtually no influence over financial and
operational matters using the cost method of accounting. In such cases, the
LLC’s original investments are recorded at cost and any distributions received
are recorded as revenue. All of the LLC’s investments in joint ventures are
subject to its impairment review policy.





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





Cash and
Cash Equivalents





Cash and
cash equivalents include cash in banks and highly liquid investments with
original maturity dates of three months or less.





The LLC's
cash and cash equivalents are held principally at two financial institutions and
at times may exceed insured limits.  The LLC has placed these funds in
high quality institutions in order to minimize risk relating to exceeding
insured limits.








55
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(2)
              Summary
      of Significant Accounting Policies -
continued





Risks and
Uncertainties





In the
normal course of business, the LLC is exposed to two significant types of
economic risk: credit and market.  Credit risk is the risk of a
lessee, borrower or other counterparty’s inability or unwillingness to make
contractually required payments.  Concentrations of credit risk with
respect to lessees, borrowers or other counterparties are dispersed across
different industry segments within the United States of America and throughout
the world.  Although the LLC does not currently foresee a concentrated
credit risk associated with these customers, contractual payments are dependent
upon the financial stability of the industry segments in which they
operate.  See Note 13 for concentration of risk.





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





Debt
Financing Costs





Expenses
associated with the incurrence of debt are capitalized and amortized over the
term of the debt instrument using the effective interest rate
method.  These costs are included in other current and other
non-current assets.





Leased
Equipment at Cost





Investments
in leased equipment are stated at cost less accumulated
depreciation.  Leased equipment is depreciated on a straight-line
basis over the lease term, which ranges from 4 to 5 years to the asset’s
residual value.





The
Manager has an investment committee that approves each new equipment lease and
other financing transaction.  As part of its process, it
determines the residual value, if any, to be used once the investment has been
approved.  The factors considered in determining the residual value
include, but are not limited to, the creditworthiness of the potential lessee,
the type of equipment considered, how the equipment is integrated into the
potential lessee’s business, the length of the lease and the industry in which
the potential lessee operates.  Residual values are reviewed for
impairment in accordance with the LLC’s impairment review policy.





The
residual value assumes, among other things, that the asset is utilized normally
in an open, unrestricted and stable market. Short-term fluctuations in the
marketplace are disregarded and it is assumed that there is no necessity either
to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  The residual value
is calculated using information from various external sources, such as trade
publications, auction data, equipment dealers, wholesalers and industry experts,
as well as inspection of the physical asset and other economic
indicators.




56
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (2)
                Summary
      of Significant Accounting Policies -
continued


Asset
Impairments





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





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





Revenue
Recognition





The LLC
leases equipment to third parties and each such lease is classified as either a
finance lease or an operating lease, which is based upon the terms of each
lease.  For a finance lease, initial direct costs are
capitalized and amortized over the term of the related lease.  For an
operating lease, the initial direct costs are included as a component of the
cost of the equipment and depreciated.





For
finance leases, the LLC records, at lease inception, the total minimum lease
payments receivable from the lessee, the estimated unguaranteed residual value
of the equipment at lease termination, the initial direct costs related to the
lease and the related unearned income.  Unearned income represents the
difference between the sum of the minimum lease payments receivable, plus the
estimated unguaranteed residual value, minus the cost of the leased
equipment.  Unearned income is recognized as finance income over the
term of the lease using the effective interest rate method.





For
operating leases, rental income is recognized on a straight-line basis over the
lease term.  Billed operating lease receivables are included in
accounts receivable until collected.  Accounts receivable are stated
at their estimated net realizable value.  Deferred revenue is the
difference between the timing of the receivables billed and the income
recognized on a straight-line basis.


57
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (2)
                Summary
      of Significant Accounting Policies -
continued


For notes
receivable, the LLC uses the interest method to recognize interest income, which
produces a constant periodic rate of return on the investment, when
earned.





Allowance
for Doubtful Accounts





When
evaluating the adequacy of the allowance for doubtful accounts, the LLC
estimates the uncollectibility of receivables by analyzing lessee, borrower and
other counterparty concentrations, creditworthiness and current economic
trends. The LLC records an allowance for doubtful accounts when the analysis
indicates that the probability of full collection is unlikely. No allowance
was deemed necessary at December 31, 2008 and 2007.





Notes
Receivable





Notes
receivable are reported at the outstanding principal balance net of any
unamortized deferred fees, premiums or discounts on purchased loans. Costs on
originated loans are reported as other current and other non-current
assets. Unearned income, discounts and premiums are amortized to income
using the effective interest method. Interest receivable resulting from the
unpaid principal is recorded separately from the outstanding
balance.





Initial
Direct Costs





The LLC
capitalizes initial direct costs associated with the origination and funding of
leased assets and other financing transactions in accordance with Statement
of Financial Accounting Standards (“SFAS”) No. 91 “Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases.” The costs are amortized on a lease by lease
basis based on actual lease term using a straight-line method for operating
leases and the effective interest rate method for finance leases and notes
receivable. Costs related to leases or other financing transactions that are not
consummated are expensed as an acquisition expense.





Acquisition
Fees





Pursuant
to the LLC Agreement, the LLC pays acquisition fees to the Manager equal to
3% of the purchase price of the LLC’s investments. These fees are capitalized
and included in the cost of the investment.





Foreign
Currency Translation





Assets
and liabilities having non-U.S. dollar functional currencies are translated at
month-end exchange rates. Contributed capital accounts are translated at the
historical rate of exchange when the capital was contributed or distributed.
Revenues, expenses and cash flow items are translated at weighted average
exchange rates for the period. Resulting translation adjustments are recorded as
a separate component of accumulated other comprehensive income or
loss.





Warrants





Warrants
held by the LLC are revalued on a quarterly basis.  The revaluation of
warrants is calculated using the Black-Scholes option pricing
model.  The assumptions utilized in the Black-Scholes model include
share price, strike price, expiration date, risk-free rate and the volatility
percentage.  The change in the fair value of warrants is recognized in
the consolidated statements of operations.




58
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (2)
                Summary
      of Significant Accounting Policies -
continued


Derivative
Financial Instruments





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





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





Income
Taxes





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





Per Share
Data





Net
income per Share is based upon the weighted average number of additional Shares
outstanding during the year.





Share
Repurchase





The LLC
may, at its discretion, repurchase Shares from a limited number of its
additional members, as provided for in its LLC Agreement. The repurchase price
for any Shares approved for repurchase is based upon a formula, as provided in
the LLC Agreement.  Additional members are required to hold their
Shares for at least one year before repurchases will be permitted.




59
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (2)
                Summary
      of Significant Accounting Policies -
continued


Comprehensive
Income (Loss)





Comprehensive
income (loss) is reported in the accompanying consolidated statements of changes
in members’ equity and accumulated other comprehensive income (loss) and
consists of net income (loss) and other gains and losses affecting members’
equity that are excluded from net income (loss).





Use of
Estimates





The
preparation of financial statements in conformity with US GAAP requires the
Manager to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities as
of the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant estimates
primarily include the determination of allowance for doubtful accounts,
depreciation and amortization, impairment losses, estimated useful lives and
residual values.  Actual results could differ from those
estimates.





Recent
Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157,
“Accounting for Fair Value Measurements” (“SFAS No. 157”).  SFAS No.
157 defines fair value, establishes a framework for measuring fair value, and
enhances fair value measurement disclosure. In February 2008, the FASB
issued FASB Staff Position (“FSP”) No. 157-2, “Effective Date of FASB
Statement No. 157” (“FSP 157-2”). FSP 157-2 delays the effective date of
SFAS No. 157 for all non-financial assets and non-financial liabilities,
except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), until the
beginning of the first quarter of 2009. The measurement and disclosure
requirements related to financial assets and financial liabilities were
effective for the LLC beginning in the first quarter of 2008. The adoption of
SFAS No. 157 for financial assets and financial liabilities did not have a
significant impact on the LLC’s consolidated financial
statements.  The Manager is currently evaluating the impact that
SFAS No. 157 will have on the LLC's consolidated financial statements
when it is applied to non-financial assets and non-financial liabilities
beginning in the first quarter of 2009. The resulting fair values calculated
under SFAS No. 157 after adoption may be different from the fair values that
would have been calculated under previous guidance.




60
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (2)
                Summary
      of Significant Accounting Policies -
continued


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 No. 159”), which permits but does not require the LLC
to measure financial instruments and certain other items at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. This statement was effective for financial
statements issued for fiscal years beginning after November 15, 2007. As the LLC
did not elect to fair value any of its financial instruments under the
provisions of SFAS No. 159, the adoption of this statement effective January 1,
2008 did not have an impact on the LLC’s consolidated financial
statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the retained interest and gain
or loss when a subsidiary is deconsolidated. This statement is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 with earlier adoption prohibited. The Manager is
currently evaluating the impact of SFAS No. 160 on the LLC’s consolidated
financial statements.





In
March 2008, the FASB issued SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities - an amendment of FASB Statement
No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced
disclosures about an entity’s derivative and hedging activities, and is
effective for financial statements issued for reporting periods beginning after
November 15, 2008, with early application encouraged. Since
SFAS No. 161 requires only additional disclosures concerning
derivatives and hedging activities, adoption of SFAS No. 161 will not
affect the LLC’s financial condition, results of operations or cash
flows.





Reclassifications





Certain
reclassifications have been made to the accompanying consolidated financial
statements in prior years to conform to the current presentation.





(3)
            Net
      Investment in Finance Leases





Net
investment in finance leases consisted of the following at December 31, 2008 and
2007:





2008
                
                
                2007Minimum
      rents receivable
                
                $
                29,642,020
                
                
                $
                24,270,205Estimated
      residual values
                
                
                4,283,003
                
                
                
                2,129,432Initial
      direct costs, net
                
                
                682,275
                
                
                
                707,589Unearned
      income
                
                
                (7,708,565
                )
                
                
                (5,485,296
                )Net
      investment in finance leases
                
                
                26,898,733
                
                
                
                21,621,930Less:  Current
      portion of netinvestment
      in finance leases
                
                
                6,175,219
                
                
                
                4,011,408-
                
                
                
                -Net
      investment in finance leases,less
      current portion
                
                $
                20,723,514
                
                
                $
                17,610,522




61
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (3)
                Net
      Investment in Finance Leases -
continued


Telecommunications
Equipment





During
2007, the LLC, through its wholly-owned subsidiary, ICON Global Crossing IV, LLC
(“ICON Global Crossing IV”), purchased telecommunications equipment for
approximately $21,294,000 that is subject to a lease with Global Crossing
Telecommunications, Inc. (“Global Crossing”). The lease expires on November 30,
2011. The LLC incurred professional fees of approximately $149,000 and paid
acquisition fees to the Manager of approximately $639,000 relating to this
transaction.





Manufacturing
Equipment





On March
3, 2008, the LLC, through its wholly-owned subsidiary, ICON French Equipment II,
LLC (“ICON French Equipment II”), purchased auto parts manufacturing equipment
and simultaneously leased back the equipment to Sealynx Automotive Transieres
SAS (“Sealynx”).  The purchase price was approximately $11,626,000
(€7,638,400). The lease term commenced on March 3, 2008 and continues for a
period of 60 months. The LLC paid an acquisition fee to the Manager of
approximately $350,000 (€229,152) relating to this transaction. As additional
security for Sealynx’s obligations under the lease, the LLC was granted a lien
on property owned by Sealynx in France, valued at €3,746,400 at the acquisition
date, and a guaranty from Sealynx’s parent company, Sealynx Automotive
Holding.





Non-cancelable
minimum annual amounts due on investments in finance leases over the next five
years were as follows at December 31, 2008:





Years Ending December 31,2009
                
                $
                9,088,7642010
                
                
                9,088,7642011
                
                
                8,572,3772012
                
                
                2,892,115$
                29,642,020




(4)
                Leased
      Equipment at Cost


Leased
equipment at cost consisted of the following at December 31, 2008 and
2007:





2008
                
                
                2007Marine
      vessels
                
                $
                261,719,265
                
                
                $
                40,930,897Telecommunications
      equipment
                
                
                6,116,887
                
                
                
                -Coal-mining
      equipment
                
                
                12,834,631
                
                
                
                -Manufacturing
      equipment
                
                
                35,761,085
                
                
                
                26,702,750316,431,868
                
                
                
                67,633,647Less:
      Accumulated depreciation
                
                
                (14,178,194
                )
                
                
                (1,823,881
                )$
                302,253,674
                
                
                $
                65,809,766








Depreciation
expense was $12,354,313 and $1,823,881 for the years ended December 31, 2008 and
2007, respectively.




62
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (4)
                    Leased
      Equipment at Cost - continued


Marine
Vessels





On
December 3, 2008, ICON Eagle Carina Pte. Ltd., a Singapore corporation
wholly-owned by ICON Eagle Carina Holdings, LLC (“ICON Carina Holdings”), a
Marshall Islands limited liability company owned 64.3% by the LLC and 35.7% by
ICON Income Fund Ten, LLC (“Fund Ten”), an entity also managed by the
Manager, executed a Memorandum of Agreement to purchase a 95,639 DWT Aframax
product tanker, the M/V Eagle Carina (the “Eagle Carina”), from Aframax
Tanker II AS. On December 18, 2008, the Eagle Carina was purchased for
$39,010,000, of which $27,000,000 of non-recourse debt was borrowed from Fortis
Bank NV/SA (“Fortis”) and DVB Bank SE (“DVB”).  The Eagle Carina is subject
to an 84-month bareboat charter with AET that expires on November 14, 2013.
 ICON Carina Holdings paid an acquisition fee to the Manager of
approximately $1,170,000 relating to this transaction.





On
December 3, 2008, ICON Eagle Corona Pte. Ltd., a Singapore corporation
wholly-owned by ICON Eagle Corona Holdings, LLC (“ICON Corona Holdings”), a
Marshall Islands limited liability company owned 64.3% by the LLC and 35.7%
owned by Fund Ten, executed a Memorandum of Agreement to purchase a 95,634
DWT Aframax product tanker, the M/V Eagle Corona (the “Eagle Corona”), from
Aframax Tanker II AS.  On December 31, 2008, the Eagle Corona was
purchased for $41,270,000, of which $28,000,000 of non-recourse debt was
borrowed from Fortis and DVB. The Eagle Corona is subject to an 84-month
bareboat charter with AET that expires on November 14, 2013.  ICON Corona
Holdings paid an acquisition fee to the Manager of approximately $1,238,000
relating to this transaction.





On
November 18, 2008, ICON Eagle Auriga Pte. Ltd. (“ICON Eagle Auriga”), a
wholly-owned subsidiary of ICON Eagle Holdings, LLC (“ICON Eagle Holdings”),
purchased a 102,352 DWT Aframax product tanker, the M/V Eagle Auriga (the “Eagle
Auriga”), from Aframax Tanker I AS for $42,000,000, of which $28,000,000 of
non-recourse debt was borrowed from Fortis and DVB. ICON Eagle Holdings is a
wholly-owned subsidiary of the LLC. On November 21, 2008, ICON Eagle
Centaurus Pte. Ltd. (“ICON Eagle Centaurus”), also a wholly-owned subsidiary of
ICON Eagle Holdings, purchased a 95,644 DWT Aframax product tanker, the M/V
Eagle Centaurus (the “Eagle Centaurus”), for $40,500,000, of which $27,000,000
of non-recourse debt was borrowed from Fortis and DVB.  The Eagle
Auriga and the Eagle Centaurus are subject to 84-month bareboat charters with
AET, Inc. Limited (“AET”) that expire on November 14, 2013 and November 13,
2013, respectively. The LLC paid an acquisition fee to the Manager of
$2,475,000 relating to these transactions.





On April
24, 2008, the LLC, through its wholly-owned subsidiaries, ICON Arabian Express,
LLC (“ICON Arabian”) and ICON Aegean Express, LLC (“ICON Aegean”), acquired two
1,500 TEU containership vessels from Vroon Group B.V. (“Vroon”) - the Aegean
Express and the Arabian Express (collectively, the “Vessels”) - for an aggregate
purchase price of $51,000,000, of which $38,700,000 of non-recourse debt was
borrowed from Fortis. Simultaneously with the purchase, the Vessels were
bareboat chartered back to the subsidiary of Vroon for a period of 72 months.
The LLC paid approximately $2,082,000 in transaction-related costs, including
$1,530,000 in acquisition fees paid to the Manager.





63
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (4)
                    Leased
      Equipment at Cost -
continued





On June
26, 2007, the LLC and Fund Ten formed ICON Mayon, LLC (“ICON Mayon”), with
ownership interests of 51% and 49%, respectively. On July 24, 2007, ICON Mayon
purchased a 98,507 DWT Aframax product tanker, the Mayon Spirit, from an
affiliate of Teekay Corporation (“Teekay”). The purchase price for the Mayon
Spirit was approximately $40,250,000, with approximately $15,312,000 funded in
the form of a capital contribution to ICON Mayon and borrowings of approximately
$24,938,000 of non-recourse debt borrowed from Fortis Capital Corp.
Simultaneously with the closing of the purchase of the Mayon Spirit, the Mayon
Spirit was bareboat chartered back to Teekay for a term of 48 months.  The
charter commenced on July 24, 2007. The total capital contributions made to ICON
Mayon were approximately $16,020,000. The LLC paid approximately $845,000
in transaction-related costs, which included approximately $616,000 of
acquisition fees paid to the Manager.





Telecommunications
Equipment





On March
11, 2008, ICON Global Crossing IV purchased additional telecommunications
equipment for approximately $5,939,000 that is also subject to a lease with
Global Crossing. The lease expires on March 31, 2011. The LLC paid an
acquisition fee to the Manager of approximately $178,000 relating to this
transaction.





Coal-Mining
Equipment





On May 5,
2008, the LLC, through its wholly-owned subsidiary, ICON Magnum, LLC (“ICON
Magnum”), purchased the Bucyrus Erie model 1570 Dragline (the “Dragline”) for a
purchase price of approximately $12,461,000.  The Dragline was
simultaneously leased back to Magnum Coal Company and its subsidiaries. The
lease term commenced on June 1, 2008 and continues for a period of 60 months.
The LLC paid an acquisition fee to the Manager of approximately $374,000
relating to this transaction.





Manufacturing
Equipment





On
December 11, 2007, the LLC and Fund Eleven formed ICON EAR, LLC (“ICON EAR”),
with ownership interests of 55% and 45%, respectively.  On December
28, 2007, ICON EAR completed the acquisition of and simultaneously leased
back semiconductor manufacturing equipment to Equipment Acquisition
Resources, Inc. (“EAR”) for a purchase price of $6,935,000. During June 2008,
the LLC and Fund Eleven made additional contributions to ICON EAR, which were
used to complete another acquisition from and simultaneously leased back
additional semiconductor manufacturing equipment to EAR for a total purchase
price of approximately $8,795,000. The LLC and Fund Eleven retained ownership
interests of 55% and 45%, respectively, subsequent to this transaction. The
lease term for both acquisitions commenced on July 1, 2008 and expires on June
30, 2013. The LLC paid acquisition fees to the Manager of approximately $259,000
relating to these transactions.







64
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (4)
                    Leased
      Equipment at Cost - continued


On
September 28, 2007, the LLC completed the acquisition of and simultaneously
leased back substantially all of the machining and metal working equipment of LC
Manufacturing, LLC (“LC Manufacturing”), a wholly-owned subsidiary of MW
Universal, Inc. (“MWU”), for a purchase price of $14,890,000.  The
lease term commenced on January 1, 2008 and continues for a period of 60 months.
The LLC paid an acquisition fee to the Manager of approximately $447,000. On
December 10, 2007, the LLC completed the acquisition of and simultaneously
leased back substantially all of the machining and metal working equipment
of MW Crow, Inc. (“Crow”), a wholly-owned subsidiary of MWU, for a purchase
price of $4,100,000.  The lease term commenced on January 1, 2008 and
continues for a period of 60 months.  The LLC paid an acquisition fee
to the Manager of $123,000.




Simultaneously
with the closing of the transactions with LC Manufacturing and Crow, Fund Ten
and Fund Eleven (together with the LLC, the “Participating Funds”), completed
similar acquisitions with seven other subsidiaries of MWU pursuant to which the
respective funds purchased substantially all of the machining and metal working
equipment of each subsidiary.  Each subsidiary’s obligations under its
respective leases (including those of LC Manufacturing and Crow) are
cross-collateralized and cross-defaulted, and all subsidiaries’ obligations
are guaranteed by MWU.  Each of the Participating Funds has also
entered into a credit support agreement pursuant to which losses incurred by a
Participating Fund with respect to any MWU subsidiary are shared among the
Participating Funds in proportion to their respective capital investment. On
September 5, 2008, the Participating Funds and IEMC Corp., a subsidiary
of the Manager (“IEMC”), entered into a Forbearance Agreement with
MWU, LC Manufacturing, Crow and seven other subsidiaries of MWU to cure certain
non-payment related defaults under its lease covenants with the LLC. The terms
of the Forbearance Agreement include, among other things, additional collateral
being pledged and the grant of a warrant for the purchase of 180 shares of the
capital stock of MWU at an exercise price of $0.01 per share, exercisable for a
period of five years beginning September 5, 2008. As of December 31, 2008, the
LLC’s current proportionate share of the warrants was 35.3% of the warrants
issued for the capital stock of MWU. At December 31, 2008, the Manager
determined that the fair value of these warrants was $0. On February 2, 2009,
the Participating Funds and IEMC entered into an amended Forbearance Agreement
with MWU, LC Manufacturing, Crow and seven other subsidiaries of MWU with
respect to certain lease defaults. In consideration for restructuring LC
Manufacturing’s lease payment schedule, the LLC received, among other things,
warrants to purchase 10% of the outstanding stock of LC Manufacturing, at an
exercise price of $0.01 per share, exercisable for a period of five years from
the grant date. At December 31, 2008, the Manager determined that the fair value
of the warrant was $0.





65
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (4)
                    Leased
      Equipment at Cost - continued


Aggregate
annual minimum future rentals receivable from each of the LLC’s non-cancelable
leases over the next five years consisted of the following at December 31,
2008:





Years  EndingDecember 31,2009
                
                $
                49,040,6262010
                
                $
                49,654,7942011
                
                $
                45,632,1122012
                
                $
                41,651,6402013
                
                $
                27,651,371Thereafter
                
                $
                2,084,850




(5)
                Notes
      Receivable
  On
November 25, 2008, ICON Northern Leasing, LLC (“ICON Northern Leasing”), a joint
venture among the LLC, Fund Ten and Fund Eleven, purchased four promissory notes
(the “Notes”) and received an assignment of the underlying Master Loan and
Security Agreement (the “MLSA”), dated July 28, 2006. The LLC, Fund Ten and Fund
Eleven have ownership interests of 52.75%, 12.25% and 35%, respectively. The
aggregate purchase price for the Notes was approximately $31,573,000, net of a
discount of approximately $5,165,000. The Notes are secured by an underlying
pool of leases for credit card machines. The Notes accrue interest at rates
ranging from 7.97% to 8.40% per year and require monthly payments ranging from
approximately $183,000 to $422,000. The Notes mature between October 15, 2010
and August 14, 2011 and require balloon payments at the end of each note ranging
from approximately $594,000 to $1,255,000. The LLC’s share of the purchase price
of the Notes was approximately $16,655,000 and the LLC paid an acquisition fee
to the Manager of approximately $500,000 relating to this
transaction.




On
November 7, 2008, the LLC, through its wholly-owned subsidiary, ICON Appleton,
LLC (“ICON Appleton”), made a secured term loan to Appleton Papers, Inc.
(“Appleton”) in the amount of $22,000,000. The loan is secured by a machine
paper coating manufacturing line. Interest on the term note accrues at 12.5% per
year and is payable monthly in arrears in accordance with the promissory note
for a period of 60 months. The LLC paid an acquisition fee to the Manager of
$660,000 relating to this transaction.





On August
13, 2007, the LLC, along with a consortium of other lenders, entered into an
equipment financing facility with Solyndra, Inc. (“Solyndra”), a privately-held
manufacturer of solar panels, for the building of a new production facility. The
financing facility was to mature on June 30, 2013 and was secured by the
equipment as well as all other assets of Solyndra. The LLC was to receive
principal payments starting October 2008. In the interim period, interest was
paid on a quarterly basis using a range of rates from 6.20% to 6.74% per year.
The financing facility was for a maximum amount of $93,500,000, of which the LLC
committed to invest up to $5,000,000. As of June 30, 2008, the LLC had loaned
approximately $4,367,000. The LLC paid an acquisition fee to the Manager of
approximately $126,000 relating to this transaction. On July 27, 2008, Solyndra
fully repaid the outstanding note receivable and the entire financing facility
was terminated. The LLC received approximately $4,437,000 from the repayment,
which consisted of principal and interest accrued as of such date.





66
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (5)
                    Notes
      Receivable - continued


In
connection with the transaction, the LLC received warrants for the purchase of
up to 40,290 shares of Solyndra common stock at an exercise price of $4.96 per
share. The fair value of these warrants was approximately $115,000 on the
transaction date and was reflected as a discount on the face amount of the note
receivable. At December 31, 2008, the Manager determined, based on the
Black-Scholes option pricing model, that the aggregate fair value of the
warrants was $61,579. The assumptions used for the Black-Scholes option pricing
model were as follows: strike price $4.96, share price $1.53, expiration date of
April 6, 2014, a volatility of 300%, and the risk free interest rate of 0.12%.
The volatility percentage was determined by taking a sampling of similar
businesses from their initial public offering date to present and placing a
percentage based on the performance of the share price of this sampling. The
repayment of the note by Solyndra does not affect the warrants held by the LLC
and the LLC retains its rights thereunder.





(6)
                Investment
      in Joint Venture
  The LLC
and Fund Eleven formed the joint venture discussed below for the purpose of
acquiring and managing certain assets. The LLC and Fund Eleven have
substantially identical investment objectives and participate on the same terms
and conditions.





ICON
Pliant, LLC





On June
30, 2008, the LLC and Fund Eleven formed ICON Pliant, LLC (“ICON Pliant”), which
entered into an agreement with Pliant Corporation (“Pliant”)  to
acquire manufacturing equipment for a purchase price of $12,115,000, of which
the LLC paid approximately $5,452,000. On July 16, 2008, the LLC and Fund Eleven
completed the acquisition of and simultaneously leased back manufacturing
equipment to Pliant. The LLC and Fund Eleven have ownership interests in ICON
Pliant of 45% and 55%, respectively. The lease expires on September 30, 2013.
ICON Pliant paid an acquisition fee to the Manager of approximately $363,000, of
which the LLC’s share was approximately $163,000.





(7)
                Non-Recourse
      Long-Term Debt
  On July
24, 2007, ICON Mayon borrowed approximately $24,938,000 in connection with the
acquisition of the Mayon Spirit. The non-recourse long-term debt matures on July
25, 2011 and accrues interest at the London Interbank Offered Rate
(“LIBOR”) plus 1.00% per year.  The non-recourse long-term debt
requires monthly payments ranging from $476,000 to $527,000. The lender has a
security interest in the Mayon Spirit and an assignment of the charter hire. The
LLC paid and capitalized approximately $187,000 in debt financing costs. As of
December 31, 2008 and 2007, the remaining balance on the non-recourse long-term
debt was approximately $17,567,000 and $22,480,000,
respectively.





Simultaneously
with the execution of the non-recourse long-term debt agreement mentioned above,
the LLC entered into an interest rate swap contract with Fortis in order to
hedge the variable interest rate on the non-recourse long-term debt and minimize
the LLC’s risk of interest rate fluctuation. The interest rate swap contract,
which was deemed effective as of June 19, 2008, fixed the interest rate at
6.35%. As of December 31, 2008 and 2007, ICON Mayon recorded in accumulated
other comprehensive loss a cumulative decrease in the fair value of the interest
swap of approximately $1,128,000 and approximately $686,000, of which the LLC’s
share was approximately $575,000 and $350,000, respectively.




67
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(7)
                Non-Recourse
      Long-Term Debt - continued


On April
24, 2008, ICON Aegean and ICON Arabian borrowed approximately $38,700,000 in
connection with the acquisition of the Vessels. The non-recourse long-term debt
obligations mature on April 24, 2014 and accrue interest at LIBOR plus 1.50% per
year. The lender has a security interest in the Vessels and an assignment of the
charter hire. The LLC paid and capitalized approximately $387,000 in debt
financing costs. At December 31, 2008, the aggregate outstanding balance of the
non-recourse long-term debt obligations was approximately
$35,008,000.





Simultaneously
with the execution of the non-recourse long-term debt agreements mentioned
above, the LLC entered into interest rate swap contracts with Fortis in order to
hedge the variable interest rates on the non-recourse long-term debt and
minimize the LLC’s risk of interest rate fluctuation. The interest rate swap
contracts, which were deemed effective as of June 19, 2008, fixed the interest
rates of the debt of ICON Aegean and ICON Arabian at 3.93% per year. As of
December 31, 2008, ICON Aegean and ICON Arabian recorded in accumulated other
comprehensive loss a cumulative decrease in the fair value of the interest rate
swaps of approximately $2,488,000, in the aggregate.





On
November 18, 2008, ICON Eagle Holdings borrowed $55,000,000 in connection with
the acquisition of the Eagle Auriga and Eagle Centaurus. The non-recourse
long-term debt obligations mature on November 13, 2013 and accrue interest at
LIBOR plus a 1.75% per year margin. The lender has a security interest in
the Eagle Auriga and the Eagle Centaurus and an assignment of the charter hire.
The LLC paid and capitalized approximately $940,000 in debt financing costs. At
December 31, 2008, the aggregate outstanding balance of the non-recourse
long-term debt obligations was $55,000,000.





Simultaneously
with the execution of the non-recourse long-term debt agreements mentioned
above, the LLC entered into interest rate swap contracts with Fortis and DVB in
order to hedge the variable interest rates on the non-recourse long-term debt
and minimize the LLC’s risk of interest rate fluctuation. The interest rate swap
contracts, which were deemed effective as of November 18, 2008, fixed the
interest rates of the debt of ICON Eagle Holdings at 4.94% per year for
ICON Eagle Auriga and 4.63% per year for ICON Eagle Centaurus. As of December
31, 2008, ICON Eagle Holdings recorded in accumulated other comprehensive loss a
cumulative decrease in the fair value of the interest rate swaps of
approximately $1,705,000.





On
December 18, 2008, ICON Carina Holdings borrowed $27,000,000 in connection with
the acquisition of the Eagle Carina. The non-recourse long-term debt obligation
matures on November 14, 2013 and accrues interest at LIBOR plus a 1.75% per
year margin. The lender has a security interest in the Eagle Carina
and an assignment of the charter hire. The LLC paid and capitalized
approximately $405,000 in debt financing costs. At December 31, 2008, the
aggregate outstanding balance of the non-recourse long-term debt obligation was
$27,000,000.





Simultaneously
with the execution of the non-recourse long-term debt agreement mentioned above,
the LLC entered into an interest rate swap contract with Fortis and DVB in order
to hedge the variable interest rate on the non-recourse long-term debt and
minimize the LLC’s risk of interest rate fluctuation. The interest rate swap
contract, which was deemed effective as of December 18, 2008, fixed the interest
rates of the debt of ICON Carina Holdings at 3.85% per year. As of December 31,
2008, ICON Carina Holdings recorded in accumulated other comprehensive loss a
cumulative decrease in the fair value of the interest rate swaps of
$192,064.







68
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(7)
                Non-Recourse
      Long-Term Debt - continued


On
December 31, 2008, ICON Corona Holdings borrowed $28,000,000 in connection with
the acquisition of the Eagle Corona. The non-recourse long-term debt obligation
matures on November 14, 2013 and accrues interest at LIBOR plus a 1.75% per year
margin. The lender has a security interest in the Eagle Corona and an
assignment of the charter hire. The LLC paid and capitalized approximately
$422,000 in debt financing costs. At December 31, 2008, the aggregate
outstanding balance of the non-recourse long-term debt obligation was
$28,000,000.





As of
December 31, 2008 and 2007, the LLC had net debt financing costs of $2,180,047
and $168,602, respectively.  For the years ended December 31, 2008 and
2007, the LLC recognized amortization expense of $142,199 and $18,436,
respectively.





The
aggregate maturities of non-recourse long-term debt over the next five years
were as follows at December 31, 2008:





Years Ending December 31,2009
                
                $
                29,073,8972010
                
                
                30,278,7132011
                
                
                32,642,7672012
                
                
                27,102,8422013
                
                
                36,078,301Thereafter
                
                
                7,398,548$
                162,575,068




(8)
                Revolving
      Line of Credit, Recourse
  On August
31, 2005, certain of the LLC’s affiliates (entities sponsored and organized by
the Manager), ICON Income Fund Eight B, L.P. (“Fund Eight B”), ICON Income Fund
Nine, LLC, Fund Ten and Fund Eleven (collectively, the “Borrowers”) entered into
a Commercial Loan Agreement (the “Loan Agreement”), with California Bank &
Trust (“CB&T”). The Loan Agreement provided for a revolving line of credit
of up to $17,000,000 pursuant to a senior secured revolving loan facility (the
“Facility”) which is secured by all assets of the Borrowers not subject to a
first priority lien, as defined in the Loan Agreement. Each of the Borrowers is
jointly and severally liable for all amounts borrowed under the Facility.
Amounts available under the Facility are subject to a borrowing base that is
determined, subject to certain limitations, on the present value of the future
receivables under certain lease agreements in which the Borrowers have a
beneficial interest.





As part
of the Loan Agreement, the Borrowers are required to comply with certain
financial covenants, including a minimum debt coverage ratio, a tangible net
worth covenant, a leverage ratio and a minimum liquidity covenant. The Loan
Agreement prohibits any Borrower from declaring or paying any distribution to
investors if such a payment would cause such Borrower to become non-compliant
with the financial covenants in the Loan Agreement.  The Borrowers
were obligated to pay a quarterly commitment fee of 0.5% on unused commitments
under the Facility.




69
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(8)
                Revolving
      Line of Credit, Recourse -
continued


In
addition, the Borrowers entered into a Contribution Agreement (the “Contribution
Agreement”), pursuant to which the Borrowers agreed to certain restrictions on
the amounts and terms of their respective borrowings under the Facility in order
to minimize the risk that a Borrower would be unable to repay its portion of the
outstanding obligations under the Facility at any time. The Contribution
Agreement also provides that, in the event a Borrower pays an amount under the
Contribution Agreement in excess of its share of the total obligations under the
Facility, whether by reason of an event of default or otherwise, the other
Borrowers will immediately make a contribution payment to such Borrower in such
amount that the aggregate amount paid by each Borrower reflects its allocable
share of the aggregate obligations under the Facility. The Borrowers’
obligations to each other under the Contribution Agreement are collateralized by
a subordinate lien on the assets of each Borrower.





On
December 26, 2006, the Borrowers entered into a Loan Modification Agreement (the
“Loan Modification”) to the Loan Agreement. The Loan Modification extended the
Facility from August 31, 2007 to September 30, 2008 and lowered (i) the interest
rate for general advances under the Facility from CB&T’s prime rate plus
0.25% to CB&T’s prime rate and (ii) the interest rate on the five separate
advances that are permitted to be made under the Facility at the rate at which
United States dollar deposits can be acquired by CB&T in the London
Interbank Eurocurrency Market (the “LIEM Rate”) plus 2.75% per year to the LIEM
Rate plus 2.5% per year. In addition, pursuant to the terms of the Loan
Modification, the Borrowers no longer had to maintain a cash
reserve.





On June
20, 2007, the Loan Agreement, the Contribution Agreement and the Loan
Modification were modified to add the LLC as a Borrower.





On May 1,
2008, the Borrowers entered into an additional loan modification agreement. The
agreement increased the revolving line of credit up to $30,000,000 and extended
the expiration date to April 30, 2010. The Borrowers may request a one year
extension to the revolving line of credit within 390 days of the expiration
date, but CB&T has no obligation to extend. In addition, the quarterly
unused commitment fee of 0.5% was reduced to 0.25% on unused commitments under
the Facility. The interest rate at December 31, 2008 was 3.25%.





The
Borrowers were in compliance with the covenants under the Loan Agreement at
December 31, 2008 and 2007.  The Borrowers were also in compliance
with the Contribution Agreement at December 31, 2008 and 2007 and no amounts
were due to or payable by the LLC under the Contribution Agreement as of such
date.





Aggregate
borrowings by all Borrowers under the Facility amounted to $6,185,000 at
December 31, 2008. The balances of $1,185,000 and $5,000,000 were borrowed by
Fund Eight B and Fund Eleven, respectively. On February 26, 2009, Fund
Eleven borrowed an additional $600,000 under the Facility.


(9)
                Transactions
      with Related Parties


The LLC
has entered into certain agreements with its Manager and ICON Securities,
whereby the LLC pays certain fees and reimbursements to these
parties.  The Manager is entitled to receive an organizational and
offering expense allowance of 3.5% of capital raised up to $50,000,000, 2.5% of
capital raised between $50,000,001 and $100,000,000, 1.5% of capital raised
between $100,000,001 and $200,000,000, 1.0% of capital raised between
$200,000,001 and $250,000,000 and 0.5% of capital raised over
$250,000,000.  ICON Securities is entitled to receive a 2%
underwriting fee from the gross proceeds from sales of Shares to additional
members.


70
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008
 (9)
                Transactions
      with Related Parties -
continued


In
accordance with the terms of the LLC Agreement, the LLC will pay the Manager (i)
management fees ranging from 1% to 7% based on a percentage of the rentals and
other contractual payments recognized either directly by the LLC or through its
joint ventures, and (ii) acquisition fees, through the end of the operating
period, of 3% of the purchase price of the LLC’s investments.  In
addition, the Manager will be reimbursed for administrative expenses incurred in
connection with the LLC’s operations.





The
Manager performs certain services relating to the management of the LLC’s
equipment leasing and financing activities.  Such services include,
but are not limited to, the collection of lease payments from the lessees of the
equipment, re-leasing services in connection with equipment which is off-lease,
inspections of the equipment, liaising with and general supervision of lessees
to assure that the equipment is being properly operated and maintained,
monitoring performance by the lessees of their obligations under the leases and
the payment of operating expenses.





Administrative
expense reimbursements are costs incurred by the Manager or its affiliates that
are necessary to the LLC’s operations.  These costs include the Manager’s
and its affiliates’ legal, accounting, investor relations and operations
personnel, as well as professional fees and other costs that are charged to the
LLC based upon the percentage of time such personnel dedicate to the LLC. 
Excluded are salaries and related costs, travel expenses and other
administrative costs incurred by individuals with a controlling interest in the
Manager.





The
Manager also has a 1% interest in the LLC’s profits, losses, cash distributions
and liquidation proceeds. The LLC paid distributions to the Manager of
$162,440 and $20,561 for the years ended December 31, 2008 and 2007,
respectively.  The Manager’s interest in the LLC’s net income for the
years ended December 31, 2008 and 2007 was $59,426 and $1,169,
respectively.





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





For
      the Period fromMay
      25, 2007(Commencement
      ofYear
      Ended
                                              
                                              Operations)
      throughEntity
                                              
                                              Capacity
                                              
                                              Description
                                              December 31, 2008
                                              December 31, 2007ICON
      Capital Corp.
                                              
                                              Manager
                                              
                                              Organizational
      andoffering
      expenses (1)
                                              
                                              $
                                              2,273,874
                                              
                                              
                                              $
                                              2,841,757ICON
      Securities Corp.
                                              
                                              Managing
      broker-dealer
                                              
                                              Underwriting
      fees (1)
                                              
                                              $
                                              3,458,030
                                              
                                              
                                              $
                                              1,849,163ICON
      Capital Corp.
                                              
                                              Manager
                                              
                                              Acquisition
      fees (2)
                                              
                                              $
                                              7,905,969
                                              
                                              
                                              $
                                              2,090,934ICON
      Capital Corp.
                                              
                                              Manager
                                              
                                              Administrative
      expensereimbursements
      (3)
                                              
                                              $
                                              2,705,118
                                              
                                              
                                              $
                                              1,346,866ICON
      Capital Corp.
                                              
                                              Manager
                                              
                                              Management
      fees (3)
                                              
                                              $
                                              1,474,993
                                              
                                              
                                              $
                                              178,289(1)
      Amount charged directly to members' equity.(2)
      Amount capitalized and amortized to operations over the estimated service
      period in accordance with the LLC's accounting policies.(3)
      Amount charged directly to operations.







71
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(9)
                Transactions
      with Related Parties -
continued


At
December 31, 2008, the LLC, through ICON Carina Holdings and ICON Corona
Holdings, was due $1,919,144 from an affiliate for the Eagle Carina and the
Eagle Corona acquisitions. The LLC also had a payable to the Manager and its
affiliates of $1,608,556 relating to administrative expenses to the Manager and
to an affiliate for the Eagle Auriga and the Eagle Centaurus acquisitions. At
December 31, 2007, the LLC had a net payable to the Manager and its affiliates
of $246,926 relating to administrative expenses and organizational and offering
fees due to the Manager and underwriting fees due to ICON
Securities.




(10)
                Derivative
      Financial Instruments


The LLC
is exposed to interest rate risk on the floating-rate non-recourse debt and uses
floating-to-fixed interest rate swaps to hedge this exposure.  As of
December 31, 2008, the LLC had six floating-to-fixed interest rate swaps
designated as cash flow hedges with aggregate notional amounts of approximately
$134,575,000.  As of December 31, 2007, the LLC had one
floating-to-fixed interest rate swap designated as a cash flow hedge with a
notional amount of approximately $22,480,000.





The
hedging strategy of the LLC is to match the projected future business cash flows
with the underlying debt service.  When the derivative financial
instrument is deemed to be highly effective in offsetting variability in the
hedged item, changes in its fair value are recorded in accumulated other
comprehensive (loss) income and recognized contemporaneously with the earnings
effects of the hedged item.  The fair value was determined using
market prices and pricing models at December 31, 2008 and 2007.





At
December 31, 2008, the LLC’s six floating-to-fixed interest rate swaps related
to ICON Carina Holdings, two interest rate swaps for ICON Eagle Holdings, ICON
Aegean, ICON Arabian and ICON Mayon. The total unrealized loss recorded to
accumulated other comprehensive (loss) income related to the change in fair
value of these interest rate swaps was approximately $4,542,000.





At
December 31, 2007, the LLC’s floating-to-fixed interest rate swap was related to
ICON Mayon. The total unrealized loss recorded to accumulated other
comprehensive (loss) income related to the change in fair value of the interest
rate swap was approximately $350,000.





For the
years ended December 31, 2008 and 2007, gains or losses recorded in earnings
representing the amount of the hedges’ ineffectiveness were insignificant. The
LLC expects to transfer approximately $2,613,119 from accumulated other
comprehensive (loss) income to earnings in the next 12 months.





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




72
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(10)
                Derivative
      Financial Instruments -
continued


On June
19, 2008, the LLC entered into four foreign exchange Euro-to-USD forward
contracts to hedge its exposure to currency translation risk with respect to the
Sealynx transaction. Each contract had a notional value of €275,000 with a Euro
to USD conversion rate ranging from 1.5184 to 1.5368. During 2008, two of the
forward contracts matured and the LLC recognized a gain of approximately
$17,000.




(11)
                Accumulated
      Other Comprehensive Income
(Loss)


Accumulated
other comprehensive income (loss) includes accumulated unrealized loss on
derivative financial instruments of $4,455,706 and $349,950 for the years ended
December 31, 2008 and 2007, respectively. Accumulated other comprehensive income
(loss) includes acumulated unrealized income from currency translation
adjustments of $945,976 for the year ended December 31,
2008.


(12)
                Fair
      Value of Financial
Instruments


SFAS
No. 157





Effective
January 1, 2008, the LLC adopted SFAS No. 157. See Note 2, Summary of
Significant Accounting Policies.





SFAS No.
157 requires that assets and liabilities carried at fair value be classified and
disclosed in one of the following three categories:





·
            Level
      1: Quoted market prices available in active markets for identical assets
      or liabilities as of the reporting
date.


·
            Level
      2: Pricing inputs other than quoted prices in active markets included in
      Level 1, which are either directly or indirectly observable as of the
      reporting date.


·
            Level
      3: Pricing inputs that are generally unobservable and can not be
      corroborated by market data.





Financial
assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement. The Manager’s
assessment, on the LLC’s behalf, of the significance of a particular input to
the fair value measurement requires judgment, and may affect the valuation of
the assets and liabilities being measured and their placement within the fair
value hierarchy.





73
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008




(12)
                Fair
      Value of Financial Instruments -
continued


The
following table summarizes the valuation of the LLC’s material financial assets
and liabilities measured at fair value on a recurring basis as of December 31,
2008:





Level
      1(1)
                    
                    
                    Level
      2(2)
                    
                    
                    Level
      3(3)
                    
                    
                    TotalAssets:Warrants
                    
                    $
                    -
                    
                    
                    $
                    61,579
                    
                    
                    $
                    -
                    
                    
                    $
                    61,579Derivative
      Asset
                    
                    $
                    -
                    
                    
                    $
                    92,388
                    
                    
                    $
                    -
                    
                    
                    $
                    92,388Liabilities:Derivative
      Liabilities
                    
                    $
                    -
                    
                    
                    $
                    5,431,968
                    
                    
                    $
                    -
                    
                    
                    $
                    5,431,968(1)
      quoted prices in active markets for identical assets or
      liabilities(2)
      observable inputs other than quoted prices in active markets for identical
      assets and liabilities(3)
      no observable pricing inputs in the market





The LLC’s
derivative contracts, including interest rate swaps, foreign exchange forwards
and warrants, are valued using models based on readily observable market
parameters for all substantial terms of the LLC’s derivative contracts and are
classified within Level 2.  As permitted by SFAS No. 157, the LLC uses
market prices and pricing models for fair value measurements of its derivative
instruments.  The fair value of the warrants was recorded in other
non-current assets and the derivative assets and liabilities were recorded in
derivative instruments within the consolidated balance
sheets.





SFAS
No. 107





Fair
value information with respect to the LLC’s leased assets and liabilities is not
separately provided since (i) SFAS No. 107, “Disclosures About Fair Values of
Financial Instruments,” does not require fair value disclosures of lease
arrangements and (ii) the carrying value of financial assets, other than lease
related investments, and the recorded value of recourse debt, if any,
approximates fair value due to their short-term maturities and variable interest
rates.





The
estimated fair value of the LLC’s notes receivable was based on the discounted
value of future cash flows expected to be received from the loans, based on
terms consistent with the range of the LLC’s internal pricing strategies for the
transactions of this type.




Carrying Amount
                  
                  
                  Fair ValueFixed
      rate notes receivable
                  
                  $
                  52,700,354
                  
                  
                  $
                  58,409,839


(13)
                Concentrations
      of Risk


At times,
the LLC's cash and cash equivalents may exceed insured limits. The LLC has
placed these funds in high quality institutions in order to minimize risk
relating to exceeding insured limits.





For the
years ended December 31, 2008 and 2007, the LLC had three and four lessees
that accounted for approximately 55.0% and 99.6% of rental and finance income,
respectively.




74
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008




(13)
                Concentrations
      of Risk - continued


For the
years ended December 31, 2008 and 2007, the LLC had two and one borrowers that
accounted for approximately 51.7% and 40.0% of interest and other income,
respectively.





For the
years ended December 31, 2008 and 2007, the LLC had five and three lessees that
accounted for approximately 46.4% and 71.0% of total assets,
respectively.





For
the years ended December 31, 2008 and 2007, the LLC had two and one lenders that
accounted for 92.4% and 98.0% of total liabilities, respectively.




(14)
                Geographic
      Information


Geographic
information for revenue, based on the country of origin, and long-lived assets,
which includes finance leases, operating leases, net of accumulated depreciation
and investment in joint venture were as follows:





Year
      Ended December 31, 2008UnitedStates
                
                
                France
                
                
                Vessels
      (a)
                
                
                TotalRevenue:Rental
      income
                
                $
                10,542,051
                
                
                $
                -
                
                
                $
                12,398,594
                
                
                $
                22,940,645Finance
      income
                
                $
                2,185,240
                
                
                $
                1,509,938
                
                
                $
                -
                
                
                $
                3,695,178Income
      from investment in joint venture
                
                $
                325,235
                
                
                $
                -
                
                
                $
                -
                
                
                $
                325,235At
      December 31, 2008UnitedStates
                
                
                France
                
                
                Vessels
      (a)
                
                
                TotalLong-lived
      assets:Net
      investment in finance leases
                
                $
                17,300,158
                
                
                $
                9,598,575
                
                
                $
                -
                
                
                $
                26,898,733Leased
      equipment at cost, net
                
                $
                47,855,363
                
                
                $
                -
                
                
                $
                254,398,311
                
                
                $
                302,253,674Notes
      receivable on financing facility, net
                
                $
                52,700,354
                
                
                $
                -
                
                
                $
                -
                
                
                $
                52,700,354Investment
      in joint venture
                
                $
                5,374,899
                
                
                $
                -
                
                
                $
                -
                
                
                $
                5,374,899 (a)
                  The
      LLC's vessels are chartered to three separate companies: one vessel to
      Teekay, two vessels to Vroon and four vessels to AET. When the LLC
      charters a vessel to a charterer, the charterer is free to trade the
      vessel worldwide.




75
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(14)
                Geographic
      Information - continued


Year
      Ended December 31, 2007UnitedStates
                
                
                Vessels
      (a)
                
                
                TotalRevenue:Rental
      income
                
                $
                1,023,293
                
                
                $
                2,722,170
                
                
                $
                3,745,463Finance
      income
                
                $
                762,779
                
                
                $
                -
                
                
                $
                762,779At
      December 31, 2007UnitedStates
                
                
                Vessels
      (a)
                
                
                TotalLong-lived
      assets:Net
      investment in finance leases
                
                $
                21,621,930
                
                
                $
                -
                
                
                $
                21,621,930Leased
      equipment at cost, net
                
                $
                26,107,473
                
                
                $
                39,702,293
                
                
                $
                65,809,766Notes
      receivable on financing facility, net
                
                $
                4,087,568
                
                
                $
                -
                
                
                $
                4,087,568 (a)
                    The
      LLC's vessel was chartered to Teekay. When the LLC charters a vessel
      to a charterer, the charterer is free to trade the vessel
      worldwide.


(15)
                Selected
      Quarterly Financial Data
  The
following table is a summary of selected financial data, by
quarter:





(unaudited)
                
                
                Year
      endedQuarters
      Ended in 2008
                
                
                December
      31,March
      31,
                
                
                June
      30,
                
                
                September
      30,
                
                
                December
      31,
                
                
                2008Total
      revenue
                
                $
                4,247,630
                
                
                $
                6,925,960
                
                
                $
                7,951,245
                
                
                $
                10,221,667
                
                
                $
                29,346,502Net
      income allocable toadditional
      members
                
                $
                721,535
                
                
                $
                1,401,658
                
                
                $
                2,005,987
                
                
                $
                1,753,974
                
                
                $
                5,883,154Weighted
      average number of additional shares oflimited
      liability company interests outstanding
                
                
                114,701
                
                
                
                157,613
                
                
                
                203,998
                
                
                
                251,778
                
                
                
                181,777Net
      income per weighted averageadditional
      share of limited liability companyinterests
                
                $
                6.29
                
                
                $
                8.89
                
                
                $
                9.83
                
                
                $
                6.97
                
                
                $
                32.36




76
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(15)
                Selected
      Quarterly Financial Data -
continued





(unaudited)
                
                
                Year
      endedQuarters
      Ended in 2007
                
                
                December
      31,March
      31,
                
                
                June
      30,
                
                
                September
      30,
                
                
                December
      31,
                
                
                2007Total
      revenue
                
                $
                -
                
                
                $
                21,258
                
                
                $
                1,566,901
                
                
                $
                3,242,156
                
                
                $
                4,830,315Net
      (loss) income allocable toadditional
      members
                
                $
                -
                
                
                $
                (198,846
                )
                
                $
                (235,898
                )
                
                $
                550,427
                
                
                $
                115,683Weighted
      average number of additional shares oflimited
      liability company interests outstanding
                
                
                -
                
                
                
                8,429
                
                
                
                35,878
                
                
                
                74,081
                
                
                
                47,186Net
      (loss) income per weighted averageadditional
      share of limited liability companyinterests
                
                $
                -
                
                
                $
                (23.59
                )
                
                $
                (6.58
                )
                
                $
                7.43
                
                
                $
                2.45




(16)
                Commitments
      and Contingencies and Off-Balance Sheet
  Transactions
  At the
time the LLC acquires or divests of its interest in an equipment lease or
other leasing transaction, the LLC may, under very limited circumstances, agree
to indemnify the seller or buyer for specific contingent
liabilities.  The Manager believes that any liability of the LLC that
may arise as a result of any such indemnification obligations will not have
a material adverse effect on the consolidated financial condition of the LLC
taken as a whole.





On
September 28, 2007 and December 10, 2007, the LLC completed its simultaneous
acquisitions and leasing back of substantially all of the machining and metal
working equipment of LC Manufacturing and Crow. Simultaneously with the closing
of the transactions with LC Manufacturing and Crow, the Participating Funds
completed similar acquisitions with seven other subsidiaries of MWU pursuant to
which the respective funds purchased the machining and metal working equipment
of each subsidiary.  Each subsidiary’s obligations under its
respective leases (including those of LC Manufacturing and Crow) are
cross-collateralized and cross-defaulted, and all subsidiaries’ obligations are
guaranteed by MWU.  Each of the Participating Funds has also entered
into a credit support agreement, pursuant to which losses incurred by a
Participating Fund with respect to any MWU subsidiary are shared among the
Participating Funds in proportion to their respective capital
investment.  The term of each credit support agreement matches that of
the lease agreement.  No amounts were accrued at December 31, 2008 and
the Manager cannot reasonably estimate at this time the maximum potential
amounts that may become payable under the credit support agreement, if
any.





On
November 25, 2008, the LLC, through ICON Northern Leasing, purchased the Notes
and received an assignment of the MLSA. The Notes are secured by an underlying
pool of leases for credit card machines and Northern Leasing Systems, Inc., the
originator and servicer of the Notes,provided a limited
guaranty of the MLSA for payment deficiencies up to approximately
$6,355,000.







77
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(16)
                Commitments
      and Contingencies and Off-Balance Sheet Transactions –
      continued


In
connection with the acquisitions of Eagle Auriga, Eagle Centaurus, Eagle Carina
and Eagle Corona, the LLC, through ICON Eagle Holdings, ICON Carina Holdings and
ICON Corona Holdings, maintains four restricted cash accounts with Fortis. These
restricted cash accounts consist of the free cash balances that result from the
difference between the bareboat charter payments from AET and the repayments on
the non-recourse long-term debt to Fortis and DVB. The account of ICON Eagle
Holdings is cross-collateralized and the free cash remains in the
restricted cash account until a cumulative amount of $500,000 is funded
into the account. Thereafter, all free cash in excess of $500,000 can be
distributed. The free cash for ICON Carina Holdings and ICON Corona Holdings
remain in the restricted cash accounts until $500,000 is funded into each
account. Thereafter, all free cash in excess of $500,000 can be distributed from
the respective accounts. As of December 31, 2008, no amounts were deposited into
the restricted cash accounts.


(17)
                Income
      Tax Reconciliation
(unaudited)
  No
provision for income taxes has been recorded by the LLC since the liability for
such taxes is the responsibility of each of the individual members rather than
the LLC.  The LLC’s income tax returns are subject to examination by
federal and State taxing authorities, and changes, if any could adjust the
individual income taxes of the members.





At
December 31, 2008 and 2007, the members’ capital accounts included in the
consolidated financial statements totaled $223,487,730 and $79,289,609,
respectively. The members’ capital for federal income tax purposes at December
31, 2008 and 2007 totaled $215,058,845 and $80,136,483,
respectively.  The difference arises primarily from sales and offering
expenses reported as a reduction in the additional member’s capital accounts for
financial reporting purposes, but not for federal income tax reporting purposes
and differences in depreciation and amortization between financial reporting
purposes and federal income tax purposes.





The
following table reconciles net income for financial statement reporting purposes
to the net loss for federal income tax purposes for the years ended December 31,
2008 and 2007:





2008
                
                
                2007Net
      income per consolidated financial statements
                
                $
                5,942,580
                
                
                $
                116,852Rental
      income
                
                
                1,791,376
                
                
                
                2,745,798Depreciation
      and amortization
                
                
                (20,199,124
                )
                
                
                (6,286,562
                )Tax
      (loss) gain from consolidated joint venture
                
                
                (2,047,725
                )
                
                
                529,288Other
                
                
                1,691,381
                
                
                
                669,836Net
      loss for federal income tax purposes
                
                $
                (12,821,512
                )
                
                $
                (2,224,788
                )





78
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2008


(18)
                Subsequent
      Events





On
January 5, 2009, the LLC, through ICON Corona Holdings, entered into an interest
rate swap contract with Fortis in order to hedge the variable interest rate on
its non-recourse long-term debt.








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




On
February 17, 2009, Appleton notified the LLC that it was in breach of a
financial covenant contained in its secured term loans. As a result of this
breach, the parties agreed to increase the interest on the term note from 12.5%
per year to 14.25% per year beginning with the payment due on March 1,
2009.




On
February 18, 2009, the LLC, through its wholly-owned subsidiary, ICON Murray,
LLC, purchased mining equipment for approximately $3,348,000 that is subject to
lease with American Energy Corporation and Ohio American Energy, Incorporated.
The lease expires on March 31, 2011.




On March
9, 2009, the LLC, through its wholly-owned subsidiary, ICON Global Crossing IV,
purchased telecommunications equipment for approximately $2,694,000 that is
subject to lease with Global Crossing. The lease expires on March 31,
2012.








On March
24, 2009, the LLC, through its wholly-owned subsidiary, ICON Victorious, LLC
(“ICON Victorious”), purchased an interest in an Accommodation and Work Barge
(the “Barge”), Swiber Victorious, from Swiber Engineering Ltd. (“Swiber”) for
the purchase price of $42,500,000.  The purchase price was funded by (i) a
contribution by ICON Victorious of cash in the amount of $19,125,000 to
Victorious, LLC (“Victorious”), a Marshall Islands limited liability company, in
exchange for a senior, controlling equity interest in and all management rights
with respect to Victorious, (ii) the contribution of the Barge from Swiber in
exchange for a subordinate, non-controlling equity interest in Victorious, and
(iii) the assumption by Victorious of $5,000,000 of subordinated indebtedness in
favor of Swiber that bears interest at the rate of 3.5% per annum and is payable
quarterly in arrears. The Barge is subject to an eight year bareboat charter
with Swiber Offshore Marine Pte. Ltd. (the “Charterer”) beginning April 1,
2009.  At the conclusion of the charter, the Charterer has an option to
purchase the Barge for $21,000,000.  The obligations of the various Swiber
entities that are parties to the transaction are guaranteed by Swiber’s parent
company, Swiber Holdings Limited.


79
 Table of Contents








Item 9. Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure


On
November 26, 2007, ICON Leasing Fund Twelve, LLC (the “Registrant”) terminated
the services of Hays & Company LLP (“Hays”) as its independent registered
public accounting firm for the fiscal year ended December 31,
2007.  The decision to dismiss Hays was recommended and approved by
the board of directors of ICON Capital Corp. (the “Manager”), the Manager of the
Registrant (“Board of Directors”). The audit report of Hays on the balance sheet
as of December 31, 2006 contained no adverse opinion or disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope or accounting
principle.





During
the Registrant’s fiscal year ended December 31, 2006, and the subsequent interim
period through November 26, 2007, (i) there were no “disagreements” (as defined
in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with Hays on
any matter of accounting principle or practice, financial statement disclosure,
or auditing scope or procedure that, if not resolved to the satisfaction of
Hays, would have caused Hays to make reference to the subject matter of the
disagreement in connection with its report and (ii) there were no “reportable
events” (as defined in Item 304(a)(1)(v) of Regulation S-K and related
instructions), except the following with regard to the internal controls of the
Registrant’s Manager:




While
evaluating the Manager’s disclosure controls and procedures during 2006, Hays
advised the Manager and the Manager recognized that greater internal controls
were needed to aid in a more efficient closing of the Registrant’s financial
statements, thereby requiring the Manager to hire additional skilled accounting
staff.  In response, the Manager hired seven additional accounting
staff members, two tax staff members, including a director of tax, and replaced
the accounting management team over the past two years.  The most senior
accountants are certified public accountants and/or have significant experience
with public reporting entities and make up the accounting management team,
including the Senior Vice President and Chief Financial Officer.  These
accountants have more than 18, 17, 17, and 12 years, respectively, of experience
with public reporting entities. The director of tax has more than 35 years of
experience with public reporting entities.




The
Registrant provided Hays with a copy of this disclosure and Hays furnished the
Registrant with a letter dated November 30, 2007, addressed to the Securities
and Exchange Commission (the “SEC”) stating whether or not it agrees with the
above statements.  A copy of Hays’ letter dated November 30, 2007 is
attached as Exhibit 16.1 to the Form 8-K that was filed with the SEC on November
30, 2007.





On
November 26, 2007, the Board of Directors engaged Ernst & Young LLP (“Ernst
& Young”) as the Registrant’s independent registered public accounting firm
for the fiscal year ended December 31, 2007.  During the Registrant’s
two most recent fiscal years and through November 26, 2007, neither the
Registrant nor any one acting on its behalf consulted with Ernst & Young
regarding (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Registrant’s financial statements and neither a written
report was provided to the Registrant or oral advice was provided that Ernst
& Young concluded was an important factor considered by the Registrant in
reaching a decision as to the accounting, auditing or financial reporting issue
or (ii) any matter that was either the subject of a “disagreement” (as defined
in Item 304(a)(1)(iv) of Regulation S-K and related instructions) or (iii) a
“reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K and
related instructions).






80
 Table of Contents





Item 9A(T). Controls and Procedures





Evaluation of disclosure controls
and procedures





In
connection with the preparation of this Annual Report on Form 10-K for the
period ended December 31, 2008, as well as the financial statements for our
Manager, our Manager carried out an evaluation, under the supervision and with
the participation of the management of our Manager, including its Co-Chief
Executive Officers and the Chief Financial Officer, of the effectiveness of the
design and operation of our Manager’s disclosure controls and procedures as of
the end of the period covered by this Report pursuant to the Securities Exchange
Act of 1934. Based on the foregoing evaluation, the Co-Chief Executive Officers
and the Chief Financial Officer concluded that our Manager’s disclosure controls
and procedures were effective.





In
designing and evaluating our Manager’s disclosure controls and procedures, our
Manager recognized that disclosure controls and procedures, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the disclosure controls and procedures are met.  Our
Manager’s disclosure controls and procedures have been designed to meet
reasonable assurance standards. Disclosure controls and procedures cannot detect
or prevent all error and fraud. Some inherent limitations in disclosure controls
and procedures include costs of implementation, faulty decision-making, simple
error and mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is based, in
part, upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all anticipated and unanticipated future conditions. Over time, controls
may become inadequate because of changes in conditions, or the degree of
compliance with established policies or procedures.





Our
Manager’s Co-Chief Executive Officers and Chief Financial Officer have
determined that no weakness in disclosure controls and procedures had any
material effect on the accuracy and completeness of our financial reporting and
disclosure included in this Annual Report on Form 10-K.





Evaluation
of internal control over financial reporting





Our
Manager is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended, as a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that (1)
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.






81
 Table of Contents





Our
Manager assessed the effectiveness of its internal control over financial
reporting as of December 31, 2008. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in "Internal Control — Integrated
Framework."





Based on
its assessment, our Manager believes that, as of December 31, 2008, its internal
control over financial reporting is effective.





This
Annual Report does not include an attestation report of our registered public
accounting firm pursuant to the temporary rules of the Securities and Exchange
Commission that permits us to only provide management’s reports in this Annual
Report.





Item 9B. Other Information





Not
applicable.







82
 Table of Contents


PART III





Item 10. Directors, Executive Officers of the Registrant's Manager
and Corporate Governance




Our
Manager, ICON Capital Corp., a Delaware corporation (“ICON”), was formed in
1985. Our Manager's principal offices are located at 100 Fifth Avenue, 4th Floor,
New York, New York 10011, and the telephone number is (212)
418-4700.





In
addition to the primary services related to our making and disposing of
investments, our Manager provides services relating to the day-to-day
management of our investments. These services include collecting payments due
from lessees, borrowers, and other counterparties; remarketing equipment that is
off-lease; inspecting equipment; serving as a liaison with lessees, borrowers,
and other counterparties; supervising equipment maintenance; and monitoring
performance by lessees, borrowers, and other counterparties of their
obligations, including payment of contractual payments and all operating
expenses.





Name
            
            Age
            
            TitleThomas
      W. Martin
            
            55
            
            Chairman
      and DirectorMichael
      A. Reisner
            
            38
            
            Co-Chief
      Executive Officer, Co-President, and DirectorMark
      Gatto
            
            36
            
            Co-Chief
      Executive Officer, Co-President, and DirectorJoel
      S. Kress
            
            36
            
            Executive
      Vice President — Business and Legal AffairsAnthony
      J. Branca
            
            40
            
            Senior
      Vice President and Chief Financial OfficerH.
      Daniel Kramer
            
            57
            
            Senior
      Vice President and Chief Marketing OfficerDavid
      J. Verlizzo
            
            36
            
            Senior
      Vice President — Business and Legal AffairsCraig
      A. Jackson
            
            50
            
            Senior
      Vice President — Remarketing and Asset ManagementHarry
      Giovani
            
            34
            
            Senior
      Vice President — Risk





Thomas W.
Martin, Chairman, has been a Director since August 1996.  Prior
to joining ICON, Mr. Martin was the Executive Vice President, Chief Financial
Officer, and a co-founder of Griffin Equity Partners, Inc. from October 1993 to
August 1996.  Prior to that, Mr. Martin was Senior Vice President of Gemini
Financial Holdings, Inc. from April 1992 to October 1993 and he held the
position of Vice President at Chancellor Corporation (an equipment leasing
company) for 7 years. Mr. Martin has a B.S. degree from University of New
Hampshire. Mr. Martin has been in the equipment leasing business since
1983.





Michael A.
Reisner, Co-Chief Executive Officer, Co-President, and Director
joined ICON in 2001. Mr. Reisner was previously Executive Vice President, Chief
Financial Officer, and Director.  In addition, Mr. Reisner was formerly
General Counsel and he also formerly held the position of Executive Vice
President – Acquisitions. Previously, from 1996 to 2001, Mr. Reisner
was an attorney with Brodsky Altman & McMahon, LLP in New York,
concentrating on commercial transactions.  Mr. Reisner received a J.D. from
New York Law School and a B.A. from the University of
Vermont.





Mark
Gatto, Co-Chief Executive Officer, Co-President, and Director
originally joined ICON in 1999 and was previously Executive Vice President,
Chief Acquisitions Officer and Director.  Mr. Gatto was formerly Executive
Vice President – Business Development from February 2006 to May 2007 and
Associate General Counsel from November 1999 through October 2000.  Mr.
Gatto is responsible for business and corporate development, including the
acquisition of equipment subject to lease.  Before serving as Associate
General Counsel, Mr. Gatto was an attorney with Cella & Goldstein in New
Jersey, concentrating on commercial transactions and general litigation matters.
From November 2000 to June 2003, Mr. Gatto was Director of Player Licensing for
the Topps Company and, in July 2003, he co-founded a specialty business
consulting firm in New York City and served as its managing partner before
re-joining ICON in April 2005.  Mr. Gatto received an M.B.A from the W.
Paul Stillman School of Business at Seton Hall University, a J.D. from
Seton Hall University School of Law, and a B.S. from
Montclair State University.






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Joel S.
Kress, Executive Vice President – Business and Legal Affairs, started his
tenure with ICON in August 2005 as Vice President and Associate General Counsel.
 In February 2006, he was promoted to Senior Vice President and General
Counsel, and in May 2007 he was promoted to his current position.
 Previously, from 2001 to 2005, Mr. Kress was an attorney with Fried,
Frank, Harris, Shriver & Jacobson LLP in New York and London, England,
concentrating on mergers and acquisitions, corporate finance and financing
transactions (including debt and equity issuances) and private equity
investments.  Mr. Kress received a J.D. from Boston University School of
Law and a B.A. from Connecticut College.




Anthony J.
Branca has been
Senior Vice President andChief Financial Officer
since May 2008. Mr. Branca originally joined ICON in January 2007 and was
previously Senior Vice President – Accounting and Finance. Mr. Branca was
Director of Corporate Reporting & Analysis for The Nielsen Company (formerly
VNU) from May 2005 until January 2007, and held various other management
positions with The Nielsen Company from July 1997 through May 2005.
 Previously, from 1994 through 1997, Mr. Branca was employed as a
senior accountant at Fortune Brands and started his career as an auditor with
KPMG Peat Marwick in 1991.  Mr. Branca received a B.B.A. from
Pace University.





H. Daniel
Kramer, Senior Vice President and Chief Marketing Officer, joined ICON in
2008.  Mr. Kramer has more than 30 years of equipment leasing and
structured finance experience. Most recently, from 2006 to 2008, Mr. Kramer was
part of CIT Commercial Finance, Equipment Finance Division offering equipment
leasing and financing solutions to complement public and private companies’
capital structure.  Prior to that role, from 2003 to 2006, Mr. Kramer was
Senior Vice President, National Sales Manager with GMAC Commercial Equipment
Finance leading a direct sales origination team from 2001 through 2003, Senior
Vice President and National Sales Manager for ORIX Commercial Structured
Equipment Finance division, and President of Kramer, Clark & Company
for 12 years providing financial consulting services to private and public
companies, including structuring and syndicating private placements, equipment
leasing and recapitalizations.





David J.
Verlizzo has been Senior Vice President – Business and Legal
Affairs since July 2007.  Mr. Verlizzo was formerly Vice
President and Deputy General Counsel from February 2006 to July 2007 and was
Assistant Vice President and Associate General Counsel from May 2005 until
January 2006.  Previously, from 2001 to 2005, Mr. Verlizzo was an
attorney with Cohen Tauber Spievack & Wagner LLP in New York,
concentrating on public and private securities offerings, securities law
compliance and corporate and commercial transactions.  Mr. Verlizzo
received a J.D. from Hofstra University School of Law and a B.S. from The
University of Scranton.





Craig A.
Jackson has been Senior Vice President – Remarketing and Asset
Management since March 2008. Mr. Jackson was previously Vice President –
Remarketing and Portfolio Management from February 2006 through March 2008.
Previously, from October 2001 to 2006, Mr. Jackson was President and
founder of Remarketing Services, Inc., a transportation equipment remarketing
company. Prior to 2001, Mr. Jackson served as Vice President of Remarketing
and Vice President of Operations for Chancellor Fleet Corporation (an equipment
leasing company).  Mr. Jackson received a B.A. from
Wilkes University.







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Harry
Giovani, Senior Vice President – Risk, joined ICON in April 2008. Most
recently, from 2007 to 2008, he was Vice President for FirstLight Financial
Corporation, responsible for underwriting and syndicating middle market
leveraged loan transactions. Previously, from 2004 to 2007, he spent three years
at GE Commercial Finance, initially as an Assistant Vice President in the
Intermediary Group, where he was responsible for executing middle market
transactions in a number of industries including manufacturing, steel, paper,
pharmaceutical, technology, chemicals and automotive, and later as a Vice
President in the Industrial Project Finance Group where he originated highly
structured project finance transactions. He started his career at Citigroup’s
Citicorp Securities and CitiCapital divisions, where he spent six years in a
variety of roles of increasing responsibility including underwriting,
origination and strategic marketing/business development. Mr. Giovani graduated
from Cornell University in 1996 with a B.S. in Finance.





Code
of Ethics





Our
Manager, on our behalf, has adopted a code of ethics for its Co-Chief Executive
Officers and  Chief Financial Officer.  The Code of Ethics
is available free of charge by requesting it in writing from our
Manager.  Our Manager's address is 100 Fifth Avenue, 4th Floor,
New York, New York 10011.





Item 11. Executive Compensation





We have
no directors or officers. Our Manager and its affiliates were paid or accrued
the following compensation and reimbursement for costs and
expenses:





For
      the Period fromMay
      25, 2007(Commencement
      ofYear
      Ended
                                                                  
                                                                  Operations)
      throughEntity
                                                                  
                                                                  Capacity
                                                                  
                                                                  Description
                                                                  December 31, 2008
                                                                  December 31, 2007ICON
      Capital Corp.
                                                                  
                                                                  Manager
                                                                  
                                                                  Organizational
      andoffering
      expenses (1)
                                                                  
                                                                  $
                                                                  2,273,874
                                                                  
                                                                  
                                                                  $
                                                                  2,841,757ICON
      Securities Corp.
                                                                  
                                                                  Managing
      broker-dealer
                                                                  
                                                                  Underwriting
      fees (1)
                                                                  
                                                                  $
                                                                  3,458,030
                                                                  
                                                                  
                                                                  $
                                                                  1,849,163ICON
      Capital Corp.
                                                                  
                                                                  Manager
                                                                  
                                                                  Acquisition
      fees (2)
                                                                  
                                                                  $
                                                                  7,905,969
                                                                  
                                                                  
                                                                  $
                                                                  2,090,934ICON
      Capital Corp.
                                                                  
                                                                  Manager
                                                                  
                                                                  Administrative
      expensereimbursements
      (3)
                                                                  
                                                                  $
                                                                  2,705,118
                                                                  
                                                                  
                                                                  $
                                                                  1,346,866ICON
      Capital Corp.
                                                                  
                                                                  Manager
                                                                  
                                                                  Management
      fees (3)
                                                                  
                                                                  $
                                                                  1,474,993
                                                                  
                                                                  
                                                                  $
                                                                  178,289(1)
      Amount charged directly to members' equity.(2)
      Amount capitalized and amortized to operations over the estimated service
      period in accordance with the LLC's accounting policies.(3)
      Amount charged directly to operations.





Our
Manager also has a 1% interest in our profits, losses, cash distributions
and liquidation proceeds.  We paid and accrued distributions to our
Manager of $162,440 and $20,561 for the years ended December 31, 2008 and 2007,
respectively.  Our Manager’s interest in our net income was $59,426
and $1,169 for the years ended December 31, 2008 and 2007,
respectively.







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Item 12. Security Ownership of Certain Beneficial Owners and the
Manager and Related Security Holder Matters


(a)
            We
      do not have any securities authorized for issuance under any equity
      compensation plan. No person of record owns, or is known by us to own,
      beneficially more than 5% of any class of our
  securities.





(b)
            As
      of February 28, 2009, Directors and Officers of our Manager do not own any
      of our equity securities.





(c)
            Neither
      we nor our Manager are aware of any arrangements with respect to our
      securities, the operation of which may at a subsequent date result in a
      change of control of us.




Item 13. Certain Relationships and Related Transactions, and
Director Independence





See Item
11 for a discussion of our related party transactions.  See Notes 6 and 9
to our financial statements for a discussion of our investment in joint venture
and transactions with related parties, respectively.





Item 14. Principal Accounting Fees and Services





During
the years ended December 31, 2008 and 2007, our auditors provided audit services
relating to our Annual Report on Form 10-K and our Quarterly Reports on Form
10-Q.  Additionally, our auditors provided other services in the form of
tax compliance work.





Hays
& Company LLP (“Hays”) was our independent registered public accounting firm
in 2006 and 2007.  On November 26, 2007, the Board of Directors of our
Manager terminated the services of Hays as our independent registered public
accounting firm.  As a result of Hays’ termination, Hays did not
complete the audit of our financial statements for the year ended December 31,
2007.   On November 26, 2007, the Board of Directors engaged
Ernst & Young LLP (“Ernst & Young”) as the Registrant’s independent
registered public accounting firm for the fiscal year ending December 31,
2007.  The following table presents the fees for both audit and
non–audit services rendered for the years ended December 31, 2008 and
2007:





Principal
      Audit Firm - Ernst & Young LLP2008
                
                
                2007Audit
      fees
                
                $
                619,362
                
                
                $
                268,559Tax
      fees
                
                
                61,000
                
                
                
                18,895$
                680,362
                
                
                $
                287,454Predecessor
      Audit Firm - Hays & Company LLP2008
                
                
                2007Audit
      fees
                
                $
                27,850
                
                
                $
                60,974Tax
      fees
                
                
                -
                
                
                
                18,800$
                27,850
                
                
                $
                79,774






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PART IV




Item 15. Exhibits, Financial Statement Schedules





(a)
                        1.
      Financial StatementsSee
      index to financial statements included as Item 8 to this Annual Report on
      Form 10-K hereof.2.
      Financial Statement SchedulesSchedules
      not listed above have been omitted because they are not applicable or the
      information required to be set forth therein is included in the financial
      statements or notes thereto.3.
      Exhibits:3.1   
      Certificate of Formation of ICON Leasing Fund Twelve, LLC. Exhibit 3.1 to
      the Registration Statement on Form S-1 filed with the SEC on November 13,
      2006 (File No. 333-138661).4.1   
      ICON Leasing Fund Twelve, LLC Limited Liability Company
      Agreement.  Exhibit A to the Prospectus filed with the SEC on
      May 8, 2007 (File No. 333-138661).10.1   Commercial
      Loan Agreement, by and between California Bank & Trust, ICON Income
      Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON Income Fund Ten,
      LLC and ICON Leasing Fund Eleven, LLC, dated August 31, 2005 (Incorporated
      by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K
      dated August 31, 2005).10.2   Loan
      Modification Agreement, by and between California Bank & Trust and
      ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, ICON
      Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC, dated December 26,
      2006 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current
      Report on Form 8-K dated December 29, 2006).10.3   Loan
      Modification Agreement dated as of June 20, 2007 between California Bank
      & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine,
      LLC, ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC and ICON
      Leasing Fund Twelve, LLC (Incorporated by reference to Exhibit 10.1 to
      Registrant’s Current Report on Form 8-K dated June 25, 2007).10.4  
      Loan
      Modification Agreement dated as of May 1, 2008 between California Bank
      & Trust and ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC,
      ICON Income Fund Ten, LLC, ICON Leasing Fund Eleven, LLC and ICON Leasing
      Fund Twelve, LLC (Incorporated by reference to Exhibit 10.4 to
      Registrant’s Quarterly Report on Form 10-Q dated May 15,
      2008).31.1  
      Rule 13a-14(a)/15d-14(a). Certification of Co-Chief Executive
      Officer.31.2  
      Rule 13a-14(a)/15d-14(a). Certification of Co-Chief Executive
      Officer.31.3  
      Rule 13a-14(a)/15d-14(a). Certification of Chief Financial
      Officer.32.1  
      Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2  
      Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.3   
      Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.






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 Table of Contents





SIGNATURES





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





File No.
000-53189


ICON
Capital Corp.






Date:
March 30,
2009





/s/Michael A.
Reisner


Michael
A. Reisner


Co-Chief
Executive Officer and Co-President


(Co-Principal
Executive Officer)





/s/Mark
Gatto


Mark
Gatto


Co-Chief
Executive Officer and Co-President


(Co-Principal
Executive Officer)




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacity and on the dates indicated.





ICON
Capital Corp.


Manager
of the Registrant





Date:
March 30,
2009





/s/Michael A.
Reisner


Michael
A. Reisner


Co-Chief
Executive Officer, Co-President and Director






/s/Mark
Gatto


Mark
Gatto


Co-Chief
Executive Officer, Co-President and Director






/s/Anthony
Branca
 Anthony
Branca
 Chief
Financial Officer





/s/Thomas W.
Martin


Thomas W.
Martin


Chairman
and Director




Supplemental
Information to be furnished with reports filed pursuant to Section 15(d) of the
Act by Registrant which have not registered securities pursuant to Section 12 of
the Act. No Annual
Report or proxy material has been sent to security holders.









88