<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from -------------- to -------------- .
Commission File Number: 333-26933
COMMONWEALTH INCOME & GROWTH FUND III
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Pennsylvania 23-2895714
(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
</TABLE>
1160 West Swedesford Road
Berwyn, Pennsylvania 19312
(Address, including zip code, of principal executive offices)
(610) 647-6800
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days:
YES [X] NO [ ]
<PAGE>
Part I: FINANCIAL INFORMATION
Item 1: Financial Statements
Commonwealth Income & Growth Fund III
Balance Sheet
March 31, 1998
<TABLE>
<S> <C>
Assets
Cash and cash equivalents $1,700,271
Other receivables 7,343
Organization costs and deferred expenses, net of
accumulated amortization of $6,228 in 1998 83,883
----------
Total assets $1,791,497
----------
----------
Liabilities and partners' capital
Accounts payable $ 1,846
Partners' capital:
General partner 1,000
Limited partners 1,788,651
----------
Total liabilities and partners' capital $1,791,497
----------
----------
</TABLE>
See accompanying notes.
<PAGE>
Commonwealth Income & Growth Fund III
Income Statement
From January 27, 1998 (commencement of operations) to March 31, 1998
<TABLE>
<S> <C>
Income:
Interest $12,274
Expenses:
Operating 12
Amortization of organization costs and deferred expenses 6,228
----------
6,240
----------
Net income $ 6,034
----------
----------
Net income per equivalent limited partnership units $ 0.10
----------
----------
</TABLE>
See accompanying notes.
<PAGE>
Commonwealth Income & Growth Fund III
Statement of Partners' Capital
From January 27, 1998 (commencement of operations) to March 31, 1998
<TABLE>
<CAPTION>
General Limited
Partner Partner General Limited
Units Units Partner Partner Total
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Initial contribution 50 25 $ 1,000 $ 500 $ 1,500
Contributions -- 101,574 -- 2,031,480 2,031,480
Offering costs -- (222,501) (222,501)
Net income 269 5,765 6,034
Distributions (269) (26,593) (26,862)
-------------------------------------------------------------------------
Partners' capital - March 31, 1998 50 101,599 $ 1,000 $1,788,651 $1,789,651
-------------------------------------------------------------------------
-------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
Commonwealth Income & Growth Fund III
Statement of Cash Flows
From January 27, 1998 (commencement of operations) to March 31, 1998
<TABLE>
<S> <C>
Operating activities
Net income $ 6,034
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization 6,228
Changes in operating assets and liabilities:
Other receivables and deposits (7,343)
Accounts payable 1,846
Organization cost paid to the General Partner (21,336)
-------
Net cash provided by operating activities (14,571)
Investing activities
Equipment acquisition fees paid to the General Partner (68,775)
Financing activities
Partners' contributions 2,032,980
Offering costs (201,165)
Offering costs paid to the General Partner (21,336)
Distributions to partners (26,862)
-----------
Cash and cash equivalents at March 31, 1998 $ 1,700,271
-----------
-----------
</TABLE>
See accompanying notes.
<PAGE>
Commonwealth Income & Growth Fund III
Notes to Financial Statements
March 31, 1998
Basis of Presentation
The financial information presented as of any date other 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
Commonwealth Income & Growth Fund I (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, 1997.
Net Income per Equivalent Limited Partnership Unit
The net income per equivalent limited partnership unit is computed based upon
net income allocated to the limited partners and the weighted average number of
equivalent units outstanding during the period.
Subsequent Event
On April 2, 1998, reinvestment subscriptions from investors totaling $833 were
released by the escrow agent and accepted by the Partnership. The net proceeds
to the Partnership available for investment in computer equipment after payment
of offering expenses and the equipment acquisition fees were $704.
<PAGE>
Commonwealth Income & Growth Fund III
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership satisfied its minimum offering requirements and commenced
operations on January 27, 1998. On that date, subscribers for 76,284 Units
were admitted as Limited Partners of of the Partnership. Through March 31,
1998, subscribers owning an additional 25,315 Units were admitted as Limited
Partners.
The Partnership's primary sources of capital for the three months ended
March 31, 1998, were from Partners' contributions of $2,033,000. The primary
uses of cash for the three months ended March 31, 1998, were for the payment
of offering costs of $223,000, the payment of preferred distributions to
partners of $27,000, and the payment of acquisition fees of $69,000.
Currently, Partners' contributions from the Partnership's leases are invested
in money market accounts investing directly in treasury obligations pending
the Partnership expenses or to make distributions to the Partners. At
March 31, 1998, the Partnership had approximately $1,700,000 invested in
these money market accounts.
The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally
meet specified financial standards minimizes the Partnership's operating
expenses. As of March 31, 1998, the Partnership has not purchased any
equipment.
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 also reduce the
distributions to its Partners if it deems necessary. Since the Partnership's
leases are on a "triple-net" basis, no reserve for maintenance and repairs
are deemed necessary.
<PAGE>
Commonwealth Income & Growth Fund III
Part II: OTHER INFORMATION
<TABLE>
<S> <C>
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: None
b) Report on Form 8-K: None
</TABLE>
<PAGE>
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
By:_____________________________
_____________
Date George S. Sprinsteen
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001038878
<NAME> CIGFIII
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,700,271
<SECURITIES> 0
<RECEIVABLES> 7,343
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 83,883
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,791,497
<CURRENT-LIABILITIES> 1,846
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,789,651
<TOTAL-LIABILITY-AND-EQUITY> 1,791,497
<SALES> 0
<TOTAL-REVENUES> 12,274
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,240
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,034
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,034
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,034
<EPS-PRIMARY> .10
<EPS-DILUTED> 0
</TABLE>
