Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2020shares | |
Document and Entity Information: | |
Entity Registrant Name | Commonwealth Income & Growth Fund VI |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2020 |
Amendment Flag | false |
Entity Central Index Key | 0001351901 |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 0 |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | true |
Entity Current Reporting Status | Yes |
Entity Shell Company | false |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
Entity Interactive Data Current | Yes |
Entity Incorporation State Country Code | PA |
Entity File Number | 333-131736 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 8,660 | $ 3,624 |
Lease income receivable, net of reserve of approximately $31,000 and $63,000 at March 31, 2020 and December 31, 2019, respectively | 119,811 | 108,646 |
Accounts receivable, Commonwealth Capital Corp., net | 93,101 | 74,026 |
Other receivables, net of reserve of approximately $12,000 at March 31, 2020 and December 31, 2019, respectively | 9,255 | 9,255 |
Prepaid expenses | 1,992 | 3,042 |
Current Assets | 232,819 | 198,593 |
Equipment, at cost | 4,499,841 | 4,825,207 |
Accumulated depreciation | (4,199,145) | (4,380,458) |
Noncurrent assets | 300,696 | 444,749 |
Equipment acquisition costs and deferred expenses, net of accumulated amortization of approximately $22,000 and $27,000 at March 31, 2020 and December 31, 2019, respectively | 7,628 | 10,328 |
Total Assets | 541,143 | 653,670 |
LIABILITIES | ||
Accounts payable | 145,054 | 133,865 |
Accounts payable, CIGF, Inc., net | 99,621 | 128,078 |
Other accrued expenses | 19,079 | 5,059 |
Unearned lease income | 4,538 | 41,988 |
Notes payable | 123,112 | 160,453 |
Total Liabilities | 391,404 | 469,443 |
COMMITMENTS AND CONTINGENCIES | ||
PARTNERS' CAPITAL | ||
General Partner | 1,000 | 1,000 |
Limited Partners | 148,739 | 183,227 |
Total Partners' Capital | 149,739 | 184,227 |
Total Liabilities and Partners' Capital | $ 541,143 | $ 653,670 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Reserve for doubtful lease income receivable | $ 31,000 | $ 63,000 |
Other receivables reserve, net | 12,000 | 12,000 |
Accumulated amortization | $ 22,000 | $ 27,000 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Lease | $ 160,856 | $ 187,598 |
Interest and other | 19 | 2,501 |
Sales and property taxes | 11,240 | 0 |
Total revenue and gain on sale of equipment | 206,072 | 190,099 |
Expenses | ||
Operating, excluding depreciation | 105,125 | 103,631 |
Equipment management fee, General Partner | 8,043 | 9,379 |
Interest | 2,028 | 6,992 |
Depreciation | 96,048 | 134,460 |
Amortization of equipment acquisition costs and deferred expenses | 2,701 | 6,862 |
Sales and property taxes | 11,240 | 0 |
Bad debt expense | 7,517 | 0 |
Gain on sale of equipment | 33,957 | 0 |
Total expenses | 232,702 | 261,324 |
Net loss | (26,630) | (71,225) |
Net loss allocated to Limited Partners | $ (26,630) | $ (71,225) |
Net loss per equivalent Limited Partnership unit | $ (0.02) | $ (0.04) |
Weighted average number of equivalent Limited Partnership units outstanding during the period | 1,744,185 | 1,744,330 |
Condensed Statement of Partners
Condensed Statement of Partners' Capital - USD ($) | General Partners | Limited Partners | Total |
Partners' Capital at Dec. 31, 2018 | $ 1,000 | $ 300,574 | $ 301,574 |
Partners' Capital Account, Units at Dec. 31, 2018 | 50 | 1,744,254 | |
Net income (loss) | $ (71,225) | (71,225) | |
Partners' Capital at Mar. 31, 2019 | $ 1,000 | $ 229,349 | 230,349 |
Partners' Capital Account, Units at Mar. 31, 2019 | 50 | 1,744,254 | |
Partners' Capital at Dec. 31, 2019 | $ 1,000 | $ 183,227 | 184,227 |
Partners' Capital Account, Units at Dec. 31, 2019 | 50 | 1,744,254 | |
Net income (loss) | $ (26,630) | (26,630) | |
Redemptions | $ (7,858) | (7,858) | |
Redemptions, Units | (2,500) | ||
Partners' Capital at Mar. 31, 2020 | $ 1,000 | $ 148,739 | $ 149,739 |
Partners' Capital Account, Units at Mar. 31, 2020 | 50 | 1,741,754 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flow - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net cash provided by operating activities | $ (69,067) | $ 3,216 |
Cash flows from investing activities | ||
Net proceeds from the sale of equipment | 81,961 | 0 |
Net cash provided by investing activities | 81,961 | 0 |
Cash flows from financing activities | ||
Redemptions | (7,858) | 0 |
Net cash used in financing activities | (7,858) | 0 |
Net increase in cash and cash equivalents | 5,036 | 3,216 |
Cash and cash equivalents beginning of period | 3,624 | 5,863 |
Cash and cash equivalents end of period | $ 8,660 | $ 9,079 |
Business
Business | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Business | Commonwealth Income & Growth Fund VI (“CIGF6” or the “Partnership” or the “Fund”) 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 used 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 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 Institute for Portfolio Alternatives (“IPA”) 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. The Partnership was originally scheduled to end its operational phase on December 31, 2018. During the year ended December 31, 2018, the operational phase was officially extended to December 31, 2021 through an investor proxy vote. The Partnership is expected to terminate on December 31, 2023. Liquidity The General Partner elected to forgo distributions and allocations of net income owed to it, and suspended limited partner distributions. The General Partner will continue to reassess the funding of limited partner distributions throughout 2020 and will continue to waive certain fees. The General Partner and CCC will also defer certain related party payables owed to the Partnership in an effort to further increase the Partnership’s cash flow (see Note 8 – Subsequent Events). 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 may attempt to obtain additional funds by disposing of or refinancing equipment, or by borrowing within its permissible limits. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation The financial information presented as of any date other than December 31, 2019 has been prepared from the books and records without audit. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Financial information as of December 31, 2019 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. Operating results for the three months ended March 31, 2020 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2020. Disclosure of Fair Value 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 and cash equivalents, receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of March 31, 2020 and December 31, 2019 due to the short term nature of these financial instruments. The Partnership’s long-term debt consists of notes payable, which are secured by specific equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at March 31, 2020 and December 31, 2019 approximates the carrying value of these instruments, due to the interest rates on the debt approximating current market interest rates. The Partnership classifies the fair value of its notes payable within Level 2 of the valuation hierarchy based on the observable inputs used to estimate fair value. Cash and cash equivalents We consider cash equivalents to be highly liquid investments with an original maturity of 90 days or less. At March 31, 2020, cash and cash equivalents were held in one account maintained at one financial institution with an aggregate balance of approximately $10,000. Bank accounts are federally insured up to $250,000 by the FDIC. At March 31, 2020, the total cash balance was as follows: At March 31, 2020 Balance Total bank balance $ 10,000 FDIC insured (10,000 ) Uninsured amount $ - The Partnership believes it mitigates the risk of holding uninsured deposits by only depositing funds with major financial institutions. The Partnership has not experienced any losses in our accounts, and believes it is not exposed to any significant credit risk. The amounts in such accounts will fluctuate throughout 2020 due to many factors, including cash receipts, equipment acquisitions, interest rates and distributions to limited partners. Recent Accounting Pronouncements Adopted In December 2018, the Financial Accounting Standard Board (“FASB”) issued (ASU 2018-11), Targeted improvements, In December 2018, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors The amendments also clarify that when lessors allocate variable payments to lease and non-lease components they are required to follow the recognition guidance in ASC 842 for the lease component and other applicable guidance, such as ASC 606, for the non-lease component. The Partnership concluded, upon adoption of this update that there was no significant change to their accounting. The FASB issued ASU 2019-01, Codification Improvements, Fair Value Measurement Recent Accounting Pronouncements Not Yet Adopted FASB issued a new guidance, Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Codification Improvements to Topic 326, Financial Instruments – Credit Losses and Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. The FASB developed the guidance in response to concerns that credit losses were identified and recorded “too little, too late” in the period leading up to the global financial crisis of 2008. More recently, the impact of the COVID-19 pandemic may bring new challenges to identifying credit losses. While the new standard is expected to have a significant effect on entities in the financial services industry, particularly banks and others with lending operations, the guidance affects all entities in all industries and applies to a wide variety of financial instruments, including trade receivables. ASC 326-20’s CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. The standard provides entities with significant flexibility in how to pool financial assets with similar risk characteristics, determine the contractual term and obtain and adjust the relevant historical loss information that serves as the starting point for developing the estimate of expected lifetime credit losses. The Financial reporting developments (“FRD”) addresses the new guidance on the following topics: ● The current expected credit loss (CECL) impairment model (ASC 326-20) for financial assets measured at amortized cost, including net investments (i.e. for sales-type lease, the lease receivable and the unguaranteed residual asset; for direct finance lease, the lease receivable and the unguaranteed residual asset less any deferred selling profit). ● The available-for-sale (AFS) debt security impairment model (ASC 326-30) ● The initial recognition of what are called purchased financial assets with evidence of credit deterioration or purchased credit-deteriorated (PCD) assets ● The accounting for beneficial interests in securitized financial assets in the scope of ASC 325-40, Investments — Other — Beneficial Interests in Securitized Financial Assets On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Partnership continues to evaluate the impact of the new guidance on its condensed financial statements. In January 2020, The FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force). ASU 2020-01 also addresses questions about how to apply the guidance in Topic 815, “Derivatives and Hedging,” Financial Instruments.” For public business entities, ASU 2020-01 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, ASU 2020-01 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period, (a) for public business entities for periods for which financial statements have not yet been issued and (b) for all other entities for periods for which financial statements have not yet been made available for issuance. The Partnership continues to evaluate the impact of the new guidance on its condensed financial statements. |
Information Technology, Medical
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (''Equipment'') | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Information and other Technology, Inventory Management Equipment and other Capital Equipment | The Partnership is the lessor of equipment under leases with periods that generally will range from 12 to 48 months. In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee. Gains or losses from the termination of leases are recognized when the lease is modified and terminated concurrently. Loss from lease termination included in lease expense for the three months ended March 31, 2020 and 2019 was $9,000 and $0, respectively. CCC, on behalf of the Partnership and on behalf of other affiliated companies and partnerships (“partnerships”), acquires equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various companies based on certain risk factors. The Partnership’s share of the cost of the equipment in which it participates with other partnerships at March 31, 2020 was approximately $2,539,000 and is included in the Partnership’s equipment on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at March 31, 2020 was approximately $9,007,000. The Partnership’s share of the outstanding debt associated with this equipment at March 31, 2020 was approximately $64,000 and is included in the Partnership’s notes payable on its balance sheet. The total outstanding debt related to the equipment shared by the Partnership at March 31, 2020 was approximately $687,000. The Partnership’s share of the cost of the equipment in which it participates with other partnerships at December 31, 2019 was approximately $2,539,000 and is included in the Partnership’s equipment on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at December 31, 2019 was approximately $9,007,000. The Partnership’s share of the outstanding debt associated with this equipment at December 31, 2019 was approximately $88,000 and is included in the Partnership’s notes payable on its balance sheet. The total outstanding debt related to the equipment shared by the Partnership at December 31, 2019 was approximately $873,000. 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. As additional investment opportunities arise during the remainder of 2020, the Partnership expects total shared equipment and related debt to trend higher as the Partnership builds its portfolio. The following is a schedule of approximate future minimum rentals on non-cancellable operating leases: Periods Ended December 31, Amount Nine months ended December 31, 2020 $ 163,000 Year ended December 31, 2021 28,000 Year ended December 31, 2022 8,000 Year ended December 31, 2023 8,000 Year ended December 31, 2024 6,000 $ 213,000 The Partnership is scheduled to terminate on December 31, 2023. CCC will assume the rights to the remaining active leases and their related remaining revenue stream through their termination. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Related Party Transactions | Receivables/Payables As of March 31, 2020 and December 31, 2019, the Company’s related party receivables and payables are short term, unsecured and non-interest bearing. Three months ended March 31, 2020 2019 Reimbursable expenses The General Partner and its affiliates are entitled to reimbursement by the Partnership for the cost of goods, supplies or 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 of certain expenses incurred by the General Partner and its affiliates in connection with the administration and operation of the Partnership. For the three months ended March 31, 2020 and 2019, the Partnership was charged approximately $22,000 and $27,000 in Other LP expense, respectively. $ 89,000 $ 74,000 Equipment management fee The general partner is entitled to be paid a monthly fee equal to the lesser of (a) the fees which would be charged by an independent third party in the same geographic market for similar services and equipment or (b) the sum of (i) two percent of gross lease revenues attributable to equipment subject to full payout net leases which contain net lease provisions and (ii) five percent of the gross lease revenues attributable to equipment subject to operating leases. Our general partner, based on its experience in the equipment leasing industry and current dealings with others in the industry, will use its business judgment to determine if a given fee is competitive, reasonable and customary. The amount of the fee will depend upon the amount of equipment we manage, which in turn will depend upon the amount we raise in this offering. Reductions in market rates for similar services would also reduce the amount of this fee we will receive. $ 8,000 $ 9,000 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Notes Payable | Notes payable consisted of the following approximate amounts: March 31, 2020 December 31, 2019 Installment note payable to bank; interest rate of 5.46%, due in monthly installments of $4,364, including interest, with final payment in January 2020 - 4,000 Installment note payable to bank; interest rate of 5.93%, due in monthly installments of $1,425, including interest, with final payment in February 2020 - 3,000 Installment note payable to bank; interest rate of 5.56%, due in monthly installments of $2,925, including interest, with final payment in June 2020 8,500 17,000 Installment note payable to bank; interest rate of 4.87%, due in quarterly installments of $4,785, including interest, with final payment in October 2020 14,000 18,000 Installment note payable to bank; interest rate of 5.31%, due in quarterly installments of $6,157, including interest, with final payment in January 2021 24,000 30,000 Installment note payable to bank; interest rate of 6.33%, due in quarterly installments of $5,805, including interest, with final payment in January 2021 22,000 28,000 Installment note payable to bank; interest rate of 6.66%, due in quarterly installments of $2,774, including interest, with final payment in January 2021 11,000 13,000 Installment note payable to bank; interest rate of 5.33%, due in monthly installments of $582, including interest, with final payment in August 2021 9,500 11,000 Installment note payable to bank; interest rate of 4.14%, due in monthly installments of $705, including interest, with final payment in August 2024 34,000 36,000 $ 123,000 $ 160,000 The notes are secured by specific equipment with a carrying value of approximately $195,000 and are nonrecourse liabilities of the Partnership. As such, the notes do not contain any financial debt covenants with which we must comply on either an annual or quarterly basis. Aggregate approximate maturities of notes payable for each of the periods subsequent to March 31, 2020 are as follows: Amount Nine months ended December 31, 2020 $ 75,000 Year ended December 31, 2021 26,000 Year ended December 31, 2022 8,000 Year ended December 31, 2023 8,000 Year ended December 31, 2024 6,000 $ 123,000 The Partnership is scheduled to terminate on December 31, 2023. CCC will assume the obligation and rights to the remaining notes payable and its related secured equipment as described above through their termination. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Supplemental Cash Flow Information | No interest or principal on notes payable was paid by the Partnership during 2020 and 2019 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. Other noncash activities included in the determination of net loss are as follows: Three months ended March 31, 2020 2019 Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 37,000 $ 108,000 Noncash investing and financing activities include the following: Three months ended March 31, 2020 2019 Accrual for redemptions to partners paid in April 2020 (included in other accrued expenses) $ 4,000 $ - During the three months ended March 31, 2020 and 2019, the Partnership wrote-off fully amortized acquisition and finance fees of approximately $13,000 and $16,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Commitments and Contingencies | Medshare In January 2015, CCC, on behalf of the Funds, entered into a Purchase Agreement (“Purchase Agreement”) for the sale of the equipment to Medshare Technologies (“Medshare”) for approximately $3,400,000. The Partnership’s share of the sale proceeds was approximately $77,000. As of May 15, 2020, the Partnership has received approximately $62,000 of the approximate $77,000 sale proceeds and has recorded a reserve against the outstanding receivable of approximately $12,000. On April 3, 2015 Medshare was obligated to make payment in full and failed to do so. As a result, Medshare defaulted on its purchase agreement with CCC and was issued a demand letter for full payment of the equipment. On June 25, 2015, Medshare filed a lawsuit in Texas state court for breach of contract (“State Suit”). On June 26, 2015, Commonwealth filed a lawsuit in the Northern District of Texas against Medshare seeking payment in full and/or return of the Equipment and damages. In July 2016, CCC, on behalf of the Funds, entered into a $1,400,000 binding Settlement Agreement (“Settlement Agreement”) with Medshare and its principal owner, Chris Cleary (collectively referred to as “Defendants”), who are held jointly and severally liable for the entire settlement. On August 2, 2016, the Defendants made payment to CCC of an initial $200,000 to be followed by 24 structured monthly payments of approximately $50,000 per month to begin no later than September 15, 2016. The Partnership’s share of the Settlement Agreement is approximately $23,000 and is to be applied against the net Medshare receivable of approximately $18,000 as of the settlement date. The remaining $5,000 will be applied against the $12,000 reserve and recorded as a bad debt recovery. As of May 15, 2020, the Partnership received approximately $9,000 of the approximate $23,000 settlement agreement which was applied against the net Medshare receivable of approximately $18,000 as of the settlement date. As Defendant defaulted on settlement agreement, CCC sought and obtained consent judgment from U.S. District Court for Northern District of Texas, Dallas Division on July 27, 2017 in the amount of $1.5 million, less $450,000 previously paid plus $6,757 in attorney fees, both Defendant and Cleary being jointly and severally liable for judgment amount. The court also vacated the September 21, 2016 settlement dismissal. On July 27, 2017 Defendant filed Chapter 11 in Northern District of Texas Dallas Division. On July 26, 2017 Legacy Texas Bank, a secured creditor of the Defendant filed for a TRO in the U.S. District Court of the Northern District of Texas, Dallas Division. Included with the TRO filing was a request for appointment of trustee for operation of Defendant, which was granted and the case converted to Chapter 7. On December 18, 2018 the Bankruptcy Court entered final order and issued its last payment to CCC in March 2019 of approximately $43,000, of which the Partnership’s share was approximately $700. The Medshare Bankruptcy matter is now closed. Although the trustee’s final distribution to Commonwealth did not fully satisfy the judgment, recovery may still be pursued directly against Cleary. As such, management believes that the foregoing will not result in any adverse financial impact on the Funds, but no assurance can be provided until the proceedings are resolved. FINRA On May 3, 2013, the FINRA Department of Enforcement filed a complaint naming Commonwealth Capital Securities Corp. (“CCSC”) and the owner of the firm, Kimberly Springsteen-Abbott, as respondents; however on October 22, 2013, FINRA filed an amended complaint that dropped the allegations against CCSC and reduced the scope of the allegations against Ms. Springsteen-Abbott. The sole remaining charge was that Ms. Springsteen-Abbott had approved the misallocation of some expenses to certain Funds. Management believes that the expenses at issue include amounts that were proper and that were properly allocated to Funds, and also identified a smaller number of expenses that had been allocated in error, but were adjusted and repaid to the affected Funds when they were identified in 2012. During the period in question, Commonwealth Capital Corp. (“CCC”) and Ms. Springsteen-Abbott provided important financial support to the Funds, voluntarily absorbed expenses and voluntarily waived fees in amounts aggregating in excess of any questioned allocations. A Hearing Panel ruled on March 30, 2015, that Ms. Springsteen-Abbott should be barred from the securities industry because the Panel concluded that she allegedly misallocated approximately $208,000 of expenses involving certain Funds over the course of three years. As such, management had already reallocated back approximately $151,225 of the $208,000 (in allegedly misallocated expenses) to the affected funds, which was fully documented, as good faith payments for the benefit of those Income Funds. The decision of the Hearing Panel was stayed when it was appealed to FINRA's National Adjudicatory Council (the “NAC”) pursuant to FINRA Rule 9311. The NAC issued a decision that upheld the lower panel’s ruling and the bar took effect on August 23, 2016. Ms. Springsteen-Abbott appealed the NAC’s decision to the U.S. Securities and Exchange Commission (the “SEC”). On March 31, 2017, the SEC criticized that decision as so flawed that the SEC could not even review it, and remanded the matter back to FINRA for further consideration consistent with the SEC’s remand, but did not suggest any view as to a particular outcome. On July 21, 2017, FINRA reduced the list of 1,840 items totaling $208,000 to a remaining list of 87 items totaling $36,226 (which includes approximately $30,000 of continuing education expenses for personnel providing services to the Funds), and reduced the proposed fine from $100,000 to $50,000, but reaffirmed its position on the bar from the securities industry. Respondents promptly appealed FINRA’s revised ruling to the SEC. All the requested or allowed briefs have been filed with the SEC. The SEC upheld FINRA’s order on February 7, 2020 to bar, but eliminated FINRA’s proposed fine. Ms. Springsteen-Abbott has filed a Petition for Review in the United States Court of Appeals for the District of Columbia Circuit to review a final order entered against her by the U.S. Securities and Exchange Commission. As the SEC eliminated FINRA’s fine completely, Management is even more confident that regardless of final resolution, it will not result in any material adverse financial impact to the Funds, although a final assurance cannot be provided until the legal matter is resolved. That appeal is pending as of May 15, 2020. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | COVID-19 Pandemic In March 2020, the World Health Organization classified the novel coronavirus (“COVID-19”) outbreak as a pandemic, based on the rapid increase in exposure globally. The Fund’s operation is located in Florida, which has been restricted during April -May for gatherings of people due to the coronavirus outbreak. On May 4th, Governor DeSantis of Florida started his plan to begin opening certain retail stores and restaurants at limited capacity. At present, the Fund’s operations have not been adversely affected and continue to function effectively. ● On May 11th, certain administrative employees will begin to return to the office on a full-time basis, based on a three-phase plan. ● On May 4th, the General Partner applied and received a grant for “Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferments of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modification to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. We continue to examine the impacts the CARES Act may have on our business through the General Partner and indirectly, the Funds. The extent to which the COVID-19 pandemic, and our precautionary measures in response thereto, may impact our business, financial condition or results of operations will depend on how COVID-19 pandemic and its impact to continue to develop, which are highly uncertain and cannot be predicted at this time. Related Party Payables In order to provide additional support for the Partnership, the General Partner (“GP”) has converted certain payables that were classified as current to noncurrent payables. These payables were deferred to increase the Partnership’s cash flow from the date of issuance of our audited financial statements. To provide additional support to the Partnership, CCC agreed to convert approximately $128,000 of payables from due on demand to long term. Such payables won't be due until sometime after April 15, 2021. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Policy Text Block [Abstract] | |
Basis of Presentation | The financial information presented as of any date other than December 31, 2019 has been prepared from the books and records without audit. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Financial information as of December 31, 2019 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. Operating results for the three months ended March 31, 2020 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2020. |
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 and cash equivalents, receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of March 31, 2020 and December 31, 2019 due to the short term nature of these financial instruments. The Partnership’s long-term debt consists of notes payable, which are secured by specific equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at March 31, 2020 and December 31, 2019 approximates the carrying value of these instruments, due to the interest rates on the debt approximating current market interest rates. The Partnership classifies the fair value of its notes payable within Level 2 of the valuation hierarchy based on the observable inputs used to estimate fair value. |
Cash and Cash Equivalents | We consider cash equivalents to be highly liquid investments with an original maturity of 90 days or less. At March 31, 2020, cash and cash equivalents were held in one account maintained at one financial institution with an aggregate balance of approximately $10,000. Bank accounts are federally insured up to $250,000 by the FDIC. At March 31, 2020, the total cash balance was as follows: At March 31, 2020 Balance Total bank balance $ 10,000 FDIC insured (10,000 ) Uninsured amount $ - The Partnership believes it mitigates the risk of holding uninsured deposits by only depositing funds with major financial institutions. The Partnership has not experienced any losses in our accounts, and believes it is not exposed to any significant credit risk. The amounts in such accounts will fluctuate throughout 2020 due to many factors, including cash receipts, equipment acquisitions, interest rates and distributions to limited partners. |
Recent Accounting Pronouncements Not Yet Adopted | In December 2018, the Financial Accounting Standard Board (“FASB”) issued (ASU 2018-11), Targeted improvements, In December 2018, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors The amendments also clarify that when lessors allocate variable payments to lease and non-lease components they are required to follow the recognition guidance in ASC 842 for the lease component and other applicable guidance, such as ASC 606, for the non-lease component. The Partnership concluded, upon adoption of this update that there was no significant change to their accounting. The FASB issued ASU 2019-01, Codification Improvements, Fair Value Measurement Recent Accounting Pronouncements Not Yet Adopted FASB issued a new guidance, Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Codification Improvements to Topic 326, Financial Instruments – Credit Losses and Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. The FASB developed the guidance in response to concerns that credit losses were identified and recorded “too little, too late” in the period leading up to the global financial crisis of 2008. More recently, the impact of the COVID-19 pandemic may bring new challenges to identifying credit losses. While the new standard is expected to have a significant effect on entities in the financial services industry, particularly banks and others with lending operations, the guidance affects all entities in all industries and applies to a wide variety of financial instruments, including trade receivables. ASC 326-20’s CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. The standard provides entities with significant flexibility in how to pool financial assets with similar risk characteristics, determine the contractual term and obtain and adjust the relevant historical loss information that serves as the starting point for developing the estimate of expected lifetime credit losses. The Financial reporting developments (“FRD”) addresses the new guidance on the following topics: ● The current expected credit loss (CECL) impairment model (ASC 326-20) for financial assets measured at amortized cost, including net investments (i.e. for sales-type lease, the lease receivable and the unguaranteed residual asset; for direct finance lease, the lease receivable and the unguaranteed residual asset less any deferred selling profit). ● The available-for-sale (AFS) debt security impairment model (ASC 326-30) ● The initial recognition of what are called purchased financial assets with evidence of credit deterioration or purchased credit-deteriorated (PCD) assets ● The accounting for beneficial interests in securitized financial assets in the scope of ASC 325-40, Investments — Other — Beneficial Interests in Securitized Financial Assets On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Partnership continues to evaluate the impact of the new guidance on its condensed financial statements. In January 2020, The FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force). ASU 2020-01 also addresses questions about how to apply the guidance in Topic 815, “Derivatives and Hedging,” Financial Instruments.” For public business entities, ASU 2020-01 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, ASU 2020-01 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period, (a) for public business entities for periods for which financial statements have not yet been issued and (b) for all other entities for periods for which financial statements have not yet been made available for issuance. The Partnership continues to evaluate the impact of the new guidance on its condensed financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of cash and cash equivalents | At March 31, 2020 Balance Total bank balance $ 10,000 FDIC insured (10,000 ) Uninsured amount $ - |
Information Technology, Medic_2
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of future minimum rentals on non-cancellable operating leases | Periods Ended December 31, Amount Nine months ended December 31, 2020 $ 163,000 Year ended December 31, 2021 28,000 Year ended December 31, 2022 8,000 Year ended December 31, 2023 8,000 Year ended December 31, 2024 6,000 $ 213,000 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of related party transactions | Three months ended March 31, 2020 2019 Reimbursable expenses The General Partner and its affiliates are entitled to reimbursement by the Partnership for the cost of goods, supplies or 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 of certain expenses incurred by the General Partner and its affiliates in connection with the administration and operation of the Partnership. For the three months ended March 31, 2020 and 2019, the Partnership was charged approximately $22,000 and $27,000 in Other LP expense, respectively. $ 89,000 $ 74,000 Equipment management fee The general partner is entitled to be paid a monthly fee equal to the lesser of (a) the fees which would be charged by an independent third party in the same geographic market for similar services and equipment or (b) the sum of (i) two percent of gross lease revenues attributable to equipment subject to full payout net leases which contain net lease provisions and (ii) five percent of the gross lease revenues attributable to equipment subject to operating leases. Our general partner, based on its experience in the equipment leasing industry and current dealings with others in the industry, will use its business judgment to determine if a given fee is competitive, reasonable and customary. The amount of the fee will depend upon the amount of equipment we manage, which in turn will depend upon the amount we raise in this offering. Reductions in market rates for similar services would also reduce the amount of this fee we will receive. $ 8,000 $ 9,000 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Notes payable | March 31, 2020 December 31, 2019 Installment note payable to bank; interest rate of 5.46%, due in monthly installments of $4,364, including interest, with final payment in January 2020 - 4,000 Installment note payable to bank; interest rate of 5.93%, due in monthly installments of $1,425, including interest, with final payment in February 2020 - 3,000 Installment note payable to bank; interest rate of 5.56%, due in monthly installments of $2,925, including interest, with final payment in June 2020 8,500 17,000 Installment note payable to bank; interest rate of 4.87%, due in quarterly installments of $4,785, including interest, with final payment in October 2020 14,000 18,000 Installment note payable to bank; interest rate of 5.31%, due in quarterly installments of $6,157, including interest, with final payment in January 2021 24,000 30,000 Installment note payable to bank; interest rate of 6.33%, due in quarterly installments of $5,805, including interest, with final payment in January 2021 22,000 28,000 Installment note payable to bank; interest rate of 6.66%, due in quarterly installments of $2,774, including interest, with final payment in January 2021 11,000 13,000 Installment note payable to bank; interest rate of 5.33%, due in monthly installments of $582, including interest, with final payment in August 2021 9,500 11,000 Installment note payable to bank; interest rate of 4.14%, due in monthly installments of $705, including interest, with final payment in August 2024 34,000 36,000 $ 123,000 $ 160,000 |
Aggregate maturities of notes payable | Amount Nine months ended December 31, 2020 $ 75,000 Year ended December 31, 2021 26,000 Year ended December 31, 2022 8,000 Year ended December 31, 2023 8,000 Year ended December 31, 2024 6,000 $ 123,000 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Other noncash activities | Three months ended March 31, 2020 2019 Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 37,000 $ 108,000 |
Noncash investing and financing activities | Three months ended March 31, 2020 2019 Accrual for redemptions to partners paid in April 2020 (included in other accrued expenses) $ 4,000 $ - |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Mar. 31, 2020USD ($) |
Accounting Policies [Abstract] | |
Total bank balance | $ 10,000 |
FDIC insured | (10,000) |
Uninsured amount | $ 0 |
Information Technology, Medic_3
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (Details) | Mar. 31, 2020USD ($) |
Note 12 | |
Nine months ended December 31, 2020 | $ 163,000 |
Year Ended December 31, 2021 | 28,000 |
Year Ended December 31, 2022 | 8,000 |
Year ended December 31, 2023 | 8,000 |
Year ended December 31, 2024 | 6,000 |
Total | $ 213,000 |
Information Technology, Medic_4
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (Details Narrative) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Note 12 | ||
Equipment shared | $ 2,539,000 | $ 2,539,000 |
Total shared equipment | 9,007,000 | 9,007,000 |
Debt shared | 64,000 | 88,000 |
Outstanding debt total | $ 687,000 | $ 873,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Reimbursable expenses | $ 89,000 | $ 74,000 |
Equipment management fee | $ 8,000 | $ 9,000 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Long-term debt, gross | $ 123,000 | $ 160,000 |
Note 1 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 5.46%, due in monthly installments of $4,364, including interest, with final payment in January 2020 | |
Long-term debt, gross | $ 0 | 4,000 |
Note 2 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 5.93%, due in monthly installments of $1,425, including interest, with final payment in February 2020 | |
Long-term debt, gross | $ 0 | 3,000 |
Note 3 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 5.56%, due in monthly installments of $2,925, including interest, with final payment in June 2020 | |
Long-term debt, gross | $ 8,500 | 17,000 |
Note 4 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 4.87%, due in quarterly installments of $4,785, including interest, with final payment in October 2020 | |
Long-term debt, gross | $ 14,000 | 18,000 |
Note 5 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 5.31%, due in quarterly installments of $6,157, including interest, with final payment in January 2021 | |
Long-term debt, gross | $ 24,000 | 30,000 |
Note 6 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 6.33%, due in quarterly installments of $5,805, including interest, with final payment in January 2021 | |
Long-term debt, gross | $ 22,000 | 28,000 |
Note 7 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 6.66%, due in quarterly installments of $2,774, including interest, with final payment in January 2021 | |
Long-term debt, gross | $ 11,000 | 13,000 |
Note 8 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 5.33%, due in monthly installments of $582, including interest, with final payment in August 2021 | |
Long-term debt, gross | $ 9,500 | 11,000 |
Note 9 | ||
Debt instrument, description | Installment note payable to bank; interest rate of 4.14%, due in monthly installments of $705, including interest, with final payment in August 2024 | |
Long-term debt, gross | $ 34,000 | $ 36,000 |
Notes Payable (Details 1)
Notes Payable (Details 1) | Mar. 31, 2020USD ($) |
Notes Payable [Abstract] | |
Nine months ended December 31, 2020 | $ 75,000 |
Year ended December 31, 2021 | 26,000 |
Year ended December 31, 2022 | 8,000 |
Year ended December 31, 2023 | 8,000 |
Year ended December 31, 2024 | 6,000 |
Long-term debt | $ 123,000 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank | $ 37,000 | $ 108,000 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Accrual for redemptions to partners paid in April 2020 (included in other accrued expenses) | $ 4,000 | $ 0 |
Supplemental Cash Flow Inform_5
Supplemental Cash Flow Information (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Fully amortized fees written off | $ 13,000 | $ 16,000 |