**United      States**

**SECURITIES      AND EXCHANGE COMMISSION **

**WASHINGTON,      D.C. 20549 **

**FORM      10-Q **

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

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

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

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

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

**INDEX      TO QUARTERLY REPORT**

**ON      FORM 10-Q**

|                       |                                                                                                                                                       | **PAGE**                              |
|----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
| **PART                I**  | **FINANCIAL                INFORMATION**                                                                                                                   |                                  |
| Item                1.     | Financial                Statements                                                                                                                        |                                  |
|                       | Consolidated                Balance Sheets - March 31, 2006 (unaudited) and December 31,                2005                                          | 3                                     |
|                       | Consolidated                Statements of Operations Three                Months Ended March 31, 2006 and                2005 (unaudited)   | 4                                     |
|                       | Consolidated                Statement of Partners’ Capital and Comprehensive Income For                the Three Months Ended March 31, 2006    | 5                                     |
|                       | Consolidated                Statements of Cash Flows For                the Three Months Ended March 31, 2006 and 2005 (unaudited)               | 6                                     |
|                       | Notes                to Consolidated Financial Statements - March 31, 2006 (unaudited)                                                      | 7                -                15  |
| ITEM                2.     | Management’s                Discussion and Analysis of Financial Condition and                Results of Operations                                  | 16                -                20 |
| ITEM                3.     | Quantitative                and Qualitative Disclosures about Market                Risk                                                                   | 21                                    |
| ITEM                4.     | Controls                and Procedures                                                                                                                     | 21                                    |
| **PART                II** | **OTHER                INFORMATION**                                                                                                                       |                                  |
| ITEM                6.     | Exhibits                                                                                                                                                   | 22                                    |
| **SIGNATURES**             | 23                                                                                                                                                         |

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**PART      I.**
**FINANCIAL      INFORMATION**

**Item      1.**
**Financial      Statements**

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

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                           |   | **March                31,** |       | **December                31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|------------|---------------------------------|--------|
|                                                                                                                                           |   | **2006**                     |       | **2005**                        |   |
|                                                                                                                                           |   | **(unaudited)**              |       |                            |   |
| **ASSETS**                                                                                                                                     |   |                         |       |                            |   |
| Cash                                                                                                                                           |   | $                            | 3,403,566  |                            | $      | 3,205,731 |   |
| Restricted                cash                                                                                                                 |   |                         | 1,881,765  |                            |   | 1,887,933 |   |
| Accounts                receivable                                                                                                             |   |                         | 104,731    |                            |   | 89,702 |   |
| Due                from lockbox                                                                                                                |   |                         | 955,766    |                            |   | 1,343,985 |   |
| Investment                in direct financing leases and notes, net                                                                            |   |                         | 78,379,159 |                            |   | 80,782,648 |   |
| Investment                in operating leases, net of accumulated depreciation of  $1,261,075                and $1,069,031, respectively |   |                         | 1,570,597  |                            |   | 1,743,257 |   |
| Fair                value of interest rate swap                                                                                                |   |                         | 966,219    |                            |   | 658,610 |   |
| Other                assets                                                                                                                    |   |                         | 1,056,757  |                            |   | 1,080,860 |   |
|                                                                                                                                           |   | $                            | 88,318,560 |                            | $      | 90,792,726 |   |
| **LIABILITIES                AND PARTNERS’ CAPITAL**                                                                                     |   |                         |       |                            |   |   |   |
| **Liabilities:**                                                                                                                               |   |                         |       |                            |   |   |   |
| Debt                                                                                                                                      |   | $                            | 74,637,799 |                            | $      | 77,326,886 |   |
| Accounts                payable and accrued expenses                                                                                      |   |                         | 385,066    |                            |   | 418,278 |   |
| Due                to related parties, net                                                                                                |   |                         | 576,169    |                            |   | 818,235 |   |
| Security                deposits                                                                                                     |   |                         | 1,213,662  |                            |   | 801,235 |   |
| Total                liabilities                                                                                                          |   |                         | 76,812,696 |                            |   | 79,364,634 |   |
| **Partners’                Capital**                                                                                                |   |                         | 11,505,864 |                            |   | 11,428,092 |   |
|                                                                                                                                           |   | $                            | 88,318,560 |                            | $      | 90,792,726 |   |

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

**CONSOLIDATED      STATEMENTS OF      OPERATIONS**

**(unaudited)**

|                                                                                                        |   | **Three                Months Ended****March                31,** |      |
|-------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                                                                        |   | **2006**                                                          |      | **2005** |   |
| **Income:**                                                                                                 |   |                                                              |      |   |   |
| Interest                on equipment financings                                                             |   | $                                                                 | 1,520,205 |   | $ | 1,193,084 |   |
| Rental                income                                                                                |   |                                                              | 231,417   |   |   | 244,641 |   |
| Gain                (loss) on sale of equipment and lease dispositions, net                            |   |                                                              | 104,275   |   |   | (2,882 | ) |
| Other                                                                                                       |   |                                                              | 136,231   |   |   | 75,255 |   |
|                                                                                                        |   |                                                              | 1,992,128 |   |   | 1,510,098 |   |
|                                                                                                        |   |                                                              |      |   |   |   |   |
| **Expenses:**                                                                                               |   |                                                              |      |   |   |   |   |
| Interest                expense                                                                             |   |                                                              | 1,072,280 |   |   | 832,793 |   |
| Depreciation                on operating leases                                                             |   |                                                              | 192,044   |   |   | 202,522 |   |
| Provision                for credit losses                                                                  |   |                                                              | 145,474   |   |   | 240,450 |   |
| Management                fee to related party                                                              |   |                                                              | 234,316   |   |   | 154,239 |   |
| Administrative                expense reimbursed to related party                                           |   |                                                              | 103,858   |   |   | 140,261 |   |
| General                and administrative expenses                                                          |   |                                                              | 131,783   |   |   | 105,237 |   |
|                                                                                                        |   |                                                              | 1,879,755 |   |   | 1,675,502 |   |
| Net                income (loss)                                                                            |   | $                                                                 | 112,373   |   | $ | (165,404 | ) |
|                                                                                                        |   |                                                              |      |   |   |   |   |
| Weighted                average number of limited partner unitsoutstanding                during the period |   |                                                              | 171,746   |   |   | 171,746 |   |
| Net                income (loss) attributed to limited partners per unit                                    |   | $                                                                 | 0.65      |   | $ | (0.95 | ) |

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

**CONSOLIDATED      STATEMENTS OF PARTNERS’ CAPITAL**

**AND      COMPREHENSIVE INCOME **

**FOR      THE THREE MONTHS ENDED MARCH 31, 2006**

**(unaudited)**

|                                                       |   | **General                Partner** |    | **Limited                Partners** |   | **Accumulated                Other Comprehensive** |   |   **Partners’                Capital** |       | **Comprehensive                Income** |   |
|------------------------------------------------------------|--------|------------------------------------|---------|-------------------------------------|--------|----------------------------------------------------|--------|--------------------------------------------------------|------------|-----------------------------------------|--------|
|                                                       |   | **Amount**                         |    | **Units**                           |   | **Amount**                                         |   | **Income**                                             |       | **Total**                               |   | **Total** |   |
| Balance,                January 1, 2006               |   | $                                  | (40,739 | )                                   |   | 171,746                                            |   | $                                                      | 10,810,221 |                                    | $      | 658,610 |   | $ | 11,428,092 |   |   |   |   |
| Cash                distributions paid                     |   |                               | (3,422  | )                                   |   | -                                                  |   |                                                   | (338,788   | )                                       |   | − |   |   | (342,210 | ) |   |   |   |
| Net                income                                  |   |                               | 1,124   |                                |   | -                                                  |   |                                                   | 111,249    |                                    |   | − |   |   | 112,373 |   | $ | 112,373 |   |
| Unrealized                gain on hedging derivative  |   |                               | − |                                |   | −                                            |   |                                                   | −    |                                    |   | 307,609 |   |   | 307,609 |   |   | 307,609 |   |
| Balance,                March 31, 2006                |   | $                                  | (43,037 | )                                   |   | 171,746                                            |   | $                                                      | 10,582,682 |                                    | $      | 966,219 |   | $ | 11,505,864 |   | $ | 419,982 |   |

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

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(**
**unaudited**
**)**

|                                                                                                                                                  |   | **Three                Months Ended****March                31,** |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|------------|
|                                                                                                                                                  |   | **2006**                                                          |       | **2005** |   |
| **Cash                flows from operating activities:**                                                                                              |   |                                                              |       |   |   |
| Net                income (loss)                                                                                                                 |   | $                                                                 | 112,373    |   | $ | (165,404 | ) |
| Adjustments                to reconcile net income (loss) to net cash provided by  (used                in) operating                activities: |   |                                                              |       |   |   |   |   |
| (Gain)                loss on sale of equipment and lease dispositions net                                                                       |   |                                                              | (104,275   | ) |   | 2,882 |   |
| Depreciation                                                                                                                                     |   |                                                              | 192,044    |   |   | 202,522 |   |
| Amortization                of deferred financing costs                                                                                          |   |                                                              | 31,921     |   |   | 43,160 |   |
| Provision                for credit losses, net of recoveries                                                                                    |   |                                                              | 145,474    |   |   | 240,450 |   |
| Changes                in operating assets and liabilities:                                                                                           |   |                                                              |       |   |   |   |   |
| Accounts                receivable                                                                                                                    |   |                                                              | (15,029    | ) |   | (64,437 | ) |
| Due                from lockbox                                                                                                                       |   |                                                              | 388,219    |   |   | 191,104 |   |
| Other                assets                                                                                                                           |   |                                                              | (6,242     | ) |   | (62,543 | ) |
| Accounts                payable and accrued expenses                                                                                                  |   |                                                              | (33,212    | ) |   | (269,715 | ) |
| Due                to related parties, net                                                                                                            |   |                                                              | (242,066   | ) |   | (793,775 | ) |
| Net                cash provided by (used in) operating activities                                                                                    |   |                                                              | 469,207    |   |   | (675,756 | ) |
|                                                                                                                                                  |   |                                                              |       |   |   |   |   |
| **Cash                flows from investing activities:**                                                                                              |   |                                                              |       |   |   |   |   |
| Investments                in direct financing leases and notes                                                                                       |   |                                                              | (6,147,352 | ) |   | (43,485,136 | ) |
| Acquisitions                of equipment under operating leases                                                                                       |   |                                                              | (19,384    | ) |   | (1,080,017 | ) |
| Proceeds                from direct financing leases and notes, net of earned income                                                             |   |                                                              | 8,881,122  |   |   | 4,844,189 |   |
| Security                deposits, net                                                                                                                 |   |                                                              | 40,947     |   |   | 494,661 |   |
| Net                cash provided by (used in) investing activities                                                                                    |   |                                                              | 2,755,333  |   |   | (39,226,303 | ) |
|                                                                                                                                                  |   |                                                              |       |   |   |   |   |
| **Cash                flows from financing activities:**                                                                                              |   |                                                              |       |   |   |   |   |
| Decrease                in restricted cash                                                                                                            |   |                                                              | 6,168      |   |   | 4,882,473 |   |
| Increase                in deferred financing costs                                                                                                   |   |                                                              | (1,576     | ) |   | (9,867 | ) |
| Proceeds                from debt                                                                                                                     |   |                                                              | 5,943,963  |   |   | 53,109,263 |   |
| Repayment                of debt                                                                                                                      |   |                                                              | (8,633,050 | ) |   | (16,987,690 | ) |
| Partners’** **distributions                paid                                                                                            |   |                                                              | (342,210   | ) |   | (342,212 | ) |
| Net                cash (used in) provided by financing activities                                                                                    |   |                                                              | (3,026,705 | ) |   | 40,651,967 |   |
|                                                                                                                                                  |   |                                                              |       |   |   |   |   |
| Increase                in cash                                                                                                                  |   |                                                              | 197,835    |   |   | 749,908 |   |
| Cash,                beginning of period                                                                                                         |   |                                                              | 3,205,731  |   |   | 2,310,880 |   |
| Cash,                end of period                                                                                                               |   | $                                                                 | 3,403,566  |   | $ | 3,060,788 |   |

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

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH      31, 2006**

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

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

**Basis      of Presentation**

**Reclassifications**

**Classification      **

**Use      of Estimates**

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

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

**MARCH      31, 2006**

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

**Use      of Estimates − (Continued)**

**Concentration      of Credit Risk**

**Revenue      Recognition**

*Direct      Financing Leases. *

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

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

**MARCH      31, 2006**

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

**Revenue      Recognition − (Continued)**

*Operating      Leases. *

*Notes      Receivable.*

**Income      Taxes**

**Supplemental      Disclosure of Cash Flow Information**

**Transfers      of Financial Assets**

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

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

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

**MARCH      31, 2006**

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

**Fair      Value of Financial Instruments**

**NOTE      3 − RESTRICTED CASH**

**NOTE      4 − DUE FROM LOCKBOX**

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

|                                         |   | **March                31,** |       | **December                31,** |   |
|----------------------------------------------|--------|------------------------------|------------|---------------------------------|--------|
|                                         |   | **2006**                     |       | **2005**                        |   |
| Direct                financing leases       |   | $                            | 72,369,119 |                            | $      | 75,565,985 |   |
| Notes                receivable              |   |                         | 6,310,040  |                            |   | 5,621,663 |   |
|                                         |   |                         | 78,679,159 |                            |   | 81,187,648 |   |
| Allowance                for possible losses |   |                         | (300,000   | )                               |   | (405,000 | ) |
|                                         |   | $                            | 78,379,159 |                            | $      | 80,782,648 |   |

|                                                      |   | **March                31,** |       | **December                31,** |   |
|-----------------------------------------------------------|--------|------------------------------|------------|---------------------------------|--------|
|                                                      |   | **2006**                     |       | **2005**                        |   |
| Total                future minimum lease payments        |   | $                            | 80,258,281 |                            | $      | 84,051,541 |   |
| Unearned                income                            |   |                         | (8,971,541 | )                               |   | (9,167,115 | ) |
| Residuals,                net of unearned residual income |   |                         | 1,082,379  |                            |   | 681,559 |   |
|                                                      |   | $                            | 72,369,119 |                            | $      | 75,565,985 |   |

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

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

**MARCH      31, 2006**

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

|                                                                  |   | **Three                Months Ended****March                31,** |     |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------|----------|
|                                                                  |   | **2006**                                                          |     | **2005** |   |
| Allowance                for possible losses, beginning of the period |   | $                                                                 | 405,000  |   | $ | 120,000 |   |
| Provision                for credit losses                            |   |                                                              | 145,474  |   |   | 240,450 |   |
| Net                write-offs                                         |   |                                                              | (250,474 | ) |   | (110,450 | ) |
| Allowance                for possible losses, end of the period       |   | $                                                                 | 300,000  |   | $ | 250,000 |   |

| **Annual                Periods Ending****March                31,** |   | **Direct****Financing                Leases** |       | **Notes** |   | **Operating                Leases** |   | **Total** |      |
|----------------------------------------------------------------------|--------|-----------------------------------------------|------------|-----------|--------|-------------------------------------|--------|-----------|-----------|
| 2007                                                            |   | $                                             | 33,430,876 |      | $      | 1,717,328                           |   | $         | 749,675   |   | $ | 35,897,879 |   |
| 2008                                                            |   |                                          | 23,071,211 |      |   | 1,385,322                           |   |      | 387,046   |   |   | 24,843,579 |   |
| 2009                                                            |   |                                          | 14,508,188 |      |   | 1,075,444                           |   |      | 167,465   |   |   | 15,751,097 |   |
| 2010                                                            |   |                                          | 7,117,030  |      |   | 940,826                             |   |      | 77,455    |   |   | 8,135,311 |   |
| 2011                                                            |   |                                          | 1,581,348  |      |   | 684,202                             |   |      | −   |   |   | 2,265,550 |   |
| Thereafter                                                      |   |                                          | 549,628    |      |   | 506,918                             |   |      | −   |   |   | 1,056,546 |   |
|                                                                 |   | $                                             | 80,258,281 |      | $      | 6,310,040                           |   | $         | 1,381,641 |   | $ | 87,949,962 |   |

**NOTE      6− OTHER ASSETS**

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

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

**MARCH      31, 2006**

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **March                31, 2006** |       | **December                31, 2005** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|--------------------------------------|--------|
| WestLB                AG, New York Branch revolving line of credit, with an aggregate borrowing                limit of $75.0 million collateralized by specific lease receivables                and                related equipment, with a 1% credit reserve of the outstanding line                of                credit. Interest on this facility is calculated at LIBOR plus 1.10%                per                annum. To mitigate fluctuations in interest rates the Fund has entered                into interest rate swap agreements. The interest rate swap agreements                terminate at various dates ranging from August 2011 to February 2013.                The                interest rate swap agreements fix the interest rate on this facility                at                5.35% on a weighted average basis. Interest and principal are due                monthly.                The line of credit is renewable for one year periods on December                31, 2006                and 2007. |   | $                                 | 61,548,351 |                                 | $      | 62,244,034 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                              |       |                                 |   |   |   |
| 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. Interest and principle are due monthly,                with a                final maturity date of February 15, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                              | 7,273,325  |                                 |   | 8,288,944 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                              |       |                                 |   |   |   |
| 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 8% after security deposit. Interest and principle are                due                monthly, with a final maturity date of June 10, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                              | 5,816,123  |                                 |   | 6,793,908 |   |
| Total                outstanding debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                 | 74,637,799 |                                 | $      | 77,326,886 |   |

| 2007       |   | $      | 28,870,539 |   |
|------------|--------|--------|------------|--------|
| 2008       |   |   | 21,209,881 |   |
| 2009       |   |   | 13,855,595 |   |
| 2010       |   |   | 7,532,943  |   |
| 2011       |   |   | 2,210,660  |   |
| Thereafter |   |   | 958,181    |   |
|       |   | $      | 74,637,799 |   |

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

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

**MARCH      31, 2006**

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

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

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

**MARCH      31, 2006**

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

|                                              |   | **Three                Months Ended****March                31,** |    |
|---------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                              |   | **2006**                                                          |    | **2005** |   |
| Acquisition                fees                   |   | $                                                                 | 123,335 |   | $ | 891,303 |   |
| Asset                management fees              |   | $                                                                 | 234,316 |   | $ | 154,239 |   |
| Reimbursed                administrative expenses |   | $                                                                 | 103,858 |   | $ | 140,261 |   |

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

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

**MARCH      31, 2006**

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

**NOTE      11 **
**-**
**      COMPREHENSIVE INCOME **

**NOTE      12 **
**-**
** **
**NET      INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT**

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**ITEM      2.**
**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION****AND      RESULTS OF OPERATIONS (unaudited)**

**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 1A, under the caption “Risks Inherent in Our Business,” in our      annual report on Form 10-K for fiscal 2005. 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**

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

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

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

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**Our      Lease Portfolio **

**Direct      Financing Leases and Notes**

|                                 |   | **March                31, 2006** |   |           |   | **December                31, 2005** |   |
|--------------------------------------|--------|-----------------------------------|--------|----------------|--------|--------------------------------------|--------|
| **Type                of Equipment** |   | **Net                Investment** |   | **Percentage** |   | **Type                of Equipment** |   | **Net                Investment** |   | **Percentage** |   |
| Industrial                Equipment  |   | $                                 | 21,281 |           |   | 27.0                                 | %      |   | Industrial                Equipment |   | $ | 22,098 |   |   | 27.2 | % |
| Medical                Equipment     |   |                              | 18,825 |           |   | 23.9                                 |   |   | Medical                Equipment |   |   | 18,993 |   |   | 23.4 |   |
| Computers                            |   |                              | 11,709 |           |   | 14.9                                 |   |   | Computers |   |   | 13,302 |   |   | 16.4 |   |
| Office                Equipment      |   |                              | 9,113  |           |   | 11.5                                 |   |   | Office                Equipment |   |   | 9,398 |   |   | 11.6 |   |
| Garment                Care          |   |                              | 4,138  |           |   | 5.3                                  |   |   | Software |   |   | 4,269 |   |   | 5.2 |   |
| Software                             |   |                              | 3,928  |           |   | 5.0                                  |   |   | Garment                Care |   |   | 3,585 |   |   | 4.4 |   |
| Building                systems      |   |                              | 3,037  |           |   | 3.9                                  |   |   | Building                systems |   |   | 2,980 |   |   | 3.7 |   |
| Restaurant                Equipment  |   |                              | 2,772  |           |   | 3.5                                  |   |   | Restaurant                Equipment |   |   | 2,976 |   |   | 3.7 |   |
| Communications                       |   |                              | 2,253  |           |   | 2.9                                  |   |   | Communications |   |   | 2,409 |   |   | 3.0 |   |
| Agriculture                          |   |                              | 1,623  |           |   | 2.1                                  |   |   | Agriculture |   |   | 1,178 |   |   | 1.4 |   |
|                                 |   | $                                 | 78,679 |           |   | 100.0                                | %      |   |   |   | $ | 81,188 |   |   | 100.0 | % |

**Operating      Leases**

|                                 |   | **March                31, 2006** |   |           |   | **December                31, 2005** |   |
|--------------------------------------|--------|-----------------------------------|--------|----------------|--------|--------------------------------------|--------|
| **Type                of Equipment** |   | **Net                Investment** |   | **Percentage** |   | **Type                of Equipment** |   | **Net                Investment** |   | **Percentage** |   |
| Office                Equipment      |   | $                                 | 425    |           |   | 27.1                                 | %      |   | Office                Equipment |   | $ | 505 |   |   | 29.1 | % |
| Computers                            |   |                              | 420    |           |   | 26.7                                 |   |   | Computers |   |   | 476 |   |   | 27.3 |   |
| Industrial                Equipment  |   |                              | 365    |           |   | 23.2                                 |   |   | Industrial                Equipment |   |   | 380 |   |   | 21.8 |   |
| Communications                       |   |                              | 303    |           |   | 19.3                                 |   |   | Communications |   |   | 323 |   |   | 18.5 |   |
| Medical                Equipment     |   |                              | 42     |           |   | 2.7                                  |   |   | Medical                Equipment |   |   | 41 |   |   | 2.3 |   |
| Software                             |   |                              | 14     |           |   | 0.9                                  |   |   | Software |   |   | 16 |   |   | 0.9 |   |
| Restaurant                Equipment  |   |                              | 2      |           |   | 0.1                                  |   |   | Restaurant                Equipment |   |   | 2 |   |   | 0.1 |   |
|                                 |   | $                                 | 1,571  |           |   | 100.0                                | %      |   |   |   | $ | 1,743 |   |   | 100.0 | % |

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***(Back          to Index)***

**Direct      Financing Leases and Notes**

|                                                                  |   | **March                31, 2006** |   |                 |   | **December                31, 2005** |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------|--------|--------------------------------------|--------|
| **Type                of Business**                                   |   | **Net                Investment** |   |  **Percentage** |   | **Type                of Business**  |   | **Net                Investment** |   |  **Percentage** |   |
| Services                                                              |   | $                                 | 41,051 |                 |   | 52.2                                 | %      |   | Services |   | $ | 44,929 |   |   | 55.4 | % |
| Retail                Trade                                           |   |                              | 8,076  |                 |   | 10.3                                 |   |   | Retail                Trade |   |   | 8,897 |   |   | 11.0 |   |
| Manufacturing                                                         |   |                              | 7,910  |                 |   | 10.0                                 |   |   | Manufacturing |   |   | 8,774 |   |   | 10.8 |   |
| Transportation/Communication/Energy                                   |   |                              | 3,493  |                 |   | 4.4                                  |   |   | Transportation/    Communication/Energy |   |   | 3,826 |   |   | 4.7 |   |
| Construction                                                          |   |                              | 3,271  |                 |   | 4.2                                  |   |   | Construction |   |   | 3,640 |   |   | 4.5 |   |
| Finance/Insurance/                    Real Estate |   |                              | 2,996  |                 |   | 3.8                                  |   |   | Finance/Insurance/                    Real Estate |   |   | 3,125 |   |   | 3.8 |   |
| Wholesale                Trade                                        |   |                              | 2,928  |                 |   | 3.7                                  |   |   | Wholesale                Trade |   |   | 3,085 |   |   | 3.8 |   |
| Agriculture/Forestry/Fishing                                          |   |                              | 1,812  |                 |   | 2.3                                  |   |   | Agriculture/Forestry/Fishing |   |   | 2,446 |   |   | 3.0 |   |
| Public                Administration                                  |   |                              | 1,403  |                 |   | 1.8                                  |   |   | Public                Administration |   |   | 1,246 |   |   | 1.5 |   |
| Mining                                                                |   |                              | 43     |                 |   | 0.1                                  |   |   | Mining |   |   | 47 |   |   | 0.1 |   |
| Other                                                                 |   |                              | 5,696  |                 |   | 7.2                                  |   |   | Other |   |   | 1,173 |   |   | 1.4 |   |
|                                                                  |   | $                                 | 78,679 |                 |   | 100.0                                | %      |   |   |   | $ | 81,188 |   |   | 100.0 | % |

**Operating      Leases**

|                                                                  |   | **March                31, 2006** |   |           |   | **December                31, 2005** |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|--------|----------------|--------|--------------------------------------|--------|
| **Type                of Business**                                   |   | **Net                Investment** |   | **Percentage** |   | **Type                of Business**  |   | **Net                Investment** |   | **Percentage** |   |
| Services                                                              |   | $                                 | 623    |           |   | 39.7                                 | %      |   | Services |   | $ | 706 |   |   | 40.3 | % |
| Construction                                                          |   |                              | 431    |           |   | 27.4                                 |   |   | Construction |   |   | 451 |   |   | 25.9 |   |
| Wholesale                Trade                                        |   |                              | 180    |           |   | 11.5                                 |   |   | Wholesale                Trade |   |   | 199 |   |   | 11.4 |   |
| Manufacturing                                                         |   |                              | 112    |           |   | 7.1                                  |   |   | Manufacturing |   |   | 136 |   |   | 7.8 |   |
| Transportation/Communication/Energy                                   |   |                              | 95     |           |   | 6.0                                  |   |   | Transportation/    Communication/Energy |   |   | 113 |   |   | 6.5 |   |
| Finance/Insurance/                    Real Estate |   |                              | 96     |           |   | 6.1                                  |   |   | Finance/Insurance/                     Real Estate |   |   | 102 |   |   | 5.9 |   |
| Public                Administration                                  |   |                              | 13     |           |   | 0.8                                  |   |   | Public                Administration |   |   | 14 |   |   | 0.8 |   |
| Retail                Trade                                           |   |                              | 11     |           |   | 0.7                                  |   |   | Retail                Trade |   |   | 12 |   |   | 0.7 |   |
| Mining                                                                |   |                              | 6      |           |   | 0.4                                  |   |   | Mining |   |   | 6 |   |   | 0.4 |   |
| Other                                                                 |   |                              | 4      |           |   | 0.3                                  |   |   | Other |   |   | 4 |   |   | 0.3 |   |
|                                                                  |   | $                                 | 1,571  |           |   | 100.0                                | %      |   |   |   | $ | 1,743 |   |   | 100.0 | % |

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***(Back          to Index)***

**Results      of Operations **

*Three      Month Ended March 31, 2006 compared to Three Month Ended March 31,      2005*

| ·   | Interest                income on equipment financings increased to $1,520,205 for the three                months ended March 31, 2006 as compared to $1,193,084 for the three                months                March 31, 2005, an increase of $327,121                (27%). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Gain                on sale of equipment and lease dispositions increased to $104,275                for the                three month ended March 31, 2006 as compared to a loss of ($2,882)                for the                three months ended March 31, 2005, an increase of $107,157. Gains                and                losses from equipment and lease dispositions may vary significantly                from                period to period. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other                income increased to $136,221 for the three months ended March 31,                2006 as                compared to $75,255 for the three months ended March 31, 2005, an                increase                of $60,966 (81%). Other income consists primarily of late fee and                documentation fee income. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                expense increased to $1,072,280 for the three months ended March                31, 2006                as compared to $832,793 for the three months ended March 31, 2005,                an                increase of $239,487 (29%) due to our increase in debt incurred to                acquire                equipment subject to leases. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Management                fees increased to $234,316 for the three months ended March 31, 2006                as                compared to $154,239 for the three months ended March 31, 2005, an                increase of $80,077 (52%). This increase is directly attributable                to our                growth in lease assets, since management fees are paid based on lease                payments received. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General                and administrative expenses increased to $131,783 for the three months                ended March 31, 2006 as compared to $105,237 for the three months                ended                March 31, 2005, an increase of $26,546 (25%). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                provision for credit losses decreased to $145,474 for the three months                ended March 31, 2006 as compared to $240,450 for the three months                ended                March 31, 2005, a decrease of $94,976 (35%). The decrease in our                provision                for credit losses is principally a result of increased collection                efforts                and the maturing of the portfolio. We provide for bad debts when                losses                are likely to occur based on a migration analysis of past due payments                and                economic conditions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Administrative                expenses reimbursed to related party decreased to $103,858 for the                three                month ended March 31, 2006 as compared to $140,261 for the three                month                ended March 31, 2005, a decrease of $36,403 (26%). As our investment                in                financing assets matures there is less expense incurred by our general                partner to service our portfolio. As our portfolio matures, we require                less support than during the start-up                phase. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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***(Back          to Index)***

**Liquidity      and Capital Resources**

**General**

|                                                                     |   | **March                31,** |       |
|--------------------------------------------------------------------------|--------|------------------------------|------------|
|                                                                     |   | **2006**                     |       | **2005** |   |
| Net                cash provided by (used in) operating activities  |   | $                            | 469,207    |   | $ | (675,756 | ) |
| Net                cash provided by (used in) investing activities  |   |                         | 2,755,333  |   |   | (39,226,303 | ) |
| Net                cash (used in) provided by financing activities  |   |                         | (3,026,705 | ) |   | 40,651,967 |   |
| Increase                in cash                                     |   | $                            | 197,835    |   | $ | 749,908 |   |

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***(Back          to Index)***

**ITEM      3.**
**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**ITEM      4.**
**CONTROLS      AND PROCEDURES**

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***(Back          to Index)***

**PART      II - OTHER INFORMATION**

**ITEM      6.**
**EXHIBITS**

| Exhibit                No. |   | Description                                                                                                                                                         |
|----------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                        |   | Amended                and Restated Agreement of Limited Partnership (1)                                                                                            |
| 3.2                        |   | Certificate                of Limited Partnership (2)                                                                                                               |
| 4                          |   | Forms                of letters sent to limited partners confirming their investment                (2)                                                             |
| 31.1                       |   | Rule                13a-14(a)/Rule 15d-14(a) Certification of Chief Executive                Officer.                                                               |
| 31.2                       |   | Rule                13a-14(a)/Rule 15d-14(a) Certification of Chief Financial                Officer.                                                               |
| 32.1                       |   | Certification                of Chief Executive Officer pursuant to Section 1350 of Chapter 63                of Title                18 of the United States Code. |
| 32.2                       |   | Certification                of Chief Financial Officer pursuant to Section 1350 of Chapter 63                of Title                18 of the United States Code. |

| (1)   | 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. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

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***(Back          to Index)***

**SIGNATURES**

|                        | **LEASE                EQUITY APPRECIATION FUND I, L.P.**                      |
|-----------------------------|--------------------------------------------------------------------------------|
|                        | A                Delaware Limited Partnership                                  |
|                        | By:                LEAF Financial Corporation, its General Partner             |
|                        |                                                                           |
| May                15, 2006 | /s/                Crit DeMent CRIT                DEMENT                 |
|                        | Chairman                and Chief Executive Officer of the General Partner     |
|                        |                                                                           |
| May                15, 2006 | /s/                Robert K. Moskovitz ROBERT                K. MOSKOVITZ |
|                        | Chief                Financial Officer, Treasurer of the General Partner       |
|                        |                                                                           |

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