UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☑

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

For the fiscal year ended December 31, 2014

☐

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 000-53667

LEAF EQUIPMENT FINANCE FUND 4, L.P.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		61-1552209
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

110 South Poplar Street, Suite 101, Wilmington Delaware 19801

(Address of principal executive offices)

(800) 819-5556

(Registrant’s telephone number, including area code)

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

Title of Each Class		Name of Each Exchange on Which Registered
None		Not applicable

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

Limited Partner Units

Title of Class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐Yes ☑ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐Yes ☑ No

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 ☐No

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

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

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

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

There is no public market for the Registrant’s securities.

DOCUMENTS INCORPORATED BY REFERENCE

None

LEAF EQUIPMENT FINANCE FUND 4, L.P.

INDEX TO ANNUAL REPORT

ON FORM 10-K

		PAGE
PART I
ITEM 1	Business	3
ITEM IA	Risk Factors	5
ITEM 2	Properties	5
ITEM 3	Legal Proceedings	5

PART II
ITEM 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5
ITEM 6	Selected Financial Data	5
ITEM 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
ITEM 7A	Quantitative and Qualitative Disclosures about Market Risk	14
ITEM 8	Financial Statements and Supplementary Data	15
ITEM 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
ITEM 9A	Controls and Procedures	28
ITEM 9B	Other Information	28

PART III
ITEM 10	Directors and Executive Officers of the Registrant	29
ITEM 11	Executive Compensation	30
ITEM 12	Security Ownership of Certain Beneficial Owners and Management and Related Unit Holder Matters	30
ITEM 13	Certain Relationships and Related Transactions	31
ITEM 14	Principal Accountant Fees and Services	31

PART IV
ITEM 15	Exhibits, Financial Statement Schedules	32

SIGNATURES		33

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this Annual Report on Form 10-K (this “Report”) includes “forward-looking statements.” Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology.

Forward-looking statements contained in this Report are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Forward-looking statements we make in this Report are subject to various risks and uncertainties that could cause actual results to vary from our forward-looking statements, including:

•

changes in our industry, interest rates or the general economy;

•

increased rates of default and/or decreased recovery rates on our investment in leases and loans;

•

availability, terms and deployment of debt funding;

•

general volatility of the debt markets;

•

the timing of cash flows, if any, from our investments in leases and loans and payments for debt service; and

•

the degree and nature of our competition.

We caution you not to place undue reliance on these forward-looking statements which speak only as of the date of this Report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.

As used herein, the terms “we,” “us,” or “our” refer to LEAF Equipment Finance Fund 4, L.P. and subsidiaries (the “Fund”).

PART I

ITEM 1 – BUSINESS

General

We are a Delaware limited partnership formed on January 25, 2008 by our general partner, LEAF Asset Management, LLC (the “General Partner”), which manages us. Our General Partner is a Delaware limited liability company and a subsidiary of Resource America, Inc. (“RAI”). RAI is a publicly-traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service, and manage investment opportunities through its commercial finance, real estate and financial fund management segments. Our offering period began on August 12, 2008. Through our offering termination date of October 30, 2009, we raised $125.7 million by selling 1.2 million of our limited partner units. We commenced operations in September 2008.

We are expected to have a nine-year life, consisting of an offering period of up to two years, a five year reinvestment period, and a subsequent liquidation period of two years, during which time our leases and secured loans will either mature or be sold. In the event that we are unable to sell our leases and loans during the liquidation period, we expect to continue to return capital to our partners as those leases and loans mature. All of our leases and loans mature by the end of 2032. We entered our liquidation period in October 2014, and accordingly, are prohibited from acquiring additional leases and loans under the Limited Partnership Agreement (“the Partnership Agreement”). Contractually, we will terminate on December 31, 2032, unless sooner dissolved or terminated as provided in the Partnership Agreement.

We generally acquire a diversified portfolio of new, used, or reconditioned equipment that have been financed for third parties. We also acquire portfolios of existing leases and secured loans from other finance companies. Our financings are typically acquired from LEAF Financial Corporation (“LEAF Financial”), an affiliate of our General Partner and a subsidiary of RAI. In addition, we may make secured loans to end users to finance their purchase of equipment. We attempt to structure our secured loans so that, in an economic sense, there is no difference to us between a secured loan and a full payout equipment lease. We also invest in equipment, leases, and secured loans through joint venture arrangements with our General Partner’s affiliated investment programs. We typically finance business-essential equipment, including, but not limited to, computers, copiers, office furniture, water filtration systems, machinery used in manufacturing and construction, medical equipment and telecommunications equipment. We focus on the small to mid-size business market, which generally includes businesses with:

Index

•

500 or fewer employees;

•

$1.0 billion or less in total assets; or

•

$100.0 million or less in total annual sales.

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

Our leases consist of direct financing and operating leases as defined by accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under the direct financing method of accounting, interest income (the excess of the aggregate future rentals and estimated unguaranteed residuals upon expiration of the lease over the related equipment cost) is recognized over the life of the lease using the interest method. Under the operating method, the cost of the leased equipment, including acquisition fees associated with lease placements, is recorded as an asset and depreciated on a straight-line basis over its estimated useful life. Rental income on operating leases consists primarily of monthly periodic rentals due under the terms of the leases. Generally, during the lease terms of existing operating leases, we will not recover all of the cost and related expenses of rental equipment and, therefore, we are prepared to remarket the equipment in future years. We discontinue the recognition of revenue for leases and loans for which payments are more than 90 days past due, or in case of future payment card receivables, when no payments have been received in 60 days. These assets are classified as non-accrual.

As discussed further in ITEM 7, the lingering effects of the Great Recession in the United States has adversely affected our operations as a result of higher delinquencies and may continue to do so as the economy recovers.

Available Information

We file annual, quarterly and current reports and other information with the SEC. The public may read and copy information we file with the SEC, at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549, on official business days during the hours of 10:00 am and 3:00 pm. The public may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The internet address of the SEC site is http://www.sec.gov. Our General Partner’s internet address is http://www.LEAFFinancial.com. We make our SEC filings available free of charge on or through our General Partner’s internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We are not incorporating by reference in this report any material from our General Partner’s website.

Agreements with our General Partner

We do not directly employ any persons to manage or operate our business. These functions are provided by our General Partner and employees of our General Partner and/or its affiliates. We reimburse our General Partner and/or its affiliates for all direct and indirect costs of services provided, including the cost of employees and benefits properly allocable to us and all other expenses necessary or appropriate to the conduct of our business. Our General Partner and its affiliates receive fees and other compensation from us.

Competition

The equipment leasing business is highly fragmented and competitive. We acquire equipment from our General Partner and its affiliates. Our General Partner and its affiliates compete with:

•

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

•

captive finance and leasing companies affiliated with major equipment manufacturers; and

•

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

Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we have. Competition with these entities may reduce the creditworthiness of potential lessees or borrowers to whom we have access or decrease our yields. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. A lower cost of funds could enable a competitor to offer leases or loans at rates which are less than ours, potentially forcing us to lower our rates or lose origination volume.

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Employees

As is commonly the case with limited partnerships, we do not directly employ any of the persons responsible for our management or operations. Rather, the personnel of our General Partner and/or its affiliates manage and operate our business. Officers of our General Partner may spend a substantial amount of time managing the business and affairs of our General Partner and its affiliates and may face a conflict regarding the allocation of their time between our business and affairs and their other business interests. The officers of our General Partner who provide services to us are not required to work full time on our affairs. These officers may devote significant time to the affairs of our General Partner’s affiliates and be compensated by these affiliates for the services rendered to them. There may be significant conflicts between us and affiliates of our General Partner regarding the availability of these officers to manage us.

ITEM 1A – RISK FACTORS

Risk factors have been omitted as permitted under rules applicable to smaller reporting companies.

ITEM 2 – PROPERTIES

We do not own or lease any real property.

ITEM 3 – LEGAL PROCEEDINGS

We are not subject to any pending material legal proceedings.

PART II

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our limited partner units are not publicly traded. There is no market for our limited partner units and it is unlikely that any will develop. The following table shows the number of equity security holders:

Title of Class	Number of Partners as of December 31, 2014
Limited Partners		2,775
General Partner		1

Total distributions paid to limited partners for the years ended December 31, 2014 and 2013 were $2.5 million and $5.1 million, respectively. During 2013, distributions were paid on a monthly basis to our limited partners at a rate of approximately 4% of their original capital contribution. As the cash flows and liquidity of the Fund could no longer support a 4% monthly distribution, beginning with the February 2014 distribution, received in March, monthly distributions were reduced to 3%. Then, the April and May 2014 distributions, received in May and June respectively, were lowered to 2%. Distributions for June 2014, received in July, and beyond were lowered to 1% and will continue for as long as the Fund can support them.

ITEM 6 – SELECTED FINANCIAL DATA

Not applicable.

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ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides an analysis of our operating results, an overview of our liquidity and capital resources and other items related to us. This discussion and analysis should be read in conjunction with Item 1 and the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2014.

As used herein, the terms “we,” “us,” or “our” refer to LEAF Equipment Finance Fund 4, L.P. and its subsidiaries (the “Fund” or “LEAF 4”).

Fund Summary

As discussed in more detail in Item 1, we generally acquire a diversified portfolio of new, used or reconditioned equipment that have been financed for third parties. We also acquire portfolios of existing leases and secured loans from other finance companies. Our financings are typically acquired from our General Partner. In addition, we may make secured loans to end users to finance their purchase of equipment.

Since our commencement in September 2008, the United States suffered through the worst economic recession in over 75 years, known as the Great Recession. The economic slowdown impacted, and will continue to impact, our performance. While the recession began before we were launched, its magnitude and duration have been severe and the consequences broadly felt. In particular, the recession led to a “credit crisis” that impacted us directly (through the amount and terms of credit available to us) and indirectly (through the impact on the small and mid-sized businesses that make up our lease and loan borrowers).

Banks became reluctant to lend, and when they did it became more expensive to borrow. This happened very quickly and severely. In fact, shortly after our launch, we were able to obtain a new credit facility and we were hopeful that we would be able to continue to do so. However, availability and terms got much worse – not better. Interest rates increased, fees were imposed and/or increased, the lengths of extensions were shortened, and the amount that lenders would advance as a percentage of the leases being financed was significantly decreased.

As we sought new debt facilities and our existing facilities matured or needed modifications, we had to accept these new terms and our costs increased. Most significantly, we have not been able to maintain debt at the same levels. The additional investment requirement reduced the amount of assets that we could purchase, and accordingly reduced our cash flow. The lenders’ higher fees and costs also had to be paid from funds that were then unavailable to re-invest in new leases. Because we have less debt, over time, we will pay our lenders less interest expense but current cash flow is negatively impacted. As we saw these conditions fail to improve, we recognized that we would not be able to obtain enough financing on favorable terms to operate at our proposed size, and we closed to new investments approximately ten months ahead of schedule.

The combination of higher interest rates, lower levels of available credit, increased fees, losses that are slightly higher than originally projected, and the inability to use excess cash flow to pay for some of these costs created a “perfect storm” that is making it difficult to execute the business plan. We have worked to minimize the effects of these conditions. We sought new forms of capital, and were able to arrange debt for us at a time when lenders were not generally providing new facilities. Additionally we have refinanced all of our existing debt facilities by completing three term securitizations (two in 2010 and the third in January 2011) totaling approximately $360 million.

We continued to acquire leases until we entered our maturity phase in October 2014, at which time we were prohibited, under the partnership agreement, from acquiring new leases.

To date, limited partners have received total distributions ranging from approximately 21% to 31% of their original amount invested, depending upon when the investment was made. Management is working to maximize the amount that can be distributed to limited partners in the future. During 2013, distributions were made at a rate of 4%. As the cash flows and liquidity of the Fund could no longer support a 4% monthly distribution, beginning with the February 2014 distribution, received in March, monthly distributions were reduced to 3%. Then, the April and May 2014 distributions, received in May and June respectively, were lowered to 2%. Distributions for June 2014, received in July, and beyond were lowered to 1% and will continue for as long as the Fund can support them. Future cash distributions are not guaranteed and are solely dependent on our performance and are impacted by a number of factors which include lease and loan defaults by our customers, accelerated principal payments on our debt facilities required per our agreements, and prevailing economic conditions. In order to reduce our ongoing cash requirements, the General Partner waived management fees in August 2010 and subsequently waived all future management fees.

We continued to be impacted by market uncertainties during the year ended December 31, 2014 as further discussed in “Finance Receivables and Asset Quality” and in “Liquidity and Capital Resources.”

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General Economic Overview

For the quarter ended December 31, 2014, U.S. economic activity demonstrated the sustained and steady growth seen over the last several quarters, including the very robust 5% increase in GDP reported for the 3rd quarter of 2014. Most sectors of the economy, including the small business sector, showed improvement. Continued job growth and drops in the unemployment rate, along with declining oil prices, helped boost consumer sentiment. The general election in November that resulted in a change of control of Congress seemed to have no impact on the direction of the economy. Some key economic indicators and reports that were released in the 4th quarter of 2014 that have specific relevance for small to medium size business performance are summarized below. The indicators show overall positive trends. These indicators have especially important relevance to us as loans and leases to small to medium size businesses comprise the majority of our portfolio.

The Monthly Confidence Index reported by The Equipment Leasing & Finance Foundation reported in December 2014 was 63.4, an increase from 60.2 for the September 2014 Index. Any Index over 50 indicates a positive outlook for future business conditions. The Monthly Confidence Index measures lease and finance company executive sentiment with respect to availability of capital, plans on hiring, and overall U.S. economic trends. The December 2014 Index reflected the sentiment of the majority of the executives surveyed that business conditions will remain the same or improve over the next four months.

The National Association of Realtors reported in December 2014 that the number of existing home sales increased 2.1% over the prior year period, and the sales price of existing homes increased 5.0% over the prior year period. Home sales are expected to continue to grow due to improved inventory conditions and the improving U.S. economy. These housing statistics are important economic indicators because rising home sales generally contribute to an improvement in consumer sentiment which can spur consumer spending, the most important driver of economic growth.

The 4^th quarter 2014 Thomson Reuters/PayNet Small Business Lending Indices, which measure the volume of lending to small businesses, showed an increase over the prior year period. Over the same period, the small business loan delinquency rates remained stable. Commentary in the report stated “private businesses (small businesses) are leading the way towards slower but more sustained expansion.”

The National Federation of Independent Business reported that its Small Business Optimism Index as reported in December 2014 increased to 100.4, which was the first time in eight years that the Index exceeded 100. An Index over 100 indicates that the small business survey participants generally expect businesses to expand. The report stated that the Index was “bolstered by a surge in sales expectation as well as hiring, capital outlays and business expansion plans.”

The National Association of Credit Management Index (“CMI”) for December 2014 was 54.9, the same as at the end of the last quarter. Any Index over 50 shows an economy in expansion. The factors comprising the CMI include activities like credit extended, credit approval rates, delinquencies, and bankruptcies. The recent CMI numbers suggest a still sluggish but slowly growing economy. The CMI has remained over 50 for more than a year.

The December 2014 Institute of Supply Management reported its PMI Index on the manufacturing sector showed continued expansion. The PMI Index of 55.5 indicated the 19^th consecutive month of manufacturing expansion. The PMI Index covers 18 manufacturing industries, and 11 of those industries reported growth in December 2014, down from 15 industries reporting growth in the prior quarter. A common comment from those industries not reporting growth was the negative impact of the West Coast ports slowdown.

Taken altogether, these indicators point to an economy that is continuing to grow steadily but slowly, which is positive for the small to medium size businesses that comprise the majority of our portfolio.

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Finance Receivables and Asset Quality

Information about our portfolio of commercial finance assets is as follows (dollars in thousands):

	December 31,
	2014			2013
Investment in leases and loans, net	$	9,440		$	32,494

Active contracts:
Number of contracts		254			2,644
Number of individual end users ^(a)		247			2,443
Average original equipment cost	$	126.5		$	47.4
Average initial lease term (in months)		104			80
Average remaining lease term (in months)		27			18

States accounting for more than 10% of lease and loan portfolio:
New York		14	%		8	%
Texas		12	%		11	%
California		9	%		11	%

Types of assets accounting for more than 10% of lease and loan portfolio:
Medical equipment		54	%		36	%
Restaurant equipment		15	%		20	%
Industrial Equipment		8	%		11	%

Types of businesses accounting for more than 10% of lease and loan portfolio:
Services		65	%		54	%
Retail trade		18	%		22	%

(a)

Located in the 50 states as well as the District of Columbia and Puerto Rico. No individual end user accounted for more than 10% of our portfolio.

We utilize debt, in addition to our equity, to fund the acquisitions of lease and loan portfolios. Our leases and loans are generally assigned as collateral for borrowings. As of December 31, 2014 and 2013, our outstanding secured debt was $6.7 million and $25.9 million, respectively.

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Portfolio Performance

The table below provides information about our commercial finance assets including non-performing assets, which are those assets that are not accruing income due to non-performance or impairment (dollars in thousands):

	As of and for the Years Ended December 31,
							Change
	2014			2013			$			%

Investment in leases and loans before allowance for credit losses	$	9,970		$	40,544		$	(30,574	)		(75	)%
Less: allowance for credit losses		(530	)		(8,050	)		7,520			(93	)%
Investment in leases and loans, net	$	9,440		$	32,494		$	(23,054	)		(71	)%

Weighted average investment in direct financing leases and loans before allowance for credit losses	$	21,606		$	62,596		$	(40,990	)		(65	)%
Non-performing assets	$	781		$	9,232		$	(8,451	)		(92	)%
Charge-offs, net of recoveries	$	10,761		$	6,482		$	4,279			66	%
As a percentage of finance receivables:
Allowance for credit losses		5.32	%		19.85	%
Non-performing assets		7.83	%		22.77	%
As a percentage of weighted average finance receivables:
Charge-offs, net of recoveries		49.81	%		10.36	%

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

Our allowance for credit losses is our estimate of losses inherent in our commercial finance receivables. The allowance is based on factors which include our historical loss experience on equipment finance portfolios we manage, an analysis of contractual delinquencies, current economic conditions and trends, and equipment finance portfolio characteristics, adjusted for recoveries. In evaluating historic performance of our leases and loans, we perform a migration analysis, which estimates the likelihood that an account progresses through delinquency stages to ultimate charge-off unless individually reviewed for impairment. In an individual review for impairment we consider the loans performance, probability of repayment, and general and local economic conditions when assessing whether impairment is necessary. Substantially all of our leases and loans evaluated for impairment on an individual basis include an analysis of the market values of underlying collateral values, as adjusted for estimated selling and other closing costs. Our policy is to charge off to the allowance those financings for which it is probable management will be unable to collect all amounts contractually owed. Substantially all of our assets are collateral for our debt and, therefore, significantly greater delinquencies than anticipated will have an adverse impact on our cash flow and distributions to our partners.

We focus on financing equipment used by small to mid-sized businesses. Due to the shrinking size of the portfolio, the investment in leases and loans, allowance for credit losses, and non-performing assets all decreased from the prior year. The lingering effects of the economic recession have made it difficult for some of our customers to make payments on their financings with us on a timely basis, and as expected in a liquidating portfolio, the performing leases payoff as scheduled while the delinquent leases remain delinquent, resulting in an increase in charge-offs net of recoveries.

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Critical Accounting Policies

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

We have identified the following policies as critical to our business operations and the understanding of our results of operations.

Investments in Commercial Finance Assets

Our investments in commercial finance assets consist of direct financing leases, operating leases, and loans.

Direct Financing Leases. Certain of our 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. Our 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 finance income. Unearned finance income, which is recognized as revenue over the term of the financing by the effective interest method, represents the excess of the total future minimum contracted payments plus the estimated unguaranteed residual value expected to be realized at the end of the lease term over the cost of the related equipment.

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 our history with regard to the realization of residuals, available industry data and the General Partner’s senior management’s experience with respect to comparable equipment. The estimated residual values are recorded as a component of investments in leases. 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. Upward adjustments to residual values are not permitted.

Operating Leases. Leases not meeting any of the criteria to be classified as direct financing leases are deemed to be operating leases. Under the accounting for operating leases, the cost of the leased equipment, including acquisition fees associated with lease placements, is recorded as an asset and depreciated on a straight-line basis over the equipment’s estimated useful life, generally up to seven years. Rental income consists primarily of monthly periodic rental payments due under the terms of the leases. We recognize rental income on a straight line basis.

A review for impairment of operating leases is performed whenever events or changes in circumstances indicate that the carrying amount of the operating leases may not be recoverable. We write down our rental equipment to its estimated net realizable value when it is probable that its carrying amount exceeds its fair value and the excess can be reasonably estimated; gains are only recognized upon actual sale of the rental equipment.

Loans. For term loans, the investment in loans consists of the sum of the total future minimum loan payments receivable less unearned finance income. Unearned finance income, which is recognized as revenue over the term of the financing by the effective interest method, represents the excess of the total future minimum contracted loan payments over the cost of the loan. For all other loans, interest income is recorded at the stated rate on the accrual basis to the extent that such amounts are expected to be collected.

Allowance for Credit Losses. The Fund evaluates the adequacy of the allowance for credit losses (including investments in leases and loans) based upon, among other factors, management’s historical experience on the portfolios it manages, an analysis of contractual delinquencies, economic conditions and trends, and equipment finance portfolio characteristics, adjusted for expected recoveries. In evaluating historic performance, the Fund performs a migration analysis, which estimates the likelihood that an account will progress through delinquency stages to ultimate charge-off. The Fund’s policy is to charge off to the allowance those financings which are in default and for which management has determined the probability of collection to be remote. After an account becomes 180 or more days past due, any remaining balance is charged off. Generally, past due accounts are referred to our internal recovery group consisting of a team of credit specialists and collectors. The group utilizes several resources in an attempt to maximize recoveries on past due accounts including: 1) initiating litigation against the end user customer and any personal guarantor, 2) referring the account to an outside law firm or collection agency and/or 3) repossessing and remarketing the equipment through third parties.

The Fund discontinues the recognition of revenue for leases and loans for which payments are more than 90 days past due. Generally, income recognition resumes when a lease or loan becomes less than 90 days delinquent. Fees from delinquent payments are recognized when received and are included in other income.

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Results of Operations

Year Ended December 31, 2014 compared to Year Ended December 31, 2013

The following summarizes our results of operations for the years ended December 31, 2014 and 2013 (dollars in thousands):

							Increase (Decrease)
	2014			2013			$			%
Revenues:
Interest on equipment financings	$	1,539		$	4,319		$	(2,780	)		(64	)%
Rental income		83			460			(377	)		(82	)%
(Losses) gains on sales of equipment and lease dispositions, net		(21	)		551			(572	)		(104	)%
Other income		206			373			(167	)		(45	)%
		1,807			5,703			(3,896	)		(68	)%
Expenses:
Interest expense		3,315			6,688			(3,373	)		(50	)%
Depreciation of operating leases		30			168			(138	)		(82	)%
Provision for credit losses		3,241			5,612			(2,371	)		(42	)%
General and administrative expenses		681			968			(287	)		(30	)%
Administrative expenses reimbursed to affiliate		137			532			(395	)		(74	)%
		7,404			13,968			(6,564	)		(47	)%
Net loss		(5,597	)		(8,265	)		2,668
Less: Net loss attributable to the noncontrolling interest		159			209			(50	)
Net loss attributable to LEAF 4 partners	$	(5,438	)	$	(8,056	)	$	2,618
Net loss allocated to LEAF 4's limited partners	$	(5,384	)	$	(7,975	)	$	2,592

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

A decrease in interest on equipment financings and rental income. Our weighted average net investment in financing assets decreased to $21.6 million for the year ended December 31, 2014 as compared to $62.6 million for the year ended December 31, 2013, a decrease of $41.0 million or 65%. As noted previously, this decrease was primarily due to the continued runoff of our portfolio of leases and loans, as higher than anticipated defaults resulted in excess cash being used to settle debt obligations and support distributions to our partners, rather than be reinvested in new leases and loans.

Gains (losses) on sales of equipment and lease dispositions decreased $572,000 to a loss of $21,000 for the year ended December 31, 2014 compared to a gain of $551,000 for the year ended December 31, 2013. Gains and losses on sales of equipment may vary significantly from period to period.

A decrease in other income primarily due to a reduction in late fee income. The decrease is due to the reduction in the size of our portfolio.

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The decrease in total expenses was primarily a result of the following:

A decrease in interest expense due to a decrease in our average secured debt outstanding. Average secured borrowings for the years ended December 31, 2014 and 2013 were $12.7 million and $47.4, respectively, at an effective interest rate of 18.6% and 12.1%, respectively.

A decrease in depreciation of operating leases related to the decrease in our investment in operating leases.

A decrease in our provision for credit losses principally reflects the decrease of our equipment financing portfolio and the diminishing impact of the recession.

A decrease in general and administrative expenses and administrative expenses reimbursed to affiliates occurred due to the reduction in the size of our portfolio.

The net loss per limited partner unit, after the net loss allocated to our General Partner, for the years ended December 31, 2014 and 2013 was $4.27 and $6.33, respectively, based on the weighted average number of limited partner units outstanding of 1,259,493 and 1,259,537, respectively.

Liquidity and Capital Resources

Our major source of liquidity is from the collection of lease and loan payments. Our primary cash requirements, in addition to normal operating expenses, are for debt service, investments in leases and loans, and distributions to our partners.

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

	Years Ended December 31,
	2014			2013
Net cash (used in) provided by operating activities	$	(4,412	)	$	3,943
Net cash provided by investing activities		19,394			46,561
Net cash used in financing activities		(15,112	)		(50,313	)
(Decrease) increase in cash	$	(130	)	$	191

Cash decreased approximately $130,000 primarily due to net cash used in operating activities of $4.412 million, debt repayments of $20.126 million, and $2.544 million of distributions to partners, offset by net proceeds from leases and loans of $19.394 million and a $7.558 million decrease in restricted cash.

Partner’s distributions paid for the years ended December 31, 2014 and 2013 were $2.5 million and $5.1 million, respectively. Distributions to limited partners were paid at a rate of 4% of original capital invested for the year ended December 31, 2013. As the cash flows and liquidity of the Fund could no longer support a 4% monthly distribution, beginning with the February 2014 distribution, received in March, monthly distributions were reduced to 3%. Then, the April and May 2014 distributions, received in May and June respectively, were lowered to 2%. Distributions for June 2014, received in July, and beyond were lowered to 1% and will continue for as long as the Fund can support them. Future cash distributions are not guaranteed and are solely dependent on our performance and are impacted by a number of factors which include lease and loan defaults by our customers, accelerated principal payments on our debt facilities required per our agreements, and prevailing economic conditions. Cumulative partner distributions paid from our inception to December 31, 2014 were approximately $32.8 million.

The General Partner has waived its management fees. Accordingly, we did not record any management fee expense for the years ended December 31, 2014 or 2013. The cash savings on management fees and distributions is expected to be used to pay down our liabilities. Approximately $438,000 of management fees were waived for the year ended December 31, 2014 and $7.8 million have been waived on a cumulative basis.

As discussed above, our liquidity has been and may continue to be adversely affected by higher than expected equipment lease defaults, which result in a loss of anticipated revenues. These losses affect our ability to make distributions to our partners, and if the level of defaults is sufficiently large, result in our inability to fully recover our investment in the underlying equipment. In evaluating our allowance for losses on uncollectible leases, we consider our contractual delinquencies, economic conditions and trends, lease portfolio characteristics and our General Partner’s management’s prior experience with similar lease assets. As our lease portfolio ages, and if the economic recovery in the United States stalls or reverses, we anticipate the need to increase our allowance for credit losses.

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Our borrowing relationships each require the pledging of eligible leases and loans to secure amounts advanced. Borrowings outstanding under our debt facilities as of December 31, 2014 were as follows (in thousands):

	Type	Amount Outstanding ⁽¹⁾		Amount of Collateral ⁽²⁾
2011-1 Term Securitization	Term	$	6,725	$	7,039
		$	6,725	$	7,039

(1)

The outstanding borrowings are presented net of unamortized original issue discount of $464,000 at December 31, 2014.

(2)

These borrowings are collateralized by specific leases and loans and restricted cash. As of December 31, 2014, $6.6 million of leases and loans and $413,000 of restricted cash were pledged as collateral under the Fund’s term securitizations. Recourse under these securitizations is limited to the amount of collateral pledged.

2011-1 Term Securitization. In January 2011, we issued six classes of asset-backed notes (the “2011-1 Term Securitization”), one with a stated maturity date of December 2018 and five with a stated maturity date of December 2023. The notes totaled approximately $96.0 million, bear interest at fixed stated rates ranging from 1.70% to 5.50%, and were issued at an original discount of approximately $6.2 million. As of December 31, 2014, the first three classes of notes have been paid off in full prior to their stated maturity dates.

Our securitization is serviced by an affiliate of our General Partner (the “Servicer”). If the Servicer of our portfolio does not comply with certain requirements, the noteholders have the right to replace the Servicer. We are not, nor has been, delinquent on any payments owed to the noteholders. The servicing agreement was amended to increase the cumulative net loss percentage as the portfolio has exceeded the allowed cumulative net loss amount. In addition, the servicing agreement and the indenture on this facility was amended to establish an additional reserve account to be funded by cash flows on leases and loans that will be used by the trustee as additional collateral. These events do not constitute events of default. The portfolio has not been in compliance with the cumulative net loss percentage trigger level on the 2011-1 term securitization since October 31, 2013, of which the trustee, rating agency, and investors are aware.

Promissory Notes Payable: In addition to the above borrowings, LEAF Commercial Finance Fund, LLC (“LCFF”), a subsidiary of LEAF Funds JV2, offered 8.25% secured recourse promissory notes (the “Notes”) to private investors. The offering closed in February 2009 and raised approximately $9.4 million, of which about $9.3 million was outstanding as of December 31, 2014. The Notes have a six-year term, require interest only payments until their maturity in February 2015, and are subordinated to LCFF’s secured debt. LCFF may call or redeem the Notes, in whole or in part, at any time during the interest only period. The Notes are recourse to LCFF only and are collateralized by LCFF’s net assets. LCFF failed to make the January 2015 periodic interest payment and did not pay the principal balance when due in March 2015. LCFF was notified of its continuing default as a result of noncompliance with the terms of the notes. No rights or remedies, as listed below, have been executed at this time.

The Notes are subject to various covenants as set forth in their indenture, including an interest coverage ratio test which LCFF was not in compliance with as of December 31, 2014. LCFF notified the Trustee and noteholders of this breach. As a result, the noteholders have the right to declare an event of default, which to date has not occurred. If the noteholders would declare an event of default they have various rights and remedies available to them including (1) the right to declare all amounts currently outstanding under the Notes as immediately due and payable; (2) the right to take immediate possession of the assets of LCFF; and (3) the right to sell or otherwise dispose of the assets of LCFF in their current condition. The Notes are subordinated to LCFF’s secured debt. Therefore, the noteholders are only entitled to the collateral remaining after the secured debt is satisfied, if any.

Substantially all of LCFF’s assets of $7.0 million are collateral for its 2011-1 term securitization, which had a gross balance of $7.2 million as of December 31, 2014. The promissory notes are non-recourse to LEAF 4 and the impact of the default will have minimal impact to the future cash flow of LEAF 4.

In March 2015, the Company sold a pool of 26 leases with a net investment of approximately $2.6 million to a third party for proceeds totaling approximately $2.7 million and recognized a gain on the sale of approximately $80,000. The proceeds from the sale were used to repay a portion of the Company’s 2011-1 term securitization. The Company is no longer servicing these leases.

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Legal Proceedings

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

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk have been omitted as permitted under rules applicable to smaller reporting companies.

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ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners

LEAF Equipment Finance Fund 4, L.P.

We have audited the accompanying consolidated balance sheets of LEAF Equipment Finance Fund 4, L.P. (a Delaware Limited Partnership) and subsidiaries (the “Fund”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in partners’ (deficit) capital, and cash flows for each of the two years in the period ended December 31, 2014. These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LEAF Equipment Finance Fund 4, L.P. and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

March 30, 2015

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

	December 31,
	2014			2013
ASSETS
Cash	$	99		$	229
Restricted cash		589			8,147
Investment in leases and loans, net		9,440			32,494
Deferred financing costs, net		143			625
Other assets		27			50
Total assets	$	10,298		$	41,545

LIABILITIES AND PARTNERS’ (DEFICIT) CAPITAL
Liabilities:
Secured debt	$	6,725		$	25,870
Promissory notes payable		9,295			9,295
Accounts payable, accrued expenses, and other liabilities		753			1,052
Due to affiliates		2,622			6,284
Total liabilities		19,395			42,501

Commitments and contingencies (Note 10)

Partners’ (Deficit) Capital:
General partner		(1,189	)		(1,110	)
Limited partners		(7,836	)		67
Total partners' deficit		(9,025	)		(1,043	)
Noncontrolling interest		(72	)		87
Total deficit		(9,097	)		(956	)
Total liabilities and deficit	$	10,298		$	41,545

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

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except unit and per unit data)

	Years Ended December 31,
	2014			2013
Revenues:
Interest on equipment financings	$	1,539		$	4,319
Rental income		83			460
(Losses) gains on sales of equipment and lease dispositions, net		(21	)		551
Other income		206			373
		1,807			5,703
Expenses:
Interest expense		3,315			6,688
Depreciation of operating leases		30			168
Provision for credit losses		3,241			5,612
General and administrative expenses		681			968
Administrative expenses reimbursed to affiliate		137			532
		7,404			13,968
Net loss		(5,597	)		(8,265	)
Less: Net loss attributable to the noncontrolling interest		159			209
Net loss attributable to LEAF 4 partners	$	(5,438	)	$	(8,056	)
Net loss allocated to LEAF 4's limited partners	$	(5,384	)	$	(7,975	)

Weighted average number of limited partner units outstanding during the period		1,259,493			1,259,537
Net loss per partnership unit	$	(4.27	)	$	(6.33	)

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

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Statements of Changes in Partners’ (Deficit) Capital

(In thousands, except unit data)

										Total
	General									Partners’			Non-			Total
	Partner			Limited Partners						(Deficit)			Controlling			(Deficit)
	Amount			Units			Amount			Capital			Interest			Capital
Balance, at January 1, 2013	$	(978	)		1,259,537		$	13,080		$	12,102		$	296		$	12,398
Cash distributions paid		(51	)		-			(5,038	)		(5,089	)		-			(5,089	)
Net loss		(81	)		-			(7,975	)		(8,056	)		(209	)		(8,265	)
Balance, at December 31, 2013		(1,110	)		1,259,537			67			(1,043	)		87			(956	)
Cancellation of limited partnership units		–			(15,776	)		–			–			-			–
Cash distributions paid		(25	)		-			(2,519	)		(2,544	)		-			(2,544	)
Net loss		(54	)		-			(5,384	)		(5,438	)		(159	)		(5,597	)
Balance, December 31, 2014	$	(1,189	)		1,243,761		$	(7,836	)	$	(9,025	)	$	(72	)	$	(9,097	)

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

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

	Years Ended December 31,
	2014			2013
Cash flows from operating activities:
Net loss	$	(5,597	)	$	(8,265	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of operating leases		30			168
Amortization of deferred financing costs		850			1,745
Amortization of original issue discount on debt		981			1,724
Provision for credit losses		3,241			5,612
Losses (gains) on sales of equipment and lease dispositions, net		21			(551	)
Gain on extinguishment of promissory notes payable		–			(16	)
Changes in operating assets and liabilities:
Other assets		23			42
Accounts payable, accrued expenses, and other liabilities		(299	)		(328	)
Due to affiliates		(3,662	)		3,812
Net cash (used in) provided by operating activities		(4,412	)		3,943

Cash flows from investing activities:
Proceeds from leases and loans		19,886			47,324
Repurchases of leases and loans		(143	)		–
Security deposits returned		(349	)		(763	)
Net cash provided by investing activities		19,394			46,561

Cash flows from financing activities:
Decrease in restricted cash		7,558			3,405
Repayment of debt		(20,126	)		(48,555	)
Cash distributions to partners		(2,544	)		(5,089	)
Deferred financing costs incurred		–			(30	)
Redemption of promissory notes payable		–			(44	)
Net cash used in financing activities		(15,112	)		(50,313	)

(Decrease) increase in cash		(130	)		191
Cash, beginning of period		229			38
Cash, end of period	$	99		$	229

Cash paid for interest	$	1,514		$	3,279

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

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

December 31, 2014

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

LEAF Equipment Finance Fund 4, L.P. (the “Fund”), a Delaware limited partnership, was formed on January 25, 2008 by its general partner, LEAF Asset Management, LLC (the “General Partner”), which manages the Fund. The General Partner is a Delaware limited liability company and a subsidiary of Resource America, Inc. (“RAI”). RAI is a publicly traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its commercial finance, real estate and financial fund management segments. Through its offering termination date of October 30, 2009, the Fund raised $125.7 million by selling 1.2 million of its limited partner units. It commenced operations in September 2008.

The Fund is expected to have a nine-year life, consisting of an offering period of up to two years, a five-year reinvestment period, and a subsequent liquidation period of two years, during which time the Fund’s leases and secured loans will either mature or be sold. In the event the Fund is unable to sell its leases and loans during the liquidation period, the Fund expects to continue to return capital to its partners as those leases and loans mature. All of the Fund’s leases and loans mature by the end of 2032. The Fund entered its liquidation period in October 2014, and accordingly, is prohibited from acquiring additional leases and loans under the Limited Partnership Agreement (“the Partnership Agreement”). Contractually, the Fund will terminate on December 31, 2032, unless sooner dissolved or terminated as provided in the Partnership Agreement.

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

In addition to its 1% general partnership interest, the General Partner has also invested $1.0 million for a 0.88% limited partnership interest in the Fund.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Fund and its wholly-owned subsidiary LEAF Receivables Funding 4, LLC. The consolidated financial statements also include LEAF Funding, LLC (“LEAF Funds JV1”) and its wholly-owned subsidiaries LEAF Capital Funding III, LLC and LEAF Receivables Funding 2, LLC. In addition, the consolidated financial statements include LEAF Funds Joint Venture 2, LLC (“LEAF Funds JV2”) and its subsidiaries LEAF Commercial Finance Fund, LLC (“LCFF”) and LEAF Receivables Funding 6, LLC. The Fund maintains a 96% and 98% ownership interest in LEAF Funds JV1 and LEAF Funds JV2, respectively. All intercompany accounts and transactions have been eliminated in consolidation.

The Fund reflects the participation of LEAF Equipment Leasing Income Fund III, L.P. (“LEAF III”) in the net assets and in the income or losses of LEAF Funds JV1 and LEAF Funds JV2 as noncontrolling interests in the consolidated balance sheets and statements of operations. Noncontrolling interest adjusts the Fund’s consolidated operating results to reflect only the Fund’s share of the earnings or losses of LEAF Funds JV1 and LEAF Funds JV2.

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 allowance for credit losses and the estimated unguaranteed residual values of leased equipment. The Fund bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Restricted Cash

The Fund had restricted cash of approximately $589,000 and $8.1 million as of December 31, 2014 and 2013, respectively. Restricted cash as of December 31, 2014 included cash being held in reserve by the Fund’s lenders of approximately $413,000 and $176,000 of customer payments deposited into a lockbox shared with the General Partner and other entities serviced by the Fund’s General Partner. The lockbox is in the name of U.S. Bank NA as trustee under an inter-creditor agreement amongst LEAF Financial, the other entities and their respective lenders. These amounts represent customer payments received by the lockbox, applied to the respective customer’s accounts, but not yet transferred to the Fund’s bank account.

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

Concentration of Credit Risk

As of December 31, 2014, 14% and 12% of the Fund’s leases and loans were located in New York and Texas, respectively. No other state accounted for more than 10% of the Fund’s leases and loans as of December 31, 2014. Also, as of December 31, 2014, 65% and 18% of the Fund’s leases and loans were in the services and retail trade types of business, respectively. No other type of business accounted for more than 10% of the Fund’s leases and loans as of December 31, 2014. In addition, no individual end user accounted for more than 10% of the Fund’s leases and loans as of December 31, 2014.

Investments in Commercial Finance Assets

The Fund’s investments in commercial finance assets consist of direct financing leases, operating leases, loans and future payment card receivables.

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

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 General Partner’s history with regard to the realization of residuals, available industry data and the General Partner’s senior management’s experience with respect to comparable equipment. The estimated residual values are recorded as a component of investments in leases. 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. Upward adjustments to residual values are not permitted.

Operating Leases. Leases not meeting 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 rental payments due under the terms of the leases. The Fund recognizes rental income on a straight line basis.

Generally, during the lease terms of existing operating leases, the Fund will not recover all of the 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. 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.

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

Income Taxes

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

Transfers of Financial Assets

In connection with establishing its debt facilities with its banks, the Fund has formed bankruptcy remote special purpose entities through which the financings are arranged. The Fund’s transfers of assets to these special purpose entities do not qualify for sales accounting treatment due to certain call provisions that the Fund maintains. Accordingly, assets and related debt of the special purpose entities are included in the Fund’s consolidated balance sheets. The Fund’s leases and restricted cash are assigned as collateral for these borrowings and there is no further recourse to the general credit of the Fund. Collateral in excess of these borrowings represents the Fund’s maximum loss exposure.

In April 2014, the Company sold a pool of approximately 200 leases with a net investment of approximately $5.7 million to a third party for proceeds totaling approximately $5.8 million and recognized a gain on the sale of approximately $70,000. A portion of the proceeds from the sale were used to pay off in full the 2010-1 and 2010-3 Term Securitizations prior to their stated maturity dates. The Company is no longer servicing these leases.

In June 2014, the Company sold a pool of 21 leases with a net investment of approximately $377,000 to another third party for proceeds totaling approximately $377,000. No gain or loss was recognized on the sale and the Company is no longer servicing these leases.

Allocation of Partnership Income, Loss, Cash Distributions, and Net Loss Per Limited Partner Unit

The Fund allocates net income, net loss, and cash distributions as follows: 99% to the limited partners and 1% to the general partner.

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.

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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

NOTE 3 – INVESTMENT IN LEASES AND LOANS

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

	December 31,
	2014			2013
Direct financing leases ⁽¹⁾	$	954		$	6,908
Loans ⁽²⁾		9,013			33,531
Operating leases		3			105
		9,970			40,544
Allowance for credit losses		(530	)		(8,050	)
	$	9,440		$	32,494

(1)

The Fund’s direct financing leases are for initial lease terms generally ranging from 24 to 180 months.

(2)

The interest rates on loans generally range from 5% to 16%.

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

	December 31,
	2014						2013
	Leases			Loans			Leases			Loans
Total future minimum lease payments	$	897		$	10,059		$	5,620		$	35,227
Unearned income		(85	)		(932	)		(303	)		(1,295	)
Residuals, net of unearned residual income ⁽¹⁾		175			-			1,676			-
Security deposits		(33	)		(114	)		(85	)		(401	)
	$	954		$	9,013		$	6,908		$	33,531

(1)

Unguaranteed residuals for direct financing leases represent the estimated amounts recoverable at lease termination from lease extensions or disposition of the equipment.

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

	December 31,
	2014			2013
Equipment	$	108		$	1,487
Accumulated depreciation		(105	)		(1,382	)
	$	3		$	105

At December 31, 2014, the future payments scheduled to be received on non-cancelable commercial finance assets for each of the five succeeding annual periods ending December 31, and thereafter, are as follows (in thousands):

	Direct Financing Leases		Loans		Total
2015	$	434	$	3,998	$	4,432
2016		191		2,977		3,168
2017		130		1,907		2,037
2018		109		687		796
2019		27		254		281
Thereafter		6		236		242
	$	897	$	10,059	$	10,956

Index

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The following table is an age analysis of the Fund’s receivables from leases and loans, presented gross of the allowance for credit losses of $520,000 and $8.1 million as of December 31, 2014 and 2013, respectively (in thousands):

	December 31,
	2014					2013
Age of receivable	Investment in leases and loans		%			Investment in leases and loans		%
Current ^(a)	$	8,264		83	%	$	38,339		95	%
Delinquent:
31 to 91 days past due		925		9	%		1,351		3	%
Greater than 91 days		781		8	%		854		2	%
	$	9,970		100	%	$	40,544		100	%

(a)

Included in this category, as of December 31, 2013, were approximately $8.378 million of certain loans which were systematically current but were classified as nonperforming due to collectability concerns.

The Fund had $781,000 and $9.2 million of leases and loans on non-accrual status as of December 31, 2014 and 2013, respectfully. The credit quality of the Fund’s investment in leases and loans is as follows (in thousands):

	December 31,
	2014		2013
Performing	$	9,189	$	31,312
Nonperforming		781		9,232
	$	9,970	$	40,544

The Company’s investment in non-performing leases and loans as of December 31, 2014 and 2013 was collectively evaluated for impairment, except for certain asset-backed loans that were individually evaluated for impairment. The following table summarizes the annual activity in the allowance for credit losses (in thousands):

	Years Ended December 31,
	2014			2013
Allowance for credit losses, beginning of year	$	8,050		$	8,920
Provision for credit losses		3,241			5,612
Charge-offs		(11,317	)		(7,975	)
Recoveries		556			1,493
Allowance for credit losses end of year	$	530		$	8,050

Allowance for credit losses:
Ending balance, individually evaluated for impairment	$	–		$	7,230
Ending balance, collectively evaluated for impairment		530			820
Balance, end of year	$	530		$	8,050

Recorded investment in leases and term loans:
Ending balance, individually evaluated for impairment	$	–		$	8,378
Ending balance, collectively evaluated for impairment		9,970			32,166
Balance, end of year	$	9,970		$	40,544

Index

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

NOTE 5 – DEFERRED FINANCING COSTS

As of December 31, 2014 and 2013, deferred financing costs include $143,000 and $625,000, respectively, of unamortized deferred financing costs which are being amortized over the terms of the estimated useful life of the related debt. Accumulated amortization as of December 31, 2014 and 2013 was $2.5 million and $5.2 million, respectively.

NOTE 6 – SECURED DEBT

The Fund’s debt consists of the following (in thousands):

	December 31, 2014						December 31, 2013
	Type	Outstanding Balance ⁽¹⁾			Interest rate per annum		Outstanding Balance
2011-1 Term Securitization	Term	$	7,189		5.00% to 5.50%		$	13,239
2010-3 Term Securitization	Term		–			–		10,766
2010-1 Term Securitization	Term		–			–		3,311
			7,189					27,316
Less: Unamortized Original Issue Discount			(464	)				(1,446	)
		$	6,725				$	25,870

(1)

2011-1 Term Securitization. In January 2011, six classes of asset-backed notes were issued (the “2011-1 Term Securitization”), one with a stated maturity date of December 2018 and five with a stated maturity date of December 2023. The notes totaled approximately $96.0 million, bear interest at fixed stated rates ranging from 1.70% to 5.50%, and were issued at an original discount of approximately $6.2 million. As of December 31, 2014, the first three classes of notes have been paid off in full prior to their stated maturity dates.

The Fund’s 2011-1 Term Securitization is serviced by an affiliate of the Fund’s General Partner (the “Servicer”). If the Servicer of the Fund’s portfolio does not comply with certain requirements, the noteholders have the right to replace the Servicer. The Fund is not, nor has been, delinquent on any payments owed to the noteholders. The servicing agreement was amended to increase the cumulative net loss percentage as the portfolio has exceeded the allowed cumulative net loss amount. In addition, the servicing agreement and the indenture on this facility was amended to establish an additional reserve account to be funded by cash flows on leases and loans that will be used by the trustee as additional collateral. These events do not constitute events of default. The portfolio has not been in compliance with the cumulative net loss percentage trigger level on the 2011-1 Term Securitization since October 31, 2013, of which the trustee, rating agency, and investors are aware.

2010-3 Term Securitization. In August 2010, five classes of asset-backed notes were issued (the “2010-3 Term Securitization”), one with a stated maturity date of June 2016 and four with a stated maturity date of February 2022. The notes totaled approximately $171.4 million, bore interest at fixed stated rates ranging from 3.45% to 5.50%, and were issued at an original discount of approximately $3.7 million. In April 2014, this securitization was paid off in full prior to its stated maturity date.

2010-1 Term Securitization. In May 2010, three classes of asset-backed notes were issued (the “2010-1 Term Securitization”), one with a stated maturity date of October 2016 and two with a stated maturity date of September 2018. The notes totaled approximately $92.7 million, bore interest at a fixed stated rate of 5%, and were issued at an original discount of approximately $6.5 million. In April 2014, this securitization was paid off in full prior to its stated maturity date.

Index

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

Debt Repayments: Estimated annual principal payments (gross of unamortized original issue discount of $464,000 at December 31, 2014) on the Fund’s aggregate borrowings over the next five years ended December 31, and thereafter, are as follows (in thousands):

December 31, 2015	$	2,983
December 31, 2016		1,758
December 31, 2017		1,528
December 31, 2018		496
December 31, 2019		197
Thereafter		227
	$	7,189

NOTE 7 – PROMISSORY NOTES PAYABLE

LEAF Commercial Finance Fund, LLC (“LCFF”), a subsidiary of LEAF Funds JV2, offered 8.25% secured recourse promissory notes (the “Notes”) to private investors. The offering closed in February 2009 and raised approximately $9.4 million, of which about $9.3 million was outstanding as of December 31, 2014. The Notes have a six-year term, require interest only payments until their maturity in February 2015, and are subordinated to LCFF’s secured debt. LCFF may call or redeem the Notes, in whole or in part, at any time during the interest only period. The Notes are recourse to LCFF only and are collateralized by LCFF’s net assets. LCFF failed to make the January 2015 periodic interest payment and did not pay the principal balance when due in March 2015. LCFF was notified of its continuing default as a result of noncompliance with the terms of the notes. No rights or remedies, as listed below, have been executed at this time.

The Notes are subject to various covenants as set forth in their indenture, including an interest coverage ratio test which LCFF was not in compliance with as of December 31, 2014. LCFF notified the Trustee and noteholders of this breach. As a result, the noteholders have the right to declare an event of default, which to date has not occurred. If the noteholders would declare an event of default, they have various rights and remedies available to them, including (1) the right to declare all amounts currently outstanding under the Notes as immediately due and payable; (2) the right to take immediate possession of the assets of LCFF; and (3) the right to sell or otherwise dispose of the assets of LCFF in their current condition. The Notes are subordinated to LCFF’s secured debt. Therefore, the noteholders are only entitled to the collateral remaining after the secured debt is satisfied, if any.

NOTE 8 – FAIR VALUE MEASUREMENT

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

•

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

•

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

•

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

There were no assets or liabilities measured at fair value at December 31, 2014 or 2013.

The Fund is also required to disclose the fair value of financial instruments not measured at fair value for which it is practicable to estimate that value. For cash, restricted cash, receivables, and payables, the carrying amounts approximate fair value because of the short term maturity of these instruments.

Index

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements – (Continued)

December 31, 2014

The methods used to estimate the fair value on secured debt that is not measured at fair value, the level within the fair value hierarchy that those fair value measurements are categorized, and the carrying value of the Fund’s secured debt at December 31, 2014 is as follows (in thousands):

	Carrying Value		Fair Value Measurements Using						Liabilities At Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Liabilities At Fair Value
Secured Debt	$	6,725	$	−	$	5,330	$	−	$	5,330
Promissory Notes Payable	$	9,295	$	−	$	−	$	−	$	−

The fair value of the secured debt at December 31, 2014 was determined using quoted prices from a broker-dealer as of the measurement date. The fair value of the promissory notes payable at December 31, 2014 was determined to be $0 as the notes are in default and as LCFF did not pay the principal balance when due in March 2015 and does not expect to repay the balance in the future.

NOTE 9 – CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH AFFILIATES

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

	Years Ended December 31,
	2014		2013
Administrative expenses	$	137	$	532

Administrative Expenses. The General Partner and its affiliates are reimbursed by the Fund for administrative services reasonably necessary to operate the Fund which do not exceed the General Partner’s actual cost of those services.

Management Fees. The General Partner has waived management fees since August 2010 and all future management fees. The General Partner has waived management fees of approximately $438,000 and $1.0 million for the years ended December 31, 2014 and 2013, respectively, and approximately $7.8 million have been waived on a cumulative basis.

Due to Affiliates. Due to affiliates includes amounts owed to the General Partner and its affiliates for various items such as management fees, expense reimbursements, and the acquisition and management of equipment portfolios. These amounts were advanced with the original expectation of repayment.

Distributions. The General Partner owns a 1% general partner interest and 0.88% limited partner interest in the Fund. The General Partner was paid cash distributions of $25,000 and $51,000, respectively for its general partner interests for the years ended December 31, 2014 and 2013, respectively, and $22,000 and $43,000 respectively for its limited partner interests for the years ended December 31, 2014 and 2013, respectively.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

The Fund is party to various routine legal proceedings arising out of the ordinary course of its business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Fund’s financial condition or results of operations.

NOTE 11 – SUBSEQUENT EVENTS

The Fund has evaluated its December 31, 2014 financial statements for subsequent events through the date the financial statements were issued. The Fund is not aware of any subsequent events, other than the one noted above, which would require recognition or disclosure in the financial statements.

Index

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A – CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control over Financial Reporting

Our General Partner’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our General Partner’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, management used the criteria set forth by the 2013 version of the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our General Partner’s management concluded that, as of December 31, 2014, our internal control over financial reporting was effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the three months ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

ITEM 9B – OTHER INFORMATION

None.

Index

PART III

ITEM 10 – DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our General Partner manages our activities. Although our limited partners have limited voting rights under our partnership agreement, they do not directly or indirectly participate in our management or operations or have actual or apparent authority to enter into contracts on our behalf or to otherwise bind us. Our General Partner will be liable, as General Partner, for all of our debts to the extent not paid, except to the extent that indebtedness or other obligations incurred by it are specifically with recourse only to our assets. Whenever possible, our General Partner intends to make any of our indebtedness or other obligations with recourse only to our assets.

As is commonly the case with limited partnerships, we do not directly employ any of the persons responsible for our management or operation. Rather, our General Partner’s personnel manage and operate our business. Officers of our General Partner may spend a substantial amount of time managing the business and affairs of our General Partner and its affiliates and may face a conflict regarding the allocation of their time between our business and affairs and their other business interests.

The following table sets forth information with respect to the directors and executive officers of our General Partner:

Name	Age	Position
Crit S. DeMent	62	Chief Executive Officer
Robert K. Moskovitz	58	Chief Financial Officer
Jonathan Z. Cohen	44	Director
Jeffrey F. Brotman	51	Director

Crit S. DeMent was Chairman of the Board of Directors and Chief Executive Officer of LEAF Financial since November 2001 until December 14, 2011. Mr. DeMent also serves as Chairman of the Board of Directors and Chief Executive Officer of LEAF Asset Management since it was formed in August 2006, Chairman of the Board of Directors and Chief Executive Officer of LEAF Funding since March 2003, a Senior Vice President of Resource America since 2005 and Senior Vice President – Equipment Leasing of Resource Capital Corp. since March 2005. Beginning January 1, 2011, Mr. DeMent serves as the Chairman of the Board of Directors and Chief Executive Officer of LEAF Commercial Capital, Inc. Before that, he was President of Fidelity Leasing, Inc. and its successor, the Technology Finance Group of Citi-Capital Vendor Finance from 1998 to 2001. Mr. DeMent was Vice President of Marketing for Tokai Financial Services from 1987 through 1996. Mr. DeMent serves as the Chairman of the Board of Directors of the Equipment Leasing and Finance Association.

Robert K. Moskovitz has been Chief Financial Officer of LEAF Financial since February 2004, Treasurer of LEAF Financial from September 2004 until April 2009 and Assistant Secretary of LEAF Financial since June 2007. Mr. Moskovitz also serves as Chief Financial Officer and Assistant Secretary of LEAF Asset Management since it was formed in August 2006, and Chief Financial Officer and a Director of LEAF Funding since May 2004. Beginning January 1, 2011, Mr. Moskovitz serves as the Chief Financial Officer of LEAF Commercial Capital, Inc. He has over twenty-five years of experience as the Chief Financial Officer of both publicly and privately owned companies. From 2002 to 2004, Mr. Moskovitz was an independent consultant on performance management initiatives, primarily to the financial services industry. From 2001 to 2002 he was Executive Vice President and Chief Financial Officer of ImpactRx, Inc., which provides advanced sales and marketing intelligence to pharmaceutical companies. From 1983 to 2001 Mr. Moskovitz held senior executive level financial positions with several high growth public and privately held companies. He began his professional career with Deloitte & Touche (formerly Touche Ross & Co). Mr. Moskovitz holds a B.S. degree in Business Administration from Drexel University.

Jonathan Z. Cohen has been a Director of LEAF Financial Corporation since January 2002, and a Director of LEAF Asset Management since it was formed in August 2006. Mr. Cohen also serves, or has served, in the following positions with Resource America: a Director since 2002, President since 2003, Chief Executive Officer since 2004, Chief Operating Officer from 2002 to 2004, Executive Vice President from 2001 to 2003, and Senior Vice President from 1999 to 2001. In addition, Mr. Cohen serves as Chief Executive Officer, President, and a Director of Resource Capital Corp. (a publicly-traded real estate investment trust) since its formation in 2005. Mr. Cohen also serves as Executive Chairman of Atlas Energy GP, LLC (general partner of Atlas Energy, L.P., formerly known as Atlas Pipeline Holdings, L.P., a publicly-traded energy limited partnership) since January 2012, Chairman from February 2011 to January 2012, and Vice Chairman from its formation in December 2005 to February 2011. Mr. Cohen was also Vice Chairman of Atlas Energy, Inc. (formerly known as Atlas America, Inc., a publicly-traded energy company) from its formation in 2000 until its sale in February 2011, Vice Chairman of the Managing Board of Atlas Pipeline Partners GP, LLC (general partner of Atlas Pipeline Partners, L.P., a publicly-traded midstream natural gas gathering and processing limited partnership) since its formation in 1999, and Vice Chairman of the Managing Board of Atlas Resource Partners GP, LLC (general partner of Atlas Resource Partners, L.P., a publicly-traded oil and gas exploration and production limited partnership) since February 2012.

Index

Jeffrey F. Brotman has been a Director of LEAF Financial since April 2008 and a Director of LEAF Asset Management since 2010. Mr. Brotman has also been Executive Vice President of Resource America since June 2007. Mr. Brotman was a co-founder of Ledgewood, P.C. (a Philadelphia-based law firm) and was affiliated with the firm from 1992 until June 2007, serving as its managing partner from 1995 until March 2006. Mr. Brotman is also a non-active Certified Public Accountant and an Adjunct Professor at the University of Pennsylvania Law School. Mr. Brotman was Chairman of the Board of Directors of TRM Corporation (a publicly-traded consumer services company) from September 2006 until September 2008 and was its President and Chief Executive Officer from March 2006 through June 2007.

The board of directors of our General Partner has not adopted specific minimum qualifications for service on the board, but rather seeks a mixture of skills that are relevant to our business. The following presents a brief summary of the attributes of each director that led to the conclusion that such person should serve as a director:

Mr. Cohen has extensive financial and operational experience, including as the chief executive officer of our general partner’s publicly traded parent company.

Mr. Brotman has significant experience in finance, as an attorney, and as the chief executive officer of a public company.

Code of Business Conduct and Ethics

Because we do not directly employ any persons, we rely on a Code of Business Conduct and Ethics adopted by Resource America, Inc. that applies to the principal executive officer, principal financial officer and principal accounting officer of our General Partner, as well as to persons performing services for us generally. You may obtain a copy of this code of ethics by a request to our General Partner at LEAF Asset Management, LLC, One Commerce Square, 2005 Market Street, 14th Floor, Philadelphia Pennsylvania 19103.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, which we refer to as the Exchange Act, requires the directors and executive officers of our General Partner, our General Partners, and holders greater than 10% of our limited partnership interests to file reports with the SEC. SEC regulations require us to identify anyone who filed a required report late during the most recent fiscal year. Based on our review of these reports, we believe that the filing requirements for all of these reporting persons were complied with during 2014.

ITEM 11 – EXECUTIVE COMPENSATION

We do not have, nor do we expect to have, any employees as discussed in Item 10 — “Directors and Executive Officers of the Registrant.” Instead, our management and day-to-day activities are provided by the employees of our General Partner and its affiliates. No officer or director of our General Partner will receive any direct remuneration from us. Those persons will receive compensation solely from our General Partner or its affiliates other than us.

ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNIT HOLDER MATTERS

(a)

We had approximately 2,775 limited partners as of December 31, 2014.

(b)

In 2008, our General Partner contributed $1,000 to our capital as our General Partner and received its General Partner interest in us. As of December 31, 2014, our General Partner owned 10,753, or 0.88%, of our limited partner units. These purchases of limited partner units by our General Partner and its affiliates were at a price discounted by the 7% sales commission which was paid by most of our other limited partners.

(c)

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

(d)

Our General Partner’s name and address is LEAF Asset Management, LLC, 110 South Poplar Street, Suite 101, Wilmington, Delaware, 19801.

Index

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We rely on our General Partner and its affiliates to manage our operations and pay the General Partner or its affiliates fees to manage us. The following is a summary of fees and costs of services and materials charged by the General Partner or its affiliates (in thousands):

	Years Ended December 31,
	2014		2013
Administrative expenses	$	137	$	532

Because we are not listed on any national securities exchange or inter-dealer quotation system, we have elected to use the Nasdaq National Stock Market’s definition of “independent director” in evaluating whether any of our General Partner’s directors are independent. Under this definition, the board of directors of our General Partner has determined that our General Partner does not have any independent directors, nor are we required to have any.

ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees. The aggregate fees billed by our independent registered public accounting firm, Grant Thornton, LLP related to quarterly reviews and the year-end audit was approximately $166,000 and $196,000 for the years ended December 31, 2014 and 2013, respectively.

Audit-Related Fees. We did not incur fees in 2014 and 2013 for other services not included above.

Tax Fees. We did not incur fees in 2014 and 2013 for other services not included above.

All Other Fees. Our independent registered public accounting firm, Grant Thornton, LLP, billed us for professional services rendered related to sales tax filings of approximately $16,000 and $23,000 for the years ended December 31, 2014 and 2013.

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

Our General Partner’s Board of Directors reviews and approves in advance any audit and any permissible non-audit engagement or relationship between us and our independent auditors.

Index

PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Annual Report on Form 10-K:

	1.		Financial Statements

			The financial statements required by this Item are set forth in Item 8 – “Financial Statements and Supplementary Data.”

	2.		Financial Statement Schedules

			No schedules are required to be presented in this report under Regulation S-X promulgated by the SEC.

	3.		Exhibits

Exhibit No.		Description
3.1		Certificate of Limited Partnership (1)
3.2		Amended and Restated Agreement of Limited Partnership (2)
3.3		Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of LEAF Equipment Finance Fund 4, L.P. (7)
4.1		Forms of letters sent to limited partners confirming their investment (1)
10.1		Form of Origination and Servicing Agreement Among LEAF Financial Corporation, LEAF Equipment Finance Fund 4, LP and LEAF Funding, Inc. (1)
10.2		Indenture by and between LEAF Commercial Finance Fund, LLC and U.S. Bank National Association (3)
10.3		Amended and Restated Limited Liability Company Agreement of LEAF Commercial Finance Fund, LLC(3)
10.4		Limited Liability Company Agreement of LEAF Funds Joint Venture 2, LLC (3)
10.5		Indenture between LEAF Receivables Funding 2, LLC and U.S. Bank National Association dated as of May 1, 2010 (4)
10.6		Indenture between LEAF Receivables Funding 4, LLC and U.S. Bank National Association dated as of July 4, 2010 (5)
10.7		Indenture between LEAF Receivables Funding 6, LLC and U.S. Bank National Association dated as of January 6, 2011 (6)
10.8		First Amendment dated as of September 28, 2012 to the Indenture between LEAF Receivables Funding 2, LLC and U.S. Bank National Association (8)
10.9		First Amendment dated as of October 15, 2012 to the Indenture between LEAF Receivables Funding 4, LLC and U.S. Bank National Association (8)
10.10		First Amendment dated as of February 25, 2013 to the Indenture between LEAF Receivables Funding 6, LLC and U.S. Bank National Association (8)
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Interactive data file containing the following financial statements formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2014 and December 31, 2013; (ii) the Consolidated Statements of Operations for the years ended December 31, 2014 and 2013; (iii) the Consolidated Statements of Changes in Partners’ (Deficit) Capital for the years ended December 31, 2014 and 2013; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013; and, (v) the Notes to Consolidated Financial Statements.
(1)		Filed previously as an exhibit to our Registration Statement on Form S-1 filed on March 24, 2008 and by this reference incorporated herein.
(2)		Filed previously as an exhibit to Form 8-A on May 8, 2009 and by this reference incorporated herein.
(3)		Filed previously on May 12, 2009 in Post-Effective Amendment No. 1 as an exhibit to our Registration Statement and by this reference incorporated herein.
(4)		Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 and by this reference incorporated herein.
(5)		Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and by this reference incorporated herein.
(6)		Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and by this reference incorporated herein.
(7)		Filed previously as an exhibit to Form 8-K on October 20, 2011 and by this reference incorporated herein.
(8)		Filed previously as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2012 and by this reference incorporated herein.

Index

SIGNATURES

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

	LEAF EQUIPMENT FINANCE FUND 4, L.P.
	A Delaware Limited Partnership

	By:	LEAF Asset Management, LLC, the General Partner

March 30, 2015	By:	/s/ CRIT S. DEMENT
		Crit S. Dement
		Chief Executive Officer

March 30, 2015	By:	/s/ ROBERT K. MOSKOVITZ
		Robert K. Moskovitz
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated.

/s/ CRIT S. DEMENT	Chief Executive Officer of the General Partner	March 30, 2015
Crit S. Dement	(Principal Executive Officer)

/s/ ROBERT K. MOSKOVITZ	Chief Financial Officer of the General Partner	March 30, 2015
Robert K. Moskovitz	(Principal Accounting and Financial Officer)

/s/ JONATHAN Z. COHEN	Director of the General Partner	March 30, 2015
Jonathan Z. Cohen

/s/ JEFFREY F. BROTMAN	Director of the General Partner	March 30, 2015
Jeffrey F. Brotman

LEAF Equipment Finance Fund 4, L.P. 10-K