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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 MARCH 31, 2004
( ) 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 III
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2895714
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
470 John Young Way Suite 300
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 whether the registrant is an accelerated filer
(as defined in Rule 12c-2 of the Act): YES [ ] NO [X]
COMMONWEALTH INCOME & GROWTH FUND III
BALANCE SHEETS
MARCH 31, DECEMBER 31,
2004 2003
------------ -----------
(UNAUDITED)
ASSETS
Cash and cash equivalents $ 995 $ 557
Lease income receivable 2,038 9,181
Other receivables - Commonwealth Capital Corp 2,451 -
Prepaid expenses 685 -
------------ -----------
6,169 9,738
------------ -----------
Computer equipment, at cost 1,895,784 1,955,197
Accumulated depreciation (1,674,520) (1,635,341)
------------ -----------
221,264 319,856
------------ -----------
Equipment acquisition costs and deferred expenses, net 5,016 6,867
------------ -----------
TOTAL ASSETS $ 232,449 $ 336,461
============ ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accounts payable $ 25,363 $ 26,762
Accounts payable - affiliated limited partnerships 25,707 25,707
Accounts payable - General Partner 110,820 134,524
Accounts payable - Commonwealth Capital Corp. - 53,648
Unearned lease income 3,305 1,636
Notes payable 63,751 91,436
------------ -----------
TOTAL LIABILITIES 228,946 333,713
------------ -----------
PARTNERS' CAPITAL
General partner 1,000 1,000
Limited partners 2,503 1,748
------------ -----------
TOTAL PARTNERS' CAPITAL 3,503 2,748
------------ -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 232,449 $ 336,461
============ ===========
see accompanying notes to financial statements
COMMONWEALTH INCOME & GROWTH FUND III
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
2004 2003
----------- -----------
(UNAUDITED)
INCOME
Lease $ 53,925 $ 139,507
Interest and other - 10
Gain on sale of computer equipment 1,116 -
----------- -----------
TOTAL INCOME 55,041 139,517
----------- -----------
EXPENSES
Operating, excluding depreciation 7,773 59,843
Equipment management fee - General Partner 2,696 6,975
Interest 1,348 4,152
Depreciation 96,525 130,824
Amortization of equipment
acquisition costs and deferred expenses 1,851 3,898
Loss on sale of computer equipment - 2,982
----------- -----------
TOTAL EXPENSES 110,193 208,674
----------- -----------
NET (LOSS) $ (55,152) $ (69,157)
=========== ===========
NET (LOSS) PER EQUIVALENT LIMITED
PARTNERSHIP UNIT $ (0.36) $ (0.46)
=========== ===========
WEIGHTED AVERAGE NUMBER OF EQUIVALENT LIMITED
PARTNERSHIP UNITS OUTSTANDING DURING THE PERIOD 151,178 151,178
=========== ===========
see accompanying notes to financial statements
COMMONWEALTH INCOME & GROWTH FUND III
STATEMENTS OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(UNAUDITED)
GENERAL LIMITED
PARTNER PARTNER GENERAL LIMITED
UNITS UNITS PARTNER PARTNER TOTAL
------- ------- -------- -------- ------
PARTNERS' CAPITAL - DECEMBER 31, 2003 50 151,178 $ 1,000 $ 1,748 $ 2,748
Net income (loss) 783 (55,935) (55,152)
Capital contribution 42,116 - 42,116
Forgiveness of payables recorded as
capital contributions 93,165 - 93,165
Transfer of partners' capital (135,281) 135,281 -
Distributions (783) (78,591) (79,374)
------ -------- --------- --------- ----------
PARTNERS' CAPITAL - MARCH 31, 2004 50 151,178 $ 1,000 $ 2,503 $ 3,503
====== ======== ========= ========= ==========
see accompanying notes to financial statements
COMMONWEALTH INCOME & GROWTH FUND III
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
2004 2003
--------- ---------
OPERATING ACTIVITIES (UNAUDITED)
Net (loss) $ (55,152) $ (69,157)
Adjustments to reconcile net (loss) to net cash
provided by operating activities
Depreciation and amortization 98,376 134,722
(Gain) loss on sale of computer equipment (1,116) 2,982
Other noncash activities included in
determination of net (loss) (27,685) (49,718)
Changes in assets and liabilities
(Increase) decrease in assets
Lease income receivable 7,143 (2,929)
Prepaid expenses (685) -
Increase (decrease) in liabilities
Accounts payable (1,399) 72,861
Accounts payable, General Partner 6,584 30,921
Accounts payable, Common Capital Corp. 6,778 23,132
Accounts payable, affiliated limited partnerships - 10,846
Unearned lease income 1,669 (25,783)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 34,513 127,877
--------- ---------
INVESTING ACTIVITIES:
Net proceeds from the sale of computer equipment 3,183 1,994
--------- ---------
FINANCING ACTIVITIES:
Contributions 42,116 -
Distributions to partners (79,374) (79,374)
--------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES (37,258) (79,374)
--------- ---------
Net increase in cash and cash equivalents 438 50,497
Cash and cash equivalents, beginning of period 557 497
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 995 $ 50,994
========= =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS Commonwealth Income & Growth Fund III (the "Partnership")
is a limited partnership organized in the Commonwealth of
Pennsylvania. The Partnership offered for sale up to
750,000 Units of the limited partnership at the purchase
price of $20 per unit (the "Offering"). The Offering was
terminated at the close of business on July 31, 2000 by
the General Partner. The Partnership used the proceeds of
the Offering 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
("CCC"), 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. The Partnership's General Partner is Commonwealth
Income & Growth Fund, Inc. (the "General Partner"), a
Pennsylvania corporation that is an indirect wholly owned
subsidiary of CCC. 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, 2009.
2. BUSINESS PLAN The General Partner and CCC have forgiven amounts payable
by the Partnership to them and have deferred payments on
other amounts owing to allow for distributions to limited
partners. The General Partner and CCC have committed to
fund, either through cash contributions and/or forgiveness
of indebtedness, any necessary cash shortfalls of the
Partnership, including the amounts necessary to fund, if
any, distributions to limited partners, through March 31,
2005.
The Partnership intends to purchase additional equipment
once funds become available through either future rentals
from existing leases, extensions from those existing
leases or through sale of equipment.
The General Partner intends to review and reassess the
Partnership's business plan quarterly.
3. SUMMARY OF BASIS OF PRESENTATION
SIGNIFICANT
ACCOUNTING The financial information presented as of any date other
POLICIES than 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, 2003. Operating
results for the three-month period ended March 31, 2004
are not necessarily indicative of financial results that
may be expected for the full year ended December 31, 2004.
REVENUE RECOGNITION
Through March 31, 2004, 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.
The Partnership reviews a customer's credit history before
extending credit and establishes a provision for
uncollectible accounts receivable based upon the credit
risk of specific customers, historical trends and other
information.
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 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 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 March 31, 2004, the
Partnership recorded charges of approximately $28,000 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 and deferred expenses
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.
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 are 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 partners' contributed capital.
These costs were 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 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.
4. COMPUTER The Partnership is the lessor of equipment under operating
EQUIPMENT leases with periods ranging from 24 to 36 months. In
general, the lessee pays associated costs such as repairs
and maintenance, insurance and property taxes.
The Partnership's share of the computer equipment in which
they participate with other partnerships at March 31, 2004
and December 31, 2003 was approximately $277,000 for both
period ends, 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 March 31, 2004 and December 31, 2003 was
approximately $2,156,000 for both period ends. The
Partnership's share of the outstanding debt associated
with this equipment at March 31, 2004 and December 31,
2003 was approximately $21,000 and $37,000, respectively,
which is included in the Partnership's liabilities on the
balance sheet, and the total outstanding debt at March 31,
2004 and December 31, 2003 related to the equipment shared
by the Partnership was approximately $346,000 and
$510,000, respectively.
The following is a schedule of future minimum rentals on
noncancellable operating leases at March 31, 2004:
Amount
---------
Nine Months ended December 31, 2004 $ 73,000
Year Ended December 31, 2005 15,000
---------
$ 88,000
=========
5. RELATED PARTY FORGIVENESS OF RELATED PARTY PAYABLES
TRANSACTIONS
During the three months ended March 31, 2004, the General
Partner (approximately $30,000) and one of its affiliates,
CCC (approximately $63,000), forgave payables owed to them
by the Partnership in the amount of approximately $93,000.
During the three months ended March 31, 2004, CCC, through
the General Partner, made a capital contribution in the
amount of approximately $42,000.
REIMBURSABLE EXPENSES
The General Partner and its affiliates are entitled to
reimbursement by the Partnership for the cost of supplies
and 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 the three months
ended March 31, 2004 and 2003, the Partnership recorded
$4,000 and $24,000, respectively, for reimbursement of
expenses to the General Partner.
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 and capital
leases. During the three months ended March 31, 2004 and
2003, equipment management fees of approximately $3,000
and $7,000, respectively, were earned by the General
Partner.
6. NOTES PAYABLE Notes payable consisted of the following:
MARCH 31, DECEMBER 31,
2004 2003
--------- -----------
Installment notes payable to banks;
interest ranging from 6.75% to 8.00%,
due in monthly installments ranging
from $382 to $3,831, including
interest, with final payments due from
January through November 2004. 21,013 38,222
Installment notes payable to banks;
interest ranging from 6.25% to 6.75%,
due in monthly installments ranging
from $123 to $1,735, including
interest, with final payments due from
February through April 2005. 42,738 53,214
-------- --------
$ 63,751 $ 91,436
======== ========
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 March 31, 2004 are as follows:
Amount
--------
Nine months ended December 31, 2004 $ 53,449
Year ended December 31, 2005 10,302
--------
$ 63,751
========
7. SUPPLEMENTAL Other noncash activities included in the determination of
CASH FLOW net loss are as follows:
INFORMATION
Three months ended March 31, 2004 2003
- ---------------------------- ------- -------
Lease income, net of interest expense on
notes payable realized as a result of
direct payment of principal by lessee to
bank $ 27,685 $ 49,718
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.
Non-cash operating, investing and financing activities include the
following:
Three months ended March 31, 2004 2003
-------- ---------
Forgiveness of related party payables
recorded as a capital contribution $ 93,165 $ -
======== ========
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
CCC, 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. Depreciation on computer equipment
for financial statement purposes is based on the straight-line method over
estimated useful lives of four years.
REVENUE RECOGNITION
Through March 31, 2004, 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.
The Partnership reviews a customer's credit history extending credit and
establishes provisions for uncollectible accounts based upon the credit risk of
specific customers, historical trends and other information.
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 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 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.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of capital for the three months ended March
31, 2004 and 2003 were cash from operations of approximately $35,000 and
$128,000, respectively, net proceeds received from sales of equipment of
approximately $3,000 and $2,000, respectively and capital contributions from the
General Partner of approximately $42,000 for the three months ended March 31,
2004. The primary use of cash for the three months ended March 31, 2004 and 2003
was for payments of preferred distributions to partners of approximately $79,000
for both periods.
For the three month period ending March 31, 2004, the Partnership generated cash
flow from operating activities of approximately $35,000, which includes net loss
of approximately $55,000, a gain on sale of equipment of approximately $1,000
and depreciation and amortization expenses of approximately $98,000. Other
non-cash activities included in the determination of net income include direct
payments of lease income by lessees to banks of approximately $28,000.
For the three month period ended March 31, 2003, the Partnership generated cash
flows from operating activities of $128,000, which includes a net loss of
approximately $69,000 and depreciation and amortization expenses of
approximately $135,000. Other non-cash activities included in the determination
of net loss include direct payments of lease income by lessees to banks of
approximately $50,000.
The Partnership sold computer equipment for the three months ending March 31,
2004 with a net book value of approximately $2,000 for a net gain on sale of
equipment of approximately $1,000. For the period ended March 31, 2003, the
Partnership sold computer equipment with a net book value of approximately
$5,000 for a net loss on sale of equipment of approximately $3,000.
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 March 31, 2004, the Partnership had future minimum rentals on non-cancelable
operating leases of $73,000 for the balance of the year ending December 31, 2004
and $15,000 thereafter. At March 31, 2004, the outstanding debt was $64,000,
with interest rates ranging from 6.25% to 8.00%, and will be payable through
April 2005.
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 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, 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 March 31, 2004 and December 31, 2003 was approximately
$277,000 for both period ends, 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 March 31, 2004 and December 31, 2003 was
approximately $2,156,000 for both period ends. The Partnership's share of the
outstanding debt associated with this equipment at March 31, 2004 and December
31, 2003 was approximately $21,000 and $37,000, respectively, which is included
in the Partnership's liabilities on the balance sheet, and the total outstanding
debt at March 31, 2004 and December 31, 2003 related to the equipment shared by
the Partnership was approximately $346,000 and $510,000, respectively.
During the period ended March 31, 2004, the General Partner (approximately
$30,000) and one of its affiliates, CCC (approximately $63,000), forgave
payables owed to them by the Partnership in the amount of approximately $93,000.
CCC has also made a capital contribution in the amount of approximately $42,000.
The General Partner and CCC have forgiven amounts payable by the Partnership to
them and have deferred payments on other amounts owing to allow for
distributions to limited partners. The General Partner and CCC have committed to
fund, either through cash contributions and/or forgiveness of indebtedness, any
necessary cash shortfalls of the Partnership, including the amounts necessary to
fund, if any, distributions to limited partners, through March 31, 2005. The
Partnership intends to purchase additional equipment once funds become available
through either future rentals from existing leases, extensions from those
existing leases or through sale of equipment.
The General Partner intends to review and reassess the Partnership's business
plan annually.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2004 compared to Three Months Ended March 31, 2003
For the quarter ended March 31, 2004, the Partnership recognized income of
approximately $55,000 and expenses of approximately $110,000, resulting in a net
loss of approximately $55,000. For the quarter ended March 31, 2003, the
Partnership recognized income of approximately $140,000 and expenses of
approximately $209,000, resulting in a net loss of approximately $69,000.
Lease income decreased by 61% to approximately $54,000 for the quarter ended
March 31, 2004, from approximately $140,000 for the quarter ended March 31,
2003, primarily due to the fact that more lease agreements ended than new lease
agreements acquired since the quarter ended March 31, 2003.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, outside service fees and reimbursement of expenses to CCC for
administration and operation of the Partnership. With the exception of legal and
accounting fees, CCC has determined that in the best interest of the
Partnership, the majority of shared expenses will not be allocated to the
Partnership. The expenses decreased 87% to approximately $8,000 for the quarter
ended March 31, 2004, from $60,000 for the quarter ended March 31, 2003, which
is primarily attributable to a decrease in the amount charged by CCC, a related
party, to the Partnership for the administration and operation of approximately
$20,000, a decrease in accounting fees of approximately $5,000, a decrease in
outside services of approximately $5,000, a decrease in due diligence of
approximately $7,000, a decrease in insurance of approximately $9,000 and a
decrease in office supplies of approximately $3,000.
The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 61% to approximately $8,000 for the quarter ended March
31, 2004, from approximately $60,000 for the quarter ended March 31, 2003, which
is consistent with the decrease in lease income.
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
27% to approximately $98,000 for the quarter ended March 31, 2004, from
approximately $135,000 for the quarter ended March 31, 2003 due to equipment and
acquisition fees being fully depreciated/amortized and not being replaced with
as many new purchases. Included in the March 31, 2004 amount of $98,000 is a
charge of approximately $28,000, which it to record an asset at their estimated
fair value.
The Partnership sold computer equipment with a net book value of approximately
$2,000 for the quarter ended March 31, 2004, for a net gain of approximately
$1,000. The Partnership sold computer equipment with a net book value of
approximately $5,000 for the quarter ended March 31, 2003, for a net loss of
approximately $3,000.
Interest expense decreased 68% to approximately $1,000 for the quarter ended
March 31, 2004, from approximately $4,000 for the quarter ended March 31, 2003,
primarily due to the decrease in debt relating to the purchase of computer
equipment.
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 and its associated fixed revenue
streams.
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
March 31, 2004.
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 the a
Financial Officer 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 III
Item 1. LEGAL PROCEEDINGS.
Inapplicable
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:
31.1 THE RULE 15D-14(A)
31.2 THE RULE 15D-14(A)
32.1 SECTION 1350 CERTIFICATION OF CEO
32.2 SECTION 1350 CERTIFICATION OF CFO
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 III
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. General Partner
May 17, 2004 By: /s/ George S. Springsteen
- ------------------ ---------------------------------
Date George S. Springsteen
President