**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      One)




**/X/
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF**




**THE
      SECURITIES EXCHANGE ACT OF 1934**




For
      the
      quarterly period ended September 30, 2005




**OR**




**/
      / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF**




**THE
      SECURITIES EXCHANGE ACT OF 1934**




For
      the
      transition period from _______________ to ______________




Commissions
      file number 333-84730











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


(Exact
      name of registrant as specified in its charter)





Delaware
            68-0492247(State
                of Organization)
            (I.R.S.
                Employer Identification No.)





110
      S.
      Poplar Street, Suite 101


Wilmington,
      Delaware 19801


(Address
      of principal executive offices) (Zip Code)







(215)
      574-1636


(Registrant's
      telephone number, including area code)




(Former
      name, former address and former fiscal year, if changed since last
      report.)




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. Yes [ X ] No [ ]




Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act). Yes [ ] No [ X ]













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





**INDEX
      TO QUARTERLY REPORT**


**ON
      FORM 10-Q**





**PAGE****PART
                I**
            **FINANCIAL
                INFORMATION (Unaudited)**Item
                1.
            Financial
                StatementsConsolidated
                Balance Sheets - September 30, 2005 and December 31, 2004(Audited)
            3Consolidated
                Statements of OperationsThree
                and Nine Months Ended September 30, 2005 and 2004
            4Consolidated
                Statement of Partners’ Capital and Comprehensive Income (Loss)For
                the Nine Months Ended September 30, 2005
            5Consolidated
                Statements of Cash FlowsFor
                the Nine Months Ended September 30, 2005 and 2004
            6Notes
                to Consolidated Financial Statements - September 30, 2005
            7-17ITEM
                2.
            Management’s
                Discussion and Analysis of Financial Conditionand
                Results of Operations
            18-24ITEM
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            24ITEM
                4.
            Controls
                and Procedures
            24**PART
                II**
            **OTHER
                INFORMATION**ITEM
                6.
            Exhibits
            25**SIGNATURES**
            25





**PART
      I. − FINANCIAL INFORMATION**





**Item
      1. − Financial Statements**





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


**CONSOLIDATED
      BALANCE SHEETS**








**September
                30,**
            
            
            **December
                31,****2005**
            
            
            **2004**(Unaudited)
            
            
            (Audited)**ASSETS**Cash
            
            $
            3,382,485
            
            $
            2,310,880Restricted
                cash
            
            
            2,364,458
            
            
            7,642,227Due
                from lockbox
            
            
            795,098
            
            
            531,558Accounts
                receivable
            
            
            134,971
            
            
            56,837Direct
                financing leases and notes, net
            
            
            82,632,326
            
            
            53,150,659Equipment
                under operating leases, net of accumulated depreciationof
                $941,320 and $316,084
            
            
            2,021,367
            
            
            1,569,754Fair
                value of interest rate swap
            
            
            475,856
            
            
            −Other
                assets
            
            
            1,107,129
            
            
            836,441$
            92,913,690
            
            $
            66,098,356**LIABILITIES
                AND PARTNERS’ CAPITAL****Liabilities:**Debt
            
            $
            80,178,036
            
            $
            51,461,671Accounts
                payable and accrued expenses
            
            
            485,728
            
            
            840,118Due
                to related parties, net
            
            
            541,932
            
            
            955,361Fair
                value of interest rate swap
            
            
            −
            
            
            52,141Total
                liabilities
            
            
            81,205,696
            
            
            53,309,291**Partners’
                Capital**
            
            
            11,707,994
            
            
            12,789,065$
            92,913,690
            
            $
            66,098,356



































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


3


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


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(Unaudited)**





**Three
                Months Ended**
            **Nine
                Months Ended****September
                30,**
            **September
                30,****2005**
            
            
            **2004**
            
            
            **2005**
            
            
            **2004**Interest
                and rental income
            
            $
            1,952,446
            
            $
            1,083,834
            
            $
            5,444,708
            
            $
            2,351,441Interest
                expense
            
            
            1,201,831
            
            
            524,750
            
            
            3,274,962
            
            
            1,291,362Net
                interest and rental income
            
            
            750,615
            
            
            559,084
            
            
            2,169,746
            
            
            1,060,079Provision
                for credit losses
            
            
            446,693
            
            
            193,741
            
            
            999,928
            
            
            259,900303,922
            
            
            365,343
            
            
            1,169,818
            
            
            800,179Other
                income
            
            
            171,646
            
            
            22,635
            
            
            328,387
            
            
            117,352Operating
                income
            
            
            475,568
            
            
            387,978
            
            
            1,498,205
            
            
            917,531Administration
                expense reimbursed to relatedparty
            
            
            103,858
            
            
            77,489
            
            
            451,645
            
            
            355,636General
                and administrative
            
            
            131,553
            
            
            124,496
            
            
            388,913
            
            
            212,279Management
                fee to related party
            
            
            218,124
            
            
            115,661
            
            
            596,463
            
            
            260,955Depreciation
            
            
            209,717
            
            
            191,044
            
            
            628,405
            
            
            293,355663,252
            
            
            508,690
            
            
            2,065,426
            
            
            1,122,225Net
                loss
            
            $
            (187,684
            )
            $
            (120,712
            )
            $
            (567,221
            )
            $
            (204,694
            )Weighted
                average number of limited partnership
              units
                outstanding during the period
            
            
            171,746
            
            
            157,499
            
            
            171,746
            
            
            124,695Net
                loss per weighted average limitedpartnership
                unit
            
            $
            (1.08
            )
            $
            (0.76
            )
            $
            (3.27
            )
            $
            (1.63
            )





















































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


4


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


**CONSOLIDATED
      STATEMENT OF PARTNERS’ CAPITAL**


**AND
      COMPREHENSIVE INCOME (LOSS)**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2005**


**(Unaudited)**








**General
                Partner**
            
            **Limited
                Partners**
            
            **Accumulated
                Other Comprehensive**
            
            
            **Partners’
                Capital**
            
            
            **Comprehensive
                Income (Loss)****Amount**
            
            
            **Units**
            
            
            **Amount**
            
            
            **Income
                (Loss)**
            
            
            **Total**
            
            
            **Total**Balance,
                January 1, 2005
            
            $
            (20,021
            )
            
            171,746
            
            $
            12,861,227
            
            $
            (52,141
            )
            $
            12,789,065Cash
                distributions
            
            
            (10,418
            )
            
            -
            
            
            (1,031,429
            )
            
            −
            
            
            (1,041,847
            )Net
                loss
            
            
            (5,672
            )
            
            -
            
            
            (561,549
            )
            
            −
            
            
            (567,221
            )
            $
            (567,221
            )Unrealized
                gain onhedging
                derivative
            
            
            −
            
            
            −
            
            
            −
            
            
            527,997
            
            
            527,997
            
            
            527,997Balance,
                September 30, 2005
            
            $
            (36,111
            )
            
            171,746
            
            $
            11,268,249
            
            $
            475,856
            
            $
            11,707,994
            
            $
            (39,224
            )



















































































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


5


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


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**(Unaudited)**





**Nine
                Months Ended**
              **September
                30,****2005**
            
            
            **2004****Cash
                flows from operating activities:**Net
                loss
            
            $
            (567,221
            )
            $
            (204,694
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Gain on sale of equipment and lease dispositions,
                net
            
            
            (58,249
            )
            
            (46,549
            )Depreciation
            
            
            628,405
            
            
            293,355Amortization of deferred financing costs
            
            
            114,698
            
            
            32,865Increase in provision for credit losses
            
            
            999,928
            
            
            259,900(Increase) decrease in accounts receivable
            
            
            (78,134
            )
            
            54,703Increase in other assets
            
            
            (375,519
            )
            
            (370,163
            )Decrease in accounts payable and accrued expenses
            
            
            (354,390
            )
            
            (111,758
            )(Increase) decrease in due from lockbox
            
            
            (263,540
            )
            
            46,688(Decrease) increase in amounts due to related parties, net
            
            
            (413,429
            )
            
            186,056Net
                cash (used in) provided by operating activities
            
            
            (367,451
            )
            
            140,403**Cash
                flows from investing activities:**Acquisition of equipment under operating leases
            
            
            (1,080,018
            )
            
            (1,202,856
            )Investment in direct financing leases and notes
            
            
            (52,620,474
            )
            
            (28,357,884
            )Proceeds from direct financing leases and notes, net of earned
                income
            
            
            21,783,281
            
            
            7,721,941Security deposits received, net
            
            
            413,847
            
            
            395,612Net
                cash used in investing activities
            
            
            (31,503,364
            )
            
            (21,443,187
            )**Cash
                flows from financing activities:**Decrease in restricted cash
            
            
            5,277,769
            
            
            −Increase in deferred financing costs
            
            
            (9,867
            )
            
            (95,834
            )Proceeds from debt
            
            
            72,831,858
            
            
            29,838,901Repayment of debt
            
            
            (44,115,493
            )
            
            (13,154,010
            )Limited partners’ capital contribution
            
            
            −
            
            
            7,300,147Partners’****distributions
                paid
            
            
            (1,041,847
            )
            
            (445,087
            )Payment of offering costs incurred for the sale of partnership
                units
            
            
            −
            
            
            (935,940
            )Net
                cash provided by financing activities
            
            
            32,942,420
            
            
            22,508,177Increase
                in cash
            
            
            1,071,605
            
            
            1,205,393Cash,
                beginning of period
            
            
            2,310,880
            
            
            1,030,394Cash,
                end of period
            
            $
            3,382,485
            
            $
            2,235,787








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





6


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2005**


**(Unaudited)**








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





Lease
      Equity Appreciation Fund I, L.P. (“Fund”), a Delaware limited partnership, was
      formed on January 31, 2002 by LEAF Financial Corporation, a Delaware corporation
      (“General Partner”). The General Partner is a wholly owned subsidiary of
      Resource Leasing, Inc., which is a wholly owned subsidiary of Resource America,
      Inc. Resource America, Inc. is a publicly traded company (Nasdaq: REXI)
      operating in the real estate, finance fund management and equipment financing
      sectors. As of August 15, 2004, the date our offering period terminated, we
      had
      raised $17,060,772 through the sale of 171,746 limited partner
      units.





The
      Fund
      seeks to acquire a diversified portfolio of equipment to finance to end users
      throughout the United States. The Fund also seeks to acquire existing portfolios
      of equipment subject to existing financings from other equipment finance
      companies, primarily 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
      September 30, 2005 and December 31, 2004, in addition to its 1% General Partner
      interest, the General Partner also held a 5% limited partner interest in the
      Fund. The Fund will terminate on December 31, 2027, or earlier, if a dissolution
      event occurs, as defined in the Limited Partnership Agreement (the “Partnership
      Agreement”).





**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.





**Reclassifications**





Certain
      reclassifications have been made to the September 30, 2004 consolidated
      financial statements to conform to the September 30, 2005
      presentation.





**Classification**





Management
      believes that, consistent with the financial statement presentation of other
      equipment finance companies, it is more appropriate to present the Fund’s
      consolidated balance sheet on a non-classified basis, which does not segregate
      assets and liabilities into current and non-current categories.





7


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


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


**September
      30, 2005**


**(Unaudited)**








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





**Use
      of Estimates**





Preparation
      of financial statements in conformity with accounting principles generally
      accepted in the United States of America (“U.S. GAAP”) requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities as of the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Significant estimates include the
      estimated unguaranteed residual values of leased equipment, the allowance for
      possible losses and impairment of long-lived assets. Actual results could differ
      from those estimates.





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





The
      Fund’s allowance for possible losses is primarily based on factors which include
      the General Partner’s historical loss experience, an analysis of contractual
      delinquencies, economic conditions and trends, industry statistics and equipment
      finance portfolio characteristics. The Fund’s policy is to charge off to the
      allowance those financings which are in default and for which management has
      determined the probability of collection to be remote.





The
      Fund
      reviews its long-lived assets for impairment whenever events or circumstances
      indicate that the carrying amount of such assets may not be recoverable. If
      it
      is determined that estimated undiscounted future cash flows derived from
      long-lived assets will not be sufficient to recover their carrying amounts,
      an
      impairment charge will be recorded if the carrying amounts of the asset exceeds
      their estimated fair values.





**Concentration
      of Credit Risk**





Financial
      instruments which potentially subject the Fund to concentrations of credit
      risk
      consist of excess cash. The Fund deposits its excess cash in high-quality
      financial institutions. As of September 30, 2005, the Fund had deposits at
      three
      banks totaling $3,501,073, of which $3,201,073 was over the insurance limit
      of
      the Federal Deposit Insurance Corporation. No losses have been experienced
      on
      such deposits.





8


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


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


**September
      30, 2005**


**(Unaudited)**








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





**Revenue
      Recognition**





The
      Fund’s investment in financing assets consists of direct financing leases, notes
      and operating leases. Leases are recorded in accordance with Statement of
      Financial Accounting Standards No. 13, “Accounting for Leases,” and its various
      amendments and interpretations.





*Direct
      Financing Leases.* Certain
      of the Fund’s lease transactions are accounted for as direct financing leases
      (as distinguished from operating leases). Such leases transfer substantially
      all
      benefits and risks of equipment ownership to the customer. The Fund’s investment
      in direct financing leases and notes consists of the sum of the total future
      minimum lease payments receivable and the estimated unguaranteed residual value
      of leased equipment, less unearned finance income. Unearned finance income,
      which is recognized as revenue over the term of the financing by the effective
      interest method, represents the excess of the total future minimum contracted
      payments plus the estimated unguaranteed residual value expected to be realized
      at the end of the lease term over the cost of the related equipment. The Fund
      generally discontinues the recognition of revenue for direct financing leases
      for which payments are more than 90 days past due.





*Operating
      Leases.* Leases
      not meeting any of the criteria to be classified as direct financing leases
      are
      deemed to be operating leases. Under the accounting for operating leases, the
      cost of the leased equipment, including acquisition fees associated with lease
      placements, is recorded as an asset and depreciated on a straight-line basis
      over the equipment’s estimated useful life, generally up to seven years. Rental
      income consists primarily of monthly periodic rentals due under the terms of
      the
      leases. The Fund recognizes rental income on a straight line basis. Generally,
      during the lease terms of existing operating leases, the Fund will not recover
      all of the undepreciated cost and related expenses of its rental equipment
      and,
      therefore, it is prepared to remarket the equipment in future years. The Fund’s
      policy is to review, on a quarterly basis, the expected economic life of its
      rental equipment in order to determine the recoverability of its undepreciated
      cost. In accordance with U.S. GAAP, the Fund writes down its rental equipment
      to
      its estimated net realizable value when it is probable that its carrying amount
      exceeds such value and the excess can be reasonably estimated; gains are only
      recognized upon actual sale of the rental equipment. There were no write-downs
      of equipment during the nine month periods ended September 30, 2005 and
      2004.





Fees
      from
      delinquent payments are recognized when received and are included in other
      income.





**Income
      Taxes**





Federal
      and state income tax laws provide that the income or losses of the Fund are
      reportable by the Partners on their individual income tax returns. Accordingly,
      no provision for such taxes has been made in the accompanying financial
      statements.





9


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


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


**September
      30, 2005**


**(Unaudited)**








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





**Supplemental
      Disclosure of Cash Flow Information**





During
      the nine months ended September 30, 2005 and 2004, the Fund paid interest of
      $3,123,569 and $1,236,384, respectively.





**Transfers
      of Financial Assets**





In
      connection with establishing its revolving line of credit with WestLB AG, the
      Fund formed a bankruptcy remote special purpose entity (LEAF Fund I LLC) through
      which the financing is arranged. Under SFAS No. 140, “Accounting for Transfers
      and Servicing of Financial Assets and Extinguishments of Liabilities,” the
      Fund’s transfers of assets to the special purpose entity do not qualify for
      sales accounting treatment due to certain call provisions that the Fund
      maintains. Accordingly, assets and related debt of the special purpose entity
      are included in the Fund’s consolidated balance sheets. The Fund’s leases and
      restricted cash are assigned as collateral for these borrowings and there is
      no
      further recourse to the general credit of the Fund.





**Fair
      Value of Financial Instruments**





For
      cash,
      receivables and payables, the carrying amounts approximate fair values because
      of the short maturity of these instruments. The carrying value of debt
      approximates fair market value since interest rates approximate current market
      rates. The interest rate swap discussed in Note 8 is recorded at fair value
      in
      the accompanying consolidated balance sheet.





**NOTE
      3** **-** **RESTRICTED CASH**





Restricted
      Cash as of September 30, 2005 and December 31, 2004 includes cash being held
      in
      reserve by the Fund’s lenders.


10


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


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


**September
      30, 2005**


**(Unaudited)**








**NOTE
      4 − DUE FROM LOCKBOX**





Customer
      payments are deposited into a lockbox shared with our General Partner and other
      entities serviced by our General Partner. The lockbox is in the name of U.S.
      Bank NA as trustee under an inter-creditor agreement amongst our General
      Partner, the other entities and their respective lenders. Amounts recorded
      as
      due from lockbox on the accompanying Consolidated Balance Sheet, represent
      customer payments received by the lockbox, applied to the respective customer’s
      accounts, but not transferred to the Fund’s bank account.





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





The
      Fund’s direct financing leases are for initial lease terms ranging from 2 to 87
      months. The interest rates on notes receivable range from 7% to 21%. As of
      September 30, 2005 and December 31, 2004, 23% and 14% of leased equipment,
      respectively, was located in California.





**September
                30,**
            
            
            **December
                31,****2005**
            
            
            **2004**(Audited)Direct
                financing leases
            
            $
            76,761,919
            
            $
            51,340,412Notes
                receivable
            
            
            5,870,407
            
            
            1,810,247$
            82,632,326
            
            $
            53,150,659





The
      components of the net investment in direct financing leases as of September
      30,
      2005 and December 31, 2004 are as follows:





**September
                30,**
            
            
            **December
                31,****2005**
            
            
            **2004**(Audited)Total
                future minimum lease payments
            
            $
            87,300,381
            
            $
            58,892,148Unearned
                rental income
            
            
            (10,084,310
            )
            
            (7,401,200
            )Residuals,
                net of unearned residual income
            
            
            693,473
            
            
            401,166Security
                deposits
            
            
            (826,050
            )
            
            (431,702
            )77,083,494
            
            
            51,460,412Allowance
                for possible losses
            
            
            (321,575
            )
            
            (120,000
            )$
            76,761,919
            
            $
            51,340,412





11


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


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


**September
      30, 2005**


**(Unaudited)**








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





The
      following is a summary of the Fund’s allowance for possible losses for the
      periods indicated:





**For
                the Nine Months Ended**
              **September
                30,****2005**
            
            
            **2004**Allowance
                for possible losses, beginning of period
            
            $
            120,000
            
            $
            5,000Provision
                for credit losses
            
            
            999,928
            
            
            259,900Net
                write-offs
            
            
            (798,353
            )
            
            (189,900
            )Allowance
                for possible losses, end of period
            
            $
            321,575
            
            $
            75,000





The
      future minimum lease payments and related rental payments expected to be
      received on non-cancelable direct financing leases, notes and operating leases
      at September 30, 2005 are as follows:





**Periods
                Ending September 30,**
            
            
            **Direct**
              **Financing
                Leases**
            
            
            **Notes**
            
            
            **Operating
                Leases**
            
            
            **Total**2006
            
            $
            32,732,257
            
            $
            226,661
            
            $
            929,268
            
            $
            33,888,1862007
            
            
            25,353,193
            
            
            2,036,191
            
            
            590,736
            
            
            27,980,1202008
            
            
            16,989,535
            
            
            1,346,100
            
            
            254,886
            
            
            18,590,5212009
            
            
            9,561,518
            
            
            990,012
            
            
            122,237
            
            
            10,673,7672010
            
            
            2,383,646
            
            
            667,355
            
            
            23,442
            
            
            3,074,443Thereafter
            
            
            280,232
            
            
            604,088
            
            
            −
            
            
            884,320$
            87,300,381
            
            $
            5,870,407
            
            $
            1,920,569
            
            $
            95,091,357








**NOTE
      6 − OTHER ASSETS**





As
      of
      September 30, 2005 and December 31, 2004, other assets include $692,084 and
      $794,416, respectively, of unamortized deferred financing costs, which are
      being
      amortized over the terms of the related debt. Accumulated amortization as of
      September 30, 2005 and December 31, 2004 is $181,862 and $67,164,
      respectively.





12


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


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


**September
      30, 2005**


**(Unaudited)**








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





The
      table
      below summarizes the Fund’s debt at September 30, 2005 and December 31, 2004 as
      follows:





**September
                30,**
            
            **December
                31,****2005**
            
            **2004**Sovereign
                Bank, revolving warehouse line of credit, with an aggregate borrowing
                limit of $3 million collateralized by specific finance receivables
                and
                related equipment. Interest on this facility is calculated at LIBOR
                plus
                2% per annum (5.86% at September 30, 2005). Interest and principal
                are due
                monthly. The line expires in June 30, 2006.
            
            $
            1,844,766
            
            $
            3,436,872WestLB
                AG, New York Branch revolving line of credit, with an aggregate borrowing
                limit of $75 million collateralized by specific lease and note receivables
                and related equipment, with a 1% credit reserve of the outstanding
                line of
                credit. Interest on this facility is calculated at LIBOR plus 1.10%
                per
                annum. To mitigate fluctuations in interest rates the Fund has entered
                into interest rate swap agreements. The interest rate swap agreements
                terminate May 20, 2012. The interest rate swap agreements fix the
                interest
                rate on this facility to a weighted average of 5.17%. Interest and
                principal are due as payments are received under the financings.
                The line
                of credit is renewable for one year periods on December 30, 2005,
                2006 and
                2007.
            
            
            61,205,805
            
            
            23,258,244National
                City Commercial Capital Corporation f/k/a Information Leasing Corporation,
                collateralized by specified lease receivables, generally equal to
                the sum
                of the receivables, discounted to present value at 5.79%, less a
                credit
                reserve of 8% after security deposit. The loan is repayable as payments
                are made under the leases or equipment financing transactions
                collateralizing the loan, with a final maturity date of June 10,
                2010.
            
            
            7,794,562
            
            
            12,017,788OFC
                Capital, a division of OFC Servicing Corporation, collateralized
                by
                specific lease receivables equal to 93% of the aggregate payments
                due
                under the related equipment lease or equipment finance transaction,
                discounted at an interest rate of 6.9%, funded subject to a credit
                reserve
                of 3% of the loan amount. The loan is repayable as payments are made
                under
                the leases or equipment financing transactions collateralizing the
                loan,
                with a final maturity date of February 15, 2009.
            
            
            9,332,903
            
            
            12,748,767Total
                outstanding debt
            
            $
            80,178,036
            
            $
            51,461,671





As
      of
      September 30, 2005, the Fund is in compliance with all loan covenants or they
      have been waived by the lender.


13


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


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


**September
      30, 2005**


**(Unaudited)**








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





The
      debt
      maturity for each of the succeeding twelve month periods ending September 30
      and
      thereafter, is as follows:





2006
            
            $
            28,908,1422007
            
            
            22,342,2972008
            
            
            15,659,7072009
            
            
            9,419,8562010
            
            
            2,978,446Thereafter
            
            
            869,588$
            80,178,036








**NOTE
      8** **-** **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 warehouse
      facilities 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 originates 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. 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 exclusively
      with counterparties with investment grade ratings.





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 item 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 will be effectively offset by the change in the value
      of
      the hedged asset or liability. The Fund measures the effectiveness of each
      hedge
      throughout the hedge period. Any hedge ineffectiveness, as defined by Statement
      of Financial Accounting Standards (“SFAS”) No. 133/138/149 is recognized in the
      income statement.




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 exceed the
      benefits.





14


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


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


**September
      30, 2005**


**(Unaudited)**








**NOTE
      8** **-** **DERIVATIVE INSTRUMENTS − (Continued)**





At
      September 30, 2005 and December 31, 2004 the Fund had an unrealized gain of
      $475,856 and an unrealized loss of $52,141, respectively, which is included
      in
      accumulated other comprehensive income (loss). The Fund recognized no gain
      or
      loss during the nine months ended September 30, 2005 for hedge ineffectiveness.
      Assuming market rates remain constant with the rates of September 30, 2005,
      $160,000 in accumulated other comprehensive income is expected to be recognized
      in earnings over the next 12 months.





**NOTE
      9** **-** **TRANSACTIONS WITH AFFILIATES**





The
      General Partner receives an acquisition fee for assisting the Fund in acquiring
      equipment and portfolios of equipment subject to existing equipment leases.
      This
      fee is equal to 2% of the purchase price paid for the equipment and portfolios
      of equipment subject to existing equipment financing.





The
      General Partner receives a subordinated annual asset management fee of 3% of
      gross rental payments for operating leases, as defined in the Partnership
      Agreement, or 2% of gross rental payments for full payout leases, as defined
      in
      the Partnership Agreement. During the Fund's five-year investment period, the
      management fee will be subordinated to the payment of a cumulative annual
      distribution to the Fund's limited partners equal to 8% of their capital
      contributions, as adjusted by distributions deemed to be a return of
      capital.





The
      General Partner and its former affiliate, Anthem Securities, Inc. (“Anthem
      Securities”), an indirect subsidiary of Resource America, Inc. at the time,
      received an organization and offering expense allowance of 3% of the offering
      proceeds and an underwriting fee of 2% of the offering proceeds raised. These
      charges were recorded by the Fund as offering costs incurred for the sale of
      limited partnership units on the Statement of Partners’ Capital.





Anthem
      Securities, Inc. received underwriting fees of 2% of the offering proceeds
      for
      obtaining and managing the group of selling broker-dealers who sold units during
      the offering period.





The
      General Partner receives a subordinated commission equal to one-half of a
      competitive commission, to a maximum of 3% of the contract sales price, for
      arranging the sale of the Fund's equipment after the expiration of a lease.
      This
      commission is subordinated to the payment of a cumulative 8% annual return
      to
      the Limited partners on their capital contributions, as adjusted by
      distributions deemed to be a return of capital. No commissions were paid during
      the nine months ended September 30, 2005 and 2004.





The
      General Partner receives a commission equal to the lesser of a competitive
      rate
      or 2% of gross rental payments derived from any re-lease of equipment if the
      re-lease is not with the original lessee or its affiliates. No re-lease
      commissions were paid during the nine months ended September 30, 2005 and
      2004.





15


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


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


**September
      30, 2005**


**(Unaudited)**








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





The
      General Partner and its parent company 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.





The
      following is a summary of fees and costs of services and materials charged
      by
      the General Partner or its affiliates during the three and six months ended
      September 30, 2005 and 2004:





**Three
                Months Ended**
            **Nine
                Months Ended****September
                30,**
            **September
                30,****2005**
            
            
            **2004**
            
            
            **2005**
            
            
            **2004**Organization
                and offering expenses
            
            $
            −
            
            $
            141,499
            
            $
            −
            
            $
            227,334Underwriting
                fees
            
            
            −
            
            
            81,757
            
            
            −
            
            
            138,221Acquisition
                fees
            
            
            24,274
            
            
            290,484
            
            
            1,074,010
            
            
            618,420Asset
                management fees
            
            
            218,124
            
            
            115,661
            
            
            596,463
            
            
            260,955Reimbursable
                expenses
            
            
            103,858
            
            
            77,489
            
            
            451,645
            
            
            355,636





Due
      to
      related parties, net as of September 30, 2005 and December 31, 2004 represents
      net monies due to the General Partner for management fees, reimbursed expenses
      and other advances not yet paid.





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





Cash
      distributions, if any, are made monthly as follows: 99% to the limited partners
      and 1% to the General Partner until the limited partners have received an amount
      equal to their unpaid cumulative return (8% of their adjusted capital
      contribution) and thereafter, to investment and reinvestment in investments
      or,
      if the General Partner elects not to invest or reinvest such distributable
      cash,
      99% to the limited partners and 1% to the General Partner.





Net
      income for any fiscal period during the reinvestment period (the period
      commencing March 3, 2003 and ending August 15, 2009) is allocated 99% to the
      limited partners and 1% to the General Partner. Income during the liquidation
      period, as defined in the Partnership Agreements, will be allocated first to
      the
      Partners in proportion to and to the extent of the deficit balances, if any,
      in
      their respective capital accounts. Thereafter, net income will be allocated
      99%
      to the limited partners and 1% to the General Partner.





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





Comprehensive
      income (loss) includes net income and all other changes in the equity of a
      business during a period from non-owner sources. These changes, other than
      net
      income (loss), are referred to as “other comprehensive income (loss)” and for
      the Fund, only include changes in the fair value of unrealized hedging gains
      and
      losses. Comprehensive loss for the nine month period ended September 30, 2004,
      only includes net loss.





16


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


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


**September
      30, 2005**


**(Unaudited)**








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





Net
      loss
      per limited partnership unit is computed by dividing net loss allocated to
      the
      Fund’s limited partners by the weighted average number of limited partnership
      units outstanding during the period. The weighted average number of limited
      partnership units outstanding during the period is computed based on the number
      of limited partnership units issued during the period weighted for the days
      outstanding during the period. Basic loss per limited partnership unit equals
      dilutive net loss per limited partnership unit because there are no potential
      dilutive units.








17


**ITEM
      2. - Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.**





***Forward-Looking
      Statements***





**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 Item 1, under the caption “Risks Inherent In Our Business,” in our
      annual report on Form 10-K for 2004.  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. On September 30, 2004,
      our General Partner, LEAF Asset Management, Inc., merged into its parent, LEAF
      Financial Corporation. Consequently, our General Partner is a wholly owned
      subsidiary of Resource Leasing, Inc., a wholly owned subsidiary of Resource
      America, Inc. a publicly-traded company (Nasdaq: REXI) operating in the real
      estate, finance fund management and equipment financing sectors.





As
      of
      August 15, 2004, the date our offering period terminated, we had raised
      $17,060,772 through the sale of 171,746 limited partner units.





We
      acquire equipment that is financed for third parties. We may also acquire
      portfolios of equipment subject to existing leases and notes from other
      equipment lessors. Our principal objective is to generate regular cash
      distributions to our limited partners. The equipment we finance is principally
      for general business and industrial use and we focus on the small to mid sized
      business market, generally businesses with 500 or fewer employees, $1 billion
      or
      less in total assets or $100 million or less in total annual sales. We
      specialize in financing business essential equipment within a price range of
      $20,000 to $2 million. The equipment we finance includes computers, copiers,
      furniture, heating, ventilation and air conditioning equipment, industrial
      equipment, medical equipment and telecommunications equipment.





Our
      leases consist of both direct financing and operating leases which are recorded
      in accordance with generally accepted accounting principles in the United States
      of America. Under the direct financing method of accounting for leases, 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 effective interest method.
      Under
      the operating method of accounting for leases, the cost of the leased equipment,
      including acquisition fees associated with lease placements, is recorded as
      an
      asset and depreciated on a straight-line basis over 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 undepreciated cost and related
      expenses of our rental equipment and, therefore, we are prepared to remarket
      the
      equipment in future years. When a scheduled payment due is 90 days or
      more
      delinquent, the financing is classified as being on non-accrual and we do not
      recognize interest or rental income on that financing until the financing
      becomes less than 90 days delinquent.


18


We
      commenced operations on March 3, 2003. As of September 30, 2005, our portfolio
      contained 2,327 equipment leases with 2,169 individual end users in 50 states.
      No individual end user or single piece of equipment accounted for more than
      1%
      of our portfolio based on original cost of the equipment. As of September 30,
      2005, we had net investment of $2,021,367 in equipment under operating leases
      net of accumulated depreciation and a net investment of $82,632,326 in direct
      financing leases and notes for a total investment in lease assets of
      $84,653,693. Our average original equipment cost per equipment finance
      transaction was $50,288. As of September 30, 2005, the weighted average initial
      term of a lease was 48 months.





The
      following schedules detail the types, net investment (before allocating the
      allowance for possible losses) and percentage of the various types of equipment
      leased by us under operating leases, direct financing leases and notes as of
      September 30, 2005 and December 31, 2004 (dollars in thousands):





**Direct
      Financing Leases and Notes**





**September
                30, 2005**
            
            
            
            **December
                31, 2004****Type
                of Equipment**
            
            
            **Net
                Investment**
            
            
            **Percentage**
            
            
            **Type
                of Equipment**
            
            
            **Net
                Investment**
            
            
            **Percentage**Industrial
                Equipment
            
            $
            24,947
            
            
            30.1.
            %
            
            Medical
                Equipment
            
            $
            13,656
            
            
            25.6
            %Medical
                Equipment
            
            
            19,115
            
            
            23.0
            
            
            Industrial
                Equipment
            
            
            11,184
            
            
            21.0Office
                Equipment
            
            
            10,461
            
            
            12.6
            
            
            Computers
            
            
            8,289
            
            
            15.6Computers
            
            
            9,094
            
            
            11.0
            
            
            Software
            
            
            4,705
            
            
            8.8Software
            
            
            4,781
            
            
            5.8
            
            
            Office
                Equipment
            
            
            4,305
            
            
            8.1Garment
                Care
            
            
            3,933
            
            
            4.7
            
            
            Garment
                Care
            
            
            3,916
            
            
            7.4Restaurant
                Equipment
            
            
            3,416
            
            
            4.1
            
            
            Communications
            
            
            2,612
            
            
            4.9Building
                systems
            
            
            3,265
            
            
            3.9
            
            
            Building
                systems
            
            
            2,260
            
            
            4.2Communications
            
            
            2,722
            
            
            3.3
            
            
            Restaurant
                Equipment
            
            
            1,892
            
            
            3.6Agriculture
            
            
            1,220
            
            
            1.5
            
            
            Agriculture
            
            
            452
            
            
            0.8$
            82,954
            
            
            100.0
            %
            
            
            
            $
            53,271
            
            
            100.0
            %





**Operating
      Leases**





**September
                30, 2005**
            
            
            
            **December
                31, 2004****Type
                of Equipment**
            
            
            **Net
                Investment**
            
            
            **Percentage**
            
            
            **Type
                of Equipment**
            
            
            **Net
                Investment**
            
            
            **Percentage**Computers
            
            $
            628
            
            
            31.1
            %
            
            Computers
            
            $
            762
            
            
            48.5
            %Office
                Equipment
            
            
            551
            
            
            27.3
            
            
            Office
                Equipment
            
            
            473
            
            
            30.1Industrial
                Equipment
            
            
            397
            
            
            19.6
            
            
            Communications
            
            
            272
            
            
            17.3Communications
            
            
            352
            
            
            17.4
            
            
            Software
            
            
            36
            
            
            2.3Medical
                Equipment
            
            
            68
            
            
            3.4
            
            
            Industrial
                Equipment
            
            
            15
            
            
            1.0Software
            
            
            23
            
            
            1.1
            
            
            Medical
                Equipment
            
            
            9
            
            
            0.6Restaurant
                Equipment
            
            
            2
            
            
            0.1
            
            
            Restaurant
                Equipment
            
            
            3
            
            
            0.2$
            2,021
            
            
            100.0
            %
            
            
            
            $
            1,570
            
            
            100.0
            %





19


The
      following schedules provide information about the types of businesses we
      finance. The business type is grouped by standard industrial classification
      as
      of September 30, 2005 and December 31, 2004 (dollars in thousands):





**Direct
      Financing Leases and Notes**





**September
                30, 2005**
            
            
            
            **December
                31, 2004****Type
                of Business**
            
            
            **Net
                Investment**
            
            
            **Percentage**
            
            
            **Type
                of Business**
            
            
            **Net
                Investment**
            
            
            **Percentage**Services
            
            $
            44,118
            
            
            53.2
            %
            
            Services
            
            $
            33,412
            
            
            62.7
            %Manufacturing
            
            
            10,025
            
            
            12.1
            
            
            Manufacturing
            
            
            5,775
            
            
            10.9Retail
                Trade
            
            
            9,060
            
            
            10.9
            
            
            Retail
                Trade
            
            
            5,549
            
            
            10.4Construction
            
            
            4,453
            
            
            5.4
            
            
            Finance/Insurance/Real
                Estate
            
            
            2,506
            
            
            4.7Transportation/Communication/Energy
            
            
            4,365
            
            
            5.2
            
            
            Transportation/Communication/Energy
            
            
            1,993
            
            
            3.7Finance/Insurance/Real
                Estate
            
            
            3,567
            
            
            4.3
            
            
            Wholesale
                Trade
            
            
            1,991
            
            
            3.7Wholesale
                Trade
            
            
            3,470
            
            
            4.2
            
            
            Construction
            
            
            1,482
            
            
            2.8Agriculture
            
            
            2,612
            
            
            3.1
            
            
            Public
                Administration
            
            
            534
            
            
            1.0Public
                Administration
            
            
            1,232
            
            
            1.5
            
            
            Mining
            
            
            29
            
            
            0.1Mining
            
            
            52
            
            
            .1$
            82,954
            
            
            100.0
            %
            
            
            
            $
            53,271
            
            
            100.0
            %





**Operating
      Leases**





**September
                30, 2005**
            
            
            
            **December
                31, 2004****Type
                of Business**
            
            
            **Net
                Investment**
            
            
            **Percentage**
            
            
            **Type
                of Business**
            
            
            **Net
                Investment**
            
            
            **Percentage**Services
            
            $
            895
            
            
            44.3
            %
            
            Services
            
            $
            862
            
            
            54.9
            %Construction
            
            
            471
            
            
            23.4
            
            
            Wholesale
                Trade
            
            
            266
            
            
            16.9Wholesale
                Trade
            
            
            226
            
            
            11.2
            
            
            Manufacturing
            
            
            175
            
            
            11.1Manufacturing
            
            
            158
            
            
            7.8
            
            
            Transportation/Communication/Energy
            
            
            104
            
            
            6.7Transportation/Communication/Energy
            
            
            127
            
            
            6.3
            
            
            Finance/Insurance/Real
                Estate
            
            
            96
            
            
            6.1Finance/Insurance/Real
                Estate
            
            
            109
            
            
            5.4
            
            
            Construction
            
            
            52
            
            
            3.3Public
                Administration
            
            
            15
            
            
            .7
            
            
            Mining
            
            
            8
            
            
            0.5Retail
                Trade
            
            
            13
            
            
            .6
            
            
            Public
                Administration
            
            
            4
            
            
            0.3Mining
            
            
            7
            
            
            .3
            
            
            Retail
                Trade
            
            
            3
            
            
            0.2$
            2,021
            
            
            100.0
            %
            
            
            
            $
            1,570
            
            
            100.0
            %





20


In
      evaluating our allowance for possible losses on financed assets, we consider
      our
      contractual delinquencies, economic conditions and trends, industry statistics,
      lease portfolio characteristics and our General Partner's prior experience
      with
      similar finance assets. As of September 30, 2005, our credit evaluation
      indicated the need for an allowance for possible losses of our finance assets
      of
      $321,575.





We
      utilize debt facilities in addition to equity to fund the acquisitions of lease
      portfolios. As of September 30, 2005, our outstanding debt was
      $80,178,036.





**Results
      of Operations**





*Three
      month period ended September 30, 2005 compared to the three month period ended
      September 30, 2004.*





Our
      interest and rental income increased to $1,952,446 for the three month period
      ended September 30, 2005 as compared to $1,083,834 in the three month period
      ended September 30, 2004, an increase of $868,612 (80%). This increase is
      attributable to our increase in equipment finance assets. Total equipment
      finance assets increased to $84,653,693 at September 30, 2005 as compared to
      $47,616,360 at September 30, 2004, an increase of $37,037,333 (78%). The
      proceeds from our WestLB line of credit allowed us to acquire more leases from
      our General Partner. Interest expense increased to $1,201,831 for the three
      month period ended September 30, 2005 as compared to $524,750 for the three
      month period ended September 30, 2004, an increase of $677,081 (129%) due to
      our
      increase in debt incurred to acquire equipment subject to leases. Debt was
      $80,178,036 at September 30, 2005 as compared to $37,071,293 at September 30,
      2004, an increase of $43,106,743 (116%). As our lease portfolio grows and we
      incur additional debt, interest expense will increase in future periods. Our
      provision for credit losses increased to $446,693 for the three month period
      ended September 30, 2005 as compared to $193,741 for the three month period
      ended September 30, 2004, an increase of $253,952 (131%). Our allowance for
      possible losses is primarily based on factors, which include the historical
      loss
      experience, an analysis of contractual delinquencies, economic conditions and
      trends, industry statistics and portfolio characteristics. 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. Our
      projection of possible losses is by nature uncertain due to trends in the
      economy, portfolio characteristics and other factors that could effect our
      performance. Total operating expenses increased to $663,252 for the three month
      period ended September 30, 2005 as compared to $508,690 for the three month
      period ended September 30, 2004, an increase of $154,562 (30%). This increase
      was primarily due to increases in management fees and administrative expenses
      paid to our General Partner as well as an increase in depreciation expense.
      Administrative expenses reimbursed to our General Partner increased to $103,858
      for the three month period ended September 30, 2005 as compared to $77,489
      for
      the three month period ended September 30, 2004, an increase of $26,369 (34%).
      This increase is attributable to our increase in equipment finance assets.
      Management fees increased to $218,124 for the three month period ended September
      30, 2005 as compared to $115,661 for the three month period ended September
      30,
      2004, an increase of $102,463 (89%). This increase is directly attributable
      to
      our growth in lease assets because management fees are based on a percentage
      of
      customer payments received. Depreciation expense from operating leases increased
      to $209,717 for the three month period ended September 30, 2005 as compared
      to
      $191,044 for the three month period ended September 30, 2004, an increase of
      $18,673 (10%). Depreciation expense grew due to an increase in assets subject
      to
      operating leases.





Our
      net
      loss for the three months ended September 30, 2005 and 2004 was $187,684 and
      $120,712, respectively. The loss per limited partnership unit, after the loss
      allocated to our General Partner for the three month period ended September
      30,
      2005 was $1.08 based on a weighted average number of limited partnership units
      outstanding of 171,746.


21


*Nine
      Month Period Ended September 30, 2005 Compared to the Nine Month Period Ended
      September 30, 2004.*





Our
      interest and rental income increased to $5,444,708 for the nine month period
      ended September 30, 2005 as compared to $2,351,441 in the nine month period
      ended September 30, 2004 an increase of $3,093,267 (132%). This increase is
      attributable to our increase in equipment finance assets. Total equipment
      finance assets increased to $84,653,693 at September 30, 2005 as compared to
      $47,616,360 at September 30, 2004, an increase of $37,037,333 (78%). Our West
      LB
      line of credit allowed us to acquire more leases from our General Partner.
      Interest expense increased to $3,274,962 for the nine month period ended
      September 30, 2005 as compared to $1,291,362 for the nine month period ended
      September 30, 2004, an increase of $1,983,600 (154%) due to our increase in
      debt
      incurred to acquire equipment subject to leases. Debt was $80,178,036 at
      September 30, 2005 as compared to $37,071,293 at September 30, 2004, an increase
      of $43,106,743 (116%). As our lease portfolio grows and we incur additional
      debt, interest expense will increase in future periods. Our provision for credit
      losses increased to $999,928 for the nine month period ended September 30,
      2005
      as compared to $259,900 for the nine month period ended September 30, 2004,
      an
      increase of $740,028 (285%). As our portfolio grows and ages, our provision
      for
      credit losses will also grow. Total operating expenses increased to $2,065,426
      for the nine month period ended September 30, 2005 as compared to $1,122,225
      for
      the nine month period ended September 30, 2004, an increase of $943,201 (84%).
      This increase was primarily due to increases in general and administrative
      expenses, management fees paid to our General Partner as well as an increase
      in
      depreciation expense related to operating leases. General and administrative
      expenses increased to $388,913 for the nine month period ended September 30,
      2005 as compared to $212,279, an increase of $176,634 (83%). Management fees
      increased to $596,463 for the nine month period ended September 30, 2005 as
      compared to 260,955 for the nine month period ended September 30, 2004, an
      increase of $335,508 (129%). This increase is directly attributable to our
      growth in lease assets because management fees are based on a percentage of
      customer payments received. Depreciation expense from operating leases increased
      to $628,405 for the nine month period ended September 30, 2005 as compared
      to
      $293,355 for the nine month period ended September 30, 2004, an increase of
      $335,050 (114%). Depreciation expense grew due to an increase in equipment
      under
      operating leases.





Our
      net
      loss for the nine months ended September 30, 2005 and 2004 was $567,221 and
      $204,694, respectively. The loss per limited partnership unit, after the loss
      allocated to our General Partner for the nine month period ended September
      30,
      2005 was $3.27 based on a weighted average number of limited partnership units
      outstanding of 171,746.





Partners’
      distributions paid for the nine month periods ended September 30, 2005 and
      September 30, 2004 were $1,041,847 and $445,087, respectively.





**Liquidity
      and Capital Resources**





Our
      major
      sources of liquidity are cash generated from our financings and our bank line
      of
      credit.





Our
      primary cash requirements, in addition to normal operating expenses, are for
      debt service, investment in equipment financings and distributions to partners.
      In addition to cash generated from operations, we plan to meet our cash
      requirements through borrowings under our credit facilities.





22


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









**For
                the Nine Month Periods Ended**
              **September
                30,****2005**
            
            
            **2004**Net
                cash (used in) provided by operating activities
            
            $
            (367,451
            )
            $
            140,403Net
                cash used in investing activities
            
            
            (31,503,364
            )
            
            (21,443,187
            )Net
                cash provided by financing activities
            
            
            32,942,420
            
            
            22,508,177Increase
                in cash
            
            $
            1,071,605
            
            $
            1,205,393





Our
      liquidity is affected by our ability to leverage our portfolio through expansion
      of credit facilities. Our increase in our debt to equity ratio, to seven to
      one
      at September 30, 2005 from four to one at December 31, 2004, reflects the
      additional borrowings under our WestLB line of credit that we entered into
      in
      December 2004. We would expect that our leverage ratio will remain in the seven
      to one range as we become fully invested under our lines of credit. In addition,
      changes in interest rates will affect the market value of our portfolio and
      our
      ability to obtain financing. In general, the market value of an equipment lease
      will change in inverse relation to an interest rate change where the lease
      has a
      fixed rate of return. Accordingly, in a period of rising interest rates, the
      market value of our equipment leases will decrease. A decrease in the market
      value of our portfolio will adversely affect our ability to obtain financing
      against our portfolio or to liquidate it.





In
      addition, the terms of our credit facilities have financial covenants related
      to
      our net worth and leverage. As of September 30, 2005, we were in compliance
      with
      all such covenants or they have been waived by the lender. If we do not meet
      the
      requirements of the covenants in the future, default could occur that will
      have
      an adverse effect on our operations and could force us to liquidate our
      portfolio. In the event that our WestLB line of credit is not renewed in
      December 2005, we would seek to obtain an alternative credit facility with
      comparable terms.





Our
      liquidity could also be affected by higher than expected equipment lease
      defaults. Higher than expected equipment lease defaults will result in a loss
      of
      anticipated revenues. These losses may adversely affect our ability to make
      distributions to partners and, if the level of defaults is sufficiently large,
      may result in our inability to fully recover our investment in the underlying
      equipment. In evaluating our allowance for possible losses on uncollectible
      leases, we consider our contractual delinquencies, economic conditions and
      trends, industry statistics, lease portfolio characteristics and our General
      Partner's management's prior experience with similar lease assets. At September
      30, 2005, our credit evaluation indicated the need for an allowance for possible
      losses of $321,575. As our lease portfolio increases, we anticipate the
      allowance for possible losses will increase.





Net
      cash
      used in operations for the nine month period ended September 30, 2005 was
      $(367,451) as compared to cash provided by operations of $140,403 for the nine
      month period ended September 30, 2004 a decrease of $507,854 (362%). This
      decrease is primarily related to the increase in purchases of lease portfolios
      and the increase in due from our lockbox which represents customer cash
      receipts.





Net
      cash
      flows used in investing activities for the nine month period ended September
      30,
      2005 was $(31,503,364) as compared to $(21,443,187) for the nine month period
      ended September 30, 2004, an increase of $10,060,177 (47%). This increase is
      attributable to the increase in net investment in leased assets of $24,139,752.
      The expansion of our credit facilities allowed us to increase its investment
      in
      equipment finance portfolios.





23


Net
      cash
      provided by financing activities for the nine month period ended September
      30,
      2005 was $33,942,420. This was primarily due to debt proceeds of $72,831,858
      used to acquire lease portfolios (reduced by repayment of debt of $44,115,493).
      The increase in borrowings is due to the expansion of our credit facilities
      in
      2005.





**ITEM
      3. - Quantitative and Qualitative Disclosures About Market
      Risk.**





At
      September 30, 2005, our outstanding debt totaled $80,178,036, which consists
      of
      fixed rate debt of $17,127,465 and variable rate debt of $63,050,571. Our
      variable rate debt consists of $61,205,805 with WestLB AG and $1,844,766 with
      Sovereign Bank. To mitigate interest rate risk on the WestLB AG debt we employ
      a
      hedging strategy using derivative financial instruments such as interest rate
      swaps, which fixes the interest rate on this facility at 5.17%. The interest
      rate on the Sovereign facility is calculated at LIBOR plus 2% per annum. The
      weighted average interest rate for this facility was 5.40% for the nine months
      ended September 30, 2005. Holding all variables constant, if interest rates
      hypothetically increased or decreased by 10%, our net loss would change by
      approximately $22,000.





**ITEM
      4. - Controls and Procedures.**





*Evaluation
      of Disclosure Controls and Procedures*





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, is recorded, processed, summarized
      and reported within the time periods specified in the U.S. Securities and
      Exchange Commission’s rules and forms, and that such information is accumulated
      and communicated to our management, including our General Partner’s Chief
      Executive Officer and Chief Financial Officer, as appropriate, to allow timely
      decisions regarding required disclosure. In designing and evaluating the
      disclosure controls and procedures, our management recognized that any controls
      and procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and our
      management necessarily was required to apply its judgment in evaluating the
      cost-benefit relationship of possible controls and procedures.





Under
      the
      supervision of our General Partner’s Chief Executive Officer and Chief Financial
      Officer, we have carried out an evaluation of the effectiveness of our
      disclosure controls and procedures as of the end of the period covered by this
      report. Based upon that evaluation, our General Partner’s Chief Executive
      Officer and Chief Financial Officer concluded that our disclosure controls
      and
      procedures are effective at the reasonable assurance level.





There
      have been no significant changes in our internal controls over financial
      reporting during the three months ended September 30, 2005 that has materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting during our most recent fiscal year.





24


**PART
      II - OTHER INFORMATION**





**ITEM
      6. - Exhibits.**





Exhibit
                  No.
              
              Description3.1(1)
              
              Amended
                  and Restated Agreement of Limited Partnership3.2(2)
              
              Certificate
                  of Limited Partnership4.1(2)
              
              Forms
                  of letters sent to limited partners confirming their
                  investment31.1
              
              Rule
                  13a-14(a)/15d-14(a) Certifications of Chief Executive
                  Officer31.2
              
              Rule
                  13a-14(a)/15d-14(a) Certifications of Chief Financial
                  Officer32.1
              
              Section
                  1350 Certifications of Chief Executive Officer32.2
              
              Section
                  1350 Certifications of Chief Financial
                  Officer
 _________________________




(1)
            Filed
                previously as Appendix A to our Post-Effective Amendment No. 3 to
                our
                Registration Statement on Form S-1, filed on January 24,
                2004.




(2)
            Filed
                previously as an Exhibit to Amendment No. 1 to our Registration Statement
                on Form S-1 filed on June 7, 2002.













**SIGNATURES**





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





**LEASE
                EQUITY APPRECIATION FUND I, L.P.**A
                Delaware Limited PartnershipBy:
                LEAF Financial Corporation, its General PartnerNovember
                14, 2005
            /s/
                Crit DeMent
              CRIT
                DEMENTChairman
                and Chief Executive Officer
              of
                the General PartnerNovember
                14, 2005
            /s/
                Robert K. Moskovitz
              ROBERT
                K. MOSKOVITZChief
                Financial Officer, Treasurer
              of
                the General Partner








25