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EX-32.2 - EXHIBIT 32.2 - Macquarie Equipment Leasing Fund, LLCtv478513_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Macquarie Equipment Leasing Fund, LLCtv478513_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - Macquarie Equipment Leasing Fund, LLCtv478513_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Macquarie Equipment Leasing Fund, LLCtv478513_ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

(Mark One)

 

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

 

For the Quarterly Period Ended September 30, 2017

 

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: 000-53904

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   26-3291543
(State or Other Jurisdiction of   (IRS Employer
Incorporation or Organization)   Identification No.)

 

225 Franklin St, 17th Floor, Suite 1740

Boston, Massachusetts 02110

(Address of Principal Executive Offices) (Zip Code)

 

(617) 457-0645

(Registrant’s Telephone Number, Including Area Code)

 

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report): N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

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

 

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

 

Large Accelerated Filer ¨ Accelerated Filer ¨
   
Non-accelerated Filer ¨ Smaller Reporting Company x

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

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

 

There were 9,129,625 shares of limited liability company membership interests outstanding at November 14, 2017.

 

 

 

 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC
Table of Contents

 

Part I. Financial Information  
     
Item 1. Financial Statements  
     
  Balance Sheets as of September 30, 2017 and December 31, 2016 (Unaudited) 3
     
  Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited) 4
     
  Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (Unaudited) 5
     
  Statement of Changes in Members’ Equity for the Nine Months Ended September 30, 2017 (Unaudited) 6
     
  Notes to Financial Statements (Unaudited) 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
     
Item 4. Controls and Procedures 22
     
Part II. Other Information  
     
Item 1. Legal Proceedings 23
     
Item 1A. Risk Factors 23
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23
     
Item 3. Defaults Upon Senior Securities 23
     
Item 4. Mine Safety Disclosures 23
     
Item 5. Other Information 23
     
Item 6. Exhibits 23
     
  Signatures  

 

Macquarie Equipment Leasing Fund, LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Equipment Leasing Fund, LLC.

 

 2 

 

 

Part I. FINANCIAL INFORMATION

 

Item 1.Financial Statements

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

BALANCE SHEETS

(Unaudited)

 

   September 30, 2017   December 31, 2016 
         
ASSETS          
Current Assets          
Cash and cash equivalents  $2,014,303   $4,762,948 
Leased equipment held for sale   -    19,046,393 
Financial assets held for sale   11,916,944    - 
Net investment in finance lease   -    537,382 
Net investment in sales type lease   -    - 
Loans receivable less: (unamortized deferred loan origination fees and costs of $0 and $45,858 for Sep 30, 2017 and December 2016, respectively)   -    12,593,290 
Accrued interest receivable   -    114,231 
Lease receivables   95,661    - 
Maintenance reserve and other receivables   -    28,479 
Total Current Assets   14,026,908    37,082,723 
           
Non-current Assets          
Net investment in finance lease   -    1,890,442 
Leased equipment at cost (net of accumulated depreciation of  $0 and $5,384,317  as of September 30, 2017 and December 2016, respectively)   -    23,227,614 
Total Non-current Assets   -    25,118,056 
           
Total Assets  $14,026,908   $62,200,779 
           
LIABILITIES AND MEMBERS’ EQUITY          
Current Liabilities          
Fees payable (related party)  $244,503   $42,364 
Deferred finance and rental income   -    951,429 
Distribution payable   600,465    623,976 
Other payables   263,908    124,624 
Current portion of long-term debt   -    1,770,199 
Accrued interest payable   -    30,896 
Total Current Liabilities   1,108,876    3,543,488 
           
Non-current Liabilities          
Other payables   -    444,645 
Long-term debt, less current portion ($16,750,000 face value, less: unamortized debt discount and issuance costs of $0 and $50,746 as of September 30, 2017 and December 2016, respectively)   -    12,931,825 
Total Non-current Liabilities   -    13,376,470 
           
Total Liabilities  $1,108,876   $16,919,958 
           
Commitments and Contingencies (Note 13)          
           
Members’ Equity          
Shares of membership interests, $10.00 par value as may be reduced (i) under a distribution reinvestment plan, (ii) for volume discounts, or (iii) for reductions in selling commissions          
Authorized: 15,800,500 shares;          
Issued and outstanding: 9,132,125 and 9,183,494 shares as of  September 30, 2017 and December 31, 2016 respectively, net of repurchases of 525,992 and 474,623, respectively   12,918,032    45,280,821 
Accumulated surplus   -    - 
Total Members’ Equity   12,918,032    45,280,821 
           
Total Liabilities and Members’ Equity  $14,026,908   $62,200,779 

 

See accompanying notes to Financial Statements.

 

 3 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   September 30, 2017   September 30, 2016   September 30, 2017   September 30, 2016 
REVENUE                
                 
Finance and rental income   311,518    3,562,264    2,717,737    8,834,258 
Gain on sale of leased equipment   2,276,996    5,107,777    3,963,923    5,115,704 
Interest income   273,554    530,615    897,484    1,598,933 
Other income   20,546    81,708    60,581    151,216 
                     
Total revenue   2,882,614    9,282,364    7,639,725    15,700,111 
                     
EXPENSES                    
                     
Operating expenses (related party)   71,456    92,994    207,131    294,326 
Management fees (related party)   72,773    133,707    275,804    440,116 
Depreciation   117,581    893,221    703,901    3,037,699 
Impairment loss   -    -    584,590    - 
Interest expense   76,236    128,756    311,541    394,098 
Other expenses (including related party expenses of $138,427; $241,556; $369,994; and $318,726 for the three and nine months ended September 30, 2017 and 2016, respectively)   257,571    377,642    775,306    830,075 
Total expenses   595,617    1,626,320    2,858,273    4,996,314 
                     
Net income  $2,286,997   $7,656,044   $4,781,452   $10,703,797 
                     
Basic and diluted earnings per share  $0.25   $0.83   $0.52   $1.16 
                     
Weighted average number of shares outstanding: basic and diluted   9,132,125    9,183,494    9,151,460    9,232,739 

 

See accompanying notes to Financial Statements.

 

 4 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine Months Ended 
   September 30, 2017   September 30, 2016 
Cash flow from operating activities:          
Net income  $4,781,452   $10,703,797 
           
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation   703,901    3,037,699 
Impairment loss   584,590    - 
Net gain on sale of leased equipment   (3,963,923)   (5,115,704)
Recognition of maintenance reserves in finance and rental income   -    (1,574,439)
Amortization of loan origination fees   (32,697)   (37,697)
Amortization of debt discount and issuance costs   4,256    4,408 
Changes in operating assets and liabilities:          
Fees payable (related party)   202,138    273,773 
Lease receivables   (95,661)   315,800 
Accrued interest receivable   38,160    (82,991)
Net investment in finance lease   842,555    637,017 
Net investment in sale type lease   337,002    113,819 
Other receivables   28,479    (80,353)
Other payables   (305,361)   188,509 
Accrued interest payable   (30,896)   (4,066)
Deferred finance and rental income   (287,756)   (193,428)
Other assets   -    (2,680)
Net cash provided by operating activities   2,806,239    8,183,464 
           
Cash flow from investing activities:          
Proceeds from sale of leased equipment   43,184,125    18,504,025 
Participating interest - loans receivable   -    (28,345,392)
Repayment of participating interest - loans receivable   -    33,617,748 
Loan to others   -    (14,469,408)
Repayment of loan by others   3,135,023    2,007,987 
Restricted cash   -    1,445,270 
Net cash provided by investing activities   46,319,148    12,760,230 
           
Cash flow from financing activities:          
Distributions paid to members   (36,999,332)   (31,872,559)
Repurchase of shares   (168,421)   (842,871)
Repayment of principal on long-term debt   (14,706,279)   (1,277,010)
Maintenance reserve received   -    129,169 
Net cash used in financing activities   (51,874,032)   (33,863,271)
           
Net decrease in cash and cash equivalents   (2,748,645)   (12,919,577)
           
Cash and cash equivalents, beginning of the period   4,762,948    19,767,657 
           
Cash and cash equivalents, end of the period  $2,014,303   $6,848,080 
           
Supplemental disclosures of cash flow information          
           
Non cash investing and financing activities          
Maintenance reserve  $-   $1,574,439 
Distribution Payable  $600,465   $603,482 
Accrued loan to others  $-   $12,740 
Loan to others  $-   $620,000 
Repayment of loan by others  $-   $430,000 
           
Interest paid          
Cash paid during the period for interest  $341,562   $387,880 

 

See accompanying notes to Financial Statements.

 

 5 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC
STATEMENT OF CHANGES IN MEMBERS’ EQUITY

(Unaudited)

 

       Membership interests   Accumulated surplus     
   Members’
shares
   Additional
members (1)
   Managing
member
   Additional
members (1)
   Managing
member
   Total 
                         
Balance at December 31, 2016   9,183,494   $44,713,701   $567,120   $-   $-   $45,280,821 
Repurchase of shares   (51,369)   (168,421)   -              (168,421)
Distribution to members ($0.52 per share)        -    -    (4,695,665)   (85,787)   (4,781,452)
Partial-liquidating distribution ($3.53 per share)        (31,627,248)   (567,120)   -    -    (32,194,368)
Net income        -    -    4,695,665    85,787    4,781,452 
Balance at September 30, 2017   9,132,125   $12,918,032   $-    -    -   $12,918,032 

 

(1)Additional members represent all members other than the Managing member.

 

See accompanying notes to Financial Statements

 

 6 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

1. ORGANIZATION AND BUSINESS OPERATIONS

 

Macquarie Equipment Leasing Fund, LLC, a Delaware limited liability company (the “Fund”), was formed on August 21, 2008 for the purpose of being an equipment leasing program that acquires or originates a diversified portfolio of equipment, equipment leases and loans, and other equipment-related investments. The majority of the equipment leased by the Fund is leased to corporate clients. The Fund’s objective is to generate income through the collection of lease rentals, interest income, and other revenues, as well as through the sale of leased and off lease equipment and other portfolio investments. The Fund’s fiscal year end is December 31.

 

The manager of the Fund is Macquarie Asset Management Inc. (the “Manager”), a member of the Macquarie Group of Companies which is comprised of Macquarie Group Limited and its subsidiaries and affiliates worldwide (the “Macquarie Group”). Macquarie Group Limited is headquartered in Australia and is listed on the Australian Stock Exchange. The Manager has made a total of $1,505,000 in capital contributions to the Fund. The Manager and its affiliates earn fees by providing or arranging all services necessary and desirable for the operations of the Fund, including those relating to equipment acquisitions and disposals, equipment loans, asset management and administrative, reporting and regulatory services. The Fund reimburses the Manager for costs incurred for managing the Fund and the Fund’s portfolio of equipment, equipment lease and loans, and other equipment-related investments. The Fund has one reportable segment; all information and disclosures herein are related to that segment.

 

The initial closing date for the Fund was March 5, 2010, the date at which the Fund raised over $2,500,000 and reached the minimum offering amount. The Fund’s offering period ceased on March 19, 2012. The Fund’s operating period commenced on that date and ceased on June 30, 2016. The Fund’s liquidation period commenced on July 1, 2016 and may last for up to three years. To coincide with the beginning of the Fund’s liquidation period, the Manager suspended the Fund’s share redemption program. However, the Manager reserved the right to approve member requests for redemptions in cases of death or proof of disability (as the term is defined in the Americans with Disabilities Act of 1990, as amended).

 

This report covers the three and nine months ended September 30, 2017 and 2016, respectively.

 

The accompanying unaudited financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). In the opinion of management, all material adjustments, consisting only of normal recurring adjustments, considered necessary for a fair statement of the interim period financial statements have been made. Interim period results are not necessarily indicative of results for a full-year period. These financial statements and the notes thereto should be read in conjunction with the Fund’s financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the SEC on February 24, 2017.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting and Use of Estimates

 

The accompanying financial statements were prepared in accordance with U.S. GAAP. This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Fund considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are maintained with one U.S. financial institution, which at times may be in excess of the federal insurance limit of $250,000 per depositor, per FDIC-insured bank.

 

Income Taxes

 

The Fund is treated as a partnership for federal and state income tax purposes. As a partnership, the Fund is not subject to federal and state income taxes, while each member will be individually liable for income taxes, if any, on its share of net taxable income from the Fund. Interest, dividends and other income realized by the Fund may be subject to withholding tax in the jurisdiction in which the income is sourced.

 

Leased Equipment at Cost

 

If a lease meets certain requirements under ASC 840 at its inception, such that the Fund retains ownership in the underlying equipment, the lease is accounted for as an operating lease. Investment in leased equipment is stated at cost less accumulated depreciation. Leased equipment is depreciated on a straight-line basis over the lease term to the assets’ residual value. Initial direct costs (such as freight, installation, acquisition fees and expenses, legal fees and inspection fees) associated with the leases are capitalized as part of the cost of the leased equipment and depreciated over the lease term.

 

 7 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

The residual value and useful life are determined by the Manager and are calculated using information from both internal (i.e. from affiliates) and external sources, such as trade publications, industry valuers, auction data, internal and external sales data, equipment dealers, wholesalers and industry experts, as well as inspection of the physical assets. Once an asset comes off lease or is re-leased, the Fund reassesses its useful life and residual value.

 

Costs incurred in extending the useful life and/or increasing the resale value of leased equipment are capitalized into the cost of an asset. No such costs have been incurred to date.

 

If the equipment is returned at the end of a lease term and the lessee has not met the return conditions as set out in the lease, the Fund is entitled, in certain cases, to additional compensation from the lessee. The Fund’s accounting policy for recording such payments is to treat the payments as revenue when received. No such payments were received for the three and nine months ended September 30, 2017 and 2016, respectively.

 

The lessee is generally responsible for the ongoing maintenance costs of the equipment under net lease arrangements.

 

The significant operating lease assets in the Fund’s portfolio are reviewed for impairment at least annually or when indicators of impairment exist. An impairment loss will be recognized only if the carrying value of a long-lived asset is not recoverable and exceeds its fair market value. The Manager’s assessment for impairment (i.e. undiscounted cash flows used in the recoverability assessment) includes review of residual values based on published values for similar assets, recent transactions for similar assets, lease terms, asset condition, adverse changes in market conditions for specific asset types and the occurrence of significant adverse changes in general industry and market conditions that could affect the fair value of the asset.

 

If no impairment is deemed to exist and if the current assessment of the residual value is determined to be lower than the current value, the Fund adjusts the residual value downward and prospectively adjusts depreciation expense over the remaining life of the lease.

 

Net Investment in Finance Lease

 

If a lease meets specific criteria under ASC 840 at its inception, such that ownership of the underlying asset is effectively transferred to the lessee, the Fund recognizes the lease as a net investment in finance lease on its Balance Sheet. Net investment in finance leases consist of lease receivables plus the estimated unguaranteed residual value of the leased equipment on the lease termination date, less the unearned income.

 

The residual values of the Fund’s significant finance lease assets are reviewed at least annually. If the review results in a lower estimate than had been previously established, the Fund will determine whether the decline in the estimated residual value is other than temporary. If the decline in estimated residual value is judged to be other than temporary, the accounting for the transaction shall be revised using the changed estimate and the resulting reduction in the net investment shall be recognized as a loss in the period in which the estimate is changed. An upward adjustment of a leased asset’s estimated residual value shall not be made.

 

Net Investment in Sales Type Lease

 

If a lease meets specific criteria under ASC 840 at its inception, such that ownership of the underlying asset is effectively transferred to the lessee and the lease gives rise to a manufacturer’s or dealer’s profit or loss to the lessor (that is, the fair value of the lease property at lease inception is greater than or less than its cost or carrying amount), the Fund recognizes the lease as a net investment in sales type lease on its Balance Sheet and the corresponding profit or loss as a net gain on sale. While the Fund is not a manufacturer or dealer, sales type lease accounting may apply when existing lease agreements are modified and are required to be accounted for as new leases.

 

Net investment in sales type lease consists of lease receivables plus the estimated unguaranteed residual value of the leased equipment on the lease termination date, less unearned income.

 

The residual values of the Fund’s significant sales type lease assets are reviewed at least annually. If the review results in a lower estimate than had been previously established, the Fund will determine whether the decline in the estimated residual value is other than temporary. If the decline in estimated residual value is judged to be other than temporary, the accounting for the transaction shall be revised using the changed estimate and the resulting reduction in the net investment shall be recognized as a loss in the period in which the estimate is changed. An upward adjustment of a leased asset’s estimated residual value shall not be made.

 

 8 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

Lease Modifications

 

If a lease is modified, ASC 840 requires the lease to be re-evaluated as if the revised terms were in place at inception of the lease. If the revised terms result in a different classification of the lease than what existed at inception (for example, an operating lease with the revised terms qualifies as a sales type lease), then the revised lease and corresponding investment is reclassified (to either an operating lease, financing lease, or sales type lease).

 

Loans Receivable

 

Loans receivable are reported on the Fund’s Balance Sheet at the outstanding principal balance, plus costs incurred to originate the loans. Unearned income, discounts and premiums are amortized to interest income in the Statement of Operations using the effective interest method. Upon the repayment of a loan receivable, any prepayment penalties and unamortized loan origination, closing and commitment fees are recorded as part of interest income in the Statement of Operations.

 

Assets Held for Sale

 

If any of the Fund’s assets held under operating leases meet the requirements under ASC 360-10-45-9, the asset is reclassified as leased equipment held for sale on the Fund’s Balance Sheet at the lower of its carrying amount or fair value less cost to sell.

 

If the Fund’s net investment in finance leases or loan receivables meet specific criteria under ASC 310-10-35, such that the Fund no longer has the intent or ability to hold the finance lease or loan for the foreseeable future, the loan or finance lease is reclassified as financial assets held for sale and recorded at the lower of cost or fair value, with any difference being recognized in the Statements of Operations.

 

Revenue Recognition

 

At inception of a finance lease the Fund records the total minimum lease payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, the initial direct costs related to the lease, and the related unearned income. Unearned income represents the total minimum lease payments receivable plus the estimated unguaranteed residual value minus the cost of the leased equipment. Unearned income is recognized as finance income over the term of the lease using the effective interest rate method.

 

At inception of a sales type lease the Fund records the total minimum lease payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, the initial direct costs related to the lease, and the related unearned income. Unearned income represents the total minimum lease payments receivable plus the estimated unguaranteed residual value minus the cost of the leased equipment. Unearned income is recognized as finance income over the term of the lease using the effective interest rate method.

 

For operating leases, rental income is recognized on a straight-line basis over the lease term. From time to time, the Fund receives rental payments in advance. These advance payments are recognized on the Fund’s Balance Sheet as deferred revenue and recognized as income in the month they are earned.

 

Gains or losses from sales of leased and off lease equipment are recorded on a net basis in the Fund’s Statements of Operations. The Fund recognized gains on the sale of leased equipment of $2,276,996 and $3,963,923 during the three and nine months ended September 30, 2017 and $5,107,777 and $5,115,704 during the three and nine months ended September 30, 2016, respectively.

 

Certain of the Fund’s leases contain provisions for late fees on past due rent. The Fund recognizes late fees as income when they become chargeable and collection is reasonably assured.

 

During 2015, the Fund developed a vendor finance program for an Australian aircraft manufacturer. Under the program, the Australian aircraft manufacturer refers the Fund to potential customers seeking aircraft finance. In consideration for the Fund’s time and expense incurred in developing the vendor finance program, the Australian aircraft manufacturer agreed to pay a program development fee of $150,000 to the Fund in installments. The Fund will recognize the program development fee as income over the life of the agreement. The Fund recognized $18,750 and $56,250 related to the program development fee as other income during the three and nine months ended September 30, 2017 and September 30, 2016, respectively.

 

The Fund recognizes interest income on its loans receivable using the effective interest method.

 

Credit Quality of Loans Receivable and Finance Leases

 

The Fund monitors the ongoing credit quality of its financing receivables by (i) reviewing and analyzing a borrower’s financial performance on a regular basis, including reviewing financial statements when provided as prescribed in the loan or lease agreement, (ii) tracking the relevant credit metrics of each loan receivable and a borrower’s compliance with financial and non-financial covenants, and (iii) monitoring a borrower’s payment history and public credit rating, if available. As part of the monitoring process, the Fund may physically inspect the collateral and meet with a borrower’s management to better understand the borrower’s financial performance and its future plans on an as-needed basis.

 

 9 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

Allowance for Doubtful Accounts and Provision for Credit Losses

 

The Fund is exposed to risks under its leasing transactions, including risk associated with a lessee’s creditworthiness, repossession and remarketing and the future market value of the equipment. The Fund evaluates the collectability of its lease receivables by analyzing the counterparties’ payment history, general credit worthiness and current economic trends. Although the Fund currently has no reason to believe that the lessees will fail to meet their contractual obligations, a risk of loss to the Fund exists should a lessee fail to meet its payment obligations under a lease. The Fund records an allowance when the analysis indicates that the probability of full collection is unlikely. No allowance was recorded on the Fund’s Balance Sheet as of September 30, 2017 or December 31, 2016, respectively. No allowance was recorded or reversed in the Fund’s Statement of Operations during the three and nine months ended September 30, 2017 and 2016, respectively.

 

An allowance or provision for credit losses is established if there is evidence that the Fund will be unable to collect all amounts due according to the original contractual terms of the loan or finance lease receivable. The allowance for credit losses is reported as a reduction of the loan receivable’s carrying value on the Fund’s Balance Sheet. Additions to the allowance and provision for credit losses are recorded in the Fund’s Statements of Operations. Allowances and provisions for credit losses are evaluated periodically and on an individual asset and customer level. Loans receivable are considered impaired when the Fund determines that it is probable that it will not be able to collect all amounts due according to the original contractual terms. Individual credit exposures are evaluated based on the realizable value of any collateral, and payment history. The estimated recoverable amount is the value of the expected future cash flows, including amounts that may be realized with the repossession of the collateral.

 

The accrual of interest income based on the original terms of the loan receivable may be discontinued based on the facts and circumstances of the individual credit exposure, and any future interest income is recorded based on cash receipts. Any subsequent changes to the amounts and timing of the expected future cash flows compared with the prior estimates result in a change in the allowance for credit losses and are charged or credited to the Fund’s Statements of Operations. An allowance is generally reversed only when cash is received in accordance with the original contractual terms of the note.

 

The Fund does not provision for credit losses on a collective basis.

 

All loans are performing and there are no delinquent loans on the Fund’s Balance Sheet. Due to the credit rating of the counterparties, the short-term nature of loans, insurance arrangements, and borrower payment history, the Fund has not recorded a provision for credit losses on its loans receivable as of September 30, 2017 or December 31, 2016, respectively.

 

Long-Term Debt

 

Long-term debt is reported on the Fund’s balance sheet at cost. Interest expense is recognized using the effective interest method. Expenses associated with the incurrence of debt are capitalized and amortized to interest expense over the term of the debt instrument using the effective interest rate method. These costs are included in the carrying value of long-term debt.

 

Write Offs

 

The Fund takes write offs when it determines that a receivable is uncollectible and when all economically sensible means of recovery have been exhausted. No write offs were recorded for the three and nine months ended September 30, 2017 and 2016, respectively.

 

Operating Expenses and Management Fees

 

The Manager charges the Fund management fees and the Fund reimburses the Manager for certain operating expenses directly related to the Fund. These fees are recognized on accrual basis. See Note 10 for further details.

 

Comprehensive Income

 

The Fund follows the requirements of ASC 220 Comprehensive Income, for the reporting and presentation of comprehensive income and its components. The Fund does not have any components of other comprehensive income, thus it is not presented separately in the Fund’s financial statements.

 

 10 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

Distributions

 

The Manager has sole discretion to determine what portion, if any, of cash on hand will be distributed to the members. Distributions are made on a monthly basis and accrued at the end of each month. Cash distributions are paid on the 15th day of the following month and reflected in the Fund’s Statements of Changes in Members’ Equity. Distributions accrued but not paid are recorded as a distribution payable on the Fund’s Balance Sheet. With the commencement and continuation of the Fund’s liquidation period and disposal of assets, the Fund has made a number of periodic additional distributions as disclosed in Note 11.

 

New Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, requiring revenue to be recognized in an amount that reflects the consideration expected to be received in exchange for goods and services. Various amendments to ASU No. 2014-09 have been issued, including:

 

·ASU No. 2016-08 (issued in March 2016) which amends principal versus agent guidance by reframing the indicators in the guidance to focus on evidence that an entity is acting as a principal rather than as an agent;

 

·ASU No. 2016-10 (issued in April 2016) which amends criteria around licensing and performance obligations;

 

·ASU No. 2016-12 (issued in May 2016); which provides guidance on assessing collectability, presentation of sales taxes, noncash consideration and completed contracts and contract modifications at transition; and

 

·ASU No. 2016-20 (issued in December 2016) which contains various technical corrections and improvements to ASU No. 2014-09.

 

The original effective date for ASU 2014-09 would have required the Fund to adopt it beginning in its first quarter of 2018. In August 2015, the FASB issued ASU 2015-14 to amend ASU 2014-09 by approving a one-year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Fund may adopt the standard in either its first quarter of 2018 or 2019. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The adoption of this standard is not expected to have an impact on the Fund’s financial statements.

 

In January 2016, FASB issued ASU No. 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The adoption of this standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of this standard is not expected to have an impact on the Fund’s financial statements.

 

In February 2016, FASB issued ASU No. 2016-2, Leases, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance primarily affects lessees and requires that all leases create an asset and a liability for a leasing arrangement greater than 12 months; although there are some modifications to lessor accounting. The adoption of this standard becomes effective for fiscal years beginning after December 15, 2018. The adoption of this standard is not expected to have an impact on the Fund’s financial statements.

 

In March 2016, FASB issued ASU No. 2016-08, Revenue from Contracts with Customers in order to amend principal versus agent guidance in the new revenue standard contemplated in ASU 2014-09. The amendment reframes the indicators in the guidance to focus on evidence that an entity is acting as a principal rather than as an agent. The effective date and transition requirements are the same as ASU 2014-09. The Fund is currently evaluating the timing of its adoption of ASU 2104-09. The adoption of this standard is not expected to have an impact on the Fund’s financial statements.

 

In June 2016, FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses, to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit. The adoption of this standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The adoption of this standard is not expected to have an impact on the Fund’s financial statements.

 

In August 2016, FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, to provide guidance on the presentation and classification of certain cash receipts and cash payments in the Statements of Cash Flows. The adoption of this standard is effective for fiscal years beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Fund’s financial statements.

 

In November 2016, FASB issued ASB No. 2016-18, Statement of Cash Flows – Restricted Cash, to provide guidance on the presentation and classification of restricted cash in the Statements of Cash Flows. The adoption of this standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Fund is currently evaluating the impact on the Fund’s financial statements, which may include the reclassification of cash flows relating to restricted cash on the Statements of Cash Flows for prior periods. The Fund does not expect the adoption of the standard to have material impact on its financial statements for future reporting periods.

 

 11 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

3. LEASED EQUIPMENT AT COST AND HELD FOR SALE

 

The following transactions were entered into by the Fund during the nine months ended September 30, 2017:

 

Airbus A320-200 Aircraft Lease

 

In February 2017, the Fund entered into an agreement to sell its Airbus A320-200 Aircraft for a sale price of $17,395,927, which is net of rentals received in advance owed to the buyer. The aircraft was delivered to the buyer in March 2017, at which point the Fund recognized a gain on sale.

 

Aircraft Engines

 

In August 2017, the Fund entered into an agreement to sell its CFM56-7B jet engines for a sale price of $23,400,000. The CFM56-7B jet engines were delivered in August 2017, at which point the Fund recognized a gain on sale. The CFM56-7B jet engines were pledged as collateral under the Fund’s limited recourse loan agreement with a Japanese bank (Note 9). The Fund used a portion of the proceeds to repay the limited recourse loan.

 

Smart Safes

 

In June 2017, the Fund reassessed the residual value of its operating leases for smart safes. Due to a decline in the market value of this type of equipment the residual value was adjusted downward. The adjustment of the smart safes’ residual value resulted in the recoverable amount being lower than the assets’ carrying amount and an impairment charge of $584,590 was recognized in June 2017. There were no impairment charges recorded during the three months ended September 30, 2017 or the nine months ended September 30, 2016.

 

The lease for the smart safes was amended in August 2017, resulting in a reclassification of the leases from operating to a net investment in sales type lease (Note 5).

 

As of September 30, 2017, the Fund no longer has leased equipment at cost on its balance sheet and there are no remaining annual minimum future rentals.

 

4. NET INVESTMENT IN FINANCE LEASES

 

The Fund no longer has net investment in finance leases on its Balance Sheet as of September 30, 2017.

 

GA8-TC320 Aircraft

 

In September 2017, the Fund began negotiations with the Australian aircraft manufacturer on potential buyout options for its loan and lease portfolio. In October 2017, the Fund entered into an agreement where the Australian aircraft manufacturer exercised an early buyout option on its lease and loan agreements. The Australian aircraft manufacturer paid the Fund an amount above its carrying value to buyout its remaining loans and leases and to acquire all the underlying collateral. As such, the Fund reclassified its finance leases with the Australian aircraft manufacturer to financial assets held for sale as of September 30, 2017.

 

Manufacturing Equipment

 

In September 2017, the Fund began a sales process for its manufacturing equipment, which is expected to be sold above its current carrying value. As a result, the manufacturing equipment was reclassified to financial assets held for sale as of September 30, 2017.

 

Net investment in finance lease consists of the following:

 

   September 30, 2017   December 31, 2016 
Minimum lease payments receivable  $-   $981,182 
Estimated residual values of leased property   -    1,688,048 
Less: Unearned income   -    (241,406)
Net investment in direct financing lease  $-   $2,427,824 

 

 12 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

5. NET INVESTMENT IN SALES TYPE LEASE

 

Machine Tool Equipment

 

In January 2017, the Fund signed an agreement with the lessee to amend the original lease agreement. The amendment allowed for the lessee to acquire the equipment at the end of the lease and for the Fund to retain the security deposit at the end of the lease.

 

The lease amendment resulted in a reclassification of the machine tool equipment from leased equipment held for sale to a sales type lease. The Fund recognized a gain on the reclassification of the machine tool equipment in January 2017.

 

In September 2017 the Fund received the final payment and the October 2017 rent payment from the lessee. Upon receipt of the final payment, all rights and title in the machine tool equipment were transferred to the lessee. As part of the final payment the Fund retained the security deposit of $354,645 received at the inception of lease.

 

Smart Safes

 

In August, 2017, the Fund signed an agreement with the lessee of its smart safes to amend the original lease agreement. The amendment allows for the lessee to acquire the equipment at the end of the lease for an agreed-upon price. The lease amendment resulted in a reclassification of the operating leases to sales type leases.

 

In September 2017, the Fund began a sales process for its smart safe portfolio with the intention of selling the leases before maturity above their current carrying value. As a result, the smart safes were reclassified to financial assets held for sale as of September 30, 2017.

 

As of September 30, 2017 and December 31, 2016, there were no sales type leases on the Fund’s Balance Sheet.

 

6. LOANS RECEIVABLE

 

The Fund carries loans receivable at amortized cost on its Balance sheet. The Fund recognizes interest income using the effective interest method.

 

U.S. Drilling Company

 

In January 2016, the Fund entered into an agreement with a U.S. drilling company to provide a finance facility of up to $15,000,000. The finance facility has a term of two years and an interest rate of 10%.

 

The loan is secured by one of the drilling company’s land-based rigs and a three year drilling rig operating contract. The drilling company paid commitment fees and other upfront payments of $330,000 to the Fund. $140,000 of the fees were paid immediately upon entrance into the credit agreement between the Fund and the drilling company, and the remaining $190,000 in fees were paid from the amount funded by the Fund under the terms of the finance facility. The commitment and upfront fees are included as a reduction to the carrying value of the loan and are amortized to interest income using the effective interest rate method. The Fund capitalized other costs directly related to the origination of the facility. These costs are included as an increase to the amount due under the facility and are recognized to income using the effective interest method. The fund capitalized other costs of $237,740 which were directly related to origination of facility. These costs are included as an increase to the amount due under the facility and are recognized to income using the effective interest method.

 

In September 2017 the Fund began marketing its loan to the U.S. drilling company and in October 2017 it signed a term sheet with a third party to complete the sale prior to the loan’s maturity date. The Fund expects to recover at least the carrying value (as described in Note 7) of the loan from the sale. As such, the Fund has reclassified the loan to financial assets held for sale on its Balance Sheet as of September 30, 2017.

 

GA8-TC320 Aircraft

 

In October 2014, the Fund entered into an agreement with an Australian aircraft manufacturer to provide a finance facility of $540,000 for a period of 12 months with an interest rate of 9.25%. The loan is secured by a GA8-TC320 aircraft. In October 2015, the Fund extended the facility for an additional 24 months. The loan is carried at amortized cost on the Fund’s Balance Sheet. The Fund recognizes interest income using the effective interest method.

 

In November 2015, the Fund entered into an agreement with the Australian aircraft manufacturer described above to provide an additional finance facility of $579,503, net of fees received, for a period of 24 months with an interest rate of 9.95%. The loan is secured by a GA8-TC320 aircraft. The loan is carried at amortized cost on the Fund’s Balance Sheet. The Fund recognizes interest income using the effective interest method.

 

 13 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

In September 2017, the Fund began negotiations with the Australian aircraft manufacturer on potential buyout options for its loan and lease portfolio. In October 2017, the Fund entered into an agreement where the Australian aircraft manufacturer exercised an early buyout option on its lease and loan agreements. The Australian aircraft manufacturer paid the Fund an amount above carrying value to buyout its remaining loans and leases and to acquire all the underlying collateral. As such, the Fund reclassified its loans with the Australian aircraft manufacturer at their carrying value to financial assets held for sale as of September 30, 2017.

 

The Fund recognized interest income on its portfolio of loans receivable of $273,554 and $897,484 for the three and nine month ended September 30, 2017, respectively, and $386,132 and $1,112,444 for the three and nine month ended September 30, 2016, respectively.

 

7. FINANCIAL ASSETS HELD FOR SALE

 

As of September 30, 2017 the Fund reclassified its finance leases for the GA8-TC320 aircraft, manufacturing equipment, and furniture, office and other related equipment to financial assets held for sale, as discussed in Note 4. The Fund reclassified its sales type lease for smart safes to financial assets held for sale, as discussed in Note 5. The Fund also reclassified its loans receivable from the U.S. drilling company and the GA8-TC320 aircraft to financial assets held for sale, as discussed in Note 6. The reclassifications are a result of the fact that the Fund no longer has the intent to hold these assets until maturity.

 

Financial assets held for sale consists of the following:

 

   September 30, 2017   December 31, 2016 
Loan receivable - U.S. drilling company  $8,688,656   $- 
Loan receivable - GA8-TC320 aircraft   878,379    - 
Sales type lease - Smart safes   371,414    - 
Finance lease - GA8-TC320 aircraft   1,787,811    - 
Finance lease - Bus manufacturing equipment   160,650    - 
Finance lease - Furniture, office and other related equipment   30,034    - 
   $11,916,944   $- 

 

Annual minimum future rentals receivable related to the Fund’s finance leases and sales type leases classified as held for sale over the next five years consist of the following:

 

For the period October 1 to December 31, 2017  $379,111 
For the year ending December 31, 2018   383,661 
For the year ending December 31, 2019   - 
Thereafter   - 
   $762,772 

 

8. PARTICIPATING INTEREST – LOAN RECEIVABLE (ARRANGED BY A RELATED PARTY)

 

The Fund entered into a participation agreement in 2015 with Macquarie Bank Limited London Branch (“MBL UK”), a member of the Macquarie Group of companies, to provide financing to participate in an existing facility that was provided by MBL UK to a UAE information technology distribution company.

 

The Fund made additional advances to MBL UK under this participation agreement in 2016 of $28,345,392, the entire balance of which was repaid in full before the end of the year. There was no outstanding balance on the Fund’s Balance Sheet as of December 31, 2016 and the Fund did not make any additional advances during the nine months ended September 30, 2017.

 

The Fund did not recognize interest income on participating interests for the three and nine months ended September 30, 2017. The Fund recognized interest income on participating interests of $144,483 and $486,489 for the three and nine months ended September 30, 2016, respectively.

 

 14 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

9. LONG-TERM DEBT

 

In September 2015, the Fund entered into a limited recourse loan agreement with a Japanese bank. The loan had a credit limit of $16,750,000 and an interest rate of 3.192% per year. The full amount of the loan was drawn down in October 2015. The Fund’s leased CFM56-7B jet engines were pledged as collateral. The loan had a maturity of October 2019 and could be repaid prior to maturity. The Fund recognized interest expense using the effective interest method.

 

The Fund paid an upfront fee to the lender of $50,750 and incurred legal fees of $6,866 directly related to obtaining the loan. These costs are included as a reduction to the carrying value of the loan and are amortized to interest expense using the effective interest rate method.

 

The Fund recognized interest expense, including the amortization of debt financing costs, of $76,236 and $311,541 for the three and nine months ended September 30, 2017, respectively and $128,756 and $394,098 for the three and nine months ended September 30, 2016, respectively.

 

In August 2017, the Fund repaid the remaining loan balance with a portion of the proceeds from the sale of the CFM56-7B jet engines.

 

10. TRANSACTIONS WITH AFFILIATES

 

As discussed in Note 1, the Fund is required to pay fees to the Manager and its affiliates for providing or arranging all services necessary for its operations, including those relating to equipment acquisitions and disposals, asset management and administrative, reporting and regulatory services. As discussed in Note 8, the Fund entered into a participation agreement with MBL UK, a member of the Macquarie Group of companies and an affiliate of the Manager.

 

The Fund pays the Manager and its affiliates’ fees for operating services performed including:

 

Acquisition fees of 3% of the purchase price that the Fund pays for each item of equipment or direct or indirect interest in equipment acquired, including under lease agreements, trading transactions, residual value guarantees, pay per use agreements, forward purchase agreements, total lease return swaps, participation agreements, equipment purchase options, other equipment-related transactions, joint ventures, special purpose vehicles and other Fund arrangements. Since the fund has entered its liquidation period on July 1, 2016, the fund does not expect to incur any more acquisition fees from this date going forward.

 

Asset management fees equal to the lesser of: (a) (i) 5% of gross rental payments from non-full payout leases (except that 1% of gross rental payments shall be payable with respect to non-full payout leases for which management services are performed by non-affiliates under the Manager’s supervision); (ii) 2% of gross rental payments from full payout leases which contain net lease provisions; and (iii) 7% of gross rental payments from equipment for which the Fund provides services in addition to equipment management relating to the continued and active operation of the Fund’s equipment such as, but not limited to, ongoing marketing and re-leasing of equipment and hiring or arranging for the hiring of crews or operating personnel for the Fund’s equipment and similar services; or (b) the amount of fees which are competitive for similar services;

 

Remarketing fees equal to the lesser of (i) 3% of the purchase price paid to the Fund by the purchaser of the investment, or (ii) one-half of reasonable, customary and competitive brokerage fees paid for services rendered in connection with the sale of equipment of similar size, type and location. Payment of remarketing fees shall be subordinated until such time when investor return has been achieved. “Investor Return” means such time when the aggregate amount of distributions to the members equals, as of any determination date, an amount equal to a pre-tax 8.0% per annum internal rate of return compounded daily on all capital contributions of members;

 

Out-performance fees depending upon the extent to which Investor Return has been achieved. Prior to the time that Investor Return is achieved, cash distributions will be made 99.0% to the Fund’s members and 1.0% to the Manager. After the time that Investor Return is achieved, cash distributions will be made 81.0% to the Fund’s members and 19.0% to the Manager; and

 

Reimbursement of operating expenses depending upon the scope and volume of services the Manager provides to the Fund.

 

The Fund paid management fees to Macquarie Aircraft Leasing Services (“MALS”), for management services related to the aircraft lease for the Airbus model A320-200. The fees paid by the Fund to MALS were 3% of gross rental receipts and were expensed as incurred and included in the Fund’s Statements of Operations. The Fund sold the Airbus model A320-200 in March 2017 and no longer pays management fees to MALS.

 

Related party fees are invoiced as the work is performed and settled monthly. The operating expense reimbursement is generally invoiced and settled annually.

 

For the three and nine months ended September 30, 2017 and 2016, the Fund has accrued, in fees payable (related party) on the Fund’s Balance Sheet, or paid to the Manager or its affiliates the following amounts:

 

 15 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

         Three Months Ended   Nine Months Ended 
Entity  Capacity  Description  September 30, 2017   September 30, 2016   September 30, 2017   September 30, 2016 
                       
Macquarie Asset Management Inc.  Manager  Acquisition fees (1)  $-   $-   $-   $222,517 
Macquarie Asset Management Inc.  Manager  Management fee (2)   72,773    116,697    258,794    389,086 
Macquarie Asset Management Inc.  Manager  Operating Expenses (2)(3)   71,456    92,994    207,131    307,066 
Macquarie Asset Management Inc.  Manager  Outperformance fee (2)   138,427    241,556    369,994    318,726 
Macquarie Aircraft Leasing Services  Affiliate  Management fee (2)   -    17,010    17,010    51,030 

 

 

 

(1)Amount is capitalized into the carryingvalue of loan receivables.
(2)Amount charged directly to operations.
(3)Amount for the nine months ended September 30, 2016 includes $12,740 allocated to carrying amount of loan receivables and remaining amount charged directly to operations.

 

11. MEMBER’S EQUITY

 

As of September 30, 2017 and December 31, 2016, the Fund had 9,132,125 and 9,183,494 shares of limited liability company membership interest outstanding, respectively (including the Distribution Reinvestment Plan (“DRP”) shares and net of repurchased shares). As of September 30, 2017 and December 31, 2016, the cumulative number of shares repurchased since inception was 525,992 and 474,623, respectively.

 

The Fund declared distributions of $13,841,435 during the three months ended September 30, 2017, of which $13,240,970 were paid and $600,465 were payable as of September 30, 2017.

 

The $13,841,435 in distributions declared during the three months ended September 30, 2017 was approximately $1.52 per share of $10.00 par value membership interest ($9.00 par value for DRP shares), of which approximately $1.26 represented a partial-liquidating distribution paid from members’ equity.

 

12. FAIR VALUE MEASUREMENTS

 

The Fund is required to disclose the fair value of financial instruments, as defined below. None of the Fund’s assets and liabilities are carried at fair value on the Fund’s Balance Sheet on a recurring basis. 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 at the measurement date. Fair value measurements are not adjusted for transaction costs. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, generally on a national exchange.

 

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

 

Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Fund’s own estimates of assumptions that market participants would use in pricing the asset or liability.

 

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

Non-Recurring Fair Value Measurements

 

On June 30, 2017, the Fund measured its operating lease assets for smart safes at a fair value of $589,213 as part of its impairment analysis in order to determine the impairment charge of $584,590 recognized in the Fund’s Statements of Operations for the three and six months ended June 30, 2017 (Note 3). The smart safes were measured at fair value on a non-recurring basis, which the Fund considers a Level 3 measurement. In determining the value of the smart safes the Fund utilized information derived from the current status of negotiations around the buyout price with the lessee, which was affirmed when the lease was amended in August 2017.

 

 16 

 

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

 

Fair Value of Financial Instruments

 

The Fund’s financial instruments, which are not carried on the Fund’s Balance Sheet at fair value on a recurring basis, are carried at contracted amounts which approximate fair value. As of September 30, 2017 and December 31, 2016, they consist of cash and cash equivalents and restricted cash, which are classified as Level 1 under the hierarchy defined above, and loans receivable, financial assets held for sale, and loans payable which are classified as Level 3, based on the fact that they were valued using inputs that are generally unobservable and are supported by little or no market data. The Fund uses projected cash flows to estimate the fair value of these financial assets and liabilities.

 

The fair value of the Fund’s fixed rate loans receivable was estimated by discounting the future cash flows related to the loan. The discount rate was derived by adjusting the margin at inception for material changes in the counterparty’s risk and adding the applicable fixed rate based on the current interest rate curve. The fixed rate loans receivable are classified as Level 3, based on the fact that they were valued using inputs that are generally unobservable and are supported by little or no market data.

 

   September 30, 2017 
   Carrying Value   Fair Value 
           
Fixed rate loan receivables  $9,567,035   $9,586,132 

 

Fair value information with respect to certain financial instruments which are not carried on the Fund’s Balance Sheet at fair value is not separately provided given that fair value disclosures of certain kinds of lease arrangements are not required under U.S. GAAP and the carrying value of the Fund’s other financial instruments approximates fair value due to the fact that they have short term maturities (all less than one year) and credit risk is deemed low.

 

13. COMMITMENTS AND CONTINGENCIES

 

Other than obligations associated with investing activities or as set forth in the Fund’s operating agreement, there were no contractual obligations, commitments or contingencies as of September 30, 2017 and December 31, 2016, respectively.

 

 17 

 

 

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

 

The following is a discussion of the Fund’s current financial position and results of operations. This discussion should be read together with the Fund’s unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and related notes included in the Fund’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 24, 2017. This discussion should also be read in conjunction with the disclosures below regarding “Forward-Looking Statements.”

 

As used in this Quarterly Report on Form 10-Q, references to “we,” “us,” “our” or similar terms refer to Macquarie Equipment Leasing Fund, LLC (the “Fund”).

 

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,” “will,” “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 the Fund’s current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside the Fund’s 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

 

Macquarie Equipment Leasing Fund, LLC, a Delaware limited liability company, was formed on August 21, 2008 for the purpose of being an equipment leasing program that acquired or originated a diversified portfolio of equipment and equipment leases and loans, and other equipment-related investments. The majority of the Fund’s equipment is leased to corporate clients. The Fund’s objective was to generate income through the collection of lease rentals, interest income, and other revenues, as well as through the sale of leased and off lease equipment and other portfolio investments. The Fund’s fiscal year end is December 31.

 

The initial closing date for the Fund was March 5, 2010, the date at which the Fund raised over $2,500,000 and reached the minimum offering amount. The Fund’s offering was for a total of 15,000,000 shares at a price of $10.00 per share, subject to certain reductions. The Fund also offered up to 800,000 shares pursuant to its Distribution Reinvestment Plan (“DRP”) at a public offering price of $9.00 per share. The Manager made capital contributions to the Fund totaling $1,505,000.

 

The Fund’s offering period ended on March 19, 2012. The Fund’s operating period commenced on that date. The Fund acquired and disposed of equipment, entered into equipment lease and other equipment-related transactions and made loans secured by equipment collateral during the operating period. During the operating period, the Fund generated cash from equipment leases and loans. In addition, as owned equipment has come off lease, the Fund has either sold or re-leased that equipment. Thus, the Fund has also generated cash through the sale of owned equipment. The Fund reinvested equipment sale proceeds and cash generated from equipment investments into additional equipment during the operating period to the extent that the cash was not required to pay distributions and expenses or be set aside as reserves. The Fund’s revenue has been impacted by the timing of when sales proceeds can be invested in new equipment transactions. During any fiscal period, the Fund’s revenue may have been higher or lower depending on when equipment came off lease and the time it took to re-lease or sell the equipment.

 

The Fund’s operating period ceased on June 30, 2016 and its liquidation period commenced on July 1, 2016, which may last for a period of up to three years. The Fund is currently pursuing divestment opportunities for its remaining portfolio and may complete the liquidation before the three year period is complete. To coincide with the beginning of the Fund’s liquidation period, the Manager suspended the Fund’s redemption program. However, the Manager reserved the right to approve member requests for redemptions in cases of death or proof of disability (as the term is defined in the Americans with Disabilities Act of 1990, as amended). During the liquidation period, the Fund will not pursue any new equipment lease and loan investment opportunities and will continue to manage end of lease options and investigate divestment opportunities for its portfolio.

 

Equipment leasing activity levels are impacted by general economic conditions in global and local economies including the level of interest rates in various jurisdictions and more specifically business appetite for investment in new and used equipment. The availability of liquidity to finance equipment for counterparties on satisfactory terms as well as business confidence to invest in equipment throughout the cycles impacts on equipment leasing volumes and pricing in the marketplace. Pricing in the global equipment finance market has become more competitive in recent years due to the reduction in interest rates in the U.S. and Europe and entry into the market of investors seeking income or yield.

 

 18 

 

 

Results of Operations for the Three and Nine Months Ended September 30, 2017 and 2016

 

The Fund entered its liquidation period on July 1, 2016. During the liquidation period, the Fund will continue to manage end of lease options and investigate divestment opportunities for its portfolio. These activities are reflected in the results of operations, balance sheet movements and liquidity analysis below.

 

Total revenue for the three months ended September 30, 2017 was $2,882,614 compared to $9,282,364 for the three months ended September 30, 2016, a decrease of $6,339,750. The decrease was driven by following:

 

·A decrease in finance and rental income of $3,250,746 when compared to the three months ended September 30, 2016 due to sales of leased equipment in the first and third quarters of 2017 and third quarter of 2016; and

 

·A decrease in gains on sale of leased equipment of $2,830,781 compared to the three months ended September 30, 2016 due to higher volume of sales in the third quarter of 2016; and

 

·A decrease in interest income of $257,061 due to the repayment of the Fund’s participation agreements with MBL UK in the fourth quarter of 2016 and no further advances being made during the three months ended September 30, 2017.

 

Total expenses for the three months ended September 30, 2017 were $595,617 compared to $1,626,320 for the three months ended September 30, 2016, a decrease of $1,030,703. Movements in expenses were comprised of the following:

 

·A decrease in depreciation of $775,640 due to the aforementioned sales of leased assets during the third quarter of 2016 and the reclassification of the CFM56-7B jet engines, Airbus A320-200 Aircraft, and machine tool equipment as held for sale as of June 30, 2017 and December 31, 2016, respectively. In addition, the smart safe leases were reclassified from operating leases to finance leases in the third quarter of 2017;

 

·A decrease in other expenses of $120,071 primarily due to a decrease in outperformance fees. The Fund paid outperformance fees of $138,427 during the three months ended September 30, 2017 compared to $241,556 during the same period in 2016;

 

·A decrease in management fees of $60,934 due to the aforementioned sales of leased equipment; and

 

·A decrease in interest expense of $52,520 due to full repayment of the long-term debt in August 2017.

 

As a result, the Fund’s net income for the three months ended September 30, 2017 was $2,286,997 compared to $7,656,044 for the three months ended September 30, 2016, a decrease of $5,369,047.

 

Total revenue for the nine months ended September 30, 2017 was $7,639,725 compared to $15,700,111 for the nine months ended September 30, 2016, a decrease of $8,060,386. The decrease was driven by following:

 

·A decrease in finance and rental income of $6,116,521 when compared to the nine months ended September 30, 2016 due to sales of leased equipment in the first and third quarters of 2017 and second and third quarters of 2016;

 

·A decrease in gains on sale of leased equipment of $1,151,781 compared to the nine months ended September 30, 2016 due to higher sales volume in the third quarter of 2016; and

 

·A decrease in interest income of $701,449 due to the repayment of the Fund’s participation agreements with MBL UK in the fourth quarter of 2016 and no further advances being made during the nine months ended September 30, 2017.

 

Total expenses for the nine months ended September 30, 2017 was $2,858,273 compared to $4,996,314 for the nine months ended September 30, 2016, a decrease of $2,138,041. Movements in expenses were comprised of the following:

 

·A decrease in depreciation of $2,333,798 due to the aforementioned sales of leased assets during the second and third quarters of 2016 and the classification of the CFM56-7B jet engines, Airbus A320-200 Aircraft and machine tool equipment as held for sale as of June 30, 2017 and December 31, 2016, respectively; and

 

·A decrease in management fees of $164,312 due to the aforementioned sales of leased equipment; partially offset by

 

·Impairment loss recognized related to the Fund’s smart safes of $584,590 in June 2017 due to a decline in the market value of the smart safes.

 

As a result, the Fund’s net income for the nine months ended September 30, 2017 was $4,781,452 compared to $10,703,797 for the nine months ended September 30, 2016, a decrease of $5,922,345.

 

 19 

 

 

Inflation and changing prices have not had a material impact on the Fund’s leasing and interest revenue, net sales, and income from continuing operations for the three and nine months ended September 30, 2017 and 2016, respectively.

 

Financial Condition

 

This section discusses the major balance sheet variances from September 30, 2017 compared to December 31, 2016.

 

Total Assets

 

Total assets decreased by $48,173,871 from $62,200,779 as of December 31, 2016 to $14,026,908 as of September 30, 2017 primarily due to:

 

·A decrease in leased equipment at cost and held for sale by $42,274,007 during the nine months ended September 30, 2017 due to the sale of the Airbus A320-200 and reclassification of the machine tool equipment from an operating lease to a finance lease in the first quarter of 2017, and the sale of the CFM56-7B jet engines and the reclassification of the smart safes from operating leases to financial assets held for sale in third quarter of 2017; and

 

·Loans receivable and net investment in finance leases decreased to zero as of September 30, 2017 as the remaining assets were reclassified to financial assets held for sale as of September 30, 2017. Financial assets held for sale increased by $11,916,944 due to the reclassification; and

 

·Loans receivable decreased by $3,102,326 during the nine months ended September 30, 2017 prior to be being reclassified to financial assets held for sale due to principal repayments received during the period; and

 

·A decrease in cash of $2,748,645 due to total distributions paid during the nine months ended September 30, 2017 of $36,999,332 and repayments of long term debt of $14,702,024, partially offset by proceeds from the sale of the Airbus A320-200 and the CFM56-7B jet engines.

 

Total Liabilities

 

Total liabilities decreased by $15,811,082, from $16,919,958 as of December 31, 2016 to $1,108,876 as of September 30, 2017 primarily due to:

 

·A decrease in long-term debt of $14,702,024 due to the Fund fully repaying its long-term debt with a portion of the proceeds from sale of the CFM56-7B jet engines; and

 

·A decrease in deferred finance and rental income of $951,429 due to the sale of the Airbus A320-200 Aircraft. The lessee paid its rentals in quarterly in advance and as a result of the sale there were no advance rentals on the Fund’s balance sheet; partially offset by

 

·An increase in fees payable to the Manager of $202,139 due to reimbursable operating expenses incurred by the Manager on behalf of the Fund. The balance increases on a quarterly basis as the operating expenses payable to the Manager are settled annually in December.

 

Equity

 

Equity decreased by $32,362,789, from $45,280,821 as of December 31, 2016 to $12,918,032 as of September 30, 2017. The decrease in equity is primarily due to distributions declared to investors of $36,975,821, of which $36,375,356 were paid and $600,465 were payable as of September 30, 2017. Additionally, 51,369 shares were redeemed for $168,421 during the nine months ended September 30, 2017. The decreases were partially offset by net income of $4,781,452 during the same period.

 

Liquidity and Capital Resources

 

Cash Flows Summary

 

The following table sets forth summary cash flow data for the nine months ended September 30, 2017 and 2016.

 

   September 30, 2017   September 30, 2016 
Net cash provided by/(used in) :          
Operating activities  $2,806,239   $8,183,464 
Investing activities   46,319,148    12,760,230 
Financing activities   (51,874,032)   (33,863,271)
Net decrease in cash and cash equivalents  $(2,748,645)  $(12,919,577)

 

 20 

 

 

See the Statements of Cash Flows included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q for additional information.

 

As of September 30, 2017, the Fund had cash and cash equivalents of $2,014,303. The amount of cash provided by operating activities for the nine months ended September 30, 2017 of $2,806,239 consisted primarily of rentals and interest from equipment leases and loans collected during the period. The decrease of $5,377,225 from the nine months ended September 30, 2016 is primarily due to sales of leased equipment in the first and third quarters of 2017 and third quarter of 2016.

 

The cash provided by investing activities for the nine months ended September 30, 2017 is primarily attributable to proceeds of $43,184,125 from the sale of the Airbus A320-200 and the CFM56-7B jet engines, the agreed-upon buyout payment received from the lessee of the machine tool equipment, and loan repayments of $3,135,023. There were no cash outflows during the nine months ended September 30, 2017 from investing activities. The cash provided by investing activities increased by $33,558,918 when compared to the nine months ended September 30, 2016, primarily due to the aforementioned sales proceeds received by the Fund. The Fund had cash inflows from sales of leased equipment of $18,504,025 during the nine months ended September 30, 2016, which is a decrease of $24,680,100 when compared to the same period in 2017. Additionally, the Fund had cash outflows from investing activities of $14,469,408 related to its loan receivable during the nine months ended September 30, 2016.

 

The cash used in financing activities for the nine months ended September 30, 2017 is primarily attributable to distributions to members, repayment of principal on long term debt, and share repurchases. The cash used in financing activities increased by $18,010,761 compared to the nine months ended September 30, 2016. The increase is due to the fact that distributions paid by the Fund increased by $5,126,773 during the nine months ended September 30, 2017 and an increase in repayments of principal on long-term debt of $13,429,269 due to the full repayment of long-term debt.

 

Cash and cash equivalents include cash in banks and highly liquid investments with original maturities of three months or less and are held in operating and money market accounts at Wells Fargo Bank, N.A.

 

Sources and Uses of Cash

 

The Fund’s main activities and main use of cash to date has been to acquire a diversified portfolio of equipment, equipment leases, loans and other equipment-related investments which are denominated in U.S. dollars and are on lease to corporate clients around the world. The Fund entered its liquidation period on July 1, 2016 and as a result, will no longer pursue new investments in equipment-related transactions or make loans to new counterparties. The Fund will continue to pay distributions to its members during this period.

 

As of November 14, 2017 we have used approximately $188,173,701 of the offering and equipment sale proceeds to acquire the following assets:

 

   Purchase Price 
Financing provided under participating loan arrangements (fully repaid)  $72,545,705 
Aircraft engines (2 x CFM56-7B jet engines) (sold in August 2017)   25,338,321 
Aircraft (Airbus model A320-200) (sold in March 2017)   19,551,352 
Financing provided to the US drilling company   15,000,000 
Aircraft Bombardier CRJ 700 ER (sold in September 2016)   9,786,555 
Flat bed rail cars (sold in July 2016)   7,777,356 
Participation interest in Commercial jet aircraft engines (sold in March 2012)   6,500,000 
Semiconductor manufacturing tools (sold in June 2012)   6,400,800 
Machine tool equipment (sold in September 2017)   5,768,966 
Racetrack equipment (sold in August 2016)   5,311,507 
Smart safes   3,294,695 
GA8-TC320 Airvan Aircraft   2,499,292 
GA8-TC320 Airvan Aircraft (sold in May 2014, Aug 2014, Dec 2014 & Jan 2016)   2,184,398 
Self-serve checkout equipment (sold in September 2015)   2,097,353 
Financing provided to aircraft lessor   1,128,328 
Furniture, office and other related equipments (sold in Nov 2013, Mar 2014 & Sep 2014)   1,012,843 
Bus manufacturing equipment   854,333 
Furniture, office and other related equipment   669,010 
ETS-364B semiconductor test system (sold in May 2012)   383,898 
Smart safes (sold in July 2013)   68,989 
   $188,173,701 

 

 21 

 

 

Sources of Liquidity

 

The Fund believes that cash generated from our operating activities and from debt borrowings will be sufficient to finance its liquidity requirements for the foreseeable future, including paying distributions to its members, payment of management fees, equipment maintenance events, administrative expense reimbursements, and any expenses associated with liquidating the Fund. The Fund’s ability to generate cash in the future is subject to general economic, financial, competitive, regulatory and other factors that affect the Fund and its lessees’ businesses that are beyond its control.

 

The Fund’s liquidation period may last up to three years, however the Fund will likely liquidate earlier than the latest possible date. As such, the Fund’s liquidity may vary in the future, increasing from proceeds from the sales of the Fund’s remaining investments and decreasing as the Fund pays out distributions and expenses.

 

The Fund’s liquidity may be adversely affected by unanticipated or greater than anticipated operating costs or losses, including the inability of a client of the Fund to make timely lease payments or costs associated with off lease assets or assets available for sale. The Fund anticipates that it will fund its operations from cash flow generated by operating and financing activities and through divestiture of existing assets. The Manager has no intent to permanently fund any cash flow deficit of the Fund or provide other financial assistance to the Fund.

 

Distributions

 

The Fund paid total cash distributions of $13,842,678 and $24,155,593 to its members during the three months ended September 30, 2017 and 2016, respectively and cash distributions of $36,999,332 and $31,872,559 to its members during the nine months ended September 30, 2017 and 2016, respectively. While the Fund anticipates making monthly cash distributions, it may vary the amount of, or completely suspend making distributions at any time and without notice.

 

Commitments, Contingencies and Off-Balance Sheet Transactions

 

Other than obligations associated with the Fund’s investing activities or as set forth in our operating agreement, we have no contractual obligations and commitments, contingencies or off-balance sheet transactions as of September 30, 2017 and December 31, 2016, respectively.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of the Fund’s financial condition and results of operations are based upon the Fund’s 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 the Fund’s assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

 

Accounting Policies, Accounting Changes and Future Application of Accounting Standards

 

See Note 2, “Significant Accounting Policies”, in the Fund’s financial statements in “Financial Statements and Supplementary Data” in Part I, Item 1, of this Quarterly Report on Form 10-Q for financial information and further discussions, for a summary of the Company’s significant accounting policies, including a discussion of recently adopted and issued accounting pronouncements.

 

Item 3.Quantitative and Qualitative Disclosures about Market Risk

 

Although this information is not required to be disclosed for smaller reporting companies, we believe that there have been no material changes to the disclosures reported in our Annual Report on Form 10-K, dated as filed with the Securities and Exchange Commission on February 24, 2017.

 

Item 4.Controls and Procedures

 

Under the direction and with the participation of the Manager’s President and Principal Financial Officer, the Fund evaluated its disclosure controls and procedures (as such term is defined under Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Manager’s President and Principal Financial Officer concluded that the Fund’s disclosure controls and procedures were effective as of September 30, 2017. There has been no change in the Fund’s internal controls over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act) that occurred during the three months ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal controls over financial reporting.

 

 22 

 

 

PART II. OTHER INFORMATION

 

Item 1.Legal Proceedings

 

In the ordinary course of business, there may be certain claims, suits and complaints filed against the Fund. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Fund’s financial position. No material legal proceedings are currently pending or threatened, to the Fund’s knowledge, against the Fund or against any of its assets.

 

Item 1A.Risk Factors

 

Not applicable.

 

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

 

(a) None.

 

(b) None.

 

(c) A summary of the share repurchases during the quarter is as follows:

 

Period  Total Number of
Shares Purchased
   Average Price Paid
per Share
   Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
   Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet be Purchased
Under the Plans or
Programs (1)
 
July 1 to July 31, 2017   -    -    -    - 
August 1 to August 31, 2017   18,905   $2.68    18,905    - 
September 1 to September 30, 2017   -    -    -    - 
Total   18,905   $2.68    18,905    - 

 

(1) Our operating agreement, dated June 19, 2009, and which does not have an expiration date, allows for the repurchase of shares according to a specified repurchase formula set forth therein. Our operating agreement limits the number of shares that can be repurchased in any one year, but there is no maximum number of shares that may be repurchased over time. Repurchased shares may not be reissued.

 

Item 3.Defaults Upon Senior Securities

 

Not applicable.

 

Item 4.Mine Safety Disclosures

 

Not applicable.

 

Item 5.Other Information

 

None.

 

Item 6.Exhibits

 

An exhibit index has been filed as part of this Report on page E-1.

 

 23 

 

 

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.

 

MACQUARIE EQUIPMENT LEASING FUND, LLC

 

By: /s/ David Fahy  
Name: David Fahy  
Title: President of the Manager and Principal Executive  
  Officer of Registrant  

 

Date: November 14, 2017

 

By: /s/ Brett Beldner  
Name: Brett Beldner  
Title: Principal Financial Officer of the Manager and Principal  
  Accounting Officer of Registrant  

 

Date: November 14, 2017

 

 24 

 

 

Exhibit Index

 

Exhibit
Number
  Description
     
31.1*   Rule 13a-14(a)/15d-14(a) Certification of President of the Manager and Principal Executive Officer of Registrant.
     
31.2*   Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of the Manager and Principal Accounting Officer of Registrant.
     
32.1**   Section 1350 Certification of President of the Manager and Principal Executive Officer of Registrant.
     
32.2**   Section 1350 Certification of Principal Financial Officer of the Manager and Principal Accounting Officer of Registrant.
     
101.0*   The following materials from the Quarterly Report on Form 10-Q of Macquarie Equipment Leasing Fund, LLC for the three months ended September 30, 2017, filed on November 14, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016, (ii) the Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited), (iii) the Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (Unaudited), (iv) the Statements of Changes in Members’ Equity for the Nine Months Ended September 30, 2017 (Unaudited) and, (v) the Notes to Financial Statements (Unaudited).

 

 

 

*Filed herewith.

 

**Furnished, rather than filed herewith.

 

 E-1