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EX-31.1 - CERTIFICATION - ICON ECI FUND FIFTEEN, L.P.v359940_ex31-1.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[x]   QUARTERTLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended

September 30, 2013

 

or

 

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

 

 

 

 

For the transition period from

 

to

 

 

Commission File Number:

000-54604

 

ICON ECI Fund Fifteen, L.P.

(Exact name of registrant as specified in its charter)

 

Delaware

 

27-3525849

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

3 Park Avenue, 36th Floor

 

 

New York, New York

 

10016

(Address of principal executive offices)

 

(Zip Code)

(212) 418-4700

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ    No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ    No

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.

 

 

Large accelerated filer

Accelerated filer 

Non-accelerated filer  (Do not check if a smaller reporting company)

Smaller reporting company  þ 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

    Yes     No þ 

Number of outstanding limited partnership interests of the registrant on November 4, 2013 is 197,489.

 

             

 

 


 

 

 

ICON ECI Fund Fifteen, L.P.

Table of Contents

 

 

Page

PART I – FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

1

2

3

4

6

Item 2. General Partner’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3. Quantitative and Qualitative Disclosures About Market Risk

23

Item 4. Controls and Procedures

23

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

24

Item 1A. Risk Factors

24

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3. Defaults Upon Senior Securities

24

Item 4. Mine Safety Disclosures

24

Item 5. Other Information  

24

Item 6. Exhibits

25

Signatures

26

   
   

 


 

 

Table of contents

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1. Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Consolidated Balance Sheets

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

 

2013

 

2012

 

 

 

 

 

(unaudited)

 

 

 

Assets

 

Cash

$

 18,032,863 

 

$

 37,990,933 

 

Net investment in notes receivable

 

 66,907,941 

 

 

 43,136,956 

 

Leased equipment at cost (less accumulated depreciation of

 

 

 

 

 

 

 

$10,243,551 and $2,167,417, respectively)

 

 103,053,290 

 

 

 98,872,792 

 

Net investment in finance leases

 

 55,036,721 

 

 

 25,126,700 

 

Investment in joint venture

 

 12,801,025 

 

 

 - 

 

Deferred charges

 

 - 

 

 

 832,164 

 

Other assets

 

 21,976,587 

 

 

 2,314,802 

Total assets

$

 277,808,427 

 

$

 208,274,347 

Liabilities and Equity

Liabilities:

 

Non-recourse long-term debt

$

 92,771,074 

 

$

 69,250,000 

 

Due to General Partner and affiliates, net

 

 2,375,933 

 

 

 3,041,918 

 

Accrued expenses and other liabilities

 

 9,394,673 

 

 

 6,059,960 

 

 

Total liabilities

 

 104,541,680 

 

 

 78,351,878 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

Equity:

 

Partners' equity:

 

 

 

 

 

 

 

Limited partners

 

 158,953,117 

 

 

 123,633,993 

 

 

General Partner

 

 (162,189) 

 

 

 (106,892) 

 

 

 

Total partners' equity

 

 158,790,928 

 

 

 123,527,101 

 

Noncontrolling interests

 

 14,475,819 

 

 

 6,395,368 

 

 

 

Total equity

 

 173,266,747 

 

 

 129,922,469 

Total liabilities and equity

$

 277,808,427 

 

$

 208,274,347 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

1 


 

 

Table of contents

 

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Consolidated Statements of Operations

(unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

September 30,

 

 

 

 

 

 

2013

 

2012

 

2013

 

2012

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

$

 3,162,950 

 

$

 1,816,186 

 

$

 8,258,748 

 

$

 3,599,601 

 

Rental income

 

 4,579,825 

 

 

 1,234,689 

 

 

 13,416,142 

 

 

 1,250,016 

 

Income from investment in joint venture

 

 338,495 

 

 

 - 

 

 

 503,817 

 

 

 - 

 

Other income

 

 490,698 

 

 

 9,747 

 

 

 569,292 

 

 

 22,546 

 

 

 

Total revenue

 

 8,571,968 

 

 

 3,060,622 

 

 

 22,747,999 

 

 

 4,872,163 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 446,978 

 

 

 108,932 

 

 

 904,846 

 

 

 189,153 

 

Administrative expense reimbursements

 

 1,003,109 

 

 

 937,778 

 

 

 3,046,339 

 

 

 2,731,434 

 

General and administrative

 

 249,192 

 

 

 275,614 

 

 

 884,264 

 

 

 656,330 

 

Interest

 

 1,258,106 

 

 

 350,780 

 

 

 3,537,798 

 

 

 774,517 

 

Depreciation

 

 2,763,166 

 

 

 896,098 

 

 

 8,076,134 

 

 

 907,414 

 

Credit loss

 

 - 

 

 

 - 

 

 

 12,530 

 

 

 1,984,044 

 

 

 

Total expenses

 

 5,720,551 

 

 

 2,569,202 

 

 

 16,461,911 

 

 

 7,242,892 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 2,851,417 

 

 

 491,420 

 

 

 6,286,088 

 

 

 (2,370,729) 

 

Less: net income (loss) attributable to noncontrolling interests

 

 429,317 

 

 

 92,650 

 

 

 1,080,932 

 

 

 (134,828) 

Net income (loss) attributable to Fund Fifteen

$

 2,422,100 

 

$

 398,770 

 

$

 5,205,156 

 

$

 (2,235,901) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Fund Fifteen allocable to:

 

 

 

 

 

 

 

 

 

 

 

 

Limited partners

$

 2,397,879 

 

$

 394,782 

 

$

 5,153,105 

 

$

 (2,213,542) 

 

General Partner

 

 24,221 

 

 

 3,988 

 

 

 52,051 

 

 

 (22,359) 

 

 

 

 

 

 

$

 2,422,100 

 

$

 398,770 

 

$

 5,205,156 

 

$

 (2,235,901) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of limited partnership

 

 

 

 

 

 

 

 

 

 

 

 

interests outstanding

 

 197,535 

 

 

 111,412 

 

 

 182,709 

 

 

 81,938 

Net income (loss) attributable to Fund Fifteen per weighted average

 

 

 

 

 

 

 

 

 

 

 

 

limited partnership interests outstanding

$

 12.14 

 

$

 3.54 

 

$

 28.20 

 

$

 (27.01) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

2 


 

 

Table of contents

 

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Consolidated Statements of Changes in Equity

 

 

 

 

 

Partners' Equity

 

 

 

 

 

 

 

 

 

Limited

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

Partnership

 

 

Limited

 

 

General

 

 

Partners'

 

 

Noncontrolling

 

 

Total

 

 

 

Interests

 

 

Partners

 

 

Partner

 

 

Equity

 

 

Interests

 

 

Equity

Balance, December 31, 2012

 150,972 

 

$

 123,633,993 

 

$

 (106,892) 

 

$

 123,527,101 

 

$

 6,395,368 

 

$

 129,922,469 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 - 

 

 

 1,000,187 

 

 

 10,103 

 

 

 1,010,290 

 

 

 236,391 

 

 

 1,246,681 

 

Proceeds from sale of limited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

partnership interests

 22,643 

 

 

 22,464,607 

 

 

 - 

 

 

 22,464,607 

 

 

 - 

 

 

 22,464,607 

 

Sales and offering expenses

 - 

 

 

 (2,647,053) 

 

 

 - 

 

 

 (2,647,053) 

 

 

 - 

 

 

 (2,647,053) 

 

Cash distributions

 - 

 

 

 (3,048,086) 

 

 

 (30,789) 

 

 

 (3,078,875) 

 

 

 (176,796) 

 

 

 (3,255,671) 

 

Investment by noncontrolling interests

 - 

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 3,902,480 

 

 

 3,902,480 

Balance, March 31, 2013 (unaudited)

 173,615 

 

 

 141,403,648 

 

 

 (127,578) 

 

 

 141,276,070 

 

 

 10,357,443 

 

 

 151,633,513 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 - 

 

 

 1,755,039 

 

 

 17,727 

 

 

 1,772,766 

 

 

 415,224 

 

 

 2,187,990 

 

Proceeds from sale of limited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

partnership interests

 23,982 

 

 

 23,782,706 

 

 

 - 

 

 

 23,782,706 

 

 

 - 

 

 

 23,782,706 

 

Sales and offering expenses

 - 

 

 

 (2,710,863) 

 

 

 - 

 

 

 (2,710,863) 

 

 

 - 

 

 

 (2,710,863) 

 

Cash distributions

 - 

 

 

 (3,600,519) 

 

 

 (36,369) 

 

 

 (3,636,888) 

 

 

 (253,037) 

 

 

 (3,889,925) 

 

Investment by noncontrolling interests

 - 

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 4,361,088 

 

 

 4,361,088 

Balance, June 30, 2013 (unaudited)

 197,597 

 

 

 160,630,011 

 

 

 (146,220) 

 

 

 160,483,791 

 

 

 14,880,718 

 

 

 175,364,509 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 - 

 

 

 2,397,879 

 

 

 24,221 

 

 

 2,422,100 

 

 

 429,317 

 

 

 2,851,417 

 

Redemptions

 (108) 

 

 

 (95,909) 

 

 

 - 

 

 

 (95,909) 

 

 

 - 

 

 

 (95,909) 

 

Cash distributions

 

 

 

 (3,978,864) 

 

 

 (40,190) 

 

 

 (4,019,054) 

 

 

 (905,249) 

 

 

 (4,924,303) 

 

Investment by noncontrolling interests

 - 

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 71,033 

 

 

 71,033 

Balance, September 30, 2013 (unaudited)

 197,489 

 

$

 158,953,117 

 

$

 (162,189) 

 

$

 158,790,928 

 

$

 14,475,819 

 

$

 173,266,747 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

3 


 

 

Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

2013

 

2012

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

$

 6,286,088 

 

$

 (2,370,729) 

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Finance income

 

 1,016,587 

 

 

 270,466 

 

 

Credit loss

 

 12,530 

 

 

 1,984,044 

 

 

Depreciation

 

 8,076,134 

 

 

 907,414 

 

 

Income from investment in joint venture

 

 (503,817) 

 

 

 - 

 

 

Interest expense on non-recourse financing paid directly to lenders by lessees

 

 17,538 

 

 

 - 

 

 

Interest expense from amortization of debt financing costs

 

 172,673 

 

 

 36,287 

 

 

Interest expense from amortization of seller's credit

 

 212,172 

 

 

 - 

 

 

Other financial gain

 

 (467,573) 

 

 

 - 

 

 

Paid-in-kind interest

 

 123,579 

 

 

 269,133 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other assets

 

 (1,112,846) 

 

 

 (719,853) 

 

 

 

Deferred revenue

 

 131,403 

 

 

 11,408 

 

 

 

Due to General Partner and affiliates, net

 

 (681,990) 

 

 

 158,237 

 

 

 

Accrued expenses and other liabilities

 

 3,002,917 

 

 

 307,726 

Net cash provided by operating activities

 

 16,285,395 

 

 

 854,133 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of equipment

 

 (22,034,131) 

 

 

 (34,632,279) 

 

Principal received on finance leases

 

 2,441,743 

 

 

 826,190 

 

Investment in notes receivable

 

 (49,612,749) 

 

 

 (33,637,772) 

 

Principal received on notes receivable

 

 6,594,389 

 

 

 740,910 

 

Investment in joint venture

 

 (12,297,208) 

 

 

 - 

Net cash used in investing activities

 

 (74,907,956) 

 

 

 (66,702,951) 

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of non-recourse long-term debt

 

 (5,642,500) 

 

 

 (625,000) 

 

Proceeds from non-recourse long-term debt

 

 6,413,574 

 

 

 17,500,000 

 

Repayment of note payable issued by joint venture

 

 - 

 

 

 (642,600) 

 

Sale of limited partnership interests

 

 46,247,313 

 

 

 94,143,365 

 

Sales and offering expenses paid

 

 (4,282,689) 

 

 

 (9,119,281) 

 

Deferred charges paid

 

 (240,000) 

 

 

 (934,151) 

 

Debt financing costs

 

 - 

 

 

 (176,250) 

 

Investment by noncontrolling interests

 

 8,334,601 

 

 

 890,705 

 

Distributions to noncontrolling interests

 

 (1,335,082) 

 

 

 (249,461) 

 

Redemption of additional member shares

 

 (95,909) 

 

 

 - 

 

Cash distributions to partners

 

 (10,734,817) 

 

 

 (4,339,861) 

Net cash provided by financing activities

 

 38,664,491 

 

 

 96,447,466 

Net (decrease) increase in cash

 

 (19,958,070) 

 

 

 30,598,648 

Cash, beginning of period

 

 37,990,933 

 

 

 5,383,978 

Cash, end of period

$

 18,032,863 

 

$

 35,982,626 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

4 


 

 

Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

 

Nine Months Ended September 30,

 

 

2013

 

2012

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

$

 2,473,488 

 

$

 134,086 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Organizational and offering expenses due to Investment Manager

$

 - 

 

$

 8,193 

 

Organizational and offering expenses charged to equity

$

 1,075,227 

 

$

 922,465 

 

Reclassification of vessel to net investment in finance leases

$

 - 

 

$

 9,625,000 

 

Debt financing costs paid by noncontrolling interest

$

 - 

 

$

 117,500 

 

Acquisition fees due to Investment Manager

$

 - 

 

$

 1,025,000 

 

Equipment purchased with non-recourse long-term debt paid directly to seller

$

 22,750,000 

 

$

 - 

 

Equipment purchased with subordinated non-recourse financing provided by seller

$

 (4,488,041) 

 

$

 - 

 

Extinguishment of minimum rents receivable on net investment in finance lease

$

 4,488,041 

 

$

 - 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5 


 

Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

(1)           Organization 

 

ICON ECI Fund Fifteen, L.P. (the “Partnership”) was formed on September 23, 2010 as a Delaware limited partnership and was initially capitalized with $1,001. The Partnership’s offering period commenced on June 6, 2011 and ended on June 6, 2013, at which point it entered its operating period. The Partnership will continue until December 31, 2025, unless terminated sooner.

 

With the proceeds from limited partnership interests (“Interests”) sold, the Partnership (i) primarily originates or acquires a diverse pool of investments in domestic and global companies, which investments are primarily structured as debt and debt-like financings (such as loans and leases) that are collateralized by equipment and other corporate infrastructure (collectively, “Capital Assets”) utilized by such companies to operate their businesses, as well as other strategic investments in or collateralized by Capital Assets that ICON GP 15, LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner”), believes will provide the Partnership with a satisfactory, risk-adjusted rate of return, (ii) pays fees and expenses, and (iii) establishes a cash reserve. The General Partner will make investment decisions on behalf of and manage the business of the Partnership. Additionally, the General Partner has a 1% interest in the profits, losses, cash distributions and liquidation proceeds of the Partnership.

 

Partners’ capital accounts are increased for their initial capital contribution plus their proportionate share of earnings and decreased by their proportionate share of losses and distributions. Profits, losses, cash distributions and liquidation proceeds are allocated 99% to the limited partners and 1% to the General Partner until the aggregate amount of cash distributions paid to limited partners equals the sum of the limited partners’ aggregate capital contributions, plus an 8% cumulative annual return on their aggregate unreturned capital contributions, compounded daily. After such time, distributions will be allocated 90% to the limited partners and 10% to the General Partner.

 

(2)      Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements of the Partnership have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Quarterly Reports on Form 10-Q. In the opinion of the General Partner, all adjustments, which are of a normal recurring nature, considered necessary for a fair presentation have been included.  These consolidated financial statements should be read together with the consolidated financial statements and notes included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2012.  The results for the interim period are not necessarily indicative of the results for the full year.

 

Credit Quality of Notes Receivable and Finance Leases and Credit Loss Reserve

ICON Capital, LLC, a Delaware limited liability company formerly known as ICON Capital Corp. and the investment manager of the Partnership (the “Investment Manager”), weighs all credit decisions based on a combination of external credit ratings as well as internal credit evaluations of all borrowers. A borrower’s credit is analyzed using those credit ratings as well as the borrower’s financial statements and other financial data deemed relevant. 

 

As the Partnership’s financing receivables, generally finance leases and notes receivable, are limited in number, the Investment Manager is able to estimate the credit loss reserve based on a detailed analysis of each financing receivable as opposed to using portfolio-based metrics and credit loss reserve.  Financing receivables are analyzed quarterly and categorized as either performing or non-performing based on payment history.  If a financing receivable becomes non-performing due to a borrower’s missed scheduled payments or failed financial covenants, the Investment Manager analyzes whether a credit loss reserve should be established or whether the financing receivable should be restructured.  Material events would be specifically disclosed in the discussion of each financing receivable held.

 

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Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

Notes receivable are generally placed in a non-accrual status when payments are more than 90 days past due. Additionally, the Investment Manager periodically reviews the creditworthiness of companies with payments outstanding less than 90 days and based upon the Investment Manager’s judgment, these accounts may be placed in a non-accrual status.

 

In accordance with the cost recovery method, payments received on non-accrual loans are applied to principal if there is doubt regarding the ultimate collectability of principal. If collection of the principal of non-accrual loans is not in doubt, interest income is recognized on a cash basis. Loans in non-accrual status may not be restored to accrual status until all delinquent payments have been received, and the Partnership believes recovery of the remaining unpaid receivable is probable.

 

The Partnership charges off a loan in the period that it is deemed uncollectible and records a reduction in the allowance for loan losses and the balance of the loan.

 

(3)           Net Investment in Notes Receivable

Net investment in notes receivable consisted of the following:

 

 

September 30,

 

December 31,

 

 

2013

 

2012

 

Principal outstanding

$

 64,797,480 

 

$

 42,538,932 

 

Initial direct costs

 

 5,059,107 

 

 

 3,282,650 

 

Deferred fees

 

 (976,116) 

 

 

 (724,626) 

 

Credit loss reserve

 

 (1,972,530) 

 

 

 (1,960,000) 

 

        Net investment in notes receivable

$

 66,907,941 

 

$

 43,136,956 

 

 

 

 

 

 

 

 

On March 9, 2012, the Partnership made a term loan in the amount of $5,000,000 to Kanza Construction, Inc. The loan bears interest at 13% per year and is for a period of 60 months. The loan is secured by all of Kanza’s assets. As a result of Kanza’s unexpected financial hardship and failure to meet certain payment obligations, the loan was placed on non-accrual status and the Partnership recorded a credit loss reserve of $1,960,000 during the year ended December 31, 2012 based on the estimated value of the recoverable collateral. During the nine months ended September 30, 2013, the Partnership recorded an additional credit loss reserve of approximately $13,000 based on cash proceeds of approximately $503,000 received from the sale of the collateral. No finance income was recognized on the impaired loan during the nine months ended September 30, 2013.  As of September 30, 2013, the Partnership has fully reserved the remaining balance of the loan of $1,972,530. The Partnership continues to pursue all legal remedies to obtain payment.

 

On March 1, 2013, the Partnership made a secured term loan in the amount of $7,200,000 to Heniff Transportation Systems, LLC and Heniff TTL, LLC (collectively, “Heniff”).  The loan bears interest at 12.25% per year and is for a period of 42 months.  The loan is secured by, among other things, a second priority security interest in Heniff’s assets, including tractors and stainless steel tank trailers.

 

On April 5, 2013, the Partnership made a secured term loan in the amount of $13,500,000 to Lubricating Specialties Company (“LSC”). The loan bears interest at 13.5% per year and matures on August 1, 2018. The loan is secured by, among other things, a second priority security interest in LSC’s liquid storage tanks, blending lines, packaging equipment, accounts receivable and inventory.

 

On July 10, 2013, Vintage Partners, LLC (“Vintage Partners”) satisfied its obligation related to a secured term loan scheduled to mature on July 10, 2017 by making a prepayment of approximately $5,690,000 to the Partnership, comprised of all outstanding principal and paid-in-kind and unpaid interest.

On July 12, 2013, the Partnership made a secured term loan in the amount of £4,000,000 (US$6,001,200) to Quattro Plant Limited (“Quattro”). The loan bears interest at 15% per year and is for a period of 36 months. The loan is secured by a second priority security interest in all of Quattro’s rail support construction equipment, any other existing or future assets owned by Quattro, and its accounts receivable.

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Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

On September 25, 2013, the Partnership, together with a third-party creditor, made a senior secured term loan (the “Loan”) to Asphalt Carrier Shipping Company Limited (“Asphalt”), of which the Partnership’s share is $1,800,000 (the “Partnership Loan”). The Partnership Loan bears interest at 15.5% per year and matures on December 31, 2018. The Loan is secured by a first priority security interest in Asphalt’s vessel, earnings from the vessel and the equity interests of Asphalt. In accordance with the loan agreement, proceeds from the repayment of the Loan and enforcement of any security interest will first be provided to the third-party creditor and then to the Partnership.

(4)       Leased Equipment at Cost

Leased equipment at cost consisted of the following:

 

 

 

September 30,

 

December 31,

 

 

2013

 

2012

 

Marine vessels

$

 81,651,931 

 

$

 81,651,931 

 

Mining equipment

 

 19,388,278 

 

 

 19,388,278 

 

Oilfield services equipment

 

 12,256,632 

 

 

 - 

 

        Leased equipment at cost

 

 113,296,841 

 

 

 101,040,209 

 

Less: accumulated depreciation

 

 10,243,551 

 

 

 2,167,417 

 

        Leased equipment at cost, less accumulated depreciation

$

 103,053,290 

 

$

 98,872,792 

 

On February 15, 2013, the Partnership, through a joint venture owned 58% by the Partnership, 38% by ICON Equipment and Corporate Infrastructure Fund Fourteen, L.P. (“Fund Fourteen”) and 4% by ICON ECI Partners L.P. (“ECI Partners”), each an entity also managed by the Investment Manager, purchased onshore oil field services equipment from Go Frac, LLC (“Go Frac”) for approximately $11,804,000. Simultaneously, the equipment was leased back to Go Frac for a period of 45 months, expiring on November 30, 2016. On July 19, 2013, the joint venture purchased additional onshore oil field services equipment from Go Frac for approximately $165,000 which was leased back to Go Frac for a period of 45 months, expiring on April 30, 2017.

On September 9, 2013, the Partnership, through a joint venture owned 96% by the Partnership and 4% by ECI Partners, assigned the remaining 25 monthly rental payments totaling $6,812,019 due to the joint venture from Murray Energy Corporation and certain of its affiliates (collectively, “Murray”) to People's Capital and Leasing Corp. (“People’s Capital”) in exchange for People’s Capital making a $6,413,574 non-recourse loan to the joint venture which matures on October 1, 2015 and bears interest at a rate of 5.75% per year.

Depreciation expense was $2,763,166 and $8,076,134 for the three and nine months ended September 30, 2013, respectively. Depreciation expense was $896,098 and $907,414 for the three and nine months ended September 30, 2012, respectively.

(5)              Net Investment in Finance Leases

Net investment in finance leases consisted of the following:

 

 

 

September 30,

 

December 31,

 

 

2013

 

2012

 

Minimum rents receivable

$

 74,354,360 

 

$

 38,214,311 

 

Estimated residual values

 

 328,192 

 

 

 328,192 

 

Initial direct costs

 

 1,341,465 

 

 

 589,698 

 

Unearned income

 

 (20,987,296) 

 

 

 (14,005,501) 

 

        Net investment in finance leases

$

 55,036,721 

 

$

 25,126,700 

 

 

 

 

 

 

 

 

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Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

On April 2, 2013, the Partnership, through two joint ventures each owned 55% by the Partnership and 45% by Fund Fourteen, purchased two chemical tanker vessels, the Ardmore Capella and the Ardmore Calypso, from wholly-owned subsidiaries of Ardmore Shipholding Limited (“Ardmore”).  Simultaneously, the vessels were bareboat chartered back to the Ardmore subsidiaries for a period of five years.  The aggregate purchase price for the vessels was funded by $8,850,000 in cash, $22,750,000 of financing through non-recourse long-term debt and $5,500,000 of financing through subordinated, non-interest-bearing seller’s credits.

 

(6)     Investment in Joint Venture

 

On May 15, 2013, a joint venture owned 40% by the Partnership, 39% by ICON Leasing Fund Eleven, LLC (“Fund Eleven”) and 21% by ICON Leasing Fund Twelve, LLC (“Fund Twelve”), each an entity also managed by the Investment Manager, purchased a portion of the subordinated credit facility for Jurong Aromatics Corporation Pte. Ltd. ("JAC") from Standard Chartered Bank (“Standard Chartered”). The aggregate purchase price for the joint venture’s portion of the subordinated credit facility was $28,462,500. The subordinated credit facility bears interest at rates ranging between 12.5% and 15% per year and matures in January 2021. The subordinated credit facility is secured by a second priority security interest in all of JAC’s assets, which include, among other things, all equipment, plant and machinery associated with a condensate splitter and aromatics complex. The Partnership’s contribution to the joint venture was approximately $12,297,000.

 

(7)      Non-Recourse Long-Term Debt

 

As of September 30, 2013 and December 31, 2012, the Partnership had $92,771,074 and $69,250,000 of non-recourse long-term debt, respectively, with maturity dates ranging from March 31, 2018 to December 31, 2020, and interest rates ranging from 4.03% to 4.997% per year.

 

At September 30, 2013, the Partnership was in compliance with all covenants related to its non-recourse long-term debt.

 

(8)      Revolving Line of Credit, Recourse

On May 10, 2011, the Partnership entered into an agreement with California Bank & Trust (“CB&T”) for a revolving line of credit of up to $5,000,000 (the “Facility”), which is secured by all of the Partnership’s assets not subject to a first priority lien. Amounts available under the Facility are subject to a borrowing base that is determined, subject to certain limitations, based on the present value of the future receivables under certain loans and lease agreements in which the Partnership has a beneficial interest.

 

The Facility has been extended through March 31, 2015 and increased to $10,000,000. The interest rate for general advances under the Facility is CB&T’s prime rate. The Partnership may elect to designate up to five advances on the outstanding principal balance of the Facility to bear interest at the London Interbank Offered Rate (“LIBOR”) plus 2.5% per year. In all instances, borrowings under the Facility are subject to an interest rate floor of 4.0% per year. In addition, the Partnership is obligated to pay an annualized 0.5% fee on unused commitments under the Facility. At September 30, 2013, there were no obligations outstanding under the Facility and the Partnership had $10,000,000 available under the Facility pursuant to the borrowing base.

 

At September 30, 2013, the Partnership was in compliance with all covenants related to the Facility.

 

(9)    Transactions with Related Parties

The Partnership paid distributions to the General Partner of $40,190 and $107,348 for the three and nine months ended September 30, 2013, respectively. The Partnership paid distributions to the General Partner of $20,608 and $43,390 for the three and nine months ended September 30, 2012, respectively. Additionally, the General Partner’s interest in the net income attributable to the Partnership was $24,221 and $52,051 for the three and nine months ended September 30, 2013, respectively. The General Partner’s interest in the net income (loss) attributable to the Partnership was $3,988 and $(22,359) for the three and nine months ended September 30, 2012, respectively.

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Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

 

Fees and other expenses paid or accrued by the Partnership to the General Partner or its affiliates were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

 

 

September 30,

 

September 30,

 

 Entity

 Capacity

 

 Description

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

Organizational and

 

 

 

 

 

 

 

 

 

 

offering expense

 

 

 

 

 

 

 

 

 

 

 

 

 

ICON Capital, LLC

Investment Manager

 

reimbursements (1)

 

$

 - 

 

$

 238,830 

 

$

 243,063 

 

$

 770,301 

 

ICON Securities, LLC

Dealer-Manager

 

Dealer-manager fees (2)

 

 

 - 

 

 

 895,238 

 

 

 1,319,845 

 

 

 2,776,414 

 

ICON Capital, LLC

Investment Manager

 

Acquisition fees (3)

 

 

 3,315,083 

 

 

 1,986,966 

 

 

 6,734,975 

 

 

 2,898,378 

 

ICON Capital, LLC

Investment Manager

 

Management fees (4)

 

 

 446,978 

 

 

 108,932 

 

 

 904,846 

 

 

 189,153 

 

 

 

 

 

 

Administrative expense

 

 

 

 

 

 

 

 

 

 

 

 

 

ICON Capital, LLC

Investment Manager

 

reimbursements (4)

 

 

 1,003,109 

 

 

 937,778 

 

 

 3,046,339 

 

 

 2,731,434 

 

Fund Fourteen

Noncontrolling interest

 

Interest expense (4)

 

 

 101,279 

 

 

 104,305 

 

 

 295,018 

 

 

 345,693 

 

 

 

 

$

 4,866,449 

 

$

 4,272,049 

 

$

 12,544,086 

 

$

 9,711,373 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)  Amount capitalized and amortized to partners' equity. 

 

(2)  Amount charged directly to partners' equity. 

 

(3)  Amount capitalized and amortized to operations.

 

(4)  Amount charged directly to operations. 

 

 At September 30, 2013, the Partnership had a net payable of $2,375,933 due to the General Partner and its affiliates that primarily consisted of a payable of approximately $2,566,000 due to Fund Fourteen related to its noncontrolling interest in the Lewek Ambassador. At December 31, 2012, the Partnership had a net payable of $3,041,918 due to the General Partner and its affiliates that primarily consisted of a payable of approximately $2,442,000 due to Fund Fourteen related to its noncontrolling interest in the Lewek Ambassador and administrative expense reimbursements.

 

(10)       Fair Value Measurements

Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

 

·         Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

·         Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

·         Level 3: Pricing inputs that are generally unobservable and are supported by little or no market data.

 

Assets and Liabilities for which Fair Value is Disclosed

 

Certain of the Partnership’s financial assets and liabilities, which include fixed-rate notes receivable, fixed-rate non-recourse long-term debt and a seller’s credit, in which fair value is required to be disclosed, were valued using inputs that are generally unobservable and supported by little or no market data and are therefore classified within Level 3. As permitted by the accounting pronouncements, the Partnership uses projected cash flows for fair value measurements of these financial assets and liabilities. Fair value information with respect to certain of the Partnership’s other assets and liabilities is not separately provided since (i) the current accounting pronouncements do not require fair value disclosures of lease arrangements and (ii)

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Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

the carrying value of financial assets, other than lease-related investments, and the recorded value of recourse debt approximate fair value due to their short-term maturities and variable interest rates.

 

The estimated fair value of the Partnership’s fixed-rate notes receivable, fixed-rate non-recourse long-term debt and seller’s credit was based on the discounted value of future cash flows related to the loans based on recent transactions of this type. Principal outstanding on fixed-rate notes receivable was discounted at rates ranging between 12.25% and 17% per year. Principal outstanding on fixed-rate non-recourse long-term debt and the seller’s credit was discounted at a rate of 5.25% per year.

 

 

 

September 30, 2013

 

 

 

Carrying

 

Fair Value

 

 

 

Amount

 

(Level 3)

 

Principal outstanding on fixed-rate notes receivable

$

 62,824,950 

 

$

 63,205,650 

 

 

 

 

 

 

 

 

Principal outstanding on fixed-rate non-recourse long-term debt

$

 92,771,074 

 

$

 92,124,167 

 

 

 

 

 

 

 

 

Seller's credit

$

 5,886,022 

 

$

 5,331,275 

 

(11)   Commitments and Contingencies

At the time the Partnership acquires or divests of its interest in Capital Assets, the Partnership may, under very limited circumstances, agree to indemnify the seller or buyer for specific contingent liabilities.  The General Partner believes that any liability of the Partnership that may arise as a result of any such indemnification obligations will not have a material adverse effect on the consolidated financial condition or results of operations of the Partnership taken as a whole.

 

In connection with certain investments, the Partnership is required to maintain restricted cash balances with certain banks. Restricted cash of approximately $1,207,000 and $500,000 is presented within other assets in the Partnership’s consolidated balance sheets at September 30, 2013 and December 31, 2012, respectively.

 

The Partnership has entered into a remarketing agreement with a third party. Residual proceeds received in excess of specific amounts will be shared with this third party in accordance with the terms of the remarketing agreement. The present value of the obligation related to this agreement at September 30, 2013 and December 31, 2012 was approximately $121,000 and $108,000, respectively, and is included as a component of interest expense.

 

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Table of contents

ICON ECI Fund Fifteen, L.P.

(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements

September 30, 2013

(unaudited)

 

 

(12)   Subsequent Events

             

On October 4, 2013, the Partnership provided a $17,500,000 first drawdown on a secured term loan facility of up to $40,000,000 to Varada Ten Pte. Ltd. (“Varada”). The facility is comprised of three loans, each to be used toward the purchase or refinancing of a respective vessel. The facility bears interest at 15% per year and is for a period of approximately 96 months, depending on the delivery and acceptance dates of two of the vessels and the drawdown date with respect to the third vessel. Each loan is secured by a first priority security interest in and earnings from the respective vessel. On September 30, 2013, the Partnership deposited $17,500,000 into a third-party escrow account in order to position the funds in anticipation of an overseas closing. At September 30, 2013, the escrowed amount is included in other assets on the consolidated balance sheets.

On October 4, 2013, Platinum Energy Solutions, Inc. and Platinum Pressure Pumping, Inc. (collectively, “Platinum”) satisfied its obligation related to a secured term loan scheduled to mature on January 1, 2017 by making a prepayment of approximately $5,853,000.

On October 29, 2013, the Partnership, together with a third-party creditor (collectively the “Lenders”), made a superpriority, secured term loan (the “Bridge Loan”) to Green Field Energy Services, Inc. and its affiliates (collectively, “Green Field”), of which the Partnership’s share is $7,500,000.   The Bridge Loan matures in 45 days, bears interest at LIBOR plus 10% and is secured by a superpriority security interest in all of Green Field’s assets.  The Lenders also agreed, subject to certain conditions precedent, to make a superpriority, secured term loan in the amount of $30,000,000 (the “Term Loan”) on the date the Bridge Loan matures.  The Term Loan will mature in 9 months. The parties will negotiate the terms and conditions of the Term Loan, which will provide for the refinancing of the indebtedness under the Bridge Loan.

 

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Item 2. General Partner's Discussion and Analysis of Financial Condition and Results of Operations

 

The following is a discussion of our current financial position and results of operations. This discussion should be read together with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2012. This discussion should also be read in conjunction with the disclosures below regarding “Forward-Looking Statements” and the “Risk Factors” set forth in Item 1A of Part II of this Quarterly Report on Form 10-Q.

 

As used in this Quarterly Report on Form 10-Q, references to “we,” “us,” “our” or similar terms include ICON ECI Fund Fifteen, L.P. and its consolidated subsidiaries.

 

Forward-Looking Statements

 

Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are being made pursuant to the PSLRA, with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA, and, other than as required by law, we assume no obligation to update or supplement such statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as “may,” “would,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “continue,” “further,” “plan,” “seek,” “intend,” “predict” or “project” and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events. They are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from those projected. We undertake no obligation to update publicly or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

Overview

 

We are a direct financing fund that primarily makes investments in domestic and international companies, which investments are primarily structured as debt and debt-like financings (such as loans and leases) that are collateralized by Capital Assets utilized by such companies to operate their businesses, as well as other strategic investments in or collateralized by Capital Assets that our General Partner believes will provide us with a satisfactory, risk-adjusted rate of return. We were formed as a Delaware limited partnership and have elected to be treated as a partnership for federal income tax purposes. As of July 28, 2011 (the “Initial Closing Date”), we raised a minimum of $1,200,000 from the sale of our Interests, at which time we commenced operations. Subsequent to the Initial Closing Date, we returned the initial capital contribution of $1,000 to the Investment Manager. From the commencement of our offering on June 6, 2011 through the completion of our offering on June 6, 2013, we sold 197,597 Interests to 4,644 limited partners, representing $196,688,918 of capital contributions. Investors from the Commonwealth of Pennsylvania and the State of Tennessee were not admitted until we raised total equity in the amount of $20,000,000, which we achieved on November 17, 2011. Our operating period commenced on June 7, 2013.

 

After the net offering proceeds have been invested, it is anticipated that additional investments will be made with the cash generated from our initial investments to the extent that cash is not used for our expenses, reserves and distributions to our partners.  The investment in additional Capital Assets in this manner is called “reinvestment.”  We anticipate investing and reinvesting in Capital Assets from time to time for five years from June 6, 2013, the date we completed our offering.  This time frame is called the “operating period” and may be extended, at our General Partner’s discretion, for up to an additional three years.  After the operating period, we will then sell our assets and/or let our investments mature in the ordinary course of business, during a time frame called the “liquidation period.”

 

We seek to generate returns in three ways. We seek to:

 

·         generate current cash flow from payments of principal and/or interest (in the case of secured loans and other financing transactions) and rental payments (in the case of leases);

·         generate deferred cash flow by realizing the value of certain Capital Assets or interests therein at the maturity of the investment; and

·         generate a combination of both current and deferred cash flow from other structured investments.

 

In the case of secured loans and other financing transactions, the principal and interest payments due under the loan are expected to provide a return of and a return on the amount we lend. In the case of leases where there is significant current cash

13 


 

flow generated during the primary term of the lease and the value of the Capital Assets at the end of the term will be minimal or is not considered a primary reason for making the investment, the rental payments due under the lease are expected to be, in the aggregate, sufficient to provide a return of and a return on our investment.

 

In the case of investments in leased Capital Assets that decline in value at a slow rate due to the long economic life of such Capital Assets, we expect that we will generate sufficient net proceeds at the end of the investment from the sale or re-lease of such Capital Assets. In the case of operating leases, we expect most, if not all, of the return of and the return on such investments to be realized upon the sale or re-lease of the Capital Assets. For leveraged leases, we expect the rental income we receive to be less than the purchase price of the Capital Assets because we will structure these transactions to utilize some or all of the lease rental payments to reduce the amount of non-recourse indebtedness used to acquire such assets.

 

In some cases with respect to the above investments, we may acquire equity interests, as well as warrants or other rights to acquire equity interests, in the borrower or lessee that may increase the expected return on our investments.

 

Our General Partner manages and controls our business affairs, including, but not limited to, our investments in Capital Assets, under the terms of our limited partnership agreement.  Our Investment Manager, an affiliate of our General Partner, originates and services our investments.  Our Investment Manager manages or is the investment manager or sponsor for seven other public equipment funds.

 

Recent Significant Transactions

We engaged in the following significant transactions since December 31, 2012:

Notes Receivable

·          On March 1, 2013, we made a secured term loan in the amount of $7,200,000 to Heniff as part of a $12,000,000 secured term loan facility. The loan bears interest at 12.25% per year and is for a period of 42 months. The loan is secured by, among other things, a second priority security interest in Heniff’s assets, including tractors and stainless steel tank trailers, which were valued at approximately $44,810,000.

 

·          On April 5, 2013, we made a secured term loan in the amount of $13,500,000 to LSC as part of an $18,000,000 facility. The loan bears interest at 13.5% per year and matures on August 1, 2018. The loan is secured by, among other things, a second priority security interest in LSC’s liquid storage tanks, blending lines, packaging equipment, accounts receivable and inventory, which were valued in aggregate at approximately $52,030,000.

 

·          On July 10, 2013, Vintage Partners satisfied its obligation related to a secured term loan scheduled to mature on July 10, 2017 by making a prepayment of approximately $5,690,000 to us, comprised of all outstanding principal and paid-in-kind and unpaid interest.

 

·          On July 12, 2013, we made a secured term loan in the amount of £4,000,000 (US$6,001,200) to Quattro. The loan bears interest at 15% per year and is for a period of 36 months. The loan is secured by a second priority security interest in all of Quattro’s rail support construction equipment, any other existing or future assets owned by Quattro, and its accounts receivable, which were valued in aggregate at approximately £27,576,000 (US$41,367,772).

 

·          On September 25, 2013, we, together with a third-party creditor, made the Loan to Asphalt, of which our share is $1,800,000. The Partnership Loan bears interest at 15.5% per year and matures on December 31, 2018. The Loan is secured by a first priority security interest in Asphalt’s vessel, which was valued at $21,600,000, earnings from the vessel and the equity interests of Asphalt. In accordance with the loan agreement, proceeds from the repayment of the Loan and enforcement of any security interest will first be provided to the third-party creditor and then to us.

 

Investment in Joint Venture

·          On May 15, 2013, a joint venture owned 40% by us, 39% by Fund Eleven and 21% by Fund Twelve purchased a portion of an approximately $208,000,000 subordinated credit facility for JAC from Standard Chartered. The aggregate purchase price for the joint venture’s portion of the subordinated credit facility was $28,462,500. The subordinated credit facility bears interest at rates ranging between 12.5% and 15% per year and matures in January 2021. The subordinated credit facility is secured by a second priority security interest in all of JAC’s assets, which include, among other things, all equipment, plant and machinery associated with a condensate splitter and aromatics complex.

 

14 


 

Oil Field Services Equipment

·          On February 15, 2013, we, through a joint venture owned 58% by us, 38% by Fund Fourteen and 4% by ECI Partners, purchased onshore oil field services equipment from Go Frac for approximately $11,804,000. Simultaneously, the equipment was leased back to Go Frac for a period of 45 months, expiring on November 30, 2016. On July 19, 2013, the joint venture purchased additional onshore oil field services equipment from Go Frac for approximately $165,000 which was leased back to Go Frac for a period of 45 months, expiring on April 30, 2017.

 

Mining Equipment

·          On September 9, 2013, we, through a joint venture owned 96% by us and 4% by ECI Partners, assigned the remaining 25 monthly rental payments totaling $6,812,019 due to the joint venture from Murray to People’s Capital in exchange for People’s Capital making a $6,413,574 non-recourse loan to the joint venture which matures on October 1, 2015 and bears interest at a rate of 5.75% per year.

 

Tanker Vessels

·          On April 2, 2013, we, through two joint ventures each owned 55% by us and 45% by Fund Fourteen, purchased two chemical tanker vessels, the Ardmore Capella and the Ardmore Calypso, from wholly-owned subsidiaries of Ardmore.  Simultaneously, the vessels were bareboat chartered back to the Ardmore subsidiaries for a period of five years.  The aggregate purchase price for the vessels was funded by $8,850,000 in cash, $22,750,000 of financing through non-recourse long-term debt and $5,500,000 of financing through subordinated, non-interest-bearing seller’s credits.

                       

Acquisition Fees

·          We paid or accrued total acquisition fees to our Investment Manager of approximately $3,315,000 and $6,735,000 during the three and nine months ended September 30, 2013, respectively.

 

Subsequent Events

 

·          On October 4, 2013, we provided a $17,500,000 first drawdown on a secured term loan facility of up to $40,000,000 to Varada. The facility is comprised of three loans, each to be used toward the purchase or refinancing of a respective vessel. The facility bears interest at 15% per year and is for a period of approximately 96 months, depending on the delivery and acceptance dates of two of the vessels and the drawdown date with respect to the third vessel. Each loan is secured by a first priority security interest in and earnings from the respective vessel. On September 30, 2013, we deposited $17,500,000 into a third-party escrow account in order to position the funds in anticipation of an overseas closing. At September 30, 2013, the escrowed amount is included in other assets on the consolidated balance sheets.

 

·          On October 4, 2013, Platinum satisfied its obligation related to a secured term loan scheduled to mature on January 1, 2017 by making a prepayment of approximately $5,853,000.

 

·          On October 29, 2013, we, together with a third-party creditor, made the Bridge Loan to Green Field, of which our share is $7,500,000. The Bridge Loan matures in 45 days, bears interest at LIBOR plus 10% and is secured by a superpriority security interest in all of Green Field’s assets. The Lenders also agreed, subject to certain conditions precedent, to make the Term Loan in the amount of $30,000,000 on the date the Bridge Loan matures. The Term Loan will mature in 9 months. The parties will negotiate the terms and conditions of the Term Loan, which will provide for the refinancing of the indebtedness under the Bridge Loan.

 

Recent Accounting Pronouncements

 

We do not believe any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our consolidated financial statements.

 

Results of Operations for the Three Months Ended September 30, 2013 (the “2013 Quarter”) and 2012 (the “2012 Quarter”)

 

We entered into our operating period on June 7, 2013, during which we will continue to make investments with the cash generated from our initial investments to the extent that the cash is not used for expenses, reserves and distributions to limited partners. As our investments mature, we may reinvest the proceeds in additional investments in Capital Assets. We anticipate

15 


 

incurring gains or losses on our investments during our operating period. Additionally, we expect to see our rental income and finance income increase, as well as the increase of related expenses, such as depreciation and amortization expense and interest expense. We anticipate that the fees we pay our Investment Manager to manage our investment portfolio will increase during this period as the value of, and volume of activity in, our investment portfolio increases.

 

Financing Transactions

The following tables set forth the types of assets securing the financing transactions in our portfolio:

 

 

 

 

September 30, 2013

 

December 31, 2012

 

 

 

 

Net

 

 

Percentage of

 

 

Net

 

 

Percentage of

 

 

 

 

Carrying

 

 

Total Net

 

 

Carrying

 

 

Total Net

 

Asset Type

 

 

Value

 

 

Carrying Value

 

 

Value

 

 

Carrying Value

 

Marine - product tankers

 

$

 31,690,306 

 

 

26%

 

$

 - 

 

 

 - 

 

Platform supply vessel

 

 

 22,610,144 

 

 

19%

 

 

 23,919,037 

 

 

35%

 

Lubricant manufacturing and blending

 

 

 14,140,594 

 

 

12%

 

 

 - 

 

 

 - 

 

Telecommunications equipment

 

 

 10,320,609 

 

 

8%

 

 

 10,810,636 

 

 

16%

 

Oil field services equipment

 

 

 8,955,855 

 

 

7%

 

 

 9,091,278 

 

 

13%

 

Vessel - tanker

 

 

 7,653,428 

 

 

6%

 

 

 7,775,276 

 

 

11%

 

Trailers

 

 

 7,290,737 

 

 

6%

 

 

 - 

 

 

 - 

 

Marine - asphalt carrier

 

 

 7,125,303 

 

 

5%

 

 

 - 

 

 

 - 

 

Marine - dry bulk vessels

 

 

 5,792,220 

 

 

5%

 

 

 5,909,523 

 

 

9%

 

Metal pipe and tube manufacturing equipment

 

 

 2,535,789 

 

 

2%

 

 

 2,546,245 

 

 

4%

 

Rail support construction equipment

 

 

 1,977,897 

 

 

2%

 

 

 515,354 

 

 

1%

 

Aircraft parts

 

 

 1,851,780 

 

 

2%

 

 

 1,937,546 

 

 

3%

 

Marine - container vessels

 

 

 - 

 

 

 - 

 

 

 5,758,761 

 

 

8%

 

 

 

$

 121,944,662 

 

 

100%

 

$

 68,263,656 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The net carrying value of our financing transactions includes the balances of our net investment in notes receivable and our net investment in finance leases, which are included in our consolidated balance sheets.

During the 2013 Quarter and the 2012 Quarter, certain customers generated significant portions (defined as 10% or more) of our total finance income as follows:

 

 

 

 

 

 

Percentage of Total Finance Income

 

Customer

 

Asset Type

 

2013 Quarter

 

2012 Quarter

 

Gallatin Marine Management, LLC

 

Platform supply vessel

 

21%

 

39%

 

Lubricating Specialties Company

 

Lubricant manufacturing and blending

 

14%

 

 - 

 

NTS Communications, Inc.

 

Telecommunications equipment

 

10%

 

15%

 

Ensaimada S.A.

 

Marine - dry bulk vessels

 

6%

 

11%

 

Contech Castings, LLC; MPI, LLC; Metavation, LLC; MW Texas Die Casting, Inc.

 

Automotive manufacturing equipment

 

 - 

 

17%

 

 

 

 

 

51%

 

82%

 

Interest income from our net investment in notes receivable and finance income from our net investment in finance leases are included in finance income in the consolidated statements of operations.

 

The foregoing percentages are only as of a stated period and are not expected to be comparable in future periods. Further, these percentages are only representative of the percentage of the carrying value of such assets or finance income as of each stated period, and as such are not indicative of the concentration of any asset type or customer by the amount of equity invested or our investment portfolio as a whole.

16 


 

Operating Lease Transactions

 

The following tables set forth the types of equipment subject to operating leases in our portfolio:

 

 

 

 

September 30, 2013

 

December 31, 2012

 

 

 

 

Net

 

 

Percentage of

 

 

Net

 

 

Percentage of

 

 

 

 

Carrying

 

 

Total Net

 

 

Carrying

 

 

Total Net

 

Asset Type

 

 

Value

 

 

Carrying Value

 

 

Value

 

 

Carrying Value

 

Marine - container vessels

 

$

 77,674,652 

 

 

75%

 

$

 81,481,453 

 

 

82%

 

Mining equipment

 

 

 14,122,763 

 

 

14%

 

 

 17,391,339 

 

 

18%

 

Oil field services equipment

 

 

 11,255,875 

 

 

11%

 

 

 - 

 

 

 - 

 

 

 

$

 103,053,290 

 

 

100%

 

$

 98,872,792 

 

 

100%

 

 

The net carrying value of our operating lease transactions includes the balance of our leased equipment at cost, which is included in our consolidated balance sheets.

 

During the 2013 Quarter and the 2012 Quarter, certain customers generated significant portions (defined as 10% or more) of our total rental income as follows:

 

 

 

 

 

 

Percentage of Total Rental Income

 

Customer

 

Asset Type

 

2013 Quarter

 

2012 Quarter

 

Hoegh Autoliners Shipping AS

 

Marine - container vessels

 

54%

 

 - 

 

Murray Energy Corporation

 

Mining equipment

 

33%

 

100%

 

Go Frac, LLC

 

Oil field services equipment

 

13%

 

 - 

 

 

 

 

 

100%

 

100%

 

The foregoing percentages are only as of a stated period and are not expected to be comparable in future periods. Further, these percentages are only representative of the percentage of the carrying value of such assets or rental income as of each stated period, and as such are not indicative of the concentration of any asset type or customer by the amount of equity invested or our investment portfolio as a whole.

 

Revenue for the 2013 Quarter and the 2012 Quarter is summarized as follows:

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

2013

 

2012

 

Change

 

Finance income

$

 3,162,950 

 

$

 1,816,186 

 

$

 1,346,764 

 

Rental income

 

 4,579,825 

 

 

 1,234,689 

 

 

 3,345,136 

 

Income from investment in joint venture

 

 338,495 

 

 

 - 

 

 

 338,495 

 

Other income

 

 490,698 

 

 

 9,747 

 

 

 480,951 

 

 

Total revenue

$

 8,571,968 

 

$

 3,060,622 

 

$

 5,511,346 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue for the 2013 Quarter increased $5,511,346, or 180%, as compared to the 2012 Quarter. The increase in rental income was due to entering into three new operating leases during or subsequent to the 2012 Quarter. The increase in finance income was due to entering into seven new notes receivable and two new finance leases since September 30, 2012.

 

Expenses for the 2013 Quarter and the 2012 Quarter are summarized as follows:

 

17 


 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

 

2013

 

2012

 

Change

 

Management fees

$

 446,978 

 

$

 108,932 

 

$

 338,046 

 

Administrative expense reimbursements

 

 1,003,109 

 

 

 937,778 

 

 

 65,331 

 

General and administrative

 

 249,192 

 

 

 275,614 

 

 

 (26,422) 

 

Interest

 

 1,258,106 

 

 

 350,780 

 

 

 907,326 

 

Depreciation

 

 2,763,166 

 

 

 896,098 

 

 

 1,867,068 

 

 

Total expenses

$

 5,720,551 

 

$

 2,569,202 

 

$

 3,151,349 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses for the 2013 Quarter increased $3,151,349, or 123%, as compared to the 2012 Quarter. The increase was primarily related to an increase in depreciation expense on equipment acquired pursuant to three new operating leases we entered into during or subsequent to the 2012 Quarter and an increase in interest expense on our additional non-recourse long-term debt.  Management fees and administrative expense reimbursements have increased due to the increase in size of our investment portfolio since September 30, 2012.

 

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased $336,667, from $92,650 in the 2012 Quarter to $429,317 in the 2013 Quarter. The increase was primarily due to net income related to our joint ventures with Fund Fourteen, which invested in two new operating leases and two new finance leases and our joint ventures with ECI Partners, which invested in two new operating leases.

Net Income Attributable to Fund Fifteen

As a result of the foregoing factors, the net income attributable to us increased $2,023,330, from $398,770 in the 2012 Quarter to $2,422,100 in the 2013 Quarter. The net income attributable to us per weighted average Interest outstanding for the 2013 Quarter and the 2012 Quarter was $12.14 and $3.54, respectively.

 

Results of Operations for the Nine Months Ended September 30, 2013 (the “2013 Period”) and 2012 (the “2012 Period”)

Financing Transactions

During the 2013 Period and the 2012 Period, certain customers generated significant portions (defined as 10% or more) of our total finance income as follows:

 

 

 

 

 

 

Percentage of Total Finance Income

 

Customer

 

Asset Type

 

2013 Period

 

2012 Period

 

Gallatin Marine Management, LLC

 

Platform supply vessel

 

24%

 

25%

 

NTS Communications, Inc.

 

Telecommunications equipment

 

11%

 

19%

 

Lubricating Specialties Company

 

Lubricant Manufacturing and Blending

 

10%

 

0%

 

Ensaimada S.A.

 

Marine - dry bulk vessels

 

7%

 

16%

 

Contech Castings, LLC; MPI, LLC; Metavation, LLC; MW Texas Die Casting, Inc.

 

Automotive manufacturing equipment

 

 - 

 

21%

 

 

 

 

 

52%

 

81%

 

Interest income from our net investment in notes receivable and finance income from our net investment in finance leases are included in finance income in the consolidated statements of operations.

 

The foregoing percentages are only as of a stated period and are not expected to be comparable in future periods. Further, these percentages are only representative of the percentage of finance income as of each stated period, and as such are not indicative of the concentration of any asset type or customer by the amount of equity invested or our investment portfolio as a whole.

 

Operating Lease Transactions

18 


 

During the 2013 Period and the 2012 Period, certain customers generated significant portions (defined as 10% or more) of our total rental income as follows:

 

 

 

Percentage of Total Rental Income

 

Customer

 

Asset Type

 

2013 Period

 

2012 Period

 

Hoegh Autoliners Shipping AS

 

Marine - container vessels

 

55%

 

 - 

 

Murray Energy Corporation

 

Mining equipment

 

34%

 

100%

 

Go Frac, LLC

 

Oil field services equipment

 

11%

 

 - 

 

 

100%

 

100%

 

The foregoing percentages are only as of a stated period and are not expected to be comparable in future periods. Further, these percentages are only representative of the percentage of rental income as of each stated period, and as such are not indicative of the concentration of any asset type or customer by the amount of equity invested or our investment portfolio as a whole.

 

Revenue for the 2013 Period and the 2012 Period is summarized as follows:

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

2013

 

2012

 

Change

 

Finance income

$

 8,258,748 

 

$

 3,599,601 

 

$

 4,659,147 

 

Rental income

 

 13,416,142 

 

 

 1,250,016 

 

 

 12,166,126 

 

Income from investment in joint venture

 

 503,817 

 

 

 - 

 

 

 503,817 

 

Other income

 

 569,292 

 

 

 22,546 

 

 

 546,746 

 

 

Total revenue

$

 22,747,999 

 

$

 4,872,163 

 

$

 17,875,836 

 

Total revenue for the 2013 Period increased $17,875,836, or 367%, as compared to the 2012 Period. The increase in rental income was due to entering into three new operating leases during or subsequent to the 2012 Quarter. The increase in finance income was due to entering into seven new notes receivable and two new finance leases since September 30, 2012.

 

Expenses for the 2013 Period and the 2012 Period are summarized as follows:

 

 

 

 

Nine Months Ended September 30

 

 

 

 

 

 

2013

 

2012

 

Change

 

Management fees

$

 904,846 

 

$

 189,153 

 

$

 715,693 

 

Administrative expense reimbursements

 

 3,046,339 

 

 

 2,731,434 

 

 

 314,905 

 

General and administrative

 

 884,264 

 

 

 656,330 

 

 

 227,934 

 

Interest

 

 3,537,798 

 

 

 774,517 

 

 

 2,763,281 

 

Depreciation

 

 8,076,134 

 

 

 907,414 

 

 

 7,168,720 

 

Credit loss

 

 12,530 

 

 

 1,984,044 

 

 

 (1,971,514) 

 

 

Total expenses

$

 16,461,911 

 

$

 7,242,892 

 

$

 9,219,019 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses for the 2013 Period increased $9,219,019, or 127%, as compared to the 2012 Period. The increase primarily related to an increase in depreciation expense on equipment acquired pursuant to three new operating leases we entered into during or subsequent to the 2012 Quarter and an increase in interest on our additional non-recourse long-term debt. General and administrative expense, management fees, and administrative expense reimbursements have increased due to the increase in size of our investment portfolio since September 30, 2012. These increases were partially offset by a decrease in credit loss in the 2013 Period.

 

Net Income (Loss) Attributable to Noncontrolling Interests

19 


 

Net income (loss) attributable to noncontrolling interests increased $1,215,760, from a loss of $(134,828) in the 2012 Period to income of $1,080,932 in the 2013 Period. The increase was primarily due to net income related to our joint ventures with Fund Fourteen, which invested in two new operating leases and two new finance leases and our joint ventures with ECI Partners, which invested in two new operating leases.

Net Income (Loss) Attributable to Fund Fifteen

As a result of the foregoing factors, the net income (loss) attributable to us increased $7,441,057, from a loss of $(2,235,901) in the 2012 Period to income of $5,205,156 in the 2013 Period. The net income (loss) attributable to us per weighted average Interest outstanding for the 2013 Period and the 2012 Period was $28.20 and $(27.01), respectively.

 

Financial Condition

This section discusses the major balance sheet variances at September 30, 2013 compared to December 31, 2012.

 

Total Assets

Total assets increased $69,534,080, from $208,274,347 at December 31, 2012 to $277,808,427 at September 30, 2013. The increase in total assets was primarily the result of cash proceeds received from the sale of Interests, the majority of which were then used to invest in four new notes receivable, one new operating lease, two new finance leases and one new joint venture.

 

Total Liabilities

Total liabilities increased $26,189,802, from $78,351,878 at December 31, 2012 to $104,541,680 at September 30, 2013. The increase was primarily the result of (i) borrowing approximately $29,164,000 of non-recourse long-term debt and (ii) a security deposit in the amount of approximately $2,570,000 received in conjunction with another operating lease transaction during the 2013 Period, which will be returned to the lessee after the termination of the operating lease, except in the event of a default, in which case the security deposit will be used or retained to the extent required to cure the default. The increase was partially offset by principal payments we made on our non-recourse long-term debt.

 

Equity

Equity increased $43,344,278, from $129,922,469 at December 31, 2012 to $173,266,747 at September 30, 2013. The increase primarily related to the cash proceeds received from the sale of our Interests, investments by noncontrolling interests and net income recorded in the 2013 Period, which was partially offset by sales and offering expenses incurred and distributions paid to our partners and noncontrolling interests.

 

Liquidity and Capital Resources

 

Summary

 

At September 30, 2013 and December 31, 2012, we had cash of $18,032,863 and $37,990,933, respectively.  Pursuant to the terms of our offering, we have established a reserve in the amount of 0.50% of the gross offering proceeds from the sale of our Interests.  As of September 30, 2013, the cash reserve was $983,445. During our operating period, our main source of cash is from financing activities and our main use of cash is in investing activities.

 

We are using the net proceeds of the offering and cash from operations to invest in Capital Assets located in North America, Europe and other developed markets, including those in Asia, South America and elsewhere.  We have sought and continue to seek to acquire a portfolio of Capital Assets that is comprised of transactions that generate (a) current cash flow from payments of principal and/or interest (in the case of secured loans and other financing transactions) and rental payments (in the case of leases), (b) deferred cash flow by realizing the value of certain Capital Assets or interests therein at the maturity of the investment, or (c) a combination of both.

 

Unanticipated or greater than anticipated operating costs or losses (including a borrower’s inability to make timely loan payments or a lessee’s inability to make timely lease payments) would adversely affect our liquidity. To the extent that working capital may be insufficient to satisfy our cash requirements, we anticipate that we would fund our operations from cash flow generated by investing and financing activities. In addition, as of September 30, 2013, we have up to $10,000,000 available to us under the Facility pursuant to the borrowing base. Our General Partner does not intend to fund any cash flow deficit of ours or provide other financial assistance to us.

20 


 

 

From the commencement of our offering period on June 6, 2011 through the completion of our offering on June 6, 2013, we sold 197,597 Interests to 4,644 limited partners, representing $196,688,918 of capital contributions. From the Initial Closing Date through June 6, 2013, we paid or accrued sales commissions to third parties of $13,103,139 and dealer-manager fees to ICON Securities, LLC, formerly known as ICON Securities Corp., an affiliate of the General Partner and the dealer-manager of the offering of the Interests (“ICON Securities”), of $5,749,021.  In addition, organizational and offering expenses of $2,730,919 were paid or accrued by us, our General Partner or its affiliates during the offering period.

 

Cash Flows

 

Operating Activities

 

Cash provided by operating activities increased $15,431,262, from $854,133 in the 2012 Period to $16,285,395 in the 2013 Period. The increase was primarily related to rental payments received on our two new operating leases and interest received on our seven new notes receivable and two new finance leases, partially offset by payments made for administrative expense reimbursements and management fees to our Investment Manager and interest expense on third-party non-recourse long-term debt.

 

Investing Activities

 

Cash used in investing activities increased $8,205,005, from $66,702,951 in the 2012 Period to $74,907,956 in the 2013 Period. The increase was primarily related to the use of more cash to invest in notes receivable and a joint venture, partially offset by the use of less cash to purchase equipment and the increase in receipt of principal on finance leases and notes receivable during the 2013 Period.

 

Financing Activities

 

Cash provided by financing activities decreased $57,782,975, from $96,447,466 in the 2012 Period to $38,664,491 in the 2013 Period. The decrease was primarily related to (i) a decrease in the sale of our Interests resulting from our offering period ending on June 6, 2013, (ii) an increase in cash distributions paid to partners and noncontrolling interests and (iii) an increase in principal repayments of debt related to our investment in the Lewek Ambassador and the Hoegh Copenhagen. The decrease was partially offset by (i) an increase in investment in joint ventures by noncontrolling interests, (ii) a decrease in proceeds from non-recourse long-term debt in the 2013 Period and (iii) a decrease in sales and offering expenses paid in the 2013 Period.

 

Non-Recourse Long-Term Debt

 

We had non-recourse long-term debt obligations at September 30, 2013 of $92,771,074 related to the Lewek Ambassador, the Hoegh Copenhagen, the Ardmore Capella, the Ardmore Calypso and certain mining equipment. Our non-recourse long-term debt obligations consist of notes payable in which the lender has a security interest in the underlying assets. If the lessee were to default on the underlying lease, resulting in our default on the non-recourse long-term debt, the assets would be returned to the lender in extinguishment of that debt.

 

Distributions

 

We, at our General Partner’s discretion, pay monthly distributions to each of our limited partners beginning with the first month after each such limited partner’s admission and expect to continue to pay such distributions until the termination of our operating period. We paid distributions of $107,348, $10,627,469 and $1,335,082 to our General Partner, limited partners and noncontrolling interests, respectively, during the 2013 Period.

 

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At the time we acquire or divest of an interest in Capital Assets, we may, under very limited circumstances, agree to indemnify the seller or buyer for specific contingent liabilities.  Our General Partner believes that any liability of ours that may arise as a result of any such indemnification obligations will not have a material adverse effect on our consolidated financial condition or results of our operations taken as a whole.

 

21 


 

At September 30, 2013, we had non-recourse debt obligations. The lender has a security interest in the underlying assets relating to each non-recourse debt instrument and an assignment of the rental payments under the lease associated with the assets. If the lessee defaults on the lease, the assets would be returned to the lender in extinguishment of the non-recourse debt. At September 30, 2013, our outstanding non-recourse long-term indebtedness was $92,771,074.

 

We have entered into a remarketing agreement with a third party. Residual proceeds received in excess of specific amounts will be shared with this third party in accordance with the terms of the remarketing agreement. The present value of the obligation related to this agreement was approximately $121,000 at September 30, 2013.

 

In connection with certain investments, we are required to maintain restricted cash balances with certain banks. Our restricted cash amounts of approximately $1,207,000 and $500,000 are presented within other assets in our consolidated balance sheets at September 30, 2013 and December 31, 2012, respectively, and is included as a component of interest expense.

 

Off-Balance Sheet Transactions

None.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures  

 

In connection with the preparation of this Quarterly Report on Form 10-Q for the three months ended September 30, 2013, our General Partner carried out an evaluation, under the supervision and with the participation of the management of our General Partner, including its Co-Chief Executive Officers and the Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our General Partner’s disclosure controls and procedures as of the end of the period covered by this report pursuant to the Securities Exchange Act of 1934, as amended. Based on the foregoing evaluation, the Co-Chief Executive Officers and the Principal Financial and Accounting Officer concluded that our General Partner’s disclosure controls and procedures were effective.

 

In designing and evaluating our General Partner’s disclosure controls and procedures, our General Partner recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.  Our General Partner’s disclosure controls and procedures have been designed to meet reasonable assurance standards. Disclosure controls and procedures cannot detect or prevent all error and fraud. Some inherent limitations in disclosure controls and procedures include costs of implementation, faulty decision-making, simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all anticipated and unanticipated future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with established policies or procedures.  

 

Evaluation of internal control over financial reporting

There have been no changes in our internal control over financial reporting during the three months ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings  

In the ordinary course of conducting our business, we may be subject to certain claims, suits, and complaints filed against us.  In our General Partner’s opinion, the outcome of such matters, if any, will not have a material impact on our consolidated financial position or results of operations.  We are not aware of any material legal proceedings that are currently pending against us or against any of our assets.  

 

Item 1A. Risk Factors

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any limited partnership interests during the three months ended September 30, 2013.

 

Our Investment Manager consented to our repurchase of 108 Interests during the 2013 Quarter at an average price per Interest of $888. The repurchase amounts are calculated according to a specified formula pursuant to our partnership agreement. Repurchased Interests have no voting rights and do not share in distributions with other partners. Our partnership agreement limits the number of Interests that can be repurchased in any one year and repurchased Interests may not be reissued.

 

Our Registration Statement on Form S-1, as amended, was declared effective by the Securities and Exchange Commission on June 6, 2011 (SEC File No. 333-169794).  Our offering period commenced on June 6, 2011 and terminated on June 6, 2013. 

 

During the period from June 6, 2011 through June 6, 2013, we received additional capital contributions in the amount of $196,688,918.  For the period from the Initial Closing Date through June 6, 2013, we paid or accrued sales commissions to third parties of $13,103,139 and dealer-manager fees to ICON Securities of $5,749,021.  In addition, organizational and offering expenses in the amount of $2,730,919 were paid or accrued by us, our General Partner or its affiliates during this period.  Net offering proceeds to us after deducting the expenses described were $175,105,839 during this period.

 

See the disclosure under “Recent Significant Transactions” in Item 2 of Part I for a discussion of the investments we have made with our net offering proceeds.

 

Item 3. Defaults Upon Senior Securities

                    Not applicable.

 

Item 4. Mine Safety Disclosures

                    Not applicable.

 

Item 5. Other Information

                    Not applicable.

 

 

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Item 6. Exhibits

 

  3.1    Certificate of Limited Partnership of Registrant (Incorporated by reference to Exhibit 3.1 to Registrant’s Registration Statement on Form S-1 filed with the SEC on October 6, 2010 (File No. 333-169794)).

 

  4.1    Limited Partnership Agreement of Registrant (Incorporated by reference to Appendix A to Registrant’s Prospectus Supplement No. 3 filed with the SEC on December 28, 2011 (File No.333-169794)).

 

10.1    Investment Management Agreement, by and between ICON ECI Fund Fifteen, L.P. and ICON Capital Corp., dated as of June 3, 2011 (Incorporated by reference to Exhibit 10.2 to Amendment No. 6 to the Registrant’s Registration Statement on Form S-1 filed with the SEC on June 3, 2011 (File No. 333-169794)).

 

10.2    Commercial Loan Agreement, by and between California Bank & Trust and ICON ECI Fund Fifteen, L.P., dated as of May 10, 2011 (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed on August 12, 2011).

 

    10.3   Loan Modification Agreement, dated as of March 31, 2013, by and between California Bank & Trust and ICON ECI Fund Fifteen, L.P. (Incorporated by reference to Exhibit 10.3 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012, filed March 28, 2013).

 

31.1    Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.

 

31.2    Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.

 

31.3    Rule 13a-14(a)/15d-14(a) Certification of Principal Financial and Accounting Officer.

 

32.1    Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2    Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.3    Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101. INS* XBRL Instance Document.

 

101. SCH* XBRL Taxonomy Extension Schema Document.

 

101. CAL* XBRL Taxonomy Extension Calculation Linkbase Document.

 

101. DEF*  XBRL Taxonomy Extension Definition Linkbase Document.

 

101. LAB* XBRL Taxonomy Extension Labels Linkbase Document.

 

101. PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

__________________________________________________________________________________________________

*     XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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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.

 

ICON ECI Fund Fifteen, L.P.

(Registrant)

 

By: ICON GP 15, LLC

      (General Partner of the Registrant)

 

November 8, 2013

 

By: /s/ Michael A. Reisner

Michael A. Reisner

Co-Chief Executive Officer and Co-President

(Co-Principal Executive Officer)

 

By: /s/ Mark Gatto

Mark Gatto

Co-Chief Executive Officer and Co-President

(Co-Principal Executive Officer)

 

By: /s/ Nicholas A. Sinigaglia

Nicholas A. Sinigaglia

Managing Director

(Principal Financial and Accounting Officer)

 

 

 

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