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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

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

Commission File Number: 33-69996

COMMONWEALTH INCOME & GROWTH FUND I
(Exact name of registrant as specified in its charter)

Pennsylvania 23-2735641
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

470 John Young Way
Exton, PA 19341
(Address, including zip code, of principal executive offices)

(610) 594-9600
(Registrant's telephone number including area code)

Indicate by check mark whether the registrant (i) 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, and (ii) has been subject to such filing
requirements for the past 90 days: YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE
(Specific sections incorporated are identified under applicable items herein)

Certain exhibits to the Company's Registration Statement on Form S-1
(File No. 33-69996) and Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 are incorporated by reference as Exhibits in Part IV of this
Report.





PART I

ITEM 1: BUSINESS

GENERAL

Commonwealth Income and Growth Fund I ( the "Partnership") was formed
on August 26, 1993 under the Pennsylvania Revised Uniform Limited Partnership
Act. The Partnership began offering $15,000,000 of Units of Limited Partnership
("Units") to the public on December 17, 1993 (the "Offerings"). The Partnership
terminated its offering of Units on May 11, 1995, with 631,358 Units
($12,623,682) admitted as Limited Partners of the Partnership.

See "The Glossary" below for the definition of capitalized terms not
otherwise defined in the text of this report.

PRINCIPAL INVESTMENT OBJECTIVES

The Partnership was formed for the purpose of acquiring various types
of Equipment, including computer peripheral and other similar capital equipment.
The Partnership utilized the net proceeds of the Offering to purchase IBM and
IBM compatible computer peripheral and other similar capital equipment. The
Partnership utilizes Retained Proceeds and debt financing (not to exceed 30% of
the aggregate cost of the Equipment owned or subject to Conditional Sales
Contract by the Partnership at the time the debt is incurred) to purchase
additional Equipment. The Partnership acquires and leases Equipment principally
to U.S. corporations and other institutions pursuant to Operating Leases. The
Partnership retains the flexibility to enter into Full Payout Net Leases and
Conditional Sales Contracts, but has not done so.

The Partnership's principal investment objectives are to;

(a) acquire, lease and sell Equipment to generate revenues from
operations sufficient to provide quarterly cash distributions to
Limited Partners;

(b) preserve and protect Limited Partners' capital;

(c) use a portion of Cash Flow and Net Disposition Proceeds derived
from the sale, refinancing or other disposition of Equipment to
purchase additional Equipment; and

(d) refinance, sell or otherwise dispose of Equipment in a manner that
will maximize the proceeds to the Partnership.

THERE CAN BE NO ASSURANCE THAT ANY OF THESE OBJECTIVES WILL BE ATTAINED.

Limited Partners do not have the right to vote on or otherwise approve
or disapprove any particular investment to be made by the Partnership.

Although the Partnership has acquired predominately new Equipment, the
Partnership may purchase used Equipment. Generally, Equipment is acquired from
manufacturers, distributors, leasing companies, agents, owner-users,
owner-lessors, and other suppliers upon terms that vary depending upon the
Equipment and supplier involved. Manufacturers and distributors usually furnish
a limited warranty against defects in material and workmanship and some purchase
agreements for Equipment provide for service and replacement of parts during a
limited period. Equipment purchases are also made through lease brokers and on
an ad hoc basis to meet the needs of a particular lessee.

2


As of December 31, 2001, all Equipment purchased by the Partnership is
subject to an Operating Lease or an Operating Lease was entered into with a
third party when the Partnership acquired an item of Equipment. The Partnership
may also engage in sale/leaseback transactions, pursuant to which the
Partnership would purchase Equipment from companies that would then immediately
lease the Equipment from the Partnership. The Partnership may also purchase
Equipment which is leased under Full Payout Net Leases or sold under Conditional
Sales Contracts at the time of acquisition or the Partnership may enter into a
Full Payout Net Lease or Conditional Sales Contract with a third party when the
Partnership acquires an item of Equipment.

The Partnership may enter into arrangements with one or more
manufacturers pursuant to which the Partnership purchases from such
manufacturers Equipment which has previously been leased directly by the
manufacturer to third parties ("vendor leasing agreements"). The Partnership and
manufacturers may agree to nonrecourse loans to the Partnership from the
manufacturers to finance the acquisition of Equipment secured by the Equipment
and the receivables due to the manufacturers from users of such Equipment. It is
expected that the manufacturers of Equipment will provide maintenance,
remarketing and other services for the Equipment subject to such agreements. As
of December 31, 2001, the Partnership has not entered into any such agreements.

The General Partner has the discretion consistent with its fiduciary
duty to change the investment objectives of the Partnership if it determines
that such a change is in the best interest of the Limited Partners and so long
as such a change is consistent with the Partnership Agreement. The General
Partner will notify the Limited Partners if it makes such a determination to
change the Partnership's investment objectives.

TYPES OF EQUIPMENT

Computer Peripheral Equipment. Computer peripheral equipment consists
of devices used to convey information into and out of a central processing unit
(or "mainframe") of a computer system, such as tape drives, disk drives, tape
controllers, disk controllers, printers, terminals and related control units,
all of which are in some way related to the process of storing, retrieving, and
processing information by computer.

The Partnership acquires primarily IBM manufactured or IBM compatible
equipment. The General Partner believes that dealing in IBM or IBM compatible
equipment is particularly advantageous because of the large IBM customer base,
policy of supporting users with software and maintenance services and the large
amount of IBM and IBM compatible equipment in the marketplace.

Computer technology has developed rapidly in recent years and is
expected to continue to do so. Technological advances have permitted continued
reductions in the cost of computer processing capacity, thereby permitting
applications not economically feasible a few years ago. Much of the older IBM
and IBM compatible computer peripheral equipment has not been retired from
service, because software is generally interchangeable between older and newer
equipment, and older equipment is capable of performing many of the same
functions as newer equipment. The General Partner believes, historically, that
the values of peripheral equipment have been affected less dramatically by
changes in technology than have the values of central processing units. An
equipment user who upgrades to a more advanced central processor generally can
continue to use his existing peripheral equipment. Peripheral equipment
nevertheless is subject to declines in value as new, improved models are
developed and become available. Technological advances and other factors,
discussed below in Management Discussion and Analysis, have at times caused
dramatic reduction in the market prices of older models of IBM and IBM
compatible computer peripheral equipment from the prices at which they were
originally introduced.

Other Equipment-Restrictions. The Partnership acquires computer
peripheral equipment, such as tape drives, disk drives, tape controllers, disk
controllers, printers, terminals and related control units, all of which are in
some way related to the process of storing, retrieving and processing
information by computer. The General Partner is also authorized, but does not
presently intend, to cause the Partnership to invest in non-IBM compatible
computer peripheral, data processing, telecommunication or medical technology

3



equipment. The Partnership may not invest in any of such other types of
Equipment (i) to the extent that the purchase price of such Equipment, together
with the aggregate Purchase Price of all such other types of Equipment then
owned by the Partnership, is in excess of 25% of the total cost of all of the
assets of the Partnership at the time of the Partnership's commitment to invest
therein and (ii) unless the General Partner determines that such purchase is in
the best economic interest of the Partnership at the time of the purchase and,
in the case of non-IBM compatible peripheral Equipment, that such Equipment is
comparable in quality to similar IBM or IBM compatible Equipment. There can be
no assurance that any Equipment investments can be found which meet this
standard. Accordingly, there can be no assurance that investments of this type
will be made by the Partnership.

DIVERSIFICATION

Diversification is generally desirable to minimize the effects of
changes in specific industries, local economic conditions or similar risks.
However, the extent of the Partnership's diversification, in the aggregate and
within each category of Equipment, depends in part upon the financing which can
be assumed by the Partnership or borrowed from third parties on satisfactory
terms. The Partnership's policy not to borrow on a recourse basis will further
limit its financing options. Diversification also depends on the availability of
various types of Equipment. As of December 31, 2001, the Partnership has
acquired a diversified Equipment portfolio, which it has leased to 22 different
companies located throughout the United States. Approximately 50% of the
Equipment acquired by the Partnership consists of workstations, department
servers and enterprise servers. Approximately 26% of the Equipment acquired by
the Partnership consists of tape subsystems. Approximately 3% of the Equipment
acquired by the Partnership consists of printers. Approximately 4% of the
Equipment acquired by the Partnership consists of communication controllers.
Approximately 9% of the Equipment acquired by the Partnership consists of Escon
drivers. Approximately another 6% of the Equipment acquired by the Partnership
consists of optical storage. Approximately 2% of the Equipment acquired by the
Partnership consists of Routers.

During the operational stage of the Partnership, the Partnership may
not at any one point in time lease (or sell pursuant to a Conditional Sales
Contract) more than 25% of the Equipment to a single Person or Affiliated group
of Persons.

DESCRIPTION OF LEASES

The Partnership to date has purchased, and in the future intends to
continue to purchase only Equipment that is subject to a lease or for which a
lease or similar agreement will be entered into contemporaneously with the
consummation of the Partnership's acquisition of the Equipment. The General
Partner to date has leased and in the future intends to lease most of the
Equipment purchased by the Partnership to third parties pursuant to Operating
Leases. Operating Leases are relatively short-term (12 to 48 month) leases under
which the aggregate noncancellable rental payments during the original term of
the lease are not sufficient to permit the lessor to recover the purchase price
of the subject Equipment. The Equipment may also be leased pursuant to Full
Payout Net Leases. Full Payout Net Leases are leases under which the aggregate
noncancellable rental payments during the original term of the lease are at
least sufficient to recover the purchase price of the subject Equipment. It is
anticipated that the Partnership will enter into few, if any, Full Payout net
Leases. The General Partner may also enter into Conditional Sales Contracts for
Equipment. A Conditional Sales Contract generally provides that the
noncancellable payments to the seller over the term of the contract are
sufficient to recover the investment in such Equipment and to provide a return
on such investment. Under a Conditional Sales Contract, the seller reserves
title to, and retains a security interest in, the Equipment until the Purchase
Price of the Equipment is paid. As of December 31, 2001, the Partnership has not
entered into any Full Payout Net Leases or Conditional Sales Contracts for
Equipment and does not presently intend to do so.

In general, the terms of the Partnership's leases, whether the
Equipment is leased pursuant to an Operating lease or a Full Payout Net Lease,
depend upon a variety of factors, including: the desirability of each type of
lease from both an investment and a tax point of view; the relative demand among

4



lessees for Operating or Full Payout Net Leases; the type and use of Equipment
and its anticipated residual value; the business of the lessee and its credit
rating; the availability and cost of financing; regulatory considerations; the
accounting treatment of the lease sought by the lessee or the Partnership; and
competitive factors.

An Operating Lease generally represents a greater risk to the
Partnership than a Full Payout Net Lease, because in order to recover the
purchase price of the subject Equipment and earn a return on such investment, it
is necessary to renew or extend the Operating Lease, lease the Equipment to a
third party at the end of the original lease term, or sell the Equipment. On the
other hand, the term of an Operating Lease is generally much shorter than the
term of a Full Payout Net Lease, and the lessor is thus afforded an opportunity
under an Operating Lease to re-lease or sell the subject Equipment at an earlier
stage of the Equipment's life cycle than under a Full Payout Net Lease. Also,
the annual rental payments received under an Operating Lease are ordinarily
higher than those received under a Full Payout Net Lease.

The Partnership's policy is to generally enter into "triple net leases"
(or the equivalent, in the case of a Conditional Sales Contract) which typically
provide that the lessee or some other party bear the risk of physical loss of
the Equipment; pay taxes relating to the lease or use of the Equipment; maintain
the Equipment; indemnify the Partnership-lessor against any liability suffered
by the Partnership as the result of any act or omission of the lessee or its
agents; maintain casualty insurance in an amount equal to the greater of the
full value of the Equipment and a specified amount set forth in the lease; and
maintain liability insurance naming the Partnership as an additional insured
with a minimum coverage which the General Partner deems appropriate. In
addition, the Partnership may purchase "umbrella" insurance policies to cover
excess liability and casualty losses, to the extent deemed practicable and
advisable by the General Partner. As of December 31, 2001, all leases that have
been entered into are "triple net leases".

The General Partner has not established any standards for lessees to
which it will lease Equipment and, as a result, there is not an investment
restriction prohibiting the Partnership from doing business with any lessees.
However, a credit analysis of all potential lessees is undertaken by the General
Partner to determine the lessee's ability to make payments under the proposed
lease. The General Partner may refuse to enter into an agreement with a
potential lessee based on the outcome of the credit analysis.

The terms and conditions of the Partnership's leases, or Conditional
Sales Contracts, are each determined by negotiation and may impose substantial
obligations upon the Partnership. Where the Partnership assumes maintenance or
service obligations, the General Partner generally causes the Partnership to
enter into separate maintenance or service agreements with manufacturers or
certified maintenance organizations to provide such services. Such agreements
generally require annual or more frequent adjustment of service fees. As of
December 31, 2001, the Partnership has not entered into any such agreements.

BORROWING POLICIES

The General Partner, at its discretion, may cause the Partnership to
incur debt in the maximum aggregate amount of 30% of the aggregate cost of the
Equipment owned, or subject to Conditional Sales Contract, by the Partnership at
the time the debt is incurred. The Partnership incurs only non-recourse debt
which is secured by Equipment and lease income therefrom. Such leveraging
permits the Partnership to increase the aggregate amount of its depreciable
assets, and, as a result, potentially increases both its lease revenues and its
federal income tax deductions above those levels which would be achieved without
leveraging. There is no limit on the amount of debt that may be incurred in
connection with the acquisition of any single item of Equipment. Any debt
incurred is fully amortized over the term of the initial lease or Conditional
Sales Contract to which the Equipment securing the debt is subject. The precise
amount borrowed by the Partnership depends on a number of factors, including the
types of Equipment acquired by the Partnership; the creditworthiness of the
lessee; the availability of suitable financing; and prevailing interest rates.
The Partnership is flexible in the degree of leverage it employs, within the
permissible limit. There can be no assurance that credit will be available to
the Partnership in the amount or at the time desired or on terms considered
reasonable by the General Partner. As of December 31, 2001, the aggregate
nonrecourse debt outstanding of $501,000 was 15.1% of the aggregate cost of the
Equipment owned.

5


The Partnership has and may continue to purchase some items of
Equipment without leverage. If the Partnership purchases an item of Equipment
without leverage and thereafter suitable financing becomes available, it may
then obtain the financing, secure the financing with the purchased Equipment to
the extent practicable and invest any proceeds from such financing in additional
items of Equipment, or it may distribute some or all of such proceeds to the
Limited Partners. Any such later financing will be on terms consistent with the
terms applicable to borrowings generally. As of December 31, 2001, the
Partnership has not exercised this option.

To date, the General Partner has caused the Partnership to borrow funds
at fixed interest rates and plans to continue borrowing additional funds, to the
fullest extent practicable. The Partnership may borrow funds at rates which vary
with the "prime" or "base" rate. If lease revenues were fixed, a rise in the
"prime" or "base" rate would increase borrowing costs and reduce the amount of
the Partnership's income and cash available for distribution. Therefore, the
General Partner is permitted to borrow funds to purchase Equipment at
fluctuating rates only if the lease for such Equipment provides for fluctuating
rental payments calculated on a similar basis.

Any additional debt incurred by the Partnership must be nonrecourse.
Nonrecourse debt, in the context of the business to be conducted by the
Partnership, means that the lender providing the funds can look for security
only to the Equipment pledged as security and the proceeds derived from leasing
or selling such Equipment. Neither the Partnership nor any Partner (including
the General Partner) would be liable for repayment of any nonrecourse debt.

Loan agreements may also require that the Partnership maintain certain
reserves or compensating balances and may impose other obligations upon the
Partnership. Moreover, since a significant portion of the Partnership's revenues
from the leasing of Equipment will be reserved for repayment of debt, the use of
financing reduces the cash which might otherwise be available for distributions
until the debt has been repaid and may reduce the Partnership's Cash Flow over a
substantial portion of the Partnership's operating life. As of December 31,
2001, no such agreements existed.

The General Partner and any of its Affiliates may, but are not required
to, make loans to the Partnership on a short-term basis. If the General Partner
or any of its Affiliates makes such a short-term loan to the Partnership, the
General Partner of Affiliate may not charge interest at a rate greater that the
interest rate charged by unrelated lenders on comparable loans for the same
purpose in the same locality. In no event is the Partnership required to pay
interest on any such loan at an annual rate greater than three percent over the
"prime rate' from time to time announced by PNC Bank, Philadelphia, Pennsylvania
("PNC Bank"). All payments of principal and interest on any financing provided
by the General Partner or any of its affiliates are due and payable by the
Partnership within 12 months after the date of the loan.

REFINANCING POLICIES

Subject to the limitations set forth in "Borrowing Policies" above, the
Partnership may refinance its debt from time to time. With respect to a
particular item of Equipment, the General Partner will take into consideration
such factors as the amount of appreciation in value, if any, to be realized, the
possible risks of continued ownership, and the anticipated advantages to be
obtained for the Partnership, as compared to selling such Equipment. As of
December 31, 2001, the Partnership has not refinanced any of its debt.

Refinancing, if achievable, may permit the Partnership to retain an
item of Equipment and at the same time to generate additional funds for
reinvestment in additional Equipment or for distribution to the Limited
Partners.

6


LIQUIDATION POLICIES

The General Partner intends to cause the Partnership to begin disposing
of its Equipment in approximately January 2004. Notwithstanding the
Partnership's objective to sell all of its assets and dissolve by December 31,
2004, the General Partner may at any time cause the Partnership to dispose of
all its Equipment and, dissolve the Partnership upon the approval of Limited
Partners holding a Majority in Interest of Units.

Particular items of Equipment may be sold at any time if, in the
judgment of the General Partner, it is in the best interest of the Partnership
to do so. The determination of whether particular items of Partnership Equipment
should be sold or otherwise disposed of is made by the General Partner after
consideration of all relevant factors (including prevailing general economic
conditions, lessee demand, the General Partner's views of current and future
market conditions, the cash requirements of the Partnership, potential capital
appreciation, cash flow and federal income tax considerations), with a view
toward achieving the principal investment objectives of the Partnership. As
partial payment for Equipment sold, the Partnership may receive purchase money
obligations secured by liens on such Equipment. Subject to the General Partner's
discretion the Partnership may extend beyond December 31, 2004, if deemed
beneficial to the Partnership.


MANAGEMENT OF EQUIPMENT

Equipment management services for the Partnership's Equipment is
provided by the General Partner and its Affiliates and by persons employed by
the General Partner. Such services will consist of collection of income from the
Equipment, negotiation and review of leases, Conditional Sales Contracts and
sales agreements, releasing and leasing-related services, payment of operating
expenses, periodic physical inspections and market surveys, servicing
indebtedness secured by Equipment, general supervision of lessees to assure that
they are properly utilizing and operating Equipment, providing related services
with respect to Equipment, supervising, monitoring and reviewing services
performed by others in respect to Equipment and preparing monthly Equipment
operating statements and related reports.


COMPETITION

The equipment leasing industry is highly competitive. The Partnership
competes with leasing companies, equipment manufacturers and their affiliated
financing companies, distributors and entities similar to the Partnership
(including other programs sponsored by the General Partner), some of which have
greater financial resources than the Partnership and more experience in the
equipment leasing business than the General Partner. Other leasing companies and
equipment manufacturers, their affiliated financing companies and distributors
may be in a position to offer equipment to prospective lessees on financial
terms which are more favorable that those which the Partnership can offer. They
may also be in a position to offer trade-in privileges, software, maintenance
contracts and other services which the Partnership may not be able to offer.
Equipment manufacturers and distributors may offer to sell equipment on terms
(such as liberal financing terms and exchange privileges) which will afford
benefits to the purchaser similar to those obtained through leases. As a result
of the advantages which certain of its competitors may have, the Partnership may
find it necessary to lease its Equipment on a less favorable basis than certain
of its competitors.

The computer peripheral equipment industry is extremely competitive.
Competitive factors include pricing, technological innovation and methods of
financing. Certain manufacturer-lessors maintain advantages through patent
protection, where applicable, and through a policy that combines service and
hardware with payment accomplished through a single periodic charge.

7


The dominant firm in the computer marketplace is International Business
Machines Corporation, and its subsidiary IBM Credit Corporation is the dominant
force in the leasing of IBM equipment. Because of IBM's substantial resources
and dominant position, revolutionary changes with respect to computer systems,
pricing, marketing practices, technological innovation and the availability of
new and attractive financing plans could occur at any time. Significant action
in any of these areas by IBM or IBM Credit Corporation might materially
adversely affect the Partnership's business or the other manufacturers with whom
the General Partner might negotiate purchase and other agreements. Any adverse
effect on these manufacturers could be reflected in the overall return realized
by the Partnership on equipment from those manufacturers from IBM.

Investments

As of March 29, 2002, the Partnership has purchased, or has made the
commitment to purchase, the following Equipment:



EQUIPMENT LIST PURCHASE MONTHLY LEASE
LESSEE MFG DESCRIPTION PRICE PRICE RENT TERM


Xerox Corp. SUN (32) Workstation 440,800 277,705 286 39
Xerox Corp. SUN (4)SPARC2000 590,840 305,875 1,019 39
Fingerhut Corp. SIEMEN 2240-004 722,000 459,592 8,558 48
Chrysler Corp. STK (2) 4490-M30 686,158 490,110 12,001 48
GE Industrial & Power Systems HP (50%)HP9000/J200 202,680 157,635 4,115 36
Wang Laboratories Inc. PYR (50%) NILE 150 937,290 589,287 16,639 36
Chrysler Corp. IBM (20%) 3745-31A 242,244 184,383 4,203 48
Sprint Communications Co. STK (9)9490-M32 1,335,897 703,968 15,501 36
Honda R&D SGI (45%) 4XR10000 400,220 298,094 7,683 36
Sprint Communications Co. IBM (2) 3995-133 421,500 286,536 10,166 24
Equitable Life Assurance Co. LEX (80) N240 571,351 497,477 11,501 36
Chrysler Corp. STK Tape Lib/Redwd/Timbl 1,693,479 997,891 22,520 36
Equitable Life Assurance Co. LEX (16)OPTRA 74,458 94,098 2,615 36
Kaiser IBM 3745-611A/3746-900 2,149,234 1,191,555 29,786 36
Litton SUN (1)E3000 251,967 148,492 3,771 36
Sprint Communications Co. SUN (2)ES5000 371,640 231,551 7,199 30
Computer Science Corp. SGI (50%) 144Workstations 2,055,893 822,455 21,031 36
Paine Webber IBM (2)9032-003 932,206 455,473 11,060 36
Charles Schwab IBM (20%) (6) 9032-003 495,889 307,983 6,989 36
ADP IBM (3)3490-A20 (1)-B40 579,850 379,682 5,036 36
Lucent SUN (1) 3000 Server 70,300 45,892 1,181 36
Lucent SUN (1) 3500 Server 75,750 49,505 1,274 36
Pitney Bowes IBM (1) 3590 526,390 299,832 5,852 40
Cendant SUN (1)6000 512,640 274,774 6,722 36
Sprint SUN Upgrade ES5000 21,400 14,491 602 25
Kaiser CISCO (33)Routers 65,835 38,948 1,333 36
Morgan Stanley SUN ENT4000 184,144 122,751 3,018 24
Moore Business IBM (2)3900-DW1/2 515,000 460,490 9,040 43
SMS STK Tape Drive 1,452,140 576,586 34,140 36
UNUM IBM Printer 343,010 343,010 6,338 48
Thomson Consumer Electric HP Visualize C3600 26,670 17,682 696 24
GE Medical CISCO Routers 88,000 58,465 1,565 36
GE Medical CISCO Routers 59,917 35,570 950 35
GE Medical CISCO (6) Routers 34,650 22,976 617 36
Thomson Consumer Electric Thermojet SOP System 14,770 9,794 382 24
McLeod Farms COMPAQ Servers 67,175 56,318 1,685 31
Boeing Satellite Systems SUN (10)280R Sparclil 750 53,614 53,614 1,409 36
Kaiser IBM (1) Server 4,864 4,961 385 36
Capital Technology Various Servers 75,687 75,687 2,069 24-36
Capital Technology Various Servers 68,952 68,952 2,021 25-37
AOL SUN Servers 434,387 283,067 7,720 35
GE Medical IBM Printers 10,979 11,199 295 36
Thomson Consumer Electric LEX (2)PL4630 Printers 46,547 47,478 1,271 36





Reserves

Because the Partnership's leases are on a "triple-net" basis, no
permanent reserve for maintenance and repairs will be established from the
Offering proceeds. However, the General Partner, in its sole discretion, may
retain a portion of the Cash Flow and Net Disposition Proceeds available to the
Partnership for maintenance, repairs and working capital. There are no
limitations on the amount of Cash Flow and Net Disposition Proceeds that may be
retained as reserves. Since no reserve will be established if available Cash
Flow of the Partnership is insufficient to cover the Partnership's operating
expenses and liabilities, it may be necessary for the Partnership to obtain
additional funds by refinancing its Equipment or borrowing.

General Restrictions

Under the Partnership Agreement, the Partnership is not permitted,
among other things, to:

(a) invest in junior trust deeds unless received in connection with the
sale of an item of Equipment in an aggregate amount which does not exceed 30% of
the assets of the Partnership on the date of the investment;

(b) invest in or underwrite the securities of other issuers;

(c) acquire any Equipment for Units;

(d) issue senior securities (except that the issuance to lenders of
notes or other evidences of indebtedness in connection with the financing or
refinancing of Equipment or the Partnership's business shall not be deemed to be
the issuance of senior securities);

(e) make loans to any Person, including the General Partner or any of
its Affiliates, except to the extent a Conditional Sales Contract constitutes a
loan;

(f) sell or lease any Equipment to, lease any Equipment from, or enter
into any sale- leaseback transactions with, the General Partner or any of its
Affiliates; or

(g) give the General Partner or any of its Affiliates an exclusive
right or employment to sell the Partnership's Equipment.

The General Partner has also agreed in the Partnership Agreement to use
its best efforts to assure that the Partnership shall not be deemed an
"investment company" as such term is detained in the Investment Company Act of
1940.

The General Partner and its Affiliates may engage in other activities,
whether or not competitive with the Partnership. The Partnership Agreement
provides, however, that neither the General Partner nor any of its Affiliates
may receive any rebate or "give up" in connection with the Partnership's
activities or participate in reciprocal business arrangements that circumvent
the restrictions in the Partnership Agreement against dealings with Affiliates.

8


EMPLOYEES

The Partnership has no employees and received administrative and other
services from a related party, Commonwealth Capital Corp ("Com Cap Corp"), which
has 18 employees as of December 31, 2001.

ITEM 2: PROPERTIES

NOT APPLICABLE

ITEM 3: LEGAL PROCEEDINGS

On or about May 8, 2000, a complaint captioned
Commonwealth Capital Corp V. Gtronics, Inc. was filed
by Commonwealth Capital Corp against Gtronics, Inc.
(formerly known as Wang Laboratories, Inc.) with the
Federal District Court of the Eastern District of
Pennsylvania, No. 00-CV-2381. The complaint alleges
that the named defendant has not returned the proper
equipment stated in the master lease agreement and is
seeking restitution for lost monthly rentals, taxes,
attorney fees and costs, plus interest.

The defendant has filed for a Summary Judgment on
February 20, 2001, and the plaintiff has filed an
opposition to this Summary Judgment, and it remains
pending.

On September 29, 2001, the Federal District Court of
the Eastern District of Pennsylvania denied the
defendant's request for Summary Judgment.

As of March 29, 2002, the pre-trial conference was
completed. CCC anticipates that the date of the trial
will be set up within the next quarter.


ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NOT APPLICABLE

PART II



ITEM 5: MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no public market for the Units nor is it anticipated that one
will develop. As of December 31, 2001, there were 936 holders of Units. The
Units are not listed on any exchange or permitted to trade on any
over-the-counter market. In addition, there are substantial restrictions on the
transferability of Units.

GENERAL LIMITATIONS

Units cannot be transferred without the consent of the General Partner,
which may be withheld in its absolute discretion. The General Partner monitors
transfers of Units in an effort to ensure that all transfers are within certain
safe harbors promulgated by the IRS to furnish guidance regarding publicly

9



traded partnerships. These safe harbors limit the number of transfers that can
occur in any one year. The General Partner intends to cause the Partnership to
comply with the safe harbor that permits nonexempt transfers and redemptions of
Units of up to five percent of the total outstanding interest in the
Partnership's capital or profits in any one year.

REDEMPTION PROVISION

Upon the conclusion of the 30-month period following the termination of
the Offering, the Partnership may, at the sole discretion of the General
Partner, repurchase a number of the outstanding Units. After such 30 month
period, on a semi-annual basis, the General Partner, at its discretion, will
establish an amount for redemption, generally not to exceed two percent of the
outstanding Units per year, subject to the General Partner's good faith
determination that such redemptions will not (a) cause the Partnership to be
taxed as a corporation under Section 7704 of the Code or (b) impair the capital
or operations of the Partnership. (The Partnership may redeem Units in excess of
the two percent limitation if, in the good faith judgment of the General
Partner, the conditions imposed in the preceding sentence would remain
satisfied.) The redemption price for Units will be 105% of the selling Limited
Partner's Adjusted Capital Contributions attributable to the Units for sale.
Following the determination of the annual redemption amount, redemptions will
occur on a semi-annual basis and all requests for redemption, which must be made
in writing, must be on file as of the Record Date in which the redemption is to
occur. The General Partner will maintain a master list of requests for
redemption with priority being given to Units owned by estates, followed by IRAs
and Qualified Plans. All other requests will be considered in the order
received. Redemption requests made by or on behalf of Limited Partners who are
not affiliated with the General Partner or its Affiliates will be given priority
over those made by Limited Partners who are affiliated with the General Partner
or its Affiliates. All redemption request will remain in effect until and unless
canceled, in writing, by the requesting Limited Partner(s).

The Partnership will accept redemption requests beginning 30 months
following the termination of the Offering. There will be no limitations on the
period of time that a redemption request may be pending prior to its being
granted. Limited Partners will not be required to hold their interest in the
Partnership for any specified period prior to their making a redemption request.

In order to make a redemption request, Limited Partners will be
required to advise the General Partner in writing of such request. Upon receipt
of such notification, the Partnership will provide detailed forms and
instructions to complete the request. At December 31, 2001, the General Partner
has not redeemed any Units. Additionally, no Limited Partners have requested
redemption of their Units.

EXEMPT TRANSFERS

The following six categories of transfers are exempt transfers for
purposes of calculating the volume limitations imposed by the IRS and will
generally be permitted by the General Partner:

(1) transfers in which the basis of the Unit in the hands of the
transferee is determined, in whole or in part, by reference to its basis in the
hands of the transferor (for example, Units acquired by corporations in certain
reorganizations, contributions to capital, gifts of Units, Units contributed to
another partnership, and nonliquidating as well as liquidating distributions by
a parent partnership to its partners of interests in a sub partnership);

(2) transfers at death;

(3) transfers between members of a family (which include brothers and
sisters, spouse, ancestors, and lineal descendants);

10


(4) transfers resulting from the issuance of Units by the Partnership
in exchange for cash, property, or services;

(5) transfers resulting from distributions from Qualified Plans; and

(6) any transfer by a Limited Partner in one or more transactions
during any 30-day period of Units representing in the aggregate more than five
percent of the total outstanding interests in capital or profits of the
Partnership.

ADDITIONAL RESTRICTIONS ON TRANSFER

Limited Partners who wish to transfer their Units to a new beneficial
owner are required to pay the Partnership up to $50 for each transfer to cover
the Partnership's cost of processing the transfer application and take such
other actions and execute such other documents as may be reasonably requested by
the General Partner. There is no charge for re-registration of a certificate in
the event of a marriage, divorce, death, or trust so long as the transfer is not
a result of a sale of the Units.

In addition, the following restrictions apply to each transfer: (i) no
transfer may be made if it would cause 25% or more of the outstanding Units to
be owned by benefit plans; and (ii) no transfer is permitted unless the
transferee obtains such governmental approvals as may reasonably be required by
the General Partner, including without limitation, the written consents of the
Pennsylvania Securities Commissioner and of any other state securities agency or
commission having jurisdiction over the transfer.

ALLOCATION AND DISTRIBUTION BETWEEN THE GENERAL PARTNER AND THE LIMITED PARTNERS

Cash distributions, if any, are made quarterly on March 31, June 30,
and September 30, and December 31, of each year. Distributions are made 99% to
the Limited Partners and one percent to the General Partner until the Limited
Partners have received an amount equal to their Capital Contributions plus the
Priority Return; thereafter, cash distributions will be made 90% to Limited
Partners and 10% to the General Partner. Distributions made in connection with
the liquidation of the Partnership or a Partner's Units will be made in
accordance with the Partner's positive Capital Account balance as determined
under the Partnership Agreement and Treasury Regulations.

The Priority Return is calculated on the Limited Partners' Adjusted
Capital Contributions for their Units. The Adjusted Capital Contributions will
initially be equal to the amount paid by the Limited Partners for their Units.
If distributions at any time exceed the Priority Return, the excess will reduce
the Adjusted Capital Contributions, decreasing the base on which the Priority
Return is calculated.

If the proceeds resulting from the sale of any Equipment are reinvested
in Equipment, sufficient cash will be distributed to the Partners to pay the
additional federal income tax resulting from such sale for a Partner in a 39.6%
federal income tax bracket or, if lower, the maximum federal income tax rate in
effect for individuals for such taxable year.

Generally, the General Partner is allocated Net Profits equal to its
cash distributions (but not less than one percent of Net Profits) and the
balance is allocated to the Limited Partners. Net Profits arising from
transactions in connection with the termination or liquidation of the
Partnership are allocated in the following order: (1) First, to each Partner in
an amount equal to the negative amount, if any, of his Capital Account; (2)
Second, an amount equal to the excess of the proceeds which would be distributed
to the Partners based on the Operating Distributions to the Partners over the
aggregate Capital Accounts of all the Partners, to the Partners in proportion to
their respective shares of such excess, and (3) Third, with respect to any
remaining Net Profits, to the Partners in the same proportions as if the
distributions were Operating Distributions. Net Losses, if any, are in all cases
allocated 99% to the Limited Partners and one percent to the General Partner.

11


Net Profits and Net Losses are computed without taking into account, in
each taxable year of the Partnership, any items of income, gain, loss or
deduction required to be specially allocated pursuant to Section 704(b) of the
Code and the Treasury Regulation promulgated thereunder. No Limited Partner is
required to contribute cash to the capital of the Partnership in order to
restore a closing Capital Account deficit, and the General Partner has only a
limited deficit restoration obligation under the Partnership Agreement.

Quarterly distributions in the following amounts were paid to the
Limited Partners during 2001, 2000, and 1999.

Quarter Ended 2001 2000 1999
---------------------------------------------------------------------

March 31 $156,205 $242,529 $315,678

June 30 156,205 466,259 315,678

September 30 ---- 156,205 315,678

December 31 ---- 156,207 2,444

------------------------------------------------

$312,410 $1,021,200 $949,478
================================================



ALLOCATIONS AND DISTRIBUTIONS AMONG THE LIMITED PARTNERS

Except during the Offering Period, Cash Available for Distribution
which is allocable to the Limited Partners is apportioned among and distributed
to them solely with reference to the number of Units owned by each as of the
Record Date for each such distribution. During the Offering Period, Cash
Available for Distribution which is allocable to the Limited Partners was
apportioned among and distributed to them with reference to both (i) the number
of Units owned by each as of each Record Date and (ii) the number of days since
the previous Record Date (or, in the case of the first Record Date, the
commencement of the Offering Period) that the Limited Partner owned the Units.

After the Offering Period, Net Profits, Net Losses and Cash Available
for Distribution allocable to the Limited Partners is apportioned among them in
accordance with the number of Units owned by each. A different convention was
utilized during the Offering Period, whereby Net Profits and Net Losses
allocable to Limited Partners were apportioned among them in the ratio which the
product of the number of Units owned by a Limited Partner multiplied by the
number of days in which the Limited Partner owns such Units during the period
bears to the sum of such products for all Limited Partners.

In addition, where a Limited Partner transfers Units during a taxable
year, the Limited Partner may be allocated Net Profits for a period for which
such Limited Partner does not receive a corresponding cash distribution.

ITEM 6: SELECTED FINANCIAL DATA

The following table sets forth, in summary form, selected financial
data for the Partnership as of and for each of the five years ended December 31,
2001. This table is qualified in its entirety by the more detailed information
and financial statements presented elsewhere in this report, and should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and related notes
thereto included herein.

12





YEAR ENDED DECEMBER 31,
-----------------------

- ------------------------------------------------------------------------------------------------------------------------

2001 2000 1999 1998 1997
- ------------------------------- ---------------- ------------------- ----------------- ------------------ --------------


Lease Income $764,635 $1,790,339 $2,995,506 $4,527,348 $5,195,139
- ------------------------------- ---------------- ------------------- ----------------- ------------------ --------------

Net Income / (Loss) 170,529 (205,279) (478,168) (334,254) (906,123)
- ------------------------------- ---------------- ------------------- ----------------- ------------------ --------------

Cash Distributions 315,490 1,031,324 959,043 1,275,467 1,275,467
- ------------------------------- ---------------- ------------------- ----------------- ------------------ --------------

Net Income/(Loss) Per Limited .27 (.34) (.77) (.55) (1.46)
Partner Unit
- ------------------------------- ---------------- ------------------- ----------------- ------------------ --------------

Cash Distribution Per Limited .50 1.62 1.50 2.02 2.02
Partner Unit
- ------------------------------------------------------------------------------------------------------------------------




DECEMBER 31,
------------

- -------------------------------------------------------------------------------------------------------------

2001 2000 1999 1998 1997
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------


Total Assets $1,108,320 $839,551 $2,858,500 $5,906,884 $10,081,644
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------

Notes Payable 500,585 67,647 716,792 2,401,080 4,968,748
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------

Partners' Capital 438,271 583,232 1,819,835 3,257,046 4,866,767
- --------------------------------------------------------------------------------------------------------------


Net income (loss) per unit is computed based upon net income (loss)
allocated to the Limited Partners and the weighted average number of equivalent
Units outstanding during the year. Cash distribution per Unit is computed based
upon distributions allocated to the Limited Partners and the weighted average
number of equivalent Units outstanding during the year.



13


ITEM 7: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Our significant accounting policies are described in Note
1 of the Notes to the Consolidated Financial Statements. The significant
accounting policies that we believe are the most critical to aid in fully
understanding our reported financial results include the following:

REVENUE RECOGNITION

Through December 31, 2001, the Partnership has only entered into operating
leases. Lease revenue is recognized on a monthly basis in accordance with the
terms of the operating lease agreements.

LONG-LIVED ASSETS

The Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable. The Partnership
determines whether an impairment exists by estimating the undiscounted cash
flows to be generated by each asset. If the estimated undiscounted cash flows
are less than the carrying value of the asset then an impairment exists. The
amount of the impairment is determined based on the difference between the
carrying value and the fair value. Fair value is determined based on estimated
discounted cash flows to be generated by the asset.

Depreciation on computer equipment for financial statement purposes is based on
the straight-line method over estimated useful lives of four years.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's primary sources of capital for the years ended
December 31, 2001, 2000, and 1999 were cash from operations of $257,000,
$513,000, and $752,000, respectively and proceeds from the sale of computer
equipment of $230,000, $365,000, and $590,000, respectively. The primary uses of
cash were for capital expenditures for new equipment totaling $199,000, and
$161,000 for the years ended December 31, 2001, and 1999, respectively, and for
the payment of distributions to partners totaling $315,000 for 2001, $1,031,000
for 2000, and $959,000, in 1999.

Cash is invested in money market accounts that invest directly in
treasury obligations pending the Partnership's use of such funds to purchase
additional computer equipment, to pay Partnership expenses or to make
distributions to the Partners. At December 31, 2001 and 2000 the Partnership had
approximately $1,000 and $95,000, respectively, invested in these money market
accounts.

The Partnership's investment strategy of acquiring computer equipment
and generally leasing it under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
Future minimum rentals on noncancellable operating leases increased to $760,000
in 2001, up from $88,000 in 2000, but down from $1,153,000 in 1999 due to the
purchase of new computer equipment leases in 2001. This particular industry has
experienced a decrease in lease rates during 2001 due to an ongoing decrease in
interest rates. As of December 31, 2001, the Partnership had future minimum
rentals on noncancellable operating leases of $308,000 for the year ended 2002
and $452,000 thereafter. The Partnership incurred debt in 2001 in the amount of
$544,000. No debt was incurred in 2000 or 1999. At December 31, 2001, the
outstanding debt was $501,000, with a weighted average interest rate of 7.10%
and will be payable through December 2004. The Partnership intends to continue
purchasing additional computer equipment with existing cash, as well as when
future cash becomes available. In addition, the Partnership may incur debt in
purchasing computer equipment in the future.

14



Commonwealth Capital Corp, on behalf of the Partnership and other
affiliated partnerships, acquires computer equipment subject to associated debt
obligations and lease revenue and allocates a participation in the cost, debt
and lease revenue to the various partnerships based on certain risk factors.

The Partnership's share of the computer equipment in which they
participate at December 31, 2001 was approximately $469,000, which is included
in the Partnership's fixed assets on their balance sheet, and the total cost of
the equipment shared by the Partnership with other partnerships at December 31,
2001 was approximately $2,867,000. The Partnership's share of the outstanding
debt associated with this equipment at December 31, 2001 was approximately
$387,000, which is included in the Partnership's liabilities on the balance
sheet, and the total outstanding debt at December 31, 2001 related to the
equipment shared by the Partnership was approximately $2,338,000. There was no
equipment shared by the Partnership as of December 31, 2000.

The Partnership's cash flow from operations is expected to continue to
be adequate to cover all operating expenses, liabilities, and distributions to
Partners during the next 12-month period. If available Cash Flow or Net
Disposition Proceeds are insufficient to cover the Partnership expenses and
liabilities on a short and long term basis, the Partnership will attempt to
obtain additional funds by disposing of or refinancing Equipment, or by
borrowing within its permissible limits. The Partnership may also reduce the
distributions to its Partners if it deems necessary. Since the Partnership's
leases are on a "triple-net" basis, no reserve for maintenance and repairs are
deemed necessary.

RESULTS OF OPERATIONS

For the year ended December 31, 2001, 2000 and 1999, the Partnership
recognized income of $954,000, $1,797,000, and $3,005,000 and expenses of
$784,000, $2,002,000, and $3,483,000, resulting in net income of $170,000 in
2001, and a net loss of $205,000 and $478,000 for 2000 and 1999, respectively.

Lease income decreased to $765,000 in 2001, down from $1,790,000 and
$2,996,000 in 2000 and 1999 respectively, primarily due to the expiration of
leases in 2000 and entering into newer, smaller leases during 2001.

Interest income decreased to $4,000 in 2001 from $7,000 in 2000 and
$10,000 in 1999, as a result of rental income being utilized for Partnership
distributions for the year ended December 31, 2001, whereas, for the year ended
December 31, 2000 and 1999 the rental income was temporarily being invested in
money market accounts until being utilized for equipment purchases.

Operating expenses, excluding depreciation, consist of accounting,
legal, outside service fees and reimbursement of expenses to Com Cap Corp. for
administration and operation of the Partnership. The operating expenses totaled
approximately $221,000 in 2001, $193,000 in 2000, and $261,000 in 1999. The
increase from 2001 to 2000 is primarily attributable to an increase in the
annual recalculation of the overhead charges from Com Cap Corp. of approximately
$6,000, an increase in professional fees of approximately $32,000, and a
decrease in postage fees of approximately $9,000. The decrease in 2000 was
primarily attributable to a decrease in the annual recalculation of the overhead
charges from Com Cap Corp.

The equipment management fee is equal to approximately 5% of the gross
lease revenue attributable to equipment, which is subject to operating leases.
The equipment management fee decreased to $38,000 in 2001 from $90,000 and
$150,000 for 2000 and 1999 respectively, which is consistent with the decrease
in lease income.

Interest expense decreased to $11,000 for 2001, from $22,000 and
$105,000 for 2000 and 1999 respectively as a result of reduced debt from the
sale of equipment, and/or the expiration of certain leases in 2001. The majority
of new leases with associated debt obligations were acquired late in the third
and fourth quarters of 2001, whereby the effect of the additional interest
expense won't be seen until 2002.

15


Depreciation and amortization expenses consist of depreciation on
computer equipment, amortization of organization costs (for 1999 only),
equipment acquisition fees and debt placement fees. Depreciation and
amortization during 2001 decreased to $413,000 from $1,476,000 and $2,809,000 in
2000 and 1999 respectively, due to the expiration of leases in 2000 and entering
into newer, smaller leases during 2001.

The Partnership sold computer equipment with a net book value of
$44,000, $484,000, and $698,000 during the years ended December 31, 2001, 2000,
and 1999, respectively, for a net gain of $185,000 for the year ended December
31, 2001, and a net loss of $118,000 and $108,000 for the years ended December
31, 2000 and 1999, respectively.

The Partnership has reserved $100,000, $104,000, and $50,000 as
allowances against accounts receivable for the periods ending December 31, 2001,
2000, and 1999, respectively.

The Partnership identified specific computer equipment and associated
equipment acquisition costs, which were reevaluated due to technological
changes. The Partnership determined that no impairment had occurred for the
years ended December 31, 2001 and 2000. In 1999, the Partnership determined that
the carrying amount of certain assets was greater than the undiscounted cash
flows to be generated by these assets and therefore recorded a charge of $10,000
to depreciation expense to record the assets at their estimated fair value in
the year ended December 31, 1999.

NET INCOME (LOSS)

Net income increased in 2001 to $170,000 from a net (loss) of $205,000
and $478,000 in 2000 and 1999, respectively.

The changes in net income (loss) were attributable to the changes in
revenues and expenses as discussed above.

CASH FLOWS

For the year ended December 31, 2001, the Partnership generated cash
flow from operating activities of $257,000, which includes net income of
$170,000, and gain from the sale of computer equipment of $185,000, and was
reduced by depreciation and amortization expenses of $413,000. Other noncash
activities included in the determination of the net income includes direct
payments of lease income by lessees to banks of $111,000.

RECENT ACCOUNTING PRONOUNCEMENTS

Business Combinations

In June 2001, the FASB issued Statement No. 141, "Business
Combinations." The Statement addresses financial accounting and reporting for
business combinations and supersedes APB Opinion No. 16, Business Combinations,
and FASB Statement No. 38, Accounting for Preacquisiton Contingencies of
Purchased Enterprises. All business combinations in the scope of the Statement
are to be accounted for using the purchase method. The provisions of the
Statement apply to all business combinations initiated after June 30, 2001. The
Statement also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001, or later.
There was no material, financial condition, or equity upon adoption of Statement
No. 141.

16


Goodwill and Other Intangible Assets

In June 2001, the FASB issued Statement No. 142, "Goodwill and Other
Intangible Assets." The Statement addresses financial accounting and reporting
for goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how tangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition. The Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements.

The provisions of the Statement are required to be applied starting
with fiscal years beginning after December 15, 2001, except that goodwill and
intangible assets acquired after June 30, 2001, will be subject immediately to
the non-amortization and amortization provisions of the Statement. Early
application is permitted for entities with fiscal years beginning after March
15, 2001, provided that the first interim financial statements have not
previously been issued. The Statement is required to be applied at the beginning
of an entity's fiscal year and to be applied to all goodwill and other
intangible assets recognized in its financial statements at that date. There was
no material impact on earnings, financial condition, or equity upon adoption of
Statement No. 142 at January 1, 2002.

Impairment or Disposal of Long-Lived Assets

In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. However, the Statement retains the
fundamental provisions of Statement 121 for (a) recognition and measurement of
the impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale.

This Statement supersedes the accounting and reporting provisions of
APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
However, this Statement retains the requirement of Opinion 30 to report
discontinued operations separately from continuing operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
by abandonment, or in distribution to owners) or is classified as held for sale.
This Statement also amends ARB No. 51, Consolidated Financial Statements, to
eliminate the exception to consolidation for a temporarily controlled
subsidiary.

The provisions of this Statement are effective for financial statements
issued for fiscal years beginning after December 15, 2001, and interim periods
within those fiscal years, with earlier application encouraged. The provisions
of this Statement generally are to be applied prospectively. The adoption of the
Statement on January 1, 2002, did not have a material impact on earnings,
financial condition, or equity.

ITEM 7.A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership believes its exposure to market risk is not material
due to the fixed interest rate of its long-term debt and its associated fixed
revenue streams.

ITEM 8: FINANCIAL STATEMENTS

See financial statements commencing in part IV Item 14.

17


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

NONE

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

GENERAL

The General Partner, a wholly owned subsidiary of Commonwealth of
Delaware, Inc., a Delaware corporation, which is in turn a wholly-owned
subsidiary of Commonwealth Capital Corp., a Pennsylvania corporation, was
incorporated in Pennsylvania on August 26, 1993. The General Partner also acts
as the General Partner for Commonwealth Income and Growth Fund I and
Commonwealth Income and Growth Fund II. The principal business office of the
General Partner is 470 John Young Way, Suite 300, Exton, PA 19341, and its
telephone number is 610-594-9600. The General Partner manages and controls the
affairs of the Partnership and has sole responsibility for all aspects of the
Partnership's operations. The officers of the General Partner devote such time
to the affairs of the Partnership as in the opinion of the General Partner is
necessary to enable it to perform its function as General Partner. The officers
of the General Partner are not required to spend their full time in meeting
their obligations to the Partnership.

The directors and officers of the General Partner and key employees of
Com Cap Corp. are as follows:



NAME TITLE
- ---- -----

George S. Springsteen Chairman of the Board of Directors and President of the General Partner and
Com Cap Corp.

Kimberly A. Springsteen Executive Vice President, Chief Operating Officer and Secretary of the General
Partner and Com Cap Corp.

Henry J. Abbott Vice President and Portfolio Manager of Com Cap Corp.

Salvatore R. Barila Vice President and Controller of the General Partner and Com Cap Corp

John A. Conboy III Assistant Vice President and Accounting Manager of the General Partner and Com Cap
Corp.

Lynn Franceshina Accounting Manager of the General Partner and Com Cap Corp.

Dorothy A. Ferguson Assistant Vice President of Com Cap Corp.


George S. Springsteen, age 67, is President of both Com Cap Corp. and
the General Partner. Mr. Springsteen is also President of the general partners
or controlling entities of several prior programs sponsored by Com Cap Corp.
with objectives similar to the Partnership's. He has been the sole shareholder
and director of Com Cap Corp. since its formation in 1978. From 1971 to 1978,
Mr. Springsteen was involved in the computer leasing business of Granite
Computer Corporation. Mr. Springsteen served as Vice President of Marketing, in
addition to other capacities, and managed a portfolio of approximately
$120,000,000 of IBM computers and peripherals. In 1978, Granite Computer
Corporation sold its equipment portfolio and left the equipment leasing
business. Mr. Springsteen acquired a portion of Granite's portfolio, client
base, employees and corporate offices in Jenkintown, Pennsylvania. The new
company began operations as Com Cap Corp. in May of 1978. Mr. Springsteen
received a Bachelor of Science degree from the University of Delaware in 1957.

18


Kimberly A. Springsteen, age 42, is Executive Vice President, Chief
Operating Officer and Secretary of Com Cap Corp. and the General Partner and
joined Com Cap Corp. in 1997. She is also the President of Commonwealth Capital
Securities Corp. From 1980 to 1997, Ms. Springsteen was employed with Wheat
First Butcher Singer, a broker/dealer headquartered in Richmond, Virginia. While
at Wheat First Butcher Singer, Ms. Springsteen, Senior Vice President, served as
Marketing Manager for the Direct Investments Department, with over $450,000,000
of investments under management in real estate, equipment leasing and
energy-related industries. Ms. Springsteen holds Series 7, 63 and 39 NASD
licenses and is a member of the Equipment Leasing Association, Investment
Partnership Association, and International Association for Financial Planning.

Henry J. Abbott, age 50, is Vice President and Portfolio Manager of Com
Cap Corp. and has been employed by Com Cap Corp. since 1998. Mr. Abbot has been
active in the commercial lending industry, working primarily on asset-backed
transactions for more than twenty-seven years. Prior to joining Com Cap Corp.
Mr. Abbott was a founding partner of Westwood Capital LLC, in New York. Prior to
that, as Senior Vice President for IBJ Schroder Leasing Corporation where Mr.
Abbott managed a group specializing in providing operating lease financing
programs in the high technology sector. Mr. Abbott brings extensive knowledge
and experience in all facets of asset-backed financing and has successfully
managed $1.5 billion of secured transactions. Mr. Abbott attended St. John's
University. Mr. Abbott is a member of the Equipment Leasing Association.

Salvatore R. Barila, age 31, is Vice President and Controller of the
General Partner and Com Cap Corp. and certain of its subsidiaries where he has
been employed since 2000. From 1992 to 2000, Mr. Barila was employed as
Corporate Accounting Manager of RCG Information Technology, Inc. Mr. Barila
received a BS degree in Accounting from Pace University in 1992. Mr. Barila is a
member of the Equipment Leasing Association.

John A. Conboy III, age 55, is Assistant Vice President and Accounting
Manager of the General Partner and Com Cap Corp. and certain of its subsidiaries
where he has been employed since 1999. From 1965 to 1996, Mr. Conboy was
employed as a Manager of Accounting Operations of Consolidated Rail Corporation.
Mr. Conboy received a BS/BA degree in Accounting and Business Administration
from the University of Phoenix in 1994. Mr. Conboy is a member of the Equipment
Leasing Association.

Lynn A. Franceschina, age 29, is Accounting Manager of the General
Partner and Com Cap Corp. and certain of its subsidiaries where she has been
employed since 2001. From 1991 to 2001, Ms. Franceschina worked as an
Accountant, most recently as the Business Controls Manager at Liquent, Inc. Ms.
Franceschina received a B.S.B.A. degree from Robert Morris College. Ms.
Franceschina is a member of the Equipment Leasing Association.

Dorothy A. Ferguson, age 59, is Assistant Vice President of Com Cap
Corp. and has been employed by Com Cap Corp. since 1995. She brought with her
over 20 years experience in commercial banking and finance. Prior to joining
Commonwealth, she held positions as a Banking Officer and Administrative
Assistant to the Chairman of a large Philadelphia based bank, as well as
Executive Secretary to the CEO of an international manufacturing management
group.

The directors and officers of the General Partner are required to spend
only such time on the Partnership's affairs as is necessary in the sole
discretion of the directors of the General Partner for the proper conduct of the
Partnership's business. A substantial amount of time of such directors and
officers is expected to be spent on matters unrelated to the Partnership,
particularly after the Partnership's investments have been selected. Under
certain circumstances, such directors and officers are entitled to
indemnification from the Partnership.

19


ITEM 11: EXECUTIVE COMPENSATION

The following table summarizes the types, amounts and recipients of
compensation to be paid by the Partnership directly or indirectly to the General
Partner and its Affiliates. Some of these fees are paid regardless of the
success or profitability of the Partnership's operations and investments. While
such compensation and fees were established by the General Partner and are not
based on arm's-length negotiations, the General Partner believes that such
compensation and fees are comparable to those which would be charged by an
unaffiliated entity or entities for similar services. The Partnership Agreement
limits the liability of the General Partner and its Affiliates to the
Partnership and the Limited Partners and provides indemnification to the General
Partner and its Affiliates under certain circumstances.




AMOUNT AMOUNT AMOUNT
ENTITY RECEIVING INCURRED INCURRED INCURRED
COMPENSATION TYPE OF COMPENSATION DURING 2001 DURING 2000 DURING 1999

OFFERING AND ORGANIZATION STAGE

The General Partner Organizational Fee. An Organization $ 0 $0 $ 0
Fee equal to three percent of the first
$10,000,000 of Limited Partners' Capital
Contributions and two percent of the
Limited Partners' Capital Contribution
in excess of $10,000,000, as
compensation for the organization of the
Partnership. It is anticipated that all
Organizational and Offering Expenses
which include legal, accounting and
printing expenses; various registration
and filing fees; miscellaneous expenses
related to the organization and
formation of the Partnership; other
costs of registration; and costs
incurred in connection with the
preparation, printing and distribution
of this Report and other sales
literature. The General Partner pays all
Organizational and Offering Expenses,
other than Underwriter's Commissions and
a non-accountable expense allowance
payable to the Dealer Manager that is
equal to the lesser of (i) one percent
of the Offering proceeds or (ii)
$50,000.

OPERATIONAL AND SALE
OR LIQUIDATION STAGES

The General Partner Equipment Acquisition Fee. An Equipment $30,000 $0 $60,000
Acquisition Fee of four percent of the
Purchase Price of each item of
Equipment purchased as compensation for
the negotiation of the acquisition of
the Equipment and the lease thereof or
sale under a Conditional Sales
Contract. The fee was paid upon each
closing of the Offering with respect to
the Equipment purchased by the
Partnership with the net proceeds of
the Offering available for investment
in Equipment. If the Partnership
acquires Equipment in an amount
exceeding the net proceeds of the
Offering available for investment in
Equipment, the fee will be paid when
such Equipment is acquired.


20




AMOUNT AMOUNT AMOUNT
ENTITY RECEIVING INCURRED INCURRED INCURRED
COMPENSATION TYPE OF COMPENSATION DURING 2001 DURING 2000 DURING 1999

The General Partner Reimbursement of Expenses. The General $82,000 $76,000 $111,000
and its Affiliates and its Affiliates Partner are entitled
to reimbursement by the Partnership for
the cost of goods, supplies or services
obtained and used by the General Partner
in connection with the administration
and operation of the Partnership from
third parties unaffiliated with the
General Partner. In addition, the
General Partner and its affiliates are
entitled to reimbursement of certain
expenses incurred by the General Partner
and its affiliates in connection with
the administration and operation of the
Partnership. The amounts set forth on
this table do not include expenses
incurred in the offering of Units.

The General Partner Debt Placement Fee. As compensation for $ 5,000 $ 0 $ 0
arranging Term Debt to finance the
acquisition of Equipment to the
Partnership, a fee equal to one percent
of such indebtedness; provided,
however, that such fee is reduced to
the extent the Partnership incurs such
fees to third Parties, un affiliated
with the General Partner or the lender,
with respect to such indebtedness and
no such fee is paid with respect to
borrowings from the General Partner or
its Affiliates.

The General Partner Equipment Management Fee. A monthly fee $38,000 $90,000 $150,000
equal to the lesser of (I) the fees
which would be charged by an
independent third party for similar
services for similar equipment or (ii)
the sum of (a) two percent of (1) the
Gross Lease Revenues attributable to
Equipment which is subject to Full
Payout Net Leases which contain net
lease provisions plus (2) the purchase
price paid on Conditional Sales
Contracts as received by the
Partnership and (b) five percent of the
Gross Lease Revenues attributable to
Equipment which is subject to Operating
Leases.

The General Partner Re-Lease Fee. As Compensation for $ 0 $ 0 $ 0
providing re-leasing services for any
Equipment for which the General Partner
has, following the expiration of, or
default under, the most recent lease of
Conditional Sales Contract, arranged a
subsequent lease of Conditional Sales
Contract for the use of such Equipment
to a lessee or other party, other than
the current or most recent lessee of
other operator of such equipment or its
Affiliates ("Re-lease"), the General
Partner will receive, on a monthly
basis, a Re3-lease Fee equal to the
lesser of (a) the fees which would be
charged by an independent third party
of comparable services for comparable
equipment or (b) two percent of Gross
Lease Revenues derived from such
Re-lease.

The General Partner Partnership Interest. The General $ 3,080 $10,124 $ 9,565
Partner has a present and continuing
one percent interest of $1,000 in the
Partnership's item of income, gain,
loss, deduction, credit, and tax
preference. In addition, the General
Partner receives one percent of Cash
Available for Distribution until the
Limited Partners have received
distributions of Cash Available for
Distribution equal to their Capital
Contributions plus the 10% Priority
Return and thereafter, the General
Partner will receive 10% of Cash
Available for Distribution.

21



ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

NOT APPLICABLE

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Partnership is subject to various conflicts of interest arising out
of its relationships with the General Partner and its Affiliates. These
conflicts include the following:

COMPETITION WITH GENERAL PARTNER AND AFFILIATES: COMPETITION FOR
MANAGEMENT'S TIME

The General Partner and its Affiliate sponsor other investor programs,
which are in potential competition with the Partnership in connection with the
purchase of Equipment as well as opportunities to lease and sell such Equipment.
Competition for Equipment has occurred and is likely to occur in the future. The
General Partner and its Affiliates may also form additional investor programs,
which may be competitive with the Partnership.

If one or more investor programs and the Partnership are in a position
to acquire the same Equipment, the General Partner will determine which program
will purchase the Equipment based upon the objectives of each and the
suitability of the acquisition in light of those objectives. The General Partner
will generally afford priority to the program or entity that has had funds
available to purchase Equipment for the longest period of time. If one or more
investor programs and the Partnership are in a position to enter into lease with
the same lessee or sell Equipment to the same purchaser, the General Partner
will generally afford priority to the Equipment which has been available for
lease or sale for the longest period of time.

Certain senior executives of the General Partner and its Affiliates
also serve as officers and directors of the other programs and are required to
apportion their time among these entities. The Partnership is, therefore, in
competition with the other programs for the attention and management time of the
General Partner and Affiliates. The officers and directors of the General
Partner are not required to devote all or substantially all of their time to the
affairs of the Partnership.

ACQUISITIONS

Com Cap Corp. and the General Partner or other Affiliates of the
General Partner may acquire Equipment for the Partnership provided that (i) the
Partnership has insufficient funds at the time the Equipment is acquired, (ii)
the acquisition is in the best interest of the partnership and (iii) no benefit
to the General Partner or its Affiliates arises from the acquisition except for
compensation paid to Com Cap Corp., the General Partner or such other Affiliate
as disclosed in this Report. Com Cap Corp., the General Partner or their
Affiliates will not hold Equipment for more than 60 days prior to transfer to
the Partnership. If sufficient funds become available to the Partnership within
such 60 day period, such Equipment may be resold to the Partnership for a price
not in excess of the sum of the cost of the Equipment to such entity and any
accountable Acquisition Expenses payable to third parties which are incurred by
such entity and interest on the Purchase Price from the date of purchase to the
date of transfer to the Partnership. Com Cap Corp., the General Partner or such
other Affiliate will retain any rent or other payments received for the
Equipment, and bear all expenses and liabilities, other than accountable
Acquisition Expenses payable to third parties with respect to such Equipment,
for all periods prior to the acquisition of the Equipment by the Partnership.
Except as described above, there will be no sales of Equipment to or from any
Affiliate of Com Cap Corp.

22


In certain instances, the Partnership may find it necessary, in
connection with the ordering and acquisition of Equipment, to make advances to
manufacturers or vendors with funds borrowed from the General Partner for such
purpose. The Partnership does not borrow money from the General Partner or any
of its Affiliates with a term in excess of twelve months. Interest is paid on
loans or advances (in the form of deposits with manufacturers or vendors of
Equipment or otherwise) from the General Partner of its Affiliates from their
own funds at a rate equal to that which would be charged by third party
financing institutions on comparable loans from the same purpose in the same
geographic area, but in no event in excess of the General Partner's or
Affiliate's own cost of funds. In addition, if the General Partner or its
Affiliates borrow money and loan or advance it on a short-term basis to or on
behalf of the Partnership, the General Partnership than that which the General
Partner or such Affiliates are paying. The Partnership does not loan money to
any Person including the General Partner or its Affiliates except to the extent
that a Conditional Sales Contract constitutes a loan.

If the General Partner or any of its Affiliates purchases Equipment in
its own name and with its own funds in order to facilitate ultimate purchase by
the Partnership, the purchaser is entitled to receive interest on the funds
expended for such purchase on behalf of the Partnership. Simple interest on any
such temporary purchases is charged on a floating rate basis not in excess of
three percent over the "prime rate" from time to time announced by PNC Bank,
from the date of initial acquisition to the date of repayment by the
Partnership/ownership transfer.

The Partnership does not invest in equipment Limited Partnerships,
general partnerships or joint ventures, except that (a) the Partnership may
invest in general partnerships or joint ventures with persons other that
equipment Programs formed by the General Partner or its Affiliates, which
partnerships or joint ventures own specific equipment; provided that (i) the
Partnership has or acquires a controlling interest in such ventures or
partnerships, (ii) the non-controlling interest is owned by a non-Affiliated,
and (iii) the are no duplicate fees; and (b) the Partnership may invest in joint
venture arrangements with other equipment Programs formed by the General Partner
or its Affiliates if such action is in the best interest of all Programs and if
all the following conditions are met: (i) all the Programs have substantially
identical investment objectives; (ii) there are no duplicate fees; (iii) the
sponsor compensation is substantially identical in each Program; (iv) the
Partnership has a right of first refusal to buy another Program's interest in a
joint venture if the other Program wishes to sell equipment held in the joint
venture; (v) the investment of each Program is on substantially the same terms
and conditions; and (vi) the joint venture is formed either for the purpose of
effecting appropriated diversification for the Programs or for the purpose of
relieving the General Partner or its Affiliates from a commitment entered into
pursuant to certain provisions of the Partnership Agreement.

GLOSSARY

The following terms used in this Report shall (unless otherwise expressly
provided herein or unless the context otherwise requires) have the meanings set
forth below.

"Acquisition Expenses" means expenses relating to the prospective selection and
acquisition of or investment in Equipment by the Partnership, whether or not
actually acquired, including, but not limited to, legal fees and expenses,
travel and communication expenses, costs of appraisal, accounting fees and
expenses and other related expenses.

"Acquisition Fees" means the total of all fees and commissions paid by any party
in connection with the initial purchase of Equipment acquired by the
Partnership. Included in the computation of such fees or commissions shall be
the Equipment Acquisition Fee and any commission, selection fee, construction
supervision fee, financing fee, non-recurring management fee or any fee of a
similar nature, however designated.

23


"Adjusted Capital Contributions" means Capital Contributions of the Limited
Partners reduced by any cash distribution received by the Limited Partners
pursuant to the Partnership Agreement, to the extent such distributions exceed
any unpaid Priority Return as of the date such distributions were made.

"Affiliate" means, when used with reference to a specified Person, (i) any
person, that directly or indirectly through one or more intermediaries controls
or is controlled by or is under common control with the specified Person, (ii)
any Person that is a director or an executive officer of, partner in, or serves
in a similar capacity to, the specified Person, or any Person of which the
specified Person is an executive officer or partner or with respect to which the
specified Person serves in a similar capacity, (iii) any Person owning or
controlling 10% or more of the outstanding voting securities of such specified
Person, or (iv) if such Person is an officer, director or partner, any entity
for which such Person acts in such capacity.

"Capital Account" means the bookkeeping account maintained by the Partnership
for each Partner.

"Capital Contributions" means in the case of the General Partner, the total
amount of money contributed to the Partnership by the General Partner, and in
the case of Limited Partners, $20 for each Unit, or where the context requires,
the total Capital Contributions of all the Partners.

"Cash Available for Distribution" means Cash Flow plus Net Disposition Proceeds
plus cash funds available for distribution from Partnership reserves, less such
amounts as the General Partner, in accordance with the Partnership Agreement,
causes the Partnership to reinvest in Equipment or interests therein, and less
such amounts as the General Partner, in its sole discretion, determines should
be set aside for the restoration or enhancement of Partnership reserves.

"Cash Flow" for any fiscal period means the sum of (i) cash receipts from
operations, including, but not limited to, rents or revenues arising from the
leasing or operation of the Equipment and interest, if any, earned on funds on
deposit for the Partnership, but not including Net Disposition Proceeds, minus
(ii) all cash expenses and costs incurred and paid in connection with the
ownership, lease, management, use and/or operation of the Equipment, including,
but not limited to, fees for handling and storage; all interest expenses paid
and all repayments of principal regarding borrowed funds; maintenance; repair
costs; insurance premiums; accounting and legal fees and expenses; debt
collection expenses; charges, assessments or levies imposed upon or against the
Equipment; ad valorem, gross receipts and other property taxes levied against
the Equipment; and all costs of repurchasing Units in accordance with the
Partnership Agreement; but not including depreciation or amortization of fees or
capital expenditures, or provisions for future expenditures, including, without
limitation, Organizational and Offering Expenses.

"Closing Date" means May 11, 1995.

"Code" means the Internal Revenue Code of 1986, as amended, and as may be
amended from tine to time by future federal tax statutes.

"Competitive Equipment Sale Commission" means that brokerage fee paid for
services rendered in connection with the purchase or sale of Equipment, which is
reasonable, customary, and competitive in light of the size, type, and location
of the Equipment.

"Conditional Sales Contract" means an agreement to sell Equipment to a buyer in
which the seller reserves title to, and retains a security interest in, the
Equipment until the Purchase Price of the Equipment is paid.

"Effective Date" means December 17, 1993, the date on which the Partnership's
Registration Statement on Form S-1 was declared effective by the United States
Securities and Exchange Commission.

"Equipment" means each item of and all of the computer peripheral and other
similar capital equipment purchased, owned, operated, and/or leased by the
Partnership or in which the Partnership has acquired a direct or indirect
interest, together with all appliances, parts, instruments, accessories,
furnishings, or other equipment included therein and all substitutions,
renewals, or replacements of, and all additions, improvements, and accessions
to, any and all thereof.

24


"Full Payout Net Lease" means an initial Net Lease of the Equipment under which
the non-cancelable rental payments due (and which can be calculated at the
commencement of the Net Lease) during the initial noncancelable fixed term (not
including any renewal or extension period of the lease or other contract for the
use of the Equipment are at least sufficient to recover the Purchase Price of
the Equipment.

"General Partner" means Commonwealth Income & Growth Fund, Inc. and any
additional, substitute or successor general partner of the Partnership.

"Gross Lease Revenues" means Partnership gross receipts from leasing or other
operation of the Equipment, except that, to the extent the Partnership has
leased the Equipment from an unaffiliated party, it shall mean such receipts
less any lease expense.

"Initial Closing" means March 14, 1994, the date after the Minimum Subscription
Amount was received on which funds to acquire Units were released from the
Escrow Account and distributed to the Partnership for the acquisition of Units
by Limited Partners.

"IRS" means the Internal Revenue Service.

"Limited Partner" means a person who acquires Units and who is admitted to the
Partnership as a limited partner in accordance with the terms of the Partnership
Agreement.

"Majority in Interest" means, with respect to the Partnership, Limited Partners
holding more than 50% of the outstanding Units held by all Limited Partners at
the Record Date for any vote or consent of the Limited Partners.

"Minimum Subscription Amount" means an aggregate of $2,500,000 in Subscriptions.

"Net Dispositions Proceeds" means the net proceeds realized by the Partnership
from the refinancing, sale or other disposition of Equipment, including
insurance proceeds or lessee indemnity payments arising from the loss or
destruction of Equipment, less such amounts as are used to satisfy Partnership
liabilities.

"Net Lease" means a lease or other contract under which the owner provides
equipment to a lessee or other operator in return for a payment, and the lessee
assumes all obligations and pays for the operation, repair, maintenance and
insuring of the equipment.

"Net Profits" or "Net Losses" shall be computed in accordance with Section
703(a) of the Code (including all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a) (1) of the Code) for
each taxable year of the Partnership or shorter period prior to an interim
closing of the Partnership's books with the following adjustments: (I) any
income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Net Profits and Net Loss pursuant to
this definition shall be added to such taxable income or shall reduce such
taxable loss; (ii) any expenditure of the Partnership described in Code Section
705(a) (2) (B) or treated as Code Section 705(a) (2) (B) expenditures pursuant
to Treasury Regulations section 1.704-1(b) (2) (iv) (i) and not otherwise taken
into account in computing Net Profits and Net Losses pursuant to this definition
shall be subtracted from such taxable income or loss; (iii) items of income,
gain, loss and deduction specially allocated pursuant to Section 7.3 of the
Partnership Agreement shall not be included in the computation of Net Profits or
Net Loss; and if property is reflected on the books of the Partnership at a book
value that differs from the adjusted tax basis of the property in accordance
with Treasury Regulation Section 1.704-1(b) (2) (iv) (d) or (f), depreciation,
amortization, and gain or loss with respect to such property shall be determined
by reference to such book value in a manner consistent with Treasury Regulation
Section 1.704-1(b) (2) (iv) (g). The terms "Net Profit" or "Net Losses" shall
include the Partnership's distributive share of the profit or loss of any
partnership or joint venture in which it is a partner or joint venturer.

25


"Offering" means the initial public offering of Units in the Partnership.

"Offering Period" means the period commencing the Effective Date and ending the
last day of the calendar month in which the Closing Date occurs.

"Operating Distributions" means the quarterly distributions made to the Partners
pursuant to Article 8 of the Partnership Agreement.

"Operating Lease" means a lease or other contractual arrangement under which an
unaffiliated party agrees to pay the Partnership, directly or indirectly, for
the use of the Equipment, and which is not a Full Payout Net Lease.

"Organizational and Offering Expenses" means the expenses incurred in connection
with the organization of the Partnership and in preparation of the Offering,
including Underwriting Commissions, listing fees and advertising expenses
specifically incurred in connection with the distribution of the Units.

"Partner (s)" means any one or more of the General Partner and the Limited
Partners.

"Partnership" means Commonwealth Income & Growth Fund I, a Pennsylvania limited
partnership.

"Partnership Agreement" means that Limited Partnership Agreement of Commonwealth
Income & Growth Fund I by and among the General Partner and the Limited
Partners, pursuant to which the Partnership is governed.

"Person" means an individual, partnership, limited liability company, joint
venture, corporation, trust, estate or other entity.

"Priority Return" means an amount equal to a return at a rate of 10% per annum,
compounded daily, on the Adjusted Capital Contribution for all outstanding
Units, which amount shall begin accruing at the end of the calendar quarter in
which such Units are sold by the Partnership.

"Proceeds" means proceeds from the sale of the Units.

"Program" means a limited or general partnership, joint venture, unincorporated
association or similar organization, other than a corporation formed and
operated for the primary purpose of investment in and the operation of or gain
from an interest in Equipment.

"Purchase Price" means, with respect to any Equipment, an amount equal to the
sum of (i) the invoice cost of such Equipment or any other such amount paid to
the seller, (ii) any closing, delivery and installation charges associated
therewith not included in such invoice cost and paid by or on behalf of the
Partnership, (iii) the cost of any capitalized modifications or upgrades paid by
on or behalf of the Partnership in connection with its purchase of the
Equipment, and (iv) solely for purposes of the definition of Full Payout Net
Lease, the amount of the Equipment Acquisition Fee and any other Acquisition
Fees.

"Retained Proceeds" means Cash Available for Distribution, which instead of
being distributed to the Partners is retained by the Partnership for the purpose
of acquiring or investing in Equipment.

"Term Debt" means debt of the Partnership with a term in excess of twelve
months, incurred with respect to acquiring or investing in Equipment, or
refinancing non-Term Debt, but not debt incurred with respect to refinancing
existing Partnership Term Debt.

26



"Unit" means a Limited Partnership interest in the Partnership.

PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K

(a) (1) Financial Statements

Commonwealth Income & Growth Fund I

Reports of Independent Certified Public Accountants

Balance Sheets as of December 31, 2001 and 2000

Statements of Operations for each of the three years ended
December 31, 2001, 2000 and 1999

Statements of Partners' Capital for each of the three years ended
December 31, 2001, 2000 and 1999

Statements of Cash Flows for each of the three years ended December 31,
2001, 2000 and 1999

Notes to Financial Statements

Commonwealth Income & Growth Fund, Inc.

Report of Independent Auditors

Balance sheet as of February 29, 2001

Notes to Balance Sheet

Commonwealth Capital Corp.

Report of Independent Auditors

Consolidated Balance Sheet as of February 29, 2001

Notes to Consolidated Balance Sheet

(a) (2) Schedules.

Schedules are omitted because they are not applicable, not required, or
because the required information is included in the financial statements and
notes thereto.

(a) (3) Exhibits.

* 3.1 Certificate of Limited Partnership

* 3.2 Agreement of Limited Partnership

27 Financial Data Schedule

27


* Incorporated by reference from the Partnership's Registration
Statement on Form S-1 (Registration No. 333-26933)

** Incorporated by reference from the Partnership's Annual Report
on 10-K for the year ended December 31, 1993

(b) Reports on Form 8-K

(c) Exhibits.

SIGNATURES

Pursuant to the requirements of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf March 29, 2002 by the undersigned thereunto duly authorized.

COMMONWEALTH INCOME & GROWTH FUND I
By: COMMONWEALTH INCOME &
GROWTH FUND, INC., General Partner

By: /s/ George S. Springsteen
--------------------------------
George S. Springsteen, President

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 29, 2002.

SIGNATURE CAPACITY
- --------- --------

/s/ GEORGE S. SPRINGSTEEN Chairman, President and Sole Director of
- ------------------------- Commonwealth Income & Growth Fund, Inc.
George S. Springsteen

/s/ KIMBERLY A. SPRINGSTEEN Executive Vice President Chief Operating
- --------------------------- Officer and Secretary
Kimberly A. Springsteen

/s/ SALVATORE R. BARILA Vice President and Controller
- -----------------------
Salvatore R. Barila

28







Commonwealth Income
& Growth Fund I


Financial Statements
Years Ended December 31, 2001, 2000 and 1999


Commonwealth Income & Growth Fund I

Contents

- --------------------------------------------------------------------------------


Report of Independent Certified Public Accountants 3-4

Financial statements
Balance sheets 5
Statements of operations 6
Statements of partners' capital 7
Statements of cash flows 8-9

Notes to financial statements 10-23


2


Report of Independent Certified Public Accountants



The Partners
Commonwealth Income & Growth Fund I
Exton, Pennsylvania

We have audited the accompanying balance sheets of Commonwealth Income & Growth
Fund I as of December 31, 2001 and 2000, and the related statements of
operations, partners' capital, and cash flows for the years ended December 31,
2001 and 2000. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Commonwealth Income & Growth
Fund I at December 31, 2001 and 2000, and the results of its operations and its
cash flows for the years ended December 31, 2001 and 2000, in conformity with
generally accepted accounting principles in the United States.



/s/ BDO Seidman, LLP

Philadelphia, Pennsylvania
March 8, 2002


3



Report of Independent Auditors

The Partners
Commonwealth Income & Growth Fund I

We have audited the accompanying statements of operations, partners' capital,
and cash flows of Commonwealth Income & Growth Fund I for the year ended
December 31, 1999. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Commonwealth
Income & Growth Fund I for the year ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.


/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
March 24, 2000

4



- -----------------------------------------------------------------------------------------------------------------
December 31, 2001 2000
- -----------------------------------------------------------------------------------------------------------------

Assets

Cash and cash equivalents $ 1,082 $ 64,577
Lease income receivable, net of reserves of $299,578 for 2001, and
$149,747 for 2000 300,956 307,546
Accounts Receivable - Commonwealth Capital Corp 17,904 --
Other receivables and deposits 200 200
- -----------------------------------------------------------------------------------------------------------------

320,142 372,323
- -----------------------------------------------------------------------------------------------------------------

Computer equipment, at cost 3,312,836 6,107,056
Accumulated depreciation (2,556,037) (5,647,310)
- -----------------------------------------------------------------------------------------------------------------

756,799 459,746
- -----------------------------------------------------------------------------------------------------------------

Equipment acquisition costs and deferred expenses, net of
accumulated amortization of $5,358 and $285,046, respectively
31,379 7,482
- -----------------------------------------------------------------------------------------------------------------

Total assets $ 1,108,320 $ 839,551
=================================================================================================================




Commonwealth Income & Growth Fund I


Balance Sheets

- --------------------------------------------------------------------------------


December 31, 2001 2000
- -----------------------------------------------------------------------------------------------------------------

Liabilities and Partners' Capital

Liabilities
Accounts payable $ 30,013 $ 74,355
Accounts payable, General Partner 29,924 5,117
Accounts payable, Commonwealth Capital Corp. -- 25
Accounts payable, affiliated limited partnerships 105,886 105,671
Unearned lease income 3,641 3,504
Notes payable 500,585 67,647
- -----------------------------------------------------------------------------------------------------------------

Total liabilities 670,049 256,319
- -----------------------------------------------------------------------------------------------------------------

Partners' capital
General Partner 1,000 1,000
Limited partners 437,271 582,232
- -----------------------------------------------------------------------------------------------------------------

Total partners' capital 438,271 583,232
- -----------------------------------------------------------------------------------------------------------------

Total liabilities and partners' capital $ 1,108,320 $ 839,551
=================================================================================================================


See accompanying notes to financial statements.

5

Commonwealth Income & Growth Fund I


Statements of Operations

- --------------------------------------------------------------------------------


Year ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------

Income
Lease $ 764,635 $ 1,790,339 $ 2,995,506
Interest and other 4,156 6,722 9,683
Gain on sale of computer equipment 185,549 -- --
- -----------------------------------------------------------------------------------------------------------------

Total income 954,340 1,797,061 3,005,189
- -----------------------------------------------------------------------------------------------------------------

Expenses
Operating, excluding depreciation 221,147 192,622 261,038
Equipment management fee, General Partner 38,232 89,517 149,675
Interest 11,121 22,242 105,223
Depreciation 402,199 1,433,902 2,664,825
Amortization of organization costs, equipment
acquisition costs, and deferred expenses 11,281 41,842 143,956
Uncollectible accounts receivable 99,831 103,818 50,000
Loss on sale of computer equipment -- 118,397 108,640
- -----------------------------------------------------------------------------------------------------------------

Total expenses 783,811 2,002,340 3,483,357
- -----------------------------------------------------------------------------------------------------------------

Net income (loss) $ 170,529 $ (205,279) $ (478,168)
=================================================================================================================

Net income (loss) per equivalent limited partnership unit $ .27 $ (.34) $ (.77)

Weighted average number of equivalent
limited partnership units outstanding during the year 631,124 631,358 631,358
=================================================================================================================


See accompanying notes to financial statements.

6

Commonwealth Income & Growth Fund I


Statements of Partners' Capital

- --------------------------------------------------------------------------------


General Limited
Partner Partner General Limited
Units Units Partner Partners Total
- ------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998 50 631,358 $ 1,000 $ 3,256,046 $ 3,257,046

Net income (loss) -- -- 9,565 (487,733) (478,168)
Distributions -- -- (9,565) (949,478) (959,043)
- ------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999 50 631,538 1,000 1,818,835 1,819,835

Net income (loss) -- -- 10,124 (215,403) (205,279)
Distributions -- -- (10,124) (1,021,200) (1,031,324)
- ------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000 50 631,358 1,000 582,232 583,232

Net income -- -- 3,080 167,449 170,529
Adjustment -- (234) -- -- --
Distributions -- -- (3,080) (312,410) (315,490)
- ------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001 50 631,124 $ 1,000 $ 437,271 $ 438,271
==================================================================================================================

See accompanying notes to financial statements.

7

Commonwealth Income & Growth Fund I


Statements of Cash Flows

- --------------------------------------------------------------------------------


Year ended December 31, 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------

Cash flows from operating activities
Net income (loss) $ 170,529 $ (205,279) $ (478,168)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation and amortization 413,480 1,475,744 2,808,801
(Gain) loss on sale of computer
equipment (185,549) 118,397 108,640
Other noncash activities included in
determination of net income (loss) (111,180) (649,145) (1,706,647)
Changes in assets and liabilities
(Increase) decrease in assets
Lease income receivable 6,590 (94,922) (64,420)
Other receivables and deposits -- 1,809 1,294
Accounts receivable, General
Partner -- -- 9,199
Accounts receivable, Commonwealth
Capital Corp. (17,929) -- --
(Decrease) increase in liabilities
Accounts payable (44,342) 20,318 3,727
Accounts payable, General
Partner 24,807 (29,901) 35,018
Accounts payable,
Commonwealth Capital Corp. -- (29,263) 6,808
Accounts payable,
affiliated limited partnerships 215 28,171 77,500
Accrued expenses -- (25,000) (34,000)
Unearned lease income 137 (97,526) (15,938)
- ---------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities 256,758 513,403 751,814
- ---------------------------------------------------------------------------------------------------------------


8


Commonwealth Income & Growth Fund I


Statements of Cash Flows

- --------------------------------------------------------------------------------


Year ended December 31, 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------

Cash flows from investing activities
Capital expenditures $ (199,304) $ -- $ (160,935)
Net proceeds from sale of computer
equipment 229,719 365,210 590,355
Equipment acquisition fees paid to the General
Partner (29,737) -- (6,468)
- ---------------------------------------------------------------------------------------------------------------

Net cash provided by investing activities 678 365,210 422,952
- ---------------------------------------------------------------------------------------------------------------

Cash flows from financing activities
Distributions to partners (315,490) (1,031,324) (959,043)
Debt placement fee paid to the General
Partner (5,441) -- --
- ---------------------------------------------------------------------------------------------------------------

Net cash (used in) financing activities (320,931) (1,031,324) (959,043)
- ---------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash
equivalents (63,495) (152,711) 215,723

Cash and cash equivalents at beginning of year 64,577 217,288 1,565
- ---------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of year $ 1,082 $ 64,577 $ 217,288
===============================================================================================================

See accompanying notes to financial statements.

9

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

1. Business Commonwealth Income & Growth Fund I (the "Partnership")
is a limited partnership organized in the Commonwealth of
Pennsylvania to acquire, own and lease various types of
computer peripheral equipment and other similar capital
equipment, which will be leased primarily to U.S.
corporations and institutions. Commonwealth Capital Corp,
on behalf of the Partnership and other affiliated
partnerships, acquires computer equipment subject to
associated debt obligations and lease revenue and
allocates a participation in the cost, debt and lease
revenue to the various partnerships based on certain risk
factors. The Partnership's General Partner is
Commonwealth Income & Growth Fund, Inc. (the "General
Partner"), a Pennsylvania corporation which is an
indirect wholly owned subsidiary of Commonwealth Capital
Corp. Approximately ten years after the commencement of
operations, the Partnership intends to sell or otherwise
dispose of all of its computer equipment, make final
distributions to partners, and to dissolve. Unless sooner
terminated, the Partnership will continue until December
31, 2004.

Allocations of income and distributions of cash are based
on the Partnership's Limited Partnership Agreement (the
"Agreement"). The various allocations under the Agreement
prevent any limited partner's capital account from being
reduced below zero and ensure the capital accounts
reflect the anticipated sharing ratios of cash
distributions, as defined in the Agreement. During 2001,
the Partnership distributed to the limited partners
$312,410. The 2001 distributions were at an annual rate
of 2.4% of the limited partners' original contributed
capital. During 2000, the Partnership distributed to the
limited partners $781,097, in addition to $240,103
distributed in January 2000, which pertained to the 1999
fourth quarter distribution. The 2000 distributions,
exclusive of the January 2000 distributions, were at an
annual rate of 6.2% of the limited partners' original
contributed capital. During 1999, the Partnership
distributed to the limited partners, three quarterly
distributions totaling $949,478. The three quarterly
distributions in 1999 plus the payment in January 2000
noted above represented an annual rate of 9.4%.
Distributions during 2001 reflect an annual return of
capital in the amount of approximately $0.50 per limited
partnership unit, for units which were outstanding for

10

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

the entire year. Distributions during 2000 reflect an
annual return of capital in the amount of approximately
$1.62 per limited partnership unit, for units which were
outstanding for the entire year, which includes $.38 per
unit which was distributed in January 2000 for the fourth
quarter of 1999. Distributions during 1999 reflect an
annual return of capital in the amount of approximately
$1.50 per limited partnership unit, for units, which were
outstanding for the entire year.


2. Summary of Revenue Recognition
Significant
Accounting Through December 31, 2001, the Partnership has only
Policies entered into operating leases. Lease revenue is
recognized on a monthly basis in accordance with the
terms of the operating lease agreements.

Use of Estimates

The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Long-Lived Assets

The Partnership evaluates its long-lived assets when
events or circumstances indicate that the value of the
asset may not be recoverable. The Partnership determines
whether an impairment exists by estimating the
undiscounted cash flows to be generated by each asset. If
the estimated undiscounted cash flows are less than the
carrying value of the asset then an impairment exists.
The amount of the impairment is determined based on the
difference between the carrying value and the fair value.
Fair value is determined based on estimated discounted
cash flows to be generated by the asset.

11

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

During 2001, 2000 and 1999, the Partnership identified
specific computer equipment and associated equipment
acquisition costs, which were reevaluated due to
technological changes. In 2001 and 2000, the Partnership
determined that no impairment had occurred. In 1999, the
Partnership determined that the carrying amount of
certain assets was greater than the undiscounted cash
flows to be generated by these assets. The Partnership
recorded charges of $10,000 in the fourth quarter of 1999
to record the assets at their estimated fair value. Such
amounts have been included in depreciation expense in the
accompanying financial statements.

Depreciation on computer equipment for financial
statement purposes is based on the straight-line method
over estimated useful lives of four years.

Intangible Assets

Equipment acquisition costs and deferred expenses are
amortized on a straight-line basis over two- to-four year
lives. Unamortized acquisition fees are charged to
amortization expense when the associated leased equipment
is sold.

Cash and Cash Equivalents

The Company considers all highly liquid investments with
a maturity of three months or less to be cash
equivalents. Cash equivalents have been invested in a
money market fund investing directly in Treasury
obligations.

Income Taxes

The Partnership is not subject to federal income taxes;
instead, any taxable income (loss) is passed through to
the partners and included on their respective income tax
returns.

Taxable income differs from financial statement net
income as a result of reporting certain income and
expense items for tax purposes in periods other than
those used for financial statement purposes, principally
relating to depreciation, amortization, and lease income.

12

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

Offering Costs

Offering costs are payments for selling commissions,
dealer manager fees, professional fees and other offering
expenses relating to the syndication. Selling commissions
are 7% of the partners' contributed capital and dealer
manager fees are 2% of the partners' contributed capital.
These costs have been deducted from partnership capital
in the accompanying financial statements.

Net Income (Loss) Per Equivalent Limited Partnership Unit

The net income (loss) per equivalent limited partnership
unit is computed based upon net income (loss) allocated
to the limited partners and the weighted average number
of equivalent limited partner units outstanding during
the year.

3. Computer The Partnership is the lessor of equipment under
Equipment operating leases with periods ranging from 24 to 37
months. In general, associated costs such as repairs and
maintenance, insurance and property taxes are paid by the
lessee.

The Partnership's share of the computer equipment in
which they participate at December 31, 2001 was
approximately $469,000, which is included in the
Partnership's fixed assets on their balance sheet, and
the total cost of the equipment shared by the Partnership
with other partnerships at December 31, 2001 was
approximately $2,867,000. The Partnership's share of the
outstanding debt associated with this equipment at
December 31, 2001 was approximately $387,000, which is
included in the Partnership's liabilities on the balance
sheet, and the total outstanding debt at December 31,
2001 related to the equipment shared by the Partnership
was approximately $2,338,000. There was no equipment
shared by the Partnership as of December 31, 2000.

The following is a schedule of future minimum rentals on
noncancelable operating leases at December 31, 2001:

13

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

Year ending December 31, Amount
---------------------------------------------------------

2002 $ 308,000
2003 289,000
2004 163,000
---------------------------------------------------------

$ 760,000
=========================================================

Lease income from one lessee, exceeding 10% of lease
revenue, aggregated 21% of lease income for the year
ended December 31, 2001. Lease income from three lessees,
each exceeding 10% of lease revenue, aggregated 38% of
lease income for the year ended December 31, 2000. Lease
income from one lessee, exceeding 10% of total lease
income, approximated 12% of lease income for the year
ended December 31, 1999.

As of December 31, 2001, one lessee comprised
approximately 91% of the Partnership's accounts
receivable.

4. Related Party Reimbursement of Expenses
Transactions
The General Partner and its affiliates are entitled to
reimbursement by the Partnership for the cost of goods,
supplies or services obtained and used by the General
Partner in connection with the administration and
operation of the Partnership from third parties
unaffiliated with the General Partner. In addition, the
General Partner and its affiliates are entitled to
reimbursement for certain expenses incurred by the
General Partner and its affiliates in connection with the
administration and operation of the Partnership. During
2001, 2000 and 1999, the Partnership recorded $82,000,
$76,000 and $111,000, respectively, for reimbursement of
expenses to the General Partner.

14

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

Equipment Acquisition Fee

The General Partner is entitled to be paid an equipment
acquisition fee of 4% of the purchase price of each item
of equipment purchased as compensation for the
negotiation of the acquisition of the equipment and lease
thereof or sale under a conditional sales contract.
During 2001, equipment acquisition fees of approximately
$30,000 were paid to the General Partner. During 1999,
equipment acquisition fees of approximately $60,000 were
paid to the General Partner. No fees were paid to the
General Partner in 2000.

Debt Placement Fee

As compensation for arranging term debt to finance the
acquisition of equipment by the Partnership, the General
Partner is paid a fee equal to 1% of such indebtedness;
provided, however, that such fee shall be reduced to the
extent the Partnership incurs such fees to third parties,
unaffiliated with the General Partner or the lender, with
respect to such indebtedness and no such fee will be paid
with respect to borrowings from the General Partner or
its affiliates. During 2001, debt placement fees of
approximately $5,000 were paid to the General Partner. No
debt placement fee was paid to the General Partner in
2000 and 1999.

Equipment Management Fee

The General Partner is entitled to be paid a monthly fee
equal to the lesser of (i) the fees which would be
charged by an independent third party for similar
services for similar equipment or (ii) the sum of (a) two
percent of (1) the gross lease revenues attributable to
equipment which is subject to full payout net leases
which contain net lease provisions plus (2) the purchase
price paid on conditional sales contracts as received by
the Partnership and (b) 5% of the gross lease revenues
attributable to equipment which is subject to operating
leases. During 2001, 2000 and 1999, equipment management
fees of approximately $38,000, $90,000 and $150,000,
respectively, were paid to the General Partner as
determined pursuant to section (ii) above.

15

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

Release Fee

As compensation for providing releasing services for any
equipment for which the General Partner has, following
the expiration of, or default under, the most recent
lease or conditional sales contract, arranged a
subsequent lease or conditional sales contract for the
use of such equipment to a lessee or other party, other
than the current or most recent lessee or other operator
of such equipment or its affiliates ("Release"), the
General Partner shall receive, on a monthly basis, a
Release Fee equal to the lesser of (a) the fees which
would be charged by an independent third party for
comparable services for comparable equipment or (b) two
percent of gross lease revenues derived from such
Release. There were no such fees paid to the General
Partner in 2001, 2000 and 1999.

Equipment Liquidation Fee

With respect to each item of equipment sold by the
General Partner (other than in connection with a
conditional sales contract), a fee equal to the lesser of
(i) 50% of the competitive equipment sale commission or
(ii) three percent of the sales price for such equipment
is payable to the General Partner. The payment of such
fee is subordinated to the receipt by the limited
partners of the net disposition proceeds from such sale
in accordance with the Partnership Agreement. Such fee
will be reduced to the extent any liquidation or resale
fees are paid to unaffiliated parties. There were no such
fees paid to the General Partner in 2001, 2000 and 1999.

16

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

5. Notes Payable Notes payable consisted of the following:



December 31, 2001 2000
---------------------------------------------------------

Installment note payable to a
bank; interest at 7.0%; due in
monthly installments of $5,852
including interest. The note
was paid in full in September
2001 in connection with the
sale of equipment. $ -- $ 67,647

Installment note payable to a
bank; interest at 8.40%; due in
monthly installments of $696
including interest through
January 2003 8,620 --

Installment note payable to a
bank; interest at 7.30%; due in
monthly installments of $1,565
including interest through
January 2003 37,530 --

Installment note payable to a
bank; interest at 9.25%; due in
monthly installments of $1,685
including interest through
January 2004 38,174 --

Installment note payable to a
bank; interest at 6.50%; due in
monthly installments of $1,409
including interest through
September 2004 42,464 --

17

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

Installment note payable to a
bank; interest at 7.00%; due in
monthly installments of $2,069
including interest through
August 2003 60,225 --

Installment note payable to a
bank; interest at 7.50%; due in
monthly installments of $182
including interest through
December 2003 3,964 --

Installment note payable to a
bank; interest at 9.00%; due in
monthly installments of $138
including interest through
February 2004 3,249 --

Installment note payable to a
bank; interest at 9.25%; due in
monthly installments of $485
including interest through
April 2004 12,172 --

Installment note payable to a
bank; interest at 7.00%; due in
monthly installments of $565
including interest through
October 2004 17,379 --

Installment note payable to a
bank; interest at 7.00%; due in
monthly installments of $651
including interest through
December 2004 21,083 --


18

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

Installment note payable to a
bank; interest at 6.75%; due in
monthly installments of $7,720
including interest through
November 2004 246,003 --

Installment note payable to a
bank; interest at 6.25%; due in
monthly installments of $295
including interest through
December 2004 9,722 --
---------------------------------------------------------

$ 500,585 $ 67,647
=========================================================

These notes are secured by specific computer equipment
and are nonrecourse liabilities of the Partnership.
Aggregate maturities of notes payable for each of the
years subsequent to December 31, 2001 are as follows:.

Year ending December 31, Amount
---------------------------------------------------------

2002 $ 181,246
2003 185,380
2004 133,959
---------------------------------------------------------

$ 500,585
=========================================================

6. Supplemental Other noncash activities included in the determination of
Cash Flow net loss are as follows:
Information


Year ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------

Lease income, net of interest expense on
notes payable realized as a result of direct
payment of principal by lessee to bank $ 109,615 $ 649,145 $ 1,684,288


19

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------



Lease income paid to original lessor in lieu
of cash payment for computer equipment acquired
1,565 -- 22,359
- -----------------------------------------------------------------------------------------------------------------

Total adjustment to net income (loss) from other
noncash activities $ 111,180 $ 649,145 $ 1,706,647
=================================================================================================================


No interest or principal on notes payable was paid by the
Partnership because direct payment was made by lessee to
the bank in lieu of collection of lease income and
payment of interest and principal by the Partnership.

Noncash investing and financing activities include the
following:


Year ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------

Debt assumed in connection with purchase
of computer equipment $ 544,000 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------


7. Litigation The Partnership, through Commonwealth Capital Corp, has
initiated a lawsuit against a customer for the non-return
of leased equipment. Management believes that the
Partnership will prevail in this matter; the outcome of
this uncertainty will not have a material adverse impact
to the financial statements of the Partnership. The
complaint alleges that the named defendant has not
returned the proper equipment stated in the master lease
agreement and is seeking restitution for lost monthly
rentals, taxes, attorney fees and costs, plus interest.

20



Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

8. Reconciliation of Net
Income (Loss) Reported for
Financial
Reporting Purposes to
Taxable Income (Loss) on
the Federal
Partnership Return


Year ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------

Net income (loss) for financial reporting purposes
$ 170,529 $ (205,279) $ (478,168)
Adjustments
(Loss) on sale of computer equipment (311,306) (308,635) (322,612)
Depreciation 13,439 533,443 480,316
Amortization 9,728 40,791 115,830
Bad debt expense 203,649 -- --
Unearned lease income (138) (23,447) (11,074)
Other (57,478) 256,461 (94,843)
- -----------------------------------------------------------------------------------------------------------------

Taxable income (loss) on the Federal
Partnership return $ 28,423 $ 293,334 $ (310,551)
=================================================================================================================

The "Adjustments - Other" includes financial statement
adjustments reflected in the tax return in the subsequent
year.

Adjustment for (loss) on sale of equipment is due to
larger depreciation lives for tax reporting purposes.

21

Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------

9. Quarterly Results
of Operation
(Unaudited) Summarized quarterly financial data for the years ended
December 31, 2001 and 2000 is as follows:


Quarter ended
------------------------------------------------------------------
March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------------

2001

Revenues
Lease and other $ 194,105 $ 190,500 $ 278,665 $ 105,521
Gain on sale of computer
equipment 41,750 26,658 104,929 12,212
- -----------------------------------------------------------------------------------------------------------------

Total revenues 235,855 217,158 383,594 117,733

Costs and expenses 211,575 165,539 214,259 195,438

- -----------------------------------------------------------------------------------------------------------------

Net income (loss) $ 24,280 $ 51,619 $ 169,335 $ (74,705)
================================================================================================================

Income (loss) per limited
partner unit $ 0.04 $ 0.08 $ 0.27 $ (0.12)
================================================================================================================


22


Commonwealth Income & Growth Fund I


Notes to Financial Statements

- --------------------------------------------------------------------------------


Quarter ended
-------------------------------------------------------------------
March 31 June 30 September 30 December 31
- ----------------------------------------------------------------------------------------------------------------

2000

Revenues
Lease and other $ 533,653 $ 518,910 $ 424,477 $ 320,021
Gain on sale of computer
equipment 63,135 -- -- --
- ----------------------------------------------------------------------------------------------------------------

Total revenues 596,788 518,910 424,477 320,021
- ----------------------------------------------------------------------------------------------------------------

Costs and expenses
Costs and expenses 590,149 493,387 412,353 388,054
Loss on sale of computer
equipment -- 68,408 101,309 11,815
- ----------------------------------------------------------------------------------------------------------------

Total costs and expenses 590,149 561,795 513,662 399,869
- ----------------------------------------------------------------------------------------------------------------

Net income (loss) $ 6,639 $ (42,885) $ (89,185) $ (79,848)
================================================================================================================

Income (loss) per limited
partner unit $ 0.01 $ (0.07) $ (0.14) $ (0.13)
================================================================================================================


The cumulative gain or loss on sale of computer equipment
is included in revenues or costs as appropriate.

9. Fourth Quarter During the fourth quarter of 2001, the Partnership
Adjustments recorded bad debts of approximately $50,000. During the
fourth quarter of 2000, the Partnership recorded bad
debts of approximately $104,000.



23













[GRAPHIC OMITTED]















COMMONWEALTH INCOME & GROWTH FUND, INC.

(An Indirect Wholly-Owned Subsidiary of Commonwealth Capital Corp.)

BALANCE SHEET

FEBRUARY 28, 2001







COMMONWEALTH INCOME & GROWTH FUND, INC.
(An Indirect Wholly-Owned Subsidiary
of Commonwealth Capital Corp.)

FEBRUARY 28, 2001




TABLE OF CONTENTS

PAGE
----
INDEPENDENT AUDITOR'S REPORT 1

BALANCE SHEET 2

NOTES TO BALANCE SHEET 3





[GRAPHIC OMITTED] Elkins Park Square -- Suite 200
8080 Old York Road
Elkins Park, PA 19027-1455
215-635-3100
Fax: 215-635-5788



INDEPENDENT AUDITOR'S REPORT

Stockholder
Commonwealth Income & Growth Fund, Inc.

We have audited the accompanying balance sheet of COMMONWEALTH INCOME &
GROWTH FUND, INC. (An indirect wholly-owned subsidiary of Commonwealth Capital
Corp.) as of February 28, 2001. This balance sheet is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Commonwealth Income & Growth Fund,
Inc. as of February 28, 2001, in conformity with generally accepted accounting
principles.



/s/ FISHBEIN & COMPANY, P.C.
-------------------------------
FISHBEIN & COMPANY, P.C.


April 5, 2001




Page 2

COMMONWEALTH INCOME & GROWTH FUND, INC.
(An Indirect Wholly-Owned Subsidiary
of Commonwealth Capital Corp.)

BALANCE SHEET

FEBRUARY 28, 2001




ASSETS

Cash $ 9,732

Due from parent 84,203

Investment in Partnerships 3,000
-----------
$ 96,935
===========


LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES
Due to income funds $ 95,835
-----------
STOCKHOLDER'S EQUITY
Common stock - No par value
Authorized 1,000 shares
Issued and outstanding 100 shares 1,000
Additional paid-in capital 1,000,100
-----------
1,001,100
Less note receivable (1,000,000)
-----------

1,100
-----------

$ 96,935
===========

See notes to balance sheet




Page 3

COMMONWEALTH INCOME & GROWTH FUND, INC.
(An Indirect Wholly-Owned Subsidiary
of Commonwealth Capital Corp.)

NOTES TO BALANCE SHEET

FEBRUARY 28, 2001


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Nature of Business

Commonwealth Income & Growth Fund, Inc. (the Company) is a
wholly-owned subsidiary of Commonwealth of Delaware, Inc. which is a
wholly-owned subsidiary of Commonwealth Capital Corp. (CCC). The
Company, through its wholly-owned subsidiaries, primarily leases
various types of computer peripheral equipment and related equipment
to U.S. corporations and institutions. The Company is the sole General
Partner of Commonwealth Income & Growth Fund I, Commonwealth Income &
Growth Fund II, and Commonwealth Income & Growth Fund III, all
Pennsylvania limited partnerships (the "Partnerships").

CCC has provided additional capital by means of a noninterest-bearing
demand note in the amount of $1,000,000, so that the Company will at
all times have a net worth (which includes the net equity of the
Company and the demand note receivable from CCC) of at least
$1,000,000. The note receivable is reflected on the accompanying
balance sheet as a reduction of the Company's equity.

The Company's operations are included in the consolidated federal
income tax return of CCC.

b. Use of Estimates

The preparation of the balance sheet in conformity with generally
accepted accounting principles 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.

2. INVESTMENT IN PARTNERSHIPS

The Company contributed $3,000 in cash to the Partnerships for its general
partner interests. The Company may, at its sole discretion, purchase a
limited partnership interest in the Partnerships ("Units") for an
additional capital contribution of $20 per Unit with a minimum investment
of 125 units.

3. RELATED PARTY TRANSACTIONS

The Company and its affiliates receive substantial fees and compensation in
connection with the offering of Units and the management of the
Partnerships' assets. The Company pays expenses to CCC equal to the fees
collected from the Partnerships.





[GRAPHIC OMITTED]



COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001






COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001



TABLE OF CONTENTS

PAGE
----
INDEPENDENT AUDITOR'S REPORT

CONSOLIDATED FINANCIAL STATEMENTS 1

Balance sheets 2

Statements of operations and retained earnings 3

Statements of cash flows 4

Notes to financial statements 5 - 11






[GRAPHIC OMITTED] Elkins Park Square -- Suite 200
8080 Old York Road
Elkins Park, PA 19027-1455
215-635-3100
Fax: 215-635-5788


INDEPENDENT AUDITOR'S REPORT


Stockholder

Commonwealth Capital Corp.


We have audited the accompanying consolidated balance sheets of
COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES as of February 28, 2001 and February
29, 2000, and the related consolidated statements of operations and retained
earnings and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Commonwealth
Capital Corp. and Subsidiaries as of February 28, 2001 and February 29, 2000,
and the consolidated results of their operations and their consolidated cash
flows for the years then ended in conformity with generally accepted accounting
principles.



/s/ Fishbein & Company, P.C.
- ------------------------------------
Elkins Park, Pennsylvania
April 5, 2001





Page 2

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



ASSETS

February 28, February 29,
2001 2000
---------- ----------
Cash and cash equivalents $ 145,343 $ 27,162


Receivables from Income Funds 317,577 255,035

Other receivables 60,423 59,736

Minimum lease payments receivable - Net of
unearned interest income of $1,404,050 - 2001
and $1,725,985 - 2000 4,130,000 4,715,000

Investment in income funds 11,666 12,666

Office furniture and equipment - Net of
accumulated depreciation of $115,407 - 2001
and $112,918 - 2000 4,031 6,520

Deferred offering costs 8,192

Other assets 6,127 6,890
---------- ----------
$4,675,167 $5,091,201
========== ==========



LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES
Accounts payable and accrued expenses $ 285,790 $ 75,713
Due to Income Funds 61,255
Nonrecourse obligations 4,130,000 4,715,000
---------- ----------
4,415,790 4,851,968
========== ==========
STOCKHOLDER'S EQUITY
Common stock - Par value $1
Authorized 1,000 shares
Issued and outstanding 10 shares 10 10
Retained earnings 259,367 239,223
---------- ----------
259,377 239,233
---------- ----------
$4,675,167 $5,091,201
========== ==========


See notes to consolidated financial statements





Page 3

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS


Year Ended
--------------------------------
February 28, February 29,
2001 2000
------------ ------------

INCOME
Fee income from Income Funds $ 928,913 $ 972,246
Commission income 24,576 49,432
Interest income on minimum lease
payments receivable 321,935 358,828
Equity in income of Income Funds 93,207 43,832
Interest and miscellaneous 92,252 21,822
---------- ----------
1,460,883 1,446,160
---------- ----------

EXPENSES
Personnel 587,067 669,538
General and administrative 429,640 534,984
Selling 99,608 167,935
Interest expense on nonrecourse
obligations 321,935 358,828
Depreciation 2,489 4,129
---------- ----------
1,440,739 1,735,414
---------- ----------

NET INCOME (LOSS) 20,144 (289,254)


RETAINED EARNINGS - BEGINNING 239,223 528,477
---------- ----------
RETAINED EARNINGS - ENDING $ 259,367 $ 239,223
========== ==========


See notes to consolidated financial statements.





Page 4

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS





Year Ended
--------------------------------
February 28, February 29,
2001 2000
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 20,144 $289,254
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Equity in income of Income Funds (93,207) (43,832)
Depreciation 2,489 4,129
Changes in operating assets and liabilities:
Receivables from Income Funds (62,542) 91,237
Other receivables (687) 5,018
Deferred offering costs (8,192) 249,481
Other assets 763 2,152
Accounts payable and accrued expenses 210,077 (65,552)
-------- --------

Net cash provided by (used in) operating
activities 85,229 (46,621)
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Distributions from Income Funds - Net cash
provided by investing activities 32,952 45,239
-------- --------


CASH FLOWS FROM FINANCING ACTIVITIES - None


NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 118,181 (1,382)


CASH AND CASH EQUIVALENTS - BEGINNING 27,162 28,544
-------- --------


CASH AND CASH EQUIVALENTS - ENDING $145,343 $ 27,162
======== ========



See notes to consolidated financial statements.




Page 5

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001

1. NATURE OF BUSINESS

Commonwealth Capital Corp., through its wholly-owned subsidiary,
Commonwealth of Delaware, Inc. (CDI), primarily leases various types of
computer peripheral equipment and related equipment to U.S. corporations
and institutions. Certain wholly-owned subsidiaries of CDI were formed for
the purpose of functioning as general partners/managing trustees which own
a 1% interest in limited partnerships/trusts (the "Income Funds") which
were organized to acquire, own, and act as lessor with respect to certain
computer equipment. CDI's subsidiaries include Commonwealth Capital Fund
1987-I, Inc., Commonwealth Capital Fund 1988-I, Inc., Commonwealth Capital
Fund No. 3, Inc., Commonwealth Capital Fund No. 4, Inc., Commonwealth
Capital Fund V, Inc., Commonwealth Capital Private Fund-I, Inc.,
Commonwealth Capital Fund VI, Inc., Commonwealth Capital Fund VII, Inc.,
Commonwealth Capital Private Fund - II, Inc., Commonwealth Capital Trustee
VIII, Inc., Commonwealth Capital Trustee IX, Inc., Commonwealth Capital
Trustee X, Inc., Commonwealth Capital Private Fund-III, Inc., Commonwealth
Income & Growth Fund, Inc., Commonwealth Capital Private Fund IV, Inc.,
Commonwealth Capital Private Fund V, Inc., and Commonwealth Capital Private
Fund VI, Inc. (collectively the "General Partner Subsidiaries"),
Commonwealth Capital Securities Corp., Garden State Facilities Funding,
Inc. (GSFF), and Commonwealth Capital Delaware Trustee, Inc.

Certain limited partnerships/trusts have been liquidated during the years
ended February 28, 2001 (four entities) and February 29, 2000 (one entity).

The Company is dependent on the compensation it receives from the Income
Funds. This compensation may be reduced due to the financial performance of
each Income Fund. There are certain Income Funds that have deferred the
payment of fees to the Company, because distributions to the limited
partners were reduced because of their financial performance. If the
financial performance of additional Income Funds deteriorates and the
distributions to the limited partners are reduced, there is no assurance
that the Company would be able to continue to collect fees for services
provided. No fees were waived or forgiven for the years ended February 28,
2001 or February 29, 2000.

Commission income is earned by Commonwealth Capital Securities Corp., which
sells units of its affiliated partnerships through broker-dealer firms to
their respective customers throughout the United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation

The accompanying consolidated financial statements include the
accounts of the Company, CDI, and CDI's subsidiaries (the Company)
(see Note 1). All significant intercompany transactions and balances
have been eliminated. The balance sheets are presented on an
unclassified basis in accordance with leasing industry practice.




Page 6

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b. Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.

c. Cash and Cash Equivalents

The Company maintains its cash balances in several financial
institutions. The balances in each institution are insured (up to
$100,000) by the Federal Deposit Insurance Corporation or the
Securities Investor Protection Corporation. At times, the balances may
exceed federally insured limits. The Company has not experienced any
losses in such accounts, and believes it is not exposed to any
significant credit risk on cash.

The Company considers all highly-liquid investments purchased with a
maturity of three months or less to be cash equivalents. At February
28, 2001 and February 29, 2000, cash equivalents consist of a money
market fund which invests in U.S. Treasury obligations.

d. Investment in Income Funds

The Company accounts for its 1% interests in the Income Funds by the
equity method. At February 29, 2000, certain Income Funds had
liabilities in excess of their assets. As the Company is obligated to
fund any liabilities in excess of assets, the Company reduced its
investment in Income Funds and recorded a Due to Income Funds of
$61,255 at February 29, 2000, which was restored during the year ended
February 28, 2001. Financial information of the Income Funds as of
December 31, 2000 and 1999, is as follows:

December 31,
------------------------------
2000 1999
----------- -----------
Total assets $11,742,000 $18,025,000
Nonrecourse debt 4,524,000 7,214,000
Other liabilities 846,000 2,216,000
Partnership capital 6,371,000 8,595,000
Net loss (921,757) (1,692,000)



Page 7

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

d. Investment in Income Funds (Continued)

The Company has guaranteed the performance of certain nonmonetary
obligations of the General Partner Subsidiaries to the respective
Income Funds, primarily the responsibility for management of the
Income Funds. In addition, the Company is responsible for certain
capital funding requirements of the General Partner Subsidiaries which
it satisfies through noninterest-bearing demand notes. Such notes
total approximately $4,166,000 at February 28, 2001 and February 29,
2000, and have been eliminated in consolidation.

Fee income earned by the Company from the Income Funds consists of:
(1) equipment acquisition fees (4% (as defined) of the purchase price
of all equipment purchased by the Income Funds), (2) debt placement
fees (1% of the cost of equipment financed by the Income Funds), (3)
sales fees (3% of the gross proceeds of equipment sold by the Income
Funds), and (4) equipment management fees (3% - 5% as defined) of the
gross operating lease revenues of the Income Funds). Ongoing
acquisition fees and equipment management fees may be increased as an
indirect result of company loans.

Approximately 79% and 58% of fee income for the years ended February
28, 2001 and February 29, 2001, was from three Income Funds.

e. Office Furniture and Equipment

Office furniture and equipment are stated at cost. Depreciation is
provided using the declining balance method over the estimated useful
lives of the assets (ranging from 5 to 7 years).

f. Deferred Offering Costs

Deferred offering costs represented amounts incurred by the Company
for the organization of an Income Fund. These costs were recovered
from the Income Fund through fees as cash proceeds were raised through
the sale of Limited Partnership Units during the offering period or,
if necessary, the future operations of the Income Fund. Deferred
offering costs at February 29, 2000 relating to an Income Fund,
expired in July, 2000.

g. Revenue Recognition

The Company recognizes fees as earned in accordance with the various
Limited Partnership and Trust Agreements. The Company recognizes
commission income and brokerage fee expense on an accrual basis based
on the trade date of the underlying customer transactions. Interest
income on minimum lease payments receivable is recognized as earned.




Page 8

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(h) Income Taxes

Deferred income taxes are provided as necessary for temporary
differences between the financial and tax bases of investment in
Income Funds and office furniture and equipment. The tax basis of
investment in income funds differs from financial reporting due to
temporary differences associated with ownership of general partnership
interests in the various Income Funds. Also, for income tax reporting,
the cost of property and equipment is being recovered using the
methods and lives prescribed by the Internal Revenue Code.

Deferred income tax assets are also recognized for net operating
losses and investment tax credit carryforwards that are available to
offset future income taxes. A valuation allowance is provided as
necessary to reduce the deferred income tax assets to the amount that
is more likely than not to be realized.

3. EASE COMMITMENTS

GSFF acted as lessor in a series of lease purchase transactions whereby the
underlying assets were funded by investors through certificates of
participation in the lease payments. All of GSFF's rights as lessor were
assigned to a third-party agent which administers the collection of rentals
paid by the lessee. The obligations under the certificates are nonrecourse
to GSFF. Accordingly, any reduction in the minimum lease payments
receivable for uncollectible accounts would result in an equal reduction of
the nonrecourse obligations. Amounts outstanding at February 28, 2001 and
February 29, 2000, under these leases and certificates of participation are
$4,130,000 and $4,715,000, respectively, and are reflected as minimum lease
payments receivable and nonrecourse obligations in the accompanying balance
sheets. The certificates mature at various dates through 2011. The Company
recognized interest income and interest expense in connection with these
leases of $321,935 and $358,828 for the years ended February 28, 2001 and
February 29, 2000, respectively.




Page 9

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001



3. EASE COMMITMENTS (Continued)

Future minimum lease payments to be received as of February 28, 2001, are
as follows:

Year Ending February 28,
------------------------
2002 $ 683,324
2003 684,490
2004 678,794
2005 676,097
2006 680,759
Thereafter 2,130,586
----------

5,534,050
amount representing interest 1,404,050
----------
$4,130,000
==========

The Company leases an automobile, certain office equipment and office space
under noncancelable operating leases expiring in various dates through
2006. Rent expense under all operating leases was approximately $149,000
and $155,000 for the years ended February 28, 2001 and February 29, 2000,
respectively. Future minimum lease payments under noncancelable operating
leases as of February 28, 2001, are as follows:

Year Ending February 28,
------------------------
2002 $ 89,955
2003 78,866
2004 58,539
2005 61,620
2006 63,161
----------
$ 352,141
==========

4. PROFIT SHARING PLAN

The Company has a profit sharing plan which covers substantially all of its
employees. Contributions to the plan may be made at the discretion of
management. Profit sharing plan contributions were $20,615 for the year
ended February 28, 2001 and no contributions to the plan were made or
accrued for the year ended February 29, 2000.




Page 10

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001


5. INCOME TAXES

The Company and its subsidiaries file a consolidated federal income tax
return.

The Company has net operating loss carryforwards of approximately $537,000
and investment tax credit carryforwards of approximately $52,000 available
to reduce future federal income taxes. If not used, the carryforwards will
expire as follows:

Net Operating Investment
Year Ending February 28, Losses Tax Credits
------------------------ ------------- -----------
2002 $ $52,000
2019 135,000
2020 452,000
--------
$587,000 $52,000
======== =======

The Company also has net operating loss carryforwards of approximately
$4,325,000 available to reduce future Pennsylvania state income taxes. If
not used, the carryforwards will expire as follows:

Year Ending February 28,
------------------------
2006 $ 108,000
2007 638,000
2008 962,000
2009 899,000
2010 1,086,000
2011 632,000
----------
$4,325,000
==========



Page 11

COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2001


5. INCOME TAXES (Continued)

At February 28, 2001 and February 29, 2000, the cumulative temporary
differences resulted in net deferred tax assets or liabilities consisting
primarily of:

February 28, February 29,
2001 2000
---------- ----------
Deferred tax assets:
Other $ 3,000 $ 4,500
Investment tax credit carryforwards 52,000 109,000
Net operating loss carryforwards 485,000 465,000

Less valuation allowance (463,300) (483,900)
---------- ----------

Deferred tax assets, net 76,700 94,600
---------- ----------
Deferred tax liabilities:
Investment in Income Funds (76,000) (94,200)
Office furniture and equipment (700) (400)
---------- ----------

Deferred tax liabilities, net (76,700) (94,600)
---------- ----------

Net deferred tax assets (liabilities) $ -- $
========== ==========

The valuation allowance was increased (decreased) by ($20,600) and
$146,000, respectively, for the years ended February 28, 2001 and February
29, 2000.


6. SUPPLEMENTAL CASH FLOW INFORMATION

Other noncash activities associated with lease transactions

Year Ended Year Ended
February 28, February 29,
2001 2000
---------- ----------
Reduction of minimum lease receivable
and repayment of nonrecourse obligation
associated with direct payment made by
lessee to bank $ 585,000 $ 545,000
========== ==========

Other noncash activities associated with
investment in income funds
Increase (decrease) in due to
income funds $ (61,255) $ (2,127)
========== ==========