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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
( ) 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 Suite 300
Exton, Pennsylvania 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 [ ]
Commonwealth Income & Growth Fund I
Balance Sheets
September 30 December 31,
2002 2001
------------------------------------------------
(unaudited)
Assets
Cash and cash equivalents $ 860 $ 1,082
Lease income receivable, net of allowance for doubtful
accounts reserve of $306,871 as of September 30, 2002
and $299,578 as of December 31, 2001 256,786 300,956
Other receivables - Commonwealth Capital Corp - 17,904
Other receivables 200 200
Prepaid fees 3,000 -
------------------------------------------------
260,846 320,142
------------------------------------------------
Computer equipment, at cost 2,727,893 3,312,836
Accumulated depreciation (1,965,620) (2,556,037)
------------------------------------------------
762,273 756,799
------------------------------------------------
Equipment acquisition costs and deferred expenses, net 29,717 31,379
------------------------------------------------
Total assets $ 1,052,836 $ 1,108,320
================================================
Liabilities and Partners' Capital
Liabilities
Accounts payable 22,206 30,013
Accounts payable - Other LP Affiliates 107,132 105,886
Accounts payable - General Partner 114,344 29,924
Accounts payable - Commonwealth Capital Corp. 22,000 -
Unearned lease income 56,009 3,641
Notes payable 475,321 500,585
------------------------------------------------
Total liabilities 797,012 670,049
------------------------------------------------
Partners' Capital
General partner 1,000 1,000
Limited partners 254,321 437,271
------------------------------------------------
Total partners' capital 255,824 438,271
------------------------------------------------
Total liabilities and partners' capital $ 1,052,836 $ 1,108,320
================================================
see accompanying notes to financial statements
Commonwealth Income & Growth Fund I
Statements of Income
Three Months Ended Nine Months Ended
September 30 September 30
2002 2001 2002 2001
-------------------------------------------------------------------------
(unaudited) (unaudited)
Income
Lease $ 96,821 $ 278,635 $ 312,785 $ 661,706
Interest and other - 30 2,573 1,564
Gain on sale of computer equipment - 104,929 17,726 173,337
----------------- ---------------- ------------------ -----------------
Total income 96,821 383,594 333,084 836,607
----------------- ---------------- ------------------ -----------------
Expenses
Operating, excluding depreciation 85,773 43,252 222,583 147,229
Equipment management fee - General Partner 4,841 13,928 15,639 33,007
Interest 9,812 4,321 30,229 7,257
Depreciation 73,055 100,272 216,965 345,003
Amortization of equipment
acquisition costs and deferred expenses 4,458 2,571 12,843 8,962
Bad debt expense 15,964 49,915 17,272 49,915
----------------- ---------------- ------------------ -----------------
Total expenses 193,903 214,259 515,531 591,373
----------------- ---------------- ------------------ -----------------
Net (loss) income $ (97,082) $ 169,335 $ (182,447) $ 245,234
================= ================ ================== =================
Net (loss) income per equivalent limited
partnership unit $ (0.15) $ 0.27 $ (0.29) $ 0.39
================= ================ ================== =================
Weighted average number of equivalent limited
partnership units outstanding during the period 631,124 631,124 631,124 631,124
================= ================ ================== =================
see accompanying notes to financial statements
Commonwealth Income & Growth Fund I
Statements of Partners' Capital
For the Nine Months ended September 30, 2002
(unaudited)
General Limited
Partner Partner General Limited
Units Units Partner Partner Total
----------------------------------------------------------------------------
Partners' capital - December 31, 2001 50 631,124 $ 1,000 $ 437,271 $ 438,271
----------------------------------------------------------------------------
Net (loss) - (182,447) (182,447)
----------------------------------------------------------------------------
Partners' capital - September 30, 2002 50 631,124 $ 1,000 $ 254,824 $ 255,824
============================================================================
see accompanying notes to financial statements
Commonwealth Income & Growth Fund I
Statements of Cash Flow
For the Nine Months Ended September 30, 2002 and 2001
2002 2001
----------------------------------------
(unaudited)
Operating activities
Net (loss) income $ (182,447) $ 245,234
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization 229,808 353,965
(Gain) on sale of computer equipment (17,726) (173,337)
Other noncash activities included in
determination of net (loss) income (228,891) (91,403)
Changes in assets and liabilities
(Increase) decrease in assets
Lease income receivable 44,170 (47,219)
Prepaid items (3,000) -
Increase (decrease) in liabilities
Accounts payable (7,807) (4,376)
Accounts payable, Common Capital Corp. 39,904 (90,327)
Accounts payable, affiliated limited partnerships 1,246 (15,480)
Accounts payable, General Partner 84,420 6,820
Unearned lease income 52,368 8,200
----------------------------------------
Net cash provided by operating activities 12,045 192,077
----------------------------------------
Investing activities:
Capital expenditures (25,000) (95,097)
Net proceeds from the sale of computer equipment 23,914 183,163
Equipment acquisition fees paid to General Partner (9,145) (10,372)
----------------------------------------
Net cash (used in) provided by investing activities (10,231) 77,694
----------------------------------------
Financing activities:
Distributions to partners - (315,490)
Debt Placement fee paid to the General Partner (2,036) (1,642)
----------------------------------------
Net cash (used in) financing activities (2,036) (317,132)
----------------------------------------
Net (decrease) in cash and equivalents (222) (47,361)
Cash and cash equivalents, beginning of period 1,082 64,577
----------------------------------------
Cash and cash equivalents, end of period $ 860 $ 17,216
========================================
see accompanying notes to financial statements
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 agreements and allocates a
participation in the cost, debt and lease revenue to the
various partnerships based on certain risk factors.
Commonwealth Capital Corp. is a member of the Investment
Program Association (IPA), Financial Planning Association
(FPA), and the Equipment Leasing Association (ELA). 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.
2. Summary of Basis of Presentation
Significant
Accounting The financial information presented as of any date other than
Policies December 31 has been prepared from the books and records
without audit. Financial information as of December 31 has
been derived from the audited financial statements of the
Partnership, but does not include all disclosures required by
generally accepted accounting principles. In the opinion of
management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of
the financial information for the periods indicated have been
included. For further information regarding the Partnership's
accounting policies, refer to the financial statements and
related notes included in the Partnership's annual report on
Form 10-K for the year ended December 31, 2001. Operating
results for the nine-month period ended September 30, 2002
are not necessarily indicative of financial results that may
be expected for the full year ended December 31, 2002.
Revenue Recognition
Through September 30, 2002, 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.
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.
As of September 30, 2002, there is no impairment.
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
maturity of three months or less to be cash equivalents.
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.
Offering Costs
Offering costs were payments for selling commissions, dealer
manager fees, professional fees and other offering expenses
relating to the syndication. Selling commissions were 7% of
the partners' contributed capital and dealer manager fees
were 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
period.
Reimbursable Expenses
Reimbursable expenses, which are charged to the Partnership
by CCC in connection with the administration and operation of
the Partnership, are allocated to the Partnership based upon
several factors including, but not limited to, the number of
investors, compliance issues, and the number of existing
leases.
3. Computer The Partnership is the lessor of equipment under operating
Equipment leases with periods ranging from 14 to 48 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 with other partnerships at September 30,
2002 and December 31, 2001 was approximately $519,000 and
$469,000, respectively, 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 September 30, 2002 and December 31,
2001 was approximately $2,967,000 and $2,867,000,
respectively. The Partnership's share of the outstanding debt
associated with this equipment at September 30, 2002 and
December 31, 2001 was approximately $313,000 and $387,000,
respectively, which is included in the Partnership's
liabilities on the balance sheet, and the total outstanding
debt at September 30, 2002 and December 31, 2001 related to
the equipment shared by the Partnership was approximately
$1,806,000 and $2,338,000, respectively.
The following is a schedule of future minimum rentals on
noncancellable operating leases at September 30, 2002:
Amount
--------------------------------------------------------
Three months ended December 31, 2002 $ 87,000
Year ended December 31, 2003 332,000
Year ended December 31, 2004 172,000
Year ended December 31, 2005 17,000
Year ended December 31, 2006 8,000
------------
$ 616,000
============
4. Notes Payable
Notes payable consisted of the following:
September 30 December 31
2002 2001
----------------------------------------------------------------------------------
Installment notes payable to Banks, interest
ranging from 7.50% to 9.50%; due in monthly
installments ranging from $182 to $1,320,
including interest, with final payments due
from January
through December 2003. $ 30,618 $ 12,584
Installment notes payable to Banks, interest
ranging from 6.25% to 9.25%; due in monthly
installments ranging from $138 to $7,720,
including interest, with final payments due
from January through December 2004.
444,703 488,001
--------------------------------
$ 475,321$ 500,585
================================
These notes are secured by specific computer equipment and
are nonrecourse liabilities of the Partnership. Aggregate
maturities of notes payable for each of the periods
subsequent to September 30, 2002 are as follows:
Amount
--------------------------------------------------------------
Three months ended December 31, 2002 $ 68,177
Year ended December 31, 2003 266,505
Year ended December 31, 2004 140,639
-----------
$ 475,321
===========
5. Supplemental Other noncash activities included in the determination of net
Cash Flow income are as follows:
Information
Nine months ended September 30, 2002 2001
- ----------------------------------------------------------------------------------------------
Lease income, net of interest expense on
notes payable realized as a result of direct
payment of principal by lessee to bank $ 228,891 $ 89,839
Lease income paid to original lessor in lieu
of cash payment for computer equipment
acquired $ - $ 1,564
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:
Nine months ended September 30, 2002 2001
- -------------------------------------------------------------------------------
Debt assumed in connection with purchase
of computer equipment $ 203,627 $ 164,215
- -------------------------------------------------------------------------------
6. Litigation The Partnership, thru 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
is not expected to have a material adverse impact to the
financial statements of the Partnership.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
CRITICAL ACCOUNTING POLICIES
Financial Reporting Release No. 60, which was 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
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:
COMPUTER EQUIPMENT
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.
REVENUE RECOGNITION
Through September 30, 2002, 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 source of capital for the nine months ended September
30, 2002 was cash from operations of approximately $12,000. Net proceeds
received from the sale of equipment for the nine months ended September 30,
2002, was approximately $24,000. The primary source of capital for the nine
months ended September 30, 2001 was cash from operations of approximately
$192,000. Net proceeds received from sale of equipment for the nine months ended
September 30, 2001 was approximately $183,000. The primary use of cash for the
nine months ended September 30, 2002 and 2001 was for capital expenditures of
new equipment of approximately $25,000 and $95,000, respectively. There were
payments of preferred distributions to partners of approximately $315,000 for
the nine months ended September 30, 2001. There were no payments of preferred
distributions to partners for the nine months ended September 30, 2002.
For the nine-month period ended September 30, 2002, the Partnership generated
cash flows from operating activities of $12,000, which includes a net gain from
the sale of computer equipment of $18,000, and depreciation and amortization
expenses of $230,000. Other noncash activities included in the determination of
net income include direct payments of lease income by lessees to banks of
$229,000.
For the nine-month period ended September 30, 2001, the Partnership generated
cash flows from operating activities of $192,000, which includes a net gain from
the sale of computer of $173,000, and depreciation and amortization expenses of
$354,000. Other noncash activities included in the determination of net income
include direct payments of lease income by lessees to banks of $91,000.
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.
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. As
of September 30, 2002, the Partnership had future minimum rentals on
non-cancelable operating leases of $87,000 for the balance of the year ending
December 31, 2002 and $529,000 thereafter. At September 30, 2002, outstanding
debt was $475,000, with interest rates ranging from 6.25% to 9.50%, payable
through December 2004.
The Partnership's cash from operations is expected to continue to be adequate to
cover all operating expenses, liabilities and preferred 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, the Partnership will attempt to obtain additional funds by
disposing of or refinancing Equipment, or by borrowing within its permissible
limits. The Partnership may, from time to time, 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.
The Partnership's share of the computer equipment in which they participate with
other partnerships at September 30, 2002 and December 31, 2001 was approximately
$519,000 and $469,000, respectively, 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 September 30, 2002 and December
31, 2001 was approximately $2,967,000 and $2,867,000, respectively. The
Partnership's share of the outstanding debt associated with this equipment at
September 30, 2002 and December 31, 2001 was approximately $313,000 and
$387,000, respectively, which is included in the Partnership's liabilities on
the balance sheet, and the total outstanding debt at September 30, 2002 and
December 31, 2001 related to the equipment shared by the Partnership was
approximately $1,806,000 and $2,338,000, respectively.
Results of Operations
Three Months Ended September 30, 2002 compared to Three Months Ended September
30, 2001
For the quarter ended September 30, 2002, the Partnership recognized income of
$97,000 and expenses of $194,000, resulting in a net loss of $97,000. For the
quarter ended September 30, 2001, the Partnership recognized income of $383,000
and expenses of $214,000, resulting in net income of $169,000.
Lease income decreased by 65% to $97,000 for the quarter ended September 30,
2002, from $279,000 for the quarter ended September 30, 2001, primarily due to
the fact that more lease agreements terminated than new lease agreements entered
into since the quarter ended September 30, 2001, and that the partnership has
stopped recording revenue on its Gtronics lease arrangement, due to the fact
that the defendant (see Legal Proceedings in Part II, Item 1) has returned some
equipment, but not the proper equipment as stated in the master lease agreement.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expense increased 98%, to approximately
$86,000 for the quarter ended September 30, 2002, from $43,000 for the quarter
ended September 30, 2001. There was an increase in reimbursable expenses with
the administration and operation of the Partnership charged by Commonwealth
Capital Corp., a related party, of approximately $39,000, an increase in
recruiting fees of approximately $2,000, an increase in insurance of
approximately $2,000, an increase in due diligence of approximately $2,000.
The equipment management fee is equal to 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 65% to approximately $5,000 for the quarter ended
September 30, 2002, from $14,000 for the quarter ended September 30, 2001, which
is consistent with the decrease in lease revenue.
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
25% to approximately $78,000 for the quarter ended September 30, 2002, from
$103,000 for the quarter ended September 30, 2001 due to the older equipment
becoming fully depreciated and certain acquisition and finance fees being fully
amortized and only a small amount of new additions.
The partnership recorded bad debt expenses of approximately $16,000 related to
disputed accounts receivables balances for the quarter ended September 30, 2002,
compared to $50,000 for the quarter ended September 30, 2001.
The Partnership sold no computer equipment for the quarter ended September 30,
2002. The Partnership sold computer equipment with a net book value of
approximately $8,000 for the quarter ended September 30, 2001, for a net gain of
$105,000.
Interest expense increased 127% to $10,000 for the quarter ended September 30,
2002 from $4,000 for the quarter ended September 30, 2001; primarily due to the
increase in equipment purchased that carry an outstanding debt.
Nine Months Ended September 30, 2002 compared to Nine Months Ended September 30,
2001
For the nine months ended September 30, 2002, the Partnership recognized income
of $333,000 and expenses of $515,000, resulting in a net loss of $182,000. For
the nine months ended September 30, 2001, the Partnership recognized income of
$836,000 and expenses of $591,000, resulting in net income of $245,000.
Lease income decreased by 53% to $313,000 for the nine months ended September
30, 2002, from $662,000 for the nine months ended September 30, 2001, primarily
due to the fact that more lease agreements terminated than new lease agreements
entered into since the nine months ended September 30, 2001, and that the
partnership has stopped recording revenue on its Gtronics lease arrangement, due
to the fact that the defendant (see Legal Proceedings in Part II, Item 1) has
returned some equipment, but not the proper equipment as stated in the master
lease agreement.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expense increased 51%, to approximately
$223,000 for the nine months ended September 30, 2002, from $147,000 for the
nine months ended September 30, 2001. There was an increase in reimbursable
expenses with the administration and operation of the Partnership charged by
Commonwealth Capital Corp., a related party, of approximately $62,000, an
increase in marketing of approximately $5,000, an increase in recruiting fees of
approximately $7,000, and an increase in due diligence of approximately $7,000.
The equipment management fee is equal to 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 53% to approximately $16,000 for the nine months ended
September 30, 2002, from $33,000 for the nine months ended September 30, 2001,
which is consistent with the decrease in lease revenue.
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
35% to approximately $230,000 for the nine months ended September 30, 2002, from
$354,000 for the nine months ended September 30, 2001 due to the older equipment
becoming fully depreciated and certain acquisition and finance fees being fully
amortized and only a small amount of new additions.
The partnership recorded bad debt expenses of approximately $17,000 related to
disputed accounts receivables balances for the nine months ended September 30,
2002, compared to $50,000 for the nine months ended September 30, 2001.
The Partnership sold computer equipment with a net book value of $6,000 for the
nine months ended September 30, 2002, for a net gain of $18,000. The Partnership
sold computer equipment with a net book value of $10,000 for the nine months
ended September 30, 2001, for a net gain of $173,000.
Interest expense increased to $30,000 for the nine months ended September 30,
2002 from $7,000 for the nine months ended September 30, 2001, primarily due to
the increase in equipment purchased that carry an outstanding debt.
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS 146
On July 30, 2002, the FASB issued FASB Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which nullifies EITF Issues No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred an a Restructuring)"
and No. 88-10, Costs Associated with Lease Modification or Termination."
Statement 146 fundamentally changed how a company should account for future
"restructurings." The Partnership believes that the adoption of SFAS 146 will
not have an impact on its financial position and results of operations.
Item 3. 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.
Item 4. Controls and Procedures
The Chief Executive Officer and a Financial Officer of the Partnership have
conducted a review of the Partnership's disclosure controls and procedures as of
September 30, 2002.
The Company's disclosure controls and procedures include the Partnership's
controls and other procedures designed to ensure that information required to be
disclosed in this and other reports filed under the Securities Exchange Act of
1934, as amended (the " Exchange Act") is accumulated and communicated to the
Partnership's management, including its chief executive officer and a financial
officer, to allow timely decisions regarding required disclosure and to ensure
that such information is recorded, processed, summarized and reported with the
required time periods.
Based upon this review, the Partnership's Chief Executive Officer and a
Financial Officer of the Partnership have concluded that the Partnership's
disclosure controls (as defined in pursuant to Rule 13a-14 c promulgated under
the Exchange Act) are sufficiently effective to ensure that the information
required to be disclosed by the Partnership in the reports it files under the
Exchange Act is recorded, processed, summarized and reported with adequate
timeliness.
Part II: OTHER INFORMATION
Commonwealth Income & Growth Fund I
Item 1. 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.
The defendant has filed for a Summary Judgement 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.
Item 2. Changes in Securities
Inapplicable
Item 3. Defaults Upon Senior Securities.
Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders.
Inapplicable
Item 5. Other Information.
Inapplicable
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
99.1 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Commonwealth Income & Growth Fund I,
(the "Company") on Form 10-Q for the period ending September 30, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, George S. Springsteen, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ George S. Springsteen
- --------------------------
George S. Springsteen
Chief Executive Officer
November 27, 2002
99.2 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Commonwealth Income & Growth Fund I,
(the "Company") on Form 10-Q for the period ending September 30, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
Kimberly A. Springsteen, Principal Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Kimberly A. Springsteen
- ----------------------------
Kimberly A. Springsteen
Principal Financial Officer
November 27, 2002
b) Report on Form 8-K: None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMONWEALTH INCOME & GROWTH FUND I
BY: COMMONWEALTH INCOME & GROWTH FUND, INC.
General Partner
November 27, 2002 By: /s/ George S. Springsteen
Date --------------------------------------
George S. Springsteen
President
CERTIFICATIONS
I, George Springsteen certify that:
1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income &
Growth Fund I (the Registrant);
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure
the material information relating to the Registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the" Evaluation
Date" ); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and the
procedures based on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors ( or persons performing the equivalent
function):
a) all significant deficiencies in the design or the operation
of internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report
financial data we have identified for the Registrant's
auditors any material weakness in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in
the Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ George S. Springsteen
- --------------------------
George S. Springsteen
Chief Executive Officer
November 27, 2002
I, Kimberly A. Springsteen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income &
Growth Fund I (the Registrant);
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure
the material information relating to the Registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the" Evaluation
Date" ); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and the
procedures based on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors ( or persons performing the equivalent
function):
a) all significant deficiencies in the design or the operation
of internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report
financial data we have identified for the Registrant's
auditors any material weakness in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in
the Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ Kimberly A. Springsteen
- -----------------------------
Kimberly A. Springsteen
Principal Financial Officer
November 27, 2002