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

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EXCEL - IDEA: XBRL DOCUMENT - LEAF Equipment Finance Fund 4, L.P.	Financial_Report.xls
EX-32.2 - EXHIBIT 32.2 - LEAF Equipment Finance Fund 4, L.P.	ex32_2.htm
EX-31.2 - EXHIBIT 31.2 - LEAF Equipment Finance Fund 4, L.P.	ex31_2.htm
EX-32.1 - EXHIBIT 32.1 - LEAF Equipment Finance Fund 4, L.P.	ex32_1.htm
EX-31.1 - EXHIBIT 31.1 - LEAF Equipment Finance Fund 4, L.P.	ex31_1.htm

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, 2011

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 R 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 R 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. R 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). R 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. R

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 £	Smaller Reporting Company R
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). £ Yes R 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	2
ITEM 1A:	Risk Factors	4
ITEM 1B:	Unresolved Staff Comments	4
ITEM 2:	Properties	4
ITEM 3:	Legal Proceedings	4
ITEM 4:	Mine Safety Disclosures	4

PART II
ITEM 5:	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer of Purchases of Equity Securities	5
ITEM 6:	Selected Financial Data	6
ITEM 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operation	7
ITEM 7A:	Quantitative and Qualitative Disclosures about Market Risk	16
ITEM 8:	Financial Statements and Supplementary Data	17
ITEM 9:	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	34
ITEM 9A:	Controls and Procedures	34
ITEM 9B:	Other Information	34

PART III
ITEM 10:	Directors and Executive Officers of the Registrant	35
ITEM 11:	Executive Compensation	36
ITEM 12:	Security Ownership of Certain Beneficial Owners and Management and Related Unit Holder Matters	36
ITEM 13:	Certain Relationships and Related Transactions	37
ITEM 14:	Principal Accountant Fees and Services	37

PART IV
ITEM 15	Exhibits, Financial Statement Schedules
		39
SIGNATURES

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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;

•

the degree and nature of our competition; and

•

availability and retention of qualified personnel.

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.

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 maturity period of two years, during which our leases and secured loans will either mature or be sold. In the event we are unable to sell our leases and loans during the maturity period, we expect to continue to return capital to our partners as those leases and loans mature. Substantially all of our leases and loans mature by the end of 2015. We expect to enter our liquidation period beginning in October 2014. We will terminate on December 31, 2032, unless sooner dissolved or terminated as provided in our Limited Partnership Agreement.

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We acquire a diversified portfolio of new, used, or reconditioned equipment that we lease to third parties. We also acquire portfolios of equipment subject to existing leases from other equipment lessors. 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 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:

•

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 economic 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.

Debt Facilities

We have augmented the proceeds of our original offering with debt, and intend to finance a significant portion of the cost of the equipment we acquire. We are not limited in the amount of debt, including financings through securitizations, we may incur. Our ability to obtain financing will, however, depend upon our General Partner’s assessment of whether funds are available at rates and upon terms that are economically advantageous to us. As a result, the amount of our financings may vary significantly from our expectations.

The tight credit markets have adversely affected our ability to obtain debt financing needed to execute our investment strategies. Specifically, we rely on both revolving and term debt facilities to fund our acquisitions of equipment financings. If our banks do not renew a revolving facility upon maturity, the debt facility would convert to a term facility and we would not be able to borrow additional amounts under the line of credit. A term debt facility is a loan that is contractually repaid over a period of time. If we are unable to obtain new debt that will allow us to invest the repayments of existing leases and loans into new investments, the volume of our leases and loans will be reduced.

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.

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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.

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 1B – UNRESOLVED STAFF COMMENTS

None.

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.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

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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, 2011
Limited Partners		2,774
General Partner		1

Total distributions paid to limited partners for the years ended December 31, 2011, 2010 and 2009 were $5.1 million, $8.4 million and $6.2 million, respectively.

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ITEM 6 – SELECTED FINANCIAL DATA

The following selected financial data should be read together with our consolidated financial statements, the notes to our financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 in this report. We derived the selected consolidated financial data below from our consolidated financial statements appearing elsewhere in this report which have been audited by Grant Thornton LLP, an independent registered public accounting firm. We deem September 16, 2008 to be the commencement of our operations and we refer to the period from that date through December 31, 2008 as the period ended December 31, 2008 (in thousands, except unit and per unit data):

	Years Ended December 31,									Period Ended December 31,
	2011			2010			2009			2008
Revenues	$	37,115		$	40,064		$	29,124		$	255
Interest expense		21,093			26,644			22,991			22,991
Provision for credit losses		15,685			20,785			19,107			19,107
Other expenses		5,967			14,971			6,778			6,778
Total expenses		42,745			62,400			48,876			1,003
Equity in losses of affiliate		-			-			(3,261	)		(600	)
Net loss		(5,630	)		(22,336	)		(23,013	)		(1,348	)
Net income (loss) attributable to noncontrolling interest		(7	)		235			366			-
Net loss allocated to limited partners	$	(5,581	)	$	(21,880	)	$	(22,421	)	$	(1,335	)
Distributions to partners	$	5,089		$	8,431		$	6,216		$	366
Weighted average number of limited partner units outstanding during the year		1,259,907			1,259,907			806,087			257,627
Net loss per weighted average limited partner unit	$	(4.43	)	$	(17.37	)	$	(27.81	)	$	(5.18	)

	December 31,
	2011			2010			2009			2008
Investment in leases and loans, net	$	184,938		$	334,826		$	501,174		$	14,934
Debt		157,911			296,975			427,025			-
Partners’ (deficit) capital:
General partner		(716	)		(609	)		(304	)		(12	)
Limited partners		39,027			49,642			79,933			32,240
Accumulated other comprehensive loss		-			-			-			(567	)
Total partners’ capital	$	38,311		$	49,033		$	79,629		$	31,661

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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, 2011.

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

Fund Summary

As discussed in more detail in Item 1, we acquire a diversified portfolio of new, used or reconditioned equipment that we lease to third parties. We also acquire portfolios of equipment subject to existing leases from other equipment lessors. 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 has suffered through the worst economic recession in over 75 years. The ongoing economic slowdown has 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.

All of these events have come in the early stages of our life cycle. With sufficient cash and debt facilities, we hope to pursue additional financings that will allow for us to acquire leases and benefit from the resulting cash flows in the future. We can continue to acquire leases until we enter our maturity phase in October 2014, at which time we will be prohibited, under the partnership agreement, from acquiring new leases.

To date, limited partners have received total distributions ranging from approximately 11% to 21% 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. However, we could not continue to support 8.5% distributions, and beginning in August 2010, distributions were lowered to 4.0%. In order to reduce our ongoing cash requirements, the General Partner waived management fees in August 2010 and subsequently waived all future management fees.

As we seek new financing arrangements, opportunistically sell leases and undertake other ways to improve our performance, we hope to be able to increase the distribution and re-invest in leases and loans.

We continued to be impacted by market uncertainties during the year ended December 31, 2011 as further discussed in “Finance Receivables and Asset Quality” and in “Liquidity and Capital Resources.”

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General Economic Overview

Uncertainty and caution continue to reign in the various forecasts for the U.S. economy. However, during the fourth quarter of 2011 there was, on balance, more favorable economic news than unfavorable economic news. During the fourth quarter of 2011 there was improvement in the employment rate, reduction in jobless claims, and increases in equipment sales and business borrowing, both of which tend to be precursors to sustained economic growth. At the same time continued uncertainty and a lack of confidence in the small business community, a key driver in long term job creation, continue to be major impediments to steady and sustained economic growth. Significant economic statistics reported on fourth quarter activity are presented below.

The National Federation of Independent Business survey showed that small business concerns over business conditions and the political climate continue to be key reasons preventing business expansion. Small businesses comprise the majority of the borrowers and lessees in the LEAF Fund’s portfolio and consequently the health of the small business community is critical to the LEAF Funds portfolio performance.

The National Association of Realtors reported that existing home sales in December 2011 increased for the third month in a row and remained above prior year levels significantly reducing the housing inventory. At the same time the S&P Case-Shiller Home Price Index showed decreases in home prices. So while there is more sales activity (a positive), the price declines negatively impact personal wealth (a negative).

The Federal Reserve’s Beige Book released in the fourth quarter of 2011 showed increases in consumer spending and manufacturing activity and economic activity was described as slow to moderate.

During the fourth quarter of 2011 the unemployment rate fell to 8.5%, and the Institute of Supply Management reported an accelerating pace in U.S. manufacturing which supported employment gains.

The Equipment Lease and Finance Foundation’s Monthly Confidence Index in December 2011 was 57.2 signifying steadying optimism about business activity among surveyed executives in the equipment lease and finance industry. Similarly the December 2011 Credit Manager’s Index published by the National Association of Credit Managers increased to 54.4 (positive territory) driven largely by gains in the service industry.

As stated previously the overall economic trends in the fourth quarter of 2011 tended to be more positive than negative. Those trends are in line with recent stability shown in the LEAF Funds portfolio performance. However, while uncertainty in the economic outlook persists, and while the economy remains unsettled, the LEAF Funds portfolio performance may be affected.

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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,
	2011			2010
Investment in leases and loans, net	$	184,938		$	334,826

Number of contracts		10,000			12,900
Number of individual end users (a)		9,000			11,500
Average original equipment cost	$	59.6		$	60.9
Average initial lease term (in months)		58			57
Average remaining lease term (in months)		23			27
States accounting for more than 10% of lease and loan portfolio:
California		12	%		14	%
New York		15	%		11	%

Types of equipment accounting for more than 10% of lease and loan portfolio:
Medical equipment		22	%		23	%
Industrial equipment		20	%		21	%
Restaurant equipment		11	%		11	%

Types of businesses accounting for more than 10% of lease and loan portfolio:
Services		44	%		46	%
Finance/Insurance/Real Estate		18	%		13	%
Retail trade		17	%		18	%

______________________________________

(a)	Located in the 50 states as well as the District of Columbia and Puerto Rico. No individual end user or single piece of equipment accounted for more than 10% of our portfolio based on the origination amount.

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, 2011 and 2010, our outstanding debt was $157.9 million and $297.0 million, respectively.

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Finance Receivables and Asset Quality

The performance of our commercial finance assets portfolio is a measure of our General Partner’s underwriting and collection standards, skills, policies and procedures and is an indication of asset quality. 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
	2011			2010			$			%
Investment in leases and loans before allowance for credit losses	$	189,348		$	344,680		$	(155,332	)		(45	)%
Less: allowance for credit losses		4,410			9,854			(5,444	)		(55	)%
Investment in leases and loans, net	$	184,938		$	334,826		$	(149,888	)		(45	)%

Weighted average investment in direct financing leases and loans before allowance for credit losses	$	249,774		$	420,345		$	(170,571	)		(41	)%
Non-performing assets (a)	$	26,800		$	39,561		$	(12,761	)		(32	)%
Charge-offs, net of recoveries	$	21,129		$	26,565		$	(5,436	)		(20	)%
As a percentage of finance receivables:
Allowance for credit losses		2.33	%		2.86	%
Non-performing assets		14.15	%		11.48	%
As a percentage of weighted average finance receivables:
Charge-offs, net of recoveries		8.46	%		6.32	%

______________________________________

(a)	Included in non-performing assets are approximately $24.8 million and $25.7 million as of December 31, 2011 and 2010, respectively, of certain revolving real estate loans.

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 recent economic 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 recent 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, we perform a migration analysis, which estimates the likelihood that an account progresses through delinquency stages to ultimate charge-off. Our policy is to charge off to the allowance those financings which are in default and for which management has determined the probability of collection to be remote. 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. The recent economic recession in the U.S has made it more difficult for some of our customers to make payments on their financings with us on a timely basis, which has adversely affected our operations in the form of higher delinquencies. In 2011 our non-performing assets as a percentage of finance receivables increased to 14.15% at December 31, 2011 compared to 11.48% at December 31, 2010, due primarily to continued non-performance of certain revolving real estate loans that require interest only payments until their maturity, partially offset by an improved aging on our portfolio. Our investments in leases and loans that were current as a percentage of our portfolio increased to 96.7% as of December 31, 2011 compared to 86.6% at December 31, 2010. We are cautiously optimistic that the aging of our portfolio will continue to improve as the economy recovers.

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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, the estimated unguaranteed residual values of leased equipment, impairment of long-lived assets and the fair value of interest rate swaps and caps. 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

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. There were no write-downs of equipment during the years ended December 31, 2011 and 2010.

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, loans and future payment card receivables) 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 progresses through delinquency stages to ultimate charge-off. After an account becomes 180 or more days past due, any remaining balance is fully-reserved less an estimated recovery amount. Generally, the account is then 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 charged-off 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’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.

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The Fund discontinues the recognition of revenue for leases and loans for which payments are more than 90 days past due. As of December 31, 2011 and, 2010, the Fund had $26.8 million and $39.6 million, respectively, of leases and loans on non-accrual status. Payments received while leases and loans are on non-accrual status are recorded as a reduction of principal. Income recognition resumes when a lease or loan becomes less than 90 days delinquent, unless certain factors specific to those leases or loans continue to raise concerns as to future collectability.

Results of Operations

Our investments in commercial finance assets declined to $184.9 million as of December 31, 2011 as compared to $334.8 million as of December 31, 2010. As the economy recovers, we hope to pursue additional financings to be utilized to acquire additional commercial finance assets. Our General Partner expects revenue derived from these additional leases and loans to exceed the interest expense incurred by the debt incurred to obtain these investments.

Year Ended December 31, 2011 compared to Year Ended December 31, 2010

The following summarizes our results of operations for the years ended December 31, 2011 and 2010 (dollars in thousands):

							Increase (Decrease)
	2011			2010			$			%
Revenues:
Interest on equipment financings	$	18,264		$	35,083		$	(16,819	)		(48	)%
Rental income		2,512			2,905			(393	)		(14	)%
Gains on sales of equipment and lease dispositions, net		1,559			646			913			141	%
Gain on extinguishment of debt		13,677			-			13,677			100	%
Other income		1,103			1,430			(327	)		(23	)%
		37,115			40,064			(2,949	)		(7	)%

Expenses:
Interest expense		21,093			26,644			(5,551	)		(21	)%
Depreciation on operating leases		2,005			2,423			(418	)		(17	)%
Provision for credit losses		15,685			20,785			(5,100	)		(25	)%
General and administrative expenses		1,384			1,734			(350	)		(20	)%
Administrative expenses reimbursed to affiliate		2,450			3,095			(645	)		(21	)%
Management fees to affiliate		-			2,932			(2,932	)		(100	)%
Mark to market changes on derivative liabilities		128			4,787			(4,659	)		(97	)%
		42,745			62,400			(19,655	)		(31	)%
Net loss		(5,630	)		(22,336	)		16,706			(75	)%
Less: Net (income) loss attributable to the noncontrolling interest		(7	)		235			(242	)		(103	)%
Net loss attributable to LEAF 4 partners	$	(5,637	)	$	(22,101	)	$	16,464
Net loss allocated to LEAF 4's limited partners	$	(5,581	)	$	(21,880	)	$	16,299

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

•

A decrease in interest on equipment financings. Our weighted average net investment in financing assets decreased to $249.8 million for the year ended December 31, 2011 as compared to $420.3 million for the period ended December 31, 2010, a decrease of $170.5 million (41%). As discussed above, this decrease was driven primarily by our requirement to satisfy the Unpaid Cumulative Return prior to reinvesting Distributable Cash in new finance investments.

•

A decrease in rental income which was principally the result of a decrease in our investment in operating leases for the year ending December 31, 2011 compared to 2010.

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•

A decrease in other income primarily due to a reduction in late fee income, collection income, and other handling fees associated with our investment portfolio. The decrease is due to the reduction in the size of our portfolio at December 31, 2011 compared to December 31, 2010.

The decrease in total revenues was partially offset by a non-recurring gain on extinguishment of debt of $13.7 million related to the payoff and termination of our Morgan Stanley facility.

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

•

A decrease in interest expense due to a decrease in our average debt outstanding. Average borrowings for the years ended December 31, 2011 and 2010 were $221.1 million and $367.4 million, respectively, at an effective interest rate of 9.5% and 8.9%, respectively.

•

Mark to market changes on derivative liabilities decreased to $128,000 at December 31, 2011 compared to $4.8 million at December 31, 2010. Subsequent to the completion of the 2011-1 Term Securitization, all of our debt was on a fixed-rate basis and, therefore, we terminated all of our interest rate swap contracts in January 2011. Accordingly, we no longer own any derivative instruments. The decrease in expense period over period is a function of interest rate movements that occurred during that period.

•

A decrease in our provision for credit losses principally reflects the decrease of our equipment financing portfolio and an improvement in the aging of our receivables.

•

A decrease in management fees. Our General Partner waived asset management fees of $3.1 million for the year ended December 31, 2011 and has waived $4.6 million on a cumulative basis. The General Partner has also waived all future management fees.

The net loss per limited partner unit, after the net loss allocated to our General Partner, for the years ended December 31, 2011 and 2010 was $4.43 and $17.37, respectively, based on the weighted average number of limited partner units outstanding of 1,259,907 each period.

Year Ended December 31, 2010 compared to Period Ended December 31, 2009

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The following summarizes our results of operations for the years ended December 31, 2010 and 2009 (dollars in thousands):

							Increase (Decrease)
	2010			2009			$			%
Revenues:
Interest on equipment financings	$	35,083		$	26,174		$	8,909			34	%
Rental income		2,905			1,764			1,141			65	%
Gains on sales of equipment and lease dispositions, net		646			295			351			119	%
Other income		1,430			891			539			60	%
		40,064			29,124			10,940			38	%

Expenses:
Interest expense		26,644			22,991			3,653			16	%
Depreciation on operating leases		2,423			1,522			901			59	%
Provision for credit losses		20,785			19,107			1,678			9	%
General and administrative expenses		1,734			1,653			81			5	%
Administrative expenses reimbursed to affiliate		3,095			2,811			284			10	%
Management fees to affiliate		2,932			3,945			(1,013	)		(26	)%
Mark to market changes on derivative liabilities		4,787			(3,153	)		7,940			(69	)%
		62,400			48,876			13,524			28	%
Loss before equity in losses of affiliate		(22,336	)		(19,752	)		(2,584	)		13	%
Equity in losses of affiliate		-			(3,261	)		3,261			(100	)%
Net loss		(22,336	)		(23,013	)		677			(3	)%
Less: Net loss attributable to the noncontrolling interest		235			366			(131	)		(36	)%
Net loss attributable to LEAF 4 partners	$	(22,101	)	$	(22,647	)	$	546
Net loss allocated to LEAF 4's limited partners	$	(21,880	)	$	(22,421	)	$	541

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The increase in total revenues was attributable to the following:

•

An increase in interest on equipment financings. Our weighted average net investment in financing assets increased to $420.3 million for the year ended December 31, 2010 as compared to $286.9 million for the period ended December 31, 2009, an increase of $133.4 million (47%). This growth was driven by our acquisitions of portfolios of leases and loans in 2009.

•

An increase in rental income which was principally the result of an increase in our investment in operating leases in the 2010 period compared to the 2009 period.

•

An increase in gains on sales of equipment. Gains and losses on sales of equipment may vary significantly from period to period.

•

An increase in other income, which consists primarily of late fee income. Late fee income has increased due to the increase of the equipment financing portfolio coupled with an increase in payment collection efforts.

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

•

An increase in interest expense due to the 2010-3 Term Securitization that triggered both the charge-off of $1.4 million of deferred financing costs and a prepayment penalty of $0.4 million incurred as a result of paying off the Wells Fargo facility. Average borrowings for the year ended December 31, 2010 and 2009 were $367.4 million and $444.9 million, respectively, at an effective interest rate of 8.9% and 6.0%, respectively.

•

Losses on derivative hedging activities include cash payments or receipts relating to our hedging activities and the changes in the fair value of our derivative financial instruments. For the year ended December 31, 2010, net cash payments were $5.9 million and the change in fair value resulted in a non-cash gain of $1.1 million. Gains (losses) we incur related to derivative hedging activities are based on the value of the derivative contracts at the respective balance sheet date and, in a volatile market that is changing daily, may not necessarily reflect the cash amount to be paid at settlement. Such gains (losses) can create volatility in our results of operations, as the market value of our derivative financial instruments changes over time, and this volatility may adversely impact our results of operations and financial condition.

•

An increase in depreciation on operating leases related to our increase in our investment in operating leases.

These increases were offset, in part, by:

•

A decrease in our management fees attributable to an increase in our non performing assets, since management fees are paid based on lease payments received. In addition, beginning August 1, 2010, our General Partner waived its asset management fees. Accordingly, $1.5 million of management fees were waived for the year ended December 31, 2010. The General Partner has waived all future management fees.

The net loss per limited partner unit, after the net loss allocated to our General Partner, for the years ended December 31, 2010 and 2009 was $17.37 and $27.81, respectively, based on the weighted average number of limited partner units outstanding of 1,259,907 and 806,087, respectively.

Liquidity and Capital Resources

Our primary cash requirements, in addition to normal operating expenses, are for debt service, investment in leases and loans and distributions to partners. During the life of the partnership, we depend upon cash generated from operations, and the excess cash derived from the collection of lease payments after debt service to meet our liquidity needs.

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

	Years Ended December 31,
	2011			2010			2009
Net cash provided by operating activities	$	9,244		$	8,491		$	1,641
Net cash provided by (used in) investing activities		130,745			138,773			(111,119	)
Net cash (used in) provided by financing activities		(139,978	)		(148,491	)		104,363
Increase (decrease) in cash	$	11		$	(1,227	)	$	(5,115	)

Cash increased $11,000 primarily due to proceeds received on our investments in leases and loans of approximately $134.0 million, additional debt financings of $90.0 million, and an overall reduction in our operating expenses, partially offset by debt repayments of approximately $221.6 million and distributions to partners of $5.1 million.

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Partner’s distributions paid for the year ended December 31, 2011, 2010, and 2009 were $5.1 million, $8.4 million, and $6.2 million, respectively. Distributions to limited partners were paid at a rate of 8.5% per annum of invested capital and were lowered to 4.0% with the August 2010 distribution. Cumulative partner distributions paid from our inception to December 31, 2011 were approximately $20.1 million.

Future cash distributions are dependent on the performance of the fund and are impacted by a number of factors which include: our ability to obtain and maintain debt financing on acceptable terms to build and maintain our equipment finance portfolio; lease and loan defaults by our customers; and prevailing economic conditions. Due to the recent economic recession, we continue to see a scarcity of available debt on terms beneficial to the partnership and higher than expected loan defaults, resulting in poorer fund performance than projected.

Beginning August 1, 2010, our General Partner waived its asset management fees. Accordingly, $3.1 million of management fees were waived for the year ended December 31, 2011 and $4.6 million have been waived on a cumulative basis. The General Partner has waived all future management fees. The cash savings on management fees and distributions is expected to be used to pay down our liabilities.

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, 2011 were as follows (in thousands):

				Amount		Amount of
	Type	Maturity		Outstanding		Collateral (1)
2011-1 Term Securitization	Term		(2)		56,205		57,314
2010-1 Term Securitization	Term		(3)		21,825		26,465
2010-3 Term Securitization	Term		(4)		79,881		89,458
				$	157,911	$	173,237

______________________________________

(1)	Recourse under these facilities is limited to the amount of collateral pledged.

(2)	Six classes of asset-backed notes were issued that have varying maturity dates ranging from December 2018 to December 2023. The asset-backed notes totaled $ 96.0 million and bear interest at fixed, stated rates ranging from 1.7% to 5.5%.

(3)

Three classes of asset-backed notes were issued, one that matures on October 23, 2016 and two that mature on September 23, 2018, respectively. The asset-backed notes totaled $92.7 million and bear interest at a fixed, stated rate of 5% and were issued at an original issue discount of approximately $6.5 million.

(4)

Five classes of asset-backed notes were issued, one that matures on June 20, 2016 and four that mature on February 20, 2022, respectively. The asset-backed notes total $171.4 million and bear interest at fixed, stated rates ranging from 3.5% to 5.5 % and were issued at an original issue discount of approximately $3.7 million.

In Fiscal 2010, the Fund maintained a Morgan Stanley term loan which matured on August 4, 2010. This facility was terminated and paid off on January 26, 2011 with the proceeds from the 2011-1 Term Securitization. As of December 31, 2010 we had breached certain financial covenants related to our debt facility with Morgan Stanley. Those breaches were eliminated with the payoff and termination of this facility. The Fund also terminated a Morgan Stanley/RBS facility on May 18, 2010 and Wells Fargo and UniCredit facilities on August 17, 2010, with the proceeds from the 2010-1 Term Securitization and 2010-3 Term Securitization, respectively. No amounts remain outstanding or available to us under these facilities as of December 31, 2011.

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.

Recently Issued Accounting Pronouncements

See Note 2 in the Notes to Consolidated Financial Statements for a description of certain new accounting pronouncements that will or may affect our consolidated financial statements.

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 as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in capital and cash flows for each of the three years in the period ended December 31, 2011. 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of LEAF Equipment Finance Fund 4, L.P. as of December 31, 2011 and 2010 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

March 28, 2012

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

Consolidated Balance Sheets

(In thousands)

	December 31,
	2011			2010
ASSETS
Cash	$	405		$	394
Restricted cash		19,202			20,505
Investment in leases and loans, net		184,938			334,826
Derivative assets at fair value		-			147
Deferred financing costs, net		2,629			3,487
Other assets		217			253
Total assets	$	207,391		$	359,612

LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Debt	$	157,911		$	296,975
Accounts payable, accrued expenses and other liabilities		1,143			894
Derivative liabilities at fair value		-			2,856
Due to affiliates		190			25
Subordinated notes payable		9,355			9,355
Total liabilities		168,599			310,105

Commitments and contingencies (Note 13)

Capital (deficit):
General partner		(716	)		(609	)
Limited partners		39,027			49,642
Total partners' capital		38,311			49,033
Noncontrolling interest		481			474
Total capital		38,792			49,507
Total liabilities and capital	$	207,391		$	359,612

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,
	2011			2010			2009
Revenues:
Interest on equipment financings	$	18,264		$	35,083		$	26,174
Rental income		2,512			2,905			1,764
Gains on sales of equipment and lease dispositions, net		1,559			646			295
Gain on extinguishment of debt		13,677			-			-
Other income		1,103			1,430			891
		37,115			40,064			29,124

Expenses:
Interest expense		21,093			26,644			22,991
Depreciation on operating leases		2,005			2,423			1,522
Provision for credit losses		15,685			20,785			19,107
General and administrative expenses		1,384			1,734			1,653
Administrative expenses reimbursed to affiliate		2,450			3,095			2,811
Management fees to affiliate		-			2,932			3,945
Mark to market changes on derivative liabilities		128			4,787			(3,153	)
		42,745			62,400			48,876
Loss before equity in losses of affiliate		(5,630	)		(22,336	)		(19,752	)
Equity in losses of affiliate		-			-			(3,261	)
Net loss		(5,630	)		(22,336	)		(23,013	)
Less: Net (income) loss attributable to the noncontrolling interest		(7	)		235			366
Net loss attributable to LEAF 4 partners	$	(5,637	)	$	(22,101	)	$	(22,647	)
Net loss allocated to LEAF 4's limited partners	$	(5,581	)	$	(21,880	)	$	(22,421	)
Weighted average number of limited partner units outstanding during the period		1,259,907			1,259,907			806,087

Net loss per weighted average limited partner unit	$	(4.43	)	$	(17.37	)	$	(27.81	)

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 Capital

(In thousands, except unit data)

	Attributable to LEAF 4 Partners
	General									Accumulated Other			Total			Non-
	Partner			Limited Partners						Comprehensive			Partners’			Controlling			Total			Comprehensive
	Amount			Units			Amount			(Loss) Income			Capital			Interest			Capital			(Loss) Income
Balance, January 1, 2009	$	(12	)		390,925		$	32,240		$	(567	)	$	31,661		$	-		$	31,661

Sales of limited partnership units		-			875,493			87,203			-			87,203			-			87,203
Offering costs related to the sale of limited partner units		-			-			(10,421	)		-			(10,421	)		-			(10,421	)
Issuance of membership interest to noncontrolling interest		-			-			-			-			-			428			428
Cash distributions paid		(66	)		-			(6,150	)		-			(6,216	)		-			(6,216	)
Redemption of limited partnership units		-			(6,054	)		(518	)		-			(518	)		-			(518	)
Comprehensive loss:
Net loss		(226	)		-			(22,421	)		-			(22,647	)		(366	)		(23,013	)	$	(23,013	)
Unrealized gains on financial derivatives		-			-			-			1,347			1,347			-			1,347			1,347
Comprehensive loss		-			-			-			-			-			-			-			(21,666	)
Consolidation of LEAF Funds JV1		-			-			-			(780	)		(780	)		647			(133	)
Comprehensive loss attributable to noncontrolling interest		-			-			-			-			-			-			-			366
Balance, December 31, 2009		(304	)		1,260,364			79,933			-			79,629			709			80,338		$	(21,300	)

Return of offering costs related to the sale of limited partnership units		-			-			8			-			8			-			8
Cash distributions paid		(84	)		-			(8,347	)		-			(8,431	)		-			(8,431	)
Redemption of limited partnership units		-			(827	)		(72	)		-			(72	)		-			(72	)
Comprehensive loss:
Net loss		(221	)		-			(21,880	)		-			(22,101	)		(235	)		(22,336	)	$	(22,336	)
Comprehensive loss attributable to noncontrolling interest		-			-			-			-			-			-			-			235
Balance, December 31, 2010		(609	)		1,259,537			49,642			-			49,033			474			49,507		$	(22,101	)

Return of offering costs related to the sale of limited partnership units		-			-			4			-			4			-			4
Cash distributions paid		(51	)		-			(5,038	)		-			(5,089	)		-			(5,089	)
Comprehensive loss:
Net loss		(56	)		-			(5,581	)		-			(5,637	)		7			(5,630	)	$	(5,630	)
Comprehensive income attributable to noncontrolling interest		-			-			-			-			-			-			-			(7	)
Balance, December 31, 2011	$	(716	)		1,259,537		$	39,027		$	-		$	38,311		$	481		$	38,792		$	(5,637	)

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,
	2011			2010			2009
Cash flows from operating activities:
Net loss attributable to LEAF 4 partners	$	(5,637	)	$	(22,101	)	$	(22,647	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Gain on extinguishment of debt		(13,677	)		-			-
Gains on sales of equipment and lease dispositions, net		(1,559	)		(646	)		(295	)
Amortization of deferred charges and discount on debt		11,800			11,090			6,274
Depreciation on operating leases		2,005			2,423			1,522
Provision for credit losses		15,685			20,785			19,107
Equity in losses in affiliate		-			-			3,261
Net income (loss) attributable to the noncontrolling interest		7			(235	)		(366	)
Losses (gains) on derivative hedging activities		166			(841	)		(3,645	)
Changes in operating assets and liabilities:
Other assets		36			140			(39	)
Accounts payable, accrued expenses, other liabilities		249			(1,946	)		685
Due to affiliates		169			(178	)		(2,216	)
Net cash provided by operating activities		9,244			8,491			1,641

Cash flows from investing activities:
Purchases of leases and loans		-			(12,150	)		(182,608	)
Proceeds from leases and loans		133,959			154,352			96,992
Security deposits collected, net of returns		(3,214	)		(3,429	)		(1,130	)
Investment in LEAF Funds JV1		-			-			(1,225	)
Issuance of membership interest in LEAF Funds JV2 to noncontrolling interest		-			-			428
Investment in LEAF Commercial Finance Fund, net of cash acquired		-			-			(7,649	)
Investment in RCF		-			-			(7,545	)
Investment in LEAF Funds JV1, net of cash acquired		-			-			(8,382	)
Net cash provided by (used in) investing activities		130,745			138,773			(111,119	)

Cash flows from financing activities:
Borrowings of debt		90,041			272,622			143,009
Repayment of debt		(221,633	)		(405,605	)		(102,731	)
Decrease (increase) in restricted cash		1,303			2,346			(3,988	)
Increase in deferred financing costs		(1,725	)		(2,912	)		(1,895	)
Acquisition of financial derivatives		-			-			(80	)
Termination of financial derivatives		(2,875	)		(6,439	)		-
Limited partners' capital contributions		-			-			87,203
Offering costs incurred for the sale of partnership units		-			-			(10,421	)
Cash distributions to partners		(5,089	)		(8,431	)		(6,216	)
Redemption of limited partnership units		-			(72	)		(518	)
Net cash (used in) provided by financing activities		(139,978	)		(148,491	)		104,363

Increase (decrease) in cash		11			(1,227	)		(5,115	)
Cash, beginning of period		394			1,621			6,736
Cash, end of period	$	405		$	394		$	1,621

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, 2011

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 maturity period of two years, during which 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 maturity period, the Fund expects to continue to return capital to its partners as those leases and loans mature. Substantially all of the Fund’s leases and loans mature by the end of 2015. The Fund expects to enter its maturity period beginning in October 2014. The Fund will terminate on December 31, 2032, unless sooner dissolved or terminated as provided in the Limited Partnership Agreement.

The Fund acquires diversified portfolios of equipment to finance to end users throughout the United States as well as the District of Columbia and Puerto Rico. The Fund also acquires existing portfolios of equipment subject to existing financings 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 0.85% limited partnership interest in the Fund.

The Fund has evaluated its December 31, 2011 financial statements for subsequent events through the date the financial statements were issued.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Fund and its wholly owned subsidiaries, LEAF Receivables Funding 4, LLC and LEAF 4A SPE, LLC. Effective March 1, 2009, the consolidated financial statements also include LEAF Funds Joint Venture 2, LLC (“LEAF Funds JV2”), in which the Fund acquired and maintains a 98% interest. Effective June 30, 2009, the consolidated financial statements also include Resource Capital Funding, LLC (“RCF”) in which the Fund acquired a 100% interest. Effective August 31, 2009, the consolidated financial statements include LEAF Funding, LLC (“LEAF Funds JV1”) in which the Fund holds an approximate 96% interest. 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.

Reclassification

Certain reclassifications have been made to 2010 and 2009 reported amounts to conform to the current year presentation. In the statement of operations, renewal income of approximately $75,000 and $34,000 was reclassified to ‘Interest on equipment financings’ and ‘Rental income,’ respectively, from ‘Other Income’ for the year ended December 31, 2010. Also, renewal income of approximately $10,000 for the year ended December 31, 2009 that was previously included in ’Other income’ has been reclassified to ‘Interest on equipment financings’ on the statement of operations.

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, the estimated unguaranteed residual values of leased equipment, and the fair value of interest rate swaps and caps. 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.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

Restricted Cash

Restricted cash includes cash being held in reserves by the Fund’s lenders. Restricted cash also includes approximately $5.3 million of customer payments deposited into a lockbox shared with LEAF Financial Corporation and other entities serviced by LEAF Financial Corporation. 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.

Concentration of Credit Risk

As of December 31, 2011, 12% and 15% of the Fund’s commercial finance assets were located in California and New York, respectively.

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.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

The Fund discontinues the recognition of revenue for leases and loans for which payments are more than 90 days past due. As of December 31, 2011 and 2010, the Fund had $26.8 million and $39.6 million, respectively, of leases and loans on non-accrual status.

Derivative Instruments

The Fund recognizes all derivatives at fair value as either assets or liabilities in the consolidated balance sheets. The accounting for subsequent changes in the fair value of these derivatives depends on whether the derivative has been designated and qualified for hedge accounting treatment pursuant to U.S. GAAP.

The Fund terminated its derivative instruments simultaneously with the pricing of the 2011-1 Term Securitization transaction in January 2011, as the 2011-1 Term Securitization is a fixed rate facility and the Fund was no longer exposed to variable interest rate risk. Accordingly, the Fund no longer purchases or owns derivative instruments.

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.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss) and all other changes in the equity of a business during a period from transactions and other events and circumstances from non-owner sources. These changes, other than net income (loss) are referred to as “other comprehensive income (loss)” and for the Fund only includes the Fund’s share of unrealized losses on hedging contracts held by affiliates that the Fund accounts for under the equity method.

Allocation of Partnership Income (Loss) and Cash Distributions

Cash available for distributions, if any, are made monthly as follows: 99% to the limited partners and 1% to the General Partner until the limited partners have received an amount equal to their unpaid cumulative return (8.5%) of their adjusted capital contribution and thereafter.

Net income (loss) for any fiscal period during the reinvestment period is allocated 99% to the limited partners and 1% to the General Partner. Income during the liquidation period, as defined in the Partnership Agreement, will be allocated first to the partners in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts. Thereafter, net income (loss) will be allocated 99% to the limited partners and 1% to the General Partner.

Net Loss Per Limited Partner Unit

Net loss per limited partner unit is computed by dividing net loss allocated to the Fund’s 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, 2011

Recent Accounting Standards

Accounting Standards Issued But Not Yet Effective

The FASB has issued the following guidance that is not yet effective for the Fund as of December 31, 2011:

Comprehensive Income - In June 2011, the FASB issued an amendment to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendment requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. This guidance will become effective for the Fund beginning January 1, 2012.

Fair Value Measurements - In May 2011, the FASB issued an amendment to revise the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the FASB does not intend for the amendments to result in a change in the application of the current requirements. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements, such as specifying that the concepts of highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements such as specifying that, in the absence of a Level 1 input, a reporting entity should apply premiums or discounts when market participants would do so when pricing the asset or liability. This guidance will become effective for the Fund beginning January 1, 2012. Adoption of this amendment will not significantly impact the Fund’s consolidated financial statements.

NOTE 3 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information is as follows (in thousands):

	Years Ended December 31,
	2011		2010		2009
Cash paid for:
Interest	$	9,277	$	22,086	$	16,234

Non-cash investing activities:
Increase in participation in loans	$	-	$	4,121	$	1,730

NOTE 4 – ACQUISITION OF INTERESTS IN POOLS OF LEASE ASSETS

In March 2009, the Fund entered into an agreement with LEAF III to form LEAF Funds JV2, which purchased an interest in LCFF, a VIE, from LEAF Financial. LCFF commenced operations in May 2008 and operates on a fiscal year ending September 30. Through February 2009, LCFF sold subordinated notes to unrelated parties. The notes offering closed in February 2009 having raised $9.4 million.

In June 2009, the Fund acquired a pool of lease assets through the acquisition of RCF from the Fund’s General Partner, which had acquired RCF in June 2009 from an affiliate of the Fund’s General Partner, for the purpose of transferring the same to the Fund.

In November 2008, the Fund and LEAF III formed LEAF Funds JV1, a joint venture which owned a pool of lease assets. The Fund acquired a 49% interest in such joint venture. The purchase price of $11.6 million represented 49% of the adjusted net equity of LEAF Funds JV1 as of the date of acquisition by the Fund.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

The Fund accounted for its investment in the LEAF Funds JV1 under the equity method of accounting since the Fund had the ability to exercise significant influence over operating and financial decisions of this entity. In addition to reflecting its 49% share of LEAF Funds JV1’s income (loss) in the consolidated statements of operations in equity in losses of affiliate, the Fund also recorded its 49% share of LEAF Funds JV1’s management fees and administrative expenses to affiliate. These expenses are reflected in the respective line items on the consolidated statements of operations.

In August 2009, the Fund increased its ownership interest in LEAF Funds JV1 by an additional 47%. As a result of this transaction, LEAF Funds JV1 was consolidated with the results of the Fund effective August 31, 2009.

The following summarizes the impact of the above transactions on the Fund’s consolidated December 31, 2009 balance sheet as of each respective acquisition date (in thousands):

	LCFF			RCF			LEAF Funds JV1
Cash	$	2,024		$	—		$	118
Restricted cash		6,713			4,218			7,916
Investment in commercial finance assets		192,528			90,534			140,538
Debt		(178,211	)		(82,319	)		(126,216	)
Derivative assets		719			—			—
Derivative liability		(5,566	)		(4,431	)		(3,887	)
Subordinated notes		(9,355	)		—			—
Due to affiliates		(8,409	)		(90	)		(1,102	)
Accounts payable and accrued expenses		—			(478	)		(691	)
Deferred financing costs and other assets		1,730			111			1,468
Other		—			—			133
		2,173			7,545			18,277
Less: the Fund’s prior ownership		—			—			(9,777	)
Total purchase price for equity interest		2,173			7,545			8,500
Cash acquired		(2,024	)		—			(118	)
Total purchase price for equity interest, net of cash acquired		149			7,545			8,382
Paydown of due to affiliate balance		7,500			—			—
Total purchase price, net of cash acquired	$	7,649		$	7,545		$	8,382

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

NOTE 5 – INVESTMENT IN LEASES AND LOANS

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

	December 31,
	2011			2010
Direct financing leases (1)	$	56,654		$	108,406
Loans (2)		130,788			231,953
Operating leases		1,645			4,008
Future payment card receivables		261			313
		189,348			344,680
Allowance for credit losses		(4,410	)		(9,854	)
	$	184,938		$	334,826

______________________________________

(1)	The Fund’s direct financing leases are for initial lease terms generally ranging from 24 to 120 months.

(2)	The interest rates on loans generally range from 7% to 14%.

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

	December 31,						December 31,
	2011						2010
	Leases			Loans			Leases			Loans
Total future minimum lease payments	$	58,450		$	145,038		$	117,370		$	266,679
Unearned income		(4,215	)		(11,817	)		(11,228	)		(29,713	)
Residuals, net of unearned residual income (1)		3,256			-			3,578			-
Security deposits		(837	)		(2,433	)		(1,314	)		(5,013	)
	$	56,654		$	130,788		$	108,406		$	231,953

______________________________________

(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,
	2011			2010
Equipment	$	6,998		$	8,549
Accumulated depreciation		(5,353	)		(4,541	)
	$	1,645		$	4,008

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

At December 31, 2011, 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		Operating Leases (1)		Total
2012	$	32,118	$	55,135	$	585	$	87,838
2013		20,117		40,885		82		61,084
2014		4,739		21,716		964		27,419
2015		996		12,205		-		13,201
2016		301		7,069		-		7,370
2017 and thereafter		179		8,028		-		8,207
	$	58,450	$	145,038	$	1,631	$	205,119

______________________________________

(1)	Operating lease amounts as shown are net of the residual value, if any, at the end of the lease term.

NOTE 6 – 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 allowance for credit losses of $4.4 million and $9.9 million as of December 31, 2011 and 2010 (in thousands):

	Years Ended December 31,
	2011					2010
Age of receivable	Investment in leases and loans		%			Investment in leases and loans		%
Current (a)	$	183,187		96.7	%	$	298,521		86.6	%
Delinquent:
31 to 91 days past due		4,118		2.2	%		32,276		9.4	%
Greater than 91 days (b)		2,043		1.1	%		13,883		4.0	%
	$	189,348		100.0	%	$	344,680		100.0	%

______________________________________

(a)

Included in this category are approximately $24.8 million and $25.7 million as of December 31, 2011 and 2010, respectively, of certain revolving real estate loans which are contractually current but are on the cost recovery method due to continued uncertainty as to collectability of future payments due.

(b)	Balances in this age category are collectively evaluated for impairment.

The Fund had $26.8 million and $39.6 million of leases and loans on non-accrual status as of December 31, 2011 and 2010, respectfully. The credit quality of the Fund’s investment in leases and loans as of December 31, 2011 is as follows (in thousands):

	Years Ended December 31,
	2011		2010
Performing	$	162,548	$	305,119
Nonperforming		26,800		39,561
	$	189,348	$	344,680

The Company’s investment in non-performing leases and loans as of December 30, 2011 and 2010 were collectively evaluated for impairment, except for certain revolving credit facilities secured by real estate 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,
	2011			2010			2009
Allowance for credit losses, beginning of year	$	9,854		$	15,634		$	570
Provision for credit losses		15,685			20,785			19,107
Charge-offs		(23,127	)		(28,229	)		(4,321	)
Recoveries		1,998			1,664			278
Allowance for credit losses, end of year	$	4,410		$	9,854		$	15,634

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

The following table presents the allowance for credit losses and the investment in leases and loans, exclusive of any allowance for credit losses, as of December 31, 2011 and 2010, respectively (in thousands):

	Years Ended December 31,
	2011		2010
Ending balance, individually evaluated for impairment		1,550		-
Ending balance, collectively evaluated for impairment		2,860	$	9,854
Balance, end of year	$	4,410	$	9,854

Recorded investment in leases and term loans:
Ending balance, individually evaluated for impairment		24,757		25,678
Ending balance, collectively evaluated for impairment		164,591		319,002
Balance, end of year	$	189,348	$	344,680

NOTE 7 – DEFERRED FINANCING COSTS

As of December 31, 2011 and 2010, deferred financing costs, net include $2.6 million and $3.5 million, 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, 2011 and 2010 was $3.1 million, and $1.8 million, respectively.

NOTE 8 –DEBT

The Fund’s debt consists of the following, net of original issue discount of $7.0 million and $7.2 million at December 31, 2011 and 2010, respectively (in thousands):

	Type	Maturity Date			December 31, 2011 Outstanding Balance (1)		Interest rate per annum	December 31, 2010 Outstanding Balance
Morgan Stanley	Term		(2	)	$	-	One month LIBOR + 3.0%	$	101,855
2011-1 Term Securitization	Term		(2	)		56,205	1.7% to 5.5%		N/A
2010-1 Term Securitization	Term		(3	)		21,825	5.00%		54,638
2010-3 Term Securitization	Term		(4	)		79,881	3.5% to 5.5%		140,482
					$	157,911		$	296,975

______________________________________

(1)

Collateralized by specific leases and loans and related equipment. As of December 31, 2011, $159.3 million of leases and loans and $13.9 million of restricted cash were pledged as collateral under the Fund’s credit facilities.

(2)

The Morgan Stanley term loan matured on August 4, 2010. This facility was terminated and paid off on January 26, 2011 with the proceeds from the 2011-1 Term Securitization, in which 6 classes of asset-backed notes were issued that have varying maturity dates ranging from December 2018 to December 2023. The asset-backed notes totaled $ 96.0 million upon issuance and bear interest at fixed, stated rates ranging from 1.7% to 5.5%.

(3)

Three classes of asset-backed notes were issued, one that matures on October 23, 2016 and two that mature on September 23, 2018, respectively. The asset-backed notes totaled $92.7 million upon issuance on May 18, 2010 and bear interest at a fixed, stated rate of 5% and were issued at an original discount of approximately $6.5 million.

(4)

Five classes of asset-backed notes were issued, one that matures on June 20, 2016 and four that mature on February 20, 2022, respectively. The asset-backed notes totaled $171.4 million upon issuance on August 17, 2010 and bear interest at fixed, stated rates ranging from 3.5% to 5.5% and were issued at an original discount of approximately $3.7 million.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

Average borrowings for the years ended December 31, 2011 and 2010 were $221.1 million and $367.4 million, respectively, at an effective interest rate of 9.5% and 8.9%, respectively.

As of December 31, 2010 the Fund had breached certain financial covenants related to the debt facility with Morgan Stanley. Those breaches were eliminated with the payoff and termination of this facility.

The Fund also terminated a Morgan Stanley/RBS facility on May 18, 2010 and Wells Fargo and UniCredit facilities on August 17, 2010, with the proceeds from the 2010-1 Term Securitization and 2010-3 Term Securitization, respectively. The Morgan Stanley/RBS, Wells Fargo, and UniCredit facilities bore interest at LIBOR plus 7.55%, LIBOR plus 4.1%, and the Commercial Paper rate plus 2.5%, respectively. No amounts remain outstanding or available to us under these facilities as of December 31, 2011.

Debt Repayments: Estimated annual principal payments on the Fund’s aggregate borrowings (presented gross of original issue discount of $7.0 million at December 31, 2011) over the next five years ended December 31, and thereafter, are as follows (in thousands):

December 31, 2012	$	66,838
December 31, 2013		53,299
December 31, 2014		23,147
December 31, 2015		10,904
December 31, 2016		5,890
Thereafter		4,806
	$	164,884

NOTE 9 – SUBORDINATED NOTES PAYABLE

LEAF Commercial Finance Fund, LLC (“LCFF”), a subsidiary of LEAF Funds JV2, has $9.4 million of 8.25% secured promissory notes (the “Notes”) outstanding, which are recourse to LCFF only. The Notes have a six-year term and require interest only payments until their maturity in February 2015. LCFF may call or redeem the Notes, in whole or in part, at any time during the interest only period.

Covenants: The Notes are subject to an interest coverage ratio test, as defined in the Notes agreement. The Fund was in compliance with this covenant as of December 31, 2011.

NOTE 10 – DERIVATIVE INSTRUMENTS

As noted previously, the Fund terminated all of its interest rate swap agreements pursuant to issuance of the 2011-1 Term Securitization, as the 2011-1 Term Securitization is a fixed rate facility and the Fund was no longer exposed to interest rate risk. However, prior to issuance of the 2011-1 Term Securitization, the Fund’s bank debt was on a floating-rate basis, which exposed the Fund to interest rate risk if rates rose because it would increase the Fund’s borrowing costs. In addition, when the Fund acquired assets, it based its pricing in part on the spread it would expect to achieve between the interest rate it would charge its customers and the effective interest cost the Fund would pay when it funds those loans. Increases in interest rates that increase the Fund’s permanent funding costs between the time the assets were originated and the time they were funded could narrow, eliminate or even reverse this spread.

To manage interest rate risk prior to issuance of the 2011-1 Term Securitization, the Fund employed a hedging strategy using derivative financial instruments such as interest rate swaps. The Fund did not designate these swaps as cash flow hedges and accordingly any changes in the fair value of derivative instruments was recognized immediately in the accompanying statement of operations. The Fund did not use derivative financial instruments for trading or speculative purposes. The Fund managed the credit risk of possible counterparty default in these derivative transactions by dealing primarily with counterparties with investment grade ratings.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

At December 31, 2010, the Fund has 12 interest rate swaps that were scheduled to terminate on various dates ranging from November 2011 to November 2020, and 11 interest rate cap agreements that were scheduled to terminate on various dates ranging from June 2011 to February 2016. These contracts, which fixed the Fund’s interest rates on a portion of its variable rate debt, were based on 1 month LIBOR. The following table indicates the notional amounts outstanding and the ranges of fixed and variable rates associated with these contracts as of December 31, 2010 (in thousands):

	2010
Fixed Caps (notional amount)	$	51,099
Fixed Swaps (notional amount)	$	37,552
Range of receive rate		.27%-1.86	%
Range of pay rate		1.0%-5.4	%

The following table indicates the fair value of the derivative contracts as of December 31, 2010 (in thousands):

	Balance Sheet Location	Amount
2010	Derivative assets, at fair value	$	147
2010	Derivative liabilities, at fair value	$	(2,856	)

The following table summarizes the effect of the interest rate swaps on the 2011 and 2010 consolidated statement of operations (in thousands):

	Location of loss recognized in the statement of operations	Amount of loss recognized in the statement of operations
2011	(a)	$	(128	)
2010	(a)	$	(4,787	)

______________________________________

(a)	All changes in fair value of derivatives were realized in Mark to market changes on derivative liabilities on the accompanying statements of operations.

NOTE 11 – FAIR VALUE MEASUREMENT

For cash, receivables and payables, the carrying amounts approximate fair values because of the short term maturity of these instruments. The carrying value of debt approximates fair market value since interest rates of the debt approximate current market rates.

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.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

As discussed in Note 9, subsequent to the 2011-1 Term Securitization all of the funds debt was on as fixed rate basis and the funds interest rate swaps were terminated. Accordingly, there were no assets or liabilities measured at fair value at December 31, 2011. The fair value of interest rate swaps and caps as of December 31, 2010 was as follows (dollars in thousands):

	Fair Value Measurements Using							Assets (Liabilities)
	Level 1		Level 2			Level 3		At Fair Value
Interest rate caps at December 31, 2010	$	-	$	147		$	-	$	147
Interest rate swaps at December 31, 2010	$	-	$	(2,856	)	$	-	$	(2,856	)

NOTE 12 – 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. 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,
	2011		2010		2009
Acquisition fees	$	-	$	241	$	2,965
Management fees		-		2,932		3,945
Administrative expenses		2,450		3,095		2,811
Organization and offering expense allowance		-		-		1,972
Underwriting fees		-		-		8,449

Acquisition Fees. An affiliate of the General Partner is paid a fee for assisting the Fund in acquiring equipment subject to existing equipment leases equal to up to 2% of the purchase price the Fund pays for the equipment or portfolio of equipment subject to existing equipment financing.

Management Fees. The General Partner is paid a subordinated annual asset management fee equal to 4% of gross rental payments for operating leases or 2% for full payout leases or a competitive fee, whichever is less. During the Fund’s five-year investment period, the management fees will be subordinated to the payment to the Fund’s limited partners of a cumulative annual distribution of 8.5% of their capital contributions, as adjusted by distributions deemed to be a return of capital. Beginning August 1, 2009, the General Partner waived asset management fees and subsequently waived all future management fees. Approximately $3.1 million and $1.5 million of management fees were waived for the years ended December 31, 2011 and 2010, respectively, and $4.6 million have been waived on a cumulative basis.

Administrative Expenses. The Fund reimburses the General Partner and its affiliates for certain costs of services and materials used by or for the Fund except those items covered by the above-mentioned fees.

Organization and Offering Expense Allowance and Underwriting Fees. The Fund paid the General Partner and Resource Securities Inc. (formerly Chadwick Securities, Inc.) (“Securities”), a wholly owned subsidiary of RAI, an organization and offering expense allowance based on a sliding scale of the offering proceeds raised. This amount includes reimbursement to Securities to use for the selling dealers’ bona fide accountable due diligence expenses of up to 0.5% of the proceeds of each unit sold by them. These charges were recorded by the Fund as offering costs related to the sale of partnership units.

Securities was paid an underwriting fee of 3% of the offering proceeds for obtaining and managing the group of selling broker-dealers who sold the units in the offering. Securities also received sales commissions of 7% of the proceeds of each unit that they sold. Securities did not sell any units and did not retain sales commissions for the years ended December 31, 2011 and 2010, respectively.

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

Notes To Consolidated Financial Statements - Continued

December 31, 2011

Due to Affiliates. Due to affiliates includes amounts due to the General Partner and LEAF Financial related to acquiring and managing portfolios of equipment, management fees and reimbursed expenses.

Distributions. The General Partner owns a 1% general partner interest and 0.85% limited partner interest in the Fund. The General Partner was paid cash distributions of $51,000 and $80,000 for its general partner interests for the years ended December 31, 2011 and 2010, respectively, and $43,000 and $76,000 for its limited partner interests for the years ended December 31, 2011 and 2010, respectively.

NOTE 13 – 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.

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

None.

ITEM 9A – CONTROLS AND PROCEDURES

Disclosure Controls

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, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control – Integrated Framework. Based upon this assessment, our General Partner’s management concluded that, as of December 31, 2011, our internal control over financial reporting is effective.

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 our General Partner’s management’s report in this annual report.

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, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B – OTHER INFORMATION

On June 8, 2011 we commenced a solicitation of our limited partners seeking their consent to amend the limited partnership agreement. On October 17, 2011, based on the approval of our limited partners, our General Partner amended the Limited Partnership Agreement to allow us to reinvest Distributable Cash into new equipment, leases and loans during the continuance of the Reinvestment Period without first having to pay the Unpaid Cumulative Return.

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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 operation 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 tables sets forth information with respect to the Directors and Executive Officers of our General Partner:

Name	Age	Position
Crit S. DeMent	59	Chief Executive Officer
Jonathan Z. Cohen	41	Director
Jeffrey F. Brotman	48	Director
Robert K. Moskovitz	55	Chief Financial Officer

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.

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 Vice Chairman of the Managing Board of Atlas Pipeline Partners GP, LLC (the general partner of Atlas Pipeline Partners, L.P., a publicly-traded oil and gas pipeline limited partnership) since its formation in 1999, Chairman of the Board of Directors of Atlas Energy GP, LLC (the general partner of Atlas Energy, L.P. (f/k/a Atlas Pipeline Holdings, L.P.), a publicly-traded oil and gas limited partnership) and Vice Chairman of the Board of Directors of Atlas Resource Partners GP, LLC (the general partner of Atlas Resource Partners, L.P., a publicly-traded oil and gas E&P limited partnership) since February 2012. Mr. Cohen was also Vice Chairman of the Board of Directors of Atlas Energy, Inc. ((f/k/a Atlas America, Inc.) a publicly-traded oil and gas company) from September 2000 until February 2011 and Vice Chairman of Atlas Energy Resources, LLC from June 2006 until February 2011.

Jeffrey F. Brotman has been a Director of LEAF Financial since April 2008. 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. DeMent has lengthy and extensive experience in the equipment leasing and finance industry.

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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.

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 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 & Touché (formerly Touché Ross & Co). Mr. Moskovitz holds a B.S. degree in Business Administration from Drexel University.

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 2011.

ITEM 11 – EXECUTIVE COMPENSATION

We do not have, and do not 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 its 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 2,774 limited partners as of December 31, 2011.

(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, 2011, our General Partner owned 10,753, or 0.85%, 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, One Commerce Square, 2005 Market Street, 14th Floor, Philadelphia, Pennsylvania 19103.

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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,
	2011		2010		2009
Acquisition fees	$	-	$	241	$	2,965
Management fees		-		2,932		3,945
Administrative expenses		2,450		3,095		2,811
Organization and offering expense allowance		-		-		1,972
Underwriting fees		-		-		8,449

Acquisition Fees. An affiliate of the General Partner is paid a fee for assisting us in acquiring equipment subject to existing equipment leases equal to up to 2% of the purchase price we pay for the equipment or portfolio of equipment subject to existing equipment financing.

Management Fees. The General Partner is paid a subordinated annual asset management fee equal to 4% of gross rental payments for operating leases or 2% for full payout leases or a competitive fee, whichever is less. During our five-year investment period, the management fees will be subordinated to the payment to our limited partners of a cumulative annual distribution of 8.5% of their capital contributions, as adjusted by distributions deemed to be a return of capital. Beginning August 1, 2009, the General Partner waived asset management fees and subsequently waived all future management fees. Approximately $3.1 million of management fees were waived for the year ended December 31, 2011 and $4.6 million have been waived on a cumulative basis.

Organization and Offering Expense Allowance and Underwriting Fees. The Fund paid the General Partner and Resource Securities, Inc. (formerly Chadwick Securities Inc.) (“Securities”), a wholly owned subsidiary of RAI, an organization and offering expense allowance based on a sliding scale of the offering proceeds raised. This amount includes reimbursement to Securities to use for the selling dealers’ bona fide accountable due diligence expenses of up to 0.5% of the proceeds of each unit sold by them. These charges were recorded by the Fund as offering costs related to the sale of partnership units.

Due to Affiliates. Due to affiliates includes amounts due to the General Partner and LEAF Financial related to acquiring and managing portfolios of equipment, management fees and reimbursed expenses.

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 auditors, Grant Thornton, LLP for the years ended December 31, 2011 and 2010 for professional services rendered were $187,000 and $228,000, respectively.

Audit-Related Fees. We did not incur fees in 2011 for other services not included above.

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Tax Fees. We did not incur fees in 2011 for other services not included above.

All Other Fees. We did not incur fees in 2011 for other services not included above.

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.

PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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

Financial Statements

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

Financial Statement Schedules

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

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. (6)
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 (7)
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, 2011 and December 31, 2010; (ii) the Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009; (iii) the Consolidated Statements of Changes in Partners’ (Deficit) Capital for the years ended December 31, 2011, 2010 and 2009; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009; and, (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text.

(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-K 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/A 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/A for the quarter ended September 30, 2010 and by this reference incorporated herein.

(6)	Filed previously as an exhibit to a Current Report on Form 8-K Report dated October 17, 2011.

(7)	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.

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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 28, 2012	By:	/s/ CRIT S. DEMENT
		Crit S. DeMent
		Chief Executive Officer

March 28, 2012	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 28, 2012
Crit S. Dement

/s/ Robert K. Moskovitz	Chief Financial Officer of the General Partner	March 28, 2012
Robert K. Moskovitz	(Principal Accounting and Financial Officer)

/s/ Jonathan Z. Cohen	Director of the General Partner	March 28, 2012
Jonathan Z. Cohen

/s/ Jeffrey F. Brotman	Director of the General Partner	March 28, 2012
Jeffrey F. Brotman

LEAF Equipment Finance Fund 4, L.P. - FORM 10-K - March 28, 2012

Attached files

LEAF Equipment Finance Fund 4, L.P. Reports