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,
    2007ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934





Commission
file number: 333-138661




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:  Limited Liability Company
Shares




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 limited liability company shares of the Registrant on February 29,
2008 is 119,217.





DOCUMENTS
INCORPORATED BY REFERENCE


None.







Table of ContentsPagePART I
              1Item 1. Business
              1Item 1A. Risk Factors
              4Item 1B. Unresolved Staff Comments
              11Item 2. Properties
              11Item 3. Legal Proceedings
              11Item 4. Submission of Matters to a Vote of Security
      Holders
              11PART II
              12Item 5. Market for the Registrant's Securities, Related
      Security Holder Matters and Issuer Purchases of Equity
      Securities
              12Item 6. Selected Financial Data
              13Item 7. Manager's Discussion and Analysis of
      Financial Condition and Results of Operations
              14Item 7A. Quantitative and Qualitative Disclosures About
      Market Risk
              26Item 8. Consolidated Financial Statements and
      Supplementary Data
              27Item 9. Changes in and Disagreements with Accountants
      on Accounting and Financial Disclosure
              53Item 9A. Controls and Procedures
              54Item 9B. Other Information
              54PART III
              55Item 10. Directors, Executive Officers of the
      Registrant's Manager and Corporate Governance
              55Item 11. Executive Compensation
              56Item 12. Security Ownership of Certain Beneficial Owners
      and Manager and Related Security Holder Matters
              56Item 13. Certain Relationships and Related Transactions,
      and Director Independence
              56Item 14. Principal Accounting Fees and
      Services
              57PART IVItem 15. Exhibits, Financial Statement
      Schedules
              58SIGNATURES
              59


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,”
“intend,” “plan,” “seek,”  “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 report, the terms
“we,” “us” and “our” refer to the LLC (and its consolidated
subsidiaries).





Our
manager is ICON Capital Corp. (our “Manager”), which was originally a
Connecticut corporation.  Effective June 1, 2007, our Manager was
re-incorporated as a Delaware corporation. Our Manager manages and controls our
business affairs, including, but not limited to, our equipment leases and
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 in the process of raising capital and
acquiring assets.  The initial capitalization of the LLC was $2,000,
which consisted of $1,000 from our Manager and $1,000 contributed for a single
additional member share from an officer of our Manager. We are offering
membership interests on a “best efforts” basis with the current intention of
raising up to $410,800,000 of capital, consisting of 400,000 shares of limited
liability interests at a purchase price of $1,000 and an additional 12,000
shares which have been reserved for our Distribution Reinvestment
Plan.  The Distribution Reinvestment Plan allows Additional Members to
purchase additional member shares with distributions received from the LLC at a
discounted share price of $900.  As of December 31, 2007,
approximately 1,351 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 our Manager.







1
 Table of Contents






Our
Business





We
operate as an equipment leasing 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 are 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 is 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 member
      shares in items of equipment that will be subject to a
    lease.





(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 extend until 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. If our Manager believes it would benefit
      our members to reinvest the proceeds received from our investments in
      additional investments during the liquidation period, we may do so, but
      our Manager will not receive any additional acquisition fees in connection
      with such reinvestments. 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, 2007 and 2006, we had total assets of $114,242,189 and $2,000,
respectively. For the year ended December 31, 2007, our total rental income and
income from financings was $4,508,242, which included three lessees that
accounted for all of our total rental income and income from
financings.  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 had raised $1,200,000.  Since the Commencement of
Operations to December 31, 2007, we sold 93,805 additional member shares,
representing $93,670,295 of capital contributions and admitted 2,476 Additional
Members.  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, 2007, we have paid or
accrued $7,396,652 of sales commissions to third parties, $2,841,757 of
organizational and offering expenses to our Manager, and $1,849,163 of
underwriting fees to ICON Securities Corp. (“ICON Securities”), an entity owned
by our Manager.





2
 Table of Contents







At
December 31, 2007, our current portfolio, which we hold either directly or
through joint venture investments with affiliates, consisted of the following
equipment subject to lease:





Telecommunications
Equipment





·
            We
      have a 100% interest in ICON Global Crossing IV, LLC (“ICON Global
      Crossing”), which purchased telecommunications equipment from various
      vendors, which was then leased to Global Crossing Telecommunications, Inc.
      (“Global Crossing”). The lease expires on November 30,
      2011.





Marine
Vessels





·
            We
      have a 51% interest in ICON Mayon, LLC (“ICON Mayon”), which purchased one
      Aframax 98,507 DWT product tanker, the Mayon Spirit, from an affiliate of
      the Teekay Corporation (“Teekay”).  The Mayon Spirit has a
      bareboat charter which expires on July 23,
2011.





Manufacturing
Equipment





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





·
            We
      own 55% of certain semiconductor manufacturing equipment, which was
      purchased from Equipment Acquisition Resources, Inc.
      (“EAR”).  The latest the lease term expires is June 29,
      2013.





Notes
Receivable, net





·
            We, along
      with a consortium of other lenders, have a 100% interest in an equipment
      financing facility with Solyndra, Inc. (“Solyndra”), a privately held
      manufacturer of solar panels for the construction of a new production
      facility.  The financing facility matures on June 30,
      2013.





For a
discussion of our lease and other significant transactions for the year ended
December 31, 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 leasing and financing equipment
subject with companies that we generally believe to be
creditworthy.





Competition





The
equipment leasing and financing industry is highly competitive.  When
seeking leasing and financing transactions for acquisition, we compete with
leasing companies, manufacturers that lease their products directly, equipment
brokers and dealers and financial institutions, including commercial banks and
insurance companies.  Many competitors are larger than us and have greater
financial resources than we do.  For additional information about our
competition and other risks relating to our operations, please see “Risk
Factors” in Item 1A.





3
 Table of Contents







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 and 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 operating leases, and revenues in geographic
areas outside of the United States. For additional information, see Note 13 to
our consolidated financial statements.





Item 1A. Risk Factors





Our
operations are subject to a number of risks.  You should carefully
read and consider these risks, together with all other information in this
Annual Report on Form 10-K.  The risks and uncertainties described
below are not the only ones we may face.  If any of the following
risks actually occur, our business, operating results and financial condition
could be adversely affected.





Uncertainties
associated with the equipment leasing business may affect our business,
operating results and financial condition.





We are
subject to a number of uncertainties associated with the equipment leasing
business that may affect our business, operating results and financial
condition. These include, but are not limited to:





·
            changes
      in economic conditions, including fluctuations in demand for equipment and
      interest rates;


·
            the
      technological and economic obsolescence of
  equipment;


·
            potential
      defaults by lessees or borrowers;


·
            the
      existence of leverage increases the risk of foreclosure;
    and


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





4
 Table of Contents







Our
Manager’s decisions are subject to conflicts of interest with us.




Our
Manager’s decisions could 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 have an economic incentive to place
its interests above ours. Our Manager sponsors and currently manages five other
equipment leasing businesses. See “Item 13. Certain Relationships and Related
Transactions, and Director Independence.” These conflicts may include, but are
not limited to:





·
            Our
      Manager will receive more fees for making investments if we incur
      indebtedness to fund these acquisitions than it would if we did not incur
      such indebtedness;


·
            Our
      LLC Agreement does not prohibit our Manager from competing with us for
      equipment acquisitions and engaging in other types of
      business;


·
            Our
      Manager will have opportunities to earn fees for referring a prospective
      acquisition opportunity to purchasers other than
  us;


·
            Our
      Manager may receive fees in connection with the turnover of our equipment
      portfolio;


·
            The
      lack of separate legal representation for us and our Manager and lack of
      arm’s-length transactions could affect 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 the best interests of our members given a member’s 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.





Because
we borrowed, and may in the future borrow, funds to purchase equipment, losses
as a result of lessee defaults may be greater than if debt were not
incurred.





Although
we acquired, and may in the future acquire, some of our investments for cash, we
borrowed and may in the future borrow a substantial portion of the purchase
price of our equipment investments and there is no limit to the amount of debt
we may incur when purchasing equipment. While we believe the use of leverage
results in us being able to make more acquisitions and that each acquisition
will have fewer dollars at risk than if leverage were not utilized, there can be
no assurance that the benefits of greater size and diversification of the
portfolio offset the heightened risk of loss in an individual lease transaction
using leverage.  With respect to our non-recourse borrowings, a lessee
default could force us to make the debt service payments that would otherwise be
paid by the lessee so as to protect our investment in equipment and prevent the
equipment owned by us from being subject to repossession.





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, specifically 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 a revolving line of
credit agreement with California Bank & Trust.  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.”





5
 Table of Contents







The
risks and uncertainties associated with the industries of our lessees 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. We primarily acquire equipment subject to lease, purchase
equipment and lease it to third-party end users or finance equipment for third
party end users, and, to a lesser degree, acquire ownership rights to items of
leased equipment at lease expiration in a variety of industries with a number of
lessees. As such, we are indirectly subject to the various risks and
uncertainties that affect our lessees’ businesses and operations.  If
such risks or uncertainties were to affect our lessees, we may indirectly suffer
a loss on our investment, lose future revenues or experience adverse
consequences to our business, operating results and financial
condition.





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





A
significant part of the value of some of the equipment that we purchase is the
potential value of the equipment once the lease term expires (“residual value”).
Generally, leased equipment is expected to decline in value over its useful
life. In acquiring equipment, we calculate a residual value for the equipment at
the end of the lease based on available information including, depending on the
equipment, historical residual value rates.  The expected residual
value, when combined with lease payments, is expected 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 lease term. However, the residual
value of the equipment at the end of a lease, and whether that value meets our
expectations, depends to a significant extent upon many factors, including the
following, many of which are beyond our control:





·
            our
      ability to acquire or, to a lesser degree, enter into lease agreements
      that preserve or enhance the relative value of the
    equipment;


·
            our
      ability to maximize the value of the equipment upon the sale or re-lease
      when the lease expires;


·
            the
      technological and economic obsolescence of
  equipment;


·
            market
      conditions prevailing at the time the lease
  expires;


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


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


·
            the
      strength of the economy at the time the lease expires;
  and


·
            the
      condition of the equipment when the lease
  expires.





We cannot
assure you that our assumptions with respect to value are accurate or that the
equipment will not lose value more rapidly than we anticipate.  If our
residual value estimates are incorrect, the total proceeds of the lease plus the
proceeds received from realizing the residual value of the equipment may be
insufficient to achieve our anticipated rate of return, or even in growth leases
to recover the principal invested.


6
 Table of Contents







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





If a
lessee fails to maintain equipment in accordance with the terms of its lease, we
may have to make unanticipated expenditures to repair the equipment in order to
protect our investment. In addition, some of the equipment we purchase is used
equipment. While we plan to inspect most used equipment prior to purchase, 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 seek
to obtain representations from the sellers and lessees of used equipment
that:





·
            the
      equipment has been maintained in compliance with the terms of their
      leases;


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


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





We would
have rights against the seller of the 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 would 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.





If
a lessee defaults on its lease, we could incur losses.





We may
lease equipment to lessees that have senior debt rated below investment grade.
We do not require our lessees to have a minimum credit rating. Lessees with such
lower credit ratings may default on lease payments more frequently than lessees
with higher credit ratings. If a lessee does not make lease payments to us when
due, or violates the terms of its lease in another important way, we may be
forced to terminate the lease 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 the
equipment right away, if at all. If that were to happen, we would lose the
expected lease revenues and might not be able to recover the entire amount or
any of our original investment in the equipment. The costs of recovering
equipment upon a lessee’s default, enforcing the lessee’s obligations under the
lease, and transporting, storing, repairing and finding a new lessee 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 files for bankruptcy, we may have difficulty enforcing the terms of the
lease and may incur losses.





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





7
 Table of Contents







We
may invest in options 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, which is typically at the end of a lease term. 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.





Leasing
equipment in foreign countries may be riskier than domestic leasing and may
result in losses.





We lease
equipment for use by domestic or foreign lessees outside of the United States.
We may have difficulty enforcing our rights under a foreign lease. In addition,
we may have difficulty repossessing our equipment if a foreign lessee defaults,
and lease enforcement outside the United States could be more expensive.
Moreover, foreign jurisdictions may confiscate 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 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 or that insurance reimbursements will be adequate to allow
for recovery of and a return on foreign investments.





In
addition, we lease equipment that may travel to or between locations outside of
the United States. Regulations in foreign countries may adversely affect our
title to 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 lessees’ financial viability,
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.





We
may be subject to greater income tax obligations than originally
anticipated.





We may
acquire equipment subject to lease that the Internal Revenue Code requires us to
depreciate over a longer period than the depreciation period for most of the
equipment that our Manager’s prior equipment leasing funds purchased. 
Similarly, some of the equipment that we may 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 or we may enter
into financings that do not provide any tax shelter. 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.





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





We have
the ability to lease equipment where the rental payments are not made in U.S.
dollars. In these cases, we may then enter into a contract to protect the lease
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 the rent
and any other fixed, periodic payments due under the lease even if the exchange
rate between the U.S. dollar and the currency of the lease changes over the
lease term. If the lease payments were disrupted due to default by the lessee,
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 lease 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 rental payments, 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 lease payments are
not made in U.S. dollars.





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Furthermore,
when we acquire a residual interest in foreign equipment, we may not be able to
hedge our foreign currency exposure with respect to those residual values
because the terms and conditions of such hedge contracts might not be in the
best interest of our members. Even with leases requiring rental payments in U.S.
dollars, the equipment may be sold at lease expiration for an amount that cannot
be pre-determined to a buyer paying in a foreign currency. This could 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 have
acquired and may in the future 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 the 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.





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 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 typically must 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 may 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.





Leased
equipment may be damaged or lost. Fire, weather, accidents, theft or other
events can cause damage or loss of leased equipment. While our leases generally
require lessees 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 loss occurs to the equipment, we could
suffer a total loss of any investment in the affected equipment. In leasing some
types of equipment, we may be 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.








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





Many
types of transportation equipment are subject to registration requirements by
U.S. governmental agencies, as well as foreign governments if the equipment is
to be used outside of the United States. Failing to register the equipment, or
losing the 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 of the
equipment is not required to do so under the lease. These changes could force
the equipment to be removed from service for a period of time. The terms of our
leases may provide for rent reductions if the equipment must remain out of
service for an extended period of time or is removed from service. We may then
have reduced rental income from the lease for this item of 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.





If
a lease is determined to be a loan, it could be subject to usury laws, which
could lower our lease revenue.





Equipment
leases have sometimes been held by the courts to be loan transactions subject to
State usury laws, which limit the interest rate that can be charged. Although we
anticipate entering into or acquiring 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. Loans at
usurious interest rates are subject to a reduction in the amount of interest due
under such loans and, 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 lease revenue.





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





We do not
employ our own full-time officers, managers or employees. Instead, our Manager
supervises and controls our business affairs. Our Manager’s officers and
employees also spend time supervising the affairs of other equipment leasing
programs it manages, so they devote the amount of time 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.





We
compete with a variety of financing sources for our lessees, 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 programs,
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 a strong economy, growing
marketplace liquidity and increasing recognition of the attractiveness of the
commercial leasing and financing 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 meet our investment objectives.





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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 2007.




11
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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 29,
      2008Manager
      (as a member)
            1Additional
      members
            3,038





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 termination
of the operating period, which we currently anticipate will be in May
2014.  We paid distributions to additional members totaling $2,040,455
for the period from the Commencement of Operations through December 31,
2007.  Additionally, we paid our Manager distributions of $20,561 for
the period from May 7, 2007 (Commencement of Operations) through December 31,
2007. The terms of our loan agreement with California Bank & Trust could
restrict us from paying cash distributions on our members’ shares if such
payment would cause us to not be in compliance with our financial covenants. For
additional information on our distributions and the terms of our loan agreement,
see “Item 7. Manager’s Discussion and Analysis of Financial Condition and
Results of Operations – Liquidity and Capital Resources.”





In order
for the Financial Industry Regulatory Authority, Inc. (“FINRA”) members and
their associated persons to participate in the offering and sale of member
shares (the “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 must prepare annual 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 at December 31,
2007.





This
estimate was based on the amount of remaining undiscounted lease payments on our
existing leases, the booked estimated residual values of the equipment held by
us upon the termination of those leases and 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. To the extent that this calculation yields a
value in excess of the offering price per share, the offering price per share is
used for these purposes.  This valuation was based solely on our
Manager’s perception of market conditions and the types and amounts of our
assets. No independent valuation was sought. However, as set forth below, there
is no significant public trading market for our Shares at this time, and there
can be no assurance that additional 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. The foregoing valuation was
performed solely for the ERISA and FINRA purposes described above. Furthermore,
there can be no assurance as to the amount we may actually receive if and when
we seek to liquidate our assets or the amount of lease payments and equipment
disposition proceeds we will actually receive over our remaining
term.





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Item 6. Selected Financial Data





The
selected consolidated 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.








Year
      EndedDecember
      31,2007Total
      revenue (a)
            
            $
            4,830,315Net
      income (b)
            
            $
            116,852Net
      income allocable to the additional members
            
            $
            115,683Net
      income allocable to the Manager
            
            $
            1,169Weighted
      average number of additional membersshares
      outstanding
            
            
            47,186Net
      income per weighted averageadditional
      member share outstanding
            
            $
            2.45Distributions
      to additional members
            
            $
            2,040,455Distributions
      per weighted averageadditional
      member share outstanding
            
            $
            43.24Distributions
      to the Manager
            
            $
            20,561December 31,2007
            
            
            2006Total
      assets
            
            $
            114,242,189
            
            
            $
            2,000Notes
      payable
            
            $
            22,480,270
            
            
            $
            -Members'
      equity
            
            $
            79,289,609
            
            
            $
            2,000(a)
            In
      2007, total revenue consisted of (i) $3,745,463 of rental income, (ii)
      $762,779 of finance income and (iii) $322,073 ofinterest
      and other income from our acquisitions of leased assets as well as the
      equipment financing facility.(b)
            In
      2007, net income related to (i) $4,830,315 of total revenue partially
      offset by (ii) $1,346,886 of administrativeexpense
      reimbursements due to our Manager, (iii) $1,860,863 of depreciation and
      amortization expenseand
      (iv) $704,418 of interest expense.





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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 program formed on October 3, 2006.  We
began active operations on May 25, 2007.  We engage in 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 extent, 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.  The majority of the purchase price of our other equipment
leases will be financed, so these leases will generate little or no current cash
flow because substantially all of the rental payments received from the lessees
will be paid to lenders. For these "growth" leases, we anticipate that the
future value of the leased equipment will exceed the cash portion of the
purchase price paid for the equipment.





Our
manager is ICON Capital Corp. (our “Manager”), which was originally a
Connecticut corporation.  Effective June 1, 2007, our Manager was
re-incorporated as a Delaware corporation. Our Manager manages and controls our
business affairs, including, but not limited to, our equipment leases and
financing transactions, under the terms of our amended and restated limited
liability company agreement (our “LLC Agreement”).





We are
currently in our offering period.  The minimum offering of $1,200,000
was achieved on May 25, 2007 (Commencement of Operations). From our Commencement
of Operations through December 31, 2007, we have raised total equity of
$93,669,295, respectively.  With the net proceeds from our offering,
we anticipate acquiring both income leases and growth leases.  As our
leases expire, we may sell the equipment and reinvest the proceeds in additional
equipment subject to leases or re-lease the equipment.  We anticipate
incurring both gains and losses on the sales of equipment during our operating
period. Additionally, we plan to have 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.





Current
Business Environment and Outlook





We
believe that domestic equipment leasing and financing volume is correlated to
overall business investments in equipment. According to information published by
the Equipment Leasing and Finance Association, domestic business investment in
equipment in 2008 is forecasted to be an estimated $1,159 billion as compared to
a low of $868 billion in 2002 and estimated investment of $1,106 billion in
2007, while the corresponding forecast for equipment finance volume in 2008 is
estimated to be $657 billion as compared to a low of $476 billion in 2003 and
estimated value of $625 billion in 2007. In addition, we believe that a similar
correlation exists in the international markets in which we operate. Increased
capital spending may increase the number of available leases thereby creating
more opportunities in the leasing market. While lower interest rates will remain
a key obstacle for the equipment leasing and financing industry because of the
increased likelihood of customers choosing to purchase rather than lease
business investments in equipment, we believe the leasing and financing
industry's outlook for the foreseeable future is encouraging.







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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 overall business
investment in equipment increases, and as companies tend to preserve cash and
lease (rather than purchase) equipment in pre-recessionary and recessionary
economies, we are optimistic that equipment leasing volume will increase as more
lessees return to the marketplace.





Lease
and Other Significant Transactions





We
entered into the following leases and other significant transactions during the
period from May 25, 2007 (Commencement of Operations) through December 31,
2007:





Telecommunications
Equipment





On June
28, 2007, we, through our wholly-owned subsidiary ICON Global Crossing IV, LLC
(“ICON Global Crossing IV”), purchased telecommunications equipment for
approximately $7,008,000. The telecommunication equipment is subject to a lease
with Global Crossing Telecommunications, Inc.  (“Global
Crossing”).  ICON Global Crossing IV collected interim rent of $2,501
per day until commencement of the base term.  The base lease term is
48 months, and commenced on December 1, 2007.  We incurred
professional fees of approximately $159,000 and paid an acquisition fee to our
Manager of approximately $210,000 relating to this transaction.





On
September 19, 2007, ICON Global Crossing IV purchased additional
telecommunications equipment for approximately $8,993,000. The additional
telecommunication equipment is also subject to a lease with Global
Crossing.  ICON Global Crossing IV collected interim rent of $3,210
per day until commencement of the base term.  The base lease term is
48 months, and commenced on December 1, 2007.  We paid an acquisition
fee to our Manager of approximately $270,000 relating to this
transaction.





On
November 30, 2007, ICON Global Crossing IV purchased additional
telecommunications equipment for approximately $5,293,000. The additional
telecommunication equipment is also subject to a lease with Global
Crossing.  The base lease term is 48 months, and commenced on December
1, 2007.  We paid an acquisition fee to our Manager of approximately
$159,000 relating to this transaction.





Marine
Vessel





On July
24, 2007, we and ICON Income Fund Ten, LLC (“Fund Ten”), an entity also managed
by our Manager, formed ICON Mayon, LLC (“ICON Mayon”), with interests of 51% and
49%, respectively. ICON Mayon purchased one Aframax 98,507 DWT product tanker,
the Mayon Spirit, from an affiliate of Teekay Corporation (“Teekay”). The
purchase price for the Mayon Spirit was approximately $40,250,000, comprised of
(i) the cash payment of approximately $15,312,000 funded in the form of a
capital contribution to ICON Mayon and (ii) borrowings of approximately
$24,938,000 of non-recourse debt provided under a secured loan agreement with
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. We paid
approximately $845,000 in deal related costs, which included an additional
cash payment of approximately $616,000, in the form of an acquisition fee
paid to our Manager. The total capital contributions made to ICON Mayon as of
December 31, 2007 were approximately $16,020,000, of which our share was
approximately $8,472,000.





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 Table of Contents


Manufacturing
Equipment





MW
Universal





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 LLC (“LC Manufacturing”), a
wholly owned subsidiary of MW Universal, Inc. (“MWU”), for a purchase price of
$14,890,000.  We paid acquisition fees of approximately $447,000 to
our Manager.  We collected interim rent of approximately $299,000 per
month until the commencement of the lease term.  The lease term
commenced on January 1, 2008 and continues for a period of 60
months.





On
December 10, 2007, we completed the acquisition of and simultaneously leased
back 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.  We paid acquisition fees of $123,000 to our
Manager.  We collected interim rent of approximately $82,000 per month
until the commencement of the lease term.  The lease term commenced on
January 1, 2008 and continues for a period of 60 months.





Simultaneously
with the closing of the transactions with LC Manufacturing and Crow, ICON
Leasing Fund Eleven, LLC (“Fund Eleven”), an entity managed by our Manager, and
Fund Ten (together, 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 subsidary’s obligations under its respective leases
(including those of LC Manufacturing) are cross-collateralized, cross-defaulted,
and all subsidiaries’ obligations are guaranteed by MWU.  Each of the
Participating Funds has also entered into a credit support agreement with us,
pursuant to which if losses are incurred by a Participating Fund with respect to
any MWU subsidiary, those losses are shared among the Participating Funds
proportionately based on the amount of capital invested.





ICON
EAR





On
December 28, 2007, the LLC and Fund Eleven formed ICON EAR, LLC (“ICON EAR”),
with interests of 55% and 45%, respectively.  ICON EAR completed the
acquisition of and simultaneously leased back semiconductor manufacturing
equipment from Equipment Acquisition Resources, Inc. (“EAR”) for an initial
acquisition price of $6,935,000.  We paid acquisition fees of
approximately $114,000 to our Manager. We will collect $4,332 per day as interim
rent until the commencement of the lease term, which is the earlier of June 30,
2008 or upon meeting of a specific threshold.  The lease term will
continue for 60 months.





Financing
Facility





On August
13, 2007, we, 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 matures on June 30, 2013 and is
secured by the equipment as well as all other assets of Solyndra.  The
equipment consists of two fully automated manufacturing lines that combine glass
tubes and thin film semiconductors to produce solar panels.  We will
receive principal payments starting October 2008.  During the interim
period, interest will be paid on a quarterly basis using a range of rates from
8.86% to 9.01%.  In connection with the transaction, we received
warrants to purchase up to 40,290 shares of Solyndra common stock.





The
financing facility is for a maximum amount of $93,500,000, of which we have
committed to invest up to $5,000,000.  At December 31, 2007, we had
loaned approximately $4,202,000.  We paid acquisition fees of
approximately $126,000 to our Manager.  In 2008, we loaned an
additional $165,000.








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 Table of Contents





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 Measurement” (“SFAS No. 157”).  SFAS
No. 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and establishes a hierarchy
that categorizes and prioritizes the sources to be used to estimate fair value.
SFAS No. 157 also expands financial statement disclosures about fair value
measurements. On February 14, 2008, the FASB issued FASB Staff Position SFAS
No. 157-1, which amends SFAS No. 157 to exclude SFAS No. 13,
“Accounting for Leases” and other accounting pronouncements that address fair
value measurements of leases from the provisions of SFAS
No. 157.  SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. Our
Manager has not yet determined whether SFAS No. 157 will have a material
impact on its financial condition, results of operations, or cash flow. However,
our Manager believes we will likely be required to provide additional
disclosures as part of our future financial statements, beginning with the first
quarter of 2008.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—Including an Amendment of SFAS
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 as
reported in earnings.  This statement is effective for financial
statements issued for fiscal years beginning after November 15,
2007.  Our Manager is currently evaluating the impact of adopting SFAS
No. 159 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.





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 (“US GAAP”) requires our Manager
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and 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,


·
            Warrants,
      and


·
            Derivative
      financial instruments





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Lease
Classification and Revenue Recognition





Each
lease with regard to the equipment we lease to third parties will be classified
either as a finance or an operating lease, which will be determined based
upon the terms of each lease. For a finance lease, the initial direct costs
are capitalized and amortized over the term of the lease.  For an operating
lease, the 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 and uncollected operating lease receivables are
included in rents receivable.  Deferred income is the difference
between the timing of the cash payments and the income recognized on a straight
line basis.





Our
Manager has an investment committee that approves each new equipment and
financing transaction and lease acquisition.  As part of its process
it determines the residual value, if any, to be used once the acquisition 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 being considered, how the equipment is integrated
into the potential lessees business, the length of the lease and the industry in
which the potential lessee operates.





The
residual value assumes, among other things, that the asset is utilized normally
in an open, unrestricted and stable market. Short-term fluctuations in the
market place are disregarded and it is assumed that there is no necessity either
to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  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, 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 amount
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 statement of operations in the period the determination is
made.





The
events or changes in circumstances that generally indicate that an asset may be
impaired are (i) the estimated fair value of the underlying equipment is less
than its carrying value or (ii) the lessee is experiencing financial
difficulties and it does not appear likely that the estimated proceeds from the
disposition of the asset will be sufficient to satisfy the residual position in
the asset and, if applicable, the remaining obligation to the non-recourse
lender.  Generally in the latter situation, the residual position relates
to equipment subject to third party non-recourse debt where the lessee
remits its rental payments directly to the lender and 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.






18
 Table of Contents





Depreciation





We record
depreciation expense on 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.





Notes
Receivable





Notes
receivable are reported at their outstanding principal balances net of any
unamortized deferred fees and premiums or discounts on purchased loans.
Costs on originated loans are reported as other non-current assets. Unearned
income, discounts and premiums are amortized to income using the interest
method.  Interest receivable resulting from 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
lease assets and investment in financing facility 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 actual lease term using a
straight-line method for operating leases and the effective interest rate method
for direct finance leases and notes receivable. Costs related to leases or notes
receivable that are not consummated are expensed as an acquisition
expense.





Acquisition
fees





Pursuant
to our LLC Agreement, acquisition fees paid to our Manager are based on 3% of
the equipment purchase price. These fees are capitalized and included in the
cost of the acquired asset.





Warrants





Warrants
held by us are revalued on a quarterly basis.  The revaluation of the
warrants is computed 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 fair value of the warrants is recognized in
the consolidated statement of operations for the decline in the fair value of
the warrants.


19
 Table of Contents


Derivative
Financial Instruments





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
instruments.





SFAS No.
133, as amended, requires us to recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value. It
further provides criteria for derivative instruments to be designated as fair
value or cash flow hedges, and establishes accounting standards for reporting
changes in the fair value of the derivative instruments.





We
designate derivative financial instruments as either a hedge or a derivative
instrument.  For hedging instruments, at the trade date, these
instruments and their hedging relationship are identified, designated and
documented.  For derivative financial instruments designated as hedge
instruments, we evaluate the effectiveness of these hedges, at least quarterly,
to ensure that there remains a highly effective correlation in the hedge
relationship. Once the hedge relationship is established the effective portion
of the hedge is recorded on the consolidated balance sheet as a component of
members’ equity, accumulated other comprehensive income, while the ineffective
portion, if any, is recognized as an expense in our consolidated statements of
operations.





For
derivative financial instruments not designated as hedge instruments, realized
and unrealized changes in fair value are recognized into our earnings in the
period in which the changes occur or when such instruments are
settled.




20
 Table of Contents


Results
of Operations for the Year Ended December 31, 2007 (“2007”)





Year
      endedDecember 31, 2007Rental
      income
            
            $
            3,745,463Finance
      income
            
            
            762,779Interest
      and other income
            
            
            322,073Total
      revenue
            
            $
            4,830,315





Total
revenue for the year ended December 31, 2007 was $4,830,315 which was primarily
comprised of rental income from ICON Mayon, LC Manufacturing and
Crow.  Finance income was from the telecommunications equipment
subject to a finance lease with Global Crossing.  Interest income was
due to interest received on our money market account as well as the financing
facility for Solyndra.





Year
      endedDecember 31, 2007Management
      fees - Manager
            
            $
            178,289Administrative
      expense reimbursements - Manager
            
            
            1,346,866General
      and administrative
            
            
            161,497Interest
            
            
            704,418Other
      financial loss
            
            
            25,024Depreciation
      and amortization
            
            
            1,860,863Total
      expenses
            
            $
            4,276,957





Total
expenses for the year ended December 31, 2007 were $4,276,957.  For
the year, we recorded depreciation and amortization expense for the Mayon
Spirit, and assets owned by LC Manufacturing, Crow and ICON Global Crossing
IV.  Interest expense was recorded as a result of the outstanding
borrowings of ICON Mayon.  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.  General and administrative expenses
include our audit, legal and tax expenses.





Minority
Interest





Minority
interest for the year ended December 31, 2007 was $436,506 due to the minority
ownership which Fund Ten has in ICON Mayon as well as the minority ownership
which Fund Eleven has in ICON EAR.





21
 Table of Contents





Financial
Condition





This
section discusses the major balance sheet items as of December 31,
2007:





Total assets.  Our
total assets at December 31, 2007 were $114,242,189.  The assets
consisted primarily of leased equipment, investments in direct finance leases
and cash.





Total
liabilities.  Our total liabilities at December 31, 2007 were
$24,089,822.  We have $22,480,270 in non-recourse debt which is
related to the acquisition of the Mayon Spirit.  The remainder of the
balance includes the liability associated with the interest rate swap contracts,
deferred revenue, payables to our Manager and affiliates and other accrued
expenses.





Members’
equity.  Our members’ equity at December 31, 2007 was
$79,289,609.  The majority of this balance is associated with our
equity raise which was partially offset by the organizational and offering fees,
sales commissions to third parties and underwriting fees paid to ICON Securities
Corp. (“ICON Securities”), an entity owned by our Manager.  We also
recorded losses through other comprehensive income as a result the revaluation
of our interest rate swaps.




Liquidity
and Capital Resources





Sources
and Uses of Cash





At
December 31, 2007, we had cash and cash equivalents of
$22,154,903.  We will establish working capital reserves of
approximately 0.5% of the gross offering proceeds from the sale of our
membership shares. We are offering our membership shares on a “best efforts”
basis with the intention of raising up to $410,800,000.  We will use
the net proceeds of the offering to purchase various types of equipment. We plan
to lease the equipment to third party end users.  The leases we enter
into will generally be with lessees that our Manager determines are creditworthy
and are located in North America, Europe and other developed markets, including
those in Asia, South America and elsewhere.





The
majority of our investments will be the outright purchase of equipment that will
be subject to lease.  From this type of investment, we will be
entitled to receive rental payments from leasing the equipment and, as owner of
the equipment, we may sell or re-lease it at lease expiration.  We
will purchase equipment subject to lease either directly or through subsidiary
entities.  We may, in some cases, jointly purchase equipment with
other businesses our Manager sponsors and manages or with unaffiliated third
parties.  In such cases, we may co-own a joint venture with other
parties.





We will
seek to acquire a portfolio of equipment leases that is comprised of both (a)
transactions that provide current cash flow in the form of rental payments made
directly to us, and (b) transactions where the cash flow in the form of rental
payments has been pledged or assigned, in whole or in part, to a lender. We
refer to current cash flow leases which we acquire for cash as income
leases.  We call leases where a substantial portion of the cash flow
(and perhaps a portion of the expected residual value of the equipment) has been
pledged or assigned to a lender as growth leases (also known within the
equipment leasing industry as leveraged leases). We expect that most of the
indebtedness that we incur to pay a portion of the purchase price for growth
leases will be non-recourse to our other assets, meaning that in the event the
lender is not paid, our other assets would not be at risk as a source of
payment; only the particular item or items of financed equipment would be at
risk.





As
additional Shares are sold, we will experience a relative increase in liquidity
as cash is received and then a relative decrease in liquidity as cash is
expended to acquire equipment subject to leases and purchase equipment and lease
it to third-party end users.





22
 Table of Contents






Unanticipated
or greater than anticipated operating costs or losses (including a lessee’s
inability to make timely lease payments) would adversely affect our liquidity.
To the extent that working capital reserves may be insufficient to satisfy our
cash requirements, we anticipate that we would fund our operations from cash
flow generated by operating and financing activities.  In addition, we
may use a portion of cash on hand to re-establish working capital reserves. Our
Manager has no intent or requirements to fund any cash flow deficit of ours or
provide other financial assistance to us.





Since the
Commencement of Operations through December 31, 2007, we sold 93,804 shares,
representing $93,669,295 of capital contributions.  We admitted 2,476
Additional Members.  Through December 31, 2007, we have paid or
accrued $7,396,652 of sales commissions to third parties, $2,841,757 of
organizational and offering expenses to our Manager, and $1,849,163 of
underwriting fees to ICON Securities.





Operating
Activities




Sources
of cash




Our main
source of cash from operating activities in the year ended December 31, 2007 was
the collection of rental income from LC Manufacturing, Crow and Global
Crossing.





Investing
Activities




Uses
of cash




Our main
use of cash from investing activities in the year ended December 31, 2007 was
the purchase of approximately $63,961,271 worth of leased
equipment.  These acquisitions were for telecommunication equipment,
marine vessels, manufacturing equipment.  Additionally, $4,328,300 was
invested into the financing facility.





Financing
Activities




Sources
of cash




Our main
sources of cash from financing activities in the year ended December 31, 2007
were the issuance of additional member shares, net of sales and offering
expenses and investments by minority interests in joint
ventures.  During the year ended December 31, 2007 we sold
93,805 additional member shares, representing $93,670,295 of capital
contributions.  We received $10,762,478 of investments for minority
interests in ICON Mayon and ICON EAR.





Beginning
with the Commencement of Operations, we have been paying sales commissions to
third parties and various fees to our Manager and ICON
Securities.  These sales commissions and fees paid to our Manager and
ICON Securities are recorded as a reduction of our equity.





Uses
of cash




Our main
use of cash from financing activities in the year ended December 31, 2007 was
cash distributions to our members of $2,061,016.




Financings
and Borrowings





Non-Recourse
Notes Payable





We had
non-recourse debt at December 31, 2007 of approximately $22,480,270 which was
solely related to the Mayon Spirit acquisition.  All of our
non-recourse debt consists of notes payable in which the lender has a security
interest in the equipment. In some cases, in addition to the security interest,
the lender has an assignment of the rental payments under the
lease.  In such cases, the lender is being paid directly by the
lessee.  In other cases, we receive rental payments and remit to the
lender.  Currently our lease rental income relating to the Mayon
Spirit is sufficient to service the debt obligation.






23
 Table of Contents





Revolving
Line of Credit, Recourse





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”),
Fund Ten and Fund Eleven (collectively, the “Borrowers”) previously entered into
a Commercial Loan Agreement (the “Loan Agreement”), with California Bank &
Trust (the “Lender”). The Loan Agreement provides 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 are obligated to pay a quarterly commitment fee of 0.5% on unused
commitments under the Facility.





In
addition, the Borrowers previously entered into a Contribution Agreement
(the “Contribution Agreement”), pursuant to which the Borrowers have 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. These restrictions include, but are not limited to, borrowing in excess of
the lesser of (a) an amount each Borrower could reasonably expect to repay in
one year from its projected cash flow, or (b) the greater of (i) the borrowing
base, as defined in the Loan Agreement, as applied to such Borrower and (ii) 50%
of the net worth of such Borrower. 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 advances under the Facility from the Lender’s prime rate plus 0.25% to
the Lender’s prime rate and (ii) the interest rate on the five separate advances
that are permitted to be made under the Facility to the rate at which United
States dollar deposits can be acquired by the Lender in the London Interbank
Eurocurrency Market Rate (the “LIBOR Rate”) plus 2.75% to the LIBOR Rate plus
2.5% per year. In addition, pursuant to the terms of the Loan Modification, the
Borrowers no longer have to maintain a cash reserve. The interest rate at
December 31, 2007 was 7.25%.





24
 Table of Contents







On June
20, 2007, the Loan Agreement, the Contribution Agreement and the Loan
Modification were modified to admit us as a permitted borrower. We, as a result
of our entry into the Loan Modification, are jointly and severally liable for
the outstanding balance.





The
Borrowers were in compliance with the covenants at December 31,
2007. The Borrowers were in compliance with the Contribution Agreement at
December 31, 2007 and no amounts were due to or payable by us under the
Contribution Agreement.





Aggregate
borrowings by all Borrowers under the Facility amounted to $6,255,000 at
December 31, 2007.  We had no borrowings outstanding under the
Facility as of such date.  The balance of $6,255,000 relates to
borrowings by Fund Eight B ($1,255,000) and Fund Ten ($5,000,000).





Our
Manager believes that with the cash we have currently available and with the
cash being generated from our leases, we have sufficient cash to continue our
operations into the foreseeable future.  We have the ability to borrow
funds under the Facility if necessary.  However, our ability to
generate cash in the future is subject to general economic, financial,
competitive, regulatory and other factors that affect our lessee’s business that
are beyond our control.  See “Item 1A.  Risk
Factors.”





Distributions





We pay
monthly distributions to each of our members starting the first month after each
member is admitted and we continue to pay such distributions until the
termination of the operating period.  We paid distributions to our
Additional Members of $2,040,455 for the year ended December 31,
2007.  We paid distributions to our Manager of $20,561 for the year
ended December 31, 2007.





Contractual
Obligations and Commitments





At
December 31, 2007, we had non-recourse debt obligations. The lenders have
security interests in the equipment relating to each non-recourse debt
instrument and, in some cases, an assignment of the rental payments under the
leases associated with the equipment. In such cases, the lender is being
paid directly by the lessee.  In other cases, we receive the rental
payments and pay the lender.  If the lessee were to default on the
non-recourse debt the equipment would be returned to the lender in
extinguishment of the non-recourse debt. At December 31, 2007, our outstanding
non-recourse debt obligation was $22,480,270.  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, 2007.





Principal
and interest maturities of our non-recourse debt consisted of the following at
December 31, 2007:





Payments
      Due by PeriodLess
      Than 1
            
            
            
            1-3
            
            
            
            4-5Total
            
            
            Year
            
            
            Years
            
            
            YearsNon-recourse
      debt
            
            $
            22,480,270
            
            
            $
            4,913,501
            
            
            $
            10,797,028
            
            
            
            6,769,741Non-recourse
      interest
            
            
            3,117,730
            
            
            
            1,308,499
            
            
            
            1,612,973
            
            
            
            196,258Total
      Non-recourse debt
            
            $
            25,598,000
            
            
            $
            6,222,000
            
            
            $
            12,410,001
            
            
            $
            6,965,999




25
 Table of Contents


Commitments





On
September 28, 2007 and December 10, 2007, we completed the acquisitions of and
simultaneously leased back all of the machining and metal working equipment of
LC Manufacturing and Crow, both of which are wholly owned subsidiaries of
MWU.  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 substantially all of the machining and metal working equipment of each
subsidiary.  Each subsidary’s obligations under its respective lease
(including those of LC Manufacturing) are cross-collateralized and
cross-defaulted, and all subsidiaries’ obligations are guaranteed by
MWU.  Each of the Participating Funds had also entered into a credit
support agreement with us, pursuant to which if losses are incurred by a
Participating Fund with respect to any MWU subsidiary, those losses are shared
among the Participating Funds proportionately based on the amount of capital
invested.  The term of each credit support agreement matches that of
each lease agreement.  No amounts were accrued at December 31, 2007
and management cannot reasonably estimate at this time the maximum potential
amounts that may become payable under the credit support agreement, if
any.





Subsequent
Events





On March
3, 2008, we formed ICON French Equipment II, LLC, which purchased auto parts
manufacturing equipment from Sealynx Automotive Transieres SAS (“Sealynx”) and
leased it back to Sealynx.  The purchase price was approximately $12
million.  The lease has a base term of 60 months and will be paid in
quarterly installments.  At the conclusion of the lease, Sealynx has
the option to purchase the equipment for 20% of the acquisition price, renew the
lease for its fair market renewal value for a time period to be agreed upon
between the parties or return all but not less than all of the
equipment.  As additional security for Sealynx’s obligations under the
lease, we were given a lien on property owned by Sealynx in France as well as a
guaranty from Sealynx’s parent company, Sealynx Automotive Holding.





On March 11, 2008, we formed ICON
Global Crossing IV, LLC, which purchased additional telecommunications equipment
for approximately $6,000,000. The additional telecommunications equipment is
also subject to a lease with Global Crossing. The lease has a base term of 36
months which commences on April 1, 2008. At the conclusion of the lease, Global
Crossing must return all but not less than all of the equipment, purchase all
but not less than all of the equipment for 20% of its acquisition cost or renew
the lease for its fair market rental value.





On March
31, 2008, we, through its newly formed wholly-owned subsidiaries, ICON Arabian
Express, LLC and ICON Aegean Express, LLC (the “Purchasers”), entered into
agreements with subsidiaries of Vroon Group B.V. (“Vroon”) to acquire two 1,500
TEU containerships - the Aegean Express and the Arabian Express (collectively,
the “Vessels”) - for an aggregate purchase price of
$51,000,000.  Simultaneously with the closing of the purchase of the
Vessels, the Vessels will be bareboat chartered back to Vroon for a term of six
years.





Off-Balance
Sheet Transactions





None.





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, the lease rates that we can obtain on
future leases may increase as the cost of capital is a significant factor in the
pricing of lease financing.  Leases already in place would generally not be
affected by changes in interest rates.






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.





In
general, we manage our exposure to interest rate risk by obtaining fixed rate
debt. The fixed rate debt is structured so as to match the cash flows required
to service the debt to the payment streams under fixed rate lease receivables.
The payments under the leases are assigned to the lenders in satisfaction of the
debt.  We may finance leases with a floating interest rate and we are
therefore exposed to interest rate risk until fixed rate financing is
arranged.





To hedge
our variable interest rate risk, we may 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.





We entered
into an interest rate swap contract with Fortis Bank NV/SA, New York Branch
in order to fix the variable interest rate on our $22,480,270 non-recourse
debt with regards to ICON Mayon 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%.





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





26
 Table of Contents




Item 8. Consolidated Financial Statements and Supplementary
Data








PageReports of Independent Register Public Accounting
      Firms
            28Consolidated Balance Sheets
            30Consolidated Statement of Operations
            31Consolidated Statements of Changes in Members’
      Equity
            32Consolidated Statement of Cash Flows
            33Notes to Consolidated Financial Statements
            35




27
 Table of Contents







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




The Members
 ICON
Leasing Fund Twelve, LLC




We have
audited the accompanying consolidated balance sheet of ICON Leasing Fund Twelve,
LLC and subsidiaries as of December 31, 2007, and the related consolidated
statement of operations, changes in members’ equity, and cash flows for the year
ended December 31, 2007.  These financial statements are the
responsibility of the Company’s management.  Our responsibility is to
express an opinion on these financial statements based on our
audit.






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






In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ICON Leasing Fund
Twelve, LLC and subsidiaries at December 31, 2007, and the
consolidated results of their operations and their cash flows for the year ended
December 31, 2007, in conformity with U.S. generally accepted accounting
principles.











/s/
Ernst & Young, LLP





March 31,
2008


New York,
New York










28
 Table of Contents







The
Members


ICON
Leasing Fund Twelve, LLC





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





We have
audited the accompanying balance sheet of ICON Leasing Fund Twelve, LLC, (a
Delaware limited liability company) and subsidiaries 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







29
 Table of Contents








ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Balance SheetsAssetsDecember
      31,2007
            
            
            2006Current
      assetsCash
      and cash equivalents
            
            $
            22,154,903
            
            
            $
            2,000Current
      portion of net investment in finance leases
            
            
            4,011,408
            
            
            
            -Other
      current assets
            
            
            128,945
            
            
            
            -Total
      current assets
            
            
            26,295,256
            
            
            
            2,000Non-current
      assetsNet
      investments in finance leases, less current portion
            
            
            17,610,522
            
            
            
            -Leased
      equipment at cost, (less accumulated depreciation of $1,756,376 and
      $0)
            
            
            65,809,766
            
            
            
            -Notes
      receivable, net
            
            
            4,087,568Other
      non-current assets, net
            
            
            439,077
            
            
            
            -Total
      non-current assets
            
            
            87,946,933
            
            
            
            -Total
      Assets
            
            $
            114,242,189
            
            
            $
            2,000Liabilities
      and Members' EquityCurrent
      liabilitiesCurrent
      portion of non-recourse long-term debt
            
            $
            4,913,501
            
            
            $
            -Interest
      rate swap contracts
            
            
            686,176
            
            
            
            -Deferred
      revenue
            
            
            541,830
            
            
            
            -Due
      to Manager and affiliates
            
            
            246,926
            
            
            
            -Accrued
      expenses and other current liabilities
            
            
            134,620
            
            
            
            -Total
      current liabilities
            
            
            6,523,053
            
            
            
            -Non-current
      liabilitiesNon-recourse
      long-term debt, net of current portion
            
            
            17,566,769
            
            
            
            -Total
      Liabilities
            
            
            24,089,822
            
            
            
            -Minority
      Interest
            
            
            10,862,758
            
            
            
            -Commitments
      and contingencies (Note 14)Members'
      EquityManager
            
            
            (18,392
            )
            
            
            1,000Additional
      Members
            
            
            79,657,951
            
            
            
            1,000Accumulated
      other comprehensive loss
            
            
            (349,950
            )
            
            
            -Total
      Members' Equity
            
            
            79,289,609
            
            
            
            2,000Total
      Liabilities and Members' Equity
            
            $
            114,242,189
            
            
            $
            2,000-
            
            
            
            -See
      accompanying notes to consolidated financial statements





30
 Table of Contents





ICON Income Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statement of OperationsYear Ended December 31,2007Revenue:Rental
      income
            
            $
            3,745,463Finance
      income
            
            
            762,779Interest
      and other income
            
            
            322,073Total
      revenue
            
            
            4,830,315Expenses:Management
      fees - Manager
            
            
            178,289Administrative
      expense reimbursements - Manager
            
            
            1,346,866General
      and administrative
            
            
            161,497Interest
            
            
            704,418Other
      financial loss
            
            
            25,024Depreciation
      and amortization
            
            
            1,860,863Total
      expenses
            
            
            4,276,957Income
      before Minority Interest
            
            
            553,358Minority
      interest
            
            
            (436,506
            )Net
      Income
            
            $
            116,852Net
      income allocable to:Additional
      Members
            
            $
            115,683Manager
            
            
            1,169$
            116,852Weighted
      average number of additionalmember
      shares outstanding
            
            
            47,186Net
      income per weighted averageadditional
      member share
            
            $
            2.45See
      accompanying notes to consolidated financial statements





31
 Table of Contents





ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statements of Changes in Members' EquityAdditional
            
            
            
            
            
            
            
            
            Accumulated
      OtherMember
            
            
            Additional
            
            
            Managing
            
            
            ComprehensiveShares
            
            
            Members
            
            
            Member
            
            
            Loss
            
            
            TotalOpening
      balance, January 1, 2006
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Proceeds
      from issuance ofadditional
      members shares
            
            
            1
            
            
            
            1,000
            
            
            
            -
            
            
            
            -
            
            
            
            1,000Proceeds
      from issuance ofmanaging
      members shares
            
            
            -
            
            
            
            -
            
            
            
            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
            )Total
      comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (233,098
            )Proceeds
      from issuance ofadditional
      members shares
            
            
            93,805
            
            
            
            93,670,295
            
            
            
            -
            
            
            
            -
            
            
            
            93,670,295Redemption
      of additional membershares
            
            
            (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
            )
            
            $
            79,289,609-
            
            
            
            -
            
            
            
            -
            
            
            
            -See
      accompanying notes to consolidated financial statements





32
 Table of Contents





ICON Leasing Fund Twelve, LLC(A
      Delaware Limited Liability Company)Consolidated
      Statement of Cash FlowsYear
      EndedDecember
      31,2007Cash
      flows from operating activities:Net
      Income
            
            $
            116,852Adjustments
      to reconcile net income to net cash provided byoperating
      activities:Rental
      income paid directly to lenders by lessees
            
            
            (3,261,468
            )Finance
      income
            
            
            (762,779
            )Depreciation
      and amortization
            
            
            1,860,863Interest
      expense on non-recourse financing paid directlyto
      lenders by lessees
            
            
            693,217Minority
      interest
            
            
            436,506Changes
      in operating assets and liabilities:Net
      investment in finance leases
            
            
            1,142,760Other
      assets
            
            
            (164,163
            )Accrued
      expenses and other liabilitites
            
            
            134,620Deferred
      revenue
            
            
            541,830Due
      to Manager and affiliates
            
            
            246,926Net
      cash provided by operating activities
            
            
            985,164Cash
      flows from investing activities:Purchase
      of equipment
            
            
            (63,961,271
            )Investment
      in leases and equipment to be leased
            
            
            (823,875
            )Investment
      in notes receivable
            
            
            (4,328,300
            )Net
      cash used in investing activities
            
            
            (69,113,446
            )Cash
      flows from financing activities:Issuance
      of additional member shares, net of sales and offering expenses
      paid
            
            
            81,581,723Investments
      by minority interests in joint venture
            
            
            10,762,478Cash
      distributions to members
            
            
            (2,061,016
            )Net
      cash provided by financing activities
            
            
            90,283,185Net
      increase in cash and cash equivalents
            
            
            22,152,903Cash
      and cash equivalents, beginning of the year
            
            
            2,000Cash
      and cash equivalents, end of the year
            
            $
            22,154,903See
      accompanying notes to consolidated financial statements





33
 Table of Contents





ICON
      Leasing Fund Twelve LLC(A
      Delaware Limited Partnership)Consolidated
      Statement of Cash FlowsYear
      EndedDecember
      31,2007Supplemental
      disclosure of non-cash investing and financing activities:Principal
      and interest paid on non-recourse long-term debtpaid
      directly to lenders by lessees
            
            $
            3,128,000Non-cash
      portion of equipment purchased with non-recourse debt
            
            $
            24,938,433See
      accompanying notes to consolidated financial statements




34
 Table of Contents
 ICON Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(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 extent, acquiring ownership rights to items of leased
equipment at lease expiration.  The LLC will continue until December
31, 2026, unless terminated sooner.





The
manager of the LLC is ICON Capital Corp. (the “Manager”), which
was originally a Connecticut corporation.  Effective June 1,
2007, the Manager was reincorporated as a Delaware corporation.  The
Manager manages and controls the business affairs of the LLC, including, but not
limited to, the equipment leases and 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 in the process of raising capital and
acquiring assets.  The initial capitalization of the LLC was $2,000,
which consisted of $1,000 from the Manager and $1,000 contributed for a single
additional member share from an officer of the Manager. The LLC is offering
membership interests on a “best efforts” basis with the intent to raise up to
$410,800,000 of capital, consisting of 400,000 shares of limited liability
interests 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 member
shares with distributions received from certain other Funds managed by the
Manager at a discounted share price of $900.  As of December 31, 2007,
approximately 1,351 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, 2007, the LLC sold 93,805 additional
member shares, representing $93,670,295 of capital contributions and admitted
2,476 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
affiliate are recorded as a reduction to the LLC’s equity.  Through
December 31, 2007, the LLC has paid or accrued $7,396,652 of sales commissions
to third parties, $2,841,757 of organizational and offering expenses to the
Manager, and $1,849,163 of underwriting fees to ICON Securities Corp.
(“ICON Securities”), an entity owned by the Manager.





With
proceeds from member shares sold, the LLC intends to invest in equipment subject
to leases, equipment financing transactions, residual ownership rights in leased
equipment and establish a cash reserve. After the net offering proceeds are
invested, additional investments will be made with the cash generated from the
LLC’s initial investments, to the extent that cash is not needed for expenses,
reserves or distributions to members. The investment in additional equipment in
this manner is called “reinvestment.”  After the reinvestment period,
the LLC will then sell its assets in the ordinary course of business, a time
frame called the “liquidation period.”





35
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(1)
            Organization
      - continued





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 contribution 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 contribution account. After such time, the 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 all
subsidiaries and other controlled entities. All intercompany accounts and
transactions have been eliminated in consolidation.





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.





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’s inability or unwillingness to make contractually required
payments.  Concentrations of credit risk with respect to lessees 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, lease payments are
dependent upon the financial stability of the industry segments in which they
operate.  See Note 11 for concentration of risk.





Market
risk reflects the change in the value of debt instruments, derivatives and
credit facilities due to change 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.








36
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(2)  Summary
of Significant Accounting Policies - continued





Debt
Financing Costs





Expenses
associated with the issuance of long-term debt are capitalized and amortized
over the term of the debt instrument using the effective interest rate
method.  These costs are included in 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 range from 4 to 5 years to the asset’s residual
value.





The
residual value assumes, among other things, that the asset is utilized normally
in an open, unrestricted and stable market. Short-term fluctuations in the
market place are disregarded and it is assumed that there is no necessity either
to dispose of a significant number of the assets, if held in quantity,
simultaneously or to dispose of the asset quickly.  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.





Asset
Impairments





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





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





37
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007








(2)  Summary
of Significant Accounting Policies - continued





Revenue
Recognition





The LLC
leases equipment to third parties and each such lease may be classified as
either a finance lease or an operating lease, which is based upon the terms of
each lease.  Initial direct costs are capitalized and amortized over
the term of the related lease for a finance 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 upon 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 and uncollected operating lease receivables are
included in accounts receivable.  Accounts receivable are stated at
their estimated net realizable value.  Deferred income is the
difference between the timing of the cash payments and the income recognized on
a straight line basis.





The
Manager has an investment committee that approves each new equipment and
financing transaction and lease acquisition.  As part of its process
it determines the residual value, if any, to be used once the acquisition 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 being considered, how the equipment is integrated
into the potential lessees 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 policy relating to impairment
review.





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
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, 2007.





Notes
Receivable





Notes
receivable are reported at their outstanding principal balances net of any
unamortized deferred fees and premiums or discounts on purchased loans.
Costs on originated loans are reported as other non-current assets. Interest
receivable resulting from the unpaid principal is recorded separately from the
outstanding balance.





38
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(2)
            Summary
      of Significant Accounting Policies -
continued





Initial
direct costs





The LLC
capitalizes initial direct costs associated with the origination and funding of
lease assets and investment in financing facility in accordance with Statement
of Financial Accounting Standards (“SFAS”) 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 direct finance leases and
notes receivable. Costs related to leases or notes receivable that are not
consummated are expensed as an acquisition expense.





Acquisition
fees





Pursuant
to the LLC Agreement, acquisition fees paid to the Manager are based on 3% of
the equipment purchase price. These fees are capitalized and included in the
cost of the rental equipment.





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 Member
shares outstanding during the period.





Share
Redemption





The LLC
may, at its discretion, redeem shares from a limited number of its additional
members, as provided for in its LLC Agreement. The redemption price for any
shares approved for redemption 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 redemptions will be permitted.





Comprehensive
Loss





Comprehensive
loss is reported in the accompanying Consolidated Statements of Changes in
Members’ Equity and Accumulated other Comprehensive Loss and consists of net
income and other gains and losses affecting members’ equity that are excluded
from net income.





Derivative
Financial Instruments





The LLC
accounts for derivative financial instruments in accordance with SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“SFAS No.
133”), as amended, which established accounting and reporting standards
for derivative instruments.





SFAS No.
133, as amended, requires the LLC to recognize all derivatives as either assets
or liabilities in the consolidated balance sheet and measure those instruments
at fair value. It further provides criteria for derivative instruments to
be designated as fair value or cash flow hedges and establishes accounting
standards for reporting changes in the fair value of the derivative
instruments.




39
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007










(2)
            Summary
      of Significant Accounting Policies -
continued





The LLC
designates derivative financial instruments as either hedge or derivative
instruments. For hedging instruments, at the trade date, these instruments
and their hedging relationship are identified, designated and documented.
For derivative financial instruments designated as hedge instruments, the LLC
evaluates the effectiveness of these hedges, at least quarterly, to ensure
that there remains a highly effective correlation in the hedge
relationship. Once the hedge relationship is established the effective portion
of the hedge is recorded on the consolidated balance sheet as a component
of members' equity, accumulated other comprehensive income, while the
ineffective portion, if any, is recognized as an expense in the
consolidated statements of operations.





For
derivative financial instruments not designated as hedge instruments, realized
and unrealized changes
in fair value are recognized into the earnings in the period in which the
changes occur or when such instruments are settled.





Warrants





Warrants
held by the LLC are revalued on a quarterly basis.  The revaluation of
the warrants is computed 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 fair value of the warrants is recognized in
the consolidated statement of operations for the decline in the fair value of
the warrants.





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 and 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 SFAS
No. 157, “Accounting for Fair Value Measurement”
(“SFAS No. 157”).  SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and establishes a hierarchy that categorizes and
prioritizes the sources to be used to estimate fair value. SFAS No. 157
also expands financial statement disclosures about fair value measurements. On
February 14, 2008, the FASB issued FASB Staff Position SFAS No. 157-1,
which amends SFAS No. 157 to exclude SFAS No. 13, “Accounting for
Leases” and other accounting pronouncements that address fair value measurements
of leases from the provisions of SFAS
No. 157.  SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. The
Manager has not yet determined whether SFAS No. 157 will have a material
impact on its financial condition, results of operations, or cash flow. However,
the Manager believes the LLC will likely be required to provide additional
disclosures as part of future financial statements, beginning with the first
quarter of 2008.





40
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(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 SFAS
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 is effective for financial
statements issued for fiscal years beginning after November 15,
2007.  The Manager is currently evaluating the impact of adopting SFAS
No. 159 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.





(3)
            Net
      Investments in Finance Leases





Net investments in
finance leases consistedof the
followingat
December 31, 2007:





December 31,2007Minimum
      rents receivable
            
            $
            24,270,205Estimated
      residual value
            
            
            2,129,432Initial
      direct costs, net
            
            
            707,589Unearned
      income
            
            
            (5,485,296
            )Net
      investments in finance leases
            
            
            21,621,930Less:  Current
      portion of netinvestment
      in finance leases
            
            
            4,011,408Net
      investments in finance leases,less
      current portion
            
            $
            17,610,522





On June
28, 2007, the LLC, through our wholly-owned subsidiary ICON Global Crossing IV,
LLC (“ICON Global Crossing IV”), purchased telecommunications equipment for
approximately $7,008,000. The telecommunication equipment is subject to a lease
with Global Crossing Telecommunications, Inc.  (“Global
Crossing”).  ICON Global Crossing IV collected interim rent of $2,501
per day until commencement of the base term.  The base lease term is
48 months, and commenced on December 1, 2007.  The LLC incurred
professional fees of approximately $159,000 and paid an acquisition fee to the
Manager of approximately $210,000 relating to this transaction.





41
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(3)
            Net
      Investments in Finance Leases -
continued





On
September 19, 2007, ICON Global Crossing IV purchased additional
telecommunications equipment for approximately $8,993,000. The additional
telecommunication equipment is also subject to a lease with Global
Crossing.  ICON Global Crossing IV collected interim rent of $3,210
per day until commencement of the base term.  The base lease term is
48 months, and commenced on December 1, 2007.  The LLC paid an
acquisition fee to the Manager of approximately $270,000 relating to this
transaction.





On
November 30, 2007, ICON Global Crossing IV purchased additional
telecommunications equipment for approximately $5,293,000. The additional
telecommunication equipment is also subject to a lease with Global
Crossing.  The base lease term is 48 months, and commenced on December
1, 2007.  The LLC paid an acquisition fee to the Manager of
approximately $159,000 relating to this transaction.





Non-cancelable
minimum annual amounts due on investments in finance leases over the next five
years were as follows at December 31, 2007:





Years  EndingDecember 31,2008
            
            
            $
            6,196,6482009
            
            
            $
            6,196,6482010
            
            
            $
            6,196,6482011
            
            
            $
            5,680,2612012
            
            
            $
            -





42
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(4)  Leased
Equipment at Cost





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





2007Marine
      vessels
            
            $
            40,863,798Manufacuring
      equipment
            
            
            26,702,34467,566,142Less:
      Accumulated depreciation
            
            
            (1,756,376
            )$
            65,809,766





ICON
Mayon, LLC





On July
24, 2007, the LLC and ICON Income Fund Ten, LLC (“Fund Ten”), an entity also
managed by the Manager, formed ICON Mayon, LLC (“ICON Mayon”), with interests of
51% and 49%, respectively. ICON Mayon purchased one Aframax 98,507 DWT product
tanker, the Mayon Spirit, from an affiliate of Teekay Corporation (“Teekay”).
The purchase price for the Mayon Spirit was approximately $40,250,000, comprised
of (i) the cash payment of approximately $15,312,000 funded in the form of a
capital contribution to ICON Mayon and (ii) borrowings of approximately
$24,938,000 of non-recourse debt provided under a secured loan agreement with
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 LLC paid
approximately $845,000 on deal related costs, which included an additional
cash payment of approximately $616,000, in the form of an acquisition fee
paid to the Manager. The total capital contributions made to ICON Mayon as of
December 31, 2007 were approximately $16,020,000, of which the LLC’s share was
approximately $8,472,000.





MW
Universal





On September 28, 2007, the LLC
completed the acquisition 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 LLC paid acquisition fees of
approximately $447,000 to the Manager.  The base lease term commenced
on January 1, 2008, and continues for a period of 60 months.





On
December 10, 2007, the LLC completed the acquisition and simultaneously leased
back 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 LLC paid acquisition fees of $123,000 to the
Manager.  The LLC will collect approximately $82,000 per month until
the commencement of the base lease term.  The lease term commenced on
January 1, 2008, and continues for a period of 60 months.





43
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(4)  Leased
Equipment at Cost - continued





Simultaneously
with the closing of the transactions with LC Manufacturing and Crow, ICON
Leasing Fund Eleven, LLC (“Fund Eleven”) and Fund Ten, two entities also managed
by the Manager (together, the “Participating Funds”), completed similar
acquisitions with four other subsidiaries of MWU pursuant to which the
respective funds purchased substantially all of the machining and metal working
equipment of each subsidiary.  Each subsidary’s, obligations under its
respective leases (including those of LC Manufacturing) 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 with the LLC, pursuant to which if losses are incurred by a
Participating Fund with respect to any MWU subsidiary, those losses are shared
among the Participating Funds proportionately based on the amount of capital
invested.





ICON
EAR





On
December 28, 2007, the LLC and Fund Eleven formed ICON EAR, LLC (“ICON EAR”),
with interests of 55% and 45%, respectively.  ICON EAR completed the
acquisition and simultaneously leased back semiconductor manufacturing equipment
from Equipment Acquisition Resources, Inc. (“EAR”) for an initial acquisition
price of $6,935,000.  The LLC paid acquisition fees of approximately
$114,000 to the Manager. The LLC will collect $4,332 per day until the
commencement of the lease term, which is the earlier of June 30, 2008 or upon
meeting of a specific threshold and will continue for 60 months.





Aggregate
minimum future rentals receivable from each of the LLC’s non-cancelable leases
consisted of the following at December 31, 2007:





Years  EndingDecember 31,2008
            
            
            $
            12,357,4602009
            
            
            $
            12,359,6262010
            
            
            $
            12,359,6262011
            
            
            $
            9,772,9062012
            
            
            $
            5,389,779Thereafter
            
            
            $
            790,590





(5)
            Notes
      Receivable, net





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 matures on June 30, 2013 and is
secured by the equipment as well as all other assets of Solyndra.  The
equipment consists of two fully automated manufacturing lines that combine glass
tubes and thin film semiconductors to produce solar panels.  The LLC
will receive principal payments starting in October 2008.  In the
interim period, interest will be paid on a quarterly basis using a range of
rates from 8.36% to 9.01%.  In connection with the transaction, the
LLC received warrants to purchase up to 40,290 shares of Solyndra common
stock.  The fair value of these warrants, approximately $115,000
on the transaction date has been reflected as a discount on the face amount of
the notes receivables.  For the year ended December 31, 2007, the
LLC recognized a loss of $25,024 in other financial loss for the decline in the
fair value of the warrants.







44
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(5)
            Notes
      Receivable, net - continued





At
December 31, 2007, the Manager has determined, based on the Black-Scholes option
pricing model, that the aggregate fair value of the warrants was
$89,641.  The assumptions used for the Black-Scholes option pricing
model were as follows: Strike price $4.96, share price $2.23, expiration date of
April 6, 2014, a volatility of 250%, and the risk free interest rate of
3.98%.  The volatility percentage was determined by taking a sampling
of six similar businesses from their initial public offering date to present and
attributing a percentage based on the performance of the share price of this
sampling.





The
financing facility is for a maximum amount of $93,500,000, of which the LLC has
committed to invest up to $5,000,000.  At December 31, 2007, the LLC
had loaned approximately $4,202,000.  The LLC paid acquisition fees of
approximately $126,000 to the Manager.  In 2008, the LLC loaned an
additional $165,000.





(6)
            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 debt matures on July 25, 2011
and accrues interest at the London Interbank Eurocurrency Market Rate (the
“LIBOR Rate”) plus 1.00%.  The non-recourse debt requires monthly
payments ranging from $476,000 to $527,000. The lender has a security interest
in the vessel and an assignment of the charter hire. The LLC paid and
capitalized approximately $187,000 in debt financing costs associated with the
debt. As of December 31, 2007, the remaining balance on the non-recourse debt
and debt financing costs was $22,480,270 and $168,602,
respectively.





Simultaneously
with the execution of the non-recourse debt agreement mentioned above, the LLC
entered into interest rate swap contract with Fortis Bank NV/SA, New York Branch
in order to fix the variable interest rate on the non-recourse debt and minimize
the LLC’s risk of interest rate fluctuation. The interest rate swap contract
fixed the interest rate at 6.35%. The LLC accounts for its interest rate swap
contracts in accordance with SFAS No. 133, as amended, and records the interest
rate swap contracts at their estimated fair values, and recognizes the periodic
change in their fair values as other comprehensive income.  As of
December 31, 2007, ICON Mayon recorded through other comprehensive income a loss
of $686,176, of which the LLC’s portion is $349,950.





45
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(6)
            Non-Recourse
      Long-Term Debt - continued





The
aggregate maturities of non-recourse debt consisted of the following at December
31, 2007:





Years  EndingDecember 31,2008
            
            
            $
            4,913,5012009
            
            
            
            5,225,4312010
            
            
            
            5,571,5972011
            
            
            
            6,769,741Total
      Non-Recourse Long-Term Debt
            
            
            $
            22,480,270





(7)  Revolving
Line of Credit, Recourse





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
Nine”), Fund Ten and Fund Eleven (collectively, the “Borrowers”) previously
entered into a Commercial Loan Agreement (the “Loan Agreement”), with California
Bank & Trust (the “Lender”). The Loan Agreement provides 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 are obligated to pay a quarterly commitment fee of 0.5% on unused
commitments under the Facility.





In
addition, the Borrowers previously entered into a Contribution Agreement (the
“Contribution Agreement”), pursuant to which the Borrowers have 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. These restrictions include, but are not limited to, borrowing in
excess of the lesser of (a) an amount each Borrower could reasonably expect to
repay in one year from its projected cash flow, or (b) the greater of (i) the
borrowing base, as defined in the Loan Agreement, as applied to such Borrower
and (ii) 50% of the net worth of such Borrower. 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.







46
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(7)  Revolving
Line of Credit, Recourse - continued





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 advances under the Facility from the Lender’s prime rate plus 0.25% to
the Lender’s prime rate and ii) the interest rate on the five separate advances
that are permitted to be made under the Facility at which United States dollar
deposits can be acquired by the Lender in the LIBOR Rate plus 2.75% to the LIBOR
Rate plus 2.5%. In addition, pursuant to the terms of the Loan Modification, the
Borrowers no longer have to maintain a cash reserve. The interest rate at
December 31, 2007 was 7.25%.





On June
20, 2007, the Loan Agreement, the Contribution Agreement and the Loan
Modification were modified to admit the LLC as a permitted borrower. The LLC, as
a result of its entry into the Loan Modification, is jointly and severally
liable for the outstanding balance.





The
Borrowers were in compliance with these covenants at December 31, 2007. The
Borrowers were in compliance with the Contribution Agreement at December 31,
2007 and no amounts were due to or payable by the LLC under the Contribution
Agreement.





Aggregate
borrowings by all Borrowers under the Facility amounted to $6,255,000 at
December 31, 2007. The LLC had no borrowings outstanding under the Facility as
of such date.  The balance of $6,255,000 relates to borrowings by Fund
Eight B ($1,255,000) and Fund Ten ($5,000,000).





(8)
            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 the Additional
Members.





In
accordance with the terms of these agreements, the LLC will pay the Manager (i)
management fees ranging from 1% to 7% based on a percentage of the rentals
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 gross
value of the LLC’s acquisition transactions.  In addition, the Manager
will be reimbursed for certain administrative expenses incurred in connection
with the LLC’s operations.





The
Manager will perform certain services relating to the management of the LLC’s
equipment leasing and financing activities.  Such services include 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, liaison 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.




47
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(8)
            Transactions
      with Related Parties - continued





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
$20,561 for the year ended December 31, 2007.  The Manager’s
interest in the LLC’s net income for December 31, 2007 was $1,169.





Fees and
other expenses paid or accrued by the LLC to the Manager or its affiliates for
the year ended December 31, 2007, were as follows:





Commencementof
      Operations throughEntity
            Capacity
            Description
            
            December 31, 2007ICON
      Capital Corp.
            Manager
            Organizational
      and offering expenses (1)
            
            $
            2,841,757ICON
      Securities Corp.
            Dealer
      Manager
            Underwriting
      fees (1)
            
            $
            1,849,163ICON
      Capital Corp.
            Manager
            Acquisition
      fees (2)
            
            $
            2,090,934ICON
      Capital Corp.
            Manager
            Administrative
      expense reimbursements (3)
            
            $
            1,346,866ICON
      Capital Corp.
            Manager
            Management
      fees (3)
            
            $
            178,289(1)
      Amount charged directly to members' equity.(2)
      Amount capitalized and amortized to operations.(3)
      Amount charged directly to operations.





At
December 31, 2007, the Manager and its affiliates were due
$246,926.





(9)
            Interest
      Rate Swap Contracts





The LLC
is exposed to interest rate risk on the floating-rate non-recourse notes payable
and uses floating-to-fixed interest rate swaps to hedge this
exposure.  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
$22,480,270.





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 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, 2007.








48
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(9)
            Interest
      Rate Swap Contracts - continued





For the
year ended December 31, 2007, the LLC had one floating-to-fixed interest rate
swap related to the ICON Mayon acquisition. The total amount recorded to
accumulated other comprehensive loss was $349,950.





For the
year ended December 31, 2007, no gains or losses were recorded in earnings
representing the amount of the hedges’ ineffectiveness.




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.
  It is the
LLC’s policy to have an International Swaps and Derivatives Association (“ISDA”)
Master Agreement established with every bank with which it has entered into any
derivative contact. Under the ISDA Master Agreement, the LLC agrees to settle
only the net amount of the combined market values of all derivative contracts
outstanding with any counterparty should that counterparty default. As of
December 31, 2007, the LLC does not have an economic exposure to loss due to
credit risk on derivative financial instruments if the bank counterparty was to
default.


(10)
            Fair
      Value of Financial Instruments





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 notes payable, if any,
approximates fair value due to their short-term maturities and variable interest
rates.





(11)
            Concentrations





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
year ended December 31, 2007, the LLC had four lessees that accounted for
approximately 99.6% of rental and finance income.





For the
year ended December 31, 2007, the LLC had three lessees that accounted for
approximately 71% of total assets and one lender that accounted for
approximately 98% of the total liabilities.





49
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(12)
            Geographic
      Information





Geographic
information for revenue, based on the country of origin, and long-lived assets,
net of accumulated depreciation, which include finance leases, operating
leases and investments were as follows at December 31, 2007:





UnitedStates
            
            
            Vessels
      (a)
            
            
            TotalRevenue:Rental
      income
            
            $
            1,023,293
            
            
            $
            2,722,170
            
            
            $
            3,745,463Finance
      income
            
            
            762,779
            
            
            
            -
            
            
            
            762,779$
            1,786,072
            
            
            $
            2,722,170
            
            
            $
            4,508,242UnitedStates
            
            
            Vessels
      (a)
            
            
            TotalLong-lived
      assets:Investments
      in finance leases
            
            $
            21,621,930
            
            
            $
            -
            
            
            $
            21,621,930Leased
      Equipment at cost, net
            
            $
            26,107,473
            
            
            $
            39,702,293
            
            
            $
            65,809,766Notes
      Receivable, net
            
            $
            4,087,568
            
            
            $
            -
            
            
            $
            4,087,568(a) The
      LLC's vessels are chartered to Teekay. When the LLC charters a vessel
      to a Charterer, the Charterer isfree
      to trade the vessel worldwide and, as a result, the disclosure of
      geographic information is impractical.





50
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(13)
            Selected
      Quarterly Financial Data
(unaudited)





The
following table is a summary of selected financial data, by quarter, for the
year ended December 31, 2007:




First
              
              
              Second
              
              
              Third
              
              
              Fourth
              
              
              Year
      ended December 31,Quarter
              
              
              Quarter
              
              
              Quarter
              
              
              Quarter
              
              
              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 additionalmember
      shares outstanding
              
              
              -
              
              
              
              8,429
              
              
              
              35,878
              
              
              
              74,081
              
              
              
              47,186Net
      (loss) income perweighted
      average additionalmember
      share outstanding
              
              $
              -
              
              
              $
              (23.59
              )
              
              $
              (6.58
              )
              
              $
              7.43
              
              
              $
              2.45








(14)
            Commitments
      and Contingencies and Off Balance Sheet
  Transactions





On
September 28, 2007 and December 10, 2007, the LLC completed the acquisitions of
and simultaneously leased back substantially all of the machining and metal
working equipment of LC Manufacturing and Crow, a wholly owned subsidiary of
MWU.  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 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 with the LLC, pursuant to which if losses are incurred by a
Participating Fund with respect to any MWU subsidiary, those losses are shared
among the Participating Funds proportionately based on the amount of capital
invested.  The term of each credit support agreement matches that of
the lease agreements.  No amounts were accrued at December 31, 2007
and management cannot reasonably estimate at this time the maximum potential
amounts that may become payable under the credit support agreement.








51
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007





(15)
            Subsequent
      Events





On March
3, 2008, the LLC formed ICON French Equipment II, which purchased auto parts
manufacturing equipment from Sealynx Automotive Transieres SAS (“Sealynx”) and
leased them back to Sealynx.  The purchase price was approximately $12
million.  The lease has a base term of 60 months and will be paid in
quarterly installments.  As additional security for Sealynx’s
obligations under the lease, the LLC was given a lien on property owned by
Sealynx in France as well as a guaranty from Sealynx’s parent company, Sealynx
Automotive Holding.





On March
11, 2008, the LLC formed ICON Global Crossing IV, LLC, which purchased
additional telecommunications equipment for approximately $6,000,000. The
additional telecommunications equipment is also subject to a lease with Global
Crossing. The lease has a base term of 36 months which commences on April 1,
2008. At the conclusion of the lease, Global Crossing must return all but not
less than all of the equipment, purchase all but not less than all of the
equipment for 20% of its acquisition cost or renew the lease for its fair market
rental value.





On March
31, 2008, the LLC, through its newly formed wholly-owned subsidiaries, ICON
Arabian Express, LLC and ICON Aegean Express, LLC (the “Purchasers”), entered
into agreements with subsidiaries of Vroon Group B.V. (“Vroon”) to acquire two
1,500 TEU containerships - the Aegean Express and the Arabian Express
(collectively, the “Vessels”) - for an aggregate purchase price of
$51,000,000.  Simultaneously with the closing of the purchase of the
Vessels, the Vessels will be bareboat chartered back to Vroon for a term of six
years.





(16)  Income
Tax Reconciliation (Unaudited)





At
December 31, 2007, the members’ equity included in the consolidated financial
statements totaled $79,289,609. The members’ capital for Federal income tax
purposes at December 31, 2007 totaled $80,136,483.  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, the differences in gain (loss) on
sale of equipment and 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 year ended December 31,
2007 as follows:





2007Net
      income per consolidated financial statements
            
            $
            116,852Rental
      income
            
            
            2,745,798Depreciation
      and amortization
            
            
            (6,286,562
            )Tax
      gain from consolidated joint venture
            
            
            529,288Other
            
            
            669,836Net
      loss for Federal income tax purposes
            
            $
            (2,224,788
            )


52
 Table of Contents
 ICON
Leasing Fund Twelve, LLC
 (A
Delaware Limited Liability Company)
 Notes to
Consolidated Financial Statements
 December
31, 2007


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 several additional accounting
staff members who are certified public accountants and/or are experienced with
public reporting entities, including three additional senior accountants with
more than 16, 10, and 9 years, respectively, of experience with public reporting
entities, the most senior of those accountants was appointed Senior Vice
President of Accounting.




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 ending December 31, 2007. During the Registrant’s fiscal
year ended December 31, 2006 and the subsequent interim period 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 consolidated financial
statements and no written report or oral advice was provided by Ernst &
Young to the Registrant 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, (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 a “reportable event” (as defined in Item
304(a)(1)(v) of Regulation S-K and related instructions).







53
 Table of Contents








Item 9A. 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, 2007, 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.





Item 9B. Other Information





Not
applicable.






54
 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, was formed in 1985 as a
Connecticut corporation which was reincorporated as a Delaware corporation
effective June 1, 2007 .  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 acquisition and disposition
of equipment, our Manager provides services relating to the day-to-day
management of our equipment. These services include collecting payments due from
lessees, remarketing equipment that is off-lease, inspecting equipment, serving
as a liaison with lessees, supervising equipment maintenance, and monitoring
performance by lessees of their obligations, including payment of rent and all
operating expenses.








Name
            Age
            TitleThomas
      W. Martin
            53
            Chairman
      and DirectorMichael
      A. Reisner
            37
            Co-Chief
      Executive Officer, Co-President, Chief Financial Officer, and
      DirectorMark
      Gatto
            35
            Co-Chief
      Executive Officer, Co-President,  Chief Acquisitions Officer,
      and DirectorJoel
      S. Kress
            35
            Executive
      Vice President — Business and Legal AffairsH.
      Daniel Kramer
            56
            Senior
      Vice President and Chief Marketing OfficerDavid
      J. Verlizzo
            35
            Senior
      Vice President — Business and Legal AffairsAnthony
      J. Branca
            39
            Senior
      Vice President — Accounting and FinanceCraig
      A. Jackson
            49
            Senior
      Vice President — Remarketing and Portfolio
  Management





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, Chief Financial
Officer, 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, Chief Acquisitions
Officer, and Director, originally joined ICON in 1999 and was previously
Executive Vice President and Chief Acquisitions Officer.  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 our Manager 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.





Joel S.
Kress, Executive Vice President – Business and Legal Affairs, started his
tenure with our Manager 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.





H. Daniel
Kramer, Senior Vice President and Chief Marketing Officer, joined our
Manager in 2008.  Mr. Kramer has more than 30 years of equipment leasing
and structured finance experience. Most recently, 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, Mr. Kramer was Senior Vice President,
National Sales Manager with GMAC Commercial Equipment Finance leading a direct
sales origination team, 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.





Anthony J.
Branca has been Senior Vice President – Accounting and Finance since
January 2007. 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.





Craig A.
Jackson was Vice President – Remarketing and Portfolio Management since
February 2006. He became a Senior Vice President in 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.





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.







55
 Table of Contents







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 from May 25, 2007 (Commencement of Operations) through December 31,
2007.





Commencement
      ofOperations
      throughEntity
            Capacity
            Description
            
            December 31, 2007ICON
      Capital Corp.
            Manager
            Organizational
      and offering expenses (1)
            
            $
            2,841,757ICON
      Securities Corp.
            Dealer
      Manager
            Underwriting
      fees (1)
            
            $
            1,849,163ICON
      Capital Corp.
            Manager
            Acquisition
      fees (2)
            
            $
            2,090,934ICON
      Capital Corp.
            Manager
            Administrative
      expense reimbursements (3)
            
            $
            1,346,866ICON
      Capital Corp.
            Manager
            Management
      fees (3)
            
            $
            178,289(1)
      Amount charged directly to members' equity.(2)
      Amount capitalized and amortized to operations.(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 $20,561 from the Commencement of Operations through December 31,
2007.  Our Manager’s interest in our net income was $1,169 from the
Commencement of Operations through December 31, 2007.




Item 12. Security Ownership of Certain Beneficial Owners and
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 29, 2008, 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 8 to our
financial statements for a discussion of our investments in joint ventures and
transactions with related parties.






56
 Table of Contents





Item 14. Principal Accounting Fees and Services





During
the years ended December 31, 2007 and 2006, our auditors provided audit services
relating to our Registration Statement on Form S-1, 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, 2007 and
2006.





Principal
      Audit Firm - Ernst & Young LLP2007
            
            
            2006Audit
      fees
            
            $
            165,000
            
            
            $
            -Tax
      fees
            
            
            -
            
            
            
            -$
            165,000
            
            
            $
            -Predecessor
      Audit Firm - Hays & Company LLP2007
            
            
            2006Audit
      fees
            
            $
            56,921
            
            
            $
            4,688Tax
      fees
            
            
            -
            
            
            
            3,836$
            56,921
            
            
            $
            8,524









57
 Table of Contents







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).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.






58
 Table of Contents





SIGNATURES





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





ICON
Leasing Fund Twelve, LLC File No. 333-138661 (Registrant) by its Manager, ICON
Capital Corp.





Date:
March 31,
2008





/s/Michael A.
Reisner____


Michael
A. Reisner


Co-Chief
Executive Officer, Co-President, and Chief Financial Officer


(Co-Principal
Executive Officer and Principal Financial Officer)





/s/Mark
Gatto________


Mark
Gatto


Co-Chief
Executive Officer, Co-President, and Chief Acquisitions Officer


(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.


Sole
Manager of the Registrant





Date:
March 31,
2008





/s/Michael A.
Reisner__


Michael
A. Reisner


Co-Chief
Executive Officer, Co-President, and Chief Financial Officer


(Co-Principal
Executive Officer and Principal Financial Officer)





Date:
March 31,
2008





/s/Mark
Gatto________


Mark
Gatto


Co-Chief
Executive Officer, Co-President, and Chief Acquisitions Officer


(Co-Principal
Executive Officer)





Date:
March 31,
2008





/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.









59