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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, 2005
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 333-26933
COMMONWEALTH INCOME & GROWTH FUND I, L.P.
(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 whether the registrant is an accelerated filer
(as defined in Rule 12c-2 of the Act): YES [ ] NO [X]
FORM 10-Q
MARCH 31, 2005
TABLE OF CONTENTS
PART I
Item 1. Condensed Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15
PART II
Item 1. Legal Proceedings 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Sumission of Matters to a Vote of Securities Holders 16
Item 5. Other Information 16
Item 6. Index to Exhibits
Signatures
Certifications
COMMONWEALTH INCOME & GROWTH FUND I, L.P.
CONDENSED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2005 2004
-------------------------------
(UNAUDITED)
ASSETS
Cash and cash equivalents $ 50,854 $ 46,246
Lease income receivable, net of reserves of $473,577
as of March 31, 2005 and December 31, 2004 93,859 95,496
Net investment in direct financing lease 11,293 13,551
-------------------------------
156,006 155,293
-------------------------------
Computer equipment, at cost 1,334,418 1,345,200
Accumulated depreciation (1,234,702) (1,201,517)
-------------------------------
99,716 143,683
-------------------------------
Equipment acquisition costs and deferred expenses, net 83 133
-------------------------------
TOTAL ASSETS $ 255,805 $ 299,109
===============================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accounts payable $ 13,152 $ 8,620
Accounts payable - Affiliated limited partnerships 67,993 71,528
Accounts payable - General Partner 229,890 229,840
Accounts payable - Commonwealth Capital Corp. 15,214 2,886
Unearned lease income 18,709 18,983
Notes payable 14,413 17,158
-------------------------------
TOTAL LIABILITIES 359,371 349,015
-------------------------------
PARTNERS' CAPITAL
General partner 1,000 1,000
Limited partners (104,566) (50,906)
-------------------------------
TOTAL PARTNERS' CAPITAL (103,566) (49,906)
-------------------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 255,805 $ 299,109
===============================
see accompanying notes to condensed financial statements
3
COMMONWEALTH INCOME & GROWTH FUND I
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
2005 2004
----------------------------
(UNAUDITED)
INCOME
Lease $ 22,999 $ 64,949
Interest and other 57 4
----------------------------
TOTAL INCOME 23,056 64,953
----------------------------
EXPENSES
Operating 34,026 10,117
Equipment management fee - General Partner - 2,302
Interest 264 2,532
Depreciation 41,846 55,818
Amortization of equipment
acquisition costs and deferred expenses 50 3,002
Loss on sale of computer equipment 530 -
----------------------------
TOTAL EXPENSES 76,716 73,771
----------------------------
NET (LOSS) $ (53,660) $ (8,818)
============================
NET (LOSS) PER EQUIVALENT LIMITED
PARTNERSHIP UNIT $ (0.09) $ (0.01)
============================
WEIGHTED AVERAGE NUMBER OF EQUIVALENT LIMITED
PARTNERSHIP UNITS OUTSTANDING DURING THE PERIOD 631,124 631,124
============================
see accompanying notes to condensed financial statements
4
COMMONWEALTH INCOME & GROWTH FUND I, L.P.
CONDENSED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
GENERAL LIMITED
PARTNER PARTNER GENERAL LIMITED
UNITS UNITS PARTNER PARTNER TOTAL
----------------------------------------------------------------------
PARTNERS' CAPITAL (DEFICIT) - DECEMBER 31, 2004 50 631,124 $ 1,000 $ (50,906) $ (49,906)
Net (loss) - (53,660) (53,660)
----------------------------------------------------------------------
PARTNERS' CAPITAL (DEFICIT) - MARCH 31, 2005 50 631,124 $ 1,000 $(104,566) $(103,566)
======================================================================
see accompanying notes tocondensed financial statements
5
COMMONWEALTH INCOME & GROWTH FUND I, L.P.
CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
2005 2004
----------- -----------
(UNAUDITED) (UNAUDITED)
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,017 $ 5,011
----------- -----------
INVESTING ACTIVITIES:
Net proceeds from the sale of computer equipment 1,591 -
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,591 -
----------- -----------
Net increase in cash and cash equivalents 4,608 5,011
Cash and cash equivalents, beginning of period 46,246 1,409
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 50,854 $ 6,420
=========== ===========
see accompanying notes to condensed financial statements
6
NOTES TO CONDENSED 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
("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 which is
an indirect wholly owned subsidiary of CCC. Approximately
ten to twelve 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 approximately
December 31, 2006.
2. BUSINESS PLAN The Partnership has suffered recurring losses from
operations, declining cash provided by operating
activities, has not paid partner distributions since June
2001, and has a deficit partners' capital of
approximately $100,000 at March 31, 2005.
Commonwealth Capital Corp. filed a lawsuit on the
Partnership's behalf (see Note 9), alleging that the
named defendant has not returned the proper leased
equipment. The lawsuit was originally filed in 2000. CCC
was informed on or around August 30, 2004 that the judge
presiding over the case granted summary judgment to the
defendant. It should be noted that the judge had
previously denied the defendant's motions for summary
judgment on two different occasions. CCC and our attorney
feel that the judgment appears faulty in a number of
areas and we have filed an appeal. On March 10, 2005, CCC
filed a reply brief to the United States Court of Appeals
for the Third Circuit, related to the case of
Commonwealth Capital Corp vs. Gentronics, Inc. (F/K/A
Wang Laboratories, Inc.). Commonwealth expects a response
to the brief on or around July 2005. Due to the ongoing
delays, the General Partner feels that it is in the best
interest of the Partnership to start the liquidation
process and run out naturally all remaining leases in the
portfolio, making distributions when possible, after
expenses have been satisfied. If the Partnership's cash
is insufficient from operations, the General Partner and
CCC intend to pay the legal expenses associated with the
lawsuit on behalf on the Partnership.
The General Partner intends to review and reassess the
Partnership's business plan on a quarterly basis in 2005.
7
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 accounting principles generally
accepted in the United States. 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, 2004. Operating results for the
three-month period ended March 31, 2005 are not
necessarily indicative of financial results that may be
expected for the full year ended December 31, 2005.
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. The partnership
determined that no impairment had occurred during the
three months ended March 31, 2005.
Depreciation on computer equipment for financial
statement purposes is based on the straight-line method
over estimated useful lives of four years.
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.
8
4. NET INVESTMENT
IN DIRECT The following lists the components of the net investment
FINANCING in a direct financing lease as of March 31, 2005 and
LEASE December 31, 2004:
MARCH 31, December 31,
2005 2004
---------------------------------------------------------------------------
Minimum lease payments receivable $ 15,045 $ 18,054
Less: Unearned Revenue 3,752 4,503
---------------------------------------------------------------------------
Net investment in direct
financing lease $ 11,293 $ 13,551
===========================================================================
The following is a schedule of future minimum rentals on
the noncancellable direct financing lease at March 31,
2005:
Amount
---------------------------------------------------------------------------
Nine Months ending December 31, 2005 $ 9,027
Year Ended December 31, 2006 6,018
---------
$ 15,045
===========================================================================
5. COMPUTER The Partnership is the lessor of equipment under
EQUIPMENT operating 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.
Through March 31, 2005, the Partnership's leasing
operations consist substantially of operating leases and
one direct financing lease. Operating lease revenue is
recognized on a monthly basis in accordance with the
terms of the lease agreement. Unearned revenue from
direct financing agreements is amortized to revenue over
the lease term using the straight-line method.
The Partnership's share of the computer equipment in
which it participates with other partnerships at March
31, 2005 and December 31, 2004 was approximately $399,000
for both periods, which is included in the Partnership's
fixed assets on its balance sheet, and the total cost of
the equipment shared by the Partnership with other
partnerships at March 31, 2005 and December 31, 2004 was
approximately $1,743,000 for both periods. The
Partnership's share of the outstanding debt associated
with this equipment and the total outstanding debt at
March 31, 2005 and December 31, 2005 was $0 for both
periods.
The following is a schedule of future minimum rentals on
noncancellable operating leases at March 31, 2005:
Amount
---------------------------------------------------------------------------
Nine months ending December 31, 2005 $ 15,000
Year ended December 31, 2006 3,000
---------
$ 18,000
=========
9
6. RELATED PARTY REIMBURSABLE EXPENSES
TRANSACTIONS
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, 2005 and 2004, the Partnership recorded
$2,000 and $4,000, 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, 2005 and 2004, equipment management fees of
approximately $0 and $2,000, respectively, were earned by
the General Partner. The General Partner has decided, in
an effort to maintain operations of the Partnership, to
stop charging equipment management fees effective
February 29, 2004. As of March 31, 2005 and December 31,
2004, the unpaid balance was approximately $2,000 and
$11,000, respectively.
7. NOTE PAYABLE Note payable consisted of the following:
MARCH 31, December 31,
2005 2004
------------------------------------------------------------------
Installment note payable to a
Bank, interest at 6.50%; due in
monthly installments of $1,003,
including interest, with final
payment due June 2006. 14,413 17,158
--------------------------
$ 14,413 $ 17,158
==========================
This note is secured by specific computer equipment and
is a non-recourse liability of the Partnership.
Aggregate maturities of notes payable for each of the
periods subsequent to March 31, 2005 are as follows:
Amount
-----------------------------------------------------------------
Nine months ending December 31, 2005 $ 8,507
Year ended December 31, 2006 5,906
--------
$ 14,413
========
10
8. SUPPLEMENTAL Other noncash activities included in the
CASH FLOW determination of net income are as follows:
INFORMATION
Three months ended March 31, 2005 2004
- ------------------------------------------------------------------------------
Lease income, net of interest expense on
notes payable realized as a result of
direct payment of principal by lessee to bank $ 4,239 $ 47,805
- ------------------------------------------------------------------------------
No interest or principal on notes payable was paid by the
Partnership because direct payment was made by lessees to
the bank in lieu of collection of lease income and
payment of interest and principal by the Partnership.
9. LITIGATION The Partnership, through CCC, has initiated a lawsuit
against a customer for the non-return of leased
equipment. The Partnership has approximately $75,000 of
unreserved accounts receivable relating to this matter.
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.
CCC was informed on or around August 30, 2004 that the
judge presiding over the case granted summary judgment to
the defendant. It should be noted that the judge had
previously denied the defendant's motions for summary
judgment on two different occasions. CCC and our attorney
feel that the judgment appears faulty in a number of
areas and we have filed an appeal. On March 10, 2005, CCC
filed a reply brief to the United States Court of Appeals
for the Third Circuit, related to the case of
Commonwealth Capital Corp vs. Gentronics, Inc. (F/K/A
Wang Laboratories, Inc.). Commonwealth expects a response
to the brief on or around July 2005. Due to the ongoing
delays, the General Partner feels that it is in the best
interest of the Partnership to start the liquidation
process and run out naturally all remaining leases in the
portfolio, making distributions when possible, after
expenses have been satisfied. If the Partnership's cash
is insufficient from operations, the General Partner and
CCC intend to pay the legal expenses associated with the
lawsuit on behalf on the Partnership.
11
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
The Partnership's discussion and analysis of its financial condition and results
of operations are based upon its financial statements which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Partnership
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. The Partnership bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
The Partnership believes that its critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements.
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. 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, 2005, the Partnership's leasing operations consist
substantially of operating leases and one direct financing lease. Operating
lease revenue is recognized on a monthly basis in accordance with the terms of
the lease agreement. Unearned revenue from direct financing agreements is
amortized to revenue over the lease term.
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.
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.
12
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of capital for the three months ended March
31, 2005 and 2004 was cash generated from operating activities of approximately
$3,000 and $5,000, respectively. There was no equipment purchased for the three
months ended March 31, 2005 and 2004. There were no distributions paid for the
three months ended March 31, 2005 and 2004.
For the three-month period ended March 31, 2005, the Partnership generated cash
from operating activities of approximately $3,000, which includes net operating
loss of approximately $54,000, a net loss on sale of equipment of approximately
$500 and depreciation and amortization expenses of approximately $42,000. Other
non-cash activities included in the determination of net income include direct
payments of lease income by lessees to banks of $4,000.
For the three-month period ended March 31, 2004, the Partnership generated cash
from operating activities of $5,000, which includes a net operating loss of
$9,000 and depreciation and amortization expenses of $59,000. Other noncash
activities included in the determination of net loss include direct payments of
lease income by lessees to banks of $48,000.
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, 2005, the Partnership had future minimum rentals on non-cancelable
operating leases of $15,000 for the balance of the year ending December 31, 2005
and $3,000 thereafter. At March 31, 2005, outstanding debt was approximately
$14,000, with an interest rate of 6.50%, payable through June 2006.
The Partnership's share of the computer equipment in which it participates with
other partnerships at March 31, 2005 and December 31, 2004 was approximately
$399,000 for both periods, which is included in the Partnership's fixed assets
on its balance sheet, and the total cost of the equipment shared by the
Partnership with other partnerships at March 31, 2005 and December 31, 2004 was
approximately $1,743,000 for both periods. The Partnership's share of the
outstanding debt associated with this equipment and the total outstanding debt
at March 31, 2005 and December 31, 2004 was $0.
The Partnership, has suffered recurring losses from operations, declining cash
provided by operating activities, has not paid partner distributions since June
2001, has a deficit partners' capital of approximately $100,000 at March 31,
2005 and CCC filed a lawsuit on the Partnership's behalf (see Note 9), alleging
that the named defendant has not returned the proper leased equipment.
The lawsuit was originally filed in 2001. CCC was informed on or around August
30, 2004 that the judge presiding over the case granted summary judgment to the
defendant. It should be noted that the judge had previously denied the
defendant's motions for summary judgment on two different occasions. CCC and our
attorney feel that the judgment appears faulty in a number of areas and we have
filed an appeal. We are currently waiting for a court date from the court of
13
appeals. Due to the ongoing delays, the General Partner feels that it is in the
best interest of the Partnership to start the liquidation process and run out
naturally all remaining leases in the portfolio, making distributions when
possible, after expenses have been satisfied. The General Partner has decided
that if the court continues to delay throughout the year, then the General
Partner will seek to transfer this litigated lease into a third party qualified
Trusteeship for distribution (proportionately to investors) after completion of
the lawsuit. If the Partnership's cash is insufficient from operations or if the
trust has insufficient cash, the General Partner and CCC intend to pay the legal
expenses associated with the lawsuit on behalf on the Partnership.
The General Partner intends to review and reassess the Partnership's business
plan on a quarterly basis.
The Partnership began liquidation during the quarter ended June 30, 2004.
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 will be made by the General Partner after consideration of all relevant
factors (including prevailing economic 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.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2005 compared to Three Months Ended March 31, 2004
- -------------------------------------------------------------------------------
For the quarter ended March 31, 2005, the Partnership recognized income of
approximately $23,000 and expenses of approximately $77,000, resulting in a net
loss of approximately $54,000. For the quarter ended March 31, 2004, the
Partnership recognized income of approximately $65,000 and expenses of
approximately $74,000, resulting in a net loss of approximately $9,000.
Lease income decreased by 65% to approximately $23,000 for the quarter ended
March 31, 2005, from approximately $65,000 for the quarter ended March 31, 2004,
primarily due to the fact that lease agreements terminated since March, 2004.
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. The expense increased 340% to
approximately $34,000 for the quarter ended March 31, 2005, from $10,000 for the
quarter ended March 31, 2004. There was an increase in legal fees of
approximately $9,000, an increase in remarketing fees of approximately $13,000,
and an increase in accounting fees of approximately $5,000.
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 for the quarter ended March 31, 2005 was approximately $2,000.
The General Partner decided, in an effort to maintain operations of the
Partnership, to stop charging equipment management fees effective February 29,
2004.
14
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
29% to approximately $42,000 for the quarter ended March 31, 2005, from
approximately $59,000 for the quarter ended March 31, 2004 due to the older
equipment becoming fully depreciated and certain acquisition and finance fees
being fully amortized.
The Partnership sold computer equipment with a net book value of approximately
$2,000 for the quarter ended March 31, 2005, for a net loss of approximately
$500. The Partnership did not sell any computer equipment for the quarter ended
March 31, 2004.
Interest expense decreased 88% to approximately $300 for the quarter ended March
31, 2004 from approximately $2,500 for the quarter ended March 31, 2004,
primarily due to older equipment's associated debt being fully paid.
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, 2005.
The Partnership'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 quarters.
Based upon this review, the Partnership's Chief Executive Officer and a
Financial Officer have concluded that the Partnership's disclosure controls (as
defined in Rule 13a-14c 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.
There have been no changes in the General Partner's internal controls or in
other factors that could materially affect our disclosure controls and
procedures in the quarter ended March 31, 2005, that have materially affected or
are reasonably likely to materially affect the General Partner's internal
controls over financial reporting.
15
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. Getronics, Inc. was filed by Commonwealth
Capital Corp against Getronics, Inc. (formerly known as Wang
Laboratories, Inc.) with the Federal District Court of the
Eastern District of Pennsylvania, No. 00-CV-2381 on behalf
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.
CCC was informed on or around August 30, 2004 that the judge
presiding over the case granted summary judgment to the
defendant. It should be noted that the judge had previously
denied the defendant's motions for summary judgment on two
different occasions. CCC and our attorney feel that the
judgment appears faulty in a number of areas and we have
filed an appeal. On March 10, 2005, CCC filed a reply brief
to the United States Court of Appeals for the Third Circuit,
related to the case of Commonwealth Capital Corp vs.
Gentronics, Inc. (F/K/A Wang Laboratories, Inc.).
Commonwealth expects a response to the brief on or around
July 2005.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES.
N/A
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
N/A
Item 5. OTHER INFORMATION.
N/A
Item 6. 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
16
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
May 16, 2005 By: /s/ George S. Springsteen
- ------------ --------------------------
Date George S. Springsteen
President
17