Washington, D.C. 20549

 FOR THE QUARTERLY PERIOD ENDED JUNESEPTEMBER 30, 2007

(Exact name of registrant as specified in its charter)

Brandywine Bldg. One, Suite 200

2 Christy Drive

Chadds Ford, PA 19317

(Address, including zip code, of principal executive offices)

(610) 594-9600

(Registrant’s telephone number including area code)

Commonwealth Income & Growth Fund V (the “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”).  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 used the proceeds of the Offering to acquire, own and lease various types of computer information technology (I.T.) equipment and other similar capital equipment, which is leased primarily to U.S. corporations and institutions.  Commonwealth Capital 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’s General Partner is Commonwealth Income & Growth Fund, Inc. (the “General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of CCC.  CCC is a member of the 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.

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 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, 2006.  Operating results for the sixnine months ended JuneSeptember 30, 2007 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2007.

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 noPartnership recorded impairment existed ascharges of Juneapproximately $41,000 (included in depreciation expense) to reflect the assets at their current estimated net realizable value for the period ended September 30, 2007.

 

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 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 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.

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.

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.

The Partnership’s primary source of capital for the sixnine months ended JuneSeptember 30, 2007 was cash provided by operating activities of approximately $1,790,000.$2,588,000.  For the sixnine months ended JuneSeptember 30, 2006, the Partnership’s primary source of capital was from contributions of approximately $5,200,000.$5,255,000.  Equipment was purchased in the amount of approximately $3,560,000$3,563,000 during the sixnine months ended JuneSeptember 30, 2007 and distributions were paid in the amount of approximately $1,250,000.$1,875,000.  Equipment in the amount of approximately $3,600,000$5,821,000 was purchased during the sixnine months ended JuneSeptember 30, 2006 and distributions were paid in the amount of $1,100,000.approximately $1,818,000.

The Partnership intends to invest approximately $6,192,000$6,200,000 in additional equipment for the remainder of 2007.  The acquisition of this equipment will be funded by debt financing from cash flows from lease rental payments.

For the sixnine months ended JuneSeptember 30, 2007, the Partnership generated cash flows from operating activities in the amount of $1,790,000,approximately $2,588,000, which includes a net loss of approximately $117,000,$217,000, and depreciation and amortization expenses of approximately $2,470,000.$3,899,000.  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.$1,266,000.

For the sixnine months ended JuneSeptember 30, 2006, the Partnership generated cash flows from operating activities in the amount of $727,000,$1,086,000, which includes a net loss of approximately $309,000,$292,000, and depreciation and amortization expenses of approximately $1,085,000.$1,872,000.  Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $222,000.$410,000.

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 JuneSeptember 30, 2007, the Partnership had future minimum rentals on non-cancelable operating leases of approximately $3,422,000$1,714,000 for the balance of the year ending December 31, 2007 and approximately $9,565,000$9,683,000 thereafter.  As of JuneSeptember 30, 2007, the outstanding debt was approximately $3,744,000$3,274,000 with interest rates ranging from 4.61% to 6.3%, and will be payable through January 2010.

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 is deemed necessary.

For the three months ended JuneSeptember 30, 2007, the Partnership recognized incomerevenue of approximately $1,784,000$1,774,000 and expenses of approximately $1,873,000,$1,874,000, resulting in a net loss of approximately $89,000.$100,000.  For the three months ended JuneSeptember 30, 2006, the Partnership recognized incomerevenue of approximately $880,000$1,128,000 and expenses of approximately $941,000,$1,112,000, resulting in a net lossincome of approximately $61,000.$16,000.

Lease income increased by 128%68% to approximately $1,737,000$1,717,000 for the three months ended JuneSeptember 30, 2007, from approximately $762,000$1,022,000 for the three months ended JuneSeptember 30, 2006.  This increase was primarily due to more lease agreements started thancommencing versus new lease agreements were ending, during the three months ended JuneSeptember 30, 2007.

Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC 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 44%12% to approximately $370,000$277,000 for the three months ended JuneSeptember 30, 2007, from $257,000$248,000 for the three months ended JuneSeptember 30, 2006.  This increase is primarily attributable to an increase in Partnership taxes,other LP expenses, which was partially offset by a decrease in accounting fees and employee bonuses.office and printing services.

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%79% to approximately $87,000$86,000 for the three months ended JuneSeptember 30, 2007, from $40,000$48,000 for the three months ended JuneSeptember 30, 2006, 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. These expenses increased 122%81% to approximately $1,374,000$1,425,000 for the three months ended JuneSeptember 30, 2007, from $620,000$787,000 for the three months ended JuneSeptember 30, 2006. This increase was due to the acquisition of new equipment attributable toassociated with the purchase of new leases.  The Partnership recorded impairment charges of approximately $41,000 to reflect the assets at their current estimated net realizable value for the period ending September 30, 2007.

For the sixnine months ended JuneSeptember 30, 2007, the Partnership recognized incomerevenue of approximately $3,237,000,$5,011,000, and expenses of approximately $3,354,000,$5,228,000, resulting in a net loss of approximately $117,000.$217,000.  For the sixnine months ended JuneSeptember 30, 2006, the Partnership recognized incomerevenue of approximately $1,534,000,$2,663,000, and expenses of approximately $1,843,000,$2,955,000, resulting in a net loss of approximately $309,000.$292,000.

Lease income increased by 102% to $3,116,000approximately $4,832,000 for the sixnine months ended JuneSeptember 30, 2007, from $1,367,000,$2,389,000, for the sixnine months ended JuneSeptember 30, 2006, primarily due to the fact that more lease agreements were entered into sincecommencing versus lease agreements ending, during the sixnine months ended JuneSeptember 30, 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$933,000 for the sixnine months ended JuneSeptember 30, 2007, from $612,000$861,000 for the sixnine months ended JuneSeptember 30, 2006, primarily due to an increase in other LP expenses and Partnership taxes, whichand was set offpartially offset by a decrease in legal fees, blue sky expenses, due diligence expenses, and office and 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$242,000 for the sixnine months ended JuneSeptember 30, 2007, from $72,000$120,000 for the sixnine months ended JuneSeptember 30, 2006, whichand is consistent with the increase in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses increased to approximately $2,473,000$3,899,000 for the sixnine months ended JuneSeptember 30, 2007;2007, from $1,085,000$1,872,000 for the sixnine months ended JuneSeptember 30, 2006. This increase was due to additional equipment being purchased and the associated acquisition and finance fees being recorded by the Partnership for the sixnine months ended JuneSeptember 30, 2006.  The Partnership recorded impairment charges of approximately $41,000 to reflect the assets at their current estimated net realizable value for the period ending September 30, 2007.

 

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the 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.

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.