Investment in Equipment Subject to Operating Leases

6 Months Ended

Jun. 30, 2013

Investment In Equipment Subject To Operating Leases

Investment in Equipment Subject to Operating Leases

6.   Investment in Equipment Subject to Operating Leases

Aircraft Rotables

On June 19, 2013, Bravo purchased a lease for a 90% ownership interest in aircraft rotables located in the United States of America from SQN Fund II for $1,155,000, which includes the assumption by Bravo of a security deposit of $171,000. The Investment Manager re-tested the remaining lease term and determined the lease to be an operating lease. The lease has a remaining term which expires on February 13, 2015 and requires monthly rental payments of $16,220.

On June 19, 2013, Bravo purchased an additional lease for a 90% ownership interest in aircraft rotables located in the Australia from SQN Fund II for $310,000, which includes the assumption by Bravo of a security deposit of $29,700. The Investment Manager re-tested the remaining lease term and determined the lease to be an operating lease. The lease has a remaining term which expires on March 13, 2015 and requires monthly rental payments of $3,777.

As part of these transactions Bravo became a party to a participation agreement and a service agreement with an unrelated third party (the “Participant”). Under the participation agreement the Participant acquired a 10% ownership interest by providing 10% of the financing for each transaction. Under the service agreement the Participant will receive 5% of the gross payments from the lessees. The Participant will provide program management services and inventory tracking and monitoring services for all aircraft rotable parts. Bravo is required to remit the Participant’s portion of both the participation agreement and service agreement from the gross payments from the lessee within 10 days of receipt from the lessee.

Computer Equipment

On June 19, 2013, Bravo purchased a lease for computer equipment located in the United Kingdom from SQN Fund II for £88,862 ($140,402 applying the exchange rate used in the agreement). The Investment Manager re-tested the remaining lease term and determined the lease to be an operating lease. The lease has a remaining term through November 30, 2013 and requires monthly payments of £10,253 ($15,593 applying exchange rates as of June 30, 2013).

On June 19, 2013, Bravo purchased a lease for computer equipment located in the United Kingdom from SQN Fund II for £37,459 ($59,186 applying the exchange rate used in the agreement). The Investment Manager re-tested the remaining lease term and determined the lease to be an operating lease. The lease has three months remaining on its initial lease term and has one quarterly payment of £11,557 ($17,576 applying exchange rate as of June 30, 2013).

Furniture and fixtures

On June 19, 2013, Bravo purchased a lease for furniture and fixtures located in the United Kingdom from SQN Fund II for £172,815 ($273,048 applying the exchange rate used in the agreement). The Investment Manager re-tested the remaining lease term and determined the lease to be an operating lease. The lease has a remaining term of 21 months and quarterly payments of £21,014 ($31,958 applying the exchange rate as of June 30, 2013).

Reusable Plastic Bulk Storage Bins

On April 4, 2013, the lessee of the reusable plastic bulk storage bins contacted the Partnership’s Investment Manager inquiring about purchasing 5,000 of the reusable plastic bulk storage bins. The purchase price was determined based upon the buy-out calculation in the lease agreement to be $508,725. The Partnership received cash, net of a refund of the security deposit payable totaling $148,588, of $360,137.

On March 29, 2012, the Partnership entered into an operating lease transaction for 10,000 reusable plastic bulk storage bins used in the agricultural and food processing industries for $1,150,000 with a lease term of 60 months. The equipment is located in the United States of America. Under the terms of the agreement the Partnership received monthly payments, in advance, of $20,547. The lessee paid a security deposit of $297,176 which would be refunded at the termination of the lease period only if the lessee has made all its payments. The Partnership paid initial direct costs associated with the acquisition of this leased equipment totaling $42,641 which has been included in the cost of the leased equipment.

Investments in equipment subject to operating leases consisted of the following:

	June 30, 2013 (Unaudited)			December 31, 2012
Plastic bulk storage bins	$	596,320		$	1,192,641
Aircraft rotables		1,665,700			—
Computer equipment		140,402			—
Furniture and fixtures		332,234			—
Accumulated depreciation		(132,273	)		(111,807	)
	$	2,602,383		$	1,080,834

At June 30, 2013, the aggregate amounts of future minimum lease payments receivable are as follows:

	Lease Payment Currencies
	US Dollars		British Pounds (1)		Total
Years Ending June 30,
2013	$	363,252	$	256,542	$	619,794
2014		287,041		95,874		382,915
2015		123,288		—		123,288
2016		71,918		—		71,918
	$	845,499	$	352,416	$	1,197,915

(1) Converted to US Dollars at the June 30, 2013 exchange rate.