<PAGE>
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, 2000
( ) 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)
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 (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 [ ]
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
------------- -----------
<S> <C> <C>
Assets
Cash and cash equivalents ........................ 229,190 260,418
Lease income receivable .......................... 236,006 101,016
Other receivables and deposits ................... 89,009 2,618
Accounts receivable - General Partner ............ 28,213 --
Computer equipment, at cost ...................... 8,801,648 14,014,614
Accumulated depreciation ......................... (6,960,537) (9,311,602)
----------- -----------
1,841,111 4,703,012
Equipment acquisition costs and deferred expenses,
net of accumulated amortization of $386,219 in
2000 and $370,759 in 1999 ........................ 33,854 133,935
Organization costs ............................... -- 10,879
----------- -----------
Total Assets ..................................... 2,457,383 5,211,878
=========== ===========
Liabilities and partners' equity
Accounts payable ................................. 164,586 70,686
Accounts payable - General Partner ............... 63,231 10,716
Accounts payable - Commonwealth Capital Corp. .... 29,287 --
Unearned lease income ............................ 75,296 152,901
Notes payable .................................... 463,613 1,855,595
----------- -----------
Total liabilities ................................ 796,013 2,590,838
Partners' capital:
General partner .................................. 1,000 1,000
Limited partner .................................. 1,660,370 3,120,980
----------- -----------
Total partners' capital .......................... 1,661,370 3,121,980
----------- -----------
Total Liabilities and partners' equity ........... 2,457,383 5,906,884
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---------------------------
<S> <C> <C>
INCOME:
Lease ........................................... $ 488,750 $ 807,480
Interest and other .............................. 131,903 60
Gain on sale of computer equipment .............. 54,965 --
----------- -----------
675,618 807,540
EXPENSES:
Operating, excluding depreciation ............... 76,297 26,016
Equipment management fee - General Partner ...... 36,285 40,374
Interest ........................................ 11,226 38,427
Depreciation .................................... 452,279 854,790
Amortization of organizastion costs, equipment
acquisition costs and deferred expenses ....... 15,462 41,999
Loss on sale of computer equipment .............. -- --
----------- -----------
591,549 1,001,606
----------- -----------
Net income (loss) ............................... 84,069 (194,066)
=========== ===========
Net income (loss) per equivalent limited
partnership unit .............................. $ 0.32 $ (0.31)
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>
PARTNER UNITS GENERAL LIMITED
GENERAL LIMITED PARTNER PARTNER 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)
Distribution (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)
Distribution (12,755) (1,262,712) (12,756,467)
-- ------- -------- ----------- ------------
Partners' capital--December 31, 1997 50 631,358 1,000 4,865,767 $ 4,866,767
Net income (loss) 12,755 (288,009) (275,254)
Distribution (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 income (loss) 9,565 (546,733) (537,168)
Distribution (9,565) (949,478) (959,043)
-- ------- -------- ----------- ------------
Partners' capital--December 31, 1999 50 631,358 1,000 1,818,835 1,819,835
Net income (loss) 1,000 84,069 85,069
Distribution (242,529) (242,529)
-- ------- -------- ----------- ------------
Partners' capital--March 31, 2000 1,000 1,660,375 1,662,375
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-----------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income ....................................... 84,069 $ (170,816)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................... 467,741 1,182,676
(Gain) loss on sale of computer equipment ........ (47,020) 58,197
Other noncash activities included in
determination of net income ................... (404,936) (625,884)
Changes in operating assets and liabilities: ..... 115,601
Accounts receivable - General Partner ............ -- --
(Increase) decrease in lease income receivable ... (23,382) (8,801)
(Increase) decrease in other receivables ......... (87,000) (222)
Increase (decrease) in accounts payable .......... 110,549 13,393
Increase (decrease) in accounts payable to
Commonwealth Capital Corp. .................... 0 (1,829)
Increase (decrease) in accounts payable -
General Partner ............................... 28,213 (20,305)
Increase(decrease) other liabilities ............. (102,500)
Increase (decrease) in unearned lease income ..... (25,734) (61,566)
----------- -----------
Net cash provided by operating activities ........ 115,601 364,843
----------- -----------
Investing activities:
Capital expenditures ............................. -- (74,846)
Net proceeds from the sale of property ........... 138,830 94,450
Equipment acquisition fees paid to General Partner 0 (12,659)
----------- -----------
Net cash provided by investing activities ........ 138,830 6,945
Financing activities:
Distributions to partners ........................ (242,529) (318,868)
Debt placement fees paid to General Partner ...... -- (2,277)
----------- -----------
Net cash used by financing activities ............ (242,529) (321,145)
----------- -----------
Net increase (decrease) in cash and equivalents .. 11,902 50,643
Cash and cash equivalents, begining of year ...... 217,288 116,259
----------- -----------
Cash and cash equivalents, end of year ........... 229,190 166,902
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
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, 1999.
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, 2000 and 1999 were cash from operations of $489,000 and $807,000,
respectively; and net proceeds from the sale of computer equipment of $55,000
for the three month period ended March 31, 2000. The primary uses of cash for
the three-month period ended March 31, 2000 was for preferred distributions to
partners of $247,000 and equipment management fee of $36,000 to the General
Partner.
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,
2000, and 1999 the Partnership had approximately $229,000 and $260,000,
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, 2000, the Partnership had future minimum rentals on noncancellable
operating leases of $1,200,000 for the year ending December 31, 2000 and
$464,000, thereafter. At March 31, 2000, the outstanding debt was $330,000, with
interest rates ranging from 6.4% to 8.5%, and will be payable through September
2002. 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, 2000, the Partnership recognized income of
$676,000 and expenses of $592,000, resulting in net income of $84,000. For the
quarter ended March 31, 1999, the Partnership recognized income of $808,000 and
expenses of $1,000,000, resulting in net loss of $194,000.
Lease income decreased by 60% from $807,000 for the quarter ended March 31,
1999, to $489,000 for the quarter ended March 31, 2000. During the three months
ended March 31, 2000, the Partnership did not expend any cash to acquire new
leases.
Interest income increased from $60 for the quarter ended March 31, 1999, to
$1,018 for the quarter ended March 31, 2000. In addition, the Partnership
recognized a gain on sale of computer equipment of $55,000 for the quarter ended
March 31, 2000.
The operating expenses, excluding depreciation, primarily consist of accounting,
legal and outside office services. The 34% increase from approximately $26,000
for the quarter ended March 31, 1999, to $76,000 for the quarter ended March 31,
2000, 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 that is subject to operating leases. The equipment
management fee was $36,000 and $40,000, respectively, for the quarters ended
March 31, 2000 and 1999.
Interest expense decreased 28% from approximately $38,000 for the quarter ended
March 31, 1999, to $11,000 for the quarter ended March 31, 2000.
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 52% from approximately
$897,000 for the quarter ended March 31, 1999, to $468,000 for the quarter ended
March 31, 2000.
For the three month period ended March 31, 2000, the Partnership generated cash
flows from operating activities of $116,000, which includes a net decrease of
$249,000, and depreciation and amortization expenses of $468,000. Other noncash
activities included in the determination of net income include direct payments
of lease income by lessees to banks of $265,00.
For the three month period ended March 31, 1999, the Partnership generated cash
flows from operating activities of $365,000, 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 include direct payments
of lease income by lessees to banks of $1,856,000.
<PAGE>
PART II: OTHER INFORMATION
COMMONWEALTH INCOME & GROWTH FUND I
<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 I
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. General Partner
------------------------------
May 5, 2000 By: /s/ George S. Springsteen
- -------------------------- -------------------------------
Date George S. Springsteen
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON CASES 3 & 4 OF
THE COMPANY'S FORM 10-Q FOR THE YEAR TO DATE.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 229,190
<SECURITIES> 0
<RECEIVABLES> 582,418
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 616,272
<PP&E> 8,801,648
<DEPRECIATION> (6,960,537)
<TOTAL-ASSETS> 2,457,383
<CURRENT-LIABILITIES> 332,400
<BONDS> 463,613
0
0
<COMMON> 0
<OTHER-SE> 1,661,370
<TOTAL-LIABILITY-AND-EQUITY> 2,457,383
<SALES> 0
<TOTAL-REVENUES> 675,618
<CGS> 0
<TOTAL-COSTS> 580,323
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,226
<INCOME-PRETAX> 84,069
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,069
<EPS-BASIC> .32
<EPS-DILUTED> 0
</TABLE>
