**United      States**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-K**

**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934**

**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934**

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

| Delaware                               |   | 20-1056194                                          |
|----------------------------------------|--------|-----------------------------------------------------|
| (State                of Organization) |   | (I.R.S.                Employer Identification No.) |

**Securities      registered pursuant to Section 12 (b) of the Act:**

| Title                of Each Class |   | Name                of Each Exchange |
|------------------------------------|--------|--------------------------------------|
| None.                         |   | Not                applicable.       |

**Securities      registered pursuant to Section 12 (g) of the Act:**

**Title      of Class**

**DOCUMENTS      INCORPORATED BY REFERENCE**

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**INDEX      TO ANNUAL REPORT**
** **

**ON      FORM 10-K**

|                                                                                                                                                                                                                                                               |                                                                                                                                                                                        |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| **PART                I**                                                                                                                                                                                                                                          |                                                                                                                                                                                        | **Page** |
|                                                                                                                                                                                                                                                               | ITEM                1:  Business                                                                                                                                                  | 3        |
|                                                                                                                                                                                                                                                               | ITEM                1A:     Risk                Factors                                                                                                                 | 8        |
|                                                                                                                                                                                                                                                               | ITEM                2:        Properties                                                                                                                 | 17       |
|                                                                                                                                                                                                                                                               | ITEM                3:        Legal                Proceedings                                                                                      | 17       |
|                                                                                                                                                                                                                                                               | ITEM                4:        Submission                of Matters to a Vote of Security Holders                                                         | 17       |
| **PART                II**                                                                                                                                                                                                                                         |                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                               | ITEM                5:       Market                for Registrant's Common Equity and Related Stockholder                Matters                              | 18       |
|                                                                                                                                                                                                                                                               | ITEM                6:       Selected                Financial Data                                                                                           | 19       |
|                                                                                                                                                                                                                                                               | ITEM                7:       Management's Discussions and                Analysis of Financial Condition and Results of                Operations        |  20 |
|                                                                                                                                                                                                                                                               | ITEM                7A:    Quantitative                and Qualitative Disclosures about Market Risk                                                                         | 21       |
|                                                                                                                                                                                                                                                               | ITEM                8:       Financial                Statements and Supplementary Data                                                                       | 22       |
|                                                                                                                                                                                                                                                               | ITEM                9:       Changes                in and Disagreements with Accountants on Accounting and Financial                Disclosure               | 35       |
|                                                                                                                                                                                                                                                               | ITEM                9A:    Controls                and Procedures                                                                                                            | 35       |
| **PART                III**                                                                                                                                                                                                                                        |                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                               | ITEM                10:     Directors                and Executive Officers of the Registrant                                                                           | 35       |
|                                                                                                                                                                                                                                                               | ITEM                11:     Executive                Compensation                                                                                                       | 37       |
|                                                                                                                                                                                                                                                               | ITEM                12:     Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder                Matters | 37       |
|                                                                                                                                                                                                                                                               | ITEM                13:     Certain                Relationships and Related Transactions                                                                               | 38       |
|                                                                                                                                                                                                                                                               | ITEM                14:     Principal                Accountant Fees and Services                                                                                       | 38       |
| **PART                IV**                                                                                                                                                                                                                                         |                                                                                                                                                                                        |     |
|                                                                                                                                                                                                                                                               | ITEM                15:     Exhibits,                Financial Statement Schedules and Reports on Form 8-K                                                              | 39       |
| **SIGNATURES**                                                                                                                                                                                                                                                | 40                                                                                                                                                                                          |
|  **Supplemental                Information to be Furnished With Reports Filed Pursuant to Section                15(d)                of the Act by Registrants Which Have Not Registered Securities to                Section                12 of the Act** | 40                                                                                                                                                                                          |

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**Forward-Looking      Statements**

**THE      DISCUSSIONS CONTAINED IN THIS REPORT INCLUDE FORWARD-LOOKING STATEMENTS      REGARDING EVENTS AND FINANCIAL TRENDS WHICH MAY AFFECT THE REGISTRANT’S FUTURE      OPERATING RESULTS AND FINANCIAL POSITION. SUCH STATEMENTS ARE SUBJECT TO RISKS      AND UNCERTAINTIES THAT COULD CAUSE THE REGISTRANT’S ACTUAL RESULTS AND FINANCIAL      POSISION TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH      STATEMENTS.**

**PART      I**

**ITEM      1− BUSINESS **

| ·   | 500                or fewer employees; |
|--------------------|----------------------------------------|

| ·   | $1                billion or less in total assets; or |
|--------------------|-------------------------------------------------------|

| ·   | $100                million or less in total annual                sales. |
|--------------------|---------------------------------------------------------------------------|

----

**Our      Lease Portfolio **

**Direct      Financing Leases and Notes**

|                                 |   | **December                31, 2005**  |
|--------------------------------------|--------|--------------------------------------------|
| **Type                of Equipment** |   |                                       | **Net                Investment** |   |   | **Percentage** |   |
| Computers                            |   | $                                          | 12,975 |   |   | 34.2 | % |
| Medical                Equipment     |   |                                       | 6,794 |   |   | 17.9 |   |
| Industrial                Equipment  |   |                                       | 6,087 |   |   | 16.1 |   |
| Office                Equipment      |   |                                       | 2,789 |   |   | 7.4 |   |
| Software                             |   |                                       | 2,536 |   |   | 6.7 |   |
| Building                systems      |   |                                       | 1,877 |   |   | 5.0 |   |
| Garment                Care          |   |                                       | 1,570 |   |   | 4.1 |   |
| Restaurant                Equipment  |   |                                       | 1,469 |   |   | 3.9 |   |
| Communications                       |   |                                       | 980 |   |   | 2.6 |   |
| Agriculture                          |   |                                       | 812 |   |   | 2.1 |   |
|                                 |   | $                                          | 37,889 |   |   | 100.0 | % |

**Operating      Leases**

|                                      |   | **December                31, 2005**  |
|--------------------------------------|--------|--------------------------------------------|
| **Type                of Equipment** |   |                                       | **Net                Investment** |   |   | **Percentage** |   |
| Communications                       |   | $                                          | 1,248 |   |   | 28.6 | % |
| Office                Equipment      |   |                                       | 1,111 |   |   | 25.5 |   |
| Industrial                Equipment  |   |                                       | 1,070 |   |   | 24.5 |   |
| Computers                            |   |                                       | 646 |   |   | 14.8 |   |
| Medical                Equipment     |   |                                       | 255 |   |   | 5.9 |   |
| Building                Systems      |   |                                       | 29 |   |   | 0.7 |   |
|                                 |   | $                                          | 4,359 |   |   | 100.0 | % |

----

**Direct      Financing Leases and Notes**

|                                              |   | **December                31, 2005**  |
|----------------------------------------------|--------|--------------------------------------------|
| **Type                of Business**          |   |                                       | **Net                Investment** |   |   | **Percentage** |   |
| Services                                     |   | $                                          | 21,398 |   |   | 56.4 | % |
| Retail                Trade                  |   |                                       | 4,543 |   |   | 12.0 |   |
| Manufacturing                                |   |                                       | 2,900 |   |   | 7.7 |   |
| Wholesale                Trade               |   |                                       | 2,087 |   |   | 5.5 |   |
| Finance/Insurance/Real                Estate |   |                                       | 1,458 |   |   | 3.8 |   |
| Transportation/Communication/Energy     |   |                                       | 1,430 |   |   | 3.8 |   |
| Construction                                 |   |                                       | 1,218 |   |   | 3.2 |   |
| Other                                        |   |                                       | 1,021 |   |   | 2.7 |   |
| Public                Administration         |   |                                       | 912 |   |   | 2.4 |   |
| Agriculture/Forestry/Fishing                 |   |                                       | 865 |   |   | 2.3 |   |
| Mining                                       |   |                                       | 57 |   |   | 0.2 |   |
|                                         |   | $                                          | 37,889 |   |   | 100.0 | % |

**Operating      Leases**

|                                              |   | **December                31, 2005**  |
|----------------------------------------------|--------|--------------------------------------------|
| **Type                of Business**          |   |                                       | **Net                Investment** |   |   | **Percentage** |   |
| Services                                     |   | $                                          | 1,664 |   |   | 38.1 | % |
| Construction                                 |   |                                       | 977 |   |   | 22.4 |   |
| Manufacturing                                |   |                                       | 683 |   |   | 15.7 |   |
| Finance/Insurance/Real                Estate |   |                                       | 264 |   |   | 6.1 |   |
| Mining                                       |   |                                       | 281 |   |   | 6.5 |   |
| Retail                Trade                  |   |                                       | 215 |   |   | 4.9 |   |
| Wholesale                Trade               |   |                                       | 105 |   |   | 2.4 |   |
| Public                Administration         |   |                                       | 92 |   |   | 2.1 |   |
| Transportation/Communication/Energy     |   |                                       | 78 |   |   | 1.8 |   |
|                                         |   | $                                          | 4,359 |   |   | 100.0 | % |

----

|                                             |   |   | **December                31,**  |   |
|---------------------------------------------|--------|--------|---------------------------------------|--------|
|                                        |   |   | **2005**                              |   |
| Balance                at beginning of year |   | $      | −                               |   |
| Provision                for credit losses  |   |   | 130,000                               |   |
| Net                write-offs               |   |   | −                               |   |
| Balance                at end of year       |   | $      | 130,000                               |   |

**Debt      Facility**

**Agreements      with our General Partner**

| ·   | our                General Partner has a partnership interest equal to 1% of all of                our                taxable income, losses and cash distributions. Cash distributions                paid to                our General Partner for the period from April 14, 2005 (commencement                of                operations) to December 31, 2005 were                $3,327; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                General Partner receives an organization and offering expense allowance                of                3% of offering proceeds to reimburse it for expenses incurred in                preparing                us for registration or qualification under federal and state securities                laws and subsequently offering and selling our units. This expense                allowance does not cover underwriting fees or sales commissions,                but does                cover reimbursement of bona fide accountable due diligence expenses                of                selling dealers to a maximum of 1/2 of 1% of offering proceeds.                Organization and offering expenses reimbursed to the General Partner                for                the period from April 14, 2005 (commencement of operations) to December                31, 2005 were $419,268; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                General Partner receives fees for acquiring our equipment of 2% of                the                purchase price we pay, including debt we incur or assume in connection                with the acquisition. Fees for acquiring our equipment paid to the                General                Partner for the period from April 14, 2005 (commencement of operations)                to                December 31, 2005 were $870,122; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                General Partner receives a subordinated annual asset management fee                of                either 4% of gross rental payments on our operating leases or 2%                of gross                rental payments on our full payout leases and notes. During the five-year                reinvestment period, the management fee will be subordinated to the                payment to limited partners of a cumulative annual distribution of                8% of                their capital contributions, as adjusted by distributions deemed                to be a                return of capital. Asset management fees paid to the General Partner                for                the period from April 14, 2005 (commencement of operations) to December                31, 2005 were $140,001; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                General Partner will receive a subordinated commission equal to one-half                of a competitive commission, to a maximum of 3% of the contract sales                price, for arranging the sale of our equipment after the expiration                of a                lease. This commission will be subordinated to the return to our                Limited                Partners of the purchase price of their units plus a cumulative annual                distribution, compounded daily, of 8% of their capital contributions,                as                adjusted by distributions deemed to be a return of capital. No commissions                were paid in the period from April 14, 2005 (commencement of operations)                to December 31, 2005; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                General Partner will receive a commission equal to the lesser of                a                competitive rate or 2% of gross rental payments derived from any                re-lease                of equipment, payable as we receive rental payments from re-lease.                We will                not, however, pay a re-lease commission if the re-lease is with the                original lessee or its affiliates. No re-lease commissions were paid                in                the period from April 14, 2005 (commencement of operations) to December                31, 2005; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | our                General Partner is reimbursed for operating and administrative expenses,                subject to limitations contained in our partnership agreement. Reimbursed                administrative expenses paid to the General Partner for the period                from                April 14, 2005 (commencement of operations) to December 31, 2005                were                $339,926; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Anthem                Securities, Inc., which is the dealer-manager for the offering of                our                units and an affiliate of our General Partner, receives an underwriting                fee of 3% of the offering proceeds for obtaining and managing the                group of                broker-dealers who will sell the units in this offering. From this                fee,                Anthem Securities may reimburse selling broker-dealers up to 1% of                the                proceeds of each unit sold by them for marketing expenses. Anthem                Securities receives sales commissions of 7% of the proceeds of each                unit                sold by it. Underwriting fees paid to Anthem Securities for the period                from April 14, 2005 (commencement of operations) to December 31,                2005 were                $358,707. Anthem Securities did not sell any units and did not receive                sale commissions for the period from April 14, 2005 (commencement                of                operations) to December 31, 2005. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Competition**

| ·   | a                large number of national, regional and local banks, savings banks,                leasing                companies and other financial institutions; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | captive                finance and leasing companies affiliated with major equipment                manufacturers; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | other                sources of equipment lease financing, including other publicly- offered                partnerships. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

**Employees**

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**ITEM      1A - RISK FACTORS**

*This      report has not been incorporated by reference into the prospectus for the      current offering of our units and is not part of the prospectus. This report      does not constitute an offer to sell our units or a solicitation of an offer      to      buy our units.*

*Units      of limited partner interest are inherently different from capital stock of      a      corporation, although *
*many      of the business risks to which we are subject are similar to those that would      be      faced by a *
*corporation      engaged in a similar business. You should consider the following risk factors      together with all of the other information included in this report in evaluating      the likelihood that we can attain our investment objectives. If any of the      *
*following      risks actually occurs, our business, financial condition or results of      operations could be materially adversely affected. In that case, our limited      partners may lose some or all of their investment.*

**We      may not return all of our limited partners’ investment or any rate of return on      their investment. **

**Our      general partner will manage us and our business and may make decisions with      which our limited partners do not agree.**

**Because      we do not know what the composition of our entire investment portfolio will      be,      our limited partners cannot evaluate **
**our      entire portfolio at the time they invest. **

**Higher      than expected equipment lease defaults may result in losses.**

| ·   | we                may experience difficulties and delays in recovering the                equipment from the defaulting                lessee; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                equipment may be returned in poor condition;                and |
|--------------------|------------------------------------------------------------------------------------|

| ·   | we                may be unable                to enforce important lease provisions against an insolvent lessee,                including the contract provisions that require the lessee to return                the                equipment in good condition. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | enforcing                the lessee's obligations under the                lease; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | recovering                equipment on                a lessee's default; |
|--------------------|---------------------------------------------------------------------------|

| ·   | transporting,                storing, and repairing the equipment; and |
|--------------------|------------------------------------------------------------------------|

| ·   | finding                a new lessee or purchaser for the equipment. |
|--------------------|---------------------------------------------------------------------|

**If      we are unable to realize the residual value of our equipment, we may incur      losses. **

| ·   | whether                the original lessee wants to keep the                equipment; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | the                cost of comparable new equipment; |
|--------------------|------------------------------------------------------|

| ·   | the                obsolescence or poor condition of the leased equipment;                and |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | the                existence of a secondary market for the type of used                equipment. |
|--------------------|---------------------------------------------------------------------------------------------------|

**Using      “leverage” to build our portfolio subjects us to the risk that our revenues may      not be sufficient **
**to      cover our operating costs plus debt service and, consequently, may result in      losses. **

**Cost      reimbursements and significant fees we pay to our general partner, and reserves      our general partner establishes, will reduce our cash available for      distribution. **

----

**Our      limited partners’ ability to dispose of their investment in us will be limited.**

| ·   | the                offering period of our units; |
|--------------------|--------------------------------------------------|

| ·   | a                five year reinvestment period; and |
|--------------------|-----------------------------------------------------|

| ·   | a                subsequent period of three years during which we will liquidate our                assets. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

**Our      limited partners have very limited voting rights and ability to control our      business. **

**Our      general partner may be subject to various conflicts of interest arising out      of      its relationship to us. **

----

**Despite      our name, our leases will not have any equity appreciation and we must rely      on      lease payments from our lessees and any residual value of the equipment under      our operating leases to achieve our investment objectives.**

**Our      short operating history decreases our limited partners’ ability to evaluate      their investment. **

**If      we do not generate sufficient cash, we will not be able to pay our limited      partners 8% annual distributions or reinvest a portion of our revenues in      additional leases during the reinvestment period. **

**Our      limited partners may not receive cash distributions from this investment in      an      amount sufficient to return their investment to them or provide a return on      their investment and the intended cash distributions may be reduced or delayed.      **

| ·   | demand                for equipment leases we provide; |
|--------------------|--------------------------------------------------------|

| ·   | profitability                of our operations; |
|--------------------|-------------------------------------------------|

| ·   | required                principal and interest payments on the debt we                incur; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | equipment                lease defaults; |
|--------------------|------------------------------------------|

| ·   | prevailing                economic conditions; and |
|--------------------|----------------------------------------------------|

| ·   | government                regulations. |
|--------------------|----------------------------------------|

----

**If      a limited partner chooses to redeem his units he may receive much less than      if      he kept his units.**

**Our      success will be subject to risks inherent in the equipment leasing business,      any      of which may affect **
**our      ability to operate profitably. **

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

| ·   | the                quality of the equipment we acquire and                lease; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | the                continuing strength of the equipment                manufacturers; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | the                timing of equipment purchases and our ability to forecast technological                advances; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | technological                and economic obsolescence; |
|--------------------|---------------------------------------------------------|

| **·  ** | defaults                by lessees or borrowers; and |
|------------------------|------------------------------------------------------|

| **·  ** | increases                in our expenses, including labor, tax and insurance expenses. |
|------------------------|----------------------------------------------------------------------------------------|

**Interest      rate changes may reduce the value of our portfolio and our returns on it.**

**Competition      from other equipment lessors could delay investment of our capital, reduce      the      creditworthiness of potential lessees or borrowers to which we have access,      or      decrease our yields.**

| ·   | a                large number of national, regional and local banks, savings banks,                leasing                companies and other financial                institutions; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | captive                finance and leasing companies affiliated with major equipment                manufacturers; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | other                sources of equipment lease financing, including other publicly-offered                partnerships. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

----

| ·   | delay                investment of our capital; |
|--------------------|-------------------------------------------------|

| ·   | reduce                the creditworthiness of potential lessees or borrowers to which we                have                access; or |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | decrease                our yields. |
|--------------------|-------------------------------------|

**Poor      economic conditions may adversely affect our ability to build our portfolio.      **

| ·   | reduce                our income or our distributions; |
|--------------------|--------------------------------------------------------|

| ·   | increase                the delinquencies or defaults on our leases;                and |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | reduce                our ability to obtain financing, or “leverage,” to build our                portfolio. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

**Resignation      or removal of our general partner, or loss of key management personnel from      our      general **
**partner,      could adversely affect our ability to conduct our business or make      distributions. **

**Our      general partner's operating systems could be damaged or disrupted by events      beyond its control, which could interfere with our ability to conduct our      business and make us less attractive to customers as a source of equipment      leases.**

| ·   | power                loss; |
|--------------------|----------------------------|

| ·   | telecommunications                failure; |
|--------------------|--------------------------------------------|

| ·   | computer                intrusions; and |
|--------------------|-----------------------------------------|

| ·   | viruses                and similar adverse events. |
|--------------------|----------------------------------------------------|

----

**Our      inability to obtain insurance for certain types of losses means we must bear      the      cost of any losses from the non-insurable risks. **

**The      ability to evaluate the results of**
**      certain**
**      prior programs sponsored by our general partner is limited, because the cash      distributions in those programs cannot be allocated between proceeds from      operations and proceeds from sales or refinancings**
**.**

**Our      limited partners could be liable for our obligations if they participate in      the      control of our business; our limited partners may be **
**required      to return improperly received distributions. **

| ·   | to                remove our general partner; |
|--------------------|-----------------------------------------------|

| ·   | to                approve some amendments to the partnership agreement;                or |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | to                take other action under the partnership agreement; |
|--------------------|----------------------------------------------------------------------|

**Our      limited partners’ ability to begin an action against our general partner is      limited by our partnership **
**agreement.      **

**If      we are, or become, subject to usury laws, it could result in reduced revenues      or, possibly, loss on our **
**investment.      **

----

**Participation      with third-parties in joint ventures may require us to pay additional costs      or      incur losses because of actions taken by the third-parties.**

| ·   | the                possibility that our co-venturer may become bankrupt or otherwise                fail to                meet its financial obligations, thereby causing us to pay our                co-venturer’s share of the joint venture’s debts, since each co-venturer                generally must guarantee all of the joint venture’s                debts; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                co-venturer may have business or economic objectives or interests                that are                inconsistent with                ours and it may want to manage the joint venture in ways that do                not                maximize our return; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | actions                by a co-venturer might subject equipment leases owned by the joint                venture                to liabilities greater than those we contemplate;                and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | when                more than one person owns property, there may be a stalemate                on                decisions, including decisions regarding a proposed sale or other                transfer                of the assets. Although                our partnership agreement requires that any joint venture arrangement                in                which we participate must contain provisions permitting us                to                buy the assets from the other co-venturer in the case of a sale,                we may                not have the resources to                do so. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Our      limited partners may be required to pay taxes on income from us even if they      do      not receive commensurate cash distributions. **

**Our      lack of an advance ruling from the IRS as to our classification as a partnership      or as to any other federal tax consequence of an investment in us may result      in      unforeseen tax consequences and increased tax liability. **

**If      the IRS classifies us as a corporation, our limited partners will lose tax      benefits. **

| ·   | losses                realized by us would not pass through to our limited                partners; |
|--------------------|-----------------------------------------------------------------------------------------------------|

----

| ·   | we                would be taxed at income tax rates applicable to corporations, reducing                distributions to our limited partners;                and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                limited partners’ distributions would be taxed as dividend income to the                extent of our current and accumulated earnings and                profits |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**There      are limitations on the ability of our limited partners to deduct losses we      may      generate. **

**Our      limited partners will likely be subject to state and local taxes as a result      of      purchasing our units. **

**An      audit of our information return by the IRS may result in adjustments to our      limited partners’ personal income tax returns and, possibly, an audit of their      returns. **

----

**The      investment in us may cause our limited partners to pay alternative minimum      tax.**

**A      portion of our distributions may not be treated as a return of capital for      federal income tax purposes.**

**Tax-exempt      organizations will have unrelated business taxable income from their**
**investment.      **

**Foreign      investors will be subject to **
**U.S.      **
**tax      withholding and may be required to file **
**U.S.      **
**tax      returns. **

**Changes      in the law may reduce certain tax benefits of our limited partners’ investment      in us.**

**ITEM      2− PROPERTIES **

**ITEM      3− LEGAL PROCEEDINGS **

**ITEM      4− SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

----

**PART      II**

**ITEM      5− MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED      STOCKHOLDER MATTERS **

| Offering                proceeds                        |   | $      | 11,979,445 |   |
|--------------------------------------------------------------|--------|--------|------------|--------|
| Expenses:                                                    |   |   |       |   |
| Sales                commissions (1)                    |   | $      | 817,988    |   |
| Underwriting                fees (1)                    |   |   | 358,707    |   |
| Organization                and offering expenses (2)   |   |   | 419,268    |   |
| Public                offering expenses                 |   |   | 1,595,963  |   |
|                                                         |   |   |       |   |
| Net                offering proceeds                    |   |   | 10,383,482 |   |
| Reserves                                                |   |   | 103,835    |   |
| Total                proceeds available for investment  |   | $      | 10,279,647 |   |
|                                                         |   |   |       |   |
| Use                of proceeds for investment (estimated):   |   |   |       |   |
| Used                in operations (3)                   |   |   | 479,927    |   |
| Acquisition                of lease portfolios (4)      |   |   | 7,322,866  |   |
| Working                capital                          |   |   | 2,476,854  |   |

----

|   |                                                                                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Paid                to an affiliate of the general partner which is then remitted to                third                parties.                     |
| (2)    | Paid                to the general partner.                                                                                                           |
| (3)    | The                general partner was reimbursed $339,926 for operating expenses and                asset                management fees of 140,001. |
| (4)    | Included                are asset acquisition fees of $870,122 that were paid to our general                partner.                                  |

----

**ITEM      6− SELECTED FINANCIAL DATA **

|                                                                                                                    |   |   | **For                the****Year                Ended****December                31,** |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|
|                                                                                                               |   |   | **2005**                                                                               |   |
| Revenues                                                                                                           |   | $      | 1,193,648                                                                              |   |
| Expenses                                                                                                           |   | $      | 1,631,546                                                                              |   |
| Net                loss                                                                                            |   | $      | (437,898                                                                               | )      |
| Distributions                to Partners                                                                           |   | $      | 332,280                                                                                |   |
| Weighted                average number of limited partnership units outstanding during                the year     |   |   | 51,053                                                                                 |   |
| Net                loss per weighted limited partnership unit − basic and fully                diluted  |   | $      | (8.49                                                                                  | )      |

|                                                                    |   | **December                31,**  |
|--------------------------------------------------------------------|--------|---------------------------------------|
|                                                               |   |                                  | **2005** |   |   | **2004** |   |
| Total                assets                                        |   | $                                     | 44,720,022 |   | $ | 1,001 |   |
| Net                investment in direct financing leases and notes |   | $                                     | 37,758,767 |   | $ | − |   |
| Equipment                under operating leases (net)              |   | $                                     | 4,359,371 |   | $ | − |   |
| Debt                                                               |   | $                                     | 34,511,800 |   | $ | − |   |
| Partners’                capital                             |   | $                                     | 9,772,873 |   | $ | 1,001 |   |

----

**ITEM      7− MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION AND RESULTSOF OPERATIONS AND ANALYSIS OF FINANCIAL      CONDITION**

**Results      of Operations**

**Liquidity      and Capital Resources **

|                                                     |   |   | **For                the****Year                Ended  ****December                31, 2005**  |   |
|----------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------|--------|
| Net                cash used in operating activities     |   | $      | (480,581                                                                                                      | )      |
| Net                cash used in investing activities     |   |   | (42,344,345                                                                                                   | )      |
| Net                cash provided by financing activities |   |   | 43,857,864                                                                                                    |   |
| Increase                in cash                          |   | $      | 1,032,938                                                                                                     |   |

----

**ITEM      7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISKS**

----

**ITEM      8− FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**CONSOLIDATED      BALANCE SHEETS**

**DECEMBER      31, 2005 AND 2004**

|                                                                                                                  |   | **December                31,**  |
|------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|
|                                                                                                             |   |                                  | **2005** |   |   | **2004** |   |
| **ASSETS**                                                                                                       |   |                                  |   |   |   |   |   |
| Cash                                                                                                             |   | $                                     | 1,033,939 |   | $ | 1,001 |   |
| Restricted                cash                                                                                   |   |                                  | 379,120 |   |   | − |   |
| Accounts                receivable                                                                               |   |                                  | 52,455 |   |   | − |   |
| Due                from lockbox                                                                                  |   |                                  | 669,524 |   |   | − |   |
| Investment                in direct financing leases and notes, net                                              |   |                                  | 37,758,767 |   |   | − |   |
| Investment                in operating leases (net of accumulated depreciation of                $244,903)  |   |                                  | 4,359,371 |   |   | − |   |
| Fair                value of interest rate swap                                                                  |   |                                  | 158,569 |   |   | − |   |
| Other                assets                                                                                      |   |                                  | 308,277 |   |   | − |   |
|                                                                                                             |   | $                                     | 44,720,022 |   | $ | 1,001 |   |
|                                                                                                             |   |                                  |   |   |   |   |   |
| **LIABILITIES                AND PARTNERS’ CAPITAL**                                                       |   |                                  |   |   |   |   |   |
| **Liabilities:**                                                                                                 |   |                                  |   |   |   |   |   |
| Debt                                                                                                             |   | $                                     | 34,511,800 |   | $ | − |   |
| Accounts                payable and accrued expenses                                                             |   |                                  | 214,530 |   |   | − |   |
| Due                to related parties, net                                                                       |   |                                  | 69,946 |   |   | − |   |
| Security                deposits                                                                                 |   |                                  | 150,873 |   |   | − |   |
| Total                liabilities                                                                                 |   |                                  | 34,947,149 |   |   | − |   |
| **Partners’                Capital**                                                                  |   |                                  | 9,772,873 |   |   | 1,001 |   |
|                                                                                                             |   | $                                     | 44,720,022 |   | $ | 1,001 |   |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**CONSOLIDATED      STATEMENT OF OPERATIONS**

**PERIOD      FROM APRIL 14, 2005 **

**(COMMENCEMENT      OF OPERATIONS) **

**TO      DECEMBER 31, 2005**

| **Income:**                                                                                                  |   |   |      |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Interest                on equipment financings                                                              |   | $      | 861,534   |   |
| Rental                income                                                                                 |   |   | 289,841   |   |
| Loss                on sale of equipment and lease dispositions, net                                    |   |   | (4,704    | )      |
| Other                                                                                                        |   |   | 46,977    |   |
|                                                                                                         |   |   | 1,193,648 |   |
|                                                                                                         |   |   |      |   |
| **Expenses:**                                                                                                |   |   |      |   |
| Interest                expense                                                                              |   |   | 583,833   |   |
| Depreciation                on operating leases                                                              |   |   | 247,080   |   |
| Provision                for credit losses                                                                   |   |   | 130,000   |   |
| Management                fee to related party                                                               |   |   | 140,001   |   |
| Administrative                expense reimbursed to related party                                            |   |   | 339,926   |   |
| General                and administrative expenses                                                           |   |   | 190,706   |   |
|                                                                                                         |   |   | 1,631,546 |   |
| Net                loss                                                                                      |   | $      | (437,898  | )      |
|                                                                                                         |   |   |      |   |
| Weighted                average number of limited partner units outstanding during the                period |   |   | 51,053    |   |
| Net                loss per weighted average limited partner unit                                            |   | $      | (8.49     | )      |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**CONSOLIDATED      STATEMENT OF PARTNERS’ CAPITAL **

**AND      COMPREHENSIVE LOSS**

**FOR      THE YEAR ENDED DECEMBER 31, 2005**

|                                                                                                                        |   |                  | **General                 Partner**  |   | **Limited                Partners** |      | **Accumulated                Other Comprehensive** |                  |       | **Partners’                Capital** |                        |                             | **Comprehensive                Income (Loss)** |                  |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|------------------------------------------------|--------|-------------------------------------|-----------|----------------------------------------------------|-----------------------|------------|--------------------------------------------|-----------------------------|----------------------------------|------------------------------------------------|-----------------------|
|                                                                                                                        |   |                  | **Amount**                                |   |                                | **Units** |                                               |                  | **Amount** |                                       |                        | **Income                (Loss)** |                                           |                  | **Total** |   |   | **Total** |   |
| Balance,                December 31, 2004                                                                              |   |                $ | 1,000                                          |   |                                | −   |                                               |                $ | 1          |                                       |                 $ | −                          |                                           |                $ | 1,001 |   |   |   |   |
| Limited                Partners’ contribution                                                                         |   |                  | −                                        |   |                                | 120,015   |                                               |                  | 11,979,445 |                                       |                        | −                          |                                           |                  | 11,979,445 |   |   |   |   |
| Offering                costs related to the sale of                     Limited Partnership units |   |                  | −                                        |   |                                | −   |                                               |                  | (1,595,963 | )                                          |                        | −                          |                                           |                  | (1,595,963 | ) |   |   |   |
| Cash                distributions paid                                                                                      |   |                  | (3,327                                         | )      |                                | −   |                                               |                  | (328,953   | )                                          |                        | −                          |                                           |                  | (332,280 | ) |   |   |   |
| Redemption                of initial Limited Partnership                                     units |   |                  | −                                        |   |                                | −   |                                               |                  | (1         | )                                          |                        | −                          |                                           |                  | (1 | ) |   |   |   |
| Net                loss                                                                                                     |   |                  | (4,378                                         | )      |                                | −   |                                               |                  | (433,520   | )                                          |                        | −                          |                                           |                  | (437,898 | ) |  $ | (437,898 | ) |
| Unrealized                gain on hedging derivative                                                                        |   |                  | −                                        |   |                                | −   |                                               |                  | −    |                                       |                        | 158,569                          |                                           |                  | 158,569 |   |   | 158,569 |   |
| Balance,                December 31, 2005                                                                              |   | $                     | (6,705                                         | )      |                                | 120,015   |                                               | $                     | 9,621,009  |                                       | $                           | 158,569                          |                                           | $                     | 9,772,873 |   | $ | (279,329 | ) |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**CONSOLIDATED      STATEMENT OF CASH FLOWS**

**FOR      THE YEAR ENDED DECEMBER 31, 2005**

|                                                                                                       |   |   | **2005**    |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|
|                                                                                                       |   |   |        |   |
| **Cash                flows from operating activities:**                                                   |   |   |        |   |
| Net                loss                                                                                    |   | $      | (437,898    | )      |
| Adjustments                to reconcile net loss to net cash used in operating                activities:  |   |   |        |   |
| Depreciation                                                                                               |   |   | 247,080     |   |
| Provision                for credit losses                                                                 |   |   | 130,000     |   |
| Amortization                of deferred financing costs                                                    |   |   | 23,287      |   |
| Changes                in operating assets and liabilities:                                                |   |   |        |   |
| Accounts                receivable                                                                         |   |   | (52,455     | )      |
| Due                from lockbox                                                                            |   |   | (669,524    | )      |
| Other                assets                                                                                |   |   | (5,547      | )      |
| Accounts                payable and accrued expenses                                                       |   |   | 214,530     |   |
| Due                to related parties, net                                                                 |   |   | 69,946      |   |
| Net                cash used in operating activities                                                       |   |   | (480,581    | )      |
|                                                                                                       |   |   |        |   |
| **Cash                flows from investing activities:**                                                   |   |   |        |   |
| Investment                in direct financing leases and notes                                             |   |   | (38,982,715 | )      |
| Investment                in equipment under operating leases                                              |   |   | (4,606,451  | )      |
| Proceeds                from direct financing leases, net of earned income                                 |   |   | 1,093,948   |   |
| Security                deposits, net                                                                      |   |   | 150,873     |   |
| Net                cash used in investing activities                                                       |   |   | (42,344,345 | )      |
|                                                                                                       |   |   |        |   |
| **Cash                flows from financing activities:**                                                   |   |   |        |   |
| Increase                in restricted cash                                                                 |   |   | (379,120    | )      |
| Increase                in deferred financing costs                                                        |   |   | (326,017    | )      |
| Proceeds                from debt                                                                          |   |   | 36,266,280  |   |
| Repayment                of debt                                                                           |   |   | (1,754,480  | )      |
| Limited                Partners’ capital contributions                                               |   |   | 11,979,445  |   |
| Partners’** **distributions                                                                     |   |   | (332,280    | )      |
| Payment                of offering costs incurred for the sale of limited partnership                units |   |   | (1,595,963  | )      |
| Redemption                of initial limited partner units                                                 |   |   | (1          | )      |
| Net                cash provided by financing activities                                                   |   |   | 43,857,864  |   |
|                                                                                                       |   |   |        |   |
| Increase                in cash                                                                       |   |   | 1,032,938   |   |
| Cash,                beginning of year                                                                |   |   | 1,001       |   |
| Cash,                end of year                                                                      |   | $      | 1,033,939   |   |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**December      31, 2005 **

**NOTE      1 **
**-**
**      ORGANIZATION AND NATURE OF BUSINESS**

**NOTE      2 **
**-**
**      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis      of Presentation**

**Classification      **

**Use      of Estimates**

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      2 **
**-**
**      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)**

**Use      of Estimates − (Continued)**

**Concentration      of Credit Risk**

**Revenue      Recognition**

*Direct      Financing Leases. *

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      2 **
**-**
**      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)**

**Revenue      Recognition − (Continued)**

*Operating      Leases. *

*Notes      Receivable.*

**Income      Taxes**

**Supplemental      Disclosure of Cash Flow Information**

**Transfers      of Financial Assets**

*Accounting      for Transfers and Servicing of Financial Assets and Extinguishments of      Liabilities,*

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      2 **
**-**
**      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)**

**Fair      Value of Financial Instruments**

**NOTE      3 - RESTRICTED CASH**

**NOTE      4 − DUE FROM LOCKBOX**

**NOTE      5 **
**-**
**      INVESTMENT IN LEASES AND NOTES**

|                                        |   |   | **December                31,**  |   |
|----------------------------------------|--------|--------|---------------------------------------|--------|
|                                   |   |   | **2005**                              |   |
| Direct                financing leases |   | $      | 34,437,490                            |   |
| Notes                receivable        |   |   | 3,321,277                             |   |
|                                   |   | $      | 37,758,767                            |   |

|                                                           |   |   | **Year                Ended December 31,**  |   |
|-----------------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                      |   |   | **2005**                                         |   |
| Total                future minimum lease payments        |   | $      | 37,102,220                                       |   |
| Unearned                rental income                     |   |   | (4,360,607                                       | )      |
| Residuals,                net of unearned residual income |   |   | 1,825,877                                        |   |
|                                                      |   |   | 34,567,490                                       |   |
| Allowance                for possible losses.             |   |   | 130,000                                          |   |
|                                                      |   | $      | 34,437,490                                       |   |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      5 **
**-**
**      INVESTMENT IN LEASES AND NOTES − (Continued)**

|                                                                   |   |   | **Year                Ended December 31,**  |   |
|-------------------------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                              |   |   | **2005**                                         |   |
| Allowance                for possible losses, beginning of period |   | $      | −                                          |   |
| Provision                for credit losses                        |   |   | 130,000                                          |   |
| Net                write-offs                                     |   |   | −                                          |   |
| Allowance                for possible losses, end of period       |   | $      | 130,000                                          |   |

| **Years                Ending****December                31,** |   |   | **Direct****Financing                Leases** |   |   | **Notes** |   |   | **Operating                Leases** |   |   | **Total**  |   |
|----------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|-----------|--------|--------|-------------------------------------|--------|--------|------------|--------|
| 2006                                                      |   | $      | 13,146,231                                    |   | $      | 523,691   |   | $      | 1,203,075                           |   | $      | 14,872,997 |   |
| 2007                                                      |   |   | 10,416,588                                    |   |   | 561,339   |   |   | 1,188,166                           |   |   | 12,166,093 |   |
| 2008                                                      |   |   | 6,690,945                                     |   |   | 575,232   |   |   | 946,050                             |   |   | 8,212,227  |   |
| 2009                                                      |   |   | 4,493,884                                     |   |   | 569,385   |   |   | 632,371                             |   |   | 5,695,640  |   |
| 2010                                                      |   |   | 1,911,281                                     |   |   | 493,120   |   |   | 286,169                             |   |   | 2,690,570  |   |
| Thereafter                                                     |   |   | 443,291                                       |   |   | 598,510   |   |   | 2,949                               |   |   | 1,044,750  |   |
|                                                           |   | $      | 37,102,220                                    |   | $      | 3,321,277 |   | $      | 4,258,780                           |   | $      | 44,682,277 |   |

**NOTE      6 − OTHER ASSETS**

**NOTE      7 **
**-**
**      DEBT**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | **December                31, 2005**  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------|--------|
| WestLB                AG, New York Branch revolving line of credit, with an aggregate borrowing                limit of $75.0 million collateralized by specific lease receivables                and                related equipment, with a 1% credit reserve of the outstanding line                of                credit. Interest on this facility is calculated at LIBOR plus 1.10%                per                annum. To mitigate fluctuations in interest rates the Fund has entered                into interest rate swap agreements. The interest rate swap agreements                terminate on various dates ranging from December 2010 to                November 2012. The interest rate swap agreements fix the interest                rate on this facility at 5.66% on a weighted average basis. Interest                and                principal are due as payments are received under the financings.                The line                of credit is renewable for one year periods on June 21, 2006, 2007                and                2008. The terms of the Funds’ credit facility with WestLB includes                financial covenants related to the Funds net worth and leverage used.                As                of December 31, 2005, the Fund is in compliance with all such covenants. |   | $      | 34,511,800                                 |   |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      7 **
**-**
**      DEBT − (Continued)**

| 2006       |   | $      | 10,331,649 |   |
|------------|--------|--------|------------|--------|
| 2007       |   |   | 9,221,797  |   |
| 2008       |   |   | 6,728,393  |   |
| 2009       |   |   | 4,622,656  |   |
| 2010       |   |   | 2,606,435  |   |
| Thereafter |   |   | 1,000,870  |   |
|       |   | $      | 34,511,800 |   |

**NOTE      8 **
**-**
**      DERIVATIVE INSTRUMENTS**

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      9 − TRANSACTIONS WITH AFFILIATES**

|                                                   |   |   | **Year                Ended December 31,**  |   |
|---------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                              |   |   | **2005**                                         |   |
| Acquisition                fees                   |   | $      | 870,122                                          |   |
| Asset                management fees              |   | $      | 140,001                                          |   |
| Organization                and offering expenses |   | $      | 419,268                                          |   |
| Reimbursed                administrative expenses |   | $      | 339,926                                          |   |
| Underwriting                fees                  |   | $      | 358,707                                          |   |

----

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)**

**December      31, 2005 **

**NOTE      9 − TRANSACTIONS WITH AFFILIATES − (Continued)**

**NOTE      10 **
**-**
**      ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH      DISTRIBUTIONS**

**NOTE      11 − COMPREHENSIVE INCOME (LOSS)**

**NOTE      12 − NET LOSS PER LIMITED PARTNERSHIP UNIT**

**NOTE        13 − SUBSEQUENT EVENT**

----

**ITEM        9 - CHANGES IN AND DISAREEMENTS WITH ACCOUNTANTS ON        ACCOUNTING AND FINANCIAL DISCLOSURE**

**ITEM      9A - CONTROLS AND PROCEDURES**

*Evaluation      of Disclosure Controls and Procedures *

**PART      III**

**ITEM      10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

| **Name**                               | **Age** | **Position**                                                                  |
|----------------------------------------|---------|-------------------------------------------------------------------------------|
| Crit                S. DeMent          | 53      | Chairman                of the Board of Directors and Chief Executive Officer |
| Miles                Herman            | 46      | President,                Chief Operating Officer and Director                |
| Jonathan                Z. Cohen       | 35      | Director                                                                      |
| Alan                D. Schreiber, M.D. | 62      | Director                                                                      |
| Linda                Richardson        | 58      | Director                                                                      |
| Robert                K. Moskovitz     | 49      | Chief                Financial Officer and Treasurer                          |
| David                H. English        | 56      | Executive                Vice President                                       |
| Darshan                V. Patel        | 35      | General                Counsel and Secretary                                  |
| Daniel                G. Courtney      | 43      | Senior                Vice President - Investment Programs                    |
| Scott                A. Smith          | 46      | Vice                President - Corporate Development                         |

----

**CRIT      S. DEMENT**

**MILES      HERMAN**

**JONATHAN      Z. COHEN**

**ALAN      D. SCHREIBER, M.D.**

**LINDA      RICHARDSON**

**ROBERT      K. MOSKOVITZ**

**DAVID      H. ENGLISH**

**DARSHAN      V. PATEL**

----

**DANIEL      G. COURTNEY**

**SCOTT      A. SMITH**

**Code      of Business Conduct and Ethics**

**ITEM      11 - EXECUTIVE COMPENSATION **

**ITEM      12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS**
**AND      MANAGEMENT **

| (a)   | We                had approximately 341 limited partners as of December 31,                2005. |
|-----------------|--------------------------------------------------------------------------------------------------|

| (b)   | In                2004, our general partner contributed $1,000 to our capital as our                general                partner and received its general partner interest in us. As of December                31, 2005, our general partner owned 2,865 of our limited partner                units.                However, our general partner currently intends to acquire, as a limited                partner, limited partner units equal to approximately 5% of our total                limited partner units and its affiliates currently intend to purchase                up                to an additional 1% of our total limited partner units. These purchases                of                limited partner units by our general partner and its affiliates will                be at                a price discounted by the 7% sales commission which will be paid                by most                of our other limited partners. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | We                know of no arrangements that would, at any date subsequent to the                date of                this report, result in a change in control of                us. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      13 - CERTAIN RELATIONSHIPS AND RELATED      TRANSACTIONS**

**ITEM      14 - PRINCIPAL ACCOUNTANT FEES AND      SERVICES**

**Audit      Fees. **

**Audit-Related      Fees.**

**Tax      Fees.**

**All      Other Fees. **

*Procedures      for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services      of      Independent Auditor.*

----

**PART      IV**

**ITEM      15 - EXHIBITS, FINANCIAL STATEMENT      SCHEDULES**

| **1.  ** | **Financial                Statements** |
|--------------------|-----------------------------------------|

| **2.  ** | **Financial                Statement Schedules** |
|--------------------|--------------------------------------------------|

| **3.  ** | **Exhibits** |
|--------------------|--------------|

|   |                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|----------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **Exhibit                  No.** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | 3.1                              |   | Certificate                  of Limited Partnership for Lease Equity Appreciation Fund II, L.P.                  (1)                                                                                                                                                                                                                                                                                                                                            |
|   | 3.2                              |   | Amended                  Certificate of Limited Partnership for Lease Equity Appreciation                  Fund II,                  L.P.(2)                                                                                                                                                                                                                                                                                                                    |
|   | 3.3                              |   | Amended                  and Restated Agreement of Limited Partnership for Lease Equity                  Appreciation Fund II, L.P. (4)                                                                                                                                                                                                                                                                                                                         |
|   | 4.1                              |   | Forms                  of letters sent to limited partners confirming their                  investment(1)                                                                                                                                                                                                                                                                                                                                                      |
|   | 10.1                             |   | Origination                  & Servicing Agreement among LEAF Financial Corporation, Lease Equity                  Appreciation Fund II, L.P. and LEAF Funding, Inc. dated April 15,                  2005                  (3)                                                                                                                                                                                                                             |
|   | 10.3                             |   | Secured                  Loan Agreement dated as of June 1, 2005 with LEAF II, LLC as Borrower,                  LEAF Funding, Inc. as Originator, Lease Equity Appreciation Fund                  II, L.P.                  as Seller, LEAF Financial Corporation as Servicer, U.S. Bank National                  Association, as Collateral Agent and Securities Intermediary and                  WestLB                  AG, New York Branch as Lender (3) |
|   | 10.4                             |   | First                  Amendment to WestLB AG Secured Loan Agreement                                                                                                                                                                                                                                                                                                                                                                                            |
|   | 31.1                             |   | Rule                  13a-14(a)/Rule 15d-14(a) Certification of Chief Executive                  Officer.                                                                                                                                                                                                                                                                                                                                                       |
|   | 31.2                             |   | Rule                  13a-14(a)/Rule 15d-14(a) Certification of Chief Financial                  Officer.                                                                                                                                                                                                                                                                                                                                                       |
|   | 32.1                             |   | Certification                  of Chief Executive Officer pursuant to Section 1350 of Chapter                  63 of Title                  18 of the United States Code.                                                                                                                                                                                                                                                                                       |
|   | 32.2                             |   | Certification                  of Chief Financial Officer pursuant to Section 1350 of Chapter                  63 of Title                  18 of the United States Code.                                                                                                                                                                                                                                                                                       |

| (1)                 | Previously                filed on June 17, 2004 as an Exhibit to our Registration Statement |
|-------------------------------|----------------------------------------------------------------------------------------------|
| (2)                 | Previously                filed on September 8, 2004 in Pre-Effective Amendment No. 1 as an                Exhibit                to our Registration Statement |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3)                 | Previously                filed on August 15, 2005 as an Exhibit to our Form 10-Q for the quarter                ended June 30, 2005 |
|-------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
| (4)                 | Previously                filed on December 27, 2005 in Post-Effective Amendment No. 1 to our                Registration Statement as Appendix A to the                prospectus. |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

**LEASE      EQUITY APPRECIATION FUND II, L.P.**

| /s/                Crit DeMentCRIT                S. DEMENT                      | Chairman                of the Board, Chief Executive Officer of the General                Partner  | March                30, 2006 |
|----------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                             |                                                                                                 |                          |
|                                                                             |                                                                                                 |                          |
| /s/                Miles Herman MILES                HERMAN                 | President,                Chief Operating Officer and Director of the General                Partner | March                30, 2006 |
|                                                                             |                                                                                                 |                          |
|                                                                             |                                                                                                 |                          |
| /s/                Robert K. MoskovitzROBERT                K. MOSKOVITZ         | Chief                Financial Officer, Treasurer of                the General Partner              | March                30, 2006 |
|                                                                             |                                                                                                 |                          |
|                                                                             |                                                                                                 |                          |
| /s/                Jonathan Z. CohenJONATHAN                Z. COHEN             | Director                of the General Partner                                                       | March                30, 2006 |
|                                                                             |                                                                                                 |                          |
|                                                                             |                                                                                                 |                          |
| /s/                Alan D. Schreiber, M.D.ALAN                D. SCHREIBER, M.D. | Director                of the General Partner                                                       | March                30, 2006 |
|                                                                             |                                                                                                 |                          |
|                                                                             |                                                                                                 |                          |
| /s/                Linda RichardsonLINDA                RICHARDSON               | Director                of the General Partner                                                       | March                30, 2006 |

**“Supplemental        Information to be Furnished With Reports Filed Pursuant to Section 15(d)        of        the**

**Act        by Registrants Which Have Not Registered Securities Pursuant to Section 12        of        the Act**

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