10-Q 1 form10q.htm LEASE EQUITY APPRECIATION FUND I, L.P. 10-Q 3-31-2014

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

 
FORM 10-Q
 

 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2014
 
OR
 
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 333-84730
 

 
LEASE EQUITY APPRECIATION FUND I, L.P.
(Exact Name of Registrant as Specified in Its Charter)
 

 
Delaware
 
68-0492247
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
110 South Poplar Street, Suite 101, Wilmington Delaware 19801
(Address of principal executive offices) (Zip Code)

(800) 819-5556
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes     ¨ No
 
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). x Yes     ¨ 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
¨
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
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    x No
 
There is no public market for the Registrant’s securities.
 


LEASE EQUITY APPRECIATION FUND I, L.P.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q

PART I
FINANCIAL INFORMATION
PAGE
ITEM 1.
3
 
3
 
4
 
5
 
6
 
7
 
8
ITEM 2.
16
ITEM 3.
22
ITEM 4.
22
 
 
 
PART II
OTHER INFORMATION
23
ITEM 6.
23
 
 
 
24

2

PART 1. FINANCIAL INFORMATION

ITEM I – FINANCIAL STATEMENTS

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Consolidated Balance Sheets
(In thousands)
 
 
 
March 31, 2014
   
December 31, 2013
 
 
 
(Unaudited)
   
 
ASSETS
 
   
 
Cash
 
$
61
   
$
1
 
Restricted cash
   
40
     
70
 
Investment in leases and loans, net
   
634
     
817
 
Deferred financing costs, net
   
     
8
 
Other assets
   
31
     
4
 
Total assets
 
$
766
   
$
900
 
 
               
LIABILITIES AND PARTNERS’ DEFICIT
               
Liabilities:
               
Bank debt
 
$
   
$
1,300
 
Accounts payable and accrued expenses
   
112
     
132
 
Due to affiliates
   
8,384
     
7,422
 
Derivative liabilities, at fair value
   
     
9
 
Other liabilities
   
44
     
43
 
Total liabilities
   
8,540
     
8,906
 
 
               
Commitments and contingencies (Note 10)
               
 
               
Partners’ Deficit:
               
General partner
   
(226
)
   
(228
)
Limited partners
   
(7,548
)
   
(7,749
)
Accumulated other comprehensive loss
   
     
(29
)
Total partners’ deficit
   
(7,774
)
   
(8,006
)
Total liabilities and partners' deficit
 
$
766
   
$
900
 

The accompanying notes are an integral part of these consolidated financial statements.
3

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Consolidated Statements of Operations
(In thousands, except unit and per unit data)
(Unaudited)

 
 
Three Months Ended
March 31,
 
 
 
2014
   
2013
 
Revenues:
 
   
 
Interest on equipment financings
 
$
68
   
$
87
 
Rental income
   
1
     
7
 
Gains on sales of equipment and lease dispositions, net
   
4
     
56
 
Gain on extinguishment of debt
   
250
     
 
Other income
   
4
     
34
 
 
   
327
     
184
 
 
               
Expenses:
               
Interest expense
   
21
     
61
 
Depreciation on operating leases
   
     
1
 
Provision for credit losses
   
34
     
223
 
General and administrative expenses
   
34
     
74
 
Administrative expenses reimbursed to affiliate
   
15
     
15
 
Loss on derivative activities
   
20
     
51
 
 
   
124
     
425
 
Net income (loss)
 
$
203
   
$
(241
)
Net income (loss) allocated to limited partners
 
$
201
   
$
(239
)
Weighted average number of limited partner units outstanding during the period
   
171,696
     
171,696
 
Net income (loss) per weighted average limited partner unit
 
$
1.17
   
$
(1.39
)

The accompanying notes are an integral part of these consolidated financial statements.
4

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
 
 
 
Three Months Ended
March 31,
 
 
 
2014
   
2013
 
Net income (loss)
 
$
203
   
$
(241
)
Amortization of loss on financial derivatives reclassified from accumulated other comprehensive loss
   
29
     
85
 
Comprehensive income (loss)
 
$
232
   
$
(156
)
 
The accompanying notes are an integral part of these consolidated financial statements.
5

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Consolidated Statement of Changes in Partners’ Deficit
(In thousands, except unit data)
(Unaudited)
 
 
 
Accumulated
 
 
General
 
 
Other
 
Total
 
 
Partner
 
Limited Partners
 
Comprehensive
 
Partners’
 
 
Amount
 
Units
 
Amount
 
(Loss) Income
 
Deficit
 
 
 
 
 
 
 
Balance, January 1, 2014
 
$
(228
)
   
171,696
   
$
(7,749
)
 
$
(29
)
 
$
(8,006
)
Net income
   
2
     
-
     
201
     
-
     
203
 
Other comprehensive income
   
-
     
-
     
-
     
29
     
29
 
Balance, March 31, 2014
 
$
(226
)
   
171,696
   
$
(7,548
)
 
$
   
$
(7,774
)
 
The accompanying notes are an integral part of this consolidated financial statement.
6

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
 
Three Months Ended March 31,
 
 
 
2014
   
2013
 
Cash flows from operating activities:
 
   
 
Net income (loss)
 
$
203
   
$
(241
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
               
Depreciation on operating leases
   
     
1
 
Amortization of deferred financing costs
   
8
     
18
 
Provision for credit losses
   
34
     
223
 
Gains on sales of equipment and lease dispositions, net
   
(4
)
   
(56
)
Gain on extinguishment of debt
   
(250
)
 
 
Net loss on derivative activities
   
20
     
51
 
Changes in operating assets and liabilities:
               
Other assets
   
(27
)
   
(6
)
Accounts payable and accrued expenses, and other liabilities
   
(19
)
   
3
 
Due to affiliates
   
8
     
(80
)
Net cash used in operating activities
   
(27
)
   
(87
)
 
               
Cash flows from investing activities:
               
Proceeds from leases and loans
   
153
     
949
 
Security deposits returned
   
     
(12
)
Net cash provided by investing activities
   
153
     
937
 
 
               
Cash flows from financing activities:
               
Repayment of debt
   
(1,050
)
   
(897
)
Advance from affiliate
   
954
   
 
Decrease in restricted cash
   
30
     
41
 
Net cash used in financing activities
   
(66
)
   
(856
)
 
               
Increase (decrease) in cash
   
60
     
(6
)
Cash, beginning of period
   
1
     
35
 
Cash, end of period
 
$
61
   
$
29
 
 
               
Supplemental cash flow disclosure:
               
Cash paid for interest
 
$
14
   
$
44
 
 
The accompanying notes are an integral part of these consolidated financial statements.

7

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements
March 31, 2014
(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Lease Equity Appreciation Fund I, L.P. (“LEAF I” or the “Fund”) is a Delaware limited partnership formed on January 31, 2002 by its General Partner, LEAF Financial Corporation (the “General Partner”). The General Partner manages the Fund. The General Partner is a subsidiary of Resource America, Inc. (“RAI”). RAI is a publicly-traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service, and manage investment opportunities through its commercial finance, real estate and financial fund management segments. Through its offering termination date of August 15, 2004, the Fund raised $17.1 million by selling 171,746 of its limited partner units. The Fund commenced operations in March 2003.

The Fund was expected to have a minimum of a nine-year life, consisting of an offering period of up to two years, a five-year reinvestment period and a subsequent liquidation period of two years, during which the Fund’s leases and secured loans will either mature or be sold.  The Fund’s five-year reinvestment period has ended and the Fund entered the liquidation period in August 2009.  All of the Fund’s leases and loans mature by the end of 2027.  Contractually, the Fund will terminate on December 31, 2027, unless sooner dissolved or terminated as provided in the Limited Partnership Agreement (“the Partnership Agreement”).

The Fund acquired diversified portfolios of equipment to finance to end users throughout the United States as well as the District of Columbia and Puerto Rico. The Fund also acquired existing portfolios of equipment subject to existing financings from other equipment finance companies, primarily an affiliate of its General Partner. The primary objective of the Fund was to generate regular cash distributions to its partners from its equipment finance portfolio over the life of the Fund.

In addition to its 1% general partnership interest, the General Partner also had invested approximately $800,000 for a 5.55% limited partnership interest in the Fund through March 2014.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Fund and its wholly-owned subsidiary, LEAF Fund I, LLC. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited financial statements reflect all adjustments that are, in the opinion of management, of a normal and recurring nature and necessary for a fair statement of the Fund’s financial position as of March 31, 2014, and the results of its operations and cash flows for the periods presented. The results of operations for the three month periods ended March 31, 2014 are not necessarily indicative of results of the Fund’s operations for the 2014 calendar year.  The financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. These interim financial statements should be read in conjunction with the Fund’s financial statements and notes thereto presented in the Fund’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on March 31, 2014.

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for credit losses, the estimated unguaranteed residual values of leased equipment, and the fair value and effectiveness of interest rate swaps. The Fund bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

8

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

Investments in Leases and Loans

The Fund’s investments in leases and loans consist of direct financing leases, operating leases and loans.

Direct Financing Leases. Certain of the Fund’s lease transactions are accounted for as direct financing leases (as distinguished from operating leases). Such leases transfer substantially all benefits and risks of equipment ownership to the customer. The Fund’s investment in direct financing leases consists of the sum of the total future minimum lease payments receivable plus the estimated unguaranteed residual value of leased equipment, less unearned finance income. Unearned finance income, which is recognized as revenue over the term of the financing by the effective interest method, represents the excess of the total future minimum contracted payments plus the estimated unguaranteed residual value over the cost of the related equipment.

Unguaranteed residual value represents the estimated amount to be received at lease termination from lease extensions or ultimate disposition of the leased equipment. The estimates of residual values are based upon the Fund’s history with regard to the realization of residuals, available industry data and the General Partner’s experience with respect to comparable equipment. The estimated residual values are recorded as a component of investments in leases. Residual values are reviewed periodically to determine if the current estimate of the equipment’s fair market value appears to be below its recorded estimate. If required, residual values are adjusted downward to reflect adjusted estimates of fair market values. Upward adjustments to residual values are not permitted.

Operating Leases. Leases not meeting any of the criteria to be classified as direct financing leases are deemed to be operating leases. Under the accounting for operating leases, the cost of the leased equipment, including acquisition fees associated with lease placements, is recorded as an asset and depreciated on a straight-line basis over the equipment’s estimated useful life, generally up to seven years. Rental income consists primarily of monthly periodic rental payments due under the terms of the leases. The Fund recognizes rental income on a straight line basis.

A review for impairment of operating leases is performed whenever events or changes in circumstances indicate that the carrying amount of the operating leases may not be recoverable.  The Fund writes down its rental equipment to its estimated net realizable value when it is probable that its carrying amount exceeds its fair value and the excess can be reasonably estimated; gains are only recognized upon actual sale of the rental equipment.

Loans. For term loans, the investment in loans consists of the sum of the total future minimum loan payments receivable less unearned finance income. Unearned finance income, which is recognized as revenue over the term of the financing by the effective interest method, represents the excess of the total future minimum contracted loan payments over the cost of the related equipment. For all other loans, interest income is recorded at the stated rate on the accrual basis to the extent that such amounts are expected to be collected.

Allowance for Credit Losses. The Fund evaluates the adequacy of the allowance for credit losses (including investments in leases and loans) based upon, among other factors, management’s historical experience on the portfolios it manages, an analysis of contractual delinquencies, economic conditions and trends and equipment finance portfolio characteristics, adjusted for expected recoveries. In evaluating historic performance, the Fund performs a migration analysis, which estimates the likelihood that an account progresses through delinquency stages to ultimate charge-off. After an account becomes 180 or more days past due, any remaining balance is fully-reserved less an estimated recovery amount. Generally, past due accounts are referred to our internal recovery group consisting of a team of credit specialists and collectors. The group utilizes several resources in an attempt to maximize recoveries on past due accounts including: 1) initiating litigation against the end user customer and any personal guarantor, 2) referring the account to an outside law firm or collection agency and/or 3) repossessing and remarketing the equipment through third parties. The Fund’s policy is to charge off to the allowance those financings which are in default and for which management has determined the probability of collection to be remote. The Fund discontinues the recognition of revenue for leases and loans for which payments are more than 90 days past due.  Payments received while leases and loans are on non-accrual status are recorded as a reduction of principal.  Generally, income recognition resumes when a lease or loan becomes less than 90 days delinquent. Fees from delinquent payments are recognized when received and are included in other income.
9

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

Derivative Instruments

The Fund entered into derivative contracts, including interest rate swaps, to add stability to its financing costs and to manage its exposure to interest rate movements on its variable rate debt.  U.S. GAAP requires recognition of all derivatives at fair value as either assets or liabilities on the balance sheet.  The accounting for subsequent changes in the fair value of these derivatives is dependent on whether the derivative qualifies and has been designated for hedge accounting treatment pursuant to U.S. GAAP.  Changes in the fair value of derivative instruments were recognized immediately on the accompanying consolidated statement of operations.

Other Income

Other income includes miscellaneous fees charged by the Fund such as late fee income, among others.  The Fund recognizes late fee income as fees are collected.  Late fee income was $4,000 for the three month period ended March 31, 2014 and $28,000 for the three month period ended March 31, 2013, respectively.
10

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

NOTE 3 – INVESTMENT IN LEASES AND LOANS

The Fund’s investment in leases and loans, net, consists of the following (in thousands):

 
 
March 31,
   
December 31,
 
 
 
2014
   
2013
 
Direct financing leases (a)
 
$
227
   
$
358
 
Loans (b)
   
446
     
528
 
Operating leases
   
1
     
1
 
 
   
674
     
887
 
Allowance for credit losses
   
(40
)
   
(70
)
 
 
$
634
   
$
817
 

(a) The Fund’s direct financing leases are for initial lease terms generally ranging from 24 to 144 months.
(b) The interest rates on loans generally range from 6% to 19%.

The components of direct financing leases and loans are as follows (in thousands):

 
 
March 31, 2014
   
December 31, 2013
 
 
 
Leases
   
Loans
   
Leases
   
Loans
 
Total future minimum lease payments
 
$
250
   
$
514
   
$
390
   
$
622
 
Unearned income
   
(35
)
   
(64
)
   
(52
)
   
(88
)
Residuals, net of unearned residual income
   
13
     
-
     
21
     
-
 
Security deposits
   
(1
)
   
(4
)
   
(1
)
   
(6
)
 
 
$
227
   
$
446
   
$
358
   
$
528
 

The Fund’s investment in operating leases, net, consists of the following (in thousands):

 
 
March 31,
   
December 31,
 
 
 
2014
   
2013
 
Equipment on operating leases
 
$
13
   
$
47
 
Accumulated depreciation
   
(12
)
   
(46
)
  $ 1
$
1

11

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The following table is an age analysis of the Fund’s receivables from leases and loans (presented gross of allowance for credit losses) as of March 31, 2014 and December 31, 2013, respectively (in thousands):

 
 
March 31, 2014
   
December 31, 2013
 
Age of receivable
 
Investments
in leases and
loans
   
%
   
Investments
in leases and
loans
   
%
 
Current
 
$
598
     
89
%
 
$
727
     
82
%
Delinquent:
                               
31 to 91 days past due
   
8
     
1
%
   
98
     
11
%
Greater than 91 days (a)
   
68
     
10
%
   
62
     
7
%
 
 
$
674
     
100
%
 
$
887
     
100
%

(a) All leases and loans are collectively evaluated for impairment.

The Fund had $68,000 and $62,000 of leases and loans on nonaccrual status as of March 31, 2014 and December 31, 2013, respectively.  The credit quality of the Fund’s investment in leases and loans as of March 31, 2014 and December 31, 2013 is as follows (in thousands):
 
 
 
March 31,
2014
   
December 31,
2013
 
Performing
 
$
606
   
$
825
 
Nonperforming
   
68
     
62
 
 
 
$
674
   
$
887
 

The following table summarizes the annual activity in the allowance for credit losses (in thousands):

 
 
Three Months Ended March 31,
 
 
 
2014
   
2013
 
Allowance for credit losses, beginning of period
 
$
70
   
$
260
 
Provision for credit losses
   
34
     
223
 
Charge-offs
   
(72
)
   
(273
)
Recoveries
   
8
     
50
 
Allowance for credit losses, end of period (a)
 
$
40
   
$
260
 

(a) End of period balances were collectively evaluated for impairment.

NOTE 5 – DEFERRED FINANCING COSTS

As of March 31, 2014, deferred financing costs were fully amortized.  Accumulated amortization as of March 31, 2014 and December 31, 2013 was approximately $1.2 million each period.
12

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

NOTE 6 – BANK DEBT

The Fund had a secured term loan agreement with Portigon Financial Services (“Portigon” or the “Lender”), previously known as West LB AG, New York Branch, which was collateralized by specific lease receivables and related equipment.

As of December 31, 2013, the outstanding balance under this financing arrangement was $1.3 million. Interest and principal were due as payments were received on the underlying leases and loans pledged as collateral. In March 2014, the General Partner repaid the outstanding debt balance owed to Portigon.  Under the terms of the payoff agreement, the amount paid to the Lender to satisfy the debt of approximately $1.2 million on the payoff date was discounted by $250,000 to approximately $950,000.  The debt forgiveness is reflected as a gain on extinguishment in the March 2014 financial statements and reflects the $950,000 provided by the general partner to satisfy the debt.  The General Partner will take over the Lender’s position in the note, but reflecting the $250,000 discount.  Interest on this facility was calculated at London Interbank Offered Rate (“LIBOR”) plus 0.95% per annum. To mitigate fluctuations in interest rates, the Fund had entered into interest rate swap agreements which had fixed the interest rate on this facility at 5.3%.  In connection with the debt forgiveness, the Fund also terminated the related interest rate swaps.

NOTE 7 – DERIVATIVE INSTRUMENTS

The Fund previously managed interest rate risk by employing a hedging strategy using derivative financial instruments such as interest rate swaps.  The Fund did not use derivative financial instruments for trading or speculative purposes. The Fund managed the credit risk of possible counterparty default in these derivative transactions by dealing primarily with counterparties with investment grade ratings.  The swaps were terminated in March 2014 in correlation with the pay down of the Portigon debt.

The following tables present the fair value of the Fund’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2013 (dollars in thousands):

 
 
2013
 
Fixed swaps (notional amount)
 
$
427
 
Range of receive rate
   
0.17% - 0.22
%
Range of pay rate
   
2.90% - 5.36
%

The following table indicates the fair value of the derivative contracts as of December 31, 2013 (in thousands):

 
 
Balance Sheet Location
   
Derivative
Assets
     
Derivative
Liabilities
2013
Derivative liabilities, at fair value
 
$
-
   
$
9
 

13

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

The following table summarizes the effect of the interest rate swaps on the consolidated statement of operations and other comprehensive income for the three months ended March 31, 2014 and 2013 (in thousands):

 
Location of loss reclassified from AOCI to the statement of operations
Amount of loss reclassified from AOCI to the statements of operations
Location of loss recognized  in the statements of operations
Amount of loss recognized in the statements of operations
2014
(a)
$              29
(b)
$                –
2013
(a)
$              85
(b)
$               1

(a) Losses reclassified from accumulated other comprehensive loss were recognized in loss on derivative activities on the accompanying statements of operations.
 
(b) All changes in fair value were recognized in loss on derivative activities and all cash payments on derivatives were recognized in interest expense. The Fund recognized an expense of $9,000 and $34,000 in interest expense for the three month periods ended March 31, 2014 and 2013, respectively, related to cash payments on derivatives.  Changes in fair value of $9,000 and $33,000 were recognized as a reduction to expense within loss on derivative activities for the three month periods ended March 2014 and 2013, respectively.

NOTE 8 – FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the measurement date (exit price). U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 – Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 – Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The Fund employed a hedging strategy to manage exposure to the effects of changes in market interest rates. All derivatives were recorded on the consolidated balance sheets at their fair value as either assets or liabilities. Because the Fund’s derivatives were not listed on an exchange, these instruments were valued by a third-party pricing agent using an income approach and utilizing models that use as their primary basis readily observable market parameters. This valuation process considered factors including interest rate yield curves, time value, credit factors and volatility factors. Although the Fund determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, the Fund assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives.  As a result, the Fund determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

Liabilities measured at fair value on a recurring basis included the following (in thousands):

 
 
Fair Value Measurements Using
   
Liabilities
At Fair Value
 
 
 
Level 1
   
Level 2
   
Level 3
     
Interest Rate Swaps at December 31, 2013
 
$
-
   
$
(9
)
 
$
-
   
$
(9
)
14

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY
Notes To Consolidated Financial Statements – (Continued)
March 31, 2014
(Unaudited)

The Fund is also required to disclose the fair value of financial instruments not measured at fair value for which it is practicable to estimate that value.  For cash, restricted cash, receivables, and payables, the carrying amounts approximate fair value because of the short term maturity of these instruments.

The methods used to estimate fair value on financial instruments not measured at fair value, the level within the fair value hierarchy that those fair value measurements are categorized, and the carrying value and fair value of the Fund’s debt at December 31, 2013 is as follows (in thousands):

 
Carrying
   
Fair Value Measurements Using
   
Liabilities
 
 
 
 Value
   
Level 1
   
Level 2
   
Level 3
   
At Fair Value
 
Bank debt, at December 31, 2013
 
$
(1,300
)
 
$
-
   
$
(1,040
)
 
$
-
   
$
(1,040
)

The fair value of debt as of December 31, 2013 was determined using quoted prices from broker-dealers of comparable securities as of the measurement date.

NOTE 9 – CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH AFFILIATES

The Fund relies on the General Partner and its affiliates to manage the Fund’s operations and pays the General Partner or its affiliates fees to manage the Fund in accordance with the Partnership Agreement.  The following is a summary of fees and costs of services and materials charged by the General Partner or its affiliates (in thousands):

 
 
Three Months Ended
March 31,
 
 
 
2014
   
2013
 
Administrative expenses
 
$
15
   
$
15
 

Management Fees. The General Partner has waived all future management fees. Through March 31, 2014, the General Partner has earned and waived management fees of $1.9 million, of which $4,000 related to the three months ended March 31, 2014.

Administrative Expenses. The General Partner and its affiliates are reimbursed by the Fund for administrative services reasonably necessary to operate the Fund which do not exceed the General Partner’s actual cost of those services.

Due to Affiliates. Due to affiliates includes amounts due to the General Partner and its affiliates related to acquiring and managing portfolios of equipment from its General Partner, management fees and reimbursed expenses.

Distributions. The General Partner owns a 1% general partner interest and a 5.55% limited partner interest in the Fund. The Fund ceased making regular cash distributions in July 2012.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

The Fund is party to various routine legal proceedings arising in the ordinary course of its business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Fund’s financial condition or results of operations.

NOTE 11 – SUBSEQUENT EVENTS

The Fund has evaluated its March 31, 2014 financial statements for subsequent events through the date the financial statements were issued.  The Fund is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

15

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

When used in this Form 10-Q, the words “believes” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties more particularly described in other documents filed with the Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to forward-looking statements which we may make to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

The following discussion provides an analysis of our operating results, an overview of our liquidity and capital resources and other items related to us. The following discussion and analysis should be read in conjunction with (i) the accompanying interim financial statements and related notes and (ii) our consolidated financial statements, related notes, and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2013.

As used herein, the terms “we,” “us,” or “our” refer to Lease Equity Appreciation Fund I, L.P. and subsidiary.

Business

We are a Delaware limited partnership formed on January 31, 2002 by our General Partner, LEAF Financial Corporation (the “General Partner”), which manages us. Our General Partner is a subsidiary of Resource America, Inc. (“RAI”). RAI is a publicly-traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its commercial finance, real estate and financial fund management segments. Through our offering termination date of August 15, 2004, we raised $17.1 million by selling 171,746 of our limited partner units. We commenced operations in March 2003.

We were expected to have a minimum of a nine-year life, consisting of an offering period of up to two years, a five year reinvestment period and a subsequent liquidation period of two years, during which our leases and secured loans will either mature or be sold. Our five year reinvestment period has ended and we entered the liquidation period in August 2009. All of our leases and loans mature by the end of 2028. We will terminate on December 31, 2028, unless sooner dissolved or terminated as provided in the Partnership Agreement.

We acquired a diversified portfolio of new, used or reconditioned equipment that we lease to third-parties. We also acquired portfolios of equipment subject to existing leases from other equipment lessors. Our financings were typically acquired from an affiliate of our General Partner. In addition, we made secured loans to end users to finance their purchase of equipment. We attempted to structure our secured loans so that, in an economic sense, there was no difference to us between a secured loan and a full payout equipment lease. We financed business-essential equipment including, but not limited to, computers, copiers, office furniture, water filtration systems, machinery used in manufacturing and construction, medical equipment and telecommunications equipment. We focused on the small to mid-size business market, which generally includes businesses with:

500 or fewer employees;

$1 billion or less in total assets;

Or $100 million or less in total annual sales.

Our principal objective was to generate regular cash distributions to our limited partners.  Limited partners have received total distributions ranging from approximately 50% to 64% of their original amount invested, depending upon when the investment was made.  Distributions to our limited partners were made at a rate of 2.0% of their original capital invested in 2011 and through June of 2012.  In July 2012, we ceased making regular cash distributions to our partners, as we are in our final liquidation process, which will continue until all of our leases are collected or sold and our debts are paid.  Future cash distributions to the partners are not expected due to the relatively small portfolio size and fixed administrative partnership maintenance costs.  We are currently exploring alternatives to terminate the Fund since future distributions to limited partners are not likely.
16

General Economic Overview

For the quarter ended March 31, 2014 U. S. economic activity showed overall slow but steady growth in many sectors of the economy especially in the small business sector.  Several high profile economic issues that were providing head winds to the economy were effectively resolved during the quarter. The Federal Reserve began the highly anticipated tapering of asset purchases under the Quantitative Easing program without noticeable adverse impact on the performance of the economy.  The commencement of the tapering was in recognition of economic improvement and stability. Congress came to an agreement on the debt ceiling thereby removing that potentially destabilizing issue from the economic agenda. Still looming over the economy is the implementation of the Affordable Care Act and the impact on economic activity, especially small business activity, which is likely to be felt throughout 2014. Some specific key economic indicators and reports that were released in the first quarter of 2014 that have specific relevance to small to medium size business performance are summarized below.  The indicators show overall positive trends. These indicators have especially important relevance to the LEAF Funds as loans and leases to small to medium size businesses comprise the majority of the LEAF Funds portfolios.

· The Monthly Confidence Index reported by The Equipment Leasing & Finance Foundation  for March 2014 was 65.1 (over 50 is considered positive) which continues an overall yearly increase in the Index which measures lease and finance company executive sentiment with respect to availability of capital, plans on hiring, and overall U.S. economic trends.
· The National Association of Realtors reported in March 2014 that home prices increased in most of the country.  This is an important economic indicator because rising home prices generally contribute to an improvement in consumer sentiment which can drive consumer spending, the most important driver of economic growth.
· In March 2014 the Thomson Reuters/PayNet Small Business Lending Index which measures the volume of lending to small businesses decreased 5% as compared to the prior month; however it is still 5% higher year over year. Commentary in the report stated “Small business owners still lack conviction about the ability of the recovery to accelerate before expanding operations.”
· The National Federation of Independent Business reported that its Small Business Optimism Index increased to 93.4 in March 2014.  The Index measures ten different items including small business sentiment about business expansion, hiring, and sales trends. While the Index has increased it is still below the pre-recession levels. An Index of 100 or greater indicates likely expansion of the small business sector.
· The National Association of Credit Management Index (“CMI”) for March 2014 measured 55.6 (any number over 50 shows an economy in expansion). The factors comprising the CMI include activities like credit extended, credit approval rates, delinquencies and bankruptcies. The CMI has remained over 50 for more than a year and CMI Index also noted and expansion in credit extended to business.
· The March 2014 Institute of Supply Management reported it’s PMI Index on the manufacturing sector.  The PMI Index showed expansion for the tenth straight month and the PMI index registered 53.7 (any number over 50 indicates growth).  Of the 18 manufacturing segments included in the index 14 segments reported growth, and the growth was shown in new orders, production and employment.
· In March 2014 the unemployment was 6.7% as compared to 7.0% in December 2013 and 7.3% in September 2013. As most new employment creation comes from small to  medium size businesses this is again another indication of  improving conditions in that segment of the economy.
· The 2014 Equipment Leasing & Finance Foundation’s U.S. Economic Outlook update released in early April reported that the U.S. economy is expected to grow 2.8% which would be the fastest pace since 2008, with growth in equipment and software investment to grow even faster at 4.2% in 2014.
 
Taken altogether, these indicators point to an economy that is continuing to grow steadily but slowly which is positive for the small to medium size businesses that comprise the majority of the LEAF Funds portfolios.

17

Finance Receivables and Asset Quality

Information about our portfolio of leases and loans is as follows (dollars in thousands):

 
 
March 31,
2014
   
December 31,
2013
 
Investment in leases and loans, net
 
$
634
   
$
817
 
 
               
Number of contracts
   
501
     
567
 
Number of individual end users (a)
   
481
     
544
 
Average original equipment cost
 
$
39.0
   
$
37.0
 
Average initial lease term (in months)
   
68
     
68
 
Average remaining lease term (in months)
   
23
     
26
 
 
               
States accounting for more than 10% of lease and loan portfolio:
               
California
   
28
%
   
27
%
Florida
   
24
%
   
21
%
New Jersey
   
19
%
   
15
%
 
               
Types of equipment accounting for more than 10% of lease and loan portfolio:
               
Medical Equipment
   
53
%
   
51
%
Industrial Equipment
   
29
%
   
34
%
Garment Care
   
12
%
   
11
%
 
               
Types of businesses accounting for more than 10% of lease and loan portfolio:
               
Services
   
66
%
   
62
%
Manufacturing
   
18
%
   
15
%
 
(a) Located in most of the 50 states as well as the District of Columbia and Puerto Rico. No individual end user or single piece of equipment accounted for more than 24% of our portfolio based on original cost of the equipment.
18

Portfolio Performance

The table below provides information about our finance receivables including non-performing assets, which are those assets that are not accruing income due to non-performance or impairment (dollars in thousands):

 
 
As of and for the
Three Months Ended March 31,
 
 
 
   
   
Change
 
 
 
2014
   
2013
   
$
   
%
 
Investment in leases and loans before allowance for credit losses
 
$
674
   
$
1,981
   
$
(1,307
)
   
(66
)%
Less: allowance for credit losses
   
(40
)
   
(260
)
   
220
     
(85
)%
Investment in leases and loans, net
 
$
634
   
$
1,721
   
$
(1,087
)
   
(63
)%
 
                               
Weighted average investment in direct financing leases and loans before allowance for credit losses
 
$
753
   
$
2,574
   
$
(1,821
)
   
(71
)%
Non-performing assets
 
$
68
   
$
24
   
$
44
     
183
%
Charge-offs, net of recoveries
 
$
64
   
$
223
   
$
(159
)
   
(71
)%
As a percentage of finance receivables:
                               
Allowance for credit losses
   
5.9
%
   
13.1
%
               
Non-performing assets
   
10.1
%
   
1.2
%
               
As a percentage of weighted average finance receivables:
                               
Charge-offs, net of recoveries
   
8.5
%
   
8.7
%
               

Our allowance for credit losses is our estimate of losses inherent in our commercial finance receivables at the current time. The allowance is based on a number of qualitative and quantitative factors which include our historical loss experience on equipment finance portfolios we manage, an analysis of contractual delinquencies, current economic conditions and trends and equipment finance portfolio characteristics, adjusted for recoveries. In evaluating historic performance, we perform a migration analysis, which estimates the likelihood that an account progresses through delinquency stages to ultimate charge-off.  Our portfolio is comprised of a large number of leases and loans that were originated prior to the recession.  Whereas payment delinquencies have improved, we have qualitatively reflected in our allowance continued uncertainty as to the performance of our portfolio. Our policy is to charge-off to the allowance those financings which are in default and for which management has determined the probability of collection to be remote. Substantially all of our assets are collateral for our debt and, therefore, significantly greater delinquencies than anticipated will have an adverse impact on our cash flow.

We focused on financing equipment used by small to mid-sized businesses. The recent economic recession in the U.S. made it more difficult for some of our customers to make payments on their financings with us on a timely basis, which adversely affected our operations in the form of higher delinquencies. These higher delinquencies have continued as the U.S. economy recovers, as evidenced by our charge-offs (net of recoveries) as a percentage of our weighted average finance receivables of 8.5% for the three month period ended March 31, 2014.  Our non-performing assets as a percentage of finance receivables increased from 1.2% at March 31, 2013 to 10.1% at March 31, 2014, largely due to a reduced investment in leases and loans.  Our allowance for credit losses decreased to 5.9% of our portfolio at March 31, 2014 as compared to 13.1% of our portfolio at March 31, 2013 as a result of our migration analysis and other qualitative factors as noted above.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including the allowance for credit losses, the estimated unguaranteed residual values of leased equipment, and the fair value and effectiveness of interest rate swaps. We base our estimates on historical experience, current economic conditions and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a complete discussion of our critical accounting procedures and estimates, see our annual report on Form 10-K for fiscal 2013 under “Management’s Discussion and Analysis of Financial Condition and Analysis of Financial Condition and Results of Operations- Critical Accounting Policies and Estimates.”  There have been no material changes to those policies through March 31, 2014.
19

Results of Operations

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

 
 
   
Increase (Decrease)
 
 
 
2014
   
2013
   
$
   
%
 
Revenues:
 
   
   
         
Interest on equipment financings
 
$
68
   
$
87
   
$
(19
)
   
(22
)%
Rental income
   
1
     
7
     
(6
)
   
(86
)%
Gains on sales of equipment and lease dispositions, net
   
4
     
56
     
(52
)
   
(93
)%
Gain on extinguishment of debt
   
250
     
     
250
     
100
%
Other income
   
4
     
34
     
(30
)
   
(88
)%
 
   
327
     
184
     
143
     
78
%
Expenses:
                               
Interest expense
   
21
     
61
     
(40
)
   
(66
)%
Depreciation on operating leases
   
     
1
     
(1
)
   
(100
)%
Provision for credit losses
   
34
     
223
     
(189
)
   
(85
)%
General and administrative expenses
   
34
     
74
     
(40
)
   
(54
)%
Administrative expenses reimbursed to affiliate
   
15
     
15
     
     
%
Loss on derivative activities
   
20
     
51
     
(31
)
   
(61
)%
 
   
124
     
425
     
(301
)
   
(71
)%
Net income (loss)
 
$
203
   
$
(241
)
 
$
444
         
Net income (loss) allocated to limited partners
 
$
201
   
$
(239
)
 
$
440
         

The overall increase in revenues is primarily a result of the gain on extinguishment of debt resulting from the payoff of the outstanding debt balance owed to Portigon.  A more specific discussion follows:

The increase in total revenues was primarily attributable to the following:

· A significant decrease in interest on equipment financings and rental income, due to a decrease in our weighted average net investment in financing assets to $0.8 million for the three months ended March 31, 2014 as compared to $2.6 million for the three months ended March 31, 2013, a decrease of $1.8 million or 69%.  As we entered our liquidation phase in August 2009, we are not permitted under the Partnership Agreement to acquire additional leases and loans. Therefore, our revenues are expected to continue to decline as our weighted average net investment in financing assets declines.

· Gains on the sale of equipment and lease dispositions decreased from $56,000 for the three months ended March 31, 2013 to $4,000 for the three months ended March 31, 2014, and decrease of 93%. Gains and losses on sales of equipment may vary significantly from period to period.

· Gain on the extinguishment of debt of $250,000 for the three months ended March 31, 2014 was a non-recurring gain related to the payoff and termination of our Portigon facility.

· Other income decreased from $34,000 for the three months ended March 31, 2013 to $4,000 for the three months ended March 31, 2014, a decrease of $30,000 or 88%.  The decrease in other income is primarily related to a decrease in late fee income, which is driven by the decrease in the size of our portfolio.

The decrease in total expenses was primarily attributable to the following:

· A decrease in our provision for credit losses.  We provide for credit losses when losses are likely to occur based on a migration analysis of past due payments and economic conditions.

· A decrease in interest expense primarily due to the decrease in our bank debt caused by the ongoing maturities of our portfolio of leases and loans. Weighted average borrowings for the three months ended March 31, 2014 were $1.1 million as compared to $2.9 million for the three months ended March 31, 2013.

· A decrease in our general and administrative expenses due to the continued maturity of our lease and loan portfolio.

The net income per limited partner unit, after the net income allocated to our General Partner, for the three months ended March 31, 2014 was $1.17 compared to a net loss per limited partner unit of $1.39 for the three month period ended March 31, 2013.  The weighted average number of limited partner units outstanding was 171,696 for both periods.
20

Liquidity and Capital Resources

General

Our major source of liquidity is excess cash derived from the collection of lease payments, after payment of debt principal and interest on debt. Our other cash requirements, in addition to debt service, are for normal operating expenses, and prior to July 2012, distributions to our limited partners. As noted previously, we ceased making regular cash distributions to our limited partners in July 2012 and it is not expected that there will be any more distributions.

We believe that our future net cash inflows can be estimated as the total scheduled future payments to be received from leases and loans less our debt service payments. At March 31, 2014, the total future minimum lease and loan payments scheduled to be received was $0.8 million which excludes the $40,000 allowance for credit losses. The Fund also derives cash from fees paid by our customers and from recoveries of previous bad debts. The following table sets forth our sources and uses of cash for the periods indicated (in thousands):

 
 
Three Months Ended March 31,
 
 
 
2014
   
2013
 
Net cash used in operating activities
 
$
(27
)
 
$
(87
)
Net cash provided by investing activities
   
153
     
937
 
Net cash used in financing activities
   
(66
)
   
(856
)
Increase (decrease) in cash
 
$
60
   
$
(6
)

Cash increased by $60,000 primarily due to net proceeds from leases and loans of $153,000, advances from affiliates of $954,000, and a decrease in restricted cash of $30,000, offset by cash used in operations of $27,000 and debt repayments of $1.050 million.

In March 2014, the General Partner repaid the outstanding debt balance owed to Portigon.  Under the terms of the payoff agreement, the amount paid to the Lender to satisfy the debt of approximately $1.2 million on the payoff date was discounted by $250,000 to approximately $950,000.  The debt forgiveness is reflected in the March 2014 financial statements and reflects the $950,000 to satisfy the debt as payable to the General Partner.  No further borrowings are available under the secured term loan agreement. The General Partner stepped into the Lender’s position in the note, but reflecting the $250,000 discount.  It is anticipated that the payoff of the Portigon debt will accelerate the winding up the partnership, as the amount owed the General Partner exceeds the remaining expected cash to be received from the Fund’s investment in leases and loans.

As noted previously, we ceased making regular distributions to our partners in July 2012.  Cumulative partner distributions paid from our inception to March 31, 2014 were approximately $9.6 million.  Any future cash distributions to our limited partners are dependent upon excess cash remaining after we have repaid our obligations.  Based on our recent performance and small portfolio size, which was negatively impacted by the economic recession, we do not expect that there will be further distributions to limited partners.

The General Partner waived its management fees beginning May 1, 2009. Accordingly, we did not record any management fee expense for the three months ended March 31, 2014. The General Partner has also waived all future management fees.  The cash savings on management fees and distributions is expected to be used to pay down our liabilities. Through March 31, 2014, the General Partner has earned and waived management fees of $1.9 million, of which $4,000 related to the three month period ended March 31, 2014.

As discussed above, our liquidity has been and may continue to be adversely affected by higher than expected equipment lease defaults, which result in a loss of anticipated revenues. These losses affected our ability to make distributions to our partners and our inability to fully recover our investment in the underlying equipment. In evaluating our allowance for losses on uncollectible leases, we consider our contractual delinquencies, economic conditions and trends, lease portfolio characteristics and our General Partner’s prior experience with similar lease assets. At March 31, 2014, our analysis indicated a need for an allowance for credit losses of $40,000.
21

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk have been omitted as permitted under rules applicable to smaller reporting companies.

ITEM 4 – CONTROLS AND PROCEDURES

Disclosure Controls

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our General Partner’s chief executive officer and chief financial officer, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our General Partner’s chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level discussed above.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

22

PART II.  OTHER INFORMATION

ITEM 6 – EXHIBITS

No.
Description
3.1
Amended and Restated Agreement of Limited Partnership (1)
3.2
Certificate of Limited Partnership (2)
4.1
Forms of letters sent to limited partners confirming their investment (2)
10.1
Origination and Servicing Agreement among LEAF Financial Corporation, Lease Equity Appreciation Fund I, L.P. and LEAF Funding, Inc., dated April 4, 2003 (4)
10.2
Secured Loan Agreement dated as of December 31, 2004 among LEAF Fund I, LLC, LEAF Funding, Inc., Lease Equity Appreciation Fund I, L.P., LEAF Financial Corporation, U.S. Bank National Association, and WestLB, New York Branch (3)
10.3
First Amendment to WestLB AG, New York Branch, Secured Loan Agreement (5)
10.4
Third Amendment to WestLB AG , New York Branch, Secured Loan Agreement (6)
10.5
Fourth Amendment to WestLB AG, New York Branch, Secured Loan Agreement (7)
10.6
Fifth Amendment to WestLB AG, New York Branch, Secured Loan Agreement (8)
10.7
Seventh Amendment WestLB AG, New York Branch, Secured Loan Agreement (9)
10.8
Eighth Amendment to WestLB AG, New York Branch, Secured Loan Agreement (10)
10.9
Ninth Amendment to WestLB AG, New York Branch, Secured Loan Agreement (11)
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101
Interactive data file containing the following financial statements formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at March 31, 2014 and December 31, 2013; (ii) the Consolidated Statements of Operations for the three  month periods ended March 31, 2014 and 2013; (iii) the Consolidated Statements of Comprehensive Income (Loss) for the three  month periods ended March 31, 2014 and 2013; (iv) the Consolidated Statement of Changes in Partners’ Deficit for the three months ended March 31, 2014; (iv) the Consolidated Statements of Cash Flows for the three month periods ended March 31, 2014 and 2013; and, (iv) the Notes to Consolidated Financial Statements.
 

(1)
Filed previously as Appendix A to our Post-Effective Amendment No. 3 to our Registration Statement on Form S-1, filed on January 26, 2004 and by this reference incorporated herein.
(2)
Filed previously as an exhibit to Amendment No. 1 to our Registration Statement on Form S-1 filed on June 7, 2002 and by this reference incorporated herein.
(3)
Filed previously as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2004 and by this reference incorporated herein.
(4)
Filed previously on Form 8-K, filed on September 19, 2003 and by this reference incorporated herein.
(5)
Filed previously as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2005 and by this reference incorporated herein.
(6)
Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and by this reference incorporated herein.
(7)
Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 and by this reference incorporated herein.
(8)
Filed previously as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2007 and by this reference incorporated herein.
(9)
Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 and by this reference incorporated herein.
(10)
Filed previously as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2008 and by this reference incorporated herein.
(11)
Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and by this reference incorporated herein.
 

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.

 
LEASE EQUITY APPRECIATION FUND I, L.P.
 
Delaware Limited Partnership
 
By:  LEAF Financial Corporation, its General Partner
 
 
 
May 14, 2014
By:
/s/ CRIT S. DEMENT
 
 
Crit S. DeMent
 
 
Chief Executive Officer
 
 
 
May 14, 2014
By:
/s/ ROBERT K. MOSKOVITZ
 
 
Robert K. Moskovitz
 
 
Chief Financial Officer
 
 
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