Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2020shares | |
Document and Entity Information: | |
Entity Registrant Name | Commonwealth Income & Growth Fund VI |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 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 | Q2 |
Entity Interactive Data Current | Yes |
Entity Incorporation State Country Code | PA |
Entity File Number | 333-131736 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 117,803 | $ 3,624 |
Lease income receivable, net of reserve of approximately $33,000 and $63,000 at June 30, 2020 and December 31, 2019, respectively | 59,483 | 108,646 |
Accounts receivable, Commonwealth Capital Corp., net | 64,955 | 74,026 |
Other receivables, net of reserve of approximately $13,000 at June 30, 2020 and December 31, 2019, respectively | 8,725 | 9,255 |
Prepaid expenses | 1,966 | 3,042 |
Current Assets | 252,932 | 198,593 |
Equipment, at cost | 4,211,421 | 4,825,207 |
Accumulated depreciation | (3,995,873) | (4,381,343) |
Noncurrent assets | 215,548 | 443,864 |
Equipment acquisition costs and deferred expenses, net of accumulated amortization of approximately $23,000 and $32,000 at June 30, 2020 and December 31, 2019, respectively | 6,065 | 10,328 |
Total Assets | 474,545 | 652,785 |
LIABILITIES | ||
Accounts payable | 80,752 | 133,865 |
Accounts payable, CIGF, Inc., net of accounts receivable of approximately $187 at June 30, 2020 and December 31, 2019 | 127,149 | 137,577 |
Other accrued expenses | 14,490 | 5,059 |
Unearned lease income | 3,630 | 41,988 |
Notes payable | 92,523 | 160,453 |
Total Liabilities | 318,544 | 478,942 |
COMMITMENTS AND CONTINGENCIES | ||
PARTNERS' CAPITAL | ||
General Partner | 1,000 | 1,000 |
Limited Partners | 155,001 | 172,843 |
Total Partners' Capital | 156,001 | 173,843 |
Total Liabilities and Partners' Capital | $ 474,545 | $ 652,785 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Reserve for doubtful lease income receivable | $ 33,000 | $ 63,000 |
Accounts payable | 114,750 | 50,096 |
Other receivables reserve, net | 13,000 | 13,000 |
Accumulated amortization | $ 23,000 | $ 32,000 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | ||||
Lease | $ 180,332 | $ 185,159 | $ 341,188 | $ 372,756 |
Interest and other | 17,768 | 53 | 17,787 | 2,554 |
Sales and property taxes | 4,222 | 9,402 | 15,462 | 15,229 |
Gain on sale of equipment | 12,737 | 125 | 46,694 | 125 |
Total revenue and gain on sale of equipment | 215,059 | 194,739 | 421,131 | 390,664 |
Expenses | ||||
Operating, excluding depreciation | 92,474 | 72,974 | 197,599 | 176,606 |
Equipment management fee, General Partner | 5,924 | 9,258 | 13,967 | 18,637 |
Interest | 1,567 | 5,723 | 3,595 | 12,715 |
Depreciation | 91,070 | 132,539 | 187,118 | 266,999 |
Amortization of equipment acquisition costs and deferred expenses | 2,346 | 6,076 | 5,047 | 12,938 |
Sales and property taxes | 4,222 | 9,402 | 15,462 | 15,229 |
Bad debt expense | 810 | 0 | 8,327 | 0 |
Total expenses | 198,413 | 235,972 | 431,115 | 503,124 |
Net income (loss) | 16,646 | (41,233) | (9,984) | (112,460) |
Net income (loss) allocated to Limited Partners | $ 16,646 | $ (41,233) | $ (9,984) | $ (112,460) |
Net income (loss) per equivalent Limited Partnership unit | $ 0.01 | $ (0.02) | $ (0.01) | $ (0.06) |
Weighted average number of equivalent Limited Partnership units outstanding during the period | 1,741,755 | 1,744,331 | 1,742,970 | 1,744,331 |
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 | |
Net income (loss) | $ (41,233) | (41,233) | |
Partners' Capital at Jun. 30, 2019 | $ 1,000 | $ 188,116 | 189,116 |
Partners' Capital Account, Units at Jun. 30, 2019 | 50 | 1,744,254 | |
Partners' Capital at Dec. 31, 2019 | $ 1,000 | $ 172,843 | 173,843 |
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 | $ 138,355 | 139,355 |
Partners' Capital Account, Units at Mar. 31, 2020 | 50 | 1,741,754 | |
Net income (loss) | $ 16,646 | 16,646 | |
Partners' Capital at Jun. 30, 2020 | $ 1,000 | $ 155,001 | $ 156,001 |
Partners' Capital Account, Units at Jun. 30, 2020 | 50 | 1,741,754 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flow - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net cash provided by operating activities | $ 34,929 | $ 2 |
Cash flows from investing activities | ||
Capital expenditures | (19,590) | 0 |
Equipment acquisition fees paid to General Partner | (784) | 0 |
Net proceeds from the sale of equipment | 107,482 | 125 |
Net cash provided by investing activities | 87,108 | 125 |
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 | 114,179 | 127 |
Cash and cash equivalents beginning of period | 3,624 | 5,863 |
Cash and cash equivalents end of period | $ 117,803 | $ 5,990 |
Business
Business | 6 Months Ended |
Jun. 30, 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. 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 | 6 Months Ended |
Jun. 30, 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 six months ended June 30, 2020 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2020. Adjustment to Prior Financial Statements The Partnership has determined that there had been an immaterial error in its accounting for Other LP expenses and accumulated depreciation in its financial statements of the Commonwealth Income & Growth Fund VI for the year ended December 31, 2019 and the quarter ended March 31, 2020. The Partnership determined that Other LP expenses should have been presented in the Statement of Operations as an increase of expense under Operating expenses, excluding depreciation and amortization. An adjustment was made to correct the error in prior period ending December 31, 2019 by reporting as an increase of expense for Other LP expenses and accumulated depreciation approximately of $9,499 and $885, respectively, the cumulative effect of the change on the Partners’ Capital by the same amounts. An adjustment was also made to correct the error in the prior period ending March 31, 2020 by reporting an increase in Accounts Payable, CIGF, Inc. and accumulated depreciation of approximately $9,499 and $885 respectively and the cumulative decreasing effect on the Partners’ Capital by the same amount. 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 June 30, 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 June 30, 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 At June 30, 2020, cash and cash equivalents were held in one account maintained at one financial institution with an aggregate balance of approximately $121,000. Bank accounts are federally insured up to $250,000 by the FDIC. At June 30, 2020, the total cash balance was as follows: At June 30, 2020 Balance Total bank balance $ 121,000 FDIC insured (121,000 ) 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 FASB issued 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, Financial Instruments – Credit Losses (Topic 326) . 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. 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. |
Information Technology, Medical
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (''Equipment'') | 6 Months Ended |
Jun. 30, 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 sale of equipment are recognized when the lease is modified and terminated concurrently. Gain from sale of equipment included in lease revenue for the six months ended June 30, 2020 and 2019 was $47,000 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 June 30, 2020 was approximately $2,503,000 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 June 30, 2020 was approximately $8,860,000. The Partnership’s share of the outstanding debt associated with this equipment at June 30, 2020 was approximately $43,000 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 June 30, 2020 was approximately $507,000. 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. The following is a schedule of approximate future minimum rentals on non-cancellable operating leases: Periods Ended December 31, Amount Six months ended December 31, 2020 $ 178,000 Year ended December 31, 2021 35,000 Year ended December 31, 2022 10,000 Year ended December 31, 2023 8,000 Year ended December 31, 2024 6,000 $ 237,000 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 | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Related Party Transactions | Receivables/Payables As of June 30, 2020 and December 31, 2019, the Company’s related party receivables and payables are short term, unsecured and non-interest bearing. Six months ended June 30, 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 six months ended June 30, 2020 and 2019, the Partnership was charged approximately $55,000 and $52,000 in Other LP expense, respectively. $ 175,000 $ 143,000 Equipment acquisition fee The General Partner earned 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. $ 1,000 $ - 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. $ 14,000 $ 19,000 Equipment liquidation fee Also referred to as a "resale fee." With respect to each item of equipment sold by the general partner, we will pay a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price of the equipment. The payment of this fee is subordinated to the receipt by the limited partners of (i) a return of their capital contributions and a 10% per annum cumulative return, compounded daily, on adjusted capital contributions and (ii) the net disposition proceeds from such sale in accordance with the partnership agreement. Our general partner, based on its experience in the equipment leasing industry and current dealings with others in the industry, uses its business judgment to determine if a given sales commission is competitive, reasonable and customary. Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties. The amount of such fees will depend upon the sale price of equipment sold. Sale prices will vary depending upon the type, age and condition of equipment sold. The shorter the terms of our leases, the more often we may sell equipment, which will increase liquidation fees we receive. $ 4,000 $ - |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Notes Payable | Notes payable consisted of the following approximate amounts: June 30, 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 - 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 9,500 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 18,000 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 17,000 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 8,000 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 8,000 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 32,500 36,000 $ 93,000 $ 160,000 The notes are secured by specific equipment with a carrying value of approximately $133,000 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 June 30, 2020 are as follows: Amount Six months ended December 31, 2020 $ 45,000 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 $ 93,000 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 | 6 Months Ended |
Jun. 30, 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: Six months ended June 30, 2020 2019 Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 68,000 $ 207,000 During the six months ended June 30, 2020 and 2019, the Partnership wrote-off fully amortized acquisition and finance fees of approximately $14,000 and $1,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Commitments and Contingencies | COVID-19 Pandemic The amount of revenue recognized and the pattern of revenue recognition may be impacted by COVID-19. Some of the business sectors that we service such as education centers, medical facilities, payroll administrators, manufacturing and transportation, we may need to account for returns and refund liabilities. The pattern of revenue recognition may change for delays in rendering services. In periods ended subsequent to the outbreak of COVID-19, the impact on expected credit losses and future cash flow projections used in impairment testing will need to be considered. The Company continues to evaluate whether adjustments to the financial statements are required or whether additional disclosures are necessary. In our leasing business, the Company is always subject to credit losses as it relates to a customer’s ability to make timely rental payments. The impact of COVID-19 may contribute to risk of non-performance, where a customer may experience financial difficulty and may delay in making timely payments. The Company recognizes impairment of receivables and loans when losses are incurred, which is when it is probable that an entity will be unable to collect all amounts due according to the contractual terms of the arrangement. Impairment is measured based on the present value of expected future cash flows discounted at the receivable’s or loans effective interest rate, except that, as a practical expedient, impairment can be measured based on a receivable’s or loans’ observable market price or the fair value of the underlying collateral. The Company believes its estimate of expected losses have been recognized based on historical experience, current conditions, and reasonable forecasts. The impacts of COVID-19 may necessitate additional adjustments in future forecasts of expected losses. The Company has not yet adopted ASC Topic 326, Credit Losses Although the Partnership cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Partnership results of future operations, financial position, and liquidity in fiscal year 2020 and beyond. 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 August 14, 2020, the Partnership had received approximately $62,000 of the approximate $77,000 sale proceeds and has recorded a reserve of $13,000 against the outstanding receivables. 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 August 14, 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 the Defendant and Cleary being jointly and severally liable for the 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 August 14, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 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 six months ended June 30, 2020 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2020. |
Adjustment to Prior Financial Statements | The Partnership has determined that there had been an immaterial error in its accounting for Other LP expenses and accumulated depreciation in its financial statements of the Commonwealth Income & Growth Fund VI for the year ended December 31, 2019 and the quarter ended March 31, 2020. The Partnership determined that Other LP expenses should have been presented in the Statement of Operations as an increase of expense under Operating expenses, excluding depreciation and amortization. An adjustment was made to correct the error in prior period ending December 31, 2019 by reporting as an increase of expense for Other LP expenses and accumulated depreciation approximately of $9,499 and $885, respectively, the cumulative effect of the change on the Partners’ Capital by the same amounts. An adjustment was also made to correct the error in the prior period ending March 31, 2020 by reporting an increase in Accounts Payable, CIGF, Inc. and accumulated depreciation of approximately $9,499 and $885 respectively and the cumulative decreasing effect on the Partners’ Capital by the same amount. |
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 June 30, 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 June 30, 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 | At June 30, 2020, cash and cash equivalents were held in one account maintained at one financial institution with an aggregate balance of approximately $121,000. Bank accounts are federally insured up to $250,000 by the FDIC. At June 30, 2020, the total cash balance was as follows: At June 30, 2020 Balance Total bank balance $ 121,000 FDIC insured (121,000 ) 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 | FASB issued 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, Financial Instruments – Credit Losses (Topic 326) . 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. 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of cash and cash equivalents | At June 30, 2020 Balance Total bank balance $ 121,000 FDIC insured (121,000 ) Uninsured amount $ - |
Information Technology, Medic_2
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of future minimum rentals on non-cancellable operating leases | Periods Ended December 31, Amount Six months ended December 31, 2020 $ 178,000 Year ended December 31, 2021 35,000 Year ended December 31, 2022 10,000 Year ended December 31, 2023 8,000 Year ended December 31, 2024 6,000 $ 237,000 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of related party transactions | Six months ended June 30, 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 six months ended June 30, 2020 and 2019, the Partnership was charged approximately $55,000 and $52,000 in Other LP expense, respectively. $ 175,000 $ 143,000 Equipment acquisition fee The General Partner earned 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. $ 1,000 $ - 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. $ 14,000 $ 19,000 Equipment liquidation fee Also referred to as a "resale fee." With respect to each item of equipment sold by the general partner, we will pay a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price of the equipment. The payment of this fee is subordinated to the receipt by the limited partners of (i) a return of their capital contributions and a 10% per annum cumulative return, compounded daily, on adjusted capital contributions and (ii) the net disposition proceeds from such sale in accordance with the partnership agreement. Our general partner, based on its experience in the equipment leasing industry and current dealings with others in the industry, uses its business judgment to determine if a given sales commission is competitive, reasonable and customary. Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties. The amount of such fees will depend upon the sale price of equipment sold. Sale prices will vary depending upon the type, age and condition of equipment sold. The shorter the terms of our leases, the more often we may sell equipment, which will increase liquidation fees we receive. $ 4,000 $ - |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Notes payable | June 30, 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 - 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 9,500 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 18,000 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 17,000 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 8,000 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 8,000 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 32,500 36,000 $ 93,000 $ 160,000 |
Aggregate maturities of notes payable | Amount Six months ended December 31, 2020 $ 45,000 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 $ 93,000 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Table Text Block Supplement [Abstract] | |
Other noncash activities | Six months ended June 30, 2020 2019 Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 68,000 $ 207,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Jun. 30, 2020USD ($) |
Accounting Policies [Abstract] | |
Total bank balance | $ 121,000 |
FDIC insured | (121,000) |
Uninsured amount | $ 0 |
Information Technology, Medic_3
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (Details) | Jun. 30, 2020USD ($) |
Note 12 | |
Six months ended December 31, 2020 | $ 178,000 |
Year Ended December 31, 2021 | 35,000 |
Year Ended December 31, 2022 | 10,000 |
Year ended December 31, 2023 | 8,000 |
Year ended December 31, 2024 | 6,000 |
Total | $ 237,000 |
Information Technology, Medic_4
Information Technology, Medical Technology, Telecommunications Technology, Inventory Management Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Note 12 | ||||
Gain from sale of equipment, included in leases | $ 12,737 | $ 125 | $ 46,694 | $ 125 |
Equipment shared | 2,503,000 | 2,503,000 | ||
Total shared equipment | 8,860,000 | 8,860,000 | ||
Debt shared | 43,000 | 43,000 | ||
Outstanding debt total | $ 507,000 | $ 507,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transactions [Abstract] | ||
Reimbursable expenses | $ 175,000 | $ 143,000 |
Equipment acquisition fee | 1,000 | 0 |
Equipment management fee | 14,000 | 19,000 |
Equipment liquidation fee | $ 4,000 | $ 0 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Long-term debt, gross | $ 93,000 | $ 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 | $ 0 | 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 | $ 9,500 | 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 | $ 18,000 | 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 | $ 17,000 | 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 | $ 8,000 | 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 | $ 8,000 | 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 | $ 32,500 | $ 36,000 |
Notes Payable (Details 1)
Notes Payable (Details 1) | Jun. 30, 2020USD ($) |
Notes Payable [Abstract] | |
Six months ended December 31, 2020 | $ 45,000 |
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 | $ 93,000 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 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 | $ 68,000 | $ 207,000 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Fully amortized fees written off | $ 14,000 | $ 1,000 |