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United States

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2009



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

For the transition period from  to

Commission file number 333-84730

LEASE EQUITY APPRECIATION FUND I, L.P.

(Exact Name of Registrant as Specified in Its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 68-0492247                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

110 South Poplar Street, Suite 101, Wilmington Delaware 19801

(Address of principal executive offices)

(800) 819-5556

(Registrants telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                                               |  |                             
|-------------------------- |  | -------------------- |  | --------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated filer   ̈                      |  | Smaller Reporting Company  þ
|                           |  |                      |  | (Do not check if a smaller reporting company) |  |                             

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









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LEASE EQUITY APPRECIATION FUND I, L.P.

INDEX TO QUARTERLY REPORT

ON FORM
10-Q



|           |  |                                                                                                    |  |     
|---------- |  | -------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                    |  | PAGE
|PART I     |  | FINANCIAL INFORMATION                                                                              |  |     
|ITEM 1.    |  | Financial Statements                                                                               |  |     
|           |  | Consolidated Balance Sheets  June 30, 2009 (unaudited) and December 31, 2008                      |  | 3   
|           |  | Consolidated Statements of OperationsThree and Six Months Ended June 30, 2009 and 2008
(unaudited) |  | 4   
|           |  | Consolidated Statement of Changes in Partners CapitalSix Months Ended June 30, 2009
(unaudited)   |  | 5   
|           |  | Consolidated Statements of Cash FlowsSix Months Ended June 30, 2009 and 2008 (unaudited)           |  | 6   
|           |  | Notes to Consolidated Financial Statements  June 30, 2009 (unaudited)                             |  | 7   
|ITEM 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations              |  | 14  
|ITEM 3.    |  | Quantitative and Qualitative Disclosures about Market Risk                                         |  | 22  
|ITEM 4.    |  | Controls and Procedures                                                                            |  | 22  
|           |  |                                                                                                   
|PART II    |  | OTHER INFORMATION                                                                                  |  |     
|ITEM 6.    |  | Exhibits                                                                                           |  | 23  
|           | 
|SIGNATURES |  | 24                                                                                                



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Consolidated Balance Sheets

(in thousands)



|                                      |  |              |        |   |                  |   |         |  
|------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------- | -
|                                      |  | June 30,2009 |        |   | December 31,2008 |  
|                                      |  | (unaudited)  |        |   |                  |  
|ASSETS                                |  |              |        |   |                  |   |         |  
|Cash                                  |  | $            | 142    |   |                  | $ | 275     |  
|Restricted cash                       |  |              | 4,703  |   |                  |   | 7,367   |  
|Accounts receivable                   |  |              | 22     |   |                  |   | 31      |  
|Investment in leases and loans, net   |  |              | 78,924 |   |                  |   | 95,844  |  
|Deferred financing costs, net         |  |              | 535    |   |                  |   | 701     |  
|Other assets                          |  |              | 274    |   |                  |   | 217     |  
|                                      |  |              |        |   |                  |   |         |  
|                                      |  | $            | 84,600 |   |                  | $ | 104,435 |  
|                                      |  |              |        |   |                  |   |         |  
|LIABILITIES AND PARTNERS CAPITAL     |  |              |        |   |                  |   |         |  
|Liabilities:                          |  |              |        |   |                  |   |         |  
|Bank debt                             |  | $            | 72,424 |   |                  | $ | 91,057  |  
|Accounts payable and accrued expenses |  |              | 193    |   |                  |   | 219     |  
|Other liabilities                     |  |              | 136    |   |                  |   | 157     |  
|Derivative liabilities at fair value  |  |              | 2,632  |   |                  |   | 3,858   |  
|Due to affiliates                     |  |              | 7,927  |   |                  |   | 7,590   |  
|                                      |  |              |        |   |                  |   |         |  
|Total liabilities                     |  |              | 83,312 |   |                  |   | 102,881 |  
|                                      |  |              |        |   |                  |   |         |  
|                                      |  |             
|Commitments and contingencies         |  |              |        |   |                  |   |         |  
|                                      |  |             
|Partners Capital:                    |  |              |        |   |                  |   |         |  
|General partner                       |  |              | (109   | ) |                  |   | (94     | )
|Limited partners                      |  |              | 4,029  |   |                  |   | 5,506   |  
|Accumulated other comprehensive loss  |  |              | (2,632 | ) |                  |   | (3,858  | )
|                                      |  |              |        |   |                  |   |         |  
|Total partners capital               |  |              | 1,288  |   |                  |   | 1,554   |  
|                                      |  |              |        |   |                  |   |         |  
|                                      |  | $            | 84,600 |   |                  | $ | 104,435 |  
|                                      |  |              |        |   |                  |   |         |  

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



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LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Consolidated Statements of Operations

(in thousands, except unit data)

(unaudited)



|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|------------------------------------------------------------------------------ |  | -------------------------- | ------- | ------------------------ | - | ------- |  | - | ------- | - |  | - | -------
|                                                                               |  | Three Months EndedJune 30, |         | Six Months EndedJune 30,
|                                                                               |  | 2009                       |         | 2008                     |   | 2009    |  |   | 2008   
|Revenues:                                                                      |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|Interest on equipment financings                                               |  | $                          | 1,752   |                          | $ | 2,316   |  | $ | 3,850   |   |  | $ | 4,910  
|Rental income                                                                  |  |                            | 134     |                          |   | 84      |  |   | 271     |   |  |   | 145    
|Gains on sales of equipment and lease dispositions, net                        |  |                            | 149     |                          |   | 582     |  |   | 291     |   |  |   | 761    
|Other                                                                          |  |                            | 162     |                          |   | 172     |  |   | 334     |   |  |   | 390    
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|                                                                               |  |                            | 2,197   |                          |   | 3,154   |  |   | 4,746   |   |  |   | 6,206  
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|Expenses:                                                                      |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|Interest expense                                                               |  |                            | 1,078   |                          |   | 1,408   |  |   | 2,274   |   |  |   | 2,877  
|Depreciation on operating leases                                               |  |                            | 107     |                          |   | 57      |  |   | 217     |   |  |   | 96     
|Provision for credit losses                                                    |  |                            | 55      |                          |   | 646     |  |   | 1,095   |   |  |   | 1,113  
|General and administrative expenses                                            |  |                            | 374     |                          |   | 315     |  |   | 767     |   |  |   | 650    
|Administrative expenses reimbursed to affiliate                                |  |                            | 299     |                          |   | 262     |  |   | 626     |   |  |   | 457    
|Management fees to affiliate                                                   |  |                            | 276     |                          |   | 314     |  |   | 569     |   |  |   | 635    
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|                                                                               |  |                            | 2,189   |                          |   | 3,002   |  |   | 5,548   |   |  |   | 5,828  
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|Net income (loss)                                                              |  | $                          | 8       |                          | $ | 152     |  | $ | (802    | ) |  | $ | 378    
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|Weighted average number of limited partner units outstanding during the period |  |                            | 171,696 |                          |   | 171,711 |  |   | 171,696 |   |  |   | 171,728
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        
|Net income (loss) per weighted average limited partner unit                    |  | $                          | 0.05    |                          | $ | 0.88    |  | $ | (4.62   | ) |  | $ | 2.18   
|                                                                               |  |                            |         |                          |   |         |  |   |         |   |  |   |        

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



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LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Consolidated Statement of Changes in Partners Capital

For the Six Months Ended June 30, 2009

(in thousands, except unit data)

(unaudited)



|                                          |  |                 |   |  |                  |  |        |                                 |   |               |                 |        |         |               |   |               |   |  |   |       |  
|----------------------------------------- |  | --------------- | - |  | ---------------- |  | ------ | ------------------------------- | - | ------------- | --------------- | ------ | ------- | ------------- | - | ------------- | - |  | - | ----- | -
|                                          |  | General Partner |   |  | Limited Partners |  |        | Accumulated Other Comprehensive |   |               | Total Partners |        |         | Comprehensive |  
|                                          |  | Amount          |   |  | Units            |  | Amount |                                 |   | Income (Loss) |                 |        | Capital |               |   | Income (Loss) |  
|Balance, January 1, 2009                  |  | $          (94  | ) |  | 171,696          |  | $      | 5,506                           |   |               | $               | (3,858 | )       |               | $ | 1,554         |   |  |   |       |  
|Cash distributions                        |  | (7              | ) |  |                 |  |        | (683                            | ) |               |                 |       |         |               |   | (690          | ) |  |   |       |  
|Net loss                                  |  | (8              | ) |  |                 |  |        | (794                            | ) |               |                 |       |         |               |   | (802          | ) |  | $ | (802  | )
|Unrealized gains on financial derivatives |  |                |   |  |                 |  |        |                                |   |               |                 | 1,226  |         |               |   | 1,226         |   |  |   | 1,226 |  
|                                          |  |                 |   |  |                  |  |        |                                 |   |               |                 |        |         |               |   |               |   |  |   |       |  
|Balance, June 30, 2009                    |  | $        (109   | ) |  | 171,696          |  | $      | 4,029                           |   |               | $               | (2,632 | )       |               | $ | 1,288         |   |  | $ | 424   |  
|                                          |  |                 |   |  |                  |  |        |                                 |   |               |                 |        |         |               |   |               |   |  |   |       |  

The accompanying notes are an integral part of this consolidated financial statement.



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LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



|                                                                                         |  |                          |         |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                         |  | Six Months EndedJune 30, |        
|                                                                                         |  | 2009                     |         |   | 2008 |  
|Cash flows from operating activities:                                                    |  |                          |         |   |      |   |         |  
|Net (loss) income                                                                        |  | $                        | (802    | ) |      | $ | 378     |  
|Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |                          |         |   |      |   |         |  
|Gains on sales of equipment and lease dispositions, net                                  |  |                          | (291    | ) |      |   | (761    | )
|Depreciation                                                                             |  |                          | 217     |   |      |   | 96      |  
|Provision for credit losses                                                              |  |                          | 1,095   |   |      |   | 1,113   |  
|Amortization of deferred financing costs                                                 |  |                          | 168     |   |      |   | 106     |  
|Changes in operating assets and liabilities                                              |  |                          |         |   |      |   |         |  
|Accounts receivable                                                                      |  |                          | 9       |   |      |   | (18     | )
|Other assets                                                                             |  |                          | (57     | ) |      |   | 190     |  
|Accounts payable and accrued expenses and other liabilities                              |  |                          | (47     | ) |      |   | (400    | )
|Due to affiliates, net                                                                   |  |                          | 337     |   |      |   | 2,594   |  
|                                                                                         |  |                          |         |   |      |   |         |  
|Net cash provided by operating activities                                                |  |                          | 629     |   |      |   | 3,298   |  
|                                                                                         |  |                          |         |   |      |   |         |  
|Cash flows from investing activities:                                                    |  |                          |         |   |      |   |         |  
|Purchases of leases and loans                                                            |  |                          | (3,651  | ) |      |   | (38,493 | )
|Proceeds from leases and loans                                                           |  |                          | 19,571  |   |      |   | 24,643  |  
|Proceeds from sale of leases to third parties                                            |  |                          |        |   |      |   | 5,625   |  
|Security deposits returned, net of collections                                           |  |                          | (21     | ) |      |   | 456     |  
|                                                                                         |  |                          |         |   |      |   |         |  
|Net cash provided by (used in) investing activities                                      |  |                          | 15,899  |   |      |   | (7,769  | )
|                                                                                         |  |                          |         |   |      |   |         |  
|Cash flows from financing activities:                                                    |  |                          |         |   |      |   |         |  
|Borrowings of bank debt                                                                  |  |                          | 4,145   |   |      |   | 34,398  |  
|Repayment of bank debt                                                                   |  |                          | (22,778 | ) |      |   | (30,184 | )
|Decrease in restricted cash                                                              |  |                          | 2,664   |   |      |   | 1,122   |  
|Increase in deferred financing costs                                                     |  |                          | (2      | ) |      |   |        |  
|Cash distributions to partners                                                           |  |                          | (690    | ) |      |   | (869    | )
|Redemption of limited partner units                                                      |  |                          |        |   |      |   | (3      | )
|                                                                                         |  |                          |         |   |      |   |         |  
|Net cash (used in) provided by financing activities                                      |  |                          | (16,661 | ) |      |   | 4,464   |  
|                                                                                         |  |                          |         |   |      |   |         |  
|Decrease in cash                                                                         |  |                          | (133    | ) |      |   | (7      | )
|Cash, beginning of period                                                                |  |                          | 275     |   |      |   | 573     |  
|                                                                                         |  |                          |         |   |      |   |         |  
|Cash, end of period                                                                      |  | $                        | 142     |   |      | $ | 566     |  
|                                                                                         |  |                          |         |   |      |   |         |  

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



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LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 1  ORGANIZATION AND NATURE OF BUSINESS

Lease Equity Appreciation Fund I, L.P. (the Fund) is a
Delaware limited partnership formed on January 31, 2002, by its General Partner, LEAF Financial Corporation (the General Partner). The General Partner is a majority owned indirect subsidiary of Resource America, Inc.
(RAI). RAI is a publicly-traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its commercial finance, real estate and financial fund management
segments. As of August 15, 2004, the date the Funds offering period terminated, the Fund had raised $17.1 million through the sale of 171,746 of its limited partner units.

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

As of June 30, 2009, in addition to its
1% general partnership interest, the General Partner also invested $805,000 for a 6% limited partnership interest in the Fund. The Fund is managed by the General Partner.

The Fund is expected to have a nine-year life, consisting of an offering period of up to two years, a five-year reinvestment period and a subsequent maturity period of approximately two years, during which the
Funds leases and secured loans will either mature or be sold and the Fund will liquidate its other assets. The Funds five-year reinvestment period ends later this year, and the Fund expects to enter the two-year maturity period prior to
December 31, 2009. The Fund will terminate on December 31, 2027, unless sooner dissolved or terminated as provided in the Limited Partnership Agreement.

The consolidated financial statements and notes thereto as of June 30, 2009 and for the three and six months ended June 30, 2009 and 2008 are unaudited. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial
statements should be read in conjunction with the audited consolidated financial statements included in the Funds Annual Report on Form 10-K for the year ended December 31, 2008. The results of operations for the six months ended
June 30, 2009 may not necessarily be indicative of the results of operations for the full year ending December 31, 2009.

NOTE 2 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Newly Adopted Accounting Principles

In
March 2008, the Fund adopted Statement of Financial Accounting Standards (SFAS) 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS 133 (SFAS 161). This
new standard requires enhanced disclosures for derivative instruments, including those used in hedging activities, which the Fund has included in Note 5. The adoption of SFAS 161 had no impact on the Funds consolidated financial statements.



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LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements  (Continued)

June 30, 2009

(unaudited)

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (Continued)

Newly Adopted Accounting Principles
 (Continued)

In April 2009, the FASB issued SFAS 165, Subsequent Events, which establishes general standards
of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. The Fund adopted SFAS 165 for the quarter ended June 30, 2009.

In April 2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments (FSP FAS 107-1 and APB 28-1), which amend SFAS 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments in interim as
well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting to require those disclosures in summarized financial information at interim reporting periods. The adoption of
FSP FAS 107-1 and APB 28-1 had no impact on the Funds financial position or results of operations.

NOTE 3  INVESTMENT IN LEASES AND
LOANS

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



|                            |  |              |        |   |                  |   |        |  
|--------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|                            |  | June 30,2009 |        |   | December 31,2008 |  
|Direct financing leases     |  | $            | 64,787 |   |                  | $ | 77,652 |  
|Loans                       |  |              | 14,831 |   |                  |   | 18,769 |  
|Operating leases            |  |              | 1,086  |   |                  |   | 1,173  |  
|                            |  |              |        |   |                  |   |        |  
|                            |  |              | 80,704 |   |                  |   | 97,594 |  
|Allowance for credit losses |  |              | (1,780 | ) |                  |   | (1,750 | )
|                            |  |              |        |   |                  |   |        |  
|                            |  | $            | 78,924 |   |                  | $ | 95,844 |  
|                            |  |              |        |   |                  |   |        |  

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



|                                           |  |               |        |   |                   |   |        |        |  |   |         |   |  |   |        |  
|------------------------------------------ |  | ------------- | ------ | - | ----------------- | - | ------ | ------ |  | - | ------- | - |  | - | ------ | -
|                                           |  | June 30, 2009 |        |   | December 31, 2008 |  
|                                           |  | Leases        |        |   | Loans             |   |        | Leases |  |   | Loans   |  
|Total future minimum payments              |  | $             | 72,524 |   |                   | $ | 17,645 |        |  | $ | 87,984  |   |  | $ | 22,436 |  
|Unearned income                            |  |               | (8,501 | ) |                   |   | (2,551 | )      |  |   | (11,053 | ) |  |   | (3,342 | )
|Residuals, net of unearned residual income |  |               | 1,366  |   |                   |   |       |        |  |   | 1,257   |   |  |   |       |  
|Security deposits                          |  |               | (602   | ) |                   |   | (263   | )      |  |   | (536    | ) |  |   | (325   | )
|                                           |  |               |        |   |                   |   |        |        |  |   |         |   |  |   |        |  
|                                           |  | $             | 64,787 |   |                   | $ | 14,831 |        |  | $ | 77,652  |   |  | $ | 18,769 |  
|                                           |  |               |        |   |                   |   |        |        |  |   |         |   |  |   |        |  



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LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements  (Continued)

June 30, 2009

(unaudited)

NOTE 3  INVESTMENT IN LEASES AND LOANS  (Continued)

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



|                         |  |              |       |   |                  |   |       |  
|------------------------ |  | ------------ | ----- | - | ---------------- | - | ----- | -
|                         |  | June 30,2009 |       |   | December 31,2008 |  
|Equipment                |  | $            | 1,935 |   |                  | $ | 2,003 |  
|Accumulated depreciation |  |              | (845  | ) |                  |   | (821  | )
|Security deposits        |  |              | (4    | ) |                  |   | (9    | )
|                         |  |              |       |   |                  |   |       |  
|                         |  | $            | 1,086 |   |                  | $ | 1,173 |  
|                         |  |              |       |   |                  |   |       |  

The following is a summary of the Funds allowance for credit losses (in thousands):



|                                                 |  |                            |       |   |                          |   |      |      |  |   |        |   |  |   |        |  
|------------------------------------------------ |  | -------------------------- | ----- | - | ------------------------ | - | ---- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                 |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                                 |  | 2009                       |       |   | 2008                     |   |      | 2009 |  |   | 2008   |  
|Allowance for credit losses, beginning of period |  | $                          | 1,930 |   |                          | $ | 550  |      |  | $ | 1,750  |   |  | $ | 600    |  
|Provision for credit losses                      |  |                            | 55    |   |                          |   | 645  |      |  |   | 1,095  |   |  |   | 1,113  |  
|Charge-offs                                      |  |                            | (234  | ) |                          |   | (645 | )    |  |   | (1,111 | ) |  |   | (1,228 | )
|Recoveries                                       |  |                            | 29    |   |                          |   |     |      |  |   | 46     |   |  |   | 65     |  
|                                                 |  |                            |       |   |                          |   |      |      |  |   |        |   |  |   |        |  
|Allowance for credit losses, end of period       |  | $                          | 1,780 |   |                          | $ | 550  |      |  | $ | 1,780  |   |  | $ | 550    |  
|                                                 |  |                            |       |   |                          |   |      |      |  |   |        |   |  |   |        |  

The Fund discontinues the recognition of revenue for leases and loans for which payments are more
than 90 days past due (non-accrual). As of June 30, 2009 and December 31, 2008, the Fund had $4.8 million and $4.1 million, respectively, of leases and loans on non-accrual status.



9



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##### Table of Contents

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements  (Continued)

June 30, 2009

(unaudited)

NOTE 4  BANK DEBT

The Fund has a secured term loan agreement with WestLB AG, New York Branch
which is collateralized by specific lease receivables and related equipment. As of June 30, 2009, the outstanding balance under this financing arrangement was $72.4 million. Interest and principal are due as payments are received under the
leases and loans, with any remaining balance due in March 2014. Interest on this facility is calculated at LIBOR plus 0.95% per annum. To mitigate fluctuations in interest rates, the Fund has entered into interest rate swap agreements which fix
the interest rate on this facility at 5.3%. The interest rate swap agreements terminate at various dates ranging from February 2010 to June 2015. Recourse under this facility is limited to the amount of collateral pledged. As of June 30, 2009,
$75.6 million of leases and loans and $3.9 million of restricted cash were pledged as collateral under this facility. As of June 30, 2009, the Fund is in compliance with all covenants under this agreement.

Debt repayments.Annual principal payments on the Funds aggregate borrowings over the next five years ended June 30 and thereafter are
as follows (in thousands):



|     |  |   |       
|---- |  | - | ------
|2010 |  | $ | 29,792
|2011 |  |   | 21,292
|2012 |  |   | 12,333
|2013 |  |   | 6,332 
|2014 |  |   | 2,675 
|     |  |   |       
|     |  | $ | 72,424
|     |  |   |       

NOTE 5  DERIVATIVE INSTRUMENTS

The majority of the Funds assets and liabilities are financial contracts with fixed and variable rates. Any mismatch between the repricing and
maturity characteristics of the Funds assets and liabilities exposes it to interest rate risk when interest rates fluctuate. For example, the Funds assets are structured on a fixed-rate basis, but since funds borrowed through bank debt
are obtained on a floating-rate basis, the Fund is exposed to a certain degree of risk if interest rates rise which in turn will increase the Funds borrowing costs. In addition, when the Fund acquires assets, it bases its pricing in part on
the spread it expects to achieve between the interest rate it charges its customers and the effective interest cost the Fund will pay when it funds those loans. Increases in interest rates that increase the Funds permanent funding costs
between the time the assets are originated and the time they are funded could narrow, eliminate or even reverse this spread.

To manage
interest rate risk, the Fund employs a hedging strategy using derivative financial instruments such as interest rate swaps which are designated as cash flow hedges. For derivatives designated and qualifying as cash flow hedges, the effective portion
of changes in fair value of those derivatives are recorded in Accumulated Other Comprehensive Loss and are subsequently reclassified into earnings when the hedged forecasted interest payments are recognized in earnings. The Fund does not use
derivative financial instruments for trading or speculative purposes. The Fund manages the credit risk of possible counterparty default in these derivative transactions by dealing primarily with counterparties with investment grade ratings. The Fund
has agreements with certain of its derivative counterparties that contain a provision where if the Fund defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the
lender, then the Fund could also be declared in default on its derivative obligations. The Fund has agreements with certain of its derivative counterparties that incorporates the loan covenant provisions of the Funds indebtedness with a
lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Fund being in default on any derivative instrument obligations covered by the agreement. As of June 30, 2009, the fair
value of



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##### Table of Contents

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements  (Continued)

June 30, 2009

(unaudited)

NOTE 5  DERIVATIVE INSTRUMENTS  (Continued)

derivatives in a net liability position, which excludes any
adjustment for nonperformance risk, related to these agreements was $2.7 million. As of June 30, 2009, the Fund has not posted any collateral related to these agreements. If the Fund had breached any of these provisions at June 30, 2009,
it could have been required to settle its obligations under the agreements at their termination value of $2.7 million.

Before entering
into a derivative transaction for hedging purposes, the Fund determines that a high degree of initial effectiveness exists between the change in the value of the hedged forecasted transactions and the change in the value of the derivative from a
movement in interest rates. High effectiveness means that the change in the value of the derivative is expected to provide a high degree of offset against changes in the value of the hedged forecasted transactions caused by changes in interest rate
risk. The Fund measures the effectiveness of each cash flow hedge throughout the hedge period. Any hedge ineffectiveness on cash flow hedging relationships, as defined by U.S. GAAP, is recognized in the consolidated statements of operations.

There can be no assurance that the Funds hedging strategies or techniques will be effective, that profitability will not be
adversely affected during any period of change in interest rates or that the costs of hedging will not exceed the benefits.

The following
tables present the fair value of the Funds derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of June 30, 2009:



|                                                             |  |                |        |                        |                                      |           |   |      
|------------------------------------------------------------ |  | -------------- | ------ | ---------------------- | ------------------------------------ | --------- | - | -----
|                                                             |  | NotionalAmount |        | Balance Sheet Location |                                      | FairValue
|Derivatives designated as hedging instruments under SFAS 133 |  |                |        |                        |                                      |           |   |      
|Interest rate swap contracts                                 |  | $              | 68,057 |                        | Derivative liabilities at fair value |           | $ | 2,632



|                                                                         |  |                                                                          |       |                                                                                            |   |               |  |                   |  |   |                 |   |  |   |        |  
|------------------------------------------------------------------------ |  | ------------------------------------------------------------------------ | ----- | ------------------------------------------------------------------------------------------ | - | ------------- |  | ----------------- |  | - | --------------- | - |  | - | ------ | -
|Derivatives designated as Cash Flow Hedging Relationships under SFAS 133 |  | Amount of Gain orLoss Recognized inOCI on Derivatives(Effective Portion) |       | Location and Amount of LossReclassified from
Accumulated OCIinto Income(Effective Portion) |  
|                                                                         |  | ThreeMonthsEnded                                                         |       | SixMonthsEnded                                                                             |   |               |  | Three MonthsEnded |  |   | Six MonthsEnded |  
|                                                                         |  | June 30, 2009                                                            |       |                                                                                            |   | June 30, 2009 | 
|Interest Rate Products                                                   |  | $                                                                        | 1,414 |                                                                                            | $ | 2,745         |  | Interest expense  |  | $ | (708            | ) |  | $ | (1,519 | )

For the three and six months ended June 30, 2009 and 2008, the Fund recognized no gain or
loss for hedge ineffectiveness. Assuming market rates remain constant with the rates as of June 30, 2009, $1.9 million of the $2.6 million in accumulated other comprehensive loss is expected to be charged to earnings over the next 12 months.



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##### Table of Contents

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements  (Continued)

June 30, 2009

(unaudited)

NOTE 6  FAIR VALUE MEASUREMENT

For cash, receivables and payables, the carrying amounts
approximate fair values because of the short term maturity of these instruments. The carrying value of debt approximates fair market value since interest rates approximate current market rates.

It is not practicable for the Fund to estimate the fair value of the Funds loans. They comprise of a large number of transactions with commercial
customers in different businesses, and may be secured by liens on various types of equipment and may be guaranteed by third parties and cross-collateralized. Any difference between the carrying value and fair value of each transaction would be
affected by a potential buyers assessment of the transactions credit quality, collateral value, guarantees, payment history, yield, term, documents and other legal matters, and other subjective considerations. Value received in a fair
market sale of a transaction would be based on the terms of the sale, the Funds and the buyers views of economic and industry conditions, the Funds and the buyers tax considerations, and other factors.

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



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



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



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

The Fund employs a hedging strategy to manage exposure to the effects of changes in market interest rates. All derivatives are recorded on the Balance Sheets at their fair value as either assets or liabilities. Because the Funds
derivatives are not listed on an exchange, these instruments are valued by a third-party pricing agent using an income approach and utilizing models that use as their primary basis readily observable market parameters. This valuation process
considers factors including interest rate yield curves, time value, credit factors and volatility factors. Although the Fund has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value
hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, the Fund has
assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its
derivatives. As a result, the Fund has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Assets and liabilities measured at fair value on a recurring basis include the
following as of June 30, 2009 (in thousands):



|                    |  |                               |   |             |             |   |         |   |               |  |   |        |  
|------------------- |  | ----------------------------- | - | ----------- | ----------- | - | ------- | - | ------------- |  | - | ------ | -
|                    |  | Fair Value Measurements Using |   | Liabilities |            
|                    |  | Level 1                       |   | Level 2     |             |   | Level 3 |   | At Fair Value | 
|Interest Rate Swaps |  | $                             |  |             | $    (2,632 | ) |         | $ |              |  | $ | (2,632 | )



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##### Table of Contents

LEASE EQUITY APPRECIATION FUND I, L.P. AND SUBSIDIARY

Notes To Consolidated Financial Statements  (Continued)

June 30, 2009

(unaudited)

NOTE 7  CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH AFFILIATES

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



|                        |  |                            |     |                          |   |      |  |      |     |  |   |    
|----------------------- |  | -------------------------- | --- | ------------------------ | - | ---- |  | ---- | --- |  | - | ---
|                        |  | Three Months EndedJune 30, |     | Six Months EndedJune 30,
|                        |  | 2009                       |     | 2008                     |   | 2009 |  | 2008
|Acquisition fees        |  | $                          |    |                          | $ | 391  |  | $    | 77  |  | $ | 721
|Management fees         |  |                            | 276 |                          |   | 314  |  |      | 569 |  |   | 635
|Administrative expenses |  |                            | 299 |                          |   | 262  |  |      | 626 |  |   | 457

Acquisition Fees.The General Partner is paid a fee for assisting the Fund in acquiring
equipment subject to existing equipment leases equal to 2% of the purchase price the Fund pays for the equipment or portfolio of equipment subject to existing equipment financing.

Management Fees. The General Partner is paid a subordinated annual asset management fee equal to 4% or 2% of gross rental payments for operating
leases, or full payout leases, respectively, or a competitive fee, whichever is less. During the Funds five-year investment period, the management fees will be subordinated to the payment to the Funds limited partners of a cumulative
annual distribution of 8% of their capital contributions, as adjusted by distributions deemed to be a return of capital.

Administrative
Fees. The General Partner and its affiliates are reimbursed by the Fund for certain costs of services and materials used by or for the Fund except those items covered by the above-mentioned fees.

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

NOTE 8  COMMITMENTS AND CONTINGENCIES

In connection with a sale of leases and loans to a third party, the Fund agreed to repurchase delinquent leases up to a maximum of 7.5% of total proceeds
received from the sale (Repurchase Liability). The Funds maximum remaining Repurchase Liability at June 30, 2009 is $78,000. The Fund has recorded a liability of $25,000 to reflect the estimate of losses it expects to incur on
assets repurchased. This liability is included in Other Liabilities on the Consolidated Balance Sheets.

NOTE 9  SUBSEQUENT EVENTS

The Fund has evaluated subsequent events through August 13, 2009, the date which these financial statements were issued and filed
with the SEC, and determined that there have not been any events that have occurred that would require adjustments to or disclosure in the unaudited consolidated financial statements.



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##### Table of Contents

ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

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

Overview

We are a Delaware limited partnership
formed on January 31, 2002 by our General Partner, LEAF Financial Corporation (our General Partner). Our General Partner is a majority owned indirect subsidiary of Resource America, Inc. (RAI). RAI is a publicly-traded
company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its commercial finance, real estate and financial fund management segments. As of August 15, 2004, the date
our offering period terminated, we raised $17.1 million through the sale of 171,746 of our limited partner units.

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



| |  |  | 500 or fewer employees;
| | - |  | -----------------------



| |  |  | $1.0 billion or less in total assets; or
| | - |  | ----------------------------------------



| |  |  | $100.0 million or less in total annual sales.
| | - |  | ---------------------------------------------

Our principal objective is to generate regular cash distributions to our limited partners.

Our leases
consist of direct financing and operating leases as defined by accounting principles generally accepted in the United States of America (U.S. GAAP). Under the direct financing method of accounting, interest income (the excess of the
aggregate future rentals and estimated unguaranteed residuals upon expiration of the lease over the related equipment cost) is recognized over the life of the lease using the interest method. Under the operating method, the cost of the leased
equipment, including acquisition fees associated with lease placements, is recorded as an asset and depreciated on a straight-line basis over its estimated useful life. Rental income on operating leases consists primarily of monthly periodic rentals
due under the terms of the leases. Generally, during the lease terms of existing operating leases, we will not recover all of the cost and related expenses of rental equipment and, therefore, we are prepared to remarket the equipment in future
years. We discontinue the recognition of revenue for leases and loans for which payments are more than 90 days past due. These assets are classified as non-accrual.

As further discussed in the Finance Receivables and Asset Quality section below, the current economic recession in the United States has adversely affected our operations as a result of higher
delinquencies and it may continue to do so until the economy recovers.



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##### Table of Contents

Finance Receivables and Asset Quality

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



|                                                                            |  |              |        |   |                  |   |        |  
|--------------------------------------------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|                                                                            |  | June 30,2009 |        |   | December 31,2008 |  
|Investment in leases and loans, net                                         |  | $            | 78,924 |   |                  | $ | 95,844 |  
|Number of contracts                                                         |  |              | 10,100 |   |                  |   | 12,700 |  
|Number of individual end users(a)                                           |  |              | 9,100  |   |                  |   | 11,600 |  
|Average original equipment cost                                             |  | $            | 19.2   |   |                  | $ | 15.7   |  
|Average initial term (in months)                                            |  |              | 51     |   |                  |   | 53     |  
|States accounting for more than 10% of lease and loan portfolio:            |  |              |        |   |                  |   |        |  
|California                                                                  |  |              | 11     | % |                  |   | 11     | %
|Types of equipment accounting for 10% or more of lease and loan portfolio:  |  |              |        |   |                  |   |        |  
|Industrial equipment                                                        |  |              | 22     | % |                  |   | 23     | %
|Medical equipment                                                           |  |              | 19     | % |                  |   | 19     | %
|Office equipment                                                            |  |              | 14     | % |                  |   | 13     | %
|Water purification                                                          |  |              | 11     | % |                  |   | 11     | %
|Types of businesses accounting for 10% or more of lease and loan portfolio: |  |              |        |   |                  |   |        |  
|Services                                                                    |  |              | 48     | % |                  |   | 47     | %
|Retail trade                                                                |  |              | 13     | % |                  |   | 13     | %
|Manufacturing                                                               |  |              | 9      | % |                  |   | 10     | %



|(a) | Located in the 50 states as well as the District of Columbia and Puerto Rico. No individual end user or single piece of equipment accounted for more than 2% of our portfolio based
on original cost of the equipment.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of June 30, 2009, the average original equipment cost increased as compared to
December 31, 2008 as a result of an increase in the average original equipment cost of leases acquired from our General Partner in 2009.

We utilize debt in addition to our equity to fund the acquisitions of lease portfolios. As of June 30, 2009 and December 31, 2008, our outstanding debt was $72.4 million and $91.1 million, respectively.



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##### Table of Contents

The performance of our lease and loan portfolio is a measure of our General Partners underwriting
and collection standards, skills, policies and procedures and is an indication of asset quality. The table below provides information about our finance receivables including non-performing assets, which are those assets that are not accruing income
due to non-performance or impairment (dollars in thousands):



|                                                                                                    |  |                                            |        |   |                              |   |         |        |  |   |              |   |  |      |    |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------------------------ | ------ | - | ---------------------------- | - | ------- | ------ |  | - | ------------ | - |  | ---- | -- |  | - | ------- | -
|                                                                                                    |  | As of and for theSix Months Ended June 30, |        |   | As of and for the Year Ended |  
|                                                                                                    |  |                                            |        |   |                              |   |         | Change |  |   | December 31, |  
|                                                                                                    |  | 2009                                       |        |   | 2008                         |   |         | $      |  |   | %            |   |  | 2008 |   
|Investment in direct financing leases and loans before allowance for credit losses                  |  | $                                          | 79,618 |   |                              | $ | 108,407 |        |  | $ | (28,789      | ) |  | (27  | )% |  | $ | 96,421  |  
|Weighted average investment in direct financing leases and loans before allowance for credit losses |  |                                            | 88,670 |   |                              |   | 106,446 |        |  |   | (17,776      | ) |  | (17  | )% |  |   | 105,908 |  
|Allowance for credit losses                                                                         |  |                                            | 1,780  |   |                              |   | 550     |        |  |   | 1,230        |   |  | 224  | %  |  |   | 1,750   |  
|Non-performing assets                                                                               |  |                                            | 4,801  |   |                              |   | 2,699   |        |  |   | 2,102        |   |  | 78   | %  |  |   | 4,142   |  
|Charge-offs, net of recoveries                                                                      |  | $                                          | 1,065  |   |                              | $ | 1,163   |        |  | $ | (98          | ) |  | (8   | )% |  | $ | 1,789   |  
|As a percentage of finance receivables:                                                             |  |                                            |        |   |                              |   |         |        |  |   |              |   |  |      |    |  |   |         |  
|Allowance for credit losses                                                                         |  |                                            | 2.24   | % |                              |   | 0.51    | %      |  |   |              |   |  |      |    |  |   | 1.81    | %
|Non-performing assets                                                                               |  |                                            | 6.03   | % |                              |   | 2.49    | %      |  |   |              |   |  |      |    |  |   | 4.30    | %
|As a percentage of weighted average finance receivables:                                            |  |                                            |        |   |                              |   |         |        |  |   |              |   |  |      |    |  |   |         |  
|Charge-offs, net of recoveries                                                                      |  |                                            | 1.20   | % |                              |   | 1.09    | %      |  |   |              |   |  |      |    |  |   | 1.69    | %

We manage our credit risk by adhering to strict credit policies and procedures, and closely
monitoring our receivables. Our General Partner, the servicer of our leases and loans, has responded to the current economic recession by increasing the number of employees in its collection department and it has implemented earlier intervention
techniques in collection procedures. Our General Partner has also increased its credit standards and limited the amount of business we do with respect to certain industries, geographic locations and equipment types. Because of the current scarcity
of credit available to small and mid-size businesses we have been able to increase our credit standards without reducing the rate we charge on our leases and loans.

Our allowance for credit losses is our estimate of losses inherent in our commercial finance receivables. The allowance is based on factors which include our historical loss experience on equipment finance portfolios
we manage, an analysis of contractual delinquencies, current economic conditions and trends and equipment finance portfolio characteristics, adjusted for recoveries. In evaluating historic performance, we perform a migration analysis, which
estimates the likelihood that an account progresses through delinquency stages to ultimate charge off. Our policy is to charge off to the allowance those financings which are in default and for which management has determined the probability of
collection to be remote. Substantially all of our assets are collateral for our debt and, therefore, significantly greater delinquencies than anticipated will have an adverse impact on our cash flow and distributions to our partners.

The current economic recession in the United States has adversely affected our operations as a result of higher delinquencies and it may continue to do
so until the economy recovers. The increase in delinquencies, as well as the current economic trends, has caused us to conclude that a greater allowance for credit loss is necessary. In addition our non-performing assets have increased due to the
increase in customers who are more than ninety days delinquent at June 30, 2009, compared to December 31, 2008 and June 30, 2008.



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##### Table of Contents

The equipment we finance includes computers, copiers, office furniture, water filtration systems,
machinery used in manufacturing and construction, medical equipment and telecommunications equipment. We focus on financing equipment used by small to mid-size businesses, and our General Partner anticipates that the recession will make it more
difficult for some of our customers to make payments on their financings with us on a timely basis, which could result in higher delinquencies.

Our net charge-offs, as a percentage of weighted average finance receivables, increased in the six months ended June 30, 2009 compared to 2008 due to the aging of our portfolio of leases and loans as well as the current economic
recession as discussed above.

Critical Accounting Policies

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

For a complete discussion of our critical accounting policies and estimates, see our annual report on Form 10-K for fiscal 2008 under
Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Policies and Estimates.



17



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##### Table of Contents

Results of Operations

Three Months Ended June 30, 2009 compared to the Three Months Ended June 30, 2008

The following summarizes our
results of operations for the three months ended June 30, 2009 and 2008 (dollars in thousands):



|                                                        |  |          |       |                     |   |       |  |   |      |   |  |     |   
|------------------------------------------------------- |  | -------- | ----- | ------------------- | - | ----- |  | - | ---- | - |  | --- | --
|                                                        |  | June 30, |       | Increase (Decrease) |  
|                                                        |  | 2009     |       | 2008                |   | $     |  |   | %    |  
|Revenues:                                               |  |          |       |                     |   |       |  |   |      |   |  |     |   
|Interest on equipment financings                        |  | $        | 1,752 |                     | $ | 2,316 |  | $ | (564 | ) |  | (24 | %)
|Rental income                                           |  |          | 134   |                     |   | 84    |  |   | 50   |   |  | 60  | % 
|Gains on sales of equipment and lease dispositions, net |  |          | 149   |                     |   | 582   |  |   | (433 | ) |  | (74 | %)
|Other                                                   |  |          | 162   |                     |   | 172   |  |   | (10  | ) |  | (6  | %)
|                                                        |  |          |       |                     |   |       |  |   |      |   |  |     |   
|                                                        |  |          | 2,197 |                     |   | 3,154 |  |   | (957 | ) |  | (30 | %)
|                                                        |  |          |       |                     |   |       |  |   |      |   |  |     |   
|Expenses:                                               |  |          |       |                     |   |       |  |   |      |   |  |     |   
|Interest expense                                        |  | $        | 1,078 |                     | $ | 1,408 |  | $ | (330 | ) |  | (23 | %)
|Depreciation on operating leases                        |  |          | 107   |                     |   | 57    |  |   | 50   |   |  | 88  | % 
|Provision for credit losses                             |  |          | 55    |                     |   | 646   |  |   | (591 | ) |  | (91 | %)
|General and administrative expenses                     |  |          | 374   |                     |   | 315   |  |   | 59   |   |  | 19  | % 
|Administrative expenses reimbursed to affiliate         |  |          | 299   |                     |   | 262   |  |   | 37   |   |  | 14  | % 
|Management fees to affiliate                            |  |          | 276   |                     |   | 314   |  |   | (38  | ) |  | (12 | %)
|                                                        |  |          |       |                     |   |       |  |   |      |   |  |     |   
|                                                        |  |          | 2,189 |                     |   | 3,002 |  |   | (813 | ) |  | (27 | %)
|                                                        |  |          |       |                     |   |       |  |   |      |   |  |     |   
|Net income                                              |  | $        | 8     |                     | $ | 152   |  | $ | (144 | ) |  | (95 | %)
|                                                        |  |          |       |                     |   |       |  |   |      |   |  |     |   

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



| |  |  | a decrease in interest on equipment financings due to a decrease in our weighted average net investment in financing assets which decreased to $84.3 million for the
three months ended June 30, 2009 as compared to $107.8 million for the three months ended June 30, 2008, a decrease of $23.5 million (22%). This decrease was offset by the increased yields on leases acquired in 2008 due to an increase in
the rates we were able to charge as a result of the current scarcity of credit available to small and mid-size businesses. As expected, we will enter our liquidation phase later this year. As a result, we do not plan to acquire additional leases and
loans. Therefore, our revenues are expected to continue to decline as our weighted average net investment in financing assets declines.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a decrease in gains on sales of equipment and lease dispositions, net. Gains and losses on sales of equipment may vary significantly from period to period.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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



| |  |  | a decrease in interest expense due to a decrease in average debt outstanding. Weighted average borrowings decreased to $78.0 million for the 2009 period compared to
$100.3 million for the 2008 period, a decrease of $22.3 million (22%). Borrowings for the 2009 and 2008 periods were at an effective interest rate of 5.5% and 5.6%, respectively. Because we are entering our liquidation phase later this year, we
amended our debt facility earlier this year such that it is now a term facility which is contractually repaid over time and we are not able to borrow additional amounts. As a result, our interest expense is expected to continue to decline.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a decrease in our provision for credit losses. We provide for credit losses when losses are likely to occur based on migration analysis of past due payments and
economic conditions. Our provision for credit losses has decreased due to the decrease in our portfolio.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a decrease in management fees to affiliate attributable to the decrease in our portfolio of equipment financing assets, since management fees are paid based on
lease payments received.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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These decreases were partially offset by:



| |  |  | an increase in depreciation on operating leases related to our increase in our investment in operating leases since June 30, 2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | an increase in administrative expenses reimbursed to affiliate due to the hiring of additional collection personnel by our General Partner to attempt to control the
impact of delinquencies resulting from the economic recession in the United States.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The net income per limited partner
unit, after the net income allocated to our General Partner for the three months ended June 30, 2009 and 2008 was $0.05 and $0.88, respectively, based on a weighted average number of limited partner units outstanding of 171,696 and 171,711,
respectively.

Six Months Ended June 30, 2009 compared to the Six Months Ended June 30, 2008

The following summarizes our results of operations for the six months ended June 30, 2009 and 2008 (dollars in thousands):



|                                                        |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|------------------------------------------------------- |  | ---- | ----- | ------------------- | ---- | - | ----- |  | - | ------ | - |  | ---- | --
|                                                        |  |      |       | Increase (Decrease) |     
|                                                        |  | 2009 |       |                     | 2008 |   | $     |  |   | %      |  
|Revenues:                                               |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|Interest on equipment financings                        |  | $    | 3,850 |                     |      | $ | 4,910 |  | $ | (1,060 | ) |  | (22  | %)
|Rental income                                           |  |      | 271   |                     |      |   | 145   |  |   | 126    |   |  | 87   | % 
|Gains on sales of equipment and lease dispositions, net |  |      | 291   |                     |      |   | 761   |  |   | (470   | ) |  | (62  | %)
|Other                                                   |  |      | 334   |                     |      |   | 390   |  |   | (56    | ) |  | (14  | %)
|                                                        |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|                                                        |  |      | 4,746 |                     |      |   | 6,206 |  |   | (1,460 | ) |  | (24  | %)
|                                                        |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|Expenses:                                               |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|Interest expense                                        |  |      | 2,274 |                     |      |   | 2,877 |  |   | (603   | ) |  | (21  | %)
|Depreciation on operating leases                        |  |      | 217   |                     |      |   | 96    |  |   | 121    |   |  | 126  | % 
|Provision for credit losses                             |  |      | 1,095 |                     |      |   | 1,113 |  |   | (18    | ) |  | (2   | %)
|General and administrative expenses                     |  |      | 767   |                     |      |   | 650   |  |   | 117    |   |  | 18   | % 
|Administrative expenses reimbursed to affiliate         |  |      | 626   |                     |      |   | 457   |  |   | 169    |   |  | 37   | % 
|Management fees to affiliate                            |  |      | 569   |                     |      |   | 635   |  |   | (66    | ) |  | (10  | %)
|                                                        |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|                                                        |  |      | 5,548 |                     |      |   | 5,828 |  |   | (280   | ) |  | (5   | %)
|                                                        |  |      |       |                     |      |   |       |  |   |        |   |  |      |   
|Net (loss) income                                       |  | $    | (802  | )                   |      | $ | 378   |  | $ | (1,180 | ) |  | (312 | %)
|                                                        |  |      |       |                     |      |   |       |  |   |        |   |  |      |   

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



| |  |  | a decrease in interest on equipment financings due to a decrease in our weighted average net investment in financing assets which decreased to $88.7 million for the
six months ended June 30, 2009 as compared to $106.4 million for the six months ended June 30, 2008, a decrease of $17.7 million (17%). As expected, we will enter our liquidation phase later this year. As a result, we do not plan to
acquire additional leases and loans. Therefore, our revenues are expected to continue to decline as our weighted average net investment in financing assets declines.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a decrease in gains on sales of equipment and lease dispositions, net. Gains and losses on sales of equipment may vary significantly from period to period.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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



| |  |  | a decrease in interest due to a decrease in average debt outstanding. Weighted average borrowings decreased to $83.0 million for the 2009 period compared to $100.5
million for the 2008 period, a decrease of $17.5 million (17%). Borrowings for the 2009 and 2008 periods were at an effective interest rate of 5.5% and 5.7%, respectively. Because we are entering our liquidation phase later this year, we amended our
debt facility earlier this year such that it is now a term facility which is
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | contractually repaid over time and we are not able to borrow additional amounts. As a result, our interest expense is expected to continue to decline.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a decrease in management fees to affiliate attributable to the decrease in our portfolio of equipment financing assets, since management fees are paid based on
lease payments received.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These increases were partially offset by:



| |  |  | an increase in depreciation on operating leases related to our increase in our investment in operating leases since June 30, 2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | an increase in general and administrative expenses, principally related to increased legal costs associated with collection efforts. We expect the increase in legal
costs will result in future recoveries of credit losses.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an increase in administrative expenses reimbursed to affiliate due to the hiring of additional collection personnel by our General Partner to attempt to control the
impact of delinquencies resulting from the economic recession in the United States.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The net (loss) income per limited
partner unit, after the net (loss) income allocated to our General Partner for the six months ended June 30, 2009 and 2008 was $(4.62) and $2.18, respectively, based on a weighted average number of limited partner units outstanding of 171,696
and 171,728, respectively.

Liquidity and Capital Resources

Our major sources of liquidity are obtained by the collection of lease payments after payments of debt principal and interest on debt. Our primary cash requirements, in addition to normal operating expenses, are for
debt service and distributions to partners. We plan to meet our cash requirements through cash generated from operations.

The following
table sets forth our sources and uses of cash for the periods indicated (in thousands):



|                                                    |  |                          |         |   |      |   |        |  
|--------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------ | -
|                                                    |  | Six Months EndedJune 30, |        
|                                                    |  | 2009                     |         |   | 2008 |  
|Net cash provided by operating activities           |  | $                        | 629     |   |      | $ | 3,298  |  
|Net cash provided by (used in) investing activities |  |                          | 15,899  |   |      |   | (7,769 | )
|Net cash (used in) provided by financing activities |  |                          | (16,661 | ) |      |   | 4,464  |  
|                                                    |  |                          |         |   |      |   |        |  
|Decrease in cash                                    |  | $                        | (133    | ) |      | $ | (7     | )
|                                                    |  |                          |         |   |      |   |        |  

Cash decreased by $133,000 which was primarily due to a net debt repayment of $18.6 million (net
of purchases of and proceeds from leases and loans of $15.9 million) and distributions to our partners of $690,000, partially offset by a decrease in restricted cash of $2.7 million and increased amounts due to affiliate of $337,000.

We are expected to have a nine-year life, consisting of an offering period of up to two years, a five-year reinvestment period and a subsequent
liquidation period of approximately two years, during which our leases and secured loans will either mature or be sold and we will liquidate our other assets. Our five-year reinvestment period ends later this year, and we expect to enter the
two-year liquidation period prior to December 31, 2009.

Partners distributions paid for the six months ended June 30, 2009
and 2008 were $690,000 and $869,000, respectively. Effective April 2009, our annual distribution to limited partners was reduced to 4%. (In July 2007, the limited partners monthly distribution was increased to 10% of invested capital. The limited
partners distribution rate was 8% prior to July 2007.) However, there can be no assurance we will continue to make distributions at this rate.



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As of June 30, 2009, $72.4 million was outstanding under our secured term credit facility with WestLB.
This facility is secured by the pledging of eligible leases and loans. Interest on this facility is calculated at LIBOR plus 0.95% per annum. Interest rate swap agreements fix the interest rate on this facility at 5.3% on a weighted average basis.
Interest and principal are due as payments are received under the leases and loans, with any remaining balance due in March 2014. As of June 30, 2009, we are in compliance with all covenants contained in this agreement.

As of April 2009, our General Partner has agreed to defer payment of asset management fees charged subsequent to June 30, 2009 until we liquidate
our assets, and we have reduced the annual distribution rate to partners to 4.0% effective in April 2009. The cash savings from these measures is expected to be used to pay down our liabilities. As expected, we will enter our liquidation phase later
this year.

As discussed above, our liquidity has been and may continue to be adversely affected by higher than expected equipment lease
defaults, which result in a loss of anticipated revenues. These losses affect our ability to make distributions to our partners and, if the level of defaults is sufficiently large, result in our inability to fully recover our investment in the
underlying equipment. In evaluating our allowance for losses on uncollectible leases, we consider our contractual delinquencies, economic conditions and trends, lease portfolio characteristics and our General Partners managements prior
experience with similar lease assets. At June 30, 2009, our credit evaluation indicated a need for an allowance for credit losses of $1.8 million. As our lease portfolio ages, and if the economy in the United States deteriorates even further or
the recession continues for a substantial period of time, we anticipate the need to increase our allowance for credit losses.

Contractual Obligations
and Commercial Commitments

The following table sets forth our obligations and commitments as of June 30, 2009 (in thousands):



|             |  |       |        |                        |   |            |  |            |        |              |   |       |  |   |  
|------------ |  | ----- | ------ | ---------------------- | - | ---------- |  | ---------- | ------ | ------------ | - | ----- |  | - | -
|             |  |       |        | Payments Due by Period
|             |  | Total |        | Less than1 Year        |   | 1  3Years |  | 4  5Years |        | After 5Years
|Bank debt(1) |  | $     | 72,424 |                        | $ | 29,792     |  | $          | 33,625 |              | $ | 9,007 |  | $ | 



|(1) | To mitigate interest rate risk on the variable rate debt, we employ a hedging strategy using derivative financial instruments, such as interest rate swaps, which fix the weighted
average interest rates. Not included in the table above are estimated interest payments calculated at rates in effect at June 30, 2009: Less than 1 year: $3.1 million; 1-3 years: $2.5 million; 4-5 years: $381,000. The fair value of the swap
liability as of June 30, 2009 is $2.6 million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above table does not include expected payments related to the Repurchase
Liability (defined below) as of June 30, 2009. In connection with a sale of leases and loans to a third party, we agreed to repurchase delinquent leases up to maximum of 7.5% of total proceeds received from the sale (the Repurchase
Liability). Our maximum remaining Repurchase Liability at June 30, 2009 is $78,000.

Legal Proceedings

We are a party to various routine legal proceedings arising out of the ordinary course of our business. Our General Partner believes that none of these
actions, individually or in the aggregate, will have a material adverse effect on our financial condition or operations.



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ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of losses arising from changes in values of financial instruments. We are exposed to market risks associated with changes in
interest rates and our earnings may fluctuate with changes in interest rates. The lease assets we purchase are almost entirely fixed-rate. Accordingly, we seek to finance these assets with fixed interest rate debt. At June 30, 2009, our
outstanding debt totaled $72.4 million which consisted of variable rate debt. To mitigate interest rate risk on the variable rate debt, we employ a hedging strategy using derivative financial instruments such as interest rate swaps, which fixes the
weighted average interest rates at 5.3%, for the WestLB, debt facility. At June 30, 2009, the notional amounts of the 45 interest rate swaps were $68.0 million. The interest rate swap agreements terminate on various dates ranging from February
2010 to June 2015.

The following sensitivity analysis table shows, at June 30, 2009, the estimated impact on the fair value of our
interest rate-sensitive investments and liabilities of changes in interest rates, assuming rates instantaneously fall 100 basis points and rise 100 basis points (dollars in thousands):



|                                  |  |                                    |        |   |           |   |        |                                    |  |   |        |  
|--------------------------------- |  | ---------------------------------- | ------ | - | --------- | - | ------ | ---------------------------------- |  | - | ------ | -
|                                  |  | Interest ratesfall 100 basispoints |        |   | Unchanged |   |        | Interest ratesrise 100 basispoints | 
|Hedging instruments               |  |                                    |        |   |           |   |        |                                    |  |   |        |  
|Fair value                        |  | $                                  | (3,725 | ) |           | $ | (2,632 | )                                  |  | $ | (1,833 | )
|Change in fair value              |  | $                                  | (1,092 | ) |           |   |        |                                    |  | $ | 799    |  
|Change as a percent of fair value |  |                                    | 41     | % |           |   |        |                                    |  |   | 30     | %

It is important to note that the impact of changing interest rates on fair value can change
significantly when interest rates change beyond 100 basis points from current levels. Therefore, the volatility in the fair value of our assets could increase significantly when interest rates change beyond 100 basis points from current levels. In
addition, other factors impact the fair value of our interest rate-sensitive investments and hedging instruments, such as the shape of the yield curve, market expectations as to future interest rate changes and other market conditions. Accordingly,
in the event of changes in actual interest rates, the change in the fair value of our assets would likely differ from that shown above and such difference might be material and adverse to our partners.

ITEM 4  CONTROLS AND PROCEDURES

Disclosure Controls

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

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

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial
reporting that occurred during the three months ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

ITEM 6  EXHIBITS



|            |  |                                                                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                      
|            | 
|3.1         |  | Amended and Restated Agreement of Limited Partnership (1)                                                                                        
|            | 
|3.2         |  | Certificate of Limited Partnership (2)                                                                                                           
|            | 
|4.1         |  | Forms of letters sent to limited partners confirming their investment (2)                                                                        
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



|(1) | Filed previously as Appendix A to our post effective Amendment No. 3 to our Registration Statement on Form S-1 filed on January 26, 2004 and by this reference incorporated
herein.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Filed previously as an exhibit to Amendment No. 1 to our Registration Statement on Form S-1 filed on June 7, 2002 and by this reference incorporated herein.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

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



|                |  |  |  |                                                    
|--------------- |  |  |  | ---------------------------------------------------
|                |  |  |  | LEASE EQUITY APPRECIATION FUND I, L.P              
|                |  | 
|                |  |  |  | By: LEAF Financial Corporation, its General Partner
|                |  | 
|August 13, 2009 |  |  |  | /s/ Crit DeMent                                    
|                |  |  |  | CRIT DEMENT Chairman and Chief Executive
Officer   
|                |  | 
|August 13, 2009 |  |  |  | /s/ Robert K. Moskovitz                            
|                |  |  |  | ROBERT K. MOSKOVITZ Chief Financial
Officer        
|                |  | 
|August 13, 2009 |  |  |  | /s/ Tonya L. Zweier                                
|                |  |  |  | TONYA L. ZWEIER Chief Accounting
Officer           



24