-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CTL2IreBmGKJ/1qdQuDyi66GJIe00Tb7WEDRZ6bAlUK5W3Os+sAT6QupTxbb0myy rOtKHkDGCsj/7GVzVLsqMg== 0001014865-98-000047.txt : 19981014 0001014865-98-000047.hdr.sgml : 19981014 ACCESSION NUMBER: 0001014865-98-000047 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19981013 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEASERVICE INCOME FUND I CENTRAL INDEX KEY: 0000709145 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 061085385 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 002-80216 FILM NUMBER: 98724428 BUSINESS ADDRESS: STREET 1: 71 UNION AVE CITY: RUTHERFORD STATE: NJ ZIP: 07070 BUSINESS PHONE: 2019398133 MAIL ADDRESS: STREET 1: 71 UNION AVE CITY: RUTHERFORD STATE: NJ ZIP: 07070 FORMER COMPANY: FORMER CONFORMED NAME: LEASERVICE INCOME FUND 1983 DATE OF NAME CHANGE: 19830509 10-K 1 1997 10-K FOR LEASERVICE INCOME FUND-I SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _______________ to _________________ Commission file number 2-80216 LEASERVICE INCOME FUND-I (Exact name of registrant as specified in its charter) California 06-1085385 ---------------------------- ------------------------------------ (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 25 East Spring Valley Avenue, Maywood, New Jersey 07607 - ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (201) 368-2515 Securities registered pursuant to Section 12(b) of the Act: Title of each Class: None Name of each exchange on which registered: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[X] No[ ] As of December 31, 1997, 76,328 Units of Limited Partnership interest were outstanding. No market exists for the Units of Limited Partnership interest and, therefore, there exists no aggregate market value at December 31, 1997. Documents Incorporated by Reference: None -1- PART I Item 1. Business General Leaservice Income Fund-I (the "Partnership") was organized as a limited partnership under the Uniform Limited Partnership Law of the State of California on April 22, 1983. During the period from June 23, 1983 to October 9, 1984, the Partnership sold an aggregate of 76,328 units of limited partnership interests ("Units") in the Partnership at a purchase price of $100 per Unit pursuant to a Registration Statement on Form S-1 (File No. 2-80216) declared effective by the Securities and Exchange Commission on June 23, 1983. The Partnership actively engaged in the equipment leasing business from 1983 until June 1986 during which it purchased equipment subject to nineteen operating leases having an aggregate purchase price of approximately $9,462,615. Since June 1986 the Partnership has not purchased any equipment. Since May 24, 1991, when the Partnership was dissolved by virtue of the dissolution of its sole general partner, Leaservice Partners, a New York general partnership, the Partnership has been in the process of winding up its business. By December 31, 1993, all operating leases to which the Partnership's equipment had been subject had expired and all of its equipment, which by then had been fully depreciated, was written off. A Certificate of Cancellation was filed with the Secretary of State of the State of California on December 17, 1997 DISSOLUTION OF THE PARNERSHIP The Partnership's sole general partner was Leaservice Partners, a New York general partnership which initially consisted of three corporate partners: (i) National Industrial Services Corp., a New York corporation (which changed its name to Capital Market Services Corp and was merged with and into Pittsburgh Annealing Box Company, a Pennsylvania corporation ("PAB")in October 1987), and which served as the managing partner of Leaservice Partners; (ii) Mid-States Resources, Inc., a Missouri corporation which dissolved on March 1, 1996; and (iii) Mid-States Leasing, Inc., a Missouri corporation which on May 24, 1991 withdrew from Leaservice Partners causing the general partnership's dissolution; Mid-States Leasing, Inc. was formally dissolved on June 29, 1991. The dissolution of Leaservice Partners on May 24, 1991, caused the dissolution of the Partnership pursuant to the terms of the Partnership's Amended and Restated Agreement of Limited Partnership (the "Limited Partnership Agreement") . The Partnership's limited partners were advised of the dissolution of Leaservice Partners and its effect on the Partnership and were given the opportunity, pursuant to the terms of the Limited Partnership Agreement to continue the Partnership and elect a new general partner at a meeting of limited partners scheduled for July 8, 1991. At this meeting, the requisite number of limited partners failed to vote to continue the Partnership. Accordingly, since May 1991, the Partnership has been in the process of winding up its affairs. From May 1991 until January 1998, PAB, (as the successor to the sole managing partner of Leaservice Partners, the general partnership that served as the sole general partner of the Partnership) oversaw the winding up of the business of Leaservice Partners and the Partnership. On January 7, 1998, Capital Resource Group, L.L.C., a Pennsylvania limited liability company ("CRG") assumed all of the rights and all of the obligations of PAB in the Partnership and in Leaservice Partners. CRG is overseeing the final stages of the winding up of the affairs of the Partnership. -2- Item 2. Properties During the year ended December 31, 1997 and thereafter, the Partnership has not owned or leased any material property. Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the year covered by this report or at anytime thereafter. PART II Item 5. Market for the Partnership's Common Equity and Related Stockholder Matters (a) The Partnership's Units have never been publicly traded. Pursuant to the terms of the Partnership's Limited Partnership Agreement, a Unit could be transferred only after certain requirements were satisfied and transferees could become limited partners only with the consent of the general partner, which consent could be granted or withheld at the sole discretion of the general partner. There has never been a market for such Units and no public trading market ever developed for the Units. (b) As of December 31, 1997 and through the date of the filing of this Annual Report on Form 10-K, there were approximately 800 holders of record of the Partnership's Units and one holder of a general partnership interest in the Partnership. Item 6. Selected Financial Data
Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year Ended Ended Ended Ended Ended 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 ----------- ----------- ----------- ----------- ---------- Total Income ...................................... $ 7 $ 10 $ 6,059 $ 4,571 $ 86,087 Net Income (Loss) Allocable to Limited Partners ............................... (62,713) (3,990) 2,508 (8,815) 69,391 Net Income (Loss) Allocable to General Partner ................................... (627) (40) 443 (89) 12,246 Distributions to Limited Partners ................. -0- -0- -0- -0- -0-
-3-
Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year Ended Ended Ended Ended Ended 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 ----------- ----------- ----------- ----------- ---------- Equipment Purchased for Rental .................... -0- -0- -0- -0- -0- Total Assets ...................................... $ 129,034 $ 139,247 $139,277 $ 137,326 $144,469 Total Liabilities ................................. 128,231 75,731 71,731 72,731 70,970 Total Partners' Equity ............................ 803 63,516 67,546 64,595 73,499
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The Partnership was dissolved in fiscal 1991 and continued to wind up its affairs during the fiscal year ended December 31, 1996. See Item 1 "Business". The Partnership ceased purchasing equipment subject to operating leases in June 1986, because, in the opinion of the general partner, total prospective returns attainable on such leases (taking into consideration residual equipment value risks which the Partnership would be subject to) were not been favorable to the Partnership. During the fiscal year ended December 31, 1993, all operating leases to which the Partnership's equipment had been subject expired or were otherwise terminated and all equipment then owned by the Partnership (which had an original cost of $104,197 and which had been fully depreciated) was written off. In addition, amounts held as deposits for the final months rent under the terminated leases were recognized as income in fiscal 1993. During fiscal 1996, the Partnership held no equipment for rental under operating leases and no deposits under operating leases. During the fiscal years ended December 31, 1997, 1996 and 1995, the Partnership had no operating lease rentals. Operating expenses were $62,720, $4,040 and $3,108, respectively in fiscals 1997, 1996 and 1995. Net income (loss) for the years ended December 31, 1997, 1996 and 1995 was ($62,713) , ($4,030) and $2,951 respectively. Net (loss) for the years December 31, 1997 and December 31, 1996 was allocated ($62,086) and ($3,990) (99%) respectively, to the limited partners and ($627) and ($40) (1%), respectively to the general partner. Net income for the year ended December 31, 1995 was allocated $2,508 (85%) to the limited partners and $443 (15%), respectively to the general partner. For the years ended December 31, 1997, 1996 and 1995, income (loss) per Unit on a weighted average basis was ($.81), ($.05) and $.03, respectively. -4- LIQUIDITY AND CAPITAL RESOURCES The Partnership had sufficient funds to cover its diminishing expenses in 1998 Item 8. Financial Statements and Supplementary Data (Annexed hereto starting on page F-1) Item 9. Changes in and Disagreements on Accounting and Financial Disclosure As reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1992, on May 14, 1993 the Company notified Deloitte & Touche, which had previously been the independent accountant of the Company, that it had been dismissed. On September 10, 1992 Capuano & Hartley CPAs was selected to audit the Company's financial statements for the year ended December 31, 1991. Capuano & Hartley, CPAs served as the Partnership's independent accountants from September 10, 1992 until they were formally dismissed on December 31, 1997. As reported in the Company's Current Report on Form 8-K dated February 5, 1998, on December 31, 1997, the Partnership formally dismissed Capuano & Hartley, CPAs as its independent accountant because Capuano & Hartley, CPAs had disbanded in 1996. On December 23, 1997, the Partnership engaged Wiss & Co. to serve as its independent accountants to audit the Partnership's financial statements for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 as part of the Partnership's effort to complete winding up its affairs following the Partnership's dissolution on May 24, 1991. As reported in the Company's Current Report on Form 8-K dated February 5, 1998, while serving as the Partnership's independent accountants from September 10, 1992 until December 31, 1997, Capuano & Hartley, CPAs audited the Registrant's annual financial statements for the years ended December 31, 1991 and 1992 and their reports on these financial statements did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, scope or accounting principals. Until December 23, 1997, the Partnership had not requested Capuano & Hartley, CPAs or any other independent accountant to audit the Partnership's financial statements for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 because as more particularly described in Item 1 above, the Partnership has been in the process of winding up its affairs since its dissolution during fiscal 1991, has engaged in no new business since June 1986 and believed that the cost of annual audits exceeded the value to be derived from same in light of the Partnership's small and diminishing assets and the lack of a public market for its Units of limited partnership interest. PART III Item 10. Directors and Executive Officers of the Registrant The general partner of the Partnership was Leaservice Partners, a New York general partnership which has dissolved on May 21, 1991. From May 1991 until January 1998, PAB, (as the successor to the sole managing partner of Leaservice Partners, the general partnership that served as the sole general partner of the Partnership) oversaw the winding up of the business of Leaservice Partners and the Partnership. On January 7, 1998, CRG assumed all of the rights and all of the obligations of PAB in the Partnership and in Leaservice Partners. CRG is overseeing the final stages of the winding up of the affairs of the Partnership. -5- The executive officers and directors of PAB during the year ended December 31, 1997were Sam Michaels, Chief Executive Officer, President and Director, Edward J. Landau, Secretary and Director and John A. Kenna, Vice President The executive officers and managers of CRG are Sam Michaels, Chairman of the Board and Manager, Edward J. Landau, Secretary and Manager and Gary Hitechew, President and Manager. Item 11. Management Remuneration and Transactions (Certain of the capitalized terms used in this section are defined at the end of the section.) The Partnership's Limited Partnership Agreement provides that the general partner is compensated for services performed in connection with, among other things, managing the operations of the Partnership. As compensation for the management services it performs the general partner receives a management fee payable quarterly in an amount equal to 3% of the Partnership's gross revenues derived from full payout leases, 6% of the partnership's gross revenues derived from operating leases and 3% of the Partnership's gross revenues derived from the sale of equipment. If the Partnership does not generate sufficient cash from operations to pay the management fee or even if it does, at the discretion of the General Partner, such fees will be accrued as debt of the Partnership payable out of cash available for distribution. In addition to the management fee, the general partner is allocated 1% of the Partnership's net losses and 15% of the Partnership's net income. The general partner also is reimbursed for any direct expenses incurred by it, its employees or agents in connection with the Partnership's business and on behalf of the Partnership, except that the general partner is not reimbursed for any general and administrative expenses or other overhead expenses of the general partner and is not reimbursed for any organizational and offering expenses in excess of 3% of the gross proceeds of the offering of Units. During the fiscal year ended December 31, 1997 the Partnership did not pay or accrue a management fee applicable to the general partner; the general partner was allocated ($627) (1%) of the net (loss) of the Partnership for such year. Item 12. Security Ownership of Certain Beneficial Owners and Management (a) No person owns of record, or is known by the Partnership to own beneficially, more than 5% of any class of the voting securities of the Partnership (b)The general partner's general partnership interest in the Partnership represents a 15% interest in the Partnership's annual net income for financial reporting purposes and tax allocations of 1% of net losses and 15% of net income. Item 13. Certain Relationships and Related Transactions None Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Exhibits -6- (3) Restated and Amended Agreement of Limited Partnership of the Partnership dated as of June 23, 1983. Incorporated by reference to Exhibit A to the definitive Prospectus dated June 23, 1983 filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933. (b) Financial Statements and Schedules Financial Statements Page No. -------------------- -------- Independent Auditor's Report F-1 Balance Sheets as of December 31, 1997 and 1996 F-2 Statements of Operations for the years ended December 31, 1997, 1996 and 1995 F-3 Statements of Changes in Partners' Equity (Deficiency) for the years ended December 31, 1997, 1996 and 1995 F-4 Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 F-5 Notes to Financial Statements F-6 All other schedules are omitted because they are not required or because the required information is presented in the financial statements or related notes. (c) Reports on Form 8-K The Partnership did not file any Current Reports on Form 8-K during the fiscal year ended December 31, 1997. -7- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LEASERVICE INCOME FUND - I (dissolved) By: LEASERVICE PARTNERS (dissolved) By: CAPITAL RESOURCE GROUP LLC (successor to the managing partner of Leaservice Partners) Dated: September 29, 1998 By: /s/ Edward J. Landau -------------------- Edward J. Landau Secretary 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 the capacities and on the dates indicated: Signature Title Date - --------- ----- ---- /s/ Sam Michaels Chairman of the Board September 29, 1998 - ---------------- and Manager Sam Michaels (Principal Executive Officer) /s/ Patrick Costello Consultant September 29, 1998 - -------------------- Principal Accounting and Patrick Costello Financial Officer /s/ Edward J. Landau Secretary and Manager September 29, 1998 - -------------------- Edward J. Landau -8- INDEPENDENT AUDITORS' REPORT General Partner and Limited Partners Leaservice Income Fund - I We have audited the accompanying balance sheets of Leaservice Income Fund - I (A California Limited Partnership) as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' equity and cash flows for each of the three years in the period then ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, such financial statements present fairly, in all material respects, the financial position of Leaservice Income Fund - I (A California Limited Partnership) at December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. As indicated in the Notes to the financial statements, the Partnership does not own or hold any equipment for lease and has not entered into any new agreements. WISS & COMPANY, LLP Livingston, New Jersey January 24, 1998 F-1 LEASERVICE INCOME FUND - I (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS December 31, --------------------------- 1997 1996 --------- --------- ASSETS CASH AND CASH EQUIVALENTS .................. $ 129,034 $ 139,247 ========= ========= LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Accrued expenses ......................... $ 60,500 $ 8,000 Sales tax payable ........................ 44,216 44,216 Due to General Partner ................... 23,515 23,515 --------- --------- 128,231 75,731 PARTNERS' EQUITY: Limited Partners ...................... 9,211 71,297 General Partners ...................... (8,408) (7,781) --------- --------- Total Partners' Equity ............. 803 63,516 --------- --------- $ 129,034 $ 139,247 See the accompanying notes to financial statements. F-2 LEASERVICE INCOME FUND - I (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS Year Ended December 31, -------------------------------- 1997 1996 1995 -------- -------- -------- INTEREST INCOME ............................. $ 7 $ 10 $ 6,059 OPERATING EXPENSES .......................... 62,720 4,040 3,108 -------- -------- -------- NET INCOME (LOSS) ........................... $(62,713) $ (4,030) $ 2,951 ======== ======== ======== ALLOCATION OF NET INCOME (LOSS): Net income (loss) allocable to General Partner ...................... $ (627) $ (40) $ 443 ======== ======== ======== Net income (loss) allocable to Limited Partners ..................... $(62,086) $ (3,990) $ 2,508 ======== ======== ======== Net income (loss) per weighted average Limited Partnership Unit ................ $ (.81) $ (.05) $ 0.03 ======== ======== ======== See the accompanying notes to financial statements. F-3
LEASERVICE INCOME FUND - I (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) Total Limited Partners Partners' General --------------------------- Equity Partner (Units) (Amounts) (Deficiency) -------- -------- --------- ------------ BALANCE, JANUARY 1, 1995 ............................ $ (8,184) 76,328 $ 72,779 $ 64,595 Year Ended December 31, 1995 - Net income ..................................... 443 -- 2,508 2,951 -------- -------- -------- -------- BALANCE, DECEMBER 31, 1995 .......................... (7,741) 76,328 75,287 67,546 Year Ended December 31, 1996 - Net loss ....................................... (40) -- (3,990) (4,030) -------- -------- -------- -------- BALANCE, DECEMBER 31, 1996 .......................... (7,781) 76,328 71,297 63,516 Year Ended December 31, 1997 - Net loss ....................................... (627) -- (62,086) (62,713) -------- -------- -------- -------- BALANCE, DECEMBER 31, 1997 .......................... $ (8,408) 76,328 $ 9,211 $ 803 ======== ======== ======== ======== See the accompanying notes to financial statements. F-4
LEASERVICE INCOME FUND - I (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS Year Ended December 31, --------------------------------------------------- 1997 1996 1995 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ............................................... $ (62,713) $ (4,030) $ 2,951 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Accrued expenses ............................................. 52,500 4,000 (1,000) --------- --------- --------- Net Cash Flows From Operating Activities ................... (10,213) (30) 1,951 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ........................ 139,247 139,277 137,326 --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR .............................. $ 129,034 $ 139,247 $ 139,277 ========= ========= ========= See the accompanying notes to financial statements. F-5
LEASERVICE INCOME FUND - I (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS Note 1 - Nature of the Business and Summary of Significant Accounting Policies: NATURE OF THE BUSINESS - Leaservice Income Fund - I ("the Partnership") is a California Limited Partnership formed for the purpose of acquiring various types of capital equipment and leasing same to third parties primarily on a short-term basis. On August 18, 1983, the first limited partners were admitted to the Partnership. The leasing of acquired equipment commenced on October 1, 1983. Leaservice Partners ("Leaservice"), a New York General Partnership, was the sole General Partner of the Partnership until May 24, 1991. The Partnership was informed that effective as of such date, Leaservice had been dissolved due to the withdrawal from that partnership of one of its general partners. Section 14.1.1 of the Amended and Restated Partnership Agreement of the Partnership provides that the Partnership is dissolved upon the dissolution of a general partner. A meeting of limited partners was scheduled for the purposes of considering whether the Partnership should be continued and a new general partner elected. However, limited partners owning 50% or more of the total outstanding Units of the Fund voting in person or by proxy did not vote to continue the existence of the Partnership or to elect a new general partner. On January 7, 1998 the sole remaining entity that once constituted Leaservice assigned any interest it may have in the Partnership by virtue of its interest in Leaservice to a third party (the "Assignee"). The Assignee is in the process of winding up the business of the Partnership. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ALLOCATION OF INCOME AND LOSSES - Net income is allocated 15% to the General Partner, and 85% to the Limited Partners. Net losses incurred as a result of operations are allocated 1% to the General Partner, and 99% to the Limited Partners. DISTRIBUTIONS - To the extent that cash available for distribution allows, distributions to limited partners will not be less than an amount equal to 50% of the limited partners' share of the net income of the Partnership. F-6 FINANCIAL INSTRUMENTS - Financial instruments include cash and accrued expenses. The amounts reported for financial instruments are considered to be reasonable approximations of their fair values, based on market information available to management. CASH AND CASH EQUIVALENTS - Includes cash and interest bearing deposits with original maturity dates of less than 90 days. The Partnership maintains its cash balances in a financial institution which is insured by the Federal Deposit Insurance Corporation for up to $100,000. At December 31, 1997, the Partnership had uninsured balances totalling approximately $106,000. INCOME TAXES - Leaservice Income Fund - I is classified as a partnership for Federal income tax purposes. Net income and losses are allocated between the General and Limited Partners in the same ratio as for financial reporting purposes. Note 2 - Operations: The Partnership has not purchased any equipment subject to operating leases since June 1986 and no equipment has been held for rental under operating leases since 1993. Accrued expenses for the year ended December 31, 1997 include administrative and professional fees incurred by the Partnership in order to file annual reports on Form 10-K for the years ended December 31, 1993 - 1997 with the Securities and Exchange Commission in early 1998. Note 3 - Partners' Equity: From August 8, 1983 to October 9, 1984, the expiration date of the offering, Limited Partners representing 76,328 units were admitted to the Partnership. As a result thereof, the Partnership realized net proceeds of $7,022,176 from the sale of such units. Pursuant to the limited partnership agreement, Leaservice receives from the Partnership as General Partner, a quarterly management fee equal to 3% of the Partnership's gross revenues derived from full payout leases, 6% of the Partnership's gross revenues derived from operating leases and 3% of the Partnership's gross revenues derived from the sale of equipment. For the years ended December 31, 1997, 1996 and 1995, no management fees were earned under the agreement. Net income is allocated 15% to the General Partner and 85% to the Limited Partners. In addition, the General Partner is entitled to receive an annual cash distribution an amount equal to 15% of the Partnership's net income subject to certain limitations. Net losses are allocated 1% to the General Partner and 99% to the Limited Partners. F-7 Organization and offering expenses up to a maximum of 3% of the gross proceeds of the offering have been reimbursed to the General Partner by the Partnership from the proceeds of the public offering. Net income (loss) per weighted average limited partnership unit has been computed based on the weighted average number of limited partnership units outstanding as of the first day of each month during the years ended December 31, 1997, 1996 and 1995. F-8 -----END PRIVACY-ENHANCED MESSAGE-----