10-Q 1 ten-q.txt 10-Q 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 JUNE 30, 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 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) 470 John Young Way Suite 300 Exton, Pennsylvania 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]

see accompanying notes to financial statements

see accompanying notes to financial statements

see accompanying notes to financial statements

see accompanying notes to financial statements NOTES TO 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, has a partners' capital of approximately $97,000 at June 30, 2004 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, which was originally filed in 2001, still has not been heard by the court due to several postponements by the judge assigned to the lawsuit. On June 9, 2004, the court heard oral arguments on the Defendant's second motion for summary judgment, which was denied. The Court set September 7, 2004 as the date for the trial. The Partnership has made several attempts to transfer the case to another judge. 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. 3. SUMMARY OF BASIS OF PRESENTATION SIGNIFICANT ACCOUNTING The financial information presented as of any date POLICIES 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 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 six-month period ended June 30, 2004 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2004. REVENUE RECOGNITION Through June 30, 2004, 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 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. LIQUIDATION POLICIES The Partnership has begun 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. 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. As of June 30, 2004, there is no impairment. 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 Partnership considers all highly liquid investments with a maturity of three months or less to be cash equivalents. Cash equivalents have been invested in a money market fund investing directly in Treasury obligations. 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 were 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 the partners' contributed capital. These costs have been 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 limited partner 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. NET INVESTMENT IN The following lists the components of the net DIRECT FINANCING investment in a direct financing lease as of June LEASE 30, 2004 and December 31, 2003: JUNE 30, December 31, 2004 2003 ------------------------------------------------------ Minimum lease payments receivable $24,072 $ 30,090 Less: Unearned Revenue 6,004 7,505 ------------------------------------------------------ Net investment in direct financing lease $18,068 $ 22,585 ------------------------------------------------------ The following is a schedule of future minimum rentals on the noncancellable direct financing lease at June 30, 2004: Amount ------------------------------------------------------ Six Months Ending December 31, 2004 $ 6,018 Year Ended December 31, 2005 12,036 Year Ended December 31, 2006 6,018 ------- $24,072 ------------------------------------------------------ 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. The Partnership's share of the computer equipment in which it participates with other partnerships at June 30, 2004 and December 31, 2003 was approximately $432,000 and $448,000, respectively, 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 June 30, 2004 and December 31, 2003 was approximately $2,221,000 and $2,258,000, respectively. The Partnership's share of the outstanding debt associated with this equipment at June 30, 2004 and December 31, 2003 was approximately $42,000 and $96,000, respectively, which is included in the Partnership's notes payables on the balance sheet, and the total outstanding debt at June 30, 2004 and December 31, 2003 related to the equipment shared by the Partnership was approximately $225,000 and $537,000, respectively. The following is a schedule of future minimum rentals on noncancellable operating leases at June 30, 2004: Amount --------------------------------------------------- Six months ending December 31, 2004 $69,000 Year ended December 31, 2005 13,000 Year ended December 31, 2006 5,000 ------- $87,000 ======= 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 six months ended June 30, 2004 and 2003, the Partnership recorded $32,000 and $88,000, 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 six months ended June 30, 2004 and 2003, equipment management fees of approximately $2,000 and $9,000, 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. 7. NOTES PAYABLE Notes payable consisted of the following:

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 June 30, 2004 are as follows:

8. SUPPLEMENTAL Other noncash activities included in the CASH FLOW determination of net income are as follows: INFORMATION Six months ended June 30, 2004 2003 ---------------------------------------------------------------------------- Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $86,813 $134,255 ---------------------------------------------------------------------------- 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. Management believes that the Partnership will prevail in this matter and that the outcome of this uncertainty is not expected to have a material adverse impact to the financial statements of the Partnership. The Partnership has approximately $250,000 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. The lawsuit had been scheduled for February 9, 2004, but that has been postponed. On June 9, 2004, the court heard oral arguments on the Defendant's second motion for summary judgment, which the court denied. The Court set September 7, 2004 as the date for the trial. 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 3 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 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 June 30, 2004, 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. LIQUIDITY AND CAPITAL RESOURCES The Partnership's primary source of capital for the six months ended June 30, 2004 and 2003 was net proceeds from sale of equipment of approximately $7,000 and $18,000, respectively. The primary uses of cash for the six months ended June 30, 2004 and 2003 was for cash used in operations of approximately $2,000 and $8,000, respectively, and for the purchase of computer equipment in the amount of approximately $5,000 for the six months ended June 30, 2003. There was no equipment purchased for the six months ended June 30, 2004. There were no distributions paid for the six months ended June 30, 2004 and 2003. For the six-month period ended June 30, 2004, the Partnership used cash from operating activities of approximately $2,000, which includes net operating income of approximately $10,000 and depreciation and amortization expenses of approximately $116,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of $87,000. For the six-month period ended June 30, 2003, the Partnership used cash for operating activities of $8,000, which includes a net operating loss of $108,000, a net gain from the sale of computer equipment of $9,000 and depreciation and amortization expenses of $135,000. Other noncash activities included in the determination of net loss include direct payments of lease income by lessees to banks of $134,000. 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 June 30, 2004, the Partnership had future minimum rentals on non-cancelable operating leases of $69,000 for the balance of the year ending December 31, 2004 and $18,000 thereafter. At June 30, 2004, outstanding debt was approximately $77,000, with interest rates ranging from 6.25% to 9.25%, payable through June 2006. The Partnership's share of the computer equipment in which it participates with other partnerships at June 30, 2004 and December 31, 2003 was approximately $432,000 and $448,000, respectively, 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 June 30, 2004 and December 31, 2003 was approximately $2,221,000 and $2,258,000, respectively. The Partnership's share of the outstanding debt associated with this equipment at June 30, 2004 and December 31, 2003 was approximately $42,000 and $96,000, respectively, which is included in the Partnership's notes payables on the balance sheet, and the total outstanding debt at June 30, 2004 and December 31, 2003 related to the equipment shared by the Partnership was approximately $225,000 and $537,000, respectively. The Partnership, has suffered recurring losses from operations, declining cash provided by operating activities, has not paid partner distributions since June 2001, has a partners' capital of approximately $97,000 at June 30, 2004 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, which was originally filed in 2001, still has not been heard by the court due to several postponements by the judge assigned to the lawsuit. On June 9, 2004, the court heard oral arguments on the Defendant's second motion for summary judgment, which was denied. The Court set September 7, 2004 as the date for the trial. The Partnership has made several attempts to transfer the case to another judge. 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 has begun 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 June 30, 2004 compared to Three Months Ended June 30, 2003 ----------------------------------------------------------------------------- For the quarter ended June 30, 2004, the Partnership recognized income of approximately $84,000 and expenses of approximately $65,000, resulting in net income of approximately $19,000. For the quarter ended June 30, 2003, the Partnership recognized income of approximately $87,000 and expenses of approximately $145,000, resulting in a net loss of approximately $58,000. 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 decreased 91% to approximately $6,000 for the quarter ended June 30, 2004, from $71,000 for the quarter ended June 30, 2003, which is primarily attributable to a decrease in the amount charged by CCC, a related party, to the Partnership for its administration and operation of approximately $22,000. There was also a decrease in printing services of approximately $6,000, a decrease in professional services of approximately $12,000, a decrease in office supplies of approximately $2,000, a decrease in outside office services of approximately $6,000, a decrease in partnership tax of approximately $5,000, a decrease in postage of approximately $2,000 and a decrease in due diligence expenses of approximately $7,000. 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 June 30, 2003 was approximately $4,000. The General Partner decided, in an effort to maintain operations of the Partnership, to stop charging equipment management fees effective February 29, 2004. Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses decreased 10% to approximately $57,000 for the six months ended June 30, 2004, from approximately $64,000 for the quarter ended June 30, 2003 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 $6,000 for the quarter ended June 30, 2004, for a net gain of approximately $1,000. The Partnership sold computer equipment with a net book value of approximately $9,000 for the quarter ended June 30, 2003, for a net gain of approximately $3,000. Interest expense decreased 73% to approximately $2,000 for the quarter ended June 30, 2004 from approximately $6,000 for the quarter ended June 30, 2003; primarily due to older equipment's associated debt being fully paid. Six Months Ended June 30, 2004 compared to Six Months Ended June 30, 2003 ------------------------------------------------------------------------- For the six months ended June 30, 2004, the Partnership recognized income of approximately $149,000 and expenses of approximately $139,000, resulting in net income of approximately $10,000. For the six months ended June 30, 2003, the Partnership recognized income of approximately $181,000 and expenses of approximately $289,000, resulting in a net loss of approximately $108,000. Lease income decreased by 14% to approximately $148,000 for the six months ended June 30, 2004, from approximately $172,000 for the six months ended June 30, 2003, primarily due to the fact that lease agreements terminated since the six months ended June 30, 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. The expense decreased 87% to approximately $16,000 for the six months ended June 30, 2004, from $131,000 for the six months ended June 30, 2003, which is primarily attributable to a decrease in the amount charged by CCC, a related party, to the Partnership for its administration and operation of approximately $52,000. There was also a decrease in outside office services of approximately $6,000, a decrease in other insurances of approximately $8,000, a decrease in taxes of approximately $5,000, a decrease in printing of approximately $5,000, a decrease in professional services of approximately $11,000, a decrease in communications of approximately $2,000, a decrease in conventions of approximately $2,000, a decrease in office supplies of approximately $4,000, a decrease in postage of approximately $3,000 and a decrease in due diligence expenses of approximately $9,000. 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 decreased 73% to approximately $2,000 for the six months ended June 30, 2004, from approximately $9,000 for the six months ended June 30, 2003. The General Partner decided, in an effort to maintain operations of the Partnership, to stop charging equipment management fees effective February 29, 2004. Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses decreased 14% to approximately $116,000 for the six months ended June 30, 2004, from approximately $135,000 for the six months ended June 30, 2003 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 $6,000 for the six months ended June 30, 2004, for a net gain of approximately $1,000. The Partnership sold computer equipment with a net book value of approximately $9,000 for the six months ended June 30, 2003, for a net gain of approximately $9,000. Interest expense decreased 70% to approximately $4,000 for the six months ended June 30, 2004 from approximately $14,000 for the six months ended June 30, 2003; 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. 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 June 30, 2004. 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. 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. The defendant filed for a Summary Judgment on February 20, 2001, and the plaintiff filed an opposition to this Summary Judgment. On September 29, 2001, the Federal District Court of the Eastern District of Pennsylvania denied the defendant's request for Summary Judgment. As of March 29, 2002, the pre-trial conference was completed. On February 13, 2003, the Federal District Court of the Eastern District of Pennsylvania originally assigned a trial date for May 14, 2003, and then rescheduled for June 9, 2003. The lawsuit had been scheduled for February 9, 2004, but that has been postponed. A date of June 9, 2004 was scheduled, but that also has been postponed. The current trial date is scheduled for September 7, 2004. 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 I BY: COMMONWEALTH INCOME & GROWTH FUND, INC. General Partner August 13, 2004 By: /s/ George S. Springsteen --------------- -------------------------- Date George S. Springsteen President

COMMONWEALTH INCOME & GROWTH FUND I 10-Q