UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 33-69996
COMMONWEALTH INCOME & GROWTH FUND III
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2895714
(State or other jurisdiction of I.R.S. Employer Identification Number)
incorporation or organization)
470 John Young Way Suite 300
Exton, PA 19341
(Address, including zip code, of principal executive offices)
(610) 594-9600
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (III) has been subject to such filing
requirements for the past 90 days:
YES [X] NO [ ]
Commonwealth Income & Growth Fund III
Balance Sheets
March 31 December 31,
2002 2001
--------------- ---------------
(unaudited)
Assets
Cash and cash equivalents $ 35,549 $ 5,105
Lease income receivable, net of allowance for doubtful
accounts reserve of $8,000 as of March 31, 2002 47,728 42,297
Accounts Receivables - Commonwealth Capital Corp 583 --
Prepaid Fees 3,000 --
--------------- ---------------
86,860 47,402
--------------- ---------------
Computer equipment, at cost 2,757,323 3,538,347
Accumulated depreciation (1,797,052) (2,191,099)
--------------- ---------------
960,271 1,347,248
--------------- ---------------
Equipment acquisition costs and deferred expenses, net 22,214 32,959
--------------- ---------------
Total assets $ 1,069,345 $ 1,427,609
=============== ===============
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 36,195 $ 26,929
Accounts payable - Commonwealth Capital Corp -- 25,140
Accounts payable - General Partner 461 91,446
Accounts payable - other limited partnerships 270 2,113
Unearned lease income 1,018 --
Notes payable 197,211 344,324
--------------- ---------------
Total liabilities 235,155 489,952
--------------- ---------------
Partners' Capital
General partner 1,000 1,000
Limited partners 833,190 936,657
--------------- ---------------
Total partners' capital 834,190 937,657
--------------- ---------------
Total liabilities and partners' capital $ 1,069,345 $ 1,427,609
=============== ===============
see accompanying notes to financial statements
Commonwealth Income & Growth Fund III
Statements of Income
Three Months Ended
March 31
2002 2001
--------------- ---------------
(unaudited)
Income
Lease $ 274,500 $ 318,604
Interest and other 134 2,450
Gain on sale of equipment 4,994 --
--------------- ---------------
Total Income 279,628 321,054
--------------- ---------------
Expenses
Operating, excluding depreciation 61,996 80,049
Equipment management fee - General Partner 13,725 15,931
Interest 5,561 13,431
Depreciation 203,694 238,117
Amortization of equipment
acquisition costs and deferred expenses 10,745 12,817
Bad debt expense 8,000 --
--------------- ---------------
Total expenses 303,721 360,345
--------------- ---------------
Net (loss) $ (24,093) $ (39,291)
=============== ===============
Net (loss) per equivalent limited
partnership unit $ (0.16) $ (0.26)
=============== ===============
Weighted Average number of equivalent limited
partnership units outstanding during the period 151,178 151,178
=============== ===============
see accompanying notes to financial statements
Commonwealth Income & Growth Fund III
Statements of Partners' Capital
For the Three Months ended March 31, 2002
(unaudited)
General Limited
Partner Partner General Limited
Units Units Partner Partner Total
--------------- --------------- --------------- --------------- ---------------
Partners' capital - December 31, 2001 50 151,178 $ 1,000 $ 936,657 $ 937,657
Net Income (loss) 783 (24,876) (24,093)
Distributions (783) (78,591) (79,374)
--------------- --------------- --------------- --------------- ---------------
Partners' capital - March 31, 2002 50 151,178 $ 1,000 $ 833,190 $ 834,190
=============== =============== =============== =============== ===============
see accompanying notes to financial statements
Commonwealth Income & Growth Fund III
Statements of Cash Flow
For the Three Months Ended March 31, 2002 and 2001
2002 2001
--------------- ---------------
Operating activities (unaudited)
Net (loss) $ (24,093) $ (39,291)
Adjustments to reconcile net (loss) to net cash
(used in) provided by operating activities
Depreciation and amortization 214,439 250,934
Allowance for bad debt 8,000 --
(Gain) on sale of computer equipment (4,994) --
Other noncash activities included in
determination of net income (147,113) (139,636)
Changes in assets and liabilities
(Increase) decrease in assets
Lease income receivable (13,431) 39,196
Other receivable, General Partner -- 16,713
Prepaid fees (3,000) 10,000
Increase (decrease) in liabilities
Accounts payable 9,266 6,382
Accounts payable, Common Capital Corp. (25,723) (21)
Accounts payable, General Partner (90,985) --
Accounts payable, affiliated partnerships (1,843) --
Unearned lease income 1,018 3,936
--------------- ---------------
Net cash (used in) provided by operating activities (78,459) 148,213
--------------- ---------------
Investing activities:
Capital Expenditures -- (154,251)
Net proceeds from the sale of computer equipment 188,277 --
Equipment acquisition fees paid to General Partner -- (12,172)
--------------- ---------------
Net cash provided by (used in) investing activities 188,277 (166,423)
--------------- ---------------
Financing activities:
Distributions to partners (79,374) (79,375)
--------------- ---------------
Net increase (decrease) in cash and equivalents 30,444 (97,585)
Cash and cash equivalents, beginning of period 5,105 110,730
--------------- ---------------
Cash and cash equivalents, end of period $ 35,549 $ 13,145
=============== ===============
see accompanying notes to financial statements
NOTES TO FINANCIAL STATEMENTS
1. Business Commonwealth Income & Growth Fund III (the
"Partnership") is a limited partnership organized
in the Commonwealth of Pennsylvania. The
Partnership offered for sale up to 750,000 Units
of the limited partnership at the purchase price
of $20 per unit (the "Offering"). The Offering was
terminated at the close of business on July 31,
2000 by the General Partner. The Partnership used
the proceeds of the Offering to acquire, own and
lease various types of computer peripheral
equipment and other similar capital equipment,
which will be leased primarily to U.S.
corporations and institutions. Commonwealth
Capital Corp, on behalf of the Partnership and
other affiliated partnerships, acquires computer
equipment subject to associated debt obligations
and lease revenue and allocates a participation in
the cost, debt and lease revenue to the various
partnerships based on certain risk factors. 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 Commonwealth
Capital Corp. Approximately ten years after the
commencement of operations, the Partnership
intends to sell or otherwise dispose of all of its
computer equipment, make final distributions to
partners, and to dissolve. Unless sooner
terminated, the Partnership will continue until
December 31, 2009.
2. Summary of Basis of Presentation
Significant
Accounting The financial information presented as of any date
Policies other than December 31 has been prepared from the
books and records without audit. Financial
information as of December 31 has been derived
from the audited financial statements of
Commonwealth Income & Growth Fund III (the
"Partnership"), but does not include all
disclosures required by generally accepted
accounting principles. In the opinion of
management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair
presentation of the financial information for the
periods indicated have been included. For further
information regarding the Partnership's accounting
policies, refer to the financial statements and
related notes included in the Partnership's annual
report on Form 10-K for the year ended December
31, 2001. Operating results for the three-month
period ended March 31, 2002 are not necessarily
indicative of financial results that may be
expected for the full year ended December 31,
2002.
Revenue Recognition
Through March 31, 2002, the Partnership has only
entered into operating leases. Lease revenue is
recognized on a monthly basis in accordance with
the terms of the operating lease agreements.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported amounts
of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Long-Lived Assets
The Partnership evaluates its long-lived assets
when events or circumstances indicate that the
value of the asset may not be recoverable. The
Partnership determines whether an impairment
exists by estimating the undiscounted cash flows
to be generated by each asset. If the estimated
undiscounted cash flows are less than the carrying
value of the asset then an impairment exists. The
amount of the impairment is determined based on
the difference between the carrying value and the
fair value. The fair value is determined based on
estimated discounted cash flows to be generated by
the asset. As of March 31, 2002, there is no
impairment.
Depreciation on computer equipment for financial
statement purposes is based on the straight-line
method over estimated useful lives of four years.
Intangible Assets
Equipment acquisition costs and deferred expenses
are amortized on a straight-line basis over two-
to-four year lives. Unamortized acquisition fees
are charged to amortization expense when the
associated leased equipment is sold.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or
less to be cash equivalents. At March 31, 2002,
cash equivalents were invested in a money market
fund investing directly in Treasury obligations.
Income Taxes
The Partnership is not subject to federal income
taxes; instead, any taxable income (loss) is
passed through to the partners and included on
their respective income tax returns.
Taxable income differs from financial statement
net income as a result of reporting certain income
and expense items for tax purposes in periods
other than those used for financial statement
purposes, principally relating to depreciation,
amortization, and lease income.
Offering Costs
Offering costs are payments for selling
commissions, dealer manager fees, professional
fees and other offering expenses relating to the
syndication. Selling commissions are 7% of the
partners' contributed capital and dealer manager
fees are 2% of the partners' contributed capital.
These costs have been deducted from partnership
capital in the accompanying financial statements.
Net Income (Loss) Per Equivalent Limited
Partnership Unit
The net income (loss) per equivalent limited
partnership unit is computed based upon net income
(loss) allocated to the limited partners and the
weighted average number of equivalent units
outstanding during the period.
3. Computer The Partnership is the lessor of equipment under
Equipment operating leases with periods ranging from 12 to
36 months. In general, the lessee pays associated
costs such as repairs and maintenance, insurance
and property taxes.
The Partnership's share of the computer equipment
in which they participate at March 31, 2002 and
December 31, 2001 was approximately $878,000 for
both periods, which is included in the
Partnership's fixed assets on their balance sheet,
and the total cost of the equipment shared by the
Partnership with other partnerships at March 31,
2002 and December 31, 2001 was approximately
$3,226,000 for both periods. The Partnership's
share of the outstanding debt associated with this
equipment at March 31, 2002 and December 31, 2001
was approximately $145,000 and $181,000,
respectively, which is included in the
Partnership's liabilities on the balance sheet,
and the total outstanding debt at March 31, 2002
and December 31, 2001 related to the equipment
shared by the Partnership was approximately
$1,288,000 and $1,462,000, respectively.
The following is a schedule of future minimum
rentals on noncancellable operating leases at
March 31, 2002:
Amount
--------------------------------------------------
Nine Months ended December 31, 2002 $ 257,000
Year Ended December 31, 2003 169,000
Year Ended December 31, 2004 15,000
----------
$ 441,000
==================================================
4. Notes Payable Notes payable consisted of the following:
March 31, December 31, 2001
2002
---------------------------------------------------------------------------------
Installment notes payable to banks; interest
ranging from 7.42% to 7.60%, due in monthly
installments ranging from $515 to $1,845,
including interest, with final payments due
from April through December 2002. $ 25,869 $ 140,180
Installment notes payable to banks; interest
ranging from 7.35% to 8.10%, due in monthly
installments ranging from $1,162 to $3,465,
including interest, with final payments due
from January through June 2003. 75,391 96,749
Installment notes payable to banks; interest
ranging from 6.75% to 7.80%, due in monthly
installments ranging from $604 to $3,831,
including interest, with final payments due
from January through November 2004. 95,951 107,395
---------- ----------
$ 197,211 $ 344,324
=================================================================================
These notes are secured by specific computer
equipment and are nonrecourse liabilities of the
Partnership. Aggregate maturities of notes payable
for each of the periods subsequent to March 31,
2002 are as follows:
Amount
--------------------------------------------------
Nine months ended December 31, 2002 $ 109,629
Year ended December 31, 2003 77,346
Year ended December 31, 2004 10,236
----------
$ 197,211
==================================================
6. Supplemental Other noncash activities included in the
Cash Flow determination of net loss are as follows:
Information
Three months ended March 31, 2002 2001
- --------------------------------------------------------------------------------
Lease income, net of interest
expense on notes payable
realized as a result of
direct payment of
principal by lessee to bank $ 147,113 $ 139,636
No interest or principal on notes payable was paid by the
Partnership because direct payment was made by lessee to the
bank in lieu of collection of lease income and payment of
interest and principal by the Partnership.
Noncash investing and financing activities include
the following:
Three months ended March 31, 2002 2001
- --------------------------------------------------------------------------------
Debt assumed in connection
with purchase of
computer equipment $ -- $ 120,201
================================================================================
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
CRITICAL ACCOUNTING POLICIES
Financial Reporting Release No. 60, which was released by the Securities and
Exchange Commission, requires all companies to include a discussion of critical
accounting policies or methods used in the preparation of financial statements.
Our significant accounting policies are described in Note 1 of the Notes to the
Consolidated Financial Statements. The significant accounting policies that we
believe are the most critical to aid in fully understanding our reported
financial results include the following:
COMPUTER EQUIPMENT
Commonwealth Capital Corp, on behalf of the Partnership and other affiliated
partnerships, acquires computer equipment subject to associated debt obligations
and lease revenue and allocates a participation in the cost, debt and lease
revenue to the various partnerships based on certain risk factors.
REVENUE RECOGNITION
Through March 31, 2002, the Partnership has only entered into operating leases.
Lease revenue is recognized on a monthly basis in accordance with the terms of
the operating lease agreements.
LONG-LIVED ASSETS
The Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable. The Partnership
determines whether an impairment exists by estimating the undiscounted cash
flows to be generated by each asset. If the estimated undiscounted cash flows
are less than the carrying value of the asset then an impairment exists. The
amount of the impairment is determined based on the difference between the
carrying value and the fair value. Fair value is determined based on estimated
discounted cash flows to be generated by the asset.
Depreciation on computer equipment for financial statement purposes is based on
the straight-line method over estimated useful lives of four years.
Liquidity and Capital Resources
The Partnership's primary sources of capital for the three months ended March
31, 2002 were gross proceeds received from sale of equipment totaling $188,000.
Primary sources of capital for the three months ended March 31, 2001 was cash
from operations of $148,000. There were no proceeds from sale of equipment for
the period ending March 31, 2001. The primary use of cash for the three months
ended March 31, 2002, was for operating activities of $78,000. The primary use
of cash for the three months ended March 31, 2001 was for capital expenditures
of new equipment totaling $154,000. There were no capital expenditures for new
equipment for the period ending March 31, 2002. There were payments of preferred
distributions to partners of approximately $79,000 for each of the three months
ended March 31, 2002 and 2001.
For the three month period ended March 31, 2002, the Partnership used cash for
operating activities of $78,000, which includes a net loss of $24,000, a gain on
sale of equipment totaling $5,000, repayment of payables to Commonwealth Capital
Corp. of approximately $26,000, payment of payables to the General Partner of
approximately $91,000, and depreciation and amortization expenses of $214,000.
Other noncash activities included in the determination of net loss include
direct payments of lease income by lessees to banks of $147,000.
For the three month period ended March 31, 2001, the Partnership generated cash
flows from operating activities of $148,000, which includes a net loss of
$39,000, and depreciation and amortization expenses of $251,000. Other noncash
activities included in the determination of net (loss) include direct payments
of lease income by lessees to banks of $140,000.
Cash is invested in money market accounts that invest directly in treasury
obligations pending the Partnership's use of such funds to purchase additional
computer equipment, to pay Partnership expenses or to make distributions to the
Partners. At March 31, 2002, the Partnership had approximately $96,000 invested
in these money market accounts.
The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses. As
of March 31, 2002, the Partnership had future minimum rentals on non-cancelable
operating leases of $257,000 for the balance of the year ending December 31,
2002 and $184,000 thereafter. At March 31, 2002, the outstanding debt was
$197,000, with interest rates ranging from 6.75% to 8.10%, and will be payable
through November 2004.
The Partnership's cash from operations is expected to continue to be adequate to
cover all operating expenses, liabilities, and preferred distributions to
Partners during the next 12-month period. 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 will attempt to
obtain additional funds by disposing of or refinancing Equipment, or by
borrowing within its permissible limits. The Partnership may, from time to time,
reduce the distributions to its Partners if it deems necessary. Since the
Partnership's leases are on a "triple-net" basis, no reserve for maintenance and
repairs are deemed necessary.
The Partnership's share of the computer equipment in which they participate at
March 31, 2002 and December 31, 2001 was approximately $878,000 for both
periods, which is included in the Partnership's fixed assets on their balance
sheet, and the total cost of the equipment shared by the Partnership with other
partnerships at March 31, 2002 and December 31, 2001 was approximately
$3,226,000 for both periods. The Partnership's share of the outstanding debt
associated with this equipment at March 31, 2002 and December 31, 2001 was
approximately $145,000 and $181,000, respectively, which is included in the
Partnership's liabilities on the balance sheet, and the total outstanding debt
at March 31, 2002 and December 31, 2001 related to the equipment shared by the
Partnership was approximately $1,288,000 and $1,462,000, respectively.
Results of Operations
Three Months Ended March 31, 2002 compared to Three Months Ended March 31, 2001
For the quarter ended March 31, 2002, the Partnership recognized income of
$280,000 and expenses of $304,000, resulting in a net loss of $24,000. For the
quarter ended March 31, 2001, the Partnership recognized income of $321,000 and
expenses of $360,000, resulting in a net loss of $39,000.
Lease income decreased by 14% to $275,000 for the quarter ended March 31, 2002,
from $319,000 for the quarter ended March 31, 2001, primarily due to the fact
that more lease agreements ended than new lease agreements acquired since the
quarter ended March 31, 2001.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expenses decreased 23% to approximately
$62,000 for the quarter ended March 31, 2002, from $80,000 for the quarter ended
March 31, 2001, which is primarily attributable to a decrease in outside office
services of approximately $5,000, a decrease in insurance of approximately
$8,000, a decrease in remarketing fees of approximately $2,000, a decrease in
conventions of approximately $7,000, and an increase in miscellaneous office
expenses of approximately $4,000.
The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 14% to approximately $14,000 for the quarter ended
March 31, 2002, from $16,000 for the quarter ended March 31, 2001, which is
consistent with the decrease in lease income.
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
15% to approximately $214,000 for the quarter ended March 31, 2002, from
$251,000 for the quarter ended March 31, 2001 due to equipment and acquisition
fees being fully depreciated/amortized and not being replaced with as many new
purchases.
The partnership recorded bad debt expenses of approximately $8,000 related to
disputed accounts receivables balances for the three months ended March 31,
2002.
The Partnership sold computer equipment with a net book value of $183,000 for
the quarter ended March 31, 2002, for a net gain of $5,000. The Partnership did
not sell computer equipment for the quarter ended March 31, 2001.
Interest expense decreased 59% to $6,000 for the quarter ended March 31, 2002
from $13,000 for the quarter ended March 31, 2001, primarily due to the decrease
in debt relating to the purchase of computer equipment.
RECENT ACCOUNTING PRONOUNCEMENTS
Business Combinations
In June 2001, the FASB issued Statement No. 141, "Business
Combinations." The Statement addresses financial accounting and reporting for
business combinations and supersedes APB Opinion No. 16, Business Combinations,
and FASB Statement No. 38, Accounting for Preacquisiton Contingencies of
Purchased Enterprises. All business combinations in the scope of the Statement
are to be accounted for using the purchase method. The provisions of the
Statement apply to all business combinations initiated after June 30, 2001. The
Statement also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001, or later.
There was no material, financial condition, or equity upon adoption of Statement
No. 141.
Goodwill and Other Intangible Assets
In June 2001, the FASB issued Statement No. 142, "Goodwill and
Other Intangible Assets." The Statement addresses financial accounting and
reporting for goodwill and other intangible assets and supersedes APB Opinion
No. 17, Intangible Assets. It addresses how tangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition. The Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements.
The provisions of the Statement are required to be applied
starting with fiscal years beginning after December 15, 2001, except that
goodwill and intangible assets acquired after June 30, 2001, will be subject
immediately to the non-amortization and amortization provisions of the
Statement. Early application is permitted for entities with fiscal years
beginning after March 15, 2001, provided that the first interim financial
statements have not previously been issued. The Statement is required to be
applied at the beginning of an entity's fiscal year and to be applied to all
goodwill and other intangible assets recognized in its financial statements at
that date. There was no material impact on earnings, financial condition, or
equity upon adoption of Statement No. 142 at January 1, 2002.
Impairment or Disposal of Long-Lived Assets
In August 2001, the FASB issued Statement No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets." This Statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. However, the Statement
retains the fundamental provisions of Statement 121 for (a) recognition and
measurement of the impairment of long-lived assets to be held and used and (b)
measurement of long-lived assets to be disposed of by sale.
This Statement supersedes the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations-Reporting
the Effects of Disposal of a Segment of a business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the disposal of a
segment of a business. However, this Statement retains the requirement of
Opinion 30 to report discontinued operations separately from continuing
operations and extends that reporting to a component of an entity that either
has been disposed of (by sale, by abandonment, or in distribution to owners) or
is classified as held for sale. This Statement also amends ARB No. 51,
Consolidated Financial Statements, to eliminate the exception to consolidation
for a temporarily controlled subsidiary.
The provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years, with earlier application encouraged.
The provisions of this Statement generally are to be applied prospectively. The
adoption of the Statement on January 1, 2002, did not have a material impact on
earnings, financial condition, or equity.
Part III: OTHER INFORMATION
Commonwealth Income & Growth Fund III
Item 1. Legal Proceedings.
Inapplicable
Item 2. Changes in Securities.
Inapplicable
Item 3. Defaults Upon Senior Securities.
Inapplicable
Item 4. Submission of Matters to a Vote of Securities
Holders.
Inapplicable
Item 5. Other Information.
Inapplicable
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits: None
b) Report on Form 8-K: None
Item 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Partnership believes its exposure to market
risk is not material due to the fixed interest rate
of its long-term debt.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMONWEALTH INCOME & GROWTH FUND III
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. General Partner
By:
- ------------------ -----------------------------
Date George S. Springsteen
President