Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - ATEL 12, LLC	v385758_ex32x1.htm
EX-32.2 - EXHIBIT 32.2 - ATEL 12, LLC	v385758_ex32x2.htm
EX-31.2 - EXHIBIT 31.2 - ATEL 12, LLC	v385758_ex31x2.htm
EX-31.1 - EXHIBIT 31.1 - ATEL 12, LLC	v385758_ex31x1.htm
EXCEL - IDEA: XBRL DOCUMENT - ATEL 12, LLC	Financial_Report.xls

Form 10-Q

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


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

For the quarterly period ended June 30, 2014


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to

Commission File number 000-53618

ATEL 12, LLC

(Exact name of registrant as specified in its charter)


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

The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111
(Address of principal executive offices)

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

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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 o Accelerated filer o Non-accelerated filer o Smaller reporting company x

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

The number of Limited Liability Company Units outstanding as of July 31, 2014 was 2,992,482.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

ATEL 12, LLC

Index


Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Balance Sheets, June 30, 2014 and December 31, 2013			3
Statements of Operations for the three and six months ended June 30, 2014 and 2013			4
Statements of Changes in Members’ Capital for the year ended December 31, 2013 and for the six months ended June 30, 2014			5
Statements of Cash Flows for the three and six months ended June 30, 2014 and 2013			6
Notes to the Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 4. Controls and Procedures			30
Part II. Other Information			31
Item 1. Legal Proceedings			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3. Defaults Upon Senior Securities			31
Item 4. Mine Safety Disclosures			31
Item 5. Other Information			31
Item 6. Exhibits			31

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 12, LLC

BALANCE SHEETS

JUNE 30, 2014 AND DECEMBER 31, 2013
(In Thousands)


	June 30, 2014		December 31, 2013
	(Unaudited)
ASSETS
Cash and cash equivalents	$	941	$	857
Accounts receivable, net of allowance for doubtful accounts of $0 at June 30, 2014 and $3 at December 31, 2013		33		55
Notes receivable, net of unearned interest income of $153 at June 30, 2014 and $255 as of December 31, 2013		1,065		1,701
Investment in securities		258		275
Fair value of warrants		381		555
Investments in equipment and leases, net of accumulated depreciation of $12,059 at June 30, 2014 and $11,046 at December 31, 2013		9,006		10,653
Prepaid expenses and other assets		23		30
Total assets	$	11,707	$	14,126
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member	$	58	$	55
Accrued distributions to Other Members		230		230
Other		238		211
Non-recourse debt		2,955		3,958
Unearned operating lease income		76		101
Total liabilities		3,557		4,555
Commitments and contingencies
Members’ capital:
Managing Member		—		—
Other Members		8,150		9,571
Total Members’ capital		8,150		9,571
Total liabilities and Members’ capital	$	11,707	$	14,126

See accompanying notes.

TABLE OF CONTENTS

ATEL 12, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2014 AND 2013
(In Thousands Except for Units and Per Unit Data)
(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Leasing and lending activities:
Operating leases	$	946		$	972		$	1,847		$	1,920
Direct financing leases		22			31			47			67
Interest on notes receivable		40			38			89			82
Gain on sales of lease assets and early termination of notes		30			19			145			63
Gain on sales or dispositions of securities		30			3			30			5
Unrealized loss on fair valuation of warrants		(96	)		—			(174	)		—
Other		3			14			4			38
Total revenues		975			1,077			1,988			2,175
Expenses:
Depreciation of operating lease assets		623			733			1,255			1,404
Asset management fees to Managing Member		39			38			79			85
Acquisition expense		3			(5	)		26			38
Cost reimbursements to Managing Member and/or affiliates		83			94			161			188
Reversal of provision for credit losses		(3	)		—			(3	)		(16	)
Impairment losses on equipment		226			—			226			—
Amortization of initial direct costs		7			9			14			18
Interest expense		18			34			40			61
Professional fees		20			11			78			51
Outside services		7			13			20			20
Other		28			31			54			67
Total expenses		1,051			958			1,950			1,916
Net (loss) income	$	(76	)	$	119		$	38		$	259
Net income (loss):
Managing Member	$	54		$	54		$	109		$	109
Other Members		(130	)		65			(71	)		150
	$	(76	)	$	119		$	38		$	259
Net (loss) income per Limited Liability Company Unit (Other Members)	$	(0.04	)	$	0.02		$	(0.02	)	$	0.05
Weighted average number of Units outstanding		2,993,471			2,993,482			2,993,476			2,993,482

See accompanying notes.

TABLE OF CONTENTS

ATEL 12, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2013
AND FOR THE SIX MONTHS ENDED
JUNE 30, 2014
(In Thousands Except for Units and Per Unit Data)


	Other Members						Managing Member
	Units			Amount			Managing Member			Total
Balance December 31, 2012		2,993,482		$	11,491		$	—		$	11,491
Distributions to Other Members ($0.90 per Unit)		—			(2,694	)		—			(2,694	)
Distributions to Managing Member		—			—			(218	)		(218	)
Net income		—			774			218			992
Balance December 31, 2013		2,993,482			9,571			—			9,571
Repurchases of Units		(1,000	)		(3	)		—			(3	)
Distributions to Other Members ($0.45 per Unit)		—			(1,347	)		—			(1,347	)
Distributions to Managing Member		—			—			(109	)		(109	)
Net (loss) income		—			(71	)		109			38
Balance June 30, 2014 (Unaudited)		2,992,482		$	8,150		$	—		$	8,150

See accompanying notes.

TABLE OF CONTENTS

ATEL 12, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2014 AND 2013
(In Thousands)
(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Operating activities:
Net (loss) income	$	(76	)	$	119		$	38		$	259
Adjustment to reconcile net (loss) income to cash provided by operating activities:
Gain on sales of lease assets and early termination of notes		(30	)		(19	)		(145	)		(63	)
Depreciation of operating lease assets		623			733			1,255			1,404
Amortization of initial direct costs		7			9			14			18
Reversal of provision for credit losses		(3	)		—			(3	)		(16	)
Impairment losses on equipment		226			—			226			—
Gain on sales or dispositions of securities		(30	)		(3	)		(30	)		(5	)
Unrealized loss on fair valuation of warrants		96			—			174			—
Changes in operating assets and liabilities:
Accounts receivable		3			(4	)		25			—
Prepaid expenses and other assets		2			2			7			7
Accounts payable, Managing Member		(37	)		(6	)		3			(48	)
Accounts payable, other		11			69			27			94
Unearned operating lease income		14			(13	)		(25	)		(58	)
Net cash provided by operating activities		806			887			1,566			1,592
Investing activities:
Purchases of equipment on operating leases		—			—			—			(895	)
Purchase of securities		(24	)		—			(24	)		—
Proceeds from sales of lease assets and early termination of notes		329			281			512			526
Payments of initial direct costs		—			(1	)		(5	)		(3	)
Note receivable advances		—			—			—			(92	)
Proceeds from sale of securities		71			21			71			21
Principal payments received on direct financing leases		30			22			57			71
Principal payments received on notes receivable		177			174			369			372
Net cash provided by investing activities		583			497			980			—
Financing activities:
Borrowings under non-recourse debt		197			1,792			197			2,734
Repayments under non-recourse debt		(613	)		(574	)		(1,200	)		(1,016	)
Distributions to Other Members		(674	)		(674	)		(1,347	)		(1,347	)
Distributions to Managing Member		(54	)		(54	)		(109	)		(109	)

See accompanying notes.

TABLE OF CONTENTS

ATEL 12, LLC

STATEMENTS OF CASH FLOWS – (continued)

FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2014 AND 2013
(In Thousands)
(Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
Repurchases of Units		(3	)		—		(3	)		—
Net cash (used in) provided by financing activities		(1,147	)		490		(2,462	)		262
Net increase in cash and cash equivalents		242			1,874		84			1,854
Cash and cash equivalents at beginning of period		699			299		857			319
Cash and cash equivalents at end of period	$	941		$	2,173	$	941		$	2,173
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	19		$	35	$	42		$	62
Cash paid during the period for taxes	$	2		$	4	$	3		$	4
Schedule of non-cash transactions:
Distributions payable to Other Members at period-end	$	230		$	230	$	230		$	230
Distributions payable to Managing Member at period-end	$	19		$	19	$	19		$	19

See accompanying notes.

TABLE OF CONTENTS

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL 12, LLC (the “Company” or the “Fund”) was formed under the laws of the state of California on January 25, 2007 for the purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities, as well as in real estate, growth capital investment activities and green technologies (the “principal operations”). From its inception into the third quarter of 2013, the Company’s Managing Member was ATEL Associates 12, LLC (“AA12”), a Nevada limited liability corporation. Effective September 30, 2013, AA12 was merged into ATEL Financial Services, LLC (“AFS”) (the “Managing Member” or “Manager”), a Nevada limited liability corporation, which assumed the role of Managing Member of the Company. The Fund may continue until December 31, 2030. As a limited liability company, the liability of any individual member for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member.

The Company conducted a public offering of 20,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On January 24, 2008, subscriptions for the minimum number of Units (120,000, representing $1.2 million), excluding subscriptions from Pennsylvania investors, had been received and the Fund requested subscription proceeds to be released from escrow. On that date, the Company commenced initial operations and continued in its development stage activities until transitioning to an operating enterprise during the second quarter of 2008. Pennsylvania subscriptions were subject to a separate escrow to be released to the Fund only when the Fund had received aggregate subscriptions for all investors equal to at least $7.5 million. Total contributions to the Fund exceeded $7.5 million on July 15, 2008. The offering was terminated on September 25, 2009.

As of June 30, 2014, cumulative contributions, net of rescissions and/or redemptions, totaling $29.9 million (inclusive of the $500 initial Member’s capital investment) have been received and 2,992,482 Units were issued and outstanding.

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

The Company’s principal objectives are to invest in a diversified portfolio of investments that (i) preserves, protects and returns the Company’s invested capital; (ii) generates regular cash distributions to Unitholders, any balance remaining after required minimum distributions to be used to purchase additional investments during the Reinvestment Period (ending six calendar years after the completion of the Company’s public offering of Units) which ends on December 31, 2015 and (iii) provides additional cash distributions following the Reinvestment Period and until all investment portfolio assets have been sold or otherwise disposed. The Company is governed by its Operating Agreement, as amended.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission.

2. Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the full year.

TABLE OF CONTENTS

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results from operations.

Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

In preparing the accompanying unaudited financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after June 30, 2014, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

Use of estimates:

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowances for doubtful accounts and reserve for credit losses on notes receivable.

Segment reporting:

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

The primary geographic regions in which the Company sought leasing opportunities were North America and Europe. For the six months ended June 30, 2014 and 2013, and as of June 30, 2014 and December 31, 2013, 100% of the Company’s operating revenues and long-lived assets relate to customers domiciled in North America.

Investment in securities:

Purchased securities

Purchased securities are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. Based upon the Company’s review of its portfolio, no fair value adjustment was deemed necessary for the three and six months ended June 30, 2014 and 2013. Purchased securities totaled $258 thousand and $275 thousand at June 30, 2014 and December 31, 2013, respectively. During the three- and six-month periods ended June 30, 2014, the Company recognized gains of $14 thousand on the disposition of certain purchased securities. By comparison, such gains totaled $3 thousand and $5 thousand for the respective three and six months ended June 30, 2013.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried at an estimated fair value on the balance sheet at the end of the period, as determined by the Managing Member. During the three and six months ended June 30, 2014, the Company recorded unrealized losses of $96 thousand and $174 thousand, respectively, on fair valuation of its warrants. Such unrealized loss reduced the estimated fair value of the Company’s portfolio of warrants to $381 thousand at June 30, 2014 from $555 thousand at December 31, 2013. There were no unrealized gains or losses

TABLE OF CONTENTS

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

recorded during the prior year period. During the three- and six-month periods ended June 30, 2014, the Company realized gains of $16 thousand on the net exercise of certain warrants. There was no such activity during the three and six months ended June 30, 2013.

Per Unit data:

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

Recent accounting pronouncements:

Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.

3. Notes receivable, net:

The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. At June 30, 2014, the terms of the notes receivable are from 36 to 42 months and bear interest at rates ranging from 11.37% to 14.30% per annum. The notes are generally secured by the equipment financed and have maturity dates ranging from 2015 through 2017. The Company had neither notes in non-accrual status nor impaired notes at both June 30, 2014 and December 31, 2013.

As of June 30, 2014, the minimum future payments receivable are as follows (in thousands):


Six months ending December 31, 2014	$	282
Year ending December 31, 2015		490
2016		400
2017		40
		1,212
Less: portion representing unearned interest income		(153	)
		1,059
Unamortized initial direct costs		6
Notes receivable, net	$	1,065

Initial direct costs (“IDC”) amortization expense related to notes receivable and the Company’s operating and direct financing leases for the three and six months ended June 30, 2014 and 2013 are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
IDC amortization – notes receivable	$	2	$	2	$	4	$	4
IDC amortization – lease assets		5		7		10		14
Total	$	7	$	9	$	14	$	18

TABLE OF CONTENTS

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses:

The Company’s allowance for credit losses are as follows (in thousands):


	Accounts Receivable Allowance for Doubtful Accounts								Valuation Adjustments on Financing Receivables					Total Allowance for Credit Losses
	Notes Receivable		Finance Leases			Operating Leases			Notes Receivable			Finance Leases
Balance December 31, 2012	$	—	$	12		$	10		$	49		$	—	$	71
Reversal of provision		—		(12	)		(7	)		(22	)		—		(41	)
Asset disposal		—		—			—			(27	)		—		(27	)
Balance December 31, 2013		—		—			3			—			—		3
Reversal of provision		—		—			(3	)		—			—		(3	)
Balance June 30, 2014	$	—	$	—		$	—		$	—		$	—	$	—

Accounts receivable

Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are currently due to the Company.

Allowances for doubtful accounts are typically established based upon their aging and historical charge off and collection experience and the creditworthiness of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received.

Accounts receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with lease or note payments outstanding less than 90 days. Based upon management’s judgment, such leases or notes may be placed in non-accrual status. Leases or notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable. Until such time, revenues on operating leases are recognized on a cash basis. All payments received on amounts billed under direct financing leases and notes receivable are applied only against outstanding principal balances.

Financing receivables

In addition to the allowance established for delinquent accounts receivable, the total allowance related solely to financing receivables also includes anticipated impairment charges on notes receivable and direct financing leases.

Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

TABLE OF CONTENTS

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)

The asset underlying a direct financing lease contract is considered impaired if the estimated undiscounted future cash flows of the asset are less than its net book value. The estimated undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the asset’s expected holding period and estimates of undiscounted future rents. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the market place are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date.

The Company’s allowance for credit losses (related solely to financing receivables) and its recorded investment in financing receivables as of June 30, 2014 and December 31, 2013 were as follows (in thousands):


June 30, 2014	Notes Receivable		Finance Leases		Total
Allowance for credit losses:
Ending balance	$	—	$	—	$	—
Ending balance: individually evaluated for impairment	$	—	$	—	$	—
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—
Financing receivables:
Ending balance	$	1,065¹	$	159	$	1,224
Ending balance: individually evaluated for impairment	$	1,065	$	159	$	1,224
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—

Includes $6 of unamortized initial direct costs.


December 31, 2013	Notes Receivable		Finance Leases		Total
Allowance for credit losses:
Ending balance	$	—	$	—	$	—
Ending balance: individually evaluated for impairment	$	—	$	—	$	—
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—
Financing receivables:
Ending balance	$	1,701²	$	200	$	1,901
Ending balance: individually evaluated for impairment	$	1,701	$	200	$	1,901
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—

Includes $5 of unamortized initial direct costs.

TABLE OF CONTENTS

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)

The Company evaluates the credit quality of its financing receivables on a scale equivalent to the following quality indicators related to corporate risk profiles:

Pass – Any account whose lessee/debtor, co-lessee/debtor or any guarantor has a credit rating on publicly traded or privately placed debt issues as rated by Moody’s or S&P for either Senior Unsecured debt, Long Term Issuer rating or Issuer rating that are in the tiers of ratings generally recognized by the investment community as constituting an Investment Grade credit rating; or, has been determined by the Manager to be an Investment Grade Equivalent or High Quality Corporate Credit per its Credit Policy or has a Not Rated internal rating by the Manager and the account is not considered by the Chief Credit Officer of the Manager to fall into one of the three risk profiles below.

Special Mention – Any traditional corporate type account with potential weaknesses (e.g. large net losses or major industry downturns) or, any growth capital account that has less than three months of cash as of the end of the calendar quarter to fund their continuing operations. These accounts deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the Fund’s receivable at some future date.

Substandard – Any account that is inadequately protected by the current worth and paying capacity of the borrower or of the collateral pledged, if any. Accounts that are so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Fund will sustain some loss as the likelihood of fully collecting all receivables may be questionable if the deficiencies are not corrected. Such accounts are on the Manager’s Credit Watch List.

Doubtful – Any account where the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Accordingly, an account that is so classified is on the Manager’s Credit Watch List, and has been declared in default and the Manager has repossessed, or is attempting to repossess, the equipment it financed. This category includes impaired notes and leases as applicable.

At June 30, 2014 and December 31, 2013, the Company’s financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):


	Notes Receivable				Finance Leases
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013
Pass	$	1,059	$	1,696	$	159	$	200
Special mention		—		—		—		—
Substandard		—		—		—		—
Doubtful		—		—		—		—
Total	$	1,059	$	1,696	$	159	$	200

At June 30, 2014 and December 31, 2013, investment in financing receivables is aged as follows (in thousands):


June 30, 2014	31 – 60 Days Past Due		61 – 90 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,059	$	1,059	$	—
Finance leases		70		4		—		74		85		159		—
Total	$	70	$	4	$	—	$	74	$	1,144	$	1,218	$	—

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)


December 31, 2013	31 – 60 Days Past Due		61 – 90 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,696	$	1,696	$	—
Finance leases		87		—		—		87		113		200		—
Total	$	87	$	—	$	—	$	87	$	1,809	$	1,896	$	—

The Company had neither financing receivables in non-accrual status nor impaired financing receivables at both June 30, 2014 and December 31, 2013. Likewise, there were no investments in financing receivables with related accounts receivable past due more than 90 days which were still on an accrual basis at June 30, 2014 and December 31, 2013.

5. Investments in equipment and leases, net:

The Company’s investment in leases consists of the following (in thousands):


	Balance December 31, 2013		Reclassifications, Additions/ Dispositions and Impairment Losses			Depreciation/ Amortization Expense or Amortization of Leases			Balance June 30, 2014
Net investment in operating leases	$	9,592	$	(115	)	$	(1,255	)	$	8,222
Net investment in direct financing leases		200		16			(57	)		159
Assets held for sale or lease, net		835		(226	)		—			609
Initial direct costs, net of accumulated amortization of $93 at June 30, 2014 and $85 at December 31, 2013		26		—			(10	)		16
Total	$	10,653	$	(325	)	$	(1,322	)	$	9,006

Impairment of investments in leases:

Management periodically reviews the carrying values of its assets on leases. Impairment losses are recorded as an adjustment to the net investment in operating leases. During the three- and six-month periods ended June 30, 2014, the Company recorded fair value adjustments of $226 thousand to reduce the cost basis of certain impaired off-lease equipment. There were no such adjustments during the three and six months ended June 30, 2013.

The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of lease transactions. Depreciation expense on the Company’s equipment totaled $623 thousand and $733 thousand for the respective three months ended June 30, 2014 and 2013, and was $1.3 million and $1.4 million for the respective six months ended June 30, 2014 and 2013. IDC amortization expense related to the Company’s operating and direct financing leases totaled $5 thousand and $7 thousand for the respective three months ended June 30, 2014 and 2013, and $10 thousand and $14 thousand for the respective six months ended June 30, 2014 and 2013 (See Note 3).

All of the Company’s leased property was acquired in the years 2008 through 2013.

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

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

Operating leases:

Property on operating leases consists of the following (in thousands):


	Balance December 31, 2013			Additions			Reclassifications or Dispositions			Balance June 30, 2014
Transportation	$	4,935		$	—		$	—		$	4,935
Manufacturing		3,269			—			—			3,269
Construction		2,989			—			—			2,989
Mining		2,893			—			—			2,893
Aviation		2,167			—			—			2,167
Materials handling		1,902			—			(250	)		1,652
Computer		139			—			(21	)		118
Other		90			—			(87	)		3
		18,384			—			(358	)		18,026
Less accumulated depreciation		(8,792	)		(1,255	)		243			(9,804	)
Total	$	9,592		$	(1,255	)	$	(115	)	$	8,222

The average estimated residual value for assets on operating leases was 29% of the assets’ original cost at both June 30, 2014 and December 31, 2013. There were no operating leases in non-accrual status at June 30, 2014 and December 31, 2013.

Direct financing leases:

As of June 30, 2014 and December 31, 2013, investment in direct financing leases consists of materials handling and manufacturing equipment. The components of the Company’s investment in direct financing leases as of June 30, 2014 and December 31, 2013 are as follows (in thousands):


	June 30, 2014			December 31, 2013
Total minimum lease payments receivable	$	212		$	297
Estimated residual values of leased equipment (unguaranteed)		13			12
Investment in direct financing leases		225			309
Less unearned income		(66	)		(109	)
Net investment in direct financing leases	$	159		$	200

There were no investments in direct financing leases in non-accrual status at June 30, 2014 and December 31, 2013.

At June 30, 2014, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):


	Operating Leases		Direct Financing Leases		Total
Six months ending December 31, 2014	$	1,309	$	77	$	1,386
Year ending December 31, 2015		1,251		117		1,368
2016		489		17		506
2017		471		1		472
2018		109		—		109
	$	3,629	$	212	$	3,841

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

6. Related party transactions:

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

The Operating Agreement allows for the reimbursement of costs incurred by Managing Member and/or affiliates for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. The Managing Member is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of investments. The Company would be liable for certain future costs to be incurred by the Managing Member to manage the administrative services provided to the Company.

Each of AFS and ATEL Leasing Corporation (“ALC”) is a wholly-owned subsidiary of ATEL Capital Group and performs services for the Company on behalf of the Managing Member. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS.

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

During the three and six months ended June 30, 2014 and 2013, the Managing Member and/or affiliates earned fees and billed for reimbursements pursuant to the Operating Agreement as follows (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
Administrative costs reimbursed to Managing Member and/or affiliates	$	83	$	94		$	161	$	188
Asset management fees to Managing Member		39		38			79		85
Acquisition and initial direct costs paid to Managing Member and/or affiliates		3		(5	)		31		41
	$	125	$	127		$	271	$	314

7. Non-recourse debt:

At June 30, 2014, non-recourse debt consists of notes payable to financial institutions. The notes are due in monthly installments. Interest on the notes is at fixed rates ranging from 1.41% to 4.40% per annum. The notes are secured by assignments of lease payments and pledges of assets. At June 30, 2014, gross lease rentals totaled approximately $3.0 million over the remaining lease terms; and the carrying value of the pledged assets is approximately $6.9 million. The notes mature at various dates from 2014 through 2018.

The non-recourse debt does not contain any material financial covenants. The debt is secured by liens granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lenders, such as warranties as to

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

7. Non-recourse debt: - (continued)

genuineness of the transaction parties' signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company's good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

Future minimum payments of non-recourse debt are as follows (in thousands):


	Principal		Interest		Total
Six months ending December 31, 2014	$	956	$	27	$	983
Year ending December 31, 2015		978		30		1,008
2016		454		17		471
2017		464		7		471
2018		103		1		104
	$	2,955	$	82	$	3,037

8. Borrowing facilities:

The Company participates with AFS and certain of its affiliates in a revolving credit facility (the “Credit Facility”) with a syndicate of financial institutions. The Credit Facility is comprised of a working capital facility to AFS, an acquisition facility (the “Acquisition Facility”) and a warehouse facility (the “Warehouse Facility”) to AFS, the Company and affiliates, and a venture facility available to an affiliate. The Credit Facility was for an amount up to $60 million and set to expire in June 2014. During January 2014, the line was increased to $75 million, an affiliated participant added, and the expiration extended to June 2015. The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’s assets as collateral for any and all borrowings under the Acquisition Facility, and on a pro-rata basis under the Warehouse Facility. Such Credit Facility includes certain financial covenants.

As of June 30, 2014 and December 31, 2013, borrowings under the Credit Facility were as follows (in thousands):


	June 30, 2014			December 31, 2013
Total available under the financing arrangement	$	75,000		$	60,000
Amount borrowed by the Company under the acquisition facility		—			—
Amounts borrowed by affiliated partnerships and limited liability companies under the venture, acquisition and warehouse facilities		(2,180	)		(7,310	)
Total remaining available under the venture, acquisition and warehouse facilities	$	72,820		$	52,690

The Company and its affiliates pay an annual commitment fee to have access to this line of credit. As of June 30, 2014, the aggregate amount of the Credit Facility is potentially available to the Company, subject to certain sub-facility and borrowing-base limitations. However, as amounts are drawn on the Credit Facility by each of the Company and the affiliates who are borrowers under the Credit Facility, the amount remaining available to all borrowers to draw under the Credit Facility is reduced. As the Warehousing Facility is a short term bridge facility, any amounts borrowed under the Warehousing Facility, and then repaid by the affiliated borrowers (including the Company) upon allocation of an acquisition to a specific purchaser, become available under the Warehouse Facility for further short term borrowing.

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

8. Borrowing facilities: - (continued)

As of June 30, 2014, the Company’s Tangible Net Worth requirement under the Credit Facility was $7.5 million, the permitted maximum leverage ratio was not to exceed 1.25 to 1, and the required minimum interest coverage ratio was not to be less than 2 to 1. The Company was in compliance with these financial covenants under the Credit Facility with a minimum Tangible Net Worth, leverage ratio and interest coverage ratio, as calculated per the Credit Facility agreement of $8.2 million, 0.36 to 1, and 42.79 to 1, respectively, as of June 30, 2014. As such, as of June 30, 2014, the Company was in compliance with all material financial covenants, and with all other material conditions of the Credit Facility. The Company does not anticipate any covenant violations nor does it anticipate that any of these covenants will restrict its operations or its ability to procure additional financing.

Fee and interest terms

The interest rate on the Credit Facility is based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the bank’s Prime rate, which re-prices daily. Principal amounts of loans made under the Credit Facility that are prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Credit Facility. There were no borrowings outstanding at June 30, 2014 and December 31, 2013.

Warehouse facility

To hold the assets under the Warehousing Facility prior to allocation to specific investor programs, a Warehousing Trust has been entered into by the Company, AFS, ALC, and certain of the affiliated partnerships and limited liability companies. The Warehousing Trust is used by the Warehouse Facility borrowers to acquire and hold, on a short-term basis, certain lease transactions that meet the investment objectives of each of such entities. Each of the leasing programs sponsored by AFS and ALC is a pro rata participant in the Warehousing Trust, as described below. When a program no longer has a need for short-term financing provided by the Warehousing Facility, it is removed from participation, and as new leasing investment entities are formed by AFS and ALC and commence their acquisition stages, these new entities are added.

As of June 30, 2014, the investment program participants were the Company, ATEL 14, LLC, ATEL 15, LLC and ATEL 16, LLC. Pursuant to the Warehousing Trust, the benefit of the lease transaction assets, and the corresponding liabilities under the Warehouse Facility, inure to each of such entities based upon each entity’s pro-rata share in the Warehousing Trust estate. The “pro-rata share” is calculated as a ratio of the net worth of each entity over the aggregate net worth of all entities benefiting from the Warehousing Trust estate, excepting that the trustees, AFS and ALC, are both jointly and severally liable for the pro-rata portion of the obligations of each of the affiliated limited liability companies participating under the Warehouse Facility. Transactions are financed through this Warehouse Facility only until the transactions are allocated to a specific program for purchase or are otherwise disposed by AFS and ALC. When a determination is made to allocate the transaction to a specific program for purchase by the program, the purchaser repays the debt associated with the asset, either with cash or by means of proceeds of a draw under the Acquisition Facility, and the asset is removed from the Warehouse Facility collateral, and ownership of the asset and any debt obligation associated with the asset are assumed solely by the purchasing entity.

There were no borrowings under the Warehouse Facility as of June 30, 2014 and December 31, 2013.

9. Commitments:

At June 30, 2014, the Company had no commitments to purchase lease assets or fund investments in notes receivable.

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

10. Guarantees:

The Company enters into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

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

11. Members’ capital:

A total of 2,992,482 and 2,993,482 Units were issued and outstanding as of June 30, 2014 and December 31, 2013, respectively. The Fund was authorized to issue up to 20,000,000 total Units.

The Company has the right, exercisable in the Manager’s discretion, but not the obligation, to repurchase Units of a Unitholder who ceases to be a U.S. Citizen, for a price equal to 100% of the holder’s capital account. The Company is otherwise permitted, but not required, to repurchase Units upon a holder’s request. The repurchase of Fund Units is made in accordance with Section 13 of the Amended and Restated Limited Liability Company Operating Agreement. The repurchase would be at the discretion of the Manager on terms it determines to be appropriate under given circumstances, in the event that the Manager deems such repurchase to be in the best interest of the Company; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the Unitholder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs.

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

Fund distributions are to be allocated 7.5% to the Managing Member and 92.5% to the Other Members. Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Distributions	$	674	$	674	$	1,347	$	1,347
Weighted average number of Units outstanding		2,993,471		2,993,482		2,993,476		2,993,482
Weighted average distributions per Unit	$	0.23	$	0.23	$	0.45	$	0.45

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

12. Fair value measurements:

Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:

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

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

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

At June 30, 2014 and December 31, 2013, only the Company’s warrants were measured on a recurring basis. As of June 30, 2014, the Company recorded non-recurring fair value adjustments to reflect the fair value of certain impaired lease equipment. By comparison, there was no non-recurring fair value adjustments recorded as of December 31, 2013. Amounts at June 30, 2014 reflect the fair value of the then existing impaired assets.

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

The fair value adjustments utilized the following methodology:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, and a risk free interest rate for the term(s) of the warrant exercise(s). As of June 30, 2014 and December 31, 2013, the calculated fair values of the Fund’s warrant portfolio approximated $381 thousand and $555 thousand, respectively. Such valuations are classified within Level 3 of the valuation hierarchy.

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

12. Fair value measurements: - (continued)

The following table reconciles the beginning and ending balances of the Company’s Level 3 recurring assets (in thousands):


	Level 3 Assets
Balance at December 31, 2013	$	555
Unrealized loss on warrants, net recorded during the period		(174	)
Balance at June 30, 2014	$	381

Impaired off-lease equipment (non-recurring)

During the second quarter of 2014, the Company deemed certain off-lease equipment (assets) to be impaired and recorded fair value adjustments of $226 thousand to reduce the cost basis of the equipment. Such amount also represents total fair value adjustments for the six months ended June 30, 2014. The Company did not record non-recurring fair value adjustments to impair equipment during 2013.

The fair value adjustments recorded during the second quarter of 2014 were non-recurring. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired lease assets were classified within Level 3 of the valuation hierarchy as the data sources utilized for the valuation of such assets reflect significant inputs that are unobservable in the market. Such valuation utilizes a market approach technique and uses inputs that reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agents not readily available in the market.

The following table presents the fair value measurement of assets measured at fair value on a non-recurring basis and the level within the hierarchy in which the fair value measurements fall at June 30, 2014 (in thousands):


	June 30, 2014		Level 1 Estimated Fair Value		Level 2 Estimated Fair Value		Level 3 Estimated Fair Value
Impaired off-lease equipment	$	610	$	—	$	—	$	610

The following tables summarize the valuation techniques and significant unobservable inputs used for the Company’s recurring fair value calculation categorized as Level 3 in the fair value hierarchy at June 30, 2014 and December 31, 2013:

June 30, 2014

Name

Valuation Frequency

Valuation Technique

Unobservable Inputs

Range of Input Values

Warrants

Recurring

Black-Scholes Model

Stock price

$0.05 – $25.76

Exercise price

$0.05 – $25.76

Time to maturity (in years)

1.47 – 9.48

Risk-free interest rate

0.29% – 2.46%

Annualized volatility

16.40% – 100.00%

Lease Equipment

Non-recurring

Market Approach

Third Party Agents' Pricing
Quotes – per equipment

5,000 – $150,000
(total of $610,000)

Equipment Condition

Poor to Average

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

12. Fair value measurements: - (continued)

December 31, 2013

Name

Valuation Frequency

Valuation Technique

Unobservable Inputs

Range of Input Values

Warrants

Recurring

Black-Scholes Model

Stock price

$0.05 – $25.76

Exercise price

$0.05 – $25.76

Time to maturity (in years)

1.96 – 9.98

Risk-free interest rate

0.38% – 3.04%

Annualized volatility

17.80% – 100.00%

The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Company’s financial statements and related notes.

The Company has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or has realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents

The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.

Notes receivable

The fair value of the Company’s notes receivable is generally estimated based upon various methodologies deployed by financial and credit management including, but not limited to, credit analysis, third party appraisal and/or discounted cash flow analysis based upon current market valuation techniques and market rates for similar types of lending arrangements, which may consider adjustments for impaired loans as deemed necessary.

Investment in securities

The Company’s investment securities are not registered for public sale and are carried at cost which management believes approximates fair value, as appropriately adjusted for impairment.

Non-recourse debt

The fair value of the Company’s non-recourse debt is estimated using discounted cash flow analyses, based upon current market borrowing rates for similar types of borrowing arrangements.

Commitments and Contingencies

Management has determined that no recognition for the fair value of the Company’s loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Company’s credit requirements at the time of funding.

The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.

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ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

12. Fair value measurements: - (continued)

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at June 30, 2014 and December 31, 2013 (in thousands):


	Fair Value Measurements at June 30, 2014
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	941	$	941	$	—	$	—	$	941
Notes receivable, net		1,065		—		—		1,065		1,065
Investment in securities		258		—		—		258		258
Fair value of warrants		381		—		—		381		381
Financial liabilities:
Non-recourse debt		2,955		—		—		2,771		2,771


	Fair Value Measurements at December 31, 2013
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	857	$	857	$	—	$	—	$	857
Notes receivable, net		1,701		—		—		1,701		1,701
Investment in securities		275		—		—		275		275
Fair value of warrants		555		—		—		555		555
Financial liabilities:
Non-recourse debt		3,958		—		—		3,940		3,940

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

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

Overview

ATEL 12, LLC (the “Company” or the “Fund”) is a California limited liability company that was formed in January 2007 for the purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities, as well as in real estate, growth capital investment activities and green technologies (the “principal operations”), primarily in the United States.

During 2009, the Company completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, during the reinvestment period (“Reinvestment Period”) (defined as six full years following the year the offering was terminated), the Company has utilized its credit facilities and reinvested cash flow in excess of certain amounts required to be distributed to the Other Members to acquire additional equipment and/or to fund financing transactions. Throughout the Reinvestment Period, which ends December 31, 2015, the Company anticipates continued reinvestment of cash flow in excess of minimum distributions and other obligations. The Company is governed by its Limited Liability Company Operating Agreement (“Operating Agreement”), as amended.

The Company may continue until December 31, 2030. Periodic distributions are paid at the discretion of the Managing Member.

Results of Operations

The three months ended June 30, 2014 versus the three months ended June 30, 2013

The Company had a net loss of $76 thousand for the three months ended June 30, 2014 as compared to net income of $119 thousand for the three months ended June 30, 2013. Results for the second quarter of 2014 reflect a decrease in total revenues and an increase in total expenses when compared to the prior year period.

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Revenues

Total revenues for the second quarter of 2014 decreased by $102 thousand, or 9%, as compared to the prior year period. The decrease was primarily due to an unrealized loss on fair valuation of warrants and a reduction in operating lease revenue offset, in part, by an increase in gain on sales or disposition of securities.

The unrealized loss on fair valuation of warrants totaled $96 thousand and was attributable to the revaluation of certain warrant positions in the Fund’s portfolio. Operating lease revenues were lower by $26 thousand due to run-off and sales of lease assets.

Partially offsetting the aforementioned decreases in revenues was a $27 thousand increase in gain on sales or disposition securities. Such increase was primarily a result of $16 thousand of gains on the net exercise of certain warrants and a $14 thousand gain realized on the disposition of an equity investment.

Expenses

Total expenses for the second quarter of 2014 increased by $93 thousand, or 10%, as compared to the prior year period. The net increase in expenses was primarily the result of impairment losses recorded during the current year quarter offset, in part, by reductions in depreciation and interest expenses.

A total of $226 thousand of impairment losses was recognized during the second quarter of 2014 to reduce the cost basis of certain off-lease research equipment deemed impaired at June 30, 2014. There were no such impairment losses during the prior year quarter.

Partially offsetting the aforementioned increase in expense were decreases in depreciation and interest expenses totaling $110 thousand and $16 thousand, respectively. The decrease in depreciation expense was largely a result of run-off and sales of lease assets; while the reduction in interest expense was attributable to a $2.2 million decrease in outstanding debt since June 30, 2013.

The six months ended June 30, 2014 versus the six months ended June 30, 2013

The Company had net income of $38 thousand and $259 thousand for the six months ended June 30, 2014 and 2013, respectively. Results for the first half of 2014 reflect a decrease in total revenues and an increase in total expenses when compared to the prior year period.

Revenues

Total revenues for the first half of 2014 decreased by $187 thousand, or 9%, as compared to the prior year period. The decrease was primarily a result of an unrealized loss on fair valuation of warrants and reductions in operating lease revenue and other revenue partially offset by an increase in gain on sales of lease assets and early termination of notes.

The unrealized loss on fair valuation of warrants totaled $174 thousand and was a result of the revaluation of certain warrant positions in the Fund’s portfolio. Operating lease revenues decreased by $73 thousand due to run-off and sales of lease assets; and, other revenue declined by $34 thousand as the prior year period amount included fees collected for additional wear and tear on certain returned equipment.

Partially offsetting the aforementioned decreases in revenues was an $82 thousand increase in gain on sales of lease assets and early termination of notes. Such increase was largely a result of a period over period change in the mix of assets sold.

Expenses

Total operating expenses for the first half of 2014 increased by $34 thousand, or 2%, as compared to the prior year period. The increase was primarily a result of impairment losses recorded during the current year period offset, in part, by reductions in depreciation, cost reimbursements to AFS and interest expense.

A total of $226 thousand of impairment losses was recognized during the first half of 2014 to reduce the cost basis of certain off-lease research equipment deemed impaired at June 30, 2014. There were no such impairments during the first half of 2013.

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Partially offsetting the aforementioned increase in expense were decreases in depreciation, cost reimbursements to AFS and interest expense totaling $149 thousand, $27 thousand and $21 thousand, respectively. The decrease in depreciation expense was largely a result of run-off and sales of lease assets. Costs reimbursed to AFS declined due to lower costs allocated by the Manager based on the Company’s declining asset base; and, interest expense decreased as a result of a $2.2 million reduction in outstanding debt since June 30, 2013.

Capital Resources and Liquidity

At June 30, 2014 and December 31, 2013, the Company’s cash and cash equivalents totaled $941 thousand and $857 thousand, respectively. The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The primary source of liquidity for the Company has been its cash flow from fixed-term leasing activities. As the lease terms expire, the Company will re-lease or sell the equipment. The future liquidity beyond the contractual minimum rentals will depend on the Company’s success in remarketing or selling the equipment as it comes off rental.

Throughout the Reinvestment Period (as defined in the Operating Agreement), the Company anticipates reinvesting a portion of lease payments from assets owned, and/or payments received on notes receivable, in new leasing or financing transactions. Such reinvestment will occur only after the payment of all obligations, including debt service (both principal and interest), the payment of management fees to the Manager and providing for cash distributions to the Members.

If inflation in the general economy becomes significant, it may affect the Company in as much as the residual (resale) values and rates on re-leases of the Company’s leased assets may increase as the costs of similar assets increase. However, the Company’s revenues from existing leases and notes would not increase as such rates are generally fixed for the terms of the leases and notes without adjustment for inflation. In addition, if interest rates increase significantly under such circumstances, the rates that the Company can obtain on future lease or financing transactions will be expected to increase as the cost of capital is a significant factor in the pricing of leases and investments in notes receivable. Leases and notes already in place, for the most part, would not be affected by changes in interest rates.

The Company currently believes it has available adequate reserves available to meet its immediate cash requirements and those of the next twelve months, but in the event those reserves were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements. The Managing Member envisions no such requirements for operating purposes.

Cash Flows

The following table sets forth summary cash flow data (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
Net cash provided by (used in):
Operating activities	$	806		$	887	$	1,566		$	1,592
Investing activities		583			497		980			—
Financing activities		(1,147	)		490		(2,462	)		262
Net increase in cash and cash equivalents	$	242		$	1,874	$	84		$	1,854

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The three months ended June 30, 2014 versus the three months ended June 30, 2013

During the three months ended June 30, 2014 and 2013, the Company’s primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts, and its investments in notes receivable. Moreover, the Company realized $329 thousand and $281 thousand of proceeds from the sales of lease assets and/or the early termination of notes receivable, and utilized borrowings totaling $197 thousand and $1.8 million during the respective three months ended June 30, 2014 and 2013.

The six months ended June 30, 2014 versus the six months ended June 30, 2013

During the six months ended June 30, 2014 and 2013, the Company’s primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts, and its investments in notes receivable. Moreover, the Company realized $512 thousand and $526 thousand of proceeds from the sales of lease assets and/or the early termination of notes receivable, and utilized borrowings totaling $197 thousand and $2.7 million during the respective six months ended June 30, 2014 and 2013.

During the same respective periods, cash was primarily used to pay distributions to both Other Members and the Managing Member and pay down debt. Total distributions paid to Members amounted to $1.5 million for each of the six months ended June 30, 2014 and 2013; while cash used to pay down debt totaled $1.2 million and $1.0 million for the six months ended June 30, 2014 and 2013, respectively. During the first six months of 2013, cash was also used to purchase $895 thousand of equipment and to fund $92 thousand of investments in notes receivable. There was no such purchase or funding activity during the current year period.

Revolving credit facility

Compliance with covenants

The Credit Facility includes certain financial and non-financial covenants applicable to each borrower, including the Company. Such covenants include covenants typically found in credit facilities of the size and nature of the Credit Facility, such as accuracy of representations, good standing, absence of liens and material litigation, etc. The Company was in compliance with all covenants under the Credit Facility as of June 30, 2014. The Company considers certain financial covenants to be material to its ongoing use of the Credit Facility and these covenants are described below.

Material financial covenants

Under the Credit Facility, the Company is required to maintain a specific tangible net worth, to comply with a leverage ratio and an interest coverage ratio, and to comply with other terms expressed in the Credit Facility, including limitation on the incurrence of additional debt and guaranties, defaults, and delinquencies. The material financial covenants are summarized as follows:

Minimum Tangible Net Worth: $7.5 million
Leverage Ratio (leverage to Tangible Net Worth): Not to exceed 1.25 to 1
Collateral Value: Collateral value under the Warehouse Facility must exceed outstanding borrowings under that facility
EBITDA to Interest Ratio: Not to be less than 2 to 1 for the four fiscal quarters just ended

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“EBITDA” is defined under the Credit Facility as, for the relevant period of time (1) gross revenues (all payments from leases and notes receivable) for such period minus (2) expenses deducted in determining net income for such period plus (3) to the extent deducted in determining net income for such period (a) provision for income taxes and (b) interest expense, and (c) depreciation, amortization and other non-cash charges. Extraordinary items and gains or losses on (and proceeds from) sales or dispositions of assets outside of the ordinary course of business are excluded in the calculation of EBITDA. “Tangible Net Worth” is defined as, as of the date of determination, (i) the net worth of the Company, after deducting therefrom (without duplication of deductions) the net book amount of all assets of the Company, after deducting any reserves and other amounts for assets which would be treated as intangibles under accounting principles generally accepted in the United States of America (“GAAP”), and after certain other adjustments permitted under the agreements.

The financial covenants referred to above are applicable to the Company only to the extent that the Company has borrowings outstanding under the Credit Facility. The Company was in compliance with each of these financial covenants with a minimum Tangible Net Worth, leverage ratio and (EBITDA) interest coverage ratio, as calculated per the Credit Facility agreement of $8.2 million, 0.36 to 1, and 42.79 to 1, respectively, as of June 30, 2014. As such, as of June 30, 2014, the Company was in compliance with all such material financial covenants.

Reconciliation to GAAP of EBITDA

For purposes of compliance with the Credit Facility covenants, the Company uses a financial calculation of EBITDA, as defined therein, which is a non-GAAP financial performance measure. The EBITDA is utilized by the Company to calculate its debt covenant ratios.

The following is a reconciliation of net income to EBITDA, as defined in the loan agreement, for the twelve months ended June 30, 2014 (in thousands):


Net income – GAAP basis	$	771
Interest expense		96
Depreciation and amortization		2,618
Amortization of initial direct costs		29
Impairment losses		226
Reversal of provision for credit losses		(28	)
Unrealized gain on fair valuation of warrants		(381	)
Principal payments received on direct finance leases		103
Principal payments received on notes receivable		674
EBITDA (for Credit Facility financial covenant calculation only)	$	4,108

Events of default, cross-defaults, recourse and security

The terms of the Credit Facility include standard events of default by the Company which, if not cured within applicable grace periods, could give lenders remedies against the Company, including the acceleration of all outstanding borrowings and a demand for repayment in advance of their stated maturity. If a breach of any material term of the Credit Facility should occur, the lenders may, at their option, increase borrowing rates, accelerate the obligations in advance of their stated maturities, terminate the facility, and exercise rights of collection available to them under the express terms of the facility, or by operation of law. The lenders also retain the discretion to waive a violation of any covenant at the Company’s request.

The Company is currently in compliance with its obligations under the Credit Facility. In the event of a technical default (e.g., the failure to timely file a required report, or a one-time breach of a financial covenant), the Company believes it has ample time to request and be granted a waiver by the lenders, or, alternatively, cure the default under the existing provisions of its debt agreements, including, if necessary, arranging for additional capital from alternate sources to satisfy outstanding obligations.

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The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’s assets as collateral for any and all borrowings under the Acquisition Facility, and on a pro-rata basis under the Warehouse Facility.

The Acquisition Facility is generally recourse solely to the Company, and is not cross-defaulted to any other obligations of affiliated companies under the Credit Facility, except as described in this paragraph. The Credit Facility is cross-defaulted to a default in the payment of any debt (other than non-recourse debt) or any other agreement or condition beyond the period of grace (not exceeding 30 days), the effect of which would entitle the lender under such agreement to accelerate the obligations prior to their stated maturity in an individual or aggregate principal amount in excess of 15% of the Company’s consolidated Tangible Net Worth. Also, a bankruptcy of AFS will trigger a default for the Company under the Credit Facility.

Non-Recourse Long-Term Debt

As of June 30, 2014 and December 31, 2013, the Company had non-recourse long-term debt totaling $3.0 million and $4.0 million, respectively. Such non-recourse notes payable do not contain any material financial covenants. The notes are secured by a lien granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items.

For detailed information on the Company’s debt obligations, see Notes 7 and 8 to the financial statements as set forth in Part I, Item 1, Financial Statements (Unaudited).

Distributions

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of February 2008. Such distributions have been consistently made through June 30, 2014.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At June 30, 2014, the Company had no commitments to purchase lease assets or fund investments in notes receivable.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates, which are based upon historical experiences, market trends and financial forecasts, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these estimates under different assumptions or conditions.

The Company’s critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2013. There have been no material changes to the Company’s critical accounting policies since December 31, 2013.

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Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

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

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

Changes in internal control

There were no changes in the Managing Member’s internal control over financial reporting, as it is applicable to the Company, during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of conducting business, there may be certain claims, suits, and complaints filed against the Managing Member. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Managing Member’s financial position or results of operations.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Documents filed as a part of this report:

Financial Statement Schedules

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

Other Exhibits


31.1		Rule 13a-14(a)/15d-14(a) Certification of Dean L. Cash
31.2		Rule 13a-14(a)/15d-14(a) Certification of Paritosh K. Choksi
32.1		Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2		Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 13, 2014

ATEL 12, LLC
(Registrant)

By:

ATEL Financial Services, LLC
Managing Member of Registrant


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

ATEL 12, LLC - FORM 10-Q - August 13, 2014

Attached files

Form 10-Q

For the quarterly period ended June 30, 2014

For the transition period from to

Commission File number 000-53618

ATEL 12, LLC

DOCUMENTS INCORPORATED BY REFERENCE

ATEL 12, LLC Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL 12, LLC

BALANCE SHEETS

ATEL 12, LLC STATEMENTS OF OPERATIONS

ATEL 12, LLC STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

ATEL 12, LLC STATEMENTS OF CASH FLOWS

ATEL 12, LLC STATEMENTS OF CASH FLOWS – (continued)

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

1. Organization and Limited Liability Company matters:

2. Summary of significant accounting policies:

Basis of presentation:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

2. Summary of significant accounting policies: - (continued)

Use of estimates:

Segment reporting:

Investment in securities:

Purchased securities

Warrants

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

2. Summary of significant accounting policies: - (continued)

Per Unit data:

Recent accounting pronouncements:

3. Notes receivable, net:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses:

Accounts receivable

Financing receivables

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

5. Investments in equipment and leases, net:

Impairment of investments in leases:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

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

Operating leases:

Direct financing leases:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

6. Related party transactions:

7. Non-recourse debt:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

7. Non-recourse debt: - (continued)

8. Borrowing facilities:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

8. Borrowing facilities: - (continued)

Fee and interest terms

Warehouse facility

9. Commitments:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

10. Guarantees:

11. Members’ capital:

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

12. Fair value measurements:

Warrants (recurring)

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

12. Fair value measurements: - (continued)

Impaired off-lease equipment (non-recurring)

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

12. Fair value measurements: - (continued)

Cash and cash equivalents

Notes receivable

Investment in securities

Non-recourse debt

Commitments and Contingencies

ATEL 12, LLC NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

12. Fair value measurements: - (continued)

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

Overview

ATEL 12, LLC

Index

ATEL 12, LLC

STATEMENTS OF OPERATIONS

ATEL 12, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

ATEL 12, LLC

STATEMENTS OF CASH FLOWS

ATEL 12, LLC

STATEMENTS OF CASH FLOWS – (continued)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC

NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)

ATEL 12, LLC
(Registrant)