|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) OFTHE SECURITIES
EXCHANGE ACT OF 1934



For the quarterly
period ended September 30, 2004


OR



/ / 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 of Organization) |  | (I.R.S. Employer Identification No.)

|1845 Walnut Street,
Suite 1000Philadelphia, Pennsylvania 19103(Address of principal executive offices) (Zip Code)



(215) 574-1636
 (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.



Yes [ X
]        No [  ]


Indicate by check mark whether the
registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) of the Act.



Yes [  
]      No [ X ]








LEASE EQUITY
APPRECIATION FUND I, L.P.



INDEX TO QUARTERLY
REPORTON FORM 10-Q
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|           |                                                                                 | PAGE   
|---------- | ------------------------------------------------------------------------------- | -------
|PART I     | FINANCIAL INFORMATION                                                           |        
|Item 1     | Financial Statements                                                            |        
|          
|           | Balance Sheets - September 30, 2004 (Unaudited) and December 31, 2003 (Audited) | 3      
|          
|           | Statements of Operations (Unaudited) for the Three and Nine Months              |        
|           | Ended September 30, 2004 and 2003                                               | 4      
|          
|           | Statement of Partner's Capital (Unaudited) for the Nine Months                  |        
|           | Ended September 30, 2004                                                        | 5      
|          
|           | Statement of Cash Flows (Unaudited)                                             |        
|           | For the Nine Months Ended September 30, 2004 and 2003                           | 6      
|          
|           | Notes to Financial Statements - September 30, 2004 (Unaudited)                  | 7 - 16 
|          
|Item 2     | Management's Discussion and Analysis of Financial Condition                     |        
|           | and Results of Operations                                                       | 17 - 23
|          
|Item 3     | Quantitative and Qualitative Disclosures about Market Risk                      | 23     
|          
|Item 4     | Controls and Procedures                                                         | 23 - 24
|          
|PART II    | OTHER INFORMATION                                                              
|          
|Item 2     | Changes in Securities and Use of Proceeds                                       | 25     
|          
|Item 6     | Exhibits and Reports on Form 8-K                                                | 26     
|          
|SIGNATURES |                                                                                 | 27     

|PART I. FINANCIAL
INFORMATION



ITEM 1. FINANCIAL
STATEMENTS



LEASE EQUITY
APPRECIATION FUND I, L.P.BALANCE SHEETS
|---------------------------------------------------------------------------------------------------------------------

|                                                                         | September 30,
2004 | December 31,
2003
|------------------------------------------------------------------------ | ------------------ | -----------------
|
|ASSETS                                                                   |                    |                  
|Cash                                                                     |                    |                  
|Accounts receivable                                                      |                    |                  
|Other receivables                                                        |                    |                  
|Due from related party, net                                              |                    |                  
|Net investment in direct financing leases (net of allowance for possible |                    |                  
|losses of $75,000 and $5,000)                                            |                    |                  
|Equipment under operating leases (net of accumulated depreciation of     |                    |                  
|$447,468 and $154,113)                                                   |                    |                  
|Other assets                                                             |                    |                  
|                                                                         |                    |                  
|                                                                         |                    |                  
|                                                                         |                    |                  
|LIABILITIES AND PARTNERS' CAPITAL                                        |                    |                  
|Liabilities:                                                             |                    |                  
|Debt                                                                     |                    |                  
|Note payable                                                             |                    |                  
|Accounts payable and accrued expenses                                    |                    |                  
|Due to related party, net                                                |                    |                  
|Partners' distributions payable                                          |                    |                  
|                                                                         |                    |                  
|Total liabilities                                                        |                    |                  
|Partners' capital                                                        |                    |                  
|                                                                         |                    |                  
|                                                                         |                    |                  
|                                                                         |                    |                  

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



3








LEASE EQUITY
APPRECIATION FUND I, L.P.STATEMENTS OF OPERATIONS(Unaudited)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                              | Three Months Ended
September 30, | Nine Months Ended
September 30,
|----------------------------------------------------------------------------- | -------------------------------- | -------------------------------
|
|Interest and rental income                                                    |                                  |                                
|Interest expense                                                              |                                  |                                
|                                                                              |                                  |                                
|Net interest and rental income                                                |                                  |                                
|Provision for possible losses                                                 |                                  |                                
|                                                                              |                                  |                                
|Net interest and rental income after provision
           for possible losses |                                  |                                
|Other income                                                                  |                                  |                                
|                                                                              |                                  |                                
|Operating income                                                              |                                  |                                
|                                                                             
|Expenses reimbursed to related party                                          |                                  |                                
|General and administrative                                                    |                                  |                                
|Management fee to related party                                               |                                  |                                
|Depreciation                                                                  |                                  |                                
|                                                                              |                                  |                                
|                                                                              |                                  |                                
|                                                                              |                                  |                                
|Net loss                                                                      |                                  |                                
|                                                                              |                                  |                                
|Net loss per weighted average limited                                         |                                  |                                
|partner unit                                                                  |                                  |                                
|                                                                              |                                  |                                
|Weighted average number of limited partner                                    |                                  |                                
|units outstanding during the period                                           |                                  |                                
|                                                                              |                                  |                                

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


4








LEASE EQUITY
APPRECIATION FUND I, L.P. STATEMENT OF PARTNERS CAPITAL
For the Nine Months Ended September 30, 2004(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      | General Partner | Limited Partners | Partners' Capital
|------------------------------------- | --------------- | ---------------- | -----------------
|                                      |                 |                  |                  
|
|Balance, January 1, 2004              |                 |                  | $                
|Partners' contributions               |                 |                  |                  
|Offering costs related to the sale of |                 |                 
|Partner units                         |                 |                  |                  
|Distributions paid                    |                 |                  |                  
|Partners' distributions payable       |                 |                  |                  
|Distributions reinvested              |                 |                  |                  
|Net loss                              |                 |                  |                  
|                                      |                 |                  |                  
|Balance, September 30, 2004           |                 |                  | $                
|                                      |                 |                  |                  

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



5









LEASE EQUITY
APPRECIATION FUND I, L.P.STATEMENTS OF CASH FLOWS(Unaudited)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                            | Nine Months Ended
September 30,
|--------------------------------------------------------------------------- | -------------------------------
|
|Cash flows from operating activities:                                       |                                
|Net loss                                                                    |                                
|Adjustments to reconcile net loss to net cash used in operating activities: |                                
|Gain on sale of equipment and lease dispositions, net                       |                                
|Depreciation                                                                |                                
|Provision for possible losses                                               |                                
|Amortization of deferred financing costs                                    |                                
|Decrease (increase) in accounts receivable                                  |                                
|Decrease in related party balances, net                                     |                                
|Increase in other assets                                                    |                                
|Increase (decrease) in accounts payable and accrued expenses                |                                
|                                                                            |                                
|Net cash provided by (used in)  operating activities                        |                                
|                                                                            |                                
|                                                                           
|Cash flows from investing activities:                                       |                                
|Investment in direct financing leases                                       |                                
|Proceeds from direct financing leases, net of earned income                 |                                
|Security deposits received, net                                             |                                
|Acquisition of equipment under operating leases                             |                                
|Proceeds from sale of equipment and lease dispositions                      |                                
|                                                                            |                                
|Net cash used in investing activities                                       |                                
|                                                                            |                                
|                                                                           
|Cash flows from financing activities:                                       |                                
|Proceeds from debt                                                          |                                
|Repayment of debt                                                           |                                
|Increase in deferred financing costs                                        |                                
|Partners' capital contributions                                             |                                
|Cash distributions to partners, net of reinvestments                        |                                
|Payment of offering costs incurred for the sale of partner units            |                                
|                                                                            |                                
|Net cash provided by financing activities                                   |                                
|                                                                            |                                
|Increase in cash                                                            |                                
|Cash, beginning of period                                                   |                                
|                                                                            |                                
|Cash, end of period                                                         |                                
|                                                                            |                                
|                                                                            |                                
|Non-cash investing activity:                                                |                                
|Purchase of direct financing leases                                         |                                

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


6










LEASE EQUITY
APPRECIATION FUND I, L.P. NOTES TO FINANCIAL STATEMENTSSeptember 30, 2004(Unaudited)



BASIS OF PRESENTATION


The
accompanying financial statements have been prepared by Lease Equity Appreciation Fund I
(the Fund) in accordance with accounting principles generally accepted in the
United States of America, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. These
unaudited financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Funds Annual Report on Form 10-K for
the year ended December 31, 2003. The results for the nine months ended September
30, 2004 are not necessarily indicative of the results that may be expected for the year
ending December 31, 2004.


Certain  reclassifications  have been made to the  financial  statements as of December 31, 2003 and for the
three and nine month periods ended  September  30, 2003 to conform to the  presentation  as of September 30, 2004 and
for the three and nine month periods ended September 30, 2004.



NOTE 1 
ORGANIZATION AND NATURE OF BUSINESS


The
Fund is a Delaware limited partnership that was formed on January 31, 2002. On June 30,
2004, the Funds general partner, LEAF Asset Management, Inc. merged into its parent,
LEAF Financial Corporation (the General Partner or LEAF). LEAF is
a wholly owned subsidiary of Resource Leasing, Inc., a wholly owned subsidiary of Resource
America, Inc. which is a publicly-traded company (NASDAQ: REXI) operating
in the real estate, financial services, energy and equipment leasing sectors.


The Fund seeks to acquire diversified  portfolios of equipment to lease to end users  throughout the United
States.  The Fund also seeks to acquire  existing  portfolios  of  equipment  subject to  existing  leases from other
equipment  lessors.  The primary  objective  of the Fund is to generate  regular  cash  distributions  to the limited
partners from its equipment  lease  portfolio  over the life of the Fund. As of August 15, 2004,  the date the Funds
offering period  terminated,  the Fund had raised  $16,671,282  through the sale of 167,798 limited partner units and
$384,943  from  the  sale of  3,898  limited  partner  units  from  the  reinvestment  by  limited  partners  of cash
distributions.


As of September 30, 2004 and December 31, 2003, 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 Funds Limited Partnership Agreement (the Partnership Agreement).



NOTE 2  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES



Financial Statement
Classification


Management
believes that, consistent with the financial statement presentation of other equipment
leasing companies, it is more appropriate to present the Funds balance sheets 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 FINANCIAL
STATEMENTS  (Continued)September 30, 2004(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. The estimates of
residual values are based upon the Funds history with regard to the realization of
residuals, available industry data and 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
Funds historical loss experience, an analysis of contractual delinquencies, economic
conditions and trends, industry statistics and lease portfolio characteristics. The
Funds policy is to charge off to the allowance those leases 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 amount 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. At
September 30, 2004, the Fund had deposits at two banks totaling $2,319,021, of which
$2,119,021 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 FINANCIAL
STATEMENTS  (Continued)September 30, 2004(Unaudited)



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



Revenue Recognition


The
Funds investment in leases consists of direct financing and operating leases which
are recorded in accordance with Statement of Financial Accounting Standards No. 13,
Accounting for Leases, and its various amendments and interpretations.


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. A lease is a direct financing lease if the
creditworthiness of the customer and the collectibility of lease payments are reasonably
certain and it meets one of the following criteria: (i) the lease transfers ownership of
the equipment to the customer at the end of the lease term; (ii) the lease contains a
bargain purchase option; (iii) the lease term at inception is at least 75% of the
estimated economic life of the leased equipment; or (iv) the present value of the minimum
lease payments is at least 90% of the fair market value of the leased equipment at
inception of the lease. The Funds investment in direct financing leases consists of
the sum of the total future minimum lease payments receivable and the estimated
unguaranteed residual value of leased equipment, less unearned lease income. Unearned
lease income, which is recognized as revenue over the term of the lease by the effective
interest method, represents the excess of the total future minimum lease 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.


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. 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 months ended
September 30, 2004 and 2003.


Other
income consists of fees for delinquent payments which are recognized when received.
9








LEASE EQUITY
APPRECIATION FUND I, L.P.NOTES TO FINANCIAL
STATEMENTS  (Continued)September 30, 2004(Unaudited)



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



Income Taxes


Federal
and most 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.



Supplemental Disclosure
of Cash Flow Information


During the nine month periods ended September 30, 2004 and September 30, 2003, the Fund paid $1,236,384 and $138,609
for interest, respectively.


The Fund paid cash  distributions  of $114,071 in October  2004 which were accrued at  September  30, 2004.
The General Partner  declared and paid a cash  distribution of $65,676 in January 2004 for the month of December 2003
to all admitted partners as of December 31, 2003.



Net Loss per Limited
Partner Unit


Net loss per limited  partner  unit is computed by dividing net loss  allocated  to limited  partners by the
weighted  average  number of limited  partner units  outstanding  during the period.  The weighted  average number of
limited partner units  outstanding  during the period is computed based on the number of limited partner units issued
during  the  period  weighted  for the days  outstanding  during  the  period.  There  were no  potentially  dilutive
securities outstanding in any periods during 2004 or 2003.



Recent Accounting
Pronouncements


In
January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51 (FIN 46). In December
2003, the FASB issued a revised interpretation of FIN 46 (FIN 46-R), which
supersedes FIN 46 and clarifies and expands current accounting guidance for variable
interest entities (VIEs). FIN 46 clarifies when a company should
consolidate in its financial statements the assets, liabilities and activities of a VIE.
FIN 46 provides general guidance as to the definition of a VIE and requires it to be
consolidated if a party with an ownership, contractual or other financial interest absorbs
the majority of the VIEs expected losses, or is entitled to receive a majority of
the residual returns, or both. A variable interest holder that is such a primary
beneficiary of the VIE is required to consolidate the VIEs assets, liabilities and
non-controlling interests at fair value at the date the interest holder first becomes the
primary beneficiary of the VIE. FIN 46 and FIN 46-R were effective immediately for all
VIEs created after January 31, 2003 and for VIEs created prior to February 1, 2003, no
later than the end of the first reporting period after March 15, 2004. The adoption of FIN
46 on July 1, 2003 had no impact on the Funds financial position or results of
operations.
10








LEASE EQUITY
APPRECIATION FUND I, L.P.NOTES TO FINANCIAL
STATEMENTS  (Continued)September 30, 2004(Unaudited)




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



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.



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, are referred to as
other comprehensive income. The Fund has no other elements of comprehensive
income (loss), other than net income (loss) to report.



Other Receivables


At
September 30, 2004 and December 31, 2003, other receivables include restricted cash of $2,128,266 and
$1,595,631, respectively, being held in reserve by the Funds lenders and $432,428
and $574,246, respectively, of customers payments deposited in a lockbox account
that have not yet been transferred to the Fund.



Other Assets


At
September 30, 2004 and December 31, 2003, other assets include $217,283 and $154,315,
respectively, of unamortized deferred financing costs which are being amortized over the
terms of the related debt.



NOTE 3  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 leases 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. The General Partner declared cash distributions of $741,261 and $236,919 during
the nine month periods ended September 30, 2004 and 2003, respectively.


Net
income for any period during the reinvestment period (the period commencing March
3, 2003 and ending five years after the last closing date on which any limited partner is
admitted) is allocated 99% to the limited partners and 1% to the General Partner. Income
during the liquidation period 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.
11






LEASE EQUITY
APPRECIATION FUND I, L.P.NOTES TO FINANCIAL
STATEMENTS  (Continued)September 30, 2004(Unaudited)




NOTE 3 ALLOCATION
OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS   (Continued)


Net
losses for any fiscal period are allocated 99% to the limited partners and 1% to the
General Partner until the limited partners have been allocated losses equal to the excess,
if any, of their aggregated capital account balances over their aggregated adjusted
capital contributions. Next, losses are allocated to the partners in proportion to and to
the extent of their respective remaining positive capital account balances, if any.
Thereafter, losses are allocated 99% to the limited partners and 1% to the General
Partner.



NOTE 4 
INVESTMENT IN LEASE RECEIVABLES


The
Funds direct financing leases are for initial lease terms ranging from approximately
12 to 84 months. Unguaranteed residuals for direct financing leases represent the
estimated amounts recoverable at lease termination from lease extensions or disposition of
the equipment. As of September 30, 2004, approximately 14% of leased equipment was located
in the state of California. No other state accounted for more than 10% of the Funds
lease portfolio.


The
components of the net investment in direct financing leases are as follows at:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | September 30,
2004 | December 31,
2003
|----------------------------------- | ------------------ | -----------------
|Total future minimum lease payments |                    |                  
|Unearned rental income              |                    |                  
|Unguaranteed residuals              |                    |                  
|Unearned residual income            |                    |                  
|Security deposits                   |                    |                  
|                                    |                    |                  
|                                    |                    |                  
|Allowance for possible losses       |                    |                  
|                                    |                    |                  
|                                    |                    |                  
|                                    |                    |                  

|A
summary of the allowance for possible losses for the nine month period ended September
30, 2004 and the year ended December 31, 2003 is as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | Nine Month
Period Ended
September 30,
2004 | Year Ended
December 31,
2003
|------------------------------------------------------ | ------------------------------------------ | ----------------------------
|Allowance for possible losses, beginning of the period |                                            |                             
|Provision for possible losses                          |                                            |                             
|Charge offs                                            |                                            |                             
|                                                       |                                            |                             
|Allowance for possible losses, end of period           |                                            |                             
|                                                       |                                            |                             

|12









LEASE EQUITY
APPRECIATION FUND I, L.P.NOTES TO FINANCIAL STATEMENTS  (Continued)
September 30, 2004(Unaudited)




NOTE 4  INVESTMENT
IN LEASE RECEIVABLES  (Continued)


The
future minimum lease payments and related rental payments expected to be received on
non-cancelable direct financing and operating leases for each of the five succeeding
twelve-month periods ending September 30 and thereafter are as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Direct Financing | Operating  | 
| |  | ---------------- | ---------- | 
| |  |                  | 2005       | 
| |  |                  | 2006       | 
| |  |                  | 2007       | 
| |  |                  | 2008       | 
| |  |                  | 2009       | 
| |  |                  | Thereafter | 
| |  |                  |            | 
| |  |                  |            | 
| |  |                  |            | 

|13









LEASE EQUITY
APPRECIATION FUND I, L.P.NOTES TO FINANCIAL STATEMENTS  (Continued)
September 30, 2004(Unaudited)




NOTE 5  DEBT


The
table below summarizes the Funds debt at September 30, 2004 and December 31, 2003:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | September 30, 2004 | December 31, 2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | -----------------
|OFC Capital, a division of ALFA Financial 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. |                    |                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                    |                  
|National 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 15% after security deposit (reduced to 8% as of July 30, 2004).  The loan is repayable as
payments are made under the leases or equipment financing transactions collateralizing the loan, with a final
maturity date of November 10, 2009.       |                    |                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                    |                  
|Sovereign Bank, revolving warehouse line of credit, with an aggregate borrowing limit of $10 million collateralized
by specific lease receivables and related equipment. Interest on this facility is calculated at LIBOR plus 2.5% per
annum (4.34% at September 30, 2004).  Interest and principal are due as payments are received under the leases.
The line expires in May 2005.                                                                                                               |                    |                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                    |                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                    |                  
|Total outstanding debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                    |                  

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

| |  |  |           
| |  |  | ----------
| |  |  | 2005      
| |  |  | 2006      
| |  |  | 2007      
| |  |  | 2008      
| |  |  | 2009      
| |  |  | Thereafter
| |  |  |           
| |  |  |           
| |  |  |           

|14









LEASE EQUITY
APPRECIATION FUND I, L.P. NOTES TO FINANCIAL
STATEMENTS  (Continued)September 30, 2004(Unaudited)


NOTE 6 
NOTE PAYABLE



On
September 30, 2004, the Fund purchased a portfolio of leases in exchange for a $2,149,629 note which
was repaid in October 2004. The Note has a maturity date of October 31, 2004 and accrues interest at 8%
per annum.



NOTE 7 
TRANSACTIONS WITH AFFILIATES


The General  Partner and its affiliate,  Anthem  Securities,  Inc.  (Anthem  Securities),  a subsidiary of
Resource  America,  Inc.,  receive an organization and offering expense  allowance of 3% of the offering proceeds and
an underwriting fee of 2% of the offering proceeds raised,  respectively.  These charges were recorded by the Fund as
offering  costs  incurred for the sale of limited  partner units on the  Statement of Partners  Capital.   The expense
allowance and  underwriting  fee are contingent  upon the gross  proceeds  raised and are limited in the aggregate to
$2,500,000.


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 leases, including in each instance, debt it incurs or assumes in
connection with the acquisition.


The
General Partner receives a subordinated annual asset management fee of 3% of gross rental
payments for operating leases and 2% of gross rental payments for direct financing leases,
as defined in the Partnership Agreement. During the Funds five-year investment
period, the asset 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 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 will be
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 commission was paid during the three and nine months ended September 30, 2004
and 2003.


The
General Partner will receive a commission equal to the lesser of a competitive rate or 2%
of gross rental payments derived from any re-lease of equipment if the re-lease is not
with the original lessee or its affiliates. No re-lease commissions were paid during the
three and nine months ended September 30, 2004 and 2003.


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.


Anthem
Securities receives sales commissions of 8% of the proceeds on each unit sold, which are
then paid to third party broker dealers.



15









LEASE EQUITY
APPRECIATION FUND I, L.P. NOTES TO FINANCIAL
STATEMENTS  (Continued)September 30, 2004(Unaudited)



NOTE 7 
TRANSACTIONS WITH AFFILIATES  (Continued)


The
following is a summary of fees and costs of services and materials charged by the General
Partner and/or its affiliates:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   | Three Months Ended
September 30, | Nine Months Ended
September 30,
|---------------------------------- | -------------------------------- | -------------------------------
|
|Organization and offering expenses |                                  | $141,499                       
|Underwriting fees                  |                                  | 81,757                         
|Acquisition fees                   |                                  | 290,484                        
|Asset management fees              |                                  | 115,661                        
|Reimbursable expenses              |                                  | 77,489                         
|Sales commissions                  |                                  | 342,731                        

|16









ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited)



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 of our
annual report on Form 10-K, under the caption Risk Factors. 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 were formed on January 31, 2002.  LEAF Financial  Corporation  became our general  partner  on June 30,
2004 upon the  merger of LEAF  Asset  Management,  Inc.  into it. In August,  2002 we began our  offering  of 500,000
limited  partner  units for a maximum  offering  proceeds of  $50,000,000.  The  offering  period ended on August 15,
2004. As of September 30, 2004, we had sold 171,696 limited partner units raising $14,939,114 net of offering costs.


We
acquire portfolios of existing leases originated or acquired by an affiliate of our
general partner and other parties. The principal sources for these portfolios are
small company lessors, international leasing institutions, regional and national
commercial banks and captive finance companies of large manufacturers. Our general
partners board of directors has an investment committee which sets, and may from
time to time revise, standards and procedures for the review and approval of equipment
acquisitions and leases of that equipment.


Our
leases consist of both direct financing and operating leases which are recorded in
accordance with accounting principles generally accepted in the United States of America.
Under the direct financing method of accounting for leases, interest income (the excess of
the aggregate future minimum lease payments 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. When a direct financing lease is 90 days or more
delinquent, the lease is classified as being on non-accrual and we generally do not
recognize interest income on that lease until the lease is less than 90 days
delinquent. 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.


As of September 30, 2004,  our  portfolio  contained  1,530 leases with 1,419  individual  end users.  As of
September  30, 2004,  we had invested  $46,393,380  in equipment  under direct  financings  leases and  $1,222,980 in
equipment under operating leases.


17








ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited) - (Continued)



Our Lease Portfolio


The
following schedules detail the type, aggregate purchase price and percentage of the
various types of equipment we leased under the direct financing and operating methods as
of September 30, 2004:



Direct Financing Leases:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Type of Equipment    | Purchase Price
of Equipment | Percentage of
Total Equipment
|-------------------- | --------------------------- | -----------------------------
|Industrial equipment |                             | $  12,086,031                
|Medical equipment    |                             | 10,381,184                   
|Computer systems     |                             | 9,582,036                    
|Computer software    |                             | 6,039,186                    
|Dry cleaning         |                             | 3,932,913                    
|Telecom systems      |                             | 2,603,703                    
|Copiers              |                             | 2,111,044                    
|Other                |                             | 9,637,247                    
|                     |                             |                              
|                     |                             | $56,373,344                  
|                     |                             |                              

|Operating Leases:
|-----------------

|Type of Equipment | Purchase Price
of Equipment | Percentage of
Total Equipment
|----------------- | --------------------------- | -----------------------------
|Computer systems  |                             | $   645,656                  
|Copiers           |                             | 247,303                      
|Dental equipment  |                             | 207,278                      
|Telecom systems   |                             | 147,763                      
|Laundry equipment |                             | 135,082                      
|Other             |                             | 287,366                      
|                  |                             |                              
|                  |                             | $1,670,448                   
|                  |                             |                              

|18









ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited) - (Continued)



Our Lease Portfolio
(Continued)


The
following schedules detail the type of lessees business, aggregate purchase price
and percentage of equipment usage by industrial classification for equipment we leased
under the operating and direct financing methods as of September 30, 2004:



Direct Financing Leases:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Type of Business         | Purchase Price
of Equipment | Percentage of
Total Equipment
|------------------------ | --------------------------- | -----------------------------
|Health services          |                             | $15,865,471                  
|Business services        |                             | 8,249,023                    
|Automotive               |                             | 4,588,238                    
|Personal services        |                             | 4,576,888                    
|Real estate              |                             | 1,520,400                    
|Retail                   |                             | 1,200,565                    
|Amusement and recreation |                             | 1,177,297                    
|Other                    |                             | 19,195,462                   
|                         |                             |                              
|                         |                             | $56,373,344                  
|                         |                             |                              

|Operating Leases:
|-----------------

|Type of Business                                           | Purchase Price
of Equipment | Percentage of
Total Equipment
|---------------------------------------------------------- | --------------------------- | -----------------------------
|Health services                                            |                             | $   332,363                  
|Business services                                          |                             | 310,026                      
|Wholesale goods                                            |                             | 220,688                      
|Administrative of Environment quality and housing programs |                             | 135,082                      
|Repair services                                            |                             | 117,238                      
|Other                                                      |                             | 555,051                      
|                                                           |                             |                              
|                                                           |                             | $1,670,448                   
|                                                           |                             |                              

|19








ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited) - (Continued)



Results of Operations


We had interest and rental income of $1,083,834  and  $2,351,441  for the three and nine month periods ended
September 30, 2004,  an increase of 286% and 348% over the  comparable  periods in 2003.  From the commencement of
our operations in March 2003 to September 30, 2004, our portfolio of leases has grown to 1,530 totaling a net  investment of $46,393,380  with
1,419  different  customers.  Interest  expense of $524,750 and $1,291,362 for the three and nine month periods ended
September 30, 2004 includes  interest  incurred on a warehouse  line,  loans payable and the  amortization of deferred
financing  costs.  As our lease  portfolio  grows and we incur  additional  debt,  interest  expense will increase in
future  periods.  Total  operating  expenses were $508,690 and  $1,122,225 for the three and nine month periods ended
September  30,  2004.  General  and  administrative  expenses,  including  reimbursed  expenses to related  party,  were
$201,985 and $567,915 for the three and nine month  periods ended  September  30, 2004.  Of this amount,  $77,489 and
$355,636  was incurred to our  general  partner  as a direct  reimbursement  of  expenses  incurred  on our  behalf.  In addition,  we incurred  management fees of $115,661 and $260,955 to
our  general  partner  for the three and nine month  periods  ended  September  30,  2004.  The  management  fees are
calculated  as a percentage of gross rental  payments on both direct  financing  and  operating  leases.  Included in
Other Income,  we recognized a net gain (loss) on sale of equipment  and lease  dispositions  of $(7,777) and $46,549
for the three and nine month periods ended September 30, 2004.


Our net loss was $120,712 and $204,697  for the three and nine month period ended  September  30, 2004.  The
loss per limited  partner unit,  after the loss  allocated to our general  partner,  was $0.76 and $1.63,  based on a
weighted  average  number of limited  partner units  outstanding  of 157,499 and 124,695 for the three and nine month
periods  ended  September 30, 2004, respectively. To gain  profitability  we need to increase our revenues by acquiring  additional
leases.  We plan to obtain  additional  capital to acquire these portfolios  primarily  through new credit
facilities, which may include warehouse lines, commercial paper and securitizations.


We declared cash  distributions  of $308,397 of which  $194,326 was paid during the three month period ended
September  30, 2004.  The  remaining  distribution  of $114,071  was accrued at September 30, 2004 and was paid in
October 2004.


Three month period ended September
30, 2004 compared to the three month period ended September 30, 2003.


We had interest and rental  income of  $1,083,834  for the three month  period ended  September  30, 2004 as
compared  to $281,036  for the same period in 2003.  The  increase of $802,798 is  primarily  due to the fact that we
had just broken escrow and  commenced  operations  on March 3, 2003 and had invested  $8,304,683 in direct  financing
leases and $374,069 in equipment  under  operating  leases at the end of the earlier  period.  At September 30, 2004,
we had invested  $46,393,380  in direct  financing  leases and  $1,222,980  in equipment under operating  leases as compared to
$24,216,771  and $313,479 in 2003. Our loss for the three month period ended  September 30, 2004 was $120,712  as compared to
$71,781  for the same  period in 2003.  Our
loss for the current  quarter was primarily the result of a greater  provision for possible  losses.  The provision for
possible  losses was $193,741 for the three months ended  September  30, 2004 as compared to no provision for possible losses for the same
period in 2003. As the  portfolio  grows and ages, we aniticipate that the provision for possible losses may increase.  Our allowance for possible  losses
is based on historic loss  experience  and account aging.  Our policy is to charge off to the allowance  those leases
which are in default and for which management has determined the probability of collection to be remote.



20







ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited) - (Continued)



Other income  includes gains and losses on lease  terminations,  which vary from  transaction to transaction
and there may be  significant  variations  in our gains or losses from period to period.  Other  income for the three
month period ended  September  30, 2004 was $22,635 as compared to $9,415 for the three month period ended  September
30, 2003.


Our interest expense for the three month period ended September 30, 2004 increased by $450,794 (610%) to
$524,750 due to an increase in outstanding debt to $37,071,293 at September 30, 2004 from $7,962,395 as of September 30, 2003.


Operating expenses increased by $220,414 (76%) to $508,690 for the three month period ended September 30, 2004,
as compared to $288,276 for the same period in 2003.  Reimbursed expenses to our general partner decreased by
$52,336 because many of the expenses associated with developing our operations are now complete; however, we
anticipate that these expenses will increase in the future as our portfolio grows.  The decrease in reimbursed
expenses was offset by an increase of $102,255 in management fee to related party.  These fees, which are based on
lease payment collections, will continue to increase as the lease portfolio grows. General and administrative costs
increased by $31,142 due to the growth of our operations from the same period in the prior year.


Nine month period ended September
30, 2004 compared to the nine month period ended September 30, 2003.


We had interest and rental  income of  $2,351,441  for the nine month  period  ended  September  30, 2004 as
compared to $524,388 for the same period in 2003.  The increase of  $1,827,053  is primarily due to the growth in our
portfolio  of  leases.  We had just  broken  escrow  and  commenced  operations  on March  3,  2003 and had  invested
$17,413,393  in direct  financing  leases and  $657,953  in  operating  leases at the end of the  earlier  period.  At
September  30, 2004, we had  invested  $46,393,380  in direct  financing  leases and  $1,222,980  in  equipment  under
operating  leases.  The provision for possible losses was $259,900  for the nine months  ended  September  30, 2004
as compared to no provision for possible losses for the same period in 2003.  As the portfolio grows and ages,
we anticipate that the provision for possible losses may increase.


Other income for the nine month  period  ended  September  30, 2004 was $117,352 as compared to $29,756 the
nine month period ended  September  30,  2003.  The increase of $87,596 is primarily  due to the overall increase in
our lease portfolio resulting from an increase in late fees and gain on the termination of leases.


Our
interest expense for the nine month period ended September 30, 2004 increased by
$1,152,753 to $1,291,362 due to an increase in outstanding debt to $37,071,293 from $7,962,395 as of
September 30, 2003.


We had total  operating  expenses  of  $1,122,225  for the nine month  period  ended  September  30, 2004 as
compared to $629,590  for the same  period in 2003.  The  increase of $492,635  was  primarily  due to  increases  in
management fee to related  party of $221,482 and  depreciation  of $180,160.  These  increases are primarily due to
the fact that we commenced  operations  on March 3, 2003 and  therefore  had fewer  days of operation in the nine month
period ended September 30, 2003 as compared to the nine month period ended September 30, 2004.



Liquidity and Capital
Resources


Our major sources of liquidity are cash provided by operations, borrowings under credit facilities and the
proceeds from the issuance of limited partner units.  The offering of limited partner units ended on August 15, 2004.



21







ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited) - (Continued)


Liquidity and Capital
Resources - (Continued)


Our primary cash requirements,  in addition to normal operating expenses,  are for debt service,  investment
in leases and distributions to partners.  We plan to meet our cash requirements  through new credit  facilities,  and
through the cash generated from our existing portfolio and leases we expect to acquire.  We are currently in
discussions  with several  sources
to provide the financing that will be required to purchase additional lease portfolios.


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

|                                                        | Nine Months Ended
September 30,
|------------------------------------------------------- | -------------------------------
|
|Net cash provided by (used in)  by operating activities |                                
|Net cash used in investing activities                   |                                
|Net cash provided by financing activities               |                                
|                                                        |                                
|Increase in cash                                        |                                
|                                                        |                                

|We broke  escrow  and  commenced  operations  on March 3,  2003.  Since we were in full  operation  for nine
months in 2004 as compared to seven months in 2003,  we were able to invest in more leases  during the nine month
period ended  September  30, 2004  ($28,357,884)  as compared to the same period in 2003  ($17,413,393).  We were able
to increase our net borrowing by $16,684,891 during the nine month period ended
September 30, 2004 as compared to $11,165,160 for the same period in 2003,  because we were in operation  for a longer  period  resulting in a larger
portfolio of leases to use as collateral for financing.


We raised less in capital during the nine month period ended September 30, 2004 ($7,300,147) as compared to the nine
month period ended September 30, 2003 ($8,257,860).  This decrease was the result
of the hiatus in marketing and selling of partner units from October 31, 2003 to January 28, 2004 while our
offering prospectus was being updated.  It took additional time to reestablish ourselves with the
marketplace once we were able to restart our offering.  In addition, our offering ended August 15, 2004, which resulted in
being able to sell limited partner units for approximately six and one half months in 2004 as compared to
nine months in 2003.


Our  liquidity  is  affected  by  our  ability  to  leverage  our  portfolio  through  expansion  of  credit
facilities.  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.


Our liquidity  could also be affected by higher than expected  lease  defaults.  Higher than expected  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 levels of defaults are  significantly  large, it may result in our inability to
fully recover our  investment  in the  underlying  equipment.  In evaluating  our allowance for possible  losses,  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.  For the nine
month period ended September 30, 2004, we have written off $189,900 of our lease  portfolio and at September 30, 2004
our allowance for possible  losses was $75,000.  As our lease portfolio increases we anticipate the allowance for possible
losses to increase.



The increase in cash provided by operations and investing reflects the full period of operating activities during the nine months
ended September 30, 2004 as compared to the ramp-up of activities in the Fund in 2003.
22







ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
         RESULTS OF OPERATIONS (Unaudited) - (Continued)



Net cash provided by financing activities for the nine month period ended September 30, 2004 was
$22,508,177. This was primarily due to debt proceeds of $29,838,901 used to acquire lease portfolios (reduced by
repayment of debt of $13,154,010), and $7,300,147 from the issuance of limited partner units. On January 28, 2004, we
borrowed an additional $3,678,926 from our line of credit with OFC Capital, which was collateralized by specific
lease receivables. In May 2004, we established and borrowed $10,000,000 under a new revolving warehouse line of
credit with Sovereign Bank. This line of credit, which is secured by lease receivables, bears interest at a
floating rate of LIBOR plus 2.5% interest per annum. To mitigate our exposure to changes in interest rates, it is
our intent to use this line of credit to aggregate leases that will be later financed on a permanent basis with a
commercial paper conduit, term securitization, or term loan similar to our loans with National City Commercial
Capital Corporation or OFC Capital. On July 30, 2004 we borrowed $8.1 million from National City Commercial
Corporation. We are in negotiations with several financing sources to secure such additional financing.



Partnership Distributions


During the nine month period  ended  September  30, 2004, we declared  distributions  of  $741,261,  of which
$627,190 was  distributed  and $114,071 was accrued as of September 30, 2004.  The accrued  distribution  of $114,071
was paid in October  2004 to all admitted  partners as of  September  30,  2004.  Declared  distributions  to limited
partners were 8% of invested capital.



ITEM 3. 
Quantitative and Qualitative Disclosures about Market Risk


All
of our assets and  liabilities  are  denominated  in U.S.  dollars,  and as a result,  we
do not have exposure to currency exchange risks.


As of September 30, 2004,
the amount outstanding under the revolving warehouse line of credit was $9,918,206. This facility's
interest rate is calculated at LIBOR plus 2.5% per annum.  The weighted average interest
rate for this facility was 3.9% for the nine months ended September 30, 2004.  Holding all other variables constant, if interest rates
hypothetically increased or decreased by 10%, our net loss would change by approximately $39,000.


We
do not engage in any interest rate, foreign currency exchange rate or commodity
price-hedging transactions, and as a result, we do not have exposure to any derivatives risk.



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 Securities and Exchange Act of 1934 reports 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 the chief executive officer and our chief financial officer of our general partner,  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  designed  control  objectives,  and our
management  necessarily was required to apply its judgement in evaluating the  cost-benefit  relationship of possible
controls and procedures.



23






ITEM 4.  Controls
and Procedures - (Continued)



Under the supervision of the chief executive officer and chief financial officer of our general partner, 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, the chief executive officer and the chief financial
officer of our general partner concluded that our controls and procedures are effective at the reasonable assurance
level.


That there have been no significant changes in our internal controls over financial reporting that has materially
affected, or is reasonably likely to materially effect, our internal control over financial reporting during our
most recent fiscal quarter.

24










PART II  OTHER
INFORMATION



ITEM 2.  Changes in
Securities and Use of Proceeds


Our limited partner units are not publicly traded. As of September 30, 2004, we had 436 limited partners.


We conducted an offering of our limited partner interest pursuant to a registration statement (File No. 333-84730)
that was made effective by the Securities and Exchange Commission on August 15, 2002, when the offering commenced.
The dealer manager for the offering was Anthem Securities, Inc.  We registered the sale of 500,000 units of limited
partnership interest at an aggregate offering price of $50,000,000. As of the termination of the offering August 15,
2004, we have issued 171,696 limited partner units for an aggregate proceeds of $17,056,229.


The  following  table  shows the use of proceeds  from the  offering  since the  effective  date of the  registration
statement through September 30, 2004.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | 
|------------------------------------------- | 
|Offering proceeds                           | 
|Expenses:                                   | 
|Sales commissions (1)(2)                    | 
|Underwriting fees (1)(2)                    | 
|Organization and offering expenses (3)      | 
|                                            | 
|Public offering expenses                    | 
|                                            | 
|Net offering proceeds                       | 
|Reserves                                    | 
|                                            | 
|Total proceeds available for investment     | 
|                                            | 
|Use of proceeds for investment (estimated): | 
|Acquisition of lease portfolios (5)         | 
|Working capital (4)                         | 

---

| | (1) | We did not pay sales commissions or underwriting fees with respect to the
               10,083.3 units sold to our general partner, the selling dealers and their
               affiliates.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Paid to an affiliate of the general partner.
| | --- | --------------------------------------------

| | (3) | Paid
to the general partner.
| | --- | ----------------------------

| | (4) | The general partner was reimbursed $950,621 for operating expenses and paid
               asset management fees of $334,050.
| | --- | -----------------------------------------------------------------------------------------------------------------------------

| | (5) | Included are asset acquisition fees of $1,134,659 that were paid to our general
               partner.
| | --- | -------------------------------------------------------------------------------------------------------

|25










ITEM 6.  Exhibits
and Reports on Form 8-K


     (a)       
          The following documents are filed as part of this Quarterly Report on Form 10-Q:



1.        Financial
Statements


The
financial statements required by this Item are set forth in Item 1.



2.        Financial
Statement Schedules


No schedules
are required to be presented.


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

| | Exhibit No. | Description
| | ----------- | -----------
| |             | 3.1        
| |             | 3.2        
| |             | 4          
| |             | 10.1       
| |             | 31.1       
| |             | 31.2       
| |             | 32.1       
| |             | 32.2       

| |  | 
| |  | 

| | (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.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

26

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# LEASE EQUITY
APPRECIATION FUND I, L.P.

# SIGNATURES

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

|                |  |                                     
|--------------- |  | ------------------------------------
|/s/ Crit DeMent |  | Chief Executive Officer and Director
|CRIT DEMENT     |  | of the General Partner              

|                        |  |                            
|----------------------- |  | ---------------------------
|/s/ Robert K. Moskovitz |  | Senior Vice President,     
|ROBERT K. MOSKOVITZ     |  | and Chief Financial Officer
|                        |  | of the General Partner     

27

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