Commonwealth Income & Growth Fund VI (CIGF6) 10-Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010    or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  333-131736

COMMONWEALTH INCOME & GROWTH FUND VI

(Exact name of registrant as specified in its charter)

Pennsylvania	20-4115433
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Brandywine Bldg. One, Suite 200

2 Christy Drive

Chadds Ford, PA 19317

(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  T   NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).YES  ¨      NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "accelerated filer, “large accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company T
(Do not check if a smaller reporting company.)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      YES ¨     NO T

1

FORM 10-Q

JUNE 30, 2010

TABLE OF CONTENTS

	PART I
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4T.	Controls and Procedures	17
	PART II
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Securities Holders	17
Item 5.	Other Information	18
Item 6.	Exhibits	18

2

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Commonwealth Income & Growth Fund VI
Condensed Balance Sheets
	June 30,				December 31,
	2010				2009
	(unaudited)
ASSETS
Cash and cash equivalents		$	5,187,405			$	9,026,452
Lease income receivable, net of reserve of approximately $65,000 and $0 at June 30, 2010 and December 31, 2009, respectively			612,714				216,339
Accounts receivable, Commonwealth Capital Corp.			19,827				-
Accounts receivable, affiliated limited partnerships			-				9,196
Other receivables			1,882				6,714
Prepaid expenses			12,093				3,990
			5,833,921				9,262,691
Net investment in finance leases			39,124				45,805
Technology equipment, at cost			23,955,413				19,390,952
Accumulated depreciation			(7,728,845	)			(4,878,861	)
			16,226,568				14,512,091
Equipment acquisition costs and deferred expenses, net of
accumulated amortization of approximately $421,000 and  $273,000 at June 30, 2010 and December 31, 2009, respectively			570,037				531,120
Prepaid acquisition fees			304,971				466,996
			875,008				998,116
Total Assets		$	22,974,621			$	24,818,703
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accounts payable		$	66,781			$	47,531
Accounts payable, General Partner			24,604				28,683
Accounts payable, Commonwealth Capital Corp.			-				8,786
Accounts payable, affiliated limited partnerships			-				3,325
Other accrued expenses			66,721				51,992
Unearned lease income			384,983				455,207
Notes payable			581,872				298,899
Total Liabilities			1,124,961				894,423
PARTNERS' CAPITAL
General Partner			1,000				1,000
Limited Partners			21,848,660				23,923,280
Total Partners' Capital			21,849,660				23,924,280
Total Liabilities and Partners' Capital		$	22,974,621			$	24,818,703
see accompanying notes to condensed financial statements

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Commonwealth Income & Growth Fund VI
Condensed Statements of Operations
(unaudited)
	Three Months Ended							Six Months Ended
	June 30,							June 30,
		2010			2009			2010			2009
Revenue
Lease		$	2,046,745		$	1,091,522		$	3,823,899		$	1,777,965
Interest and other			12,070			67,484			28,829			148,302
Gain on sale of computer equipment			-			-			177			-
Total revenue			2,058,815			1,159,006			3,852,905			1,926,267
Expenses
Operating, excluding depreciation			449,039			378,289			851,888			759,242
Equipment management fee, General Partner			102,434			54,576			191,390			88,898
Organizational costs			-			-			-			89,265
Interest			7,484			6,882			11,594			14,239
Depreciation			1,498,772			818,982			2,850,163			1,344,059
Amortization of equipment acquisition costs and deferred expenses			77,609			45,927			148,002			77,751
Bad debt expense			64,575			-			64,575			-
Loss on sale of computer equipment			-			-			-			3,511
Total expenses			2,199,913			1,304,656			4,117,612			2,376,965
Net (loss)		$	(141,098	)	$	(145,650	)	$	(264,707	)	$	(450,698	)
Net (loss) allocated to Limited Partners		$	(150,148	)	$	(154,476	)	$	(282,806	)	$	(467,009	)
Net (loss) per equivalent Limited Partnership unit		$	(0.08	)	$	(0.09	)	$	(0.16	)	$	(0.28	)
Weighted average number of equivalent limited partnership units outstanding during the period			1,809,911			1,809,911			1,809,911			1,687,558
see accompanying notes to condensed financial statements

4

Commonwealth Income & Growth Fund VI
Condensed Statements of Partners' Capital
For the six months ended June 30, 2010
(unaudited)
	General		Limited
	Partner		Partner		General			Limited
	Units		Units		Partner			Partners			Total
Balance, January 1, 2010		50		1,809,911	$	1,000		$	23,923,280		$	23,924,280
Net income (loss)		-		-		18,099			(282,806	)		(264,707	)
Distributions		-		-		(18,099	)		(1,791,814	)		(1,809,913	)
Balance, June 30, 2010		50		1,809,911	$	1,000		$	21,848,660		$	21,849,660
see accompanying notes to condensed financial statements

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Commonwealth Income & Growth Fund VI
Condensed Statements of Cash Flow
(unaudited)
	Six Months ended			Six Months ended
	June 30,			June 30,
	2010			2009
Net cash provided by (used in) operating activities	$	2,118,110		$	(117,576	)
Investing activities:
Capital Expenditures		(4,132,405	)		(9,759,135	)
Payment from finance leases		9,672			-
Equipment acquisition fees paid to General Partner		(20,568	)		(289,047	)
Net proceeds from the sale of computer equipment		381			1,517
Net cash (used in)  investing activities		(4,142,920	)		(10,046,665	)
Financing activities:
Contributions		-			8,501,400
Redemptions		-			(4,389	)
Syndication costs		-			(1,015,917	)
Distributions to partners		(1,809,913	)		(1,631,161	)
Debt placement fee paid to General Partner		(4,324	)		-
Net cash (used in) provided by financing activities		(1,814,237	)		5,849,933
Net (decrease) in cash and cash equivalents		(3,839,047	)		(4,314,308	)
Cash and cash equivalents beginning of period		9,026,452			15,729,045
Cash and cash equivalents end of period	$	5,187,405		$	11,414,737
see accompanying notes to condensed financial statements

6

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Business

Commonwealth Income & Growth Fund VI (the “Partnership”) is a limited partnership organized in the Commonwealth of Pennsylvania on January 6, 2006.  The Partnership offered for sale up to 2,500,000 units of the limited partnership at the purchase price of $20 per unit (the “offering”).  The Partnership reached the minimum amount in escrow and commenced operations on May 10, 2007.  The offering terminated on March 6, 2009 with 1,810,311 units sold for a total of approximately $36,000,000 in limited partner contributions.

The Partnership uses the proceeds of the offering to acquire, own and lease various types of information technology 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 technology equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various partnerships that it manages 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. CCC is a member of the Investment Program Association (IPA), Financial Planning Association (FPA), and the Equipment Leasing and Finance Association (ELFA).   Approximately ten years after the commencement of operations, the Partnership intends to sell or otherwise dispose of all of its equipment, make final distributions to partners, and to dissolve.  Unless sooner terminated or extended pursuant to the terms of its Limited Partnership Agreement, the Partnership will continue until December 31, 2018.

2. Summary of Significant Accounting Policies

Basis of Presentation

The financial information presented as of any date other than December 31, 2009 has been prepared from the books and records without audit.  Financial information as of December 31, 2009 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by generally accepted accounting principles to be included in audited financial statements.  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, 2009.  Operating results for the six months ended June 30, 2010 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2010.

Disclosure of Fair Value of Financial Instruments

Estimated fair value was determined by management using available market information and appropriate valuation methodologies.  However, judgment was necessary to interpret market data and develop estimated fair value. Cash, receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of June 30, 2010 and December 31, 2009.

The Partnership’s long-term debt consists of notes payable, which are secured by specific technology equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at June 30, 2010 and December 31, 2009 approximates the carrying value of these instruments, due to the interest rates approximating current market values.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of June 30, 2010 and December 31, 2009. 

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Revenue Recognition

Through June 30, 2010, we have primarily entered into operating leases.  Lease revenue is recognized on a monthly straight-line basis which is in accordance with the terms of the lease agreement.

In December 2009, we entered into direct financing leases. Direct financing lease interest is recorded on a monthly basis according to the terms of the lease agreement. For finance leases, we record, at lease inception, unearned finance lease income which is calculated as follows: total lease payments, plus any residual value and initial direct costs, less the cost of the leased equipment. Interest income is earned on the finance lease receivable over the lease term using the interest method.  As required, at each reporting period, management evaluates the finance lease for impairment and considers any need for an allowance for credit losses.

Our leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.

Use of Estimates

The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America which 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.

Intangible Assets

Equipment acquisition costs and deferred expenses are amortized on a straight-line basis over two-to-four year lives based on the original term of the lease and the loan, respectively.  Unamortized acquisition costs and deferred expenses are charged to amortization expense when the associated leased equipment is sold.

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 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, 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 no impairment analysis was necessary at June 30, 2010 and 2009 as no impairment indicators were noted.

Depreciation on technology equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of three or four years.

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.  For example, if the Partnership has more investors than another program sponsored by CCC, then higher amounts of expenses related to investor services, mailing and printing costs will be allocated to the Partnership.  Also, while a Partnership is in its offering stage, higher compliance costs are allocated to it than to a program not in its offering stage, as compliance resources are utilized to review incoming investor suitability and proper documentation.  Finally, lease related expenses, such as due diligence, corres pondence, collection efforts and analysis and staff costs increase, as programs purchase more leases, and decrease as leases terminate and equipment is sold. All of these factors contribute to CCC’s determination as to the amount of expenses to allocate to the Partnership or to other sponsored programs.  For the Partnership, all reimbursable expenses are expensed as they are incurred.

Accounts Receivable

The Partnership monitors accounts receivable to ensure timely and accurate payment by lessees.  Its Lease Relations department is responsible for monitoring accounts receivable and, as necessary, resolving outstanding invoices. Lease revenue is recognized on a monthly straight-line basis which is in accordance with the terms of the lease agreement.

The Partnership reviews a customer’s credit history before extending credit. In the event of a default it may establish a provision for uncollectible accounts receivable based upon the credit risk of specific customers, historical trends and other information.

8

Cash and cash equivalents

At June 30, 2010 cash was held in a total of seven accounts maintained at two separate financial institutions. The accounts were, in the aggregate, federally insured for up to $250,000 per institution.  At June 30, 2010, the total cash balances per institution were approximately as follows:

At June 30, 2010	Bank A	Bank B
Total bank balance	$824,000	$4,380,000
FDIC insurable limit	(250,000)	( 250,000)
Uninsured amount	$574,000	$4,130,000

The Partnership mitigates the risk of holding uninsured deposits by depositing funds with more than one institution and by only depositing funds with major financial institutions.  The Partnership deposits its funds with two institutions that are Moody's Aaa-and Aa3 Rated.   The Partnership has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk.  The amounts in such accounts will fluctuate throughout 2010 due to many factors, including the pace of additional cash receipts, equipment acquisitions and distributions to investors.

Income Taxes

Pursuant to the provisions of Section 701 of the Internal Revenue Code, the Partnership is not subject to federal income taxes. All income and losses of the Partnership are the liability of the individual partners and are allocated to the partners for inclusion in their individual tax returns. The Partnership does not have any entity-level uncertain tax positions. In addition, the Partnership believes its tax status as a pass-through entity would be sustained under U.S. federal, state or local tax examination. The Partnership files U.S. federal and various state income tax returns and is generally subject to examination by federal, state and local income tax authorities for three years from the filing of a tax return.

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 revenue.

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 units outstanding during the period.

Recent Accounting Pronouncements

In July 2010, the FASB issued Accounting Standards Update No. 2010-20 (“ASC Update 2010-20”) Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.  The purpose of this ASU is to improve transparency in financial reporting by public and nonpublic companies that hold financing receivables, which include loans, lease receivables, and other long-term receivables.  This ASU requires additional disclosures to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses.  For public companies, the amendments that require disclosures as of the end of a reporting period are effective for periods ending on or after December 15, 2010. The amendments that require disclosures about activity that occurs during a reporting period are effective for periods beginning on or after December 15, 2010.  The Partnership is currently evaluating the potential impact of the adoption of this ASU on its financial statements.

In January 2010, the FASB issued Accounting Standards Update No. 2010-06 (“ASC Update 2010-06”) Improving Disclosures about Fair Value Measurements, to enhance the usefulness of fair value measurements. ASU 2010-06 amends the disclosures about fair value measurements in FASB Accounting Standards Codification™ (ASC) 820-10, Fair Value Measurements and Disclosures.  The amended guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disaggregation requirement for the reconciliation disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 15, 2010 and for interim periods within those years. The Partnership adopted this ASU in the first quarter of 2010. The adoption of this standard did not have a material impact on the Partnership’s financial statements.

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In January 2010, the FASB issued Accounting Standards Update No. 2010-04 (“ASC Update 2010-04”) Accounting for Various Topics – Technical Corrections to SEC Paragraphs.  The purpose of this ASU is to make technical corrections to certain guidance issued by the SEC that is included in the FASB Accounting Standards Codification (ASC).  Primarily, this ASU changes references to various FASB and AICPA pronouncements to the appropriate ASC paragraph numbers. The Partnership adopted this ASU in the first quarter of 2010. The adoption of this standard did not have a material impact on the Partnership’s financial statements.

In December 2009, the FASB issued Accounting Standards Update No. 2009-17, (“ASC Update 2009-17”), Consolidations (ASC 810) – Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This ASU incorporates FAS 167, Amendments to FASB Interpretation No. 46(R), into the Codification. The new requirements are effective as of the beginning of thePartnership’s first fiscal year beginning after November 15, 2009. During the first quarter of 2010, the Partnership adopted this ASU. The adoption of this s tandard did not have a material impact on the Partnership’s financial statements.

In December 2009, the FASB issued Accounting Standards Update No. 2009-16, (“ASC Update 2009-16”) Transfers and Servicing (ASC 860) – Accounting for Transfers of Financial Assets . This ASU incorporates FAS 166, Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140, into the FASB Accounting Standards Codification (the Codification). The new requirements are effective for transfers of financial assets occurring in fiscal years beginning after November 15, 2009.This standard will require more information about transferred financial assets, including securitization transactions, and where entities have continuing exposur e to the risks related to transferred financial assets. During the first quarter of 2010, the Partnership adopted this ASU. The adoption of this standard did not have a material impact on the Partnership’s financial statements.

3. Information Technology Equipment

The Partnership is the lessor of equipment under leases with periods that generally will range from 12 to 36 months.  In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.

For the six months ended June 30, 2010, the Partnership’s leasing operations consisted primarily of operating leases.   For the six months ended June 30, 2009, the Partnership’s leasing operations consisted solely of operating leases. Operating lease revenue is recognized on a monthly basis in accordance with the terms of the lease agreement.

In December 2009, the Partnership entered into direct financing leases. Direct financing lease interest is recorded on a monthly basis according to the terms of the lease agreement. For finance leases, we record, at lease inception, unearned finance lease income which is calculated as follows: total lease payments, plus any residual value and initial direct costs, less the cost of the leased equipment. Interest income is earned on the finance lease receivable over the lease term using the interest method.  As required, at each reporting period, management evaluates the finance lease for impairment and considers any need for an allowance for credit losses.

Remarketing fees will be paid to the leasing companies from which the Partnership purchases leases.  These are fees that are earned by the leasing companies when the initial terms of the lease have been met and the lessee extends or renews the lease, or the equipment is sold.  The General Partner believes that this strategy adds value since it entices the leasing company to remain actively involved with the lessee and encourages potential extensions, remarketing or sale of equipment.  This strategy is designed to minimize any conflicts the leasing company may have with a new lessee and may assist in maximizing overall portfolio performance.  The remarketing fee is tied into lease performance thresholds and is a factor in the negotiation of the up-front fee paid to the leasing company.  No such fees were incurred for the six months ended June 30, 2010.

CCC, on behalf of the Partnership and on behalf of other affiliated partnerships, acquires technology 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 share of the equipment in which it participates with other partnerships at June 30, 2010 was approximately $12,937,000 and is included in the Partnership’s fixed assets on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at June 30, 2010 was approximately $31,818,000. The Partnership’s share of the outstanding debt associated with this equipment at June 30, 2010 was approximately $517,000. The total outstanding debt related to the equipme nt shared by the Partnership at June 30, 2010 was approximately $1,385,000.

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The Partnership’s share of the equipment in which it participates with other partnerships at December 31, 2009 was approximately $11,196,000 and is included in the Partnership’s fixed assets on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at December 31, 2009 was approximately $28,372,000. The Partnership’s share of the outstanding debt associated with this equipment at December 31, 2009 was approximately $182,000. The total outstanding debt related to the equipment shared by the Partnership at December 31, 2009 was approximately $606,000.

As the Partnership and the other programs managed by the General Partner increase their overall portfolio size, opportunities for shared participation are expected to continue. Sharing in the acquisition of a lease portfolio gives the fund an opportunity to acquire additional assets and revenue streams, while allowing the fund to remain diversified and reducing its overall risk with respect to one portfolio.  Thus, total shared equipment and related debt should continue to trend higher for the remainder of 2010 as the Partnership builds its portfolio.

The following is a schedule of future minimum rentals on non-cancellable operating leases at June 30, 2010:

Six Months ended December 31, 2010	$	4,046,000
Year ended December 31, 2011		6,009,000
Year ended December 31, 2012		2,814,000
Year ended December 31, 2013		234,000
	$	13,103,000

The following lists the components of the net investment in direct financing leases at June 30, 2010:

	Amount
Total minimum lease payments to be received	$	40,000
Estimated residual value of leased equipment (unguaranteed)		5,000
Less: unearned income		(6,000)
Net investment in direct finance leases	$	39,000

The following is a schedule of future minimum rentals on noncancelable direct financing leases at June 30, 2010:

	Amount
Six Months ended December 31, 2010	$	$10,000
Year ended December 31, 2011		19,000
Year ended December 31, 2012		11,000
	$	40,000

4. Related Party Transactions

Receivables/Payables

As of June 30, 2010, the Partnership’s related party receivables and payables are short term, unsecured, and non-interest bearing.

Six months ended June 30,	2010	2009
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.  See “Summary of Significant Accounting Policies- Reimbursable Expenses,” above.	$839,000	$749,000
Syndication costs
Syndication costs are payments for selling commissions, dealer manager fees, professional fees and other offering expenses relating to the syndication of the Partnership’s units.  Selling commissions are 8% of the partners’ contributed capital and dealer manager fees are 2% of the partners’ contributed capital.   These costs were deducted from partnership capital in the accompanying financial statements.	$-	$1,016,000

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Equipment acquisition fee
The General Partner earns an equipment acquisition fee of 4% of the purchase price of each item of equipment purchased, as compensation for the negotiation of the acquisition of the equipment and lease thereof, or sale under a conditional sales contract.   At June 30, 2010, the remaining balance of prepaid acquisition fees was approximately $305,000, which is expected to be earned in future periods.	$183,000	$390,000

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 leases and 2% of the gross lease revenues attributable to equipment which is subject to finance leases.	$191,000	$89,000

5. Notes Payable

Notes payable consisted of the following approximate amounts:

	June 30, 2010		December 31, 2009
Installment note payable to bank; interest at 5.25% due in monthly installments of $8,003 including interest, with final payment in November 2010	$	39,000	$	86,000
Installment note payable to bank; interest at 5.75% due in quarterly installments of $37,927 including interest, with final payments in January 2011		111,000		182,000
Installment notes payable to bank; interest ranging from 6.21% to 7.5% due in monthly and quarterly installments of $585 and $8,843 including interest, with final payment in October 2012		106,000		31,000
Installment note payable to bank; interest at 7.50% due in monthly installments of $10,665 including interest, with final payment in April 2013		326,000		-
	$	582,000	$	299,000

The notes are secured by specific technology equipment and are nonrecourse liabilities of the Partnership.  As such, the notes do not contain any debt covenants with which we must comply on either an annual or quarterly basis.  Aggregate maturities of notes payable for each of the periods subsequent to June 30, 2010 are as follows:

		Amount
Six months ending December 31, 2010	$	188,000
Year ended December 31, 2011		193,000
Year ended December 31, 2012		159,000
Year ended December 31, 2013		42,000
	$	582,000

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6. Supplemental Cash Flow Information

Other noncash activities included in the determination of net loss are as follows:

Six months ended June 30,	2010	2009
Lease revenue net of interest expense on notes payable realized as a result of   direct payment of principal by lessee to bank	$   149,000	$   128,000

No interest or principal on notes payable was paid by the Partnership because direct payment was made by lessee to the bank in lieu of collection of lease income and payment of interest and principal by the Partnership.

Noncash investing and financing activities include the following:

Six months ended June 30,	2010	2009
Debt assumed in connection with purchase of technology equipment	$432,000	$-
Equipment acquisition fees earned by General Partner upon purchase of equipment	$183,000	$ 390,000

7. Commitments and Contingencies

On June 18, 2010, Commonwealth Capital Corp. (the parent of our general partner) filed suit on our behalf and on behalf of other affiliated equipment funds against Allied Health Care Services, Inc. (“Allied”). Allied is a lessee of medical equipment, and has failed to make its monthly lease payments since March 2010. Total rent past due as of August 1, 2010 is $550,498. Our suit for breach of contract against Allied and its owner, Charles K. Schwartz, pursuant to a partial personal guaranty, was filed in the U.S. District Court for the District of New Jersey (Case No. 2:10-cv-03135), and seeks payment of all outstanding rents, the value of the leased equipment, and all costs of collection, including attorney’s fees.

Our share of exposure related to the equipment of the Allied default (if no rent is collected, the equipment is not paid for and/or we are unable to obtain performance under partial personal guaranty) is approximately $2,347,841 as of June 30, 2010. Since the lawsuit is in its early stages, management cannot predict the outcome of this matter at this time.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

Forward-looking statement disclaimers, or the “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995.

This section, as well as other portions of this document, includes certain forward-looking statements about our business and our prospects, tax treatment of certain transactions and accounting matters, sales of securities, expenses, cash flows, distributions, investments and operating and capital requirements. Such forward-looking statements include, but are not limited to: acquisition policies of our general partner; the nature of present and future leases; provisions for uncollectible accounts; the strength and sustainability of the U.S. economy; the continued difficulties in the credit markets and their impact on the economy in general; and the level of future cash flow, debt levels, revenues, operating expenses, amortization and depreciation expenses. You can identify those statements by the use of words such as “could,” & #8220;should,” “would,” “may,” “will,” “project,” “believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “potential,” “intend,” “continue” and “contemplate,” as well as similar words and expressions.

Actual results may differ materially from those in any forward-looking statements because any such statements involve risks and uncertainties and are subject to change based upon various important factors, including, but not limited to, nationwide economic, financial, political and regulatory conditions; the health of debt and equity markets, including interest rates and credit quality; the level and nature of spending in the information, medical and telecommunications technologies markets; and the effect of competitive financing alternatives and lease pricing.

Readers are also directed to other risks and uncertainties discussed in other documents we file with the SEC, including, without limitation, those discussed in Item 1A. “Risk Factors.” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the SEC. We undertake no obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base these 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.

We believe that our critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

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INFORMATION TECHNOLOGY EQUIPMENT

CCC, on our behalf and on behalf of other affiliated partnerships, acquires information technology 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 information technology equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of three to four years.

ACCOUNTS RECEIVABLE

We monitor our accounts receivable to ensure timely and accurate payment by lessees.  Our Lease Relations department is responsible for monitoring accounts receivable and, as necessary, resolving outstanding invoices. Lease revenue is recognized on a monthly straight-line basis which is in accordance with the terms of the lease agreement.

We review a customer’s credit history before extending credit. In the event of a default, we may establish a provision for uncollectible accounts receivable based upon the credit risk of specific customers, historical trends or other information.

 REVENUE RECOGNITION

Through June 30, 2010, we have primarily entered into operating leases.  Lease revenue is recognized on a monthly straight-line basis which is in accordance with the terms of the lease agreement.

In December 2009, we entered into direct financing leases. Direct financing lease interest is recorded on a monthly basis according to the terms of the lease agreement. For finance leases, we record, at lease inception, unearned finance lease income which is calculated as follows: total lease payments, plus any residual value and initial direct costs, less the cost of the leased equipment. Interest income is earned on the finance lease receivable over the lease term using the interest method.  As required, at each reporting period, management evaluates the finance lease for impairment and considers any need for an allowance for credit losses.

Our leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.

LONG-LIVED ASSETS

We evaluate our long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.  We determine whether 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 impairment exists.  The amount of the impairment is determined based on the difference between the carrying value and the fair value.  The fair value is determined based on estimated discounted cash flows to be generated by the asset. We determined no impairment analysis was necessary at June 30, 2010 and 2009 as no impairment indicators were noted.

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of cash for the six months ended June 30, 2010 was cash provided by operating activities of approximately $2,118,000.  This compares to the six months ended June 30, 2009 where our primary source of cash was from limited partner contributions of approximately $8,501,000.  Our public offering terminated on March 6, 2009 with 1,810,311 units sold for a total of approximately $36,000,000 in limited partner contributions.

Our primary use of cash for the six months ended June 30, 2010 was for the purchase of new information technology equipment of approximately $4,132,000 and also for distributions to partners of approximately $1,810,000.  For the six months ended June 30, 2009 distributions to partners were approximately $1,631,000, capital expenditures for new information technology equipment were approximately $9,759,000 and syndication costs were approximately $1,016,000.

With the public offering complete, syndication costs will no longer comprise a material part of annual expenditures. As management focuses on additional equipment acquisitions and funding limited partner distributions, capital expenditures and distributions are expected to continue to increase overall during the remainder of 2010. We intend to invest approximately $3,000,000 in additional equipment during the remainder of 2010.  The acquisition of this equipment will be funded by the remaining cash which was raised through limited partner contributions during the initial offering period, lease revenues and debt financing. Any debt service will be funded through cash flows from lease rental payments, and not from public offering proceeds.

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Cash was provided by operating activities for the six months ended June 30, 2010 of approximately $2,118,000, which includes a net loss of approximately $265,000 and depreciation and amortization expenses of approximately $2,998,000. Additionally, we had an increase in receivables of lease revenue of approximately $396,000. Other noncash activities included in the determination of net loss includes direct payments to banks by lessees of approximately $149,000.

This compares to the six months ended June 30, 2009 where cash was used in operating activities of approximately $118,000, which includes a net loss of approximately $451,000 and depreciation and amortization expenses of approximately $1,422,000. Other noncash activities included in the determination of net loss include direct payments to banks by lessees of approximately $128,000.

As we continue to increase the size of our equipment portfolio, operating expenses will increase, which reflects the administrative costs of servicing the portfolio, but because of our investment strategy of leasing technology equipment primarily through triple-net leases, we avoid operating expenses related to equipment maintenance or taxes.  Depreciation expenses will likely increase more rapidly than operating expenses as we add technology equipment to our portfolio.

At June 30, 2010 cash was held in a total of seven accounts maintained at two separate financial institutions. The accounts were, in the aggregate, federally insured for up to $250,000 per institution.  At June 30, 2010, the total cash balances per institution were approximately as follows:

At June 30, 2010	Bank A	Bank B
Total bank balance	$824,000	$4,380,000
FDIC insurable limit	(250,000)	( 250,000)
Uninsured amount	$574,000	$4,130,000

We mitigate the risk of holding uninsured deposits by depositing funds with more than one institution and by only depositing funds with major financial institutions.  We deposit our funds with two institutions that are Moody's Aaa-and Aa3 Rated.   We have not experienced any losses in such accounts, and believe that we are not exposed to any significant credit risk.  The amounts in such accounts will fluctuate throughout 2010 due to many factors, including the pace of additional cash receipts, equipment acquisitions and distributions to investors.

As of June 30, 2010, we had future minimum rentals on non-cancelable operating leases of approximately $4,046,000 for the balance of the year ending December 31, 2010 and approximately $9,057,000 thereafter. As of June 30, 2010, we had future minimum rentals on non-cancelable finance leases of approximately $10,000 for the balance of the year ending December 31, 2010 and approximately $30,000 thereafter.

As of June 30, 2010, our debt was approximately $582,000 with interest rates ranging from 5.25% to 7.50% and will be payable through April 2013.

RESULTS OF OPERATIONS

Three months ended June 30, 2010 compared to three months ended June 30, 2009

For the three months ended June 30, 2010, we recognized revenue of approximately $2,059,000 and expenses of approximately $2,200,000, resulting in a net loss of approximately $141,000.  This net loss is primarily due to an increase in depreciation expenses, increased equipment management fees and an increase in operating expenses associated with a larger portfolio of equipment compared to the three months ended June 30, 2009.   For the three months ended June 30, 2009, we recognized revenue of approximately $1,159,000 and expenses of approximately $1,305,000, resulting in a net loss of approximately $146,000.

Our lease revenue increased to approximately $2,047,000 for the three months ended June 30, 2010, from approximately $1,092,000 for the three months ended June 30, 2009.  This increase was primarily due the acquisition of new lease agreements since the three months ended June 30, 2009.

Interest revenue from cash held at financial institutions decreased to $12,000 for the three months ended June 30, 2010 from $67,000 for the three months ended June 30, 2009 which is consistent with the decrease in cash due to equipment purchases associated with a larger portfolio. The amounts in such accounts that generate interest revenue will fluctuate throughout 2010 due to many factors, including the pace of cash receipts, equipment acquisitions and distributions to limited partners.

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Our operating expenses, excluding depreciation, primarily consist of accounting and legal fees, outside service fees and reimbursement of expenses to CCC for administration and

operation of the Partnership.  These expenses increased to approximately $449,000 for the three months ended June 30, 2010, from approximately $378,000 for the three months ended June 30, 2009.  This increase is primarily attributable to increases in administrative expenses associated with management of the fund and was partially offset by a decrease in due diligence expenses related to our public offering which terminated in March 2009.

We pay an equipment management fee to our general partner for managing our equipment portfolio. The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases and 2% of the gross lease revenue attributable to equipment that is subject to finance leases. The total equipment management fee increased to approximately $102,000 for the three months ended June 30, 2010 from approximately $55,000 for the three months ended June 30, 2009, which is consistent with the increase in lease volume and revenue. As offering proceeds continue to be utilized for the acquisition of equipment, management fees are expected to increase throughout the reminder of 2010 as our equipment and lease portfolio grows.

Depreciation and amortization expenses consist of depreciation on technology equipment and amortization of equipment acquisition fees. These expenses increased to approximately $1,576,000 for the three months ended June 30, 2010, from $865,000 for the three months ended June 30, 2010. This increase was due to the acquisition of new equipment associated with the purchase of new leases.

Six months ended June 30, 2010 compared to Six months ended June 30, 2009

For the six months ended June 30, 2010, we recognized revenue of approximately $3,853,000 and expenses of approximately $4,118,000, resulting in a net loss of approximately $265,000.  This net loss is primarily due to an increase in depreciation expenses, increased equipment management fees and an increase in operating expenses associated with a larger portfolio of equipment compared to the six months ended June 30, 2009.   For the six months ended June 30, 2009, we recognized revenue of approximately $1,926,000 and expenses of approximately $2,377,000, resulting in a net loss of approximately $451,000.

Our lease revenue increased to approximately $3,824,000 for the six months ended June 30, 2010, from approximately $1,778,000 for the six months ended June 30, 2009.  This increase was primarily due the acquisition of new lease agreements since the six months ended June 30, 2009.

Interest revenue from cash held at financial institutions decreased to $29,000 for the six months ended June 30, 2010 from $148,000 for the six months ended June 30, 2009 which is consistent with the decrease in cash due to equipment purchases associated with a larger portfolio. The amounts in such accounts that generate interest revenue will fluctuate throughout 2010 due to many factors, including the pace of cash receipts, equipment acquisitions and distributions to limited partners.

Our operating expenses, excluding depreciation, primarily consist of accounting and legal fees, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership.  These expenses increased to approximately $852,000 for the six months ended June 30, 2010, from approximately $759,000 for the six months ended June 30, 2009.  This increase is primarily attributable to increases in administrative expenses associated with management of the fund and was partially offset by a decrease in due diligence expenses related to our public offering which terminated in March 2009.

We pay an equipment management fee to our general partner for managing our equipment portfolio. The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases and 2% of the gross lease revenue attributable to equipment that is subject to finance leases. The total equipment management fee increased to approximately $191,000 for the six months ended June 30, 2010 from approximately $89,000 for the six months ended June 30, 2009, which is consistent with the increase in lease volume and revenue. As offering proceeds continue to be utilized for the acquisition of equipment, management fees are expected to increase throughout the reminder of 2010 as our equipment portfolio grows.

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We did not incur organizational costs during the six months ended June 30, 2010 compared to the six months ended June 30, 2009 which were $89,000. This decrease is a result of our offering ending in March 2009.

Depreciation and amortization expenses consist of depreciation on technology equipment and amortization of equipment acquisition fees. These expenses increased to approximately $2,998,000 for the six months ended June 30, 2010, from $1,422,000 for the six months ended June 30, 2009. This increase was due to the acquisition of new equipment associated with the purchase of new leases.

We sold equipment with a net book value of $200 for the six months ended June 30, 2010 for a net gain of $200.

For the six months ended June 30, 2009 we sold equipment with a net book value of $5,000 for a net loss of $4,000.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

N/A

Item 4T.  Controls and Procedures

Our management, under the supervision and with the participation of the principal executive officer and principal financial offer, have evaluated the effectiveness of our controls and procedures related to our reporting and disclosure obligations as of June 30, 2010 which is the end of the period covered by this Quarterly Report on Form 10-Q.  Based on that evaluation, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to provide that (a) material information relating to us, including our consolidated affiliates is made known to these officers by us and our consolidated affiliates’ other employees, particularly material information related to the period for which this periodic report is being prepared; and (b) this information is recorded , processed, summarized, evaluated and reported, as applicable, within the time periods specified in the rules and forms promulgated by the Securities and Exchange Commission.  There have been no significant changes in the General Partner’s internal controls or in other factors that could significantly affect our disclosure controls and procedures in the second quarter of 2010 or subsequent to the date of the evaluation.

Part II:   OTHER INFORMATION

Item 1.Legal Proceedings

On June 18, 2010, Commonwealth Capital Corp. (the parent of our general partner) filed suit on our behalf and on behalf of other affiliated equipment funds against Allied Health Care Services, Inc. (“Allied”). Allied is a lessee of medical equipment, and has failed to make its monthly lease payments since March 2010. Total rent past due as of August 1, 2010 is $550,498. Our suit for breach of contract against Allied and its owner, Charles K. Schwartz, pursuant to a partial personal guaranty, was filed in the U.S. District Court for the District of New Jersey (Case No. 2:10-cv-03135), and seeks payment of all outstanding rents, the value of the leased equipment, and all costs of collection, including attorney’s fees.

Our share of exposure related to the equipment of the Allied default (if no rent is collected, the equipment is not paid for and/or we are unable to obtain performance under partial personal guaranty) is approximately $2,347,841 as of June 30, 2010. Since the lawsuit is in its early stages, management cannot predict the outcome of this matter at this time.

Item 1A.Risk Factors

 N/A

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

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Item 5.Other Information

 N/A

Item 6.   Exhibits

31.1 RULE 15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

31.2 RULE 15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

32.1 SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

32.2 SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICE

SIGNATURES

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 VI

BY: COMMONWEALTH INCOME & GROWTH FUND, INC., General Partner

August 16, 2010	By: /s/ Kimberly A. Springsteen-Abbott
Date	Kimberly A. Springsteen-Abbott
	Chief Executive Officer
August 16, 2010	By: /s/ Lynn A. Franceschina
Date	Lynn A. Franceschina
	Executive Vice President, Chief Operating Officer