<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, 1999
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: 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 No.)
incorporation or organization)
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>
COMMONWEALTH INCOME & GROWTH FUND I
BALANCE SHEETS
<TABLE>
<CAPTION>
(Audited)
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 260,418 $ 1,565
Lease income receivable 101,016 148,204
Other receivables and deposits 2,618 3,303
Accounts receivable - General Partner -- 9,199
Computer equipment, at cost 14,014,614 13,864,309
Accumulated depreciation (9,311,602) (8,306,508)
------------ ------------
4,703,012 5,557,801
Equipment acquisition costs and deferred expenses, net
of accumulated amortization of $483,738 in 1999 and
$448,421 in 1998 133,935 169,252
Organization costs, net of accumulated amortization of
$128,459 in 1999 and $121,778 in 1998 10,879 17,560
------------ ------------
Total assets $ 5,211,878 $ 5,906,884
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 70,686 $ 50,310
Accounts payable - General Partner 10,716 --
Accounts payable - Commonwealth Capital Corp. -- 22,480
Unearned lease income 152,901 116,968
Notes payable 1,855,595 2,401,080
------------ ------------
Total liabilities 2,089,898 2,590,838
Partners' capital:
General partner 1,000 1,000
Limited partners 3,120,980 3,315,046
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Total partners' capital 3,121,980 3,316,046
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Total liabilities and partners' capital $ 5,211,878 $ 5,906,884
------------ ------------
------------ ------------
</TABLE>
See Accompanying Notes.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
INCOME:
Lease $ 807,480 $ 1,212,993
Interest and other 60 2,846
----------- -----------
807,540 1,215,839
EXPENSES:
Operating, excluding depreciation 26,016 15,275
Equipment management fee - General Partner 40,374 60,650
Interest 38,427 69,857
Depreciation 854,790 1,114,345
Amortization of organization costs and deferred
expenses 41,999 68,331
Loss on sale of computer equipment -- 58,197
----------- -----------
----------- -----------
1,001,606 1,386,655
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Net loss $ (194,066) $ (170,816)
----------- -----------
----------- -----------
Net loss per equivalent limited partnership unit $ (0.31) $ (0.27)
----------- -----------
----------- -----------
Weighted average number of equivalent limited
partnership units outstanding during the period 631,358 631,358
----------- -----------
----------- -----------
</TABLE>
See Accompanying Notes.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENT OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
General Limited
Partner Partner General Limited
Units Units Partner Partners' Total
----- ----- ------- --------- -----
<S> <C> <C> <C> <C> <C>
Partners' capital - December 31, 1995 50 631,358 $ 1,000 $ 9,642,571 $ 9,643,571
Net income (loss) 12,755 (1,332,502) (1,319,747)
Distributions (12,755) (1,262,712) (1,275,467)
-- ------- -------- ----------- -----------
Partners' capital - December 31, 1996 50 631,358 1,000 7,047,357 7,048,357
Net income (loss) 12,755 (918,878) (906,123)
Distributions (12,755) (1,262,712) (1,275,467)
-- ------- -------- ----------- -----------
Partners' capital - December 31, 1997 50 631,358 1,000 4,865,767 4,866,767
Net income 12,755 (288,009) (275,254)
Distributions (12,755) (1,262,712) (1,275,467)
-- ------- -------- ----------- -----------
Partners' capital - December 31, 1998 50 631,358 1,000 3,315,046 3,316,046
Net loss - (194,066) (194,066)
-- ------- -------- ----------- -----------
Partners' capital - March 31, 1999 50 631,358 $ 1,000 $ 3,120,980 $ 3,121,980
-- ------- -------- ----------- -----------
-- ------- -------- ----------- -----------
</TABLE>
See Accompanying Notes.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (194,066) $ (170,816)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 896,787 1,182,676
Loss on sale of computer equipment - 58,197
Other noncash activities included in the
determination of net income (545,485) (625,884)
Changes in operating assets and liabilities:
Lease income receivable 47,188 (8,801)
Interest and other receivables 9,884 (222)
Accounts payable 20,376 13,393
Accounts payable - General Partner 10,716 (20,305)
Accounts payable - Commonwealth Capital Corp. (22,480) (1,829)
Unearned lease income 35,933 (61,566)
--------- ---------
Net cash provided by operating activities 258,853 364,843
INVESTING ACTIVITIES
Capital expenditures - (74,846)
Net proceeds from sale of computer equipment - 94,450
Equipment acquisition fees paid to the General Partner - (12,659)
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Net cash provided by investing activities - 6,945
FINANCING ACTIVITIES
Distributions to partners - (318,868)
Debt placement fees paid to the General Partner - (2,277)
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Net cash used in financing activities - (321,145)
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Net increase in cash and cash equivalents 258,853 50,643
Cash and cash equivalents at beginning of period 1,565 116,259
--------- ---------
Cash and cash equivalents at end of period $ 260,418 $ 166,902
--------- ---------
--------- ---------
</TABLE>
See Accompanying Notes.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
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, 1998.
NET LOSS PER EQUIVALENT LIMITED PARTNERSHIP UNIT
The net 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.
<PAGE>
Commonwealth Income & Growth Fund I
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of capital for the three month period ended
March 31, 1999 and 1998 were cash from operations of $259,000 and $365,000,
respectively, and net proceeds from the sale of computer equipment of $94,000
for the three month period ended March 31, 1998.
The primary uses of cash for the three month period ended March 31, 1998 were
for capital expenditures for new equipment totaling $75,000.the payment of
acquisition fees to the General Partner of $13,000, the payment of debt
placement fees to the General Partner of $2,000, and preferred distributions to
partners of $319,000.
Currently, rental income from the Partnership's leases are invested in money
market accounts investing directly in treasury obligations pending the
Partnership's use of such funds to purchase additional computer equipment, to
pay Partnership expenses or to make distributions to the Partners. At March 31,
1999, and December 31, 1998 the Partnership had approximately $260,000 and
$2,000, respectively, invested in these money market accounts.
The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses. As
of March 31, 1999, the Partnership had future minimum rentals on noncancellable
operating leases of $1,999,000 for the year ending December 31, 1999 and
$947,000, thereafter. At March 31, 1999, the outstanding debt was $1,856,000,
with interest rates ranging from 6.4% to 8.5%, and will be payable through
December 2001. The Partnership intends to continue purchasing additional
computer equipment with existing cash, as well as when future cash becomes
available. In addition, the Partnership may incur additional debt in purchasing
computer equipment in the future.
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.
RESULTS OF OPERATIONS
For the quarter ended March 31, 1999, the Partnership recognized income of
$808,000 and expenses of $1,102,000, resulting in a net loss of $194,000. For
the quarter ended March 31, 1998, the Partnership recognized income of
$1,216,000 and expenses of $1,387,000, resulting in a net loss of $171,000.
Lease income decreased by 34% from $1,216,000 for the quarter ended March 31,
1998, to $808,000 for the quarter ended March 31, 1999. During the three months
ended March 31, 1998, the Partnership expended $75,000 in cash, and assumed
accounts payable of $206,000 for equipment, to acquire two leases, which
generated approximately $29,000 in revenue. No new leases were acquired during
the three months ended March 31, 1999.
Interest income decreased from $3,000 for the quarter ended March 31, 1997, to
$60 for the quarter ended March 31, 1999. In addition, the Partnership
recognized a loss on sale of computer equipment of $58,000 for the quarter ended
March 31, 1998.
The operating expenses, excluding depreciation, primarily consist of accounting,
legal and outside office services. The 73% increase from approximately $15,000
for the quarter ended March 31, 1998, to $26,000 for the quarter ended March 31,
1999, is attributable to the accrual of accounting fees.
<PAGE>
Commonwealth Income & Growth Fund I
The equipment management fee is equal to 5% of the gross lease revenue
attributable to equipment which is subject to operating leases. The equipment
management fee was $40,000 and $61,000, respectively, for the quarters ended
March 31, 1999 and 1998.
Interest expense decreased 46% from approximately $70,000 for the quarter ended
March 31, 1998, to $38,000 for the quarter ended March 31, 1999.
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of organizational costs, equipment acquisition fees,
and debt placement fees. These expenses decreased by 25% from approximately
$1,184,000 for the quarter ended March 31, 1998, to $893,000 for the quarter
ended March 31, 1999.
For the three period ended March 31, 1999, the Partnership generated cash flows
from operating activities of $259,000, which includes a net loss of $194,000,
and depreciation and amortization expenses of $897,000. Other noncash activities
included in the determination of net income includes direct payments of lease
income by lessees to banks of $545,000.
For the three month period ended March 31, 1998, the Partnership generated cash
flows from operating activities of $365,000, which includes a net loss of
$171,000, and depreciation and amortization expenses of $1,183,000. Other
noncash activities included in the determination of net income includes direct
payments of lease income by lessees to banks of $585,000 and lease income paid
to original lessors in lieu of cash payments for computer equipment of $41,000.
<PAGE>
PART II: OTHER INFORMATION
COMMONWEALTH INCOME & GROWTH FUND I
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
<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 I
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. General Partner
- ----------------------- By:
Date -----------------------
George S. Springsteen
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK>0000913141
<NAME>CIGF1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 260,418
<SECURITIES> 0
<RECEIVABLES> 103,634
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 144,814
<PP&E> 14,014,614
<DEPRECIATION> (9,311,612)
<TOTAL-ASSETS> 5,211,878
<CURRENT-LIABILITIES> 2,089,898
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,121,980
<TOTAL-LIABILITY-AND-EQUITY> 5,211,878
<SALES> 0
<TOTAL-REVENUES> 807,540
<CGS> 0
<TOTAL-COSTS> 963,179
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,427
<INCOME-PRETAX> (194,066)
<INCOME-TAX> 0
<INCOME-CONTINUING> (194,066)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (194,066)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> 0
</TABLE>
