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 SEPTEMBER 30, 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
September 30 December 31,
2002 2001
----------------------------------------
(unaudited)
Assets
Cash and cash equivalents $ 1,268 $ 5,105
Lease income receivable, net of allowance for doubtful 24,488 42,297
accounts reserve of $28,096 as of September 30,
2002, and $0 as of December 31, 2001
Prepaid Fees 3,000 -
----------------------------------------
28,756 47,402
----------------------------------------
Computer equipment, at cost 2,840,950 3,538,347
Accumulated depreciation (1,949,642) (2,191,099)
----------------------------------------
891,308 1,347,248
----------------------------------------
Equipment acquisition costs and deferred expenses, net 24,255 32,959
----------------------------------------
Total assets $ 944,319 $ 1,427,609
========================================
Liabilities and Partners' Capital
Liabilities
Accounts payable 30,190 26,929
Accounts payable - Other LP Affiliates 673 2,113
Accounts payable - General Partner 23,745 91,446
Accounts payable - Commonwealth Capital Corp. 24,434 25,140
Unearned lease income 58,572 -
Notes payable 309,390 344,324
----------------------------------------
Total liabilities 447,004 489,952
----------------------------------------
Partners' Capital
General partner 1,000 1,000
Limited partners 496,315 936,657
----------------------------------------
Total partners' capital 497,315 937,657
----------------------------------------
Total Liabilities and partners' capital $ 944,319 $ 1,427,609
========================================
see accompanying notes to financial statements
Commonwealth Income & Growth Fund III
Statements of Income
Three Months Ended Nine Months Ended
September 30 September 30
2002 2001 2002 2001
--------------------------------------- --------------------------------
(unaudited) (unaudited)
Income
Lease $ 178,603 $ 313,467 $ 635,446 $ 884,991
Interest and other 67 132 317 3,989
(Loss) gain on sale of computer equipment (4,505) - 4,612 -
-------------------- -------------- ------------- -------------
Total Income 174,165 313,599 640,375 888,980
-------------------- -------------- ------------- -------------
Expenses
Operating, excluding depreciation 77,275 46,399 204,204 167,964
Equipment management fee - General Partner 8,931 15,673 31,773 44,058
Interest 6,231 10,505 17,079 37,044
Depreciation 163,398 246,377 537,202 726,420
Amortization of equipment
acquisition costs and deferred expenses 5,714 11,667 22,324 35,875
Bad Debt Expense 6,035 - 30,011 -
-------------------- -------------- ------------- ------------
Total expenses 267,584 330,621 842,593 1,011,361
-------------------- -------------- -------------- -------------
Net (loss) $ (93,419) $ (17,022) $ (202,218) $ (122,381)
==================== ============== ============= =============
Net (loss) per equivalent limited
partnership unit $ (0.62) $ (0.11) $ (1.34) $ (0.81)
==================== ============== ============== =============
Weighted Average number of equivalent limited
partnership units outstanding during the period 151,178 151,178 151,178 151,178
==================== ============== ============== =============
see accompanying notes to financial statements
Commonwealth Income & Growth Fund III
Statements of Partners' Capital
For the Nine Months ended September 30, 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) 2,351 (204,569) (202,218)
Distributions (2,351) (235,773) (238,124)
------------------------------------------------------------------------------------------
Partners' capital - September 30, 2002 50 151,178 $ 1,000 $ 496,315 $497,315
=============================== ================ =================== ====================
see accompanying notes to financial statements
Commonwealth Income & Growth Fund III
Statements of Cash Flow
For the Nine Months Ended September 30, 2002 and 2001
2002 2001
----------------------------------------
(unaudited)
Operating activities
Net (loss) $ (202,218) $ (122,381)
Adjustments to reconcile net (loss) to net cash
provided by operating activities
Depreciation and amortization 559,526 762,295
(Gain) on sale of computer equipment (4,612) -
Other noncash activities included in
determination of net (loss) (255,347) (438,084)
Changes in assets and liabilities
(Increase) decrease in assets
Lease income receivable 17,809 3,817
Other receivables - Other LP's - (32,751)
Other receivable, Common Capital Corp - 16,683
Other receivables - 10,000
Prepaid Items (3,000) -
Increase (decrease) in liabilities
Accounts payable 3,261 52,273
Accounts payable, Common Capital Corp. (706) 6,242
Accounts payable, General Partner (67,701) 50,223
Accounts payable, Other LP's (1,440) -
Unearned lease income 58,572 -
---------------------- ---------------
Net cash provided by operating activities 104,144 308,317
---------------------- ---------------
Investing activities:
Capital expenditures (64,989) (167,937)
Net proceeds from the sale of computer equipment 208,752 -
Equipment acquisition fees paid to General Partner (11,416) (11,785)
---------------------- ---------------
Net cash provided by (used in) investing activities 132,347 (179,722)
---------------------- ---------------
Financing activities:
Distributions to partners (238,124) (238,123)
Debt placement fee paid to the General Partner (2,204) (1,202)
---------------------- ---------------
Net cash (used in) financing activities (240,328) (239,325)
---------------------- ---------------
Net (decrease) in cash and equivalents (3,837) (110,730)
Cash and cash equivalents, beginning of period 5,105 110,730
---------------------- ---------------
Cash and cash equivalents, end of period $ 1,268 $ -
====================== ===============
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 agreements 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. Commonwealth Capital Corp. is a member of the
Investment Program Association (IPA), Financial Planning
Association (FPA), and the Equipment Leasing Association
(ELA). 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 other than
Policies 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 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 nine-month period ended September 30, 2002 are
not necessarily indicative of financial results that may be
expected for the full year ended December 31, 2002.
Revenue Recognition
Through September 30, 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
September 30, 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
September 30, 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.
Reimbursable Expenses
Reimbursable expenses, which are charged to the Partnership by
CCC in connection with the administration and operation of the
Partnership, are allocated to the Partnership based upon
several factors including, but not limited to, the number of
investors, compliance issues, and the number of existing
leases.
3. Computer The Partnership is the lessor of equipment under operating
Equipment 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 with other partnerships at September 30, 2002
and December 31, 2001 was approximately $993,000 and $878,000,
respectively, 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
September 30, 2002 and December 31, 2001 was approximately
$3,855,000 and $3,226,000, respectively. The Partnership's
share of the outstanding debt associated with this equipment
at September 30, 2002 and December 31, 2001 was approximately
$181,000 for both periods, which is included in the
Partnership's liabilities on the balance sheet, and the total
outstanding debt at September 30, 2002 and December 31, 2001
related to the equipment shared by the Partnership was
approximately $1,448,000 and $1,462,000, respectively.
The following is a schedule of future minimum rentals on
noncancellable operating leases at September 30, 2002:
Amount
----------------------------------------------------------- --------------
Three Months ended December 31, 2002 $ 135,000
Year Ended December 31, 2003 350,000
Year Ended December 31, 2004 103,000
Year Ended December 31, 2005 14,000
------------
$ 602,000
------------------------------------------------------------------------------
4. Notes Payable Notes payable consisted of the following:
September 30, December 31, 2001
2002
----------------------------------------------------------------------------------
Installment notes payable to banks;
interest ranging from 6.60% to 8.10%,
due in monthly installments ranging
from $515 to $4,983, including
interest, with final payments due
from January through December 2002. $ 1,766 $ 126,426
Installment notes payable to banks;
interest ranging from 7.35% to 7.60%,
due in monthly installments ranging
from $1,162 to $3,465, including
interest, with final payments due
from January through June 2003. 48,462 110,503
Installment notes payable to banks;
interest ranging from 6.75% to 8.00%,
due in monthly installments ranging
from $382 to $3,831, including
interest, with final payments due
from January through November 2004. 155,972 107,395
Installment notes payable to banks;
interest ranging from 6.25% to 6.75%,
due in monthly installments ranging
from $123 to $1,735, including
interest, with final payments due
from February through April 2005. 103,190 -
-----------------------------------
$ 309,390 $ 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 September 30, 2002 are as follows:
Amount
-------------------------------------------------------------------------------
Three months ended December 31, 2002 $ 55,622
Year ended December 31, 2003 162,331
Year ended December 31, 2004 81,135
Year ended December 31, 2005 10,302
------------
$ 309,390
============
5. Supplemental Other noncash activities included in the determination of net
Cash Flow loss are as follows:
Information
Nine months ended September 30, 2002 2001
- ----------------------------------------------------------------------------------------------
Lease income, net of interest expense on
notes payable realized as a result of direct
payment of principal by lessee to bank $ 255,347 $ 438,084
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:
Nine months ended September 30, 2002 2001
- ----------------------------------------------------------------------------------------------
Debt assumed in connection with purchase
of computer equipment $ 220,413 $ 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
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 September 30, 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 nine months ended September
30, 2002 and 2001 were cash from operations of $104,000 and $308,000,
respectively, and the net proceeds received from sale of equipment for the nine
months ended September 30, 2002 totaled $209,000. There were no sales of
equipment for the nine months ended September 30, 2001. The primary use of cash
for the nine months ended September 30, 2002 and 2001 was for capital
expenditures of new equipment totaling $65,000 and $168,000, respectively and
payments of preferred distributions to partners of approximately $238,000 for
the nine months ended September 30, 2002 and 2001.
For the nine month period ended September 30, 2002, the Partnership generated
cash flows from operating activities of $104,000, which includes a net loss of
$202,000, a gain on sale of equipment totaling $5,000, and depreciation and
amortization expenses of $560,000. Other noncash activities included in the
determination of net (loss) include direct payments of lease income by lessees
to banks of $255,000.
For the nine month period ended September 30, 2001, the Partnership generated
cash flows from operating activities of $308,000, which includes a net loss of
$122,000, and depreciation and amortization expenses of $762,000. Other noncash
activities included in the determination of net (loss) include direct payments
of lease income by lessees to banks of $438,000.
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.
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 September 30, 2002, the Partnership had future minimum rentals on
non-cancelable operating leases of $135,000 for the balance of the year ending
December 31, 2002 and $467,000 thereafter. At September 30, 2002, the
outstanding debt was $309,000, with interest rates ranging from 6.25% to 8.10%,
and will be payable through April 2005.
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 with
other partnerships at September 30, 2002 and December 31, 2001 was approximately
$993,000 and $878,000, respectively, 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 September 30, 2002 and December
31, 2001 was approximately $3,855,000 and $3,226,000, respectively. The
Partnership's share of the outstanding debt associated with this equipment at
September 30, 2002 and December 31, 2001 was approximately $181,000 for both
periods, which is included in the Partnership's liabilities on the balance
sheet, and the total outstanding debt at September 30, 2002 and December 31,
2001 related to the equipment shared by the Partnership was approximately
$1,448,000 and $1,462,000, respectively.
Results of Operations
Three Months Ended September 30, 2002 compared to Three Months Ended September
30, 2001
For the quarter ended September 30, 2002, the Partnership recognized income of
$174,000 and expenses of $267,000, resulting in a net loss of $93,000. For the
quarter ended September 30, 2001, the Partnership recognized income of $314,000
and expenses of $331,000, resulting in a net loss of $17,000.
Lease income decreased by 43% to $179,000 for the quarter ended September 30,
2002, from $314,000 for the quarter ended September 30, 2001, primarily due to
the fact that more lease agreements ended than new lease agreements acquired
since the quarter ended September 30, 2001.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expenses increased 67% to approximately
$77,000 for the quarter ended September 30, 2002, from $46,000 for the quarter
ended September 30, 2001, which is primarily attributable to an increase in the
amount charged by CCC, a related party, to the Partnership for the
administration and operation of approximately $22,000, an increase in insurance
of approximately $3,000, and an increase in due diligence of approximately
$5,000.
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 43% to approximately $9,000 for the quarter ended
September 30, 2002, from $16,000 for the quarter ended September 30, 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
34% to approximately $169,000 for the quarter ended September 30, 2002, from
$258,000 for the quarter ended September 30, 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 $6,000 related to
disputed accounts receivables balances for the quarter ended September 30, 2002.
The Partnership sold computer equipment with a net book value of $21,000 for the
quarter ended September 30, 2002, for a net (loss) of $5,000. The Partnership
did not sell computer equipment for the quarter ended September 30, 2001.
Interest expense decreased 40% to $6,000 for the quarter ended September 30,
2002 from $10,000 for the quarter ended September 30, 2001, primarily due to the
decrease in debt relating to the purchase of computer equipment.
Nine Months Ended September 30, 2002 compared to Nine Months Ended September 30,
2001
For the nine months ended September 30, 2002, the Partnership recognized income
of $640,000 and expenses of $842,000, resulting in a net loss of $202,000. For
the nine months ended September 30, 2001, the Partnership recognized income of
$889,000 and expenses of $1,011,000, resulting in a net (loss) of 122,000.
Lease income decreased by 28% to $635,000 for the nine months ended September
30, 2002, from $885,000 for the nine months ended September 30, 2001, primarily
due to the fact that more lease agreements ended than new lease agreements
acquired since the nine months ended September 30, 2001.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expenses increased 22% to approximately
$204,000 for the nine months ended September 30, 2002, from $168,000 for the
nine months ended September 30, 2001, which is primarily attributable to an
increase in the amount charged by CCC, a related party, to the Partnership for
the administration and operation of approximately $23,000, a decrease in
marketing of approximately $7,000, an increase in due diligence of approximately
$19,000, and an increase in office supplies of approximately $1,000.
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 28% to approximately $32,000 for the nine months ended
September 30, 2002, from $44,000 for the nine months ended September 30, 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
27% to approximately $560,000 for the nine months ended September 30, 2002, from
$762,000 for the nine months ended September 30, 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 $30,000 related to
disputed accounts receivables balances for the nine months ended September 30,
2002.
The Partnership sold computer equipment with a net book value of $204,000 for
the nine months ended September 30, 2002, for a net gain of $5,000. The
Partnership did not sell computer equipment for the nine months ended September
30, 2001.
Interest expense decreased 54% to $17,000 for the nine months ended September
30, 2002 from $37,000 for the nine months ended September 30, 2001, primarily
due to the decrease in debt relating to the purchase of computer equipment.
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS 146
On July 30, 2002, the FASB issued FASB Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which nullifies EITF Issues No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred an a Restructuring)"
and No. 88-10, Costs Associated with Lease Modification or Termination."
Statement 146 fundamentally changed how a company should account for future
"restructurings." The Partnership believes that the adoption of SFAS 146 will
not have an impact on its financial position and results of operations.
Item 3. 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.
Item 4. Controls and Procedures
The Chief Executive Officer and a Financial Officer of the Partnership have
conducted a review of the Partnership's disclosure controls and procedures as of
September 30, 2002.
The Company's disclosure controls and procedures include the Partnership's
controls and other procedures designed to ensure that information required to be
disclosed in this and other reports filed under the Securities Exchange Act of
1934, as amended (the " Exchange Act") is accumulated and communicated to the
Partnership's management, including its chief executive officer and a financial
officer, to allow timely decisions regarding required disclosure and to ensure
that such information is recorded, processed, summarized and reported with the
required time periods.
Based upon this review, the Partnership's Chief Executive Officer and the a
Financial Officer have concluded that the Partnership's disclosure controls (as
defined in pursuant to Rule 13a-14 c promulgated under the Exchange Act) are
sufficiently effective to ensure that the information required to be disclosed
by the Partnership in the reports it files under the Exchange Act is recorded,
processed, summarized and reported with adequate timeliness.
Part II: 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:
99.1 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Commonwealth Income & Growth Fund
III, (the "Company") on Form 10-Q for the period ending September 30, 2002, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, George S. Springsteen, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ George S. Springsteen
- --------------------------------
George S. Springsteen
Chief Executive Officer
November 27, 2002
99.2 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Commonwealth Income & Growth Fund
III, (the "Company") on Form 10-Q for the period ending September 30, 2002, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Kimberly A. Springsteen, Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ Kimberly A. Springsteen
- -------------------------------
Kimberly A. Springsteen
Principal Financial Officer
November 27, 2002
b) Report on Form 8-K: None
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
November 27, 2002 By: /s/ George S. Springsteen
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Date George S. Springsteen
President
CERTIFICATIONS
I, George Springsteen certify that:
1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income &
Growth Fund III (the Registrant);
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure the
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the" Evaluation Date" ); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and the procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors ( or persons performing the equivalent
function):
a) all significant deficiencies in the design or the operation of
internal controls which could adversely affect the Registrant's ability
to record, process, summarize and report financial data we have
identified for the Registrant's auditors any material weakness in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ George S. Springsteen
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George S. Springsteen
Chief Executive Officer
November 27, 2002
I, Kimberly A. Springsteen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income &
Growth Fund III (the Registrant);
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure the
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the" Evaluation Date" ); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and the procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors ( or persons performing the equivalent
function):
a) all significant deficiencies in the design or the operation of
internal controls which could adversely affect the Registrant's ability
to record, process, summarize and report financial data we have
identified for the Registrant's auditors any material weakness in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ Kimberly A. Springsteen
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Kimberly A. Springsteen
Principal Financial Officer
November 27, 2002