Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 17, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | COMMONWEALTH INCOME & GROWTH FUND VI | |
Entity Central Index Key | 0001351901 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 0 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 333-131736 | |
Entity Incorporation State Country Code | PA | |
Entity Tax Identification Number | 20-4115433 | |
Entity Address Address Line 1 | 4532 US Highway 19 | |
Entity Address Address Line 2 | Suite 200 | |
Entity Address City Or Town | New Port Richey | |
Entity Address State Or Province | FL | |
Entity Address Postal Zip Code | 34652 | |
City Area Code | 800 | |
Local Phone Number | 249-3700 | |
Entity Interactive Data Current | Yes |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 23,775 | $ 36,178 |
Lease income receivable, net of reserve of approximately $48,000 at both September 30, 2021 and December 31, 2020, respectively | 50,733 | 51,622 |
Accounts receivable, Commonwealth Capital Corp., net of accounts payable of approximately $- and $39,000 at September 30, 2021 and December 31, 2020, respectively | 187 | 49,258 |
Other receivables, net of reserve of approximately $- and $- at September 30, 2021 and December 31, 2020, respectively | 7,988 | 25,178 |
Prepaid expenses | 1,167 | 2,534 |
Assets, Current | 83,850 | 164,770 |
Equipment, at cost | 3,145,256 | 3,564,979 |
Accumulated depreciation | (2,998,970) | (3,344,409) |
Property, Plant and Equipment, Net | 146,286 | 220,570 |
Equipment acquisition costs and deferred expenses, net of accumulated amortization of approximately $4,000 and $13,000 at September 30, 2021 and December 31, 2020, respectively | 6,422 | 7,509 |
Total Assets | 236,558 | 392,849 |
LIABILITIES | ||
Accounts payable | 90,890 | 76,523 |
Accounts payable, CIGF, Inc., net | 135,454 | 115,452 |
Accounts payable, Commonwealth Capital Corp, net of accounts receivable of approximately $36,849 and $- at September 30, 2021 and December 31, 2020, respectively | 4,909 | 0 |
Other accrued expenses | 0 | 6 |
Unearned lease income | 0 | 16,606 |
Notes payable | 40,506 | 68,828 |
Total Liabilities | 271,760 | 277,415 |
PARTNERS' (DEFICIT) CAPITAL | ||
General Partner | 1,000 | 1,000 |
Limited Partners | (36,202) | 114,434 |
Total Partners' (Deficit) Capital | (35,202) | 115,434 |
Total Liabilities and Partners' Capital | $ 236,558 | $ 392,849 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Condensed Balance Sheets | ||
Reserve for doubtful lease income receivable | $ 48,000 | $ 48,000 |
Accounts receivable, net of accounts payable | 0 | 39,000 |
Equipment acquisition costs and deferred | 4,000 | 13,000 |
Accounts payable | $ 36,849 | $ 0 |
Condensed Statements of Operati
Condensed Statements of Operations (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue | ||||
Lease | $ 37,910 | $ 121,083 | $ 155,624 | $ 462,271 |
Interest and other | 4,371 | 3 | 4,408 | 17,790 |
Sales and property taxes | 1,826 | 2,711 | 9,165 | 18,173 |
Gain on sale of equipment | 9,643 | 19,696 | 19,923 | 66,390 |
Total revenue and gain on sale of equipment | 53,741 | 143,493 | 189,119 | 564,624 |
Expenses | ||||
Operating, excluding depreciation | 52,367 | 46,980 | 213,494 | 244,579 |
Equipment management fee, General Partner | 1,896 | 6,054 | 7,782 | 20,021 |
Interest | 487 | 1,183 | 1,851 | 4,778 |
Depreciation | 25,472 | 51,218 | 99,245 | 238,336 |
Amortization of equipment acquisition costs and deferred expenses | 566 | 1,581 | 2,576 | 6,628 |
Sales and property taxes | 1,826 | 2,711 | 9,165 | 18,173 |
Impairment expense | 5,643 | 0 | 5,643 | 0 |
Bad Debt Expense | 0 | 2,848 | 0 | 11,175 |
Total expenses | 88,257 | 112,575 | 339,756 | 543,690 |
Net (Loss) Income | (34,516) | 30,918 | (150,637) | 20,934 |
Net (loss) income allocated to Limited Partners | $ (34,516) | $ 30,918 | $ (150,637) | $ 20,934 |
Net (loss) income per equivalent Limited Partnership unit | $ (0.02) | $ 0.02 | $ (0.09) | $ 0.01 |
Weighted average number of equivalent Limited Partnership units outstanding during the period | 1,738,833 | 1,741,755 | 1,740,770 | 1,742,562 |
Condensed Statement of Partners
Condensed Statement of Partners' Capital - USD ($) | Total | General Partner | Limited Partner |
Balance, shares at Dec. 31, 2019 | 50 | 1,744,254 | |
Balance, amount at Dec. 31, 2019 | $ 173,843 | $ 1,000 | $ 172,843 |
Net loss | (26,630) | 0 | $ (26,630) |
Redemptions, shares | (2,500) | ||
Redemptions, amount | (7,858) | $ 0 | $ (7,858) |
Balance, shares at Mar. 31, 2020 | 50 | 1,741,754 | |
Balance, amount at Mar. 31, 2020 | 139,355 | $ 1,000 | $ 138,355 |
Balance, shares at Dec. 31, 2019 | 50 | 1,744,254 | |
Balance, amount at Dec. 31, 2019 | 173,843 | $ 1,000 | $ 172,843 |
Net loss | 20,934 | ||
Balance, shares at Sep. 30, 2020 | 50 | 1,741,754 | |
Balance, amount at Sep. 30, 2020 | 186,919 | $ 1,000 | $ 185,919 |
Balance, shares at Mar. 31, 2020 | 50 | 1,741,754 | |
Balance, amount at Mar. 31, 2020 | 139,355 | $ 1,000 | $ 138,355 |
Net loss | 16,646 | $ 0 | $ 16,646 |
Balance, shares at Jun. 30, 2020 | 50 | 1,741,754 | |
Balance, amount at Jun. 30, 2020 | 156,001 | $ 1,000 | $ 155,001 |
Net loss | 30,918 | $ 0 | $ 30,918 |
Balance, shares at Sep. 30, 2020 | 50 | 1,741,754 | |
Balance, amount at Sep. 30, 2020 | 186,919 | $ 1,000 | $ 185,919 |
Balance, shares at Dec. 31, 2020 | 50 | 1,741,754 | |
Balance, amount at Dec. 31, 2020 | 115,434 | $ 1,000 | $ 114,434 |
Net loss | (80,743) | $ 0 | $ (80,743) |
Balance, shares at Mar. 31, 2021 | 50 | 1,741,754 | |
Balance, amount at Mar. 31, 2021 | 34,691 | $ 1,000 | $ 33,691 |
Balance, shares at Dec. 31, 2020 | 50 | 1,741,754 | |
Balance, amount at Dec. 31, 2020 | 115,434 | $ 1,000 | $ 114,434 |
Net loss | (150,637) | ||
Balance, shares at Sep. 30, 2021 | 50 | 1,737,857 | |
Balance, amount at Sep. 30, 2021 | (35,203) | $ 1,000 | $ (36,202) |
Balance, shares at Mar. 31, 2021 | 50 | 1,741,754 | |
Balance, amount at Mar. 31, 2021 | 34,691 | $ 1,000 | $ 33,691 |
Net loss | (35,378) | $ 0 | $ (35,378) |
Balance, shares at Jun. 30, 2021 | 50 | 1,741,754 | |
Balance, amount at Jun. 30, 2021 | (687) | $ 1,000 | $ (1,687) |
Net loss | (34,516) | 0 | $ (34,516) |
Redemptions, shares | (3,897) | ||
Redemptions, amount | 0 | $ 0 | $ 0 |
Balance, shares at Sep. 30, 2021 | 50 | 1,737,857 | |
Balance, amount at Sep. 30, 2021 | $ (35,203) | $ 1,000 | $ (36,202) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Statements of Cash Flows (unaudited) | ||
Net cash (used in) provided by operating activities | $ (231) | $ 97,187 |
Cash flows from investing activities | ||
Capital expenditures | (37,248) | (39,250) |
Equipment acquisition fees paid to General Partner | (1,490) | (1,570) |
Net proceeds from the sale of equipment | 26,566 | 127,178 |
Net cash (used in) provided by investing activities | (12,172) | 86,358 |
Cash flows from financing activities | ||
Redemptions | 0 | (7,858) |
Net cash used in financing activities | 0 | (7,858) |
Net (decrease) increase in cash and cash equivalents | (12,403) | 175,687 |
Cash and cash equivalents, beginning of the period | 36,178 | 3,624 |
Cash and cash equivalents, end of the period | $ 23,775 | $ 179,311 |
Business
Business | 9 Months Ended |
Sep. 30, 2021 | |
Business | |
1. Business | 1. 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 and Going Concern For the quarter ended September 30, 2021, the Partnership incurred a negative cash flow. At September 30, 2021, the Partnership has a working capital deficit of approximately $188,000. Such factors raise substantial doubt about the Partnership’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The General Partner agreed to forgo distributions and allocations of net income owed to it, and suspended limited partner distributions. The General Partner will continue to waive certain fees and may defer certain related party payables owed to the Partnership in an effort to further increase the Partnership’s cash flow. Additionally, the Partnership will seek to enhance portfolio returns and maximize cash flow through the use of leveraged lease transactions: the acquisition of lease equipment through financing. The Partnership may also attempt to obtain additional funds by disposing of or refinancing equipment, or by borrowing within its permissible limits. However, at this time, it is uncertain as to whether the General Partner’s plans will be successful. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
2. Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The financial information presented as of any date other than December 31, 2020 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, 2020 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 and nine months ended September 30, 2021 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2021. 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. Receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of September 30, 2021 and December 31, 2020 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 September 30, 2021 and December 31, 2020 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 September 30, 2021, cash and cash equivalents were held in one account maintained at one financial institution with an aggregate balance of approximately $67,000. Bank accounts are federally insured up to $250,000 by the FDIC. At September 30, 2021, the total cash balance was as follows: At September 30, 2021 Balance Total bank balance $ 67,000 FDIC insured (67,000 ) 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 2021 due to many factors, including cash receipts, equipment acquisitions, interest rates and distributions to limited partners. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard establishes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in a timelier recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of the financial instrument. Measurement of expected credit losses are to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard. Instead, entities would need to apply other U.S. GAAP, namely Topic 842 (Leases), to account for changes in the collectability assessment for operating leases. Other than operating lease receivables, Partnership trade receivables include receivables from finance leases and equipment sales. Under Topic 606 (Revenue from Contracts with Customers), revenue is recognized when, among other criteria, it is probable that the entity will collect the consideration to which it is entitled for goods or services transferred to a customer. At the point that finance lease receivables are recorded, they become subject to the CECL model and estimates of expected credit losses over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. Trade receivables derived from equipment sales are of short duration and there is not a material difference between incurred losses and expected losses. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 for the Partnership until December 15, 2022. While we continue to evaluate the new guidance, including the subsequent updates to Topic 326, we do not anticipate that adoption will have a material impact on the Partnership financial statements and related disclosures. For the three and nine months ended September 30, 2021 and 2020, Partnership finance lease revenue subject to CECL represented less than 1% of total lease revenue. |
Information Technology Medical
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Equipment) | 9 Months Ended |
Sep. 30, 2021 | |
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Equipment) | |
3. Information and other Technology, Inventory Management Equipment and other Capital Equipment | 3. Information Technology, Medical Technology, Telecommunications Technology, Inventory Management and Other Business-Essential Capital Equipment (“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 three months ended September 30, 2021 and 2020 was approximately $10,000 and $20,000, respectively. Gain from sale of equipment included in revenue for the nine months ended September 30, 2021 and 2020, was approximately $20,000 and $66,000, 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 September 30, 2021 was approximately $2,505,000 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 September 30, 2021 was approximately $8,865,000. The Partnership’s share of the outstanding debt associated with this equipment at September 30, 2021 was approximately $0 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 September 30, 2021 was approximately $0. The Partnership’s share of the cost of the equipment in which it participates with other partnerships at December 31, 2020 was approximately $2,558,000 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, 2020 was approximately $8,971,000. The Partnership’s share of the outstanding debt associated with this equipment at December 31, 2020 was approximately $16,000and 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, 2020 was approximately $177,000. The following is a schedule of approximate future minimum rentals on non-cancellable operating leases: Periods Ended December 31, Amount Three months ended December 31, 2021 $ 12,000 Year Ended December 31, 2022 32,000 Year Ended December 31, 2023 27,000 Year Ended December 31, 2024 21,000 Year Ended December 31, 2025 9,500 $ 101,500 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 | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions | |
4. Related Party Transactions | 4. Related Party Transactions Receivables/Payables As of September 30, 2021, and December 31, 2020, the Company’s related party receivables and payables are short term, unsecured and non-interest bearing. Nine months ended September 30, 2021 2020 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 nine months ended September 30, 2021 and 2020, the Partnership was charged approximately $86,000 and $82,000 in Other LP expense, respectively. $ 206,000 $ 234,000 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. $ 1,500 $ 2,000 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 $ 20,000 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. $ 136 $ 5,000 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable | |
5. Notes Payable | 5. Notes Payable Notes payable consisted of the following approximate amounts: September 30, 2021 December 31, 2020 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 $ - $ 6,000 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 - 5,500 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 - 3,000 Installment note payable to bank; interest rate of 5.33%, due in monthly installments of $582, including interest, with final payment in August 2021 - 4,500 Installment note payable to bank; interest rate of 4.14%, due in monthly installments of $705, including interest, with final payment in August 2024 23,500 29,000 Installment note payable to bank; interest rate of 5.00%, due in monthly installments of $493, including interest, with final payment in November 2024 17,500 21,000 $ 41,000 $ 69,000 The notes are secured by specific equipment with a carrying value of approximately $45,000 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 September 30, 2021 are as follows: Amount Three months ended December 31, 2021 $ 4,000 Year ended December 31, 2022 13,000 Year ended December 31, 2023 13,500 Year ended December 31, 2024 10,500 $ 41,000 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 | 9 Months Ended |
Sep. 30, 2021 | |
Supplemental Cash Flow Information | |
6. Supplemental Cash Flow Information | 6. Supplemental Cash Flow Information No interest or principal on notes payable was paid by the Partnership during 2021 and 2020 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: Nine months ended September 30, 2021 2020 Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 28,000 $ 90,000 During the nine months ended September 30, 2021 and 2020, the Partnership wrote-off fully amortized acquisition and finance fees of approximately $12,000 and $24,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
7. Commitments and Contingencies | 7. 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. 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 2021 and beyond. 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 at that time 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. Despite offering no additional evidence or legal reasoning from when SEC originally remanded this matter (for FINRA’s opinion being an unreviewably flawed opinion), the SEC upheld FINRA’s new 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. On February 26, 2021, the United States Court of Appeals for the District of Columbia Circuit, made their ruling. They dismissed in part and denied in part Ms. Springsteen-Abbott’s petition. This was regardless of CCC’s good faith reimbursements made many years ago of the questioned expense items of $208,000 (due to improper documentation), initially claimed misallocations by FINRA, even prior to FINRA’s reducing its final claim to $36,226. Prior to the original appeal to the SEC, Ms. Springsteen-Abbott discovered CCC’s required documentation of these items for FINRA review, which FINRA refused to consider, despite such efforts the District Court upheld the bar, despite admittingly not addressing her “due process” rights, for legal administrative procedural reasons. However, given the SEC’s prior removal of FINRA’s fine and the District Court upholding that removal, the General Partner anticipates that this ruling will not result in any material financial impact to the Funds. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies (Policies) | |
Basis of Presentation | The financial information presented as of any date other than December 31, 2020 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, 2020 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 and nine months ended September 30, 2021 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2021. |
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. Receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of September 30, 2021 and December 31, 2020 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 September 30, 2021 and December 31, 2020 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 September 30, 2021, cash and cash equivalents were held in one account maintained at one financial institution with an aggregate balance of approximately $67,000. Bank accounts are federally insured up to $250,000 by the FDIC. At September 30, 2021, the total cash balance was as follows: At September 30, 2021 Balance Total bank balance $ 67,000 FDIC insured (67,000 ) 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 2021 due to many factors, including cash receipts, equipment acquisitions, interest rates and distributions to limited partners. |
Recent Accounting Pronouncements Not Yet Adopted | In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard establishes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in a timelier recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of the financial instrument. Measurement of expected credit losses are to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard. Instead, entities would need to apply other U.S. GAAP, namely Topic 842 (Leases), to account for changes in the collectability assessment for operating leases. Other than operating lease receivables, Partnership trade receivables include receivables from finance leases and equipment sales. Under Topic 606 (Revenue from Contracts with Customers), revenue is recognized when, among other criteria, it is probable that the entity will collect the consideration to which it is entitled for goods or services transferred to a customer. At the point that finance lease receivables are recorded, they become subject to the CECL model and estimates of expected credit losses over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. Trade receivables derived from equipment sales are of short duration and there is not a material difference between incurred losses and expected losses. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 for the Partnership until December 15, 2022. While we continue to evaluate the new guidance, including the subsequent updates to Topic 326, we do not anticipate that adoption will have a material impact on the Partnership financial statements and related disclosures. For the three and nine months ended September 30, 2021 and 2020, Partnership finance lease revenue subject to CECL represented less than 1% of total lease revenue. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies (Tables) | |
Schedule of cash and cash equivalents | At September 30, 2021 Balance Total bank balance $ 67,000 FDIC insured (67,000 ) Uninsured amount $ - |
Information Technology Medica_2
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Equipment) | |
Schedule of future minimum rentals on non-cancellable operating leases | Periods Ended December 31, Amount Three months ended December 31, 2021 $ 12,000 Year Ended December 31, 2022 32,000 Year Ended December 31, 2023 27,000 Year Ended December 31, 2024 21,000 Year Ended December 31, 2025 9,500 $ 101,500 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions | |
Schedule of related party transactions | Nine months ended September 30, 2021 2020 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 nine months ended September 30, 2021 and 2020, the Partnership was charged approximately $86,000 and $82,000 in Other LP expense, respectively. $ 206,000 $ 234,000 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. $ 1,500 $ 2,000 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 $ 20,000 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. $ 136 $ 5,000 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable (Tables) | |
Schedule of notes payable | September 30, 2021 December 31, 2020 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 $ - $ 6,000 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 - 5,500 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 - 3,000 Installment note payable to bank; interest rate of 5.33%, due in monthly installments of $582, including interest, with final payment in August 2021 - 4,500 Installment note payable to bank; interest rate of 4.14%, due in monthly installments of $705, including interest, with final payment in August 2024 23,500 29,000 Installment note payable to bank; interest rate of 5.00%, due in monthly installments of $493, including interest, with final payment in November 2024 17,500 21,000 $ 41,000 $ 69,000 |
Schedule of aggregate maturities of notes payable | Amount Three months ended December 31, 2021 $ 4,000 Year ended December 31, 2022 13,000 Year ended December 31, 2023 13,500 Year ended December 31, 2024 10,500 $ 41,000 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Supplemental Cash Flow Information | |
Schedule of other noncash activities | Nine months ended September 30, 2021 2020 Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 28,000 $ 90,000 |
Business (Details Narrative)
Business (Details Narrative) - USD ($) | Mar. 06, 2009 | Sep. 30, 2021 |
Business | ||
Offering purchase price per unit | $ 20 | |
Offered of sale units | 2,500,000 | |
Number of sale units | 1,810,311 | |
Limited partner contributions | $ 36,000,000 | |
Working capital deficit | $ (188,000) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Sep. 30, 2021USD ($) |
Summary of Significant Accounting Policies | |
Total bank balance | $ 67,000 |
FDIC insured | (67,000) |
Uninsured amount | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Summary of Significant Accounting Policies | |
Cash and cash equivalents held | $ 67,000 |
FDIC insured limit | $ 250,000 |
Information Technology Medica_3
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Details) | Sep. 30, 2021USD ($) |
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Equipment) | |
Three months ended December 31, 2021 | $ 12,000 |
Year ended December 31, 2022 | 32,000 |
Year ended December 31, 2023 | 27,000 |
Year ended December 31, 2024 | 21,000 |
Year ended December 31, 2025 | 9,500 |
Total | $ 101,500 |
Information Technology Medica_4
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Information Technology Medical Technology Telecommunications Technology Inventory Management Equipment (Equipment) | |||||
Gain on sale of equipment | $ 10,000 | $ 20,000 | $ 20,000 | $ 66,000 | |
Equipment shared | 2,505,000 | 2,505,000 | $ 2,558,000 | ||
Total shared equipment | 8,865,000 | 8,865,000 | 8,971,000 | ||
Debt shared | 0 | 0 | 16,000 | ||
Outstanding debt total | $ 0 | $ 0 | $ 177,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Related Party Transactions | ||
Reimbursable expenses | $ 206,000 | $ 234,000 |
Equipment acquisition fee | 1,500 | 2,000 |
Equipment management fee | 8,000 | 20,000 |
Equipment liquidation fee | $ 136 | $ 5,000 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Notes payable | $ 41,000 | $ 69,000 |
Note One [Member] | ||
Notes payable | $ 0 | 6,000 |
Notes payable 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 | |
Note Two [Member] | ||
Notes payable | $ 0 | 5,500 |
Notes payable 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 | |
Note Three [Member] | ||
Notes payable | $ 0 | 3,000 |
Notes payable 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 | |
Note Four [Member] | ||
Notes payable | $ 0 | 4,500 |
Notes payable 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 | |
Note Five [Member] | ||
Notes payable | $ 23,500 | 29,000 |
Notes payable 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 | |
Note Six [Member] | ||
Notes payable | $ 17,500 | $ 21,000 |
Notes payable description | Installment note payable to bank; interest rate of 5.00%, due in monthly installments of $493, including interest, with final payment in November 2024 |
Notes Payable (Details 1)
Notes Payable (Details 1) | Sep. 30, 2021USD ($) |
Notes Payable (Tables) | |
Three months ended December 31, 2021 | $ 4,000 |
Year ended December 31, 2022 | 13,000 |
Year ended December 31, 2023 | 13,500 |
Year ended December 31, 2024 | 10,500 |
Long-term debt | $ 41,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | Sep. 30, 2021USD ($) |
Notes Payable (Tables) | |
Notes carrying value | $ 45,000 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Supplemental Cash Flow Information | ||
Lease revenue net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank | $ 28,000 | $ 90,000 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Supplemental Cash Flow Information | ||
Fully amortized fees written off | $ 12,000 | $ 24,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2015 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reducing final claim | $ 36,226 | ||||
Questioned expense | $ 208,000 | ||||
Business acquisition description | 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 | ||||
Allegedly misallocated expenses | $ 88,257 | $ 112,575 | $ 339,756 | $ 543,690 | |
Ms. Springsteen Abbott [Member] | |||||
Allegedly misallocated expenses | $ 208,000 | ||||
Allegedly misallocated expenses back | $ 208,000 |