UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006
[_]2007
£ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-108057
COMMONWEALTH INCOME & GROWTH FUND V L.P.
(Exact
(Exact name of registrant as specified in its charter)
Pennsylvania 65-1189593
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Pennsylvania | 65-1189593 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Brandywine Bldg. One, Suite 200
2 Christy Drive
Chadds Ford, PA 19317
(Address,
(Address, including zip code, of principal executive offices)
(610) 594-9600
(Registrant's
(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 (ii) has been subject to such filing requirements for the past 90 days: YES [X]T NO [_]
£
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated“accelerated filer and large accelerated filer"filer” in Rule 12b-2 of the Exchange Act.Act (Check one):
Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [X]
Large accelerated filer £ | Accelerated filer £ | Non-accelerated filer T |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [_]£ NO [X]
T
JUNE 30, 2006
2007
TABLE OF CONTENTS
PART I
| PART I | |
| | 3 |
| | 12 |
| | 16 |
| | 16 |
| PART II | |
| | 17 |
| | 17 |
| | 17 |
| | 17 |
| | 17 |
| | 17 |
| | 17 |
| | 18 |
| Certifications | |
Part I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 16
PART II
Item 1. Legal Proceedings 16
Item 1A. Risk Factors 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Securities Holders 18
Item 5. Other Information 18
Item 6. Index to Exhibits
Signatures
Certifications
2
COMMONWEALTH INCOME & GROWTH FUND V, L.P.
CONDENSED BALANCE SHEET
JUNE 30, DECEMBER 31,
2006 2005
------------ ------------
(UNAUDITED)
ASSETS
Cash and cash equivalents $11,136,299 $10,722,300
Lease income receivable, net of reserves of $0 as of
June 30, 2006 and December 31, 2005 262,711 91,047
Other receivable - Affiliates 118,870 71,259
Other receivables -- 94,293
Prepaid Fees 13,705 --
----------- -----------
11,531,585 10,978,899
----------- -----------
Computer equipment, at cost 10,344,032 5,480,291
Accumulated depreciation (1,317,229) (289,811)
----------- -----------
9,026,803 5,190,480
----------- -----------
Equipment acquisition costs and deferred expenses, net 361,046 211,190
Prepaid acquisition fees 530,963 483,504
----------- -----------
892,009 694,694
----------- -----------
TOTAL ASSETS $21,450,397 $16,864,073
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accounts payable $ 343,349 $ 138,832
Accounts payable - General Partner 83,692 61,224
Accounts payable - Commonwealth Capital Corp. 48,342 39,258
Unearned lease income 121,500 45,867
Notes Payable 1,837,670 785,157
----------- -----------
TOTAL LIABILITIES 2,434,553 1,070,338
----------- -----------
PARTNERS' CAPITAL
General partner 1,000 1,000
Limited partners 19,014,844 15,792,735
----------- -----------
TOTAL PARTNERS' CAPITAL 19,015,844 15,793,735
----------- -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $21,450,397 $16,864,073
=========== ===========
Commonwealth Income & Growth Fund V | |
Condensed Balance Sheet | |
| |
| | June 30, | | | December 31, | |
| | 2007 | | | 2006 | |
| | (unaudited) | | | | |
Assets | | | |
| | | |
Cash and cash equivalents | | $ | 3,923,760 | | | $ | 7,071,792 | |
Lease income receivable, net of reserves of $0 as of June 30, 2007 and December 31, 2006 | | | 109,025 | | | | 202,493 | |
Other receivable – Affiliates | | | 136,816 | | | | 58,578 | |
Prepaid Fees | | | 10,868 | | | | 4,670 | |
| | | 4,180,469 | | | | 7,337,533 | |
| | | |
Computer equipment, at cost | | | 20,978,068 | | | | 15,195,877 | |
Accumulated depreciation | | | (5,289,126 | ) | | | (2,949,031 | ) |
| | | 15,688,942 | | | | 12,246,846 | |
| | | |
Equipment acquisition costs and deferred expenses, net | | | 594,844 | | | | 474,586 | |
Prepaid acquisition fees | | | 247,936 | | | | 376,996 | |
| | | 842,780 | | | | 851,582 | |
| | | |
Total Assets | | $ | 20, 712,191 | | | $ | 20,435,961 | |
| | | |
Liabilities and Partners' Capital | | | |
| | | |
Liabilities | | | |
Accounts payable | | $ | 341,570 | | | $ | 177,550 | |
Accounts payable - General Partner | | | 63,462 | | | | 56,762 | |
Other accrued expenses | | | - | | | | 38,446 | |
Unearned lease income | | | 237,960 | | | | 151,248 | |
Notes Payable | | | 3,744,165 | | | | 2,320,496 | |
Total liabilities | | | 4,387,157 | | | | 2,744,502 | |
| | | |
Partners' Capital | | | |
General partner | | | 1,000 | | | | 1,000 | |
Limited partners | | | 16,324,034 | | | | 17,690,459 | |
Total Partners' Capital | | | 16,325,034 | | | | 17,691,459 | |
| | | |
Total Liabilities and Partners' Capital | | $ | 20,712,191 | | | $ | 20,435,961 | |
see accompanying notes to condensed financial statements
3
COMMONWEALTH INCOME & GROWTH FUND V
CONDENSED STATEMENTS OF OPERATIONS
FOR THE PERIOD OF
MARCH 14,
THREE-MONTHS ENDED SIX-MONTHS (COMMENCEMENT OF
ENDED OPERATIONS)
JUNE 30, JUNE 30, JUNE 30, THROUGH JUNE 30,
2006 2005 2006 2005
---------- --------- ---------- -----------------
(UNAUDITED) (UNAUDITED)
INCOME
Lease $ 762,116 $ 16,739 $1,366,704 $ 17,476
Interest and other 118,198 1 167,623 2
---------- --------- ---------- ---------
TOTAL INCOME 880,314 16,740 1,534,326 17,478
---------- --------- ---------- ---------
EXPENSES
Operating 257,596 205,787 612,086 227,659
Organizational costs -- 53,860 36,751 79,799
Equipment management fee - General Partner 41,848 837 72,077 874
Interest 20,885 -- 37,057 --
Depreciation 587,678 12,527 1,027,417 13,475
Amortization of equipment
acquisition costs and deferred expenses 33,041 668 57,436 719
Miscellaneous 230 -- 230 --
---------- --------- ---------- ---------
TOTAL EXPENSES 941,278 273,679 1,843,054 322,526
---------- --------- ---------- ---------
NET (LOSS) $ (60,963) $(256,939) (308,729) (305,048)
========== ========= ========== =========
NET (LOSS) ALLOCATED TO LIMITED PARTNERS $ (65,730) $(257,958) (319,974) (306,068)
========== ========= ========== =========
NET (LOSS) PER EQUIVALENT LIMITED
PARTNERSHIP UNIT $ (0.05) $ (0.68) (0.26) (0.80)
========== ========= ========== =========
WEIGHTED AVERAGE NUMBER OF EQUIVALENT LIMITED
PARTNERSHIP UNITS OUTSTANDING DURING THE PERIOD 1,249,951 262,747 1,249,951 232,900
========== ========= ========== =========
Commonwealth Income & Growth Fund V | |
Condensed Statement of Operations | |
| | | | | | | | | |
| | | | | | | | | |
| | Three months Ended June 30, | | | Six months Ended June 30, | |
| | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | (unaudited) | | | (unaudited) | |
Income | | | | | | | | | | | | |
Lease | | $ | 1,737,452 | | | $ | 762,116 | | | $ | 3,115,734 | | | $ | 1,366,704 | |
Interest and other | | | 46,808 | | | | 118,198 | | | | 121,289 | | | | 167,623 | |
Total income | | | 1,784,260 | | | | 880,314 | | | | 3,237,023 | | | | 1,534,327 | |
| | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | |
Operating | | | 369,762 | | | | 257,596 | | | | 655,984 | | | | 612,086 | |
Organizational costs | | | - | | | | - | | | | - | | | | 36,751 | |
Equipment management fee - General Partner | | | 86,873 | | | | 41,848 | | | | 155,787 | | | | 72,077 | |
Interest | | | 40,676 | | | | 20.885 | | | | 68,739 | | | | 37,057 | |
Depreciation | | | 1,300,867 | | | | 587,678 | | | | 2,340,095 | | | | 1,027,417 | |
Amortization of equipment acquisition costs and deferred expenses | | | 74,345 | | | | 33,041 | | | | 133,260 | | | | 57,436 | |
Loss on sale of equipment | | | 38 | | | | - | | | | 38 | | | | - | |
Miscellaneous | | | - | | | | 230 | | | | - | | | | 230 | |
Total expenses | | | 1,872,561 | | | | 941,278 | | | | 3,353,903 | | | | 1,843,054 | |
| | | | | | | | | | | | | | | | |
Net (loss) | | $ | (88,301 | ) | | $ | (60,963 | ) | | $ | (116,880 | ) | | $ | (308,729 | ) |
| | | | | | | | | | | | | | | | |
Net (loss) allocated to limited partners | | $ | (94,547 | ) | | $ | (65,730 | ) | | $ | (129,376 | ) | | $ | (319,974 | ) |
| | | | | | | | | | | | | | | | |
Net (loss) per equivalent limited partnership unit | | $ | (0.08 | ) | | $ | (0.05 | ) | | $ | (0.10 | ) | | $ | (0.26 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of equivalent limited partnership units outstanding during the period | | | 1,249,951 | | | | 1,249,951 | | | | 1,249,951 | | | | 1,249,951 | |
see accompanying notes to condensed financial statements
4
COMMONWEALTH INCOME & GROWTH FUND V, L.P.
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2006
(UNAUDITED)
GENERAL LIMITED
PARTNER PARTNER GENERAL LIMITED
UNITS UNITS PARTNER PARTNERS TOTAL
------- --------- -------- ----------- -----------
BALANCE, December 31, 2005 50 985,494 $ 1,000 $15,792,735 $15,793,735
Contributions 264,457 5,254,658 5,254,658
Offering costs (593,264) (593,264)
Net income (loss) 11,245 (319,974) (308,729)
Distributions (11,245) (1,119,311) (1,130,556)
-- --------- -------- ----------- -----------
BALANCE, JUNE 30, 2006 50 1,249,951 $ 1,000 $19,014,844 $19,015,844
== ========= ======== =========== ===========
Commonwealth income & Growth Fund V | |
Condensed Statements of Partners’ Capital | |
For the Six Months ended June 30, 2007 | |
(unaudited) | |
| |
| |
| | General | | | Limited | | | | | | | | | | |
| | Partner | | | Partner | | | General | | | Limited | | | | |
| | Units | | | Units | | | Partner | | | Partners | | | Total | |
| | | | | | | | | | | | | | | |
Balance, January 1, 2007 | | | 50 | | | | 1,249,951 | | | $ | 1,000 | | | $ | 17,690,459 | | | $ | 17,691,459 | |
| | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | - | | | | - | | | | 12,496 | | | | (129,376 | ) | | | (116,880 | ) |
Distributions | | | - | | | | - | | | | (12,496 | ) | | | (1,237,049 | ) | | | (1,249,545 | ) |
| | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2007 | | | 50 | | | | 1,249,951 | | | $ | 1,000 | | | $ | 16,324,034 | | | $ | 16,325,034 | |
see accompanying notes to condensed financial statements
5
COMMONWEALTH INCOME & GROWTH FUND V, L.P.
CONDENSED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND THE PERIOD OF MARCH 14, 2005
(COMMENCEMENT OF OPERATIONS) THROUGH JUNE 30, 2005
2006 2005
(UNAUDITED) (UNAUDITED)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 727,396 $ (136,769)
----------- ----------
Capital expenditures (3,589,483) (456,481)
Prepaid acquisition fees (47,459) (236,090)
Equipment acquisition fees paid to General Partner (194,550) (18,259)
----------- ----------
NET CASH (USED IN) INVESTING ACTIVITIES (3,831,492) (710,830)
----------- ----------
Contributions 5,254,658 7,599,940
Distributions (1,130,556) (101,944)
Offering costs (593,264) (925,384)
Debt Placement fees paid to General Partner (12,743) --
----------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,518,095 6,572,612
----------- ----------
Net increase in cash and cash equivalents 413,999 5,725,013
Cash and cash equivalents, beginning
Commonwealth Income & Growth Fund V | |
Condensed Statements of Cash Flow | |
| |
| | Six months Ended | |
| | June 30, | |
| | 2007 | | | 2006 | |
| | (unaudited) | |
| | | | | | |
Net cash provided by operating activities | | $ | 1,788,248 | | | $ | 727,396 | |
| | | | | | | | |
Capital expenditures | | | (3,563,021 | ) | | | (3,589,483 | ) |
Prepaid acquisition fees | | | 129,060 | | | | (47,459 | ) |
Net proceeds from sale of computer equipment | | | 744 | | | | - | |
Equipment acquisition fees paid to General Partner | | | (231,319 | ) | | | (194,550 | ) |
Net cash (used in) investing activities | | | (3,664,536 | ) | | | (3,831,492 | ) |
| | | | | | | | |
Contributions | | | - | | | | 5,254,658 | |
Distributions | | | (1,249,545 | ) | | | (1,130,556 | ) |
Offering costs | | | - | | | | (593,264 | ) |
Debt Placement fees paid to General Partner | | | (22,200 | ) | | | (12,743 | ) |
Net cash (used in) provided by financing activities | | | (1,271,745 | ) | | | 3,518,095 | |
| | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (3,148,032 | ) | | | 413,999 | |
Cash and cash equivalents, beginning of period | | | 7,071,792 | | | | 10,722,300 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 3,923,760 | | | $ | 11,136,299 | |
see accompanying notes to condensed financial statements
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BUSINESS Business
Commonwealth Income & Growth Fund V (the "Partnership"“Partnership”) is a limited partnership organized in the Commonwealth of Pennsylvania on May 19, 2003. The Partnership offered for sale up to 1,250,000 units of the limited partnership at the purchase price of $20 per unit (the "Offering"“Offering”). The Partnership reached the minimum amount in escrow and commenced operations on March 14, 2005. As of February 24, 2006, the Partnership was fully subscribed.
The Partnership usesused the proceeds of the Offering to acquire, own and lease various types of computer ITinformation technology (I.T.) equipment and other similar capital equipment, which will beis leased primarily to U.S. corporations and institutions. Commonwealth Capital Corp,
("CCC"Corp. (“CCC”), on behalf of the Partnership and other affiliated partnerships, will acquire computer equipment subject to associated debt obligations and lease agreements and allocate a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors.
The Partnership'sPartnership’s General Partner is Commonwealth Income & Growth Fund, Inc. (the "General Partner"“General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of Commonwealth Capital Corp.CCC. CCC is a member of the Investment Program Association (IPA), Financial Planning Association (FPA), 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 computer equipment, make final distributions to partners, and to dissolve. Unless sooner terminated, the Partnership will continue until December 31, 2015.
2. SUMMARY OF SIGNIFICANT BASIS OF PRESENTATION
ACCOUNTING
POLICIES Summary of Significant Accounting Policies
Basis of Presentation
The financial information presented as of any date other than December 31,
2006 has been prepared from the books and records without audit. Financial information as of December 31,
2006 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by
accounting
principles generally accepted
in the United
States of America.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'sPartnership’s accounting policies, refer to the financial statements and related notes included in the
Partnership'sPartnership’s annual report on Form 10-K for the year ended December 31,
2005.2006. Operating results for the
six-month periodsix months ended June 30,
20062007 are not necessarily indicative of financial results that may be expected for the full year ended December 31,
2006.
7
LONG-LIVED ASSETS
2007.
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. The partnership determined that no impairment existed as of June 30, 2006.
2007.
Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of four years.
NET INCOME (LOSS) PER EQUIVALENT LIMITED
PARTNERSHIP UNIT
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 limited partner units outstanding during the period.
3. COMPUTER EQUIPMENT Computer Equipment
The Partnership is the lessor of equipment under operating leases with periods ranging from 1410 to 4836 months. In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.
Through June 30, 2006,2007, the Partnership's
leasing operations consisted ofPartnership has only entered into operating leases. Operating leaseLease revenue is recognized on athe monthly straight-line basis which is generally in accordance with the terms of the operating lease agreement.
agreements. The company’s leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.
Remarketing fees are paid to the leasing companies from which the Partnership purchases leases. These are fees that are earned by the leasing companies when the initial terms of the lease have been
met.met and the equipment is re-leased or sold. The General Partner believes that this strategy adds value since it entices the leasing company to "stay with the lease" for potential extensions, remarketing or sale of equipment. This strategy potentially minimizes any conflicts the leasing company may have with a potential new lease and will potentially assist in maximizing overall portfolio performance. The remarketing fee is tied into lease performance thresholds and is factored in the negotiation of the fee. Remarketing fees incurred in connection with lease extensions are accounted for as operating costs. Remarketing fees incurred in connection with the sale of computer equipment are included in our gain or loss calculations. No remarketing fees were paid for the
periodsix months ended June 30,
2006.
8
2007.
The Partnership'sPartnership’s share of the computer equipment in which it participates with other partnerships at June 30, 20062007 and December 31, 20052006 was approximately $2,378,000$7,977,000 and $932,000,$3,923,000 respectively, which is included in the Partnership'sPartnership’s fixed assets on its balance sheet, and thesheet. The total cost of the equipment shared by the Partnership with other partnerships at June 30, 20062007 and December 31, 20052006 was approximately $5,542,000$15,750,000 and $2,177,000,$8,188,000, respectively. The Partnership'sPartnership’s share of the outstanding debt associated with this equipment at June 30, 20062007 and December 31, 20052006 was $460,000$2,138,000 and $0,$526,000, respectively. The total outstanding debt at June 30, 20062007 and December 31, 20052006 was $1,043,000$4,074,500 and $0,$1,148,000, respectively.
The following is a schedule of future minimum rentals on noncancellable operating leases at June 30, 2006:
Amount
-----------------------------------------------
Six months ending December 31, 2006 $1,753,602
Year ended December 31, 2007 3,416,609
Year ended December 31, 2008 2,550,680
Year ended December 31, 2009 251,240
----------
$7,972,131
==========
2007:
| | Amount | |
| | | |
Six months ending December 31, 2007 | | $ | 3,421,911 | |
Year ended December 31, 2008 | | | 6,263,077 | |
Year ended December 31, 2009 | | | 3,097,411 | |
Year ended December 31, 2010 | | | 204,649 | |
| | $ | 12,987,048 | |
4. RELATED PARTY TRANSACTIONS RECEIVABLES/PAYABLES
Related Party Transactions
Receivables/Payables
As of June 30, 2006,2007, the Partnership'sPartnership’s related party receivables and payables are short term, unsecured, and non-interest bearing.
REIMBURSABLE EXPENSES
Reimbursable Expenses
The General Partner and its affiliates are entitled to reimbursement by the Partnership for the cost of supplies and 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 for certain expenses incurred by the General Partner and its affiliates in connection with the administration and operation of the Partnership. During the six-monthssix months ended June 30, 2007, the Partnership recorded $663,569 for reimbursement of expenses to the General Partner. During the six months ended June 30, 2006, the Partnership recorded $379,613 for reimbursement of expenses to the General Partner. For the period of March
14, 2005 (Commencement of Operations) through
June 30, 2005, the Partnership recorded
$131,000 for reimbursement of expenses to the
General Partner.
OFFERING COSTS
Offering Costs
Offering costs are payments for selling commissions, dealer manager fees, professional fees and other offering expenses relating to the
syndication.syndication of the Partnership’s units. Selling commissions are 8% of the
partners'partners’ contributed capital and dealer manager fees are 2% of the
partners'partners’ contributed capital. These costs have been deducted from partnership capital in the accompanying financial statements.
9
EQUIPMENT ACQUISITION FEE
Equipment Acquisition Fee
The General Partner is entitled to be paid 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. For the periodsix months ended June 30, 2007 and 2006, equipment acquisition fees of approximately $194,550$231,300 and $195,000, respectively, were earned bythe General Partner. No equipment
acquisition fees were earned by the General
Partner for the period
Debt Placement Fee
As compensation for arranging term debt to finance the acquisition of equipment by the Partnership, the General Partner is paid a fee equal to 1% of such indebtedness; provided, however, that such fee shall be reduced to the extent the Partnership incurs such fees to third parties, unaffiliated with the General Partner or the lender, with respect to such indebtedness and no such fee will be paid with respect to borrowings from the General Partner or its affiliates. For the periodsix months ended June 30, 2007 and 2006, debt placement fees of approximately $12,743$22,200 and $13,000, respectively, were earned by the General Partner. No
debt placement fees were earned by the General
Partner for the period of March 14, 2005
(Commencement of Operations) through June 30,
2005.
EQUIPMENT MANAGEMENT FEE
Equipment Management Fee
The General Partner is entitled to be paid a monthly fee equal to the lesser of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) the sum of (a) two percent of (1) the gross lease revenues attributable to equipment which is subject to full payout net leases which contain net lease provisions plus (2) the purchase price paid on conditional sales contracts as received by the Partnership and (b) 5% of the gross lease revenues attributable to equipment which is subject to operating and capital leases. For the six-monthssix months ended June 30, 2007, and 2006 equipment management fees of approximately $156,000, and $72,000, respectively, were earned by the General Partner.
Equipment Liquidation Fee
With respect to each item of equipment sold by the General Partner (other than in connection with a conditional sales contract), a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price for such equipment is payable to the General Partner. The payment of such fee is subordinated to the receipt by the limited partners of the net disposition proceeds from such sale in accordance with the Partnership Agreement. Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties. For the six months ended June 30, 2007, equipment liquidation fees of approximately $23 were earned by the General Partner. For the
period
of March 14, 2005 (Commencement of Operations)
throughsix months ended June 30,
2005,2006 there were no equipment
managementliquidation fees
of approximately $874 were earned by the General Partner.
10
5. NOTES PAYABLE Notes Payable
Notes payable consisted of the following:
DECEMBER 31,
JUNE 30, 2006 2005
-------------------------------------------------------------
Installment note payable to
bank; interest at 4.61%, due
in monthly instaltlments of
$160, including interest, with
final payment in December
2007. $ 922 --
Installment notes payable to
banks; interest ranging from
4.65% to 6.3%, due in monthly
installments ranging from
$1,095 to $14,239, including
interest, with final payments
from February through October
2008. 925,186 785,157
Installment notes payable to
banks; interest ranging from
6.08% to 6.14%, due in monthly
installments ranging from
$21,364 to $22,990, including
interest, with final payment
in February 2009. 911,563 --
-------------------------------------------------------------
$1,837,671 785,157
-------------------------------------------------------------
| | June 30, 2007 | | | December 31, 2006 | |
| | | | | | |
Installment note payable to bank; interest at 4.61%, due in monthly installments of $160, including interest, with final payment in December 2007. | | $ | 314 | | | $ | 622 | |
| | | | | | | | |
Installment notes payable to banks; interest ranging from 4.65% to 6.3%, due in monthly installments ranging from $1,095 to $14,239, including interest, with final payments from February through October 2008. | | | 498,272 | | | | 714,889 | |
| | | | | | | | |
Installment notes payable to banks; interest ranging from 5.20% to 5.85% due in monthly installments ranging from $8,945 to $134,671, including interest, with final payments from February through October 2009. | | | 3,005,233 | | | | 1,604,985 | |
| | | | | | | | |
Installment note payable to bank; interest at 5.85%, due in monthly installments of $23,643, including interest, with final payment in January 2010. | | | 240,346 | | | | - | |
| | $ | 3,744,165 | | | $ | 2,320,496 | |
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 June 30, 20062007 are as follows:
AMOUNT
----------
Six months ended December 31, 2006 $ 365,341
Year ended December 31, 2007 763,939
Year ended December 31, 2008 619,077
Year ended December 31, 2009 89,314
----------
$1,837,671
----------
6. SUPPLEMENTAL
| | Amount | |
| | | |
Six months ending December 31, 2007 | | $ | 933,596 | |
Year ended December 31, 2008 | | | 1,733,518 | |
Year ended December 31, 2009 | | | 1,053,748 | |
Year ended December 31, 2010 | | | 23,303 | |
| | $ | 3,744,165 | |
5. Supplemental Cash Flow Information
Other noncash activities included in the
CASH FLOW determination of net loss are as follows:
INFORMATION
Six months Ended June 30, 2006 2005
- ----------------------------------------------- -------- ----
Lease income, net of interest expense on
11
notes payable realized as a result of direct
payment of principal by lessee to bank $221,744 $--
Six months Ended June 30, | | 2007 | | | 2006 | |
| | | | | | |
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank | | $ | 796,283 | | | $ | 221,744 | |
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:
Six months Ended June 30, 2006 2005
- --------------------------------------- ---------- ----
following:
Six months Ended June 30, | 2007 | 2006 |
| | |
Debt assumed in connection with purchase of computer equipment | $2,219,952 | $1,274,257 |
| | |
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees | $129,060 | $47,459 |
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are being made pursuant to the PSLRA, with purchasethe intention of computer equipment $1,274,257 $--
Equipment acquisition fees earnedobtaining the benefits of the “safe harbor” provisions of the PSLRA, and, other than as required by General Partner upon purchaselaw, we assume no obligation to update or supplement such statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of equipmentwords such as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project” and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from prepaid
acquisition fees $ 47,459 $--
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
those projected.
CRITICAL ACCOUNTING POLICIES
The Partnership's discussion and analysis of its financial condition and results of operations are based upon its financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Partnership to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Partnership believes that its critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements.
FORWARD LOOKING STATEMENTS
Certain statements within this Quarterly Report on Form 10-Q may constitute
forward-looking statements within the meaning
Table of the Private Securities
Litigation Reform Act of 1995 ("PSLRA"). These statements are being made
pursuant to the PSLRA, with the intention of obtaining the benefits of the "safe
harbor" provisions of the PSLRA, and, other than as required by law, we assume
no obligation to update or supplement such statements. Forward-looking
statements are those that do not relate solely to historical fact. They include,
but are not limited to, any statement that may predict, forecast, indicate or
12
imply future results, performance, achievements or events. You can identify
these statements by the use of words such as "may," "will," "could,"
"anticipate," "believe," "estimate," "expects," "intend," "predict" or "project"
and variations of these words or comparable words or phrases of similar meaning.
These forward-looking statements reflect our current beliefs and expectations
with respect to future events and are based on assumptions and are subject to
risks and uncertainties and other factors outside our control that may cause
actual results to differ materially from those projected.
Contents COMPUTER EQUIPMENT
CCC,
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. Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of four years.
REVENUE RECOGNITION
Through June 30, 2006,2007, the Partnership's leasing operations consist ofPartnership has only entered into operating leases. Operating leaseLease revenue is recognized on a monthly straight-line basis which is generally in accordance with the terms of the operating lease agreement. The company’s leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.
The Partnership reviews a customer'scustomer’s credit history before extending credit and establishes a provision for uncollectible accounts receivable based upon the credit risk of specific customers, historical trends and other information.
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.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
The Partnership'sPartnership’s primary source of capital for the six-monthssix months ended June 30, 2007 was cash provided by operating activities of approximately $1,790,000. For the six months ended June 30, 2006, and the periodPartnership’s primary source of March 14, 2005 (Commencement of Operations) through June
30, 2005,capital was from contributions of approximately $5,200,000$5,200,000. Equipment was purchased in the amount of approximately $3,560,000 during the six months ended June 30, 2007 and $7,600,000,
respectively.distributions were paid in the amount of approximately $1,250,000. Equipment in the amount of approximately $3,600,000 was purchased during the six-monthssix months ended June 30, 2006 and distributions in the amount of
$1,100,000 were paid during that same period. Equipment in the amount of
$456,000 was purchased and distributions were paid in the amount of $102,000
during$1,100,000.
The Partnership intends to invest approximately $6,192,000 in additional equipment for the periodremainder of March 14, 2005 (Commencement2007. The acquisition of Operations) throughthis equipment will be funded by debt financing from cash flows from lease rental payments.
For the six months ended June 30, 2005.
2007, the Partnership generated cash flows from operating activities in the amount of $1,790,000, which includes a net loss of approximately $117,000, and depreciation and amortization expenses of approximately $2,470,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $796,000.
For the
six-monthssix months ended June 30, 2006,
the Partnership generated cash
was providedflows from
operationsoperating activities in the amount of $727,000, which includes a net loss of
approximately $309,000, and depreciation and amortization expenses of approximately $1,085,000. Other non-cash activities included in the determination of net
13
income include direct payments of lease income by lessees to banks of approximately $222,000.
For the period of March 14, 2005 (Commencement of Operations) through June 30,
2005, the Partnership used cash for operating activities of approximately
$137,000, which includes a net loss of approximately $305,000, and depreciation
and amortization expenses of approximately $14,000.
The Partnership's investment strategy of acquiring computer equipment and generally leasing it under "triple-net leases"“triple-net leases” to operators who generally meet specified financial standards minimizes the Partnership's operating expenses. As of June 30, 2006,2007, the Partnership had future minimum rentals on non-cancelable operating leases of $1,753,602approximately $3,422,000 for the balance of the year ending December 31, 20062007 and $6,218,529approximately $9,565,000 thereafter. As of June 30, 2007, the outstanding debt was approximately $3,744,000 with interest rates ranging from 4.61% to 6.3%, and will be payable through January 2010.
The Partnership'sPartnership’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'sPartnership’s leases are on a "triple-net"“triple-net” basis, no reserve for maintenance and repairs areis deemed necessary.
RESULTS OF OPERATIONS
The Partnership’s share of the computer equipment in which it participates with other partnerships at June 30, 2007 and December 31, 2006 was approximately $7,977,000 and $3,923,000 respectively, which is included in the Partnership’s fixed assets on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at June 30, 2007 and December 31, 2006 was approximately $15,750,000 and $8,188,000, respectively. The Partnership’s share of the outstanding debt associated with this equipment at June 30, 2007 and December 31, 2006 was $2,138,000 and $526,000, respectively. The total outstanding debt at June 30, 2007 and December 31, 2006 was $4,074,500 and $1,148,000, respectively.
Results of Operations
Three months ended June 30, 2007 compared to Three months ended June 30, 2006 compared to
For the three months ended June 30, 20052007, the Partnership recognized income of approximately $1,784,000 and expenses of approximately $1,873,000, resulting in a net loss of approximately $89,000. For the three months ended June 30, 2006, the Partnership recognized income of approximately $880,000 and expenses of approximately $941,000, resulting in a net loss of approximately $61,000. For the three-months ended of June 30, 2005,
the Partnership recognized income of approximately $17,000 and expenses of
approximately $274,000, resulting in a net loss of approximately $257,000.
Lease income increased by 128% to approximately $1,737,000 for the three months ended June 30, 2007, from approximately $762,000 for the three months ended June 30, 2006,
from $17,000 for2006. This increase was primarily due to more lease agreements started than new lease agreements were ending during the three months ended June 30, 2005, primarily due to the fact
that more lease agreements were entered into since the six months ended June 30,
2005 as the fund commenced operations.
2007.
Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC a related
party, for administration and operation of the Partnership. With the exception of legal and accounting fees, CCC has determined that in the best interest of the Partnership, the majority of shared expenses will not be allocated to the Partnership. In accordance with the American Institute of Certified Public Accountants, Statement of Position (SOP) 98-05, costs relating to start-up activities and organization costs (accounting, legal, printing, etc.) are expensed as incurred. The expenses increased 25%44% to approximately $370,000 for the three months ended June 30, 2007, from $257,000 for the quarterthree months ended June 30, 2006,
from $205,000 for the quarter ended June 30, 2005.
2006. This increase is primarily attributable to an increase in Partnership taxes, LP expenses and employee bonuses.
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 increased
108% to approximately
$87,000 for the three months ended June 30, 2007, from $40,000 for the
quarterthree months ended June 30, 2006,
from $800 for the quarter ended June 30, 2005, which is consistent with the increase in lease income.
14
Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. TheThese expenses increased 122% to approximately $1,374,000 for the three months ended June 30, 2007, from $620,000 for the quarterthree months ended June 30, 2006, from $13,000 for
the quarter ended June 30, 20052006. This increase was due to additionalthe acquisition of new equipment being purchased andattributable to the associated acquisition and finance fees being recorded by the Partnership
since the quarterpurchase of new leases.
Six months ended June 30 2005., 2007 compared to Six months ended June 30, 2006 compared to March 14, 2005 (Commencement of
Operations) through
For the six months ended June 30, 20052007, the Partnership recognized income of approximately $3,237,000, and expenses of approximately $3,354,000, resulting in a net loss of approximately $117,000. For the six months ended June 30, 2006, the Partnership recognized income of approximately $1,534,000, and expenses of approximately $1,843,000, resulting in a net loss of approximately $309,000. For the period of to March 14, 2005
(Commencement of Operations) through June 30, 2005, the Partnership recognized
income of approximately $17,000, and expenses of approximately $322,000,
resulting in a net loss of approximately $305,000.
Lease income increased to $3,116,000 for the six months ended June 30, 2007, from $1,367,000, for the six months ended June 30, 2006,
from $17,000 for the period of to March 14, 2005 (Commencement of Operations)
through June 30, 2005, primarily due to the fact that more lease agreements were entered into since the period fromsix months ended June 30, 2005 as the fund commenced
operations.
2006.
Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC, a related party, for administration and operation of the Partnership. The expenses increased to approximately $656,000 for the six months ended June 30, 2007, from $612,000 for the six months ended June 30, 2006, from
$228,000 for the period of March 14, 2005 (Commencement of Operations) through
June 30, 2005, primarily due to an increase in the amount chargedother LP expenses and Partnership taxes, which was set off by CCC, a related party, to the Partnership for its administrationdecrease in legal fees, blue sky expenses and operation of
approximately $30,000, an increase in due diligence costs of approximately
$7,000office and an increase in accounting fees of approximately $60,000. Such
expenses increased due to the commencement of operations and further activity
within the fund.
printing expenses.
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 increased to approximately $156,000 for the six months ended June 30, 2007, from $72,000 for the six months ended June 30, 2006, from $900 for the period ended June 30, 2005, which is consistent with the increase in lease income.
Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. TheThese expenses increased to approximately $2,473,000 for the six months ended June 30, 2007; from $1,085,000 for the six months ended June 30, 2006; from $14,000
for the period ended June 30, 20052006. This increase was due to additional equipment being purchased and the associated acquisition and finance fees being recorded by the Partnership sincefor the periodsix months ended June 30, 2005.
ITEM2006.
The Partnership believes its exposure to market risk is not material due to the fixed interest rate of its long-term
debt. There are no material changes to this
disclosure related to these items since the filing of our Annual Report on Form
10-K for the year ended December 31, 2005.
15
ITEMdebt and its associated fixed revenue streams.
The Chief Executive Officer and Principal Financial Officer of the General PartnerPartnership have conducted a review of the General Partner'sPartnership's disclosure controls and procedures as of June 30, 2006.
2007.
The Company'sPartnership’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 recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Act")Commission’s rules and forms. The Partnership’s disclosure controls and procedures also 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 Exchange Act is accumulated and communicated to the General partner'sPartnership's management, including its chief executive officerChief Executive Officer and a
financial officer,Principal Financial Officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported withwithin the required time periods.
Based upon this review, the General Partner'sPartnership’s Chief Executive Officer and Principal Financial Officer have concluded that the General Partner'sPartnership's disclosure controls (as defined in pursuant to Rule 13a-14 c13a-15e promulgated under the Exchange Act) are
sufficiently effective to ensure that the information required to be disclosed by the General PartnerPartnership in the reports it files under the Exchange Act (i) is recorded, processed, summarized and reported with adequate timeliness.
within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to the Partnership's management, including its Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported within the required time periods.
There have been no changes in the General Partner'sPartner’s internal controls or in other factors that could materially affect our disclosure controls and procedures in the quartersix months ended June 30, 2006,2007, that have materially affected or are reasonably likely to materially affect the General Partner'sPartner’s internal controls over financial reporting.
PART
Part II: OTHER INFORMATION
COMMONWEALTH INCOME
Commonwealth Income & GROWTH FUNDGrowth Fund V
Item 1. LEGAL PROCEEDINGS.
N/A
Item 1A. RISK FACTORS
THERE IS NO PUBLIC MARKET FOR THE UNITS, AND YOU MAY BE UNABLE TO SELL OR
TRANSFER YOUR UNITS AT A TIME AND PRICE OF YOUR CHOOSING
There existshave been no public marketmaterial changes to the risk factors set forth in our Annual Report on Form 10-K for the units,year ended December 31, 2006, as filed with the SEC. In addition to the other information set forth in this report, one should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may have a material adverse effect on our business, financial condition and/or operating results.
| Unregistered Sales of Equity Securities and Use of Proceeds |
N/A
| Defaults Upon Senior Securities |
N/A
| Submission of Matters to a Vote of Securities Holders |
N/A
On June 20th, 2007, Ms. Katrina Mason tendered her resignation, due to the impending birth of her first child. In her resignation, she stated that "she has decided to embark on the new adventure of motherhood and devote her full attention to her family." Her resignation was effective June 14, 2007. Ms. Mason tendered her resignation to Commonwealth organization and the
General Partner does not
expect a public market for units to develop. The units cannot be pledged or
transferred without the consentpositions she held with affiliates of the
General Partner. The units should be
purchasedregistrant and her position on the Board, as
a long-term investment only. The General Partner intends to limitpreviously disclosed by the
number of transfers to no more than that number permitted by one of the safe
harbors available under the tax laws and regulations to prevent CIGF5 from being
taxed as a corporation. Generally, these safe harbors require that all nonexempt
transfers and redemptions of units in any calendar year not exceed two percent
of the outstanding interests in the capital or profits of CIGF5.
The General Partner has sole discretion in deciding whether we will redeem units
in the future. Consequently, you may not be able to liquidate your investment in
the event of an
16
emergency. You must be prepared to hold your units for the life of CIGF5.
CIGF5's life cycle will last approximately 10 to 12 years, and any extension of
this period will require an amendment to the partnership agreement, which must
be approved by a majority of the Limited Partners. You may be able to resell
your units, if at all, only at a discount to the offering price, which may be
significant, and the redemption or sale price may be less than the price you
originally paid for your units.
INFORMATION TECHNOLOGY EQUIPMENT WE PURCHASE WILL DEPRECIATE IN VALUE AND/OR
BECOME OBSOLETE OR LOSE VALUE AS NEW TECHNOLOGY IS DEVELOPED, WHICH CAN REDUCE
THE VALUE OF YOUR UNITS AND YOUR ULTIMATE CASH RETURN.
Residual value is the amount realized upon the sale or release of equipment when
the original lease has expired. The residual value of our equipment may decline
if technological advancements make it obsolete or change market preferences. The
residual value depends on, among other factors, the condition of the equipment,
the cost of comparable new equipment, the technological obsolescence of the
equipment and supply and demand for the equipment.
In either of these events, the equipment we purchased may have little or no
residual value. This will result in insufficient assets for us to distribute
cashregistrant in a total amount equal toCurrent Report filed with the invested capital of the Limited Partners
over the term of our existence. Also, such an occurrence may reduce the value of
the units. Although currently we expect CIGF5 to acquire predominantly new
equipment, CIGF5 may purchase used equipment. There is no limitationSEC on the
amount of used equipment which CIGF5 may acquire. The acquisitions of used
equipment may increase the risk that such equipment will become obsolete so that
it will have little or no residual value.
WE PAY SIGNIFICANT FEES TO THE GENERAL PARTNER AND AFFILIATES, WHICH WILL REDUCE
CASH AVAILABLE FOR DISTRIBUTIONS.
The General Partner and its affiliates, including Commonwealth Capital
Securities Corp.("CCSC"), will receive substantial fees. Some fees will be paid
without regard to the amount of distributions paid or the success or
profitability of CIGF5's operations and investments. For example, an increase in
portfolio turnover or the amount of leverage used to purchase equipment may
increase the fees we pay to the General Partner. Such compensation and fees were
established by the General Partner and are not based on arm's-length
negotiations.
CIGF5 HAS A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE PERFORMANCE.
THERE CAN BE NO ASSURANCE THAT ANY OF THE INVESTMENT OBJECTIVES WILL BE
ATTAINED.
Our operations may not ultimately be successful and we may be unable to meet our
stated investment objectives. Specifically, sufficient cash may ultimately not
be available for distribution to investors. Our General Partner sponsors four
other public equipment leasing programs with investment objectives similar to
CIGF5. The General Partner has also sponsored several privately held equipment
leasing programs. Results for these prior public and private programs have in
some cases been lower than originally anticipated.
ANY DELAY IN ACQUIRING EQUIPMENT WILL DIMINISH OUR RETURNS.
17
Due to competition with other lessors, we may experience difficulty in obtaining
and leasing appropriate equipment. Our ability to acquire and lease equipment
may also be adversely affected by interest rates, the availability of capital or
increases in corporate liquidity, since prospective lessees may prefer to raise
capital, incur debt or use internally-generated cash to purchase equipment
rather than enter the leasing market.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES.
N/A
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
N/A
Item 5. OTHER INFORMATION.
N/A
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Form 8-K.
31.1 THE RULE 15D-14(A)
15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER 31.2 THE RULE 15D-14(A)
15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER 32.1 SECTION 1350 CERTIFICATION OF CEO
PRINCIPAL EXECUTIVE OFFICER 32.2 SECTION 1350 CERTIFICATION OF CFO
b) Report on Form 8-K:
On April 24, 2006 COMMONWEALTH INCOME & GROWTH FUND V issued an 8-K statement to
the SEC. Items reported in this statement consistedPRINCIPAL FINANCIAL OFFICER Table of the following: George S.
Springsteen, Founder and former Chairman of the Board, CEO and Treasurer of the
general partner's parent company, Commonwealth Capital Corp. ("CCC"), passed
away unexpectedly on April 18, 2006. The Board of Directors immediately took
action and adopted the following changes in management effective April 24, 2006:
Mr. Springsteen's spouse, Kimberly A. Springsteen, 46, has been appointed as
Chairman of the Board, Chief Executive Officer and Treasurer of CCC, CIGF, Inc.
and CCSC, and remains a Director and Chief Operating Officer of each. Henry J.
Abbott, 55, has been appointed as President of CCC, CIGF, Inc. and CCSC. Jay M.
Dugan, 58, has been appointed as Executive Vice President of CCC, CIGF, Inc. and
CCSC. Lynn A. Franceschina, 34, has been appointed as Executive Vice President
of CCC, CIGF, Inc. and CCSC. James Pruett, 40, has been appointed as a Vice
President of CCC, CIGF, Inc. and CCSC. Donnamarie D. Abbott, 46, has been
appointed as a Vice President of CCC, CIGF, Inc. and CCSC.
18
Also included in the April 24, 2006 8-K statement were changes among the Board
of Directors as follows: Effective as of April 18, 2006, Jay M. Dugan, Katrina
M. Mason and Lynn A. Franceschina have joined Ms. Springsteen and Mr. Abbott on
the Board of Directors of CCC and CIGF, Inc. Ms. Springsteen has been appointed
as the Chairman of the Board of Directors and Katrina M. Mason, 33, has been
appointed President of CCSC, effective as of the date hereof.
Contents
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 V
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. General Partner
August 14, 2006 By: /s/ Kimberly A. Springsteen
Date ------------------------------------
Kimberly A. Springsteen
Chief Executive Officer
19
| COMMONWEALTH INCOME & GROWTH FUND V |
| BY: COMMONWEALTH INCOME & GROWTH FUND, INC. General Partner |
August 14, 2007 | By: /s/ Kimberly A. Springsteen |
Date | Kimberly A. Springsteen |
| Chief Executive Officer |