2500 One Liberty Place
1650 Market Street
RICHARD G. DEVLIN Philadelphia, PA 19103-7301
Direct Phone: 215.851.8158 215.851.8100
Email: rdevlin@reedsmith.com Fax 215.851.1420
August 22, 2006
Ms. Pamela Long
United States Securities and Exchange Commission
Washington, D.C. 20549-7010
RE: COMMONWEALTH INCOME & GROWTH FUND VI
AMENDMENT TO REGISTRATION STATEMENT ON FORM S-1
FILED JUNE 30, 2006
FILE NO. 333-131736
Dear Ms. Long:
On behalf of our client, Commonwealth Income & Growth Fund VI (the
"Company" and the registrant with respect to above referenced filing), we are
filing Pre-Effective Amendment Number 2 to the Registration Statement on Form
S-1, File No. 333-131736, pursuant to Rules 470 and 472 of Regulation C and
Regulation S-T. One clean and three marked courtesy copies showing the changes
made to the previous amendment have been delivered by overnight courier to the
attention of Brigitte Lippmann of the Commission Staff.
The following are the Company's responses to the comments included in
your letter dated July 28, 2006 regarding the above-captioned filing. For ease
of reference, each question has been restated above the related response.
Following the resolution with the staff of the comments set forth below and any
future comments the Staff may have, the Company intends to orally seek
acceleration of effectiveness of the registration statement pursuant to Rule 461
of Regulation C. In that regard, the Company and Commonwealth Capital Securities
Corp. hereby affirm that each is aware of its obligations under the Securities
Act of 1933, as amended.
GENERAL
1. PLEASE UPDATE YOUR FILING TO INCLUDE INTERIM FINANCIAL STATEMENTS.
PLEASE SIMILARLY UPDATE YOUR FINANCIAL INFORMATION THROUGHOUT THE
FILING. SEE RULE 3-12 OF REGULATION S-X.
The filing has been updated to include current interim financial
statements, and financial information throughout the filing has been updated.
LONDON o NEW YORK o LOS ANGELES o SAN FRANCISCO o WASHINGTON, D.C. o PHILADELPHIA o
PITTSBURGH o OAKLAND o PRINCETON
FALLS CHURCH o WILMINGTON o NEWARK o MIDLANDS, U.K. o CENTURY CITY o RICHMOND o
HARRISBURG o LEESBURG o WESTLAKE VILLAGE
r e e d s m i t h . c o m
Pamela A. Long
August 22, 2006
Page 2
Cover Page
2. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 5. PLEASE REVISE THE RISK FACTOR
"NONE OF OUR GENERAL PARTNER'S FIVE PRIOR PUBLIC FUNDS..." ON THE COVER
PAGE AND PAGES 7 AND 13 TO DISCLOSE THAT FUNDS I AND II HAVE COMMENCED
LIQUIDATION LAST YEAR, BUT HAVE NOT MADE ANY LIQUIDATING DISTRIBUTIONS.
ALL REVISE TO STATE THAT LOSSES AMONG ALL YOUR PRIOR PUBLIC FUNDS HAVE
BEEN COMMON. PLEASE REVISE THE LAST RISK FACTOR TO INDICATE THAT THE
OFFERING MAY BE OPEN FOR TWO YEARS UNTIL YOU RAISE THE MINIMUM AMOUNT.
The requested changes have been made to the risk factors on the cover
page and pages 7 and 13. Discussion has also been added to the risk factor on
page 13 regarding losses incurred by prior funds.
3. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 7. PLEASE DISCLOSE WHETHER
INTEREST WILL BE PAID TO INVESTORS WHEN THEY ARE ADMITTED TO THE
PARTNERSHIP.
The cover page has been revised to clarify that interest is paid on
funds held in escrow prior to the first escrow break, which occurs when the
minimum offering amount has been raised. Thereafter, interest is not paid on
escrowed funds that are accepted, because the Company expects that funds will be
in escrow for no more than two or three business days, and the cost of
distributing any nominal interest received on those funds is prohibitive. Any
such interest will be retained by the Company and used for the purchase of
equipment.
OUR COMPANY, PAGE 6
4. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 14. DISCLOSE THAT NO INVESTOR
APPROVAL IS REQUIRED TO EXTEND THE LIFE OF THE PARTNERSHIP.
The requested disclosure has been added to page 6.
ESTIMATED USE OF PROCEEDS, PAGE 9
5. WE NOTE YOUR RESPONSE TO PRIOR COMMENTS 19 AND 20. PLEASE CLARIFY
WHETHER YOU CAN BORROW ANY FUNDS DURING THE OFFERING PERIOD. ALSO
CLARIFY IN THE TABLE THAT INVESTMENT IN EQUIPMENT MEANS PROCEEDS
AVAILABLE FOR INVESTMENT. IF YOU INTEND TO RETAIN A PORTION OF THE
OFFERING PROCEEDS FOR MAINTENANCE AND REPAIRS, YOU MUST REFLECT
RESERVES IN CALCULATING THE PROCEEDS AVAILABLE FOR INVESTMENT. PLEASE
REVISE THROUGHOUT THE PROSPECTUS, INCLUDING THE COVER PAGE. WE MAY HAVE
FURTHER COMMENTS.
While there is no outright prohibition on borrowing funds during the
offering period, the Company, as a matter of policy, does not borrow funds
during the offering period. The company prefers to fully invest its proceeds
before incurring debt, so that it has no debt expense until there is sufficient
lease revenue to cover such debt expense. The company has no expectation of
varying from this policy with respect to the current offering, and therefore the
Company's estimated use of proceeds for debt expense remains at zero.
Pamela A. Long
August 22, 2006
Page 3
The last line of the table on page 9 has been revised to reflect
"Proceeds to be Invested in Equipment," rather than simply "Investment in
Equipment." Also, a statement has been added to footnote 2 on the cover page to
indicate that proceeds ultimately invested in equipment are reduced by the
equipment acquisition fee.
Finally, the Company does not intend to retain any proceeds for
maintenance and repairs, due to the triple-net nature of its leases.
COMPENSATING OUR GENERAL PARTNER AND ITS AFFILIATES, PAGE 10
6. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 23. IF YOU HAVE NEVER ACHIEVED A
10% ANNUAL RETURN ON ANY OF YOUR FUNDS, IT SEEMS INAPPROPRIATE TO STATE
THAT YOU ANTICIPATE MAKING A 10% ANNUAL RETURN FOR THIS FUND. PLEASE
DELETE THROUGHOUT THE PROSPECTUS.
The Company uses the 10% return concept only as a trigger to change the
fee structure with respect to the limited partners and the general partner. The
prospectus, on page 10 and elsewhere, states that only if the limited partners
receive a cumulative return of 10%, then the company will increase the payment
of cash available for distribution to the general partner to 10% of such cash,
up from 1%. This increase will never take place if the limited partners do not
receive a 10% cumulative return. Thus, the 10% return is a target, but is in no
way guaranteed. Further, the 10% is also used as a trigger for payment of an
equipment liquidation fee when equipment is sold. If investors have not received
a cumulative 10% return, no liquidation fee may be paid to the General Partner.
To help alleviate the Staff's concerns, we have replaced the term
"anticipated distributions," with "target distributions" in the Prior Offerings
by Affiliates section, beginning on page 39. The term "anticipated
distributions" does not appear elsewhere in the prospectus.
RISK FACTORS, PAGE 11
7. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 24. PLEASE PROVIDE AN EXAMPLE
SHOWING THAT ONLY A PORTION OF THE PROCEEDS WILL BE AVAILABLE TO
PURCHASE EQUIPMENT UNDER "WE PAY SIGNIFICANT FEES TO THE GENERAL
PARTNER."
This risk factor on page 11 has been revised to include an example of
the fees payable to the Company's affiliates in connection with an investment of
$10,000.00.
YOU MAY BE OBLIGATED TO RETURN DISTRIBUTIONS..., PAGE 15
8. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 27. PLEASE PROVIDE GREATER
DETAIL REGARDING THE CIRCUMSTANCES UNDER WHICH INVESTORS WOULD NEED TO
RETURN DISTRIBUTIONS.
A more detailed discussion of the circumstances under which a limited
partner would be obligated to return distributions has been added to this risk
factor on page 15.
Pamela A. Long
August 22, 2006
Page 4
COMMITTEES OF OUR BOARD OF DIRECTORS, PAGE 23
9. WE REISSUE PRIOR COMMENT 36. YOU STATE IN YOUR RESPONSE THAT THE COMPANY DOES
NOT CURRENTLY HAVE ANY EXISTING COMMITTEES, YET YOUR DISCLOSURE IN THE
PROSPECTUS STATES THAT COMMITTEES HAVE BEEN ESTABLISHED. PLEASE CLARIFY WHETHER
YOU CURRENTLY HAVE ANY EXISTING COMMITTEES AND, IF SO, DISCLOSE THE NAMES OF THE
MEMBERS OF THE COMMITTEES.
The inconsistency between the prior response and the disclosure was an
error. As stated in the disclosure, the Company has established an Audit
Committee and an Executive Committee. The disclosure has also been revised to
include the names of the members of each such committee.
PRIOR OFFERINGS BY AFFILIATES, PAGE 39
10. WE NOTE YOUR RESPONSE TO PRIOR COMMENT 46. PLEASE DELETE THE REFERENCE
TO "ANTICIPATED" RETURNS OR DISTRIBUTIONS.
As discussed above in comment 6, references to "anticipated"
distributions have been deleted from this section, and have been recharacterized
as "target" distributions, to emphasize that the 10% return is only a goal of
the fund, and not a guaranteed return.
PROPOSED SALES MATERIAL
11. PLEASE REVISE YOUR SALES MATERIALS TO ADDRESS THE COMMENTS IN THIS
LETTER AND OUR PRIOR LETTER DATED MARCH 9, 2006. ALSO, THE SALES
MATERIAL CANNOT CONTAIN INFORMATION THAT IS NOT IN THE PROSPECTUS.
PLEASE REVISE.
Significant revisions have been made to the sales materials, both to
provide a more balanced presentation of the risks and benefits of an investment
in the fund, and to include information in the prospectus that had previously
been contained solely in the sales materials. The majority of this information
can be found in the new prospectus section entitled "Our Industry and Our
Company," beginning on page 21 of the prospectus.
12. ITEM 19 OF INDUSTRY GUIDE 5 STATES THAT THE SALES MATERIAL SHOULD
PRESENT A BALANCED DISCUSSION OF BOTH THE RISK AND REWARD. THUS, FOR
EXAMPLE, WHEN YOU TALK ABOUT REINVESTMENT OF EXCESS CASH FLOW, YOU
SHOULD ALSO DISCUSS THE RISK THAT YOU MAY NOT GENERATE EXCESS CASH FLOW
FOR REINVESTMENT. PLEASE REVISE ALL OF THE SALES MATERIAL TO PRESENT A
BALANCED DISCUSSION. WE MAY HAVE FURTHER COMMENTS.
As stated above, revisions have been made throughout the sales
materials to provide a more balanced presentation. Revised materials are
enclosed with the hard copy of this letter.
Pamela A. Long
August 22, 2006
Page 5
If you have any questions regarding the responses to the comments or
regarding the filing in general, please call me at 215-851-8158. Thank you for
your prompt attention to this matter.
Sincerely,
Reed Smith LLP
By: /s/ Richard G. Devlin
--------------------------------
Richard G. Devlin
Enclosures
cc: Brigitte Lippmann, Esq.
Kimberly A. Springsteen (w/o encl.)
Michael B. Pollack, Esq. (w/o encl.)