Annual Report for Fiscal Year Ending DECEMBER 31, 2023 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Certain statements within this Annual Report on Form 10-K 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," "should," "anticipate," "believe," "estimate," "expect," "intend," "predict," "continue," "further," "seek," "plan," 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 and 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 Delaware limited partnership formed on January 14, 2016. Our fund operates under a structure which pools the capital invested by our partners. This pool of capital is then used to invest in business-essential, revenue-producing (or cost-saving) equipment and other physical assets with substantial economic lives and, in many cases, associated revenue streams and project financings. The pooled capital contributions are also used to pay fees and expenses associated with our organization.

Our principal investment strategy is to invest in business-essential, revenue-producing (or cost-savings) equipment with high in-place value and long, relative to the investment term, economic life and project financings. We expect to achieve our investment strategy by making investments in equipment already subject to lease or originating equipment leases in such equipment, which will include: (i) purchasing equipment and leasing it to third-party end users; (ii) providing equipment and other asset financing; (iii) acquiring equipment subject to lease; (iv) acquiring ownership rights (residual value interests) in leased equipment at lease expiration and (v) remarketing and selling other asset inventory that has been reclassified from investment in finance leases. From time to time, we may also purchase equipment and sell it directly to our leasing customers.

Many of our investments were structured as full payout finance leases or operating leases. Full payout finance leases generally are leases under which the rent over the initial term of the lease will return our invested capital plus an appropriate return without consideration of the residual value, and where the lessee may acquire the equipment or other assets at the expiration of the lease term. Operating leases generally are leases under which the aggregate non-cancelable rental payments during the original term of the lease, on a net present value basis, are not sufficient to recover the purchase price of the equipment or other assets leased under the lease. The Partnership did not have any operating leases as of December 31, 2023 and 2022.

We invested by way of loans, participation agreements and residual sharing agreements where we would acquire an interest in a pool of equipment or other assets, or rights to the equipment or other assets, at a future date. We also structured investments as project financings that are secured by, among other things, essential use equipment and/or assets. Finally, we may use other investment structures that our Investment Manager believes will provide us with the appropriate level of security, collateralization, and flexibility to optimize our return on our investment while protecting against downside risk, such as vendor and rental programs. In many cases, the structure will include us holding title to or a priority or controlling position in the equipment or other asset.

We invested in equipment and other assets that are considered essential use or core to a business or operation in the agricultural, energy, environmental, medical, manufacturing, technology, and transportation industries. Our Investment Manager may identify other assets or industries that meet our investment objectives. We invested in equipment, other assets and project financings located primarily within the United States of America and the European Union but may also make investments in other parts of the world.

We are currently in the Liquidation Period. The Operating Period concluded on October 3, 2021. The Offering Period concluded on March 31, 2019. During the Operating Period, we invested most of the net proceeds from our offering in business-essential, revenue-producing (or cost-saving) equipment, other physical assets with substantial economic lives and, in many cases, associated revenue streams and project financings. The Operating Period began on the date we admitted our first Limited Partners, at the initial closing, which occurred on October 3, 2016 and concluded on October 3, 2021. At our initial closing, we reimbursed our Investment Manager for a portion of the fees and expenses associated with our organization and offering which they previously paid on our behalf and we funded an immaterial capital reserve. The Liquidation Period, which began on October 4, 2021, is the period in which we will sell assets in the ordinary course of business and will last two years, unless it is extended, at the sole discretion of the General Partner. The General Partner extended the Liquidation Period through June 30, 2026.

Our General Partner, our Investment Manager and their affiliates, and certain non-affiliates (namely, Selling Dealers) receive fees and compensation from the offering of our Units, including the following, with any and all compensation paid to our General Partner solely in cash. We pay an underwriting fee of 2% of the gross proceeds of the offering (excluding proceeds, if any, we receive from the sale of our Units to our General Partner or its affiliates) to our selling agent or selling agents. From these underwriting fees, a selling agent may pay Selling Dealers, a non-accountable marketing fee based upon such factors as the volume of sales of such Selling Dealers, the level of marketing support provided by such participating dealers and the assistance of such Selling Dealers in marketing the offering, or to reimburse representatives of such Selling Dealers for the costs and expenses of attending our educational conferences and seminars. This fee will vary, depending upon separately negotiated agreements with each Selling Dealer. In addition, we pay a sales commission to Selling Dealers up to 5% of the gross proceeds of the offering (excluding proceeds, if any, we receive from the sale of our Units to our General Partner or its affiliates).

Our General Partner receives an organizational and offering expense allowance of up to 1.5% of our offering proceeds to reimburse it for expenses incurred in preparing us for registration or qualification under federal and state securities laws and subsequently offering and selling our Units. The organizational and offering expense allowance will be paid out of the proceeds of the offering. The organizational and offering expense allowance will not exceed the actual fees and expenses incurred by our General Partner and its affiliates. Because organizational and offering expenses will be paid as and to the extent they are incurred, organizational and offering expenses may be drawn disproportionately to the gross proceeds of each closing.

During our Operating Period, our Investment Manager received a structuring fee in an amount equal to 1.5% of each cash investment made, including reinvestments, payable on the date each such investment is made.

During our Operating Period and our Liquidation Period, our Investment Manager receives a management fee in an amount equal to the greater of (i) 2.5% per annum of the aggregate offering proceeds, payable monthly in advance or (ii) $62,500 per month. Effective January 1, 2023, the Investment Manager reduced the management fee from $62,500 per month ($750,000 per annum) to $50,000 per month ($600,000 per annum). Effective January 1, 2024, the Investment Manager reduced the management fee from $50,000 per month ($600,000 per annum) to $35,000 per month ($420,000 per annum). Effective January 1, 2025, the Investment Manager reduced the management fee from $35,000 per month ($420,000 per annum) to approximately $16,140 per month (approximately $193,700 per annum) which will be used to offset the Partnership's due from its Investment Manager balance and the General Partner's deficit capital balance.

Our General Partner will initially receive 1% of all distributed distributable cash. Our General Partner has a Promotional Interest in us equal to 20% of all distributable cash after we have provided a return to our Limited Partners of their respective capital contributions plus an 8% per annum, compounded annually, cumulative return on their capital contributions.

Current Business Environment, Industry Trends and Outlook

According to the Equipment Leasing and Finance Foundation's "2025 Equipment Leasing and Financing U.S. Economic Outlook" the U.S. economy is on uneven footing. While business-friendly tax and regulatory policy are tailwinds, consumer spending has slowed and job growth has been driven almost exclusively by healthcare, leisure and hospitality, and state and local government. Meanwhile, the Fed has been hesitant to cut rates due to worries of tariff-induced inflation later this year. With uncertainty elevated and aggregate demand softening, only modest economic growth is expected in 2025. Equipment and software investment started off 2025 with a bang, growing by nearly 22% (annualized). However, the robust expansion, which was heavily concentrated in the technology and medical sectors, was fueled by efforts to front-load purchases to avoid new tariffs. Investment growth likely slowed markedly in Q2, but if the Fed cuts rates in Q3 and Q4 as anticipated, it could provide a modest boost to investment later this year. The equipment finance industry should benefit from the recent passage of the One Big Beautiful Bill Act in multiple ways, including a permanent return to 100% expensing and EBITDA-based interest deduction, as well as a permanent 20% deduction for qualified business income for pass-through businesses. However, the accelerated phaseout for clean energy tax incentives will likely reduce investment in some verticals. Over the next six months the Foundation expects the following trends to materialize on a year-over-year basis: Agriculture machinery investment growth is likely to remain negative. Construction machinery investment growth is likely to remain in negative territory. Energy and electrical equipment investment growth should strengthen. Industrial equipment investment growth should strengthen. Medical equipment investment growth is expected to moderate. Technology equipment and software investment growth may soften but should remain positive. Transportation equipment investment growth should improve.

Recent Significant Transactions

Infrastructure Equipment

On August 28, 2020, the Partnership funded a finance lease for $954,498 for infrastructure equipment based in North Carolina. The finance lease required 60 monthly payments of $21,498 and commenced on October 1, 2020. This lease was paid off in April 2023 for net cash proceeds of $600,971. The lease had a net book value of $539,647, resulting in a gain of $61,324 which is included in Finance Income in the statements of operations.

Effective January 1, 2023, the Investment Manager reduced the management fee from $62,500 per month ($750,000 per annum) to $50,000 per month ($600,000 per annum).

On February 1, 2023, in connection with a loan and security agreement entered into on October 18, 2019, the Partnership paid off the outstanding loan facility balance and accrued interest, and terminated the agreement with the third party.

From January 2023 to December 2023, in connection with a lease facility agreement that was funded between March 26, 2020 through September 22, 2020 that was later reclassified to Other Assets, the Partnership sold some equipment for total net cash proceeds of $136,121. The equipment had a net book value of $165,278 resulting in a loss of $29,157. Furthermore, the Partnership sold an additional portion of the equipment, via a finance lease, for total monthly rental payments of $38,000, which is equivalent to the net book value. The finance lease required 12 monthly payments of $3,167 and commenced on February 1, 2023. Lastly, the Partnership sold an additional portion of the equipment, via a finance lease, for total monthly rental payments of $58,000. The equipment had a net book value of $56,711 resulting in a gain of $1,289. The finance lease required 12 monthly payments of $4,833 and commenced on July 18, 2023.

From January 2023 to December 2023, in connection with a lease facility agreement entered into on December 5, 2019 that was later reclassified to Other Assets, the Partnership received $393,613 from the sale of assets and from a pre-existing payment schedule.

Critical Accounting Estimates

An understanding of our critical accounting policies is necessary to understand our financial results. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires our General Partner and our Investment Manager to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates will primarily include the determination of the allowance for credit losses on notes and leases receivable, determination of estimated fair value of repossessed assets and how impairments are recognized on other assets and the estimated useful lives and residual values of the leased equipment we acquire. Actual results could differ from those estimates.

Lease Classification and Revenue Recognition

Each equipment lease we enter into is classified as either a finance lease or an operating lease, which is determined at lease inception, based upon the terms of each lease, or when there are significant changes to the lease terms. During the years ended December 31, 2023 and 2022, our leases were primarily financing sales-type leases. We capitalize initial direct costs associated with the origination and funding of lease assets. Initial direct costs include both internal costs (e.g., labor and overhead), if any, and external broker fees incurred with the lease origination. Costs related to leases that are not consummated are not eligible for capitalization as initial direct costs and are expensed as incurred as acquisition expense. For a finance lease, initial direct costs are capitalized and amortized over the lease term using the effective interest rate method. For an operating lease, the initial direct costs are included as a component of the cost of the equipment and depreciated over the lease term.

For finance leases, we record, at lease inception, 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, if any, and the related unearned income. Unearned income represents the difference between the sum of the 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 the straight-line basis over the lease term. Billed operating lease receivables are included in accounts receivable until collected. Accounts receivable is stated at its estimated net realizable value. Deferred revenue is the difference between the timing of the receivables billed and the income recognized on the straight-line basis.

Our Investment Manager has an investment committee that approves each new equipment lease and other financing transaction. As part of its process, the investment committee determines the residual value, if any, to be used once the investment has been approved. The factors considered in determining the residual value include, but are not limited to, the creditworthiness of the potential lessee, the type of equipment considered, how the equipment is integrated into the potential lessee's business, the length of the lease, the industry in which the potential lessee operates and the secondary market value of the equipment. Residual values are reviewed for impairment in accordance with our impairment review policy.

The residual value assumes, among other things, that the asset will be utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. The residual value is calculated using information from various external sources, such as trade publications, auction data, equipment dealers, wholesalers and industry experts, as well as inspection of the physical asset and other economic indicators.

Long-lived Asset Impairments

The Partnership assesses the impairment of long-lived assets with determinable useful lives whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable (a triggering event). When such events occur, management determines whether there has been impairment by comparing the anticipated undiscounted net future cash flows to the related asset's carrying value. If impairment exists, the asset is written down to its estimated carrying value which represents the assets estimated fair value less estimated costs to sell such assets. Impairment loss for long-lived assets was recorded in the amount of $953,145 and $875,000 for the years ended December 31, 2023 and 2022, respectively.

Collateralized Loans Receivable, net

Collateralized loans receivable are reported in our balance sheets at the outstanding principal balance net of any unamortized deferred fees, premiums or discounts on purchased notes and loans. Costs to originate notes, if any, are reported as a component of other assets in our balance sheets. Unearned income, discounts and premiums, if any, are amortized to interest income in the statements of operations using the effective interest rate method. Collateralized loans receivable are generally placed in a non-accrual status when payments are more than 90 days past due. Additionally, we periodically review the creditworthiness of companies with payments outstanding less than 90 days. Based upon the Investment Manager's judgment, accounts may be placed in a non-accrual status. Accounts on a non-accrual status are only returned to an accrual status when the account has been brought current and we believe recovery of the remaining unpaid receivable is probable. Revenue on non-accrual accounts is recognized only when cash has been received.

Finance Lease Receivables and Allowance for Loan and Lease Accounts

In the normal course of business, the Partnership provides credit or financing to its customers, performs credit evaluations of these customers, and maintains reserves for potential credit losses. These credit or financing transactions are normally collateralized by the equipment being financed. In determining the amount of allowance for credit losses related to lease, notes and loan receivables, the Investment Manager considers historical credit losses, the past due status of receivables, payment history, and other customer-specific information, including the value of the collateral (as applicable). The past due status of a receivable is based on its contractual terms. Expected credit losses are recorded as an allowance for credit losses on lease, notes and loan receivables. Receivables are written off when the Investment Manager determines they are uncollectible and all collection efforts have been exhausted. At December 31, 2023, an allowance for credit losses on lease, notes and loan receivables was deemed necessary, in the opinion of the Investment Manager, and an allowance of $82,000 was recorded. At December 31, 2022, an allowance for credit losses on lease, notes and loan receivables is not provided since, in the opinion of the Investment Manager, all accounts recorded were deemed collectible. The Partnership adopted Accounting Standards Codification ("ASC") Financial Instruments - Credit Losses (Topic 326) ("ASC 326") using the modified retrospective approach for all financial assets measured at amortized cost (finance leases and loans). Results for the reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable U.S. Generally Accepted Accounting Principles ("U.S. GAAP" or "GAAP"). The Partnership measures the Allowance for Credit Losses ("ACL") on a pooled basis, as all receivables are considered to share similar risk characteristics. The ACL is estimated using a weighted average remaining maturity ("WARM") methodology, which applies the Partnership's historical loss experience to the expected remaining contractual life of the pooled receivable portfolio, adjusted for anticipated prepayments when applicable. The model reflects expected lifetime credit losses based on historical data, current conditions, and reasonable and supportable forecasts. In addition to the quantitative model output, management incorporates qualitative adjustments to capture credit risks and environmental factors not fully reflected in historical loss rates. For the current period, qualitative factors considered include:

● Changes in local economic and business conditions, including increased business stability as U.S. public health conditions have improved, contributing to stronger economic activity;

● Changes in the volume and severity of past due loans; and

● Macroeconomic indicators, including a rise in unemployment.

Based on these factors, management applied a 0.25% qualitative adjustment to the pooled receivables portfolio to reflect both current conditions as well as reasonable and supportable forecasts. The combination of the WARM model results and qualitative adjustments represents management's best estimate of lifetime expected credit losses for the pooled receivables portfolio.

Business Overview

Our Offering Period commenced on August 11, 2016 and concluded on March 31, 2019. We have been approved for sale under Blue Sky regulations in 49 states and the District of Columbia. During the Offering Period, the majority of our cash inflows were derived from financing activities and were the direct result of capital contributions from Limited Partners.

During our Operating Period, which began on October 3, 2016 and concluded on October 3, 2021, we used the majority of our net offering proceeds from Limited Partner capital contributions to acquire our initial investments. As our investments matured, we reinvested the cash proceeds in additional investments in leased equipment and financing transactions, to the extent that the cash was not needed for expenses, reserves and distributions to our Limited Partners. During the Operating Period, the majority of our cash outflows were from investing activities as we acquired additional investments and to a lesser extent from financing activities from our paying quarterly distributions to our Limited Partners.

Results of Operations for the Years Ended December 31, 2023 and 2022

We are currently in our Liquidation Period. The Offering Period was declared effective by the SEC on August 11, 2016, and concluded on March 31, 2019. The Operating Period began on the date we admitted our first Limited Partners, at the initial closing, which occurred on October 3, 2016 and concluded on October 3, 2021. At our initial closing, we reimbursed our Investment Manager for a portion of the fees and expenses associated with our organization and offering which they previously paid on our behalf and we funded an immaterial capital reserve. The Liquidation Period, which began on October 4, 2021, is the period in which we will sell assets in the ordinary course of business and will last two years, unless it is extended, at the sole discretion of the General Partner. The General Partner extended the Liquidation Period through June 30, 2026. Through December 31, 2023, the Partnership admitted 617 Limited Partners with total capital contributions of $25,371,709 resulting in the sale of 2,537,170.91 Units. The Partnership received cash contributions of $24,718,035 and applied $653,674 which would have otherwise been paid as sales commission to the purchase of 65,367.46 additional Units.

The Operating Period is defined as the period in which we invest the net proceeds from the Offering Period into business-essential, revenue-producing (or cost-saving) equipment and other physical assets with substantial economic lives and, in many cases, associated revenue streams. During this period we paid substantial cash outflows from investing activities as we acquired leased and financed equipment.

Our revenue for the years ended December 31, 2023 and 2022 are summarized as follows:

		Year Ended December 31, 2023				Year Ended December 31, 2022
Revenue:
Finance income		$	699,512			$	1,238,947
Interest income			20,479				66,881
Total Revenue		$	719,991			$	1,305,828
Impairment and change in allowance for credit losses			(789,145	)			(875,000	)
Revenue, net		$	(69,154	)		$	430,828

For the year ended December 31, 2023, we received monthly lease payments of approximately $5,875,000 and recognized $699,512 in finance income from 13 finance leases. We also recognized $20,479 in interest income from collateralized loans receivable during the same period. We also incurred impairment on other assets and change in allowance for credit losses of $789,145 during the year ended December 31, 2023.

For the year ended December 31, 2022, we received monthly lease payments of approximately $7,807,000 and recognized $1,238,947 in finance income from 20 finance leases. We also recognized $66,881 in interest income from collateralized loans receivable during the same period. We also incurred impairment on other assets of $875,000 during the year ended December 31, 2022.

Our expenses for the years ended December 31, 2023 and 2022 are summarized as follows:

		Year Ended December 31, 2023				Year Ended December 31, 2022
Expenses:
Management fees - Investment Manager		$	600,000			$	750,000
Interest Expense			1,264				281,523
Professional fees			429,508				801,702
Administration expense			132,447				171,249
Other expenses			16,978				7,115
Total Expenses		$	1,180,197			$	2,011,589

For the year ended December 31, 2023, we incurred $1,180,197 in total expenses. We paid $600,000 in management fees to our Investment Manager during the year ended December 31, 2023. We pay our Investment Manager a management fee during the Operating Period and the Liquidation Period equal to the greater of (i) 2.5% per annum of the aggregate offering proceeds, payable monthly in advance or (ii) $50,000 per month. We recognized $132,447 in administration expense. Administration expense mainly consists of expenses paid to the fund administrator. We also incurred interest expense of $1,264 related to our loan payable. Lastly, we incurred $429,508 in professional fees, which were mostly comprised of fees related to compliance with the rules and regulations of the SEC and consulting services.

For the year ended December 31, 2022, we incurred $2,011,589 in total expenses. We paid $750,000 in management fees to our Investment Manager during the year ended December 31, 2022. We pay our Investment Manager a management fee during the Operating Period and the Liquidation Period equal to the greater of (i) 2.5% per annum of the aggregate offering proceeds, payable monthly in advance or (ii) $62,500 per month. We recognized $171,249 in administration expense. Administration expense mainly consists of expenses paid to the fund administrator. We also incurred interest expense of $281,523 related to our loan payable. Lastly, we incurred $801,702 in professional fees, which were mostly comprised of fees related to compliance with the rules and regulations of the SEC and consulting services.

Net Loss

We reported a net loss for the year ended December 31, 2023 of $1,249,351 as compared to a net loss of $1,580,761 for the year ended December 31, 2022.

Liquidity and Capital Resources

Sources and Uses of Cash

		Year Ended December 31, 2023				Year Ended December 31, 2022
Cash provided by (used in):
Operating activities		$	249,335			$	811,104
Investing activities		$	5,179,981			$	6,778,837
Financing activities		$	(4,165,603	)		$	(7,635,131	)

Sources of Liquidity

We are currently in our Liquidation Period. A substantial portion of our cash inflows are from finance leases/interest income and from sales of other assets, and a substantial portion of our cash outflows are for operating and administrative expenses. We believe that net cash inflows will be sufficient to finance our liquidity requirements for the foreseeable future, including distributions to our Limited Partners, general and administrative expenses and fees paid to our Investment Manager.

Operating Activities

Cash provided by operating activities for the year ended December 31, 2023 was $249,335 and was primarily driven by the following factors: impairment and change in allowance for credit losses of $789,145 and an increase in other assets of approximately $903,000. Offsetting these fluctuations was a net loss for the year ended December 31, 2023 of approximately $1,249,351, a decrease in deferred revenue of approximately $70,000, and a decrease in accounts payable and accrued liabilities of approximately $94,000. We expect our accounts payable and accrued expenses will fluctuate from period to period primarily due to the timing of payments related to lease and financings transactions.

Cash provided by operating activities for the year ended December 31, 2022 was $811,104 and was primarily driven by the following factors: impairment of $875,000, an increase in other assets of approximately $1,705,000, and an increase in accounts payable and accrued liabilities of approximately $74,000. Offsetting these fluctuations was a net loss for the year ended December 31, 2022 of approximately $1,581,000, a decrease in deferred revenue of approximately $194,000 and a decrease in accrued interest of approximately $44,000. We expect our accounts payable and accrued expenses will fluctuate from period to period primarily due to the timing of payments related to lease and financings transactions.

Investing Activities

Cash provided by investing activities was $5,179,981 for the year ended December 31, 2023, which consisted of approximately $700,000 in finance income, net of receipt of approximately $5,875,000 in minimum rental payments from finance leases, and approximately $169,000 in net cash received from origination and purchases of loans receivable, prepayments and satisfactions.

Cash provided by investing activities was $6,778,837 for the year ended December 31, 2022, which consisted of approximately $492,000 that we paid for the purchase of finance leases, finance income of approximately $1,239,000 net of receipt of approximately $7,807,000 in minimum rental payments from finance leases, and approximately $702,000 in net cash received from origination and purchases of loans receivable, prepayments and satisfactions.

Financing Activities

Cash used in financing activities for the year ended December 31, 2023 was $4,165,603 and was primarily due to payments of approximately $542,000 on the loan payable, and distribution payments of approximately $3,617,000 to limited partners.

Cash used in financing activities for the year ended December 31, 2022 was $7,635,131 and was primarily due to cash received from loan payable of $2,050,000, offset by payments of approximately $9,647,000 on the loan payable.

Distributions

During our Operating Period, we paid cash distributions on a quarterly basis to our Limited Partners at 1.5% per quarter, the equivalent rate of 6.0% per annum, of each Limited Partners' capital contribution (pro-rated to the date of admission for each Limited Partner). Beginning as of June 30, 2017, our distribution rate was 6.5% annually, paid quarterly at 1.625%, of capital contributions. Beginning as of March 31, 2018, we increased our distribution to 7.0% annually, paid quarterly at 1.75% of capital contributions. Beginning as of June 30, 2018, we increased our distribution to 7.5%, paid quarterly at 1.875% of capital contributions. Beginning as of September 30, 2018 we increased our distribution to 8.0%, paid quarterly at 2.00% of capital contributions. Beginning as of June 30, 2020, we decreased our distribution to 4.0%, paid quarterly at 1.00% of capital contributions. In 2021 we paid one quarterly distribution at 1.00% of capital contributions, and in 2022 we did not pay any distributions. Beginning as of January 1, 2023, we increased our distribution to 9.5%, paid quarterly at 2.375% of capital contributions. Beginning as of April 1, 2023, we increased our distribution to 24%, paid quarterly at 6% of capital contributions. The amount and rate of cash distributions could vary and are not guaranteed. During the year ended December 31, 2023, we made quarterly cash distributions to our Limited Partners totaling $3,616,819. During the year ended December 31, 2022, we didn't make a cash distributions to our Limited Partners. During the years ended December 31, 2023 and 2022, we declared and accrued distributions payable of $4,652,798 and $0, respectively, for our Limited Partners. Of these amounts, $1,035,979 and $0 remained payable and outstanding at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022 we declared and accrued distributions of $46,528 and $0, respectively, for distributions to our General Partner. Distributions payable to our General Partner totaled $95,863 and $49,335, respectively, at December 31, 2023 and 2022.

Commitments and Contingencies

Commitment and Contingencies

Our income, losses and distributions are allocated 99% to our Limited Partners and 1% to our General Partner until the Limited Partners have received total distributions equal to each Limited Partners' capital contribution plus an 8%, compounded annually, cumulative return on each Limited Partners' capital contribution. After such time, income, losses and distributions will be allocated 80% to our Limited Partners and 20% to our General Partner.

We enter into contracts that contain a variety of indemnifications. Our maximum exposure under these arrangements is not known.

In the normal course of business, we enter into contracts of various types, including lease contracts, contracts for the sale or purchase of leased assets, loan agreements and management contracts. It is prevalent industry practice for most contracts of any significant value to include provisions that each of the contracting parties, in addition to assuming liability for breaches of the representations, warranties, and covenants that are part of the underlying contractual obligations, to also assume an obligation to indemnify and hold the other contractual party harmless for such breaches, and for harm caused by such party's gross negligence and willful misconduct, including, in certain instances, certain costs and expenses arising from the contract. Generally, to the extent these contracts are performed in the ordinary course of business under the reasonable business judgment of our General Partner and our Investment Manager, no liability will arise as a result of these provisions. Should any such indemnification obligation become payable, we would separately record and/or disclose such liability in accordance with accounting principles generally accepted in the United States of America.

Off-Balance Sheet Transactions

None.

Contractual Obligations

None.