<PAGE>
                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, DC  20549


                                     FORM 10-K


(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE
    ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

( ) 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 I
               (Exact name of registrant as specified in its charter)


     Pennsylvania                                     23-2735641
(State or other jurisdiction of          (I.R.S. Employer identification No.)
incorporation or organization)  


                             1160 West Swedesford Road
                            Berwyn, Pennsylvania  19312
           (Address, including zip code, of principal executive offices)

                                   (610) 647-6800
                (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 ]   NO   [  ] 

    Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of Registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-K or any amendment to this Form 10-K.

                        DOCUMENTS INCORPORATED BY REFERENCE
 (Specific sections incorporated are identified under applicable items herein)
                                          
     Certain exhibits to the Company's Registration Statement on Form S-1 
(File No. 33-69996) and Annual Report on Form 10-K for the fiscal year ended 
December 31, 1994 are incorporated by reference as Exhibits in Part IV of 
this Report.


<PAGE>

                                       PART I

ITEM 1:        BUSINESS  

GENERAL

     Commonwealth Income and Growth Fund I (the "Partnership") was formed on 
August 26, 1993 under the Pennsylvania Revised Uniform Limited Partnership 
Act.  The Partnership began offering $15,000,000 of Units of Limited 
Partnership ("Units") to the public on December 17, 1993 (the "Offerings").  
The Partnership terminated its offering of Units on May 11, 1995, with 
631,358 Units ($12,623,682) admitted as Limited Partners of the Partnership.

     See "The Glossary" below for the definition of capitalized terms not 
otherwise defined in the text of this report.

PRINCIPAL INVESTMENT OBJECTIVES

     The Partnership was formed for the purpose of acquiring various types of 
Equipment, including computer peripheral and other similar capital equipment. 
The Partnership utilized the net proceeds  of the Offering to purchase IBM 
and IBM compatible computer peripheral and other similar capital equipment.  
The Partnership utilizes Retained Proceeds and debt financing (not to exceed 
30% of the aggregate cost of the Equipment owned or subject to Conditional 
Sales Contract by the Partnership at the time the debt is incurred) to 
purchase additional Equipment.  The Partnership acquires Equipment which is 
subject to lease principally to U.S. corporations and other institutions 
pursuant predominantly to Operating Leases.  The Partnership retains the 
flexibility to enter into Full Payout Net Leases and Conditional Sales 
Contracts, but has not done so.

The Partnership's principal investment objectives are to;

     (a) acquire, lease and sell Equipment to generate revenues from operations
     sufficient to provide quarterly cash distributions to Limited Partners;

     (b) preserve and protect Limited Partners' capital;

     (c) use a portion of Cash Flow and Net Disposition Proceeds derived from 
     the sale, refinancing or other disposition of Equipment to purchase   
     additional Equipment; and

     (d) refinance, sell or otherwise dispose of Equipment in a manner that will
     maximize the proceeds to the Partnership.

THERE CAN BE NO ASSURANCE THAT ANY OF THESE OBJECTIVES WILL BE ATTAINED.

     Limited Partners do not have the right to vote on or otherwise approve 
or disapprove any particular investment to be made by the Partnership.

     Although the Partnership has acquired predominately new Equipment, the 
Partnership may purchase used Equipment.   Generally, Equipment is acquired 
from manufacturers, distributors, leasing companies, agents, owner-users, 
owner-lessors, and other suppliers upon terms that vary depending upon the 
Equipment and supplier involved.   Manufacturers and distributors usually 
furnish a limited warranty against defects in material and workmanship and 
some purchase agreements for Equipment provide for service and replacement of 
parts during a limited period.   Equipment purchases are also made through 
lease brokers and on an ad hoc basis to meet the needs of a particular lessee.

     As of December 31, 1997, all Equipment purchased by the Partnership is 
subject to an Operating Lease  or an Operating Lease was entered into with a 
third party when the Partnership acquired an item of Equipment.   The 
Partnership may also engage in sale/leaseback transactions, pursuant to which 
the 

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Partnership would purchase Equipment from companies that would then 
immediately lease the Equipment from the Partnership.   The Partnership may 
also purchase Equipment which is leased under Full Payout Net Leases or sold 
under Conditional Sales Contracts at the time of acquisition or the 
Partnership may enter into a Full Payout Net Lease or Conditional Sales 
Contract with a third party when the Partnership acquires an item of 
Equipment.

     The Partnership may enter into arrangements with one or more 
manufacturers pursuant to which the Partnership purchases from such 
manufacturers Equipment which has previously been leased directly by the 
manufacturer to third parties ("vendor leasing agreements").   The Partnership 
and manufacturers may agree to nonrecourse loans to the Partnership from the 
manufacturers to finance the acquisition of Equipment secured by the 
Equipment and the receivables due to the manufacturers from users of such 
Equipment.  It is expected that the manufacturers of Equipment will provide 
maintenance, remarketing and other services for the Equipment subject to such 
agreements.  As of December 31, 1997, the Partnership has not entered into 
any such agreements.

     The General Partner has the discretion consistent with its fiduciary 
duty to change the investment objectives of the Partnership if it determines 
that such a change is in the best interest of the Limited Partners and so 
long as such a change is consistent with the Partnership Agreement.   The 
General Partner will notify the Limited Partners if it makes such a 
determination to change the Partnership's investment objectives.

TYPES OF EQUIPMENT

     Computer Peripheral Equipment.  Computer peripheral equipment consists 
of devices used to convey information into and out of a central processing 
unit (or "mainframe") of a computer system, such as tape drives, disk 
drives, tape controllers, disk controllers, printers, terminals and related 
control units, all of which are in some way related to the process of 
storing, retrieving, and processing information by computer.

     The Partnership acquires primarily IBM manufactured or IBM compatible 
equipment.   The General Partner believes that dealing in IBM or IBM 
compatible equipment is particularly advantageous because of the large IBM 
customer base, policy of supporting users with software and maintenance 
services and the large amount of IBM and IBM compatible equipment in the 
marketplace.   

     Computer technology has developed rapidly in recent years and is 
expected to continue to do so.   Technological advances have permitted 
continued reductions in the cost of computer processing capacity, thereby 
permitting applications not economically feasible a few years ago.   Much of 
the older IBM and IBM compatible computer peripheral equipment has not been 
retired from service, because software is generally interchangeable between 
older and newer equipment, and older equipment is capable of performing many 
of the same functions as newer equipment.   The General Partner believes that 
historically values of peripheral equipment have been affected less 
dramatically by changes in technology than have the values of central 
processing units.   An equipment user who upgrades to a more advanced central 
processor generally can continue to use his existing peripheral equipment.   
Peripheral equipment nevertheless is subject to declines in value as new, 
improved models are developed and become available.   Technological advances 
and other factors, including year 2000 issues discussed below in Management 
Discussion and Analysis, have at times caused dramatic reduction in the 
market prices of older models of IBM and IBM compatible computer peripheral 
equipment from the prices at which they were originally introduced.

     Other Equipment-Restrictions.  The Partnership acquires computer 
peripheral equipment, such as tape drives, disk drives, tape controllers, 
disk controllers, printers, terminals and related control units, all of which 
are in some way related to the process of storing, retrieving and processing 
information by computer.  The General Partner is also authorized, but does 
not presently intend, to cause the Partnership to invest in non IBM 
compatible computer peripheral, data processing, telecommunication or medical 
technology equipment. The Partnership may not invest in any of such other 
types of Equipment (i) to the 

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extent that the purchase price of such Equipment, together with the aggregate 
Purchase Price of all such other types of Equipment then owned by the 
Partnership, is in excess of 25% of the total cost of all of the assets of 
the Partnership at the time of the Partnership's commitment to invest therein 
and (ii) unless the General Partner determines that such purchase is in the 
best economic interest of the Partnership at the time of the purchase and, in 
the case of non-IBM compatible peripheral Equipment, that such Equipment is 
comparable in quality to similar IBM or IBM compatible Equipment.  There can 
be no assurance that any Equipment investments can be found which meet this 
standard.  Accordingly, there can be no assurance that investments of this 
type will be made by the Partnership.

DIVERSIFICATION

     Diversification is generally desirable to minimize the effects of 
changes in specific industries, local economic conditions or similar risks.  
However, the extent of the Partnership's diversification, in the aggregate 
and within each category of Equipment, depends in part upon the financing 
which can be assumed by the Partnership or borrowed from third parties on 
satisfactory terms. The Partnership's policy not to borrow on a recourse 
basis will further limit its financing options.  Diversification also depends 
on the availability of various types of Equipment.  As of December 31, 1997, 
the Partnership has acquired a diversified Equipment portfolio which it has 
leased to 27 different companies located throughout the United States.  
Approximately 32% of the Equipment acquired by the Partnership  consists of  
tape storage  Approximately 23% of the Equipment acquired by the Partnership 
consist of workstations, department servers and enterprise servers.  
Approximately 18% of the Equipment acquired by the Partnership consist of 
printers.  Approximately 13% of the Equipment acquired by the Partnership 
consists of disk arrays. Approximately 8% of the Equipment acquired by the 
Partnership consists of communication controllers.  Approximately 4% of the 
Equipment acquired by the Partnership consists of escon drivers. 
Approximately another 2% of the Equipment acquired by the Partnership 
consists of more traditional forms of disk storage.

     During the operational stage of the Partnership, the Partnership may not 
at any one point in time lease (or sell pursuant to a Conditional Sales 
Contract) more than 25% of the Equipment to a single Person or Affiliated 
group of Persons.

DESCRIPTION OF LEASES

     The Partnership to date has purchased, and in the future intends to 
continue to purchase only  Equipment that is subject to a lease or for which 
a lease or similar agreement will be entered into contemporaneously with the 
consummation of the Partnership's acquisition of the Equipment.  The General 
Partner to date has leased and in the future intends to lease most of the 
Equipment purchased by the Partnership to third parties pursuant to Operating 
Leases.  Operating Leases are relatively short-term (12 to 48 month) leases 
under which the aggregate noncancellable rental payments during the original 
term of the lease are not sufficient to permit the lessor to recover the 
purchase price of the subject Equipment.  The Equipment  may also be leased 
pursuant to Full Payout Net Leases.  Full Payout Net Leases are leases under 
which the aggregate noncancellable rental payments during the original term 
of the lease are at least sufficient to recover the purchase price of the 
subject Equipment.  It is anticipated that the Partnership will enter into 
few, if any, Full Payout net Leases.  The General Partner may also enter into 
Conditional Sales Contracts for Equipment.  A Conditional Sales Contract 
generally provides that the noncancellable payments to the seller over the 
term of the contract are sufficient to recover the investment in such 
Equipment and to provide a return on such investment.  Under a Conditional 
Sales Contract, the seller reserves title to, and retains a security interest 
in, the Equipment until the Purchase Price of  the Equipment is paid.   As of 
December 31, 1997, the Partnership has not entered into any Full Payout Net 
Leases or Conditional Sales Contracts for Equipment and does not presently 
intend to do so.

     In general, the terms of the Partnership's leases, whether the Equipment 
is leased pursuant to an Operating lease or a Full Payout Net Lease, depend 
upon a variety of factors, including:  the desirability of each type of lease 
from both an investment and a tax point of view; the relative demand among 
lessees for 

                                          4
<PAGE>

Operating or Full Payout Net Leases; the type and use of Equipment and its 
anticipated residual value; the business of the lessee and its credit rating; 
the availability and cost of financing; regulatory considerations; the 
accounting treatment of the lease sought by the lessee or the Partnership; 
and competitive factors.

     An Operating Lease generally represents a greater risk to the 
Partnership than a Full Payout Net Lease, because in order to recover the 
purchase price of the subject Equipment and earn a return on such investment, 
it is necessary to renew or extend the Operating Lease, lease the Equipment 
to a third party at the end of the original lease term, or sell the 
Equipment.  On the other hand, the term of an Operating Lease is generally 
much shorter than the term of a Full Payout Net Lease, and the lessor is thus 
afforded an opportunity under an Operating Lease to re-lease or sell the 
subject Equipment at an earlier stage of the Equipment's life cycle than 
under a Full Payout Net Lease.  Also, the annual rental payments received 
under an Operating Lease are ordinarily higher than those received under a 
Full Payout Net Lease.   

     The Partnership's policy is to generally enter into "triple net leases" 
(or the equivalent, in the case of a Conditional Sales Contract) which 
typically provide that the lessee or some other party bear the risk of 
physical loss of the Equipment; pay taxes relating to the lease or use of the 
Equipment; maintain the Equipment; indemnify the Partnership-lessor against 
any liability suffered by the Partnership as the result of any act or 
omission of the lessee or its agents; maintain casualty insurance in an 
amount equal to the greater of the full value of the Equipment and a 
specified amount set forth in the lease; and maintain liability insurance 
naming the Partnership as an additional insured with a minimum coverage which 
the General Partner deems appropriate.  In addition, the Partnership may 
purchase "umbrella" insurance policies to cover excess liability and casualty 
losses, to the extent deemed practicable and advisable by the General 
Partner.  As of December 31, 1997, all leases that have been entered into are 
"triple net leases".

     The General Partner has not established any standards for lessees to 
which it will lease Equipment and, as a result, there is not an investment 
restriction prohibiting the Partnership from doing business with any lessees. 
 However, a credit analysis of all potential lessees is undertaken by the 
General Partner to determine the lessee's ability to make payments under the 
proposed lease.  The General Partner may refuse to enter into an agreement 
with a potential lessee based on the outcome of the credit analysis.

     The terms and conditions of the Partnership's leases, or Conditional 
Sales Contracts, are each determined by negotiation and may impose 
substantial obligations upon the Partnership.  Where the Partnership assumes 
maintenance or service obligations, the General Partner generally causes the 
Partnership to enter into separate maintenance or service agreements with 
manufacturers or certified maintenance organizations to provide such 
services.  Such agreements generally require annual or more frequent 
adjustment of service fees.  As of December 31, 1997, the Partnership has not 
entered into any such agreements.

BORROWING POLICIES

     The General Partner, at its discretion, may cause the Partnership to 
incur debt in the maximum aggregate amount of 30% of the aggregate cost of 
the Equipment owned, or subject to Conditional Sales Contract, by the 
Partnership at the time the debt is incurred.  The Partnership incurs only 
non-recourse debt which is secured by Equipment and lease income therefrom.  
Such leveraging permits the Partnership to increase the aggregate amount of 
its depreciable assets, and, as a result, potentially increases both its 
lease revenues and its federal income tax deductions above those levels which 
would be achieved without leveraging.  There is no limit on the amount of 
debt that may be incurred in connection with the acquisition of any single 
item of Equipment.  Any debt incurred is fully amortized over the term of the 
initial lease or Conditional Sales Contract to which the Equipment securing 
the debt is subject.  The precise amount borrowed by the Partnership depends 
on a number of factors, including the types of Equipment acquired by the 
Partnership; the creditworthiness of the lessee; the availability of suitable 
financing; and prevailing interest rates. The Partnership is flexible in the 
degree of leverage it employs, within the permissible limit.  There can be no 
assurance that credit will be available to the Partnership in the amount or 
at the time 

                                          5
<PAGE>

desired or on terms considered reasonable by the General Partner.  As of 
December 31, 1997, the aggregate nonrecourse debt outstanding of $4,968,748 
was 29% of the aggregate cost of the Equipment owned.

     The Partnership has and may continue to purchase some items of Equipment 
without leverage.  If the Partnership purchases an item of Equipment without 
leverage and thereafter suitable financing becomes available, it may then 
obtain the financing, secure the financing with the purchased Equipment to 
the extent practicable and invest any proceeds from such financing in 
additional items of Equipment, or it may distribute some or all  of such 
proceeds to the Limited Partners.  Any such later financing will be on terms 
consistent with the terms applicable to borrowings generally.  As of December 
31, 1997, the Partnership has not exercised this option.

     To date, the General Partner has caused the Partnership to borrow funds 
at fixed interest rates and plans to continue borrowing additional funds, to 
the fullest extent practicable.  The Partnership may borrow funds at rates 
which vary with the "prime" or "base" rate.  If lease revenues were fixed, a 
rise in the "prime" or "base" rate would increase borrowing costs and reduce 
the amount of the Partnership's income and cash available for distribution.  
Therefore, the General Partner is permitted to borrow funds to purchase 
Equipment at fluctuating rates only if the lease for such Equipment provides 
for fluctuating rental payments calculated on a similar basis.

     Any additional debt incurred by the Partnership must be nonrecourse. 
Nonrecourse debt, in the context of the business to be conducted by the 
Partnership, means that the lender providing the funds can look for security 
only to the Equipment pledged as security and the proceeds derived from 
leasing or selling such Equipment.  Neither the Partnership nor any Partner 
(including the General Partner) would be liable for repayment of any 
nonrecourse debt.

     Loan agreements may also require that the Partnership maintain certain 
reserves or compensating balances and may impose other obligations upon the 
Partnership.  Moreover, since a significant portion of the Partnership's 
revenues from the leasing of Equipment will be reserved for repayment of 
debt, the use of financing reduces the cash which might otherwise be 
available for distributions until the debt has been repaid and may reduce the 
Partnership's Cash Flow over a substantial portion of the Partnership's 
operating life.  As of December 31, 1997, no such agreements existed.

     The General Partner and any of its Affiliates may, but are not required 
to, make loans to the Partnership on a short-term basis.  If the General 
Partner or any of its Affiliates makes such a short-term loan to the 
Partnership, the General Partner of Affiliate may not charge interest at a 
rate greater that the interest rate charged by unrelated lenders on 
comparable loans for the same purpose in the same locality.  In no event is 
the Partnership required to pay interest on any such loan at an annual rate 
greater than three percent over the "prime rate' from time to time announced 
by PNC Bank, Philadelphia, Pennsylvania ("PNC Bank").  All payments of 
principal and interest on any financing provided by the General Partner or 
any of its affiliates are due and payable by the Partnership within 12 months 
after the date of the loan.

REFINANCING POLICIES

     Subject to the limitations set forth in "Borrowing Policies" above, the 
Partnership may refinance its debt from time to time.  With respect to a 
particular item of Equipment, the General Partner will take into 
consideration such factors as the amount of appreciation in value, if any, to 
be realized, the possible risks of continued ownership, and the anticipated 
advantages to be obtained for the Partnership, as compared to selling such 
Equipment.  As of December 31, 1997, the Partnership has not refinanced any 
of its debt.

     Refinancing, if achievable, may permit the Partnership to retain an item 
of Equipment and at the same time to generate additional funds for 
reinvestment in additional Equipment or for distribution to the Limited 
Partners.

LIQUIDATION POLICIES

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     The General Partner intends to cause the Partnership to begin disposing 
of its Equipment in approximately January 2004.  Notwithstanding the 
Partnership's objective to sell all of its assets and dissolve by December 
31, 2004, the General Partner may at any time cause the Partnership to 
dispose of all its Equipment and, dissolve the Partnership upon the approval 
of Limited Partners holding a Majority in Interest of Units.

     Particular items of Equipment may be sold at any time if, in the 
judgment of the General Partner, it is in the best interest of the 
Partnership to do so. The determination of whether particular items of 
Partnership Equipment should be sold or otherwise disposed of is made by the 
General Partner after consideration of all relevant factors (including 
prevailing general economic conditions, lessee demand, the General Partner's 
views of current and future market conditions, the cash requirements of the 
Partnership, potential capital appreciation, cash flow and federal income tax 
considerations), with a view toward achieving the principal investment 
objectives of the Partnership.  As partial payment for Equipment sold, the 
Partnership may receive purchase money obligations secured by liens on such 
Equipment. Subject to the General Partner's discretion the Partnership may 
extend beyond December 31, 2004, if deemed beneficial to the Partnership.

MANAGEMENT OF EQUIPMENT

     Equipment management services for the Partnership's Equipment is 
provided by the General Partner and its Affiliates and by persons employed by 
the General Partner.  Such services will consist of collection of income from 
the Equipment, negotiation and review of leases, Conditional Sales Contracts 
and sales agreements, releasing and leasing-related services, payment of 
operating expenses,  periodic physical inspections and market surveys, 
servicing indebtedness secured by Equipment, general supervision of lessees 
to assure that they are properly utilizing and operating Equipment, providing 
related services with respect to Equipment, supervising, monitoring and 
reviewing services performed by others in respect to Equipment and preparing 
monthly Equipment operating statements and related reports.

COMPETITION

     The equipment leasing industry is highly competitive.  The Partnership 
competes with leasing companies, equipment manufacturers and their affiliated 
financing companies, distributors and entities similar to the Partnership 
(including other programs sponsored by the General Partner), some of which 
have greater financial resources than the Partnership and more experience in 
the equipment leasing business than the General Partner.  Other leasing 
companies and equipment manufacturers, their affiliated financing companies 
and distributors may be in a position to offer equipment to prospective 
lessees on financial terms which are more favorable that those which the 
Partnership can offer.  They may also be in a position to offer trade-in 
privileges, software, maintenance contracts and other services which the 
Partnership may not be able to offer.  Equipment manufacturers and 
distributors may offer to sell equipment on terms (such as liberal financing 
terms and exchange privileges) which will afford benefits to the purchaser 
similar to those obtained through leases.  As a result of the advantages 
which certain of its competitors may have, the Partnership may find it 
necessary to lease its Equipment on a less favorable basis than certain of 
its competitors.

     The computer peripheral equipment industry is extremely competitive.  
Competitive factors include pricing, technological innovation and methods of 
financing.   Certain manufacturer-lessors maintain advantages through patent 
protection, where applicable, and through a policy that combines service and 
hardware with payment accomplished through a single periodic charge.

     The dominant firm in the computer marketplace is International Business 
Machines Corporation, and its subsidiary IBM Credit Corporation is the 
dominant force in the leasing of IBM equipment.  Because of IBM's substantial 
resources and dominant position, revolutionary changes with respect to 
computer systems, pricing, marketing practices, technological innovation and 
the availability of new and attractive 

                                          7

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financing plans could occur at any time. Significant action in any of these 
areas by IBM or IBM Credit Corporation might materially adversely affect the 
Partnership's business or the other manufacturers with whom the General 
Partner might negotiate purchase and other agreements. Any adverse effect on 
these manufacturers could be reflected in the overall return realized by the 
Partnership on equipment from those manufacturers of from IBM.

Investments

     As of March 16, 1998, the Partnership has purchased, or has made the 
commitment to purchase, the following Equipment:

<TABLE>
<CAPTION>

                                              EQUIPMENT                   PURCHASE          LIST  MONTHLY     LEASE
LESSEE                                MFG    DESCRIPTION                    PRICE          PRICE    RENT       TERM

<S>                                 <C>      <C>                         <C>            <C>        <C>         <C>
Xerox Corp.                           SUN    (32) SUN WORK ST              440,800        277,705    286        39
Xerox Corp.                           SUN    (4)SPARC2000                  590,840        305,875   1,019       39
Shared Medical Systems Corp.        STK-ICE  (25%)9200-XJ3                 499,630        213,583   4,949       36
UNUM Life Insurance                   IBM    (50%) 3900 & roll             413,368        343,010   6,338       48
Fingerhut Corp.                     SIEMEN   (2) 2240-004                  722,000        459,592   8,558       48
Software Maintenance Inc.             STK    (50%) 9200-XN3                949,580        236,640   5,607       36
Bellsouth  Telecommunications, Inc.   STK    (1) 9200-XN3                2,635,720        582,671  12,929       36
GE Information Services,  Inc.        EMC    (50%) 3200-9024               702,660        293,506   5,307       28
Southern Pacific  Transportation Co.  IBM    (375) 4230-5S3              1,273,125      1,064,930  26,019       36
Chrysler Corp.                        STK    (2) 4490-M30                  686,158        490,110  12,001       48
GE Industrial & Power  Systems        HP     (50%) HP9000/J200             202,680        157,635   4,115       36
Wang Laboratories, Inc.               PYR    (50%) NILE150                 937,290        589,287  16,639       36
Shared Medical Systems  Corp.         STK    (8) 9490-M34                2,126,928      1,452,140  29,191       48
Chrysler Corp.                        IBM    (20%) 3745-31A                242,244        184,383   4,203       48
Sprint Communications  Company        STK    (10) 9490-M32               1,481,830        779,676  15,983       36
Sprint Communications  Company        STK    (9) 9490-M32                1,335,897        703,968  15,501       36
Honda R&D                             SGI    (45%) 4XR10000                400,220        298,094   7,683       36
TRW                                   HP     (19) HP9000-C110               507,370        411,075  10,711       36
Sprint Communications  Company        IBM    (2) 3995-133                  421,500        286,536  10,166       24
Equitable Life Assurance  Company     LEX    (80) N240                     571,351        497,477  11,501       36
Damark International                  PYR    (1) 3445-1210                 327,288        216,419   5,681       36
Chrysler Corp.                        STK    (50%) (7) 9490-M34            951,881        538,529  14,749        24
Chrysler Corp.                        STK    (55%) 28% tape libraries,
                                             30% redwd, 42% timberline   1,693,479        997,891   22,520      36
McDonnell Douglas                     HP     (55%) (101) HP9000          1,662,009        932,491   34,621      22
Equitable Life Assurance  Company     LEX    (16) OPTRA                     74,458         94,098    2,615      36
Kaiser                                IBM    (3) 3745-61A,
                                             (3) 3746-900                2,149,234      1,191,555   29,786      36
Litton                                SUN    (1) E3000                     251,967         148,492   3,771      36
Sprint Communications  Company        SUN    (2) E5000                     371,640         246,042   7,199      30
Computer Science Corporation          SGI    (50%)144 workstations       2,055,893         822,455  21,031      36
PaineWebber                           IBM    (2) 9032-003                  932,206         453,900  11,060      36
Charles Schwab                        IBM    (20%) (6) 9032-005          2,479,443       1,509,981   6,989      36
Xerox Corporation                     SUN    (5) SPARC 20                  243,719         153,776   1,300      39
ADP                                   IBM    (3) 3490-A20
                                             (1) 3490-B40                  579,850         379,682   5,036      69

Reserves
</TABLE>

                                       8

<PAGE>

     Because the Partnership's leases are on a "triple-net" basis,  no 
permanent reserve for maintenance and repairs will be established from the 
Offering proceeds.  However, the General Partner, in its sole discretion, may 
retain a portion of the Cash Flow and Net Disposition Proceeds available to 
the Partnership for maintenance, repairs and working capital.  There are no 
limitations on the amount of Cash Flow and Net Disposition Proceeds that may 
be retained as reserves.   Since no reserve will be established if available 
Cash Flow of the Partnership is insufficient to cover the Partnership's 
operating expenses and liabilities, it may be necessary for the Partnership 
to obtain additional funds by refinancing its Equipment or borrowing.

General Restrictions

     Under the Partnership Agreement, the Partnership is not permitted, among 
other things, to:

         (a) invest in junior trust deeds unless received in connection with 
     the sale of an item of Equipment in an aggregate amount which does not 
     exceed 30% of the assets of the Partnership on the date of the investment;

         (b) invest in or underwrite the securities of other issuers;

         (c) acquire any Equipment for Units;

         (d) issue senior securities (except that the issuance to lenders of 
     notes or other evidences of indebtedness in connection with the financing 
     or refinancing of Equipment or the Partnership's business shall not be 
     deemed to be the issuance of senior securities);

         (e) make loans to any Person, including the General Partner or any 
     of its Affiliates, except to the extent a Conditional Sales Contract 
     constitutes a loan;

         (f) sell or lease any Equipment to, lease any Equipment from, or 
     enter into any sale-leaseback transactions with, the General Partner or 
     any of its Affiliates; or

         (g) give the General Partner or any of its Affiliates an exclusive 
     right or employment to sell the Partnership's Equipment.

     The General Partner has also agreed in the Partnership Agreement to use 
its best efforts to assure that the Partnership shall not be deemed an 
"investment company" as such term is detained in the Investment Company Act 
of 1940.

     The General Partner and its Affiliates may engage in other activities, 
whether or not competitive with the Partnership.  The Partnership Agreement 
provides, however, that neither the General Partner nor any of its Affiliates 
may receive any rebate or "give up" in connection with the Partnership's 
activities or participate in reciprocal business arrangements that circumvent 
the restrictions in the Partnership Agreement against dealings with 
Affiliates.

EMPLOYEES

     The Partnership has no employees and receives administrative and other 
services from the General Partner which has 15 employees. 

ITEM 2:   PROPERTIES

               NOT APPLICABLE

ITEM 3:   LEGAL PROCEEDINGS

               NOT APPLICABLE

ITEM 4:   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                                9
<PAGE>

               NOT APPLICABLE


PART II


ITEM 5:   MARKET FOR THE REGISTRANTS COMMON EQUITY AND            

          RELATED STOCKHOLDER MATTERS

     There is no public market for the Units nor is it anticipated that one 
will develop.  As of December 31, 1997, there were 683 holders of Units.  The 
Units are not listed on any exchange or permitted to trade on any 
over-the-counter market. In addition, there are substantial restrictions on 
the transferability of Units.

GENERAL LIMITATIONS

     Units cannot be transferred without the consent of the General Partner, 
which may be withheld in its absolute discretion.   The General Partner 
monitors transfers of Units in an effort to ensure that all transfers are 
within certain safe harbors promulgated by the IRS to furnish guidance 
regarding publicly traded partnerships.   These safe harbors limit the number 
of transfers that can occur in any one year.  The General Partner intends to 
cause the Partnership to comply with the safe harbor that permits nonexempt 
transfers and redemptions of Units of up to five percent of the total 
outstanding interest in the Partnership's capital or profits in any one year.

REDEMPTION PROVISION

     Upon the conclusion of the 30 month period following the termination of 
the Offering, the Partnership may, at the sole discretion of  the General 
Partner, repurchase a number of the outstanding Units.   After such 30 month 
period, on a semi-annual basis, the General Partner, at its discretion, will 
establish an amount for redemption, generally not to exceed two percent of 
the outstanding Units per year, subject to the General Partner's good faith 
determination that such redemptions will not (a) cause the Partnership to be 
taxed as a corporation under Section 7704 of the Code or (b) impair the 
capital or operations of the Partnership.  (The Partnership may redeem Units 
in excess of the two percent limitation if, in the good faith judgment of the 
General Partner, the conditions imposed in the preceding sentence would 
remain satisfied.)  The redemption price for Units will be 105% of the 
selling Limited Partner's Adjusted Capital Contributions attributable to the 
Units for sale.   Following the determination of the annual redemption 
amount, redemptions will occur on a semi-annual basis and all requests for 
redemption, which must be made in writing, must be on file as of the Record 
Date in which the redemption is to occur.   The General Partner will maintain 
a master list of requests for redemption with priority being given to Units 
owned by estates, followed by IRAs and Qualified Plans.   All other requests 
will be considered in the order received.  Redemption requests made by or on 
behalf of Limited Partners who are not affiliated with the General Partner or 
its Affiliates will be given priority over those made by Limited Partners who 
are affiliated with the General Partner or its Affiliates.  All redemption 
request will remain in effect until and unless canceled, in writing, by the 
requesting Limited Partner(s).

     The Partnership will accept redemption requests beginning 30 months 
following the termination of the Offering.   There will be no limitations on 
the period of time that a redemption request may be pending prior to its 
being granted.   Limited Partners will not be required to hold their interest 
in the Partnership for any specified period prior to their making a 
redemption request.

     In order to make a redemption request, Limited Partners will be required 
to advise the General Partner in writing of such request.   Upon receipt of 
such notification, the Partnership will provide detailed forms 

                                10
<PAGE>

and instructions to complete the request.  At December 31, 1997, the General 
Partner has not redeemed any Units.  Additionally, no Limited Partners have 
requested redemption of their Units.

EXEMPT TRANSFERS

     The following six categories of transfers are exempt transfers for 
purposes of calculating the volume limitations imposed by the IRS and will 
generally be permitted by the General Partner:

     (1)  transfers in which the basis of the Unit in the hands of the 
transferee is determined, in whole or in part, by reference to its basis in 
the hands of the transferor (for example, Units acquired by corporations in 
certain reorganizations, contributions to capital, gifts of Units, Units 
contributed to another partnership, and nonliquidating as well as liquidating 
distributions by a parent partnership to its partners of interests in a 
subpartnership);

     (2)  transfers at death;

     (3)  transfers between members of a family (which include brothers and 
sisters, spouse, ancestors, and lineal descendants);

     (4)  transfers resulting from the issuance of Units by the Partnership 
in exchange for cash, property, or services;

     (5)  transfers resulting from distributions from Qualified Plans; and

     (6)  any transfer by a Limited Partner in one or more transactions 
during any 30-day period of Units representing in the aggregate more than 
five percent of the total outstanding interests in capital or profits of the 
Partnership.

ADDITIONAL RESTRICTIONS ON TRANSFER

     Limited Partners who wish to transfer their Units to a new beneficial 
owner are required to pay the Partnership up to $50 for each transfer to 
cover the Partnership's cost of processing the transfer application and take 
such other actions and execute such other documents as may be reasonably 
requested by the General Partner.  There is no charge for re-registration of 
a certificate in the event of a marriage, divorce, death, or trust so long as 
the transfer is not a result of a sale of the Units.

     In addition, the following restrictions apply to each transfer: (i) no 
transfer may be made if it would cause 25% or more of the outstanding Units 
to be owned by benefit plans; and (ii) no transfer is permitted unless the 
transferee obtains such governmental approvals as may reasonably be required 
by the General Partner, including without limitation, the written consents of 
the Pennsylvania Securities Commissioner and of  any other state securities 
agency or commission having jurisdiction over the transfer.

ALLOCATION  AND DISTRIBUTION BETWEEN THE GENERAL PARTNER AND THE 
LIMITED PARTNERS

     Cash distributions, if any, are made quarterly on December 31, March 31, 
June 30, and September 30 of each year. Distributions are made 99% to the 
Limited Partners and one percent to the General Partner until the Limited 
Partners have received an amount equal to their Capital Contributions plus 
the Priority Return; thereafter, cash distributions will be made 90% to 
Limited Partners and 10% to the General Partner. Distributions made in 
connection with the liquidation of the Partnership or a Partner's Units will 
be made in accordance with the Partner's positive Capital Account balance as 
determined under the Partnership Agreement and Treasury Regulations.

                                11

<PAGE>

     The Priority Return is calculated on the Limited Partners' Adjusted 
Capital Contributions for their Units.  The Adjusted Capital Contributions 
will initially be equal to the amount paid by the Limited Partners for their 
Units.  If distributions at any time exceed the Priority Return, the Adjusted 
Capital Contributions will be reduced by the excess, decreasing the base on 
which the Priority Return is calculated.

     If the proceeds resulting from the sale of any Equipment are reinvested 
in Equipment, sufficient cash will be distributed to the Partners to pay the 
additional federal income tax resulting from such sale for a Partner in a 
39.6% federal income tax bracket or, if lower, the maximum federal income tax 
rate in effect for individuals for such taxable year.

     Generally, the General Partner is allocated Net Profits equal to its 
cash distributions (but not less than one percent of Net Profits) and the 
balance is allocated to the Limited Partners.   Net Profits arising from 
transactions in connection with the termination or liquidation of the 
Partnership are allocated in the following order: (1) First, to each Partner 
in an amount equal to the negative amount, if any, of his Capital Account; 
(2) Second, an amount equal to the excess of the proceeds which would be 
distributed to the Partners based on the Operating Distributions to the 
Partners over the aggregate Capital Accounts of all the Partners, to the 
Partners in proportion to their respective shares of such excess, and (3) 
Third, with respect to any remaining Net Profits, to the Partners in the same 
proportions as if the distributions were Operating Distributions.   Net 
Losses, if any, are in all cases allocated 99% to the Limited Partners and 
one percent to the General Partner.

     Net Profits and Net Losses are computed without taking into account, in 
each taxable year of the Partnership, any items of income, gain, loss or 
deduction required to be specially allocated pursuant to Section 704(b) of 
the Code and the Treasury Regulation promulgated thereunder.  No Limited 
Partner is required to contribute cash to the capital of the Partnership in 
order to restore a closing Capital Account deficit, and the General Partner 
has only a limited deficit restoration obligation under the Partnership 
Agreement.

Quarterly distributions in the following amounts were declared and paid to 
the Limited Partners during 1997, 1996 and 1995.

<TABLE>
<CAPTION>

Quarter Ended             1997          1996            1995  
-------------          ----------    ----------     ----------
<S>                    <C>           <C>            <C>

March 31               $  315,678    $  315,678     $  247,659

June 30                   315,678       315,678        304,686

August 31                 315,678       315,678        315,605

December 31               315,678       315,678        315,679
                       ----------    ----------     ----------
                       $1,262,712     $1,262,712     $1,183,629
                       ----------    ----------     ----------
                       ----------    ----------     ----------


</TABLE>

ALLOCATIONS AND DISTRIBUTIONS AMONG THE LIMITED PARTNERS

     Except during the Offering Period, Cash Available for Distribution which 
is allocable to the Limited Partners is apportioned among and distributed to 
them solely with reference to the number of Units owned by each as of the 
Record Date for each such distribution.  During the Offering Period, Cash 
Available for Distribution which is allocable to the Limited Partners was 
apportioned among and distributed to them with reference to both (i) the 
number of Units owned by each as of each Record Date and (ii) the number of 
days since the previous Record Date (or, in the case of the first Record 
Date, the commencement of the Offering Period) that the Limited Partner owned 
the Units.

                                12
<PAGE>

     After the Offering Period, Net Profits, Net Losses and Cash Available 
for Distribution allocable to the Limited Partners is apportioned among them 
in accordance with the number of Units owned by each.  A different convention 
was utilized during the Offering Period, whereby Net Profits and Net Losses 
allocable to Limited Partners were apportioned among them in the ratio which 
the product of the number of Units owned by a Limited Partner multiplied by 
the number of days in which the Limited Partner owns such Units during the 
period bears to the sum of such products for all Limited Partners.

     In addition, where a Limited Partner transfers Units during a taxable 
year, the Limited Partner may be allocated Net Profits for a period for which 
such Limited Partner does not receive a corresponding cash distribution. 

ITEM 6:   SELECTED FINANCIAL DATA

     The following table sets forth, in summary form, certain financial data 
for the Partnership as of and for the year ended December 31, 1997, 1996, 
1995 and 1994.  This table is qualified in its entirely by the more detailed 
information and financial statements presented elsewhere in this report, and 
should be read in conjunction with "Management's Discussion and Analysis of 
Financial Condition and Results of Operations" and the financial statements 
and related notes thereto included herein.

<TABLE>
<CAPTION>

                                                         YEAR ENDED DECEMBER 31
                              -------------------------------------------------------
                                 1997           1996           1995            1994
                              ----------     ----------     ----------     ----------
<S>                           <C>            <C>            <C>            <C>
Lease Income                  $5,195,139     $5,908,389     $4,144,609     $1,129,457

Net (Loss) Income               (906,123)    (1,319,747)       (45,235)        95,047

Cash Distributions             1,275,467      1,275,467      1,195,585        443,614

Net (Loss) Income per Unit         (1.46)         (2.11)          (.10)           .33

Cash Distribution per Unit          2.00           2.00           2.00           1.60

</TABLE>

<TABLE>
<CAPTION>

                                                       DECEMBER 31
                              -------------------------------------------------------
                                 1997           1996           1995            1994
                              ----------     ----------     ----------     ----------
<S>                           <C>            <C>            <C>            <C>
Total Assets                  $10,081,644    $11,373,203    $13,910,708    $8,827,670

Notes Payable                   4,968,748      3,502,523      3,305,310     1,642,251

</TABLE>

     Net income (loss) per unit is computed based upon net income (loss) 
allocated to the Limited Partners and the weighted average number of 
equivalent Units outstanding during the year.  Cash distribution per Unit is 
computed based upon distributions allocated to the Limited Partners and the 
weighted average number of equivalent Units outstanding during the year.

ITEM 7:   MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

                                13
<PAGE>

     The Partnership's primary source of capital for the year ended December 
31, 1997 was cash from operations of $1,746,000.  The Partnership's primary 
source of capital for the year ended December 31, 1996 was from cash from 
operations of $2,526,000. The Partnership's primary sources of capital for 
the year ended December 31, 1995, were from Partners' contributions of 
$4,352,000 and cash from operations  of $2,411,000.  The primary uses of cash 
were for capital expenditures for new equipment totaling $1,348,000
$1,035,000 and $6,353,000 for the years ended December 31, 1997, 1996 and 
1995, respectively, for the payment of preferred distributions to partners 
totaling $1,275,000 for 1997 and 1996 and $1,196,000 for 1995, and for the 
payment of offering costs totaling $459,000 for 1995.

     Cash is invested in money market accounts that invest directly in 
treasury obligations pending the Partnership's use of such funds to purchase 
additional computer equipment, to pay Partnership expenses or to make 
distributions to  the Partners. At December 31, 1997 and 1996 the Partnership 
had approximately $116,000 and $1,083,000, respectively, invested in these 
money market accounts.

     The Partnership's investment strategy of acquiring computer equipment 
and generally leasing it under triple-net leases to operators who generally 
meet specified financial standards minimizes the Partnership's operating 
expenses.  Future minimum rentals on noncancellable operating leases 
increased by 10% from December 31, 1996 to December 31, 1997,  due to 
additional computer equipment leases which commenced in 1997.  This 
particular industry has experienced a decrease in lease rates during this 
period due to an ongoing decrease in interest rates. As of December 31, 1997, 
the Partnership had future minimum rentals on noncancellable operating leases 
of $4,244,000 for the year ended 1998 and $2,508,000 thereafter.  During 
1997,1996 and 1995, the Partnership incurred debt in connection with the 
purchase of computer equipment totaling $3,982,000, $2,344,000 and 
$3,128,000, respectively.  At December 31, 1997, the outstanding debt was 
$4,969,000, with interest rates ranging from 6.4% to 8.8% and will be payable 
through October 2000.  The Partnership intends to continue purchasing 
additional computer equipment with existing cash, as well as when future cash 
becomes available.  In addition, the Partnership may incur debt in purchasing 
computer equipment in the future.

     The Partnership's cash flow 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 also 
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.

RESULTS OF OPERATIONS

1997 and 1996 OPERATING RESULTS

     For the year ended December 31, 1997 and 1996, the Partnership 
recognized income of $5,230,000 and $5,955,000 and expenses of $6,136,000 and 
$7,275,000, resulting in net losses of $906,000 and $1,320,000, respectively.

     Lease income decreased by 12% compared to 1996 primarily due to the 
expiration of leases in 1997.   The decrease was offset by $1,292,000 in 
lease income from the 10 additional leases acquired in 1997 for which  the 
Partnership expended approximately $1,348,000 in cash and assumed debt for 
equipment of $3,982,000 to acquire the 10 additional leases..

     Interest income decreased 26% from $47,000 for the year ended December 
31, 1996 to $35,000 for the year ended December 31, 1997, as a result of the 
capital contributions and rental income being utilized for Equipment 
purchases for the year ended December 31, 1997, whereas, for the year ended 
December 31, 1996 the capital contributions and rental income were 
temporarily being invested in money market accounts until being utilized for 
Equipment purchases.

                                14
<PAGE>

     Operating expenses, excluding depreciation, consist of accounting, 
legal, outside service fees and reimbursement of expenses to Com Cap Corp 
for administration and operations of the Partnership.  The 37% increase from 
approximately $81,000 during the year ended December 31, 1996 to $111,000 
during the year ended December 31, 1997 is primarily attributable to costs 
incurred by the General Partner and its affiliates in connection with the 
administration and operation of the Partnership which were not changed by 
Com Cap Corp in 1996.

     The equipment management fee is equal to 5% of the gross lease revenue 
attributable to equipment which is subject to operating leases.  The 
equipment management fee decreased 12% from approximately $295,000 during the 
year ended December 31, 1996 to $260,000 during the year ended December 31, 
1997, which is consistent with the decrease in lease income.

     Interest expense increased 12% from approximately $311,000 during the 
year ended December 31, 1996 to approximately $349,000 during the year ended 
December 31, 1997, as a result of additional debt incurred for the purchase 
of Equipment.

     Depreciation and amortization expenses consist of depreciation on 
computer equipment, amortization of organization costs, equipment acquisition 
fees and debt placement fees. Depreciation and amortization during 1997 
decreased approximately 11% from $5,896,000 in 1996 to $5,219,000 due to the 
reduction of the equipment under lease.  Additionally, in 1996 depreciation 
and amortization contained a write down of approximately $904,000 compared to 
$154,000 in 1997 due to the impairment of assets. 

     The Partnership sold computer equipment with a net book value of 
$1,440,000 and $544,000 during the years ended December 31, 1996 and 1997, 
respectively, for a net loss of $692,000 and $197,000.

     In 1996, the Partnership adopted FASB Statement No. 121, "Accounting for 
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed 
Of" and identified specific computer equipment and associated equipment 
acquisition costs which were evaluated due to technological changes.  The 
Partnership determined that the carrying amount of certain assets was greater 
than the undiscounted cash flows to be generated by these assets.  The 
Partnership recorded a charge of $904,000 to depreciation expense to record 
the assets at their estimated fair value at December 31, 1996.  The 
Partnership also recorded a charge of $154,000 to depreciation expense to 
record certain asset at their estimated fair value at December 31, 1997.

     For the year ended December 31, 1997, the Partnership generated cash 
flow from operating activities of $1,746,000, which includes a net loss of 
$906,000 and was reduced by depreciation and amortization expenses of 
$5,219,000.  Other noncash activities included in the determination of the 
net loss includes direct payments of lease income by lessees to banks of 
$2,849,000.

1996 and 1995 OPERATING RESULTS

     For the year ended December 31, 1996 and 1995, the Partnership 
recognized income of $5,955,000 and $4,318,000 and expenses of $7,275,000 and 
$4,363,000, resulting in a net loss of $1,320,000 and $45,000, respectively.

     Lease income increased by 43% over 1995 primarily due to the Partnership 
expended approximately $6,353,000 in cash and assumed debt and accounts 
payable for equipment of $3,687,000 to acquire 19 additional leases in 1995, 
which have generated a full year of lease income in 1996.  Additionally, 
during 1996 the Partnership expended approximately $1,035,000 in cash and 
assumed debt and accounts payable for equipment of $2,874,000 to acquire 9 
additional leases.

     Interest income decreased (73%) from $173,000 for the year ended 
December 31, 1995 to $47,000 for the year ended December 31, 1996, as a 
result of the capital contributions being utilized for Equipment purchases 
for the year ended December 31, 1996 whereas, for the year ended December 31, 
1995 the capital contributions were temporarily being invested in money 
market accounts until being utilized for Equipment purchases.

                                15
<PAGE>

     Operating expenses, excluding depreciation, primarily consist of 
accounting, legal and outside service fees.  The 13% decrease from 
approximately $93,000 during the year ended December 31, 1995 to $81,000 
during the year ended December 31, 1996 is primarily attributable to a 
decrease in legal fees and outside service fees.

     The equipment management fee is equal to 5% of the gross lease revenue 
attributable to Equipment which is subject to operating leases.  The 
equipment management fee increased (43%) from approximately $207,000 during 
the year ended December 31, 1995 to $295,000 during the year ended December 
31, 1996, which is consistent with the increase in lease income.

     Interest expense increased (47%) from approximately $212,000 during the 
year ended December 31, 1995 to approximately $311,000 during the year ended 
December 31, 1996, as a result of additional debt incurred for the purchase 
of Equipment.

     Depreciation and amortization expenses consist of depreciation on 
computer equipment, amortization of organizational costs, equipment 
acquisition fees and debt placement fees.  The increase (53%) from 
approximately $3,850,000 during the year ended December 31, 1995 to 
$5,896,000 during the year ended December 31, 1996 is attributable to the 
purchase of approximately $3,922,000 in additional Equipment.

     The Partnership sold computer equipment with a net book value of 
$1,440,000 during the year ended December 31, 1996, for a net loss of 
$692,000.

     Additionally, in 1996, the Partnership adopted FASB Statement No. 121, 
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets 
to be Disposed Of" and identified specific computer equipment and associated 
equipment acquisition costs which were evaluated due to technological 
changes.  The Partnership determined that the carrying amount of certain 
assets was greater than the undiscounted cash flows to be generated by these 
assets.  The Partnership recorded a charge of $904,000 to depreciation 
expense to record the assets at their estimated fair value at December 31, 
1996.

     For the year ended December 31, 1996, the Partnership generated cash 
flow from operating activities of $2,526,000, which includes a net loss of 
$1,320,000 reduced by depreciation and amortization expenses of $5,896,000.  
Other noncash activities included in the determination of the net loss 
includes direct payments of lease income be lessees to banks of $2,675,000 
and lease income paid to original lessors in lieu of cash payments for 
computer equipment of $15,000.

Impact of Year 2000

    The Year 2000 Issue is the result of computer programs being written 
using two digits rather than four to define the applicable year.  Any 
computer programs that have time-sensitive software may recognize a date 
using "00" as the year 1900 rather than the year 2000.  This could result in 
a system failure or miscalculations causing disruptions of operations, 
including, among other things, a temporary inability to process transactions, 
send invoices, or engage in similar normal business activities.

    The Partnership does not have any computer programs or systems as all 
services required for the management of the Partnership are provided by the 
General Partner which receives fees and certain reimbursements for these 
services.  Therefore, the General Partner is responsible for any costs 
associated with Year 2000 issues.  Based on a recent assessment, the General 
Partner determined that it will be required to modify or replace portions of 
its software so that its computer systems will function properly with respect 
to dates in the year 2000 and thereafter.  The General Partner presently 
believes that with modifications to existing software and conversions to new 
software, the year 2000 Issue will not pose significant operational problems 
for its computer systems.  The General Partner expects that its modifications 
will be complete by 1999.  The General Partner and its affiliates will be 
entitled to reimbursement for any costs associated with the Year 2000 issue.  
As of December 31, 1997, the General Partner has not incurred any significant 
expenses. 

    The Partnership and the General Partner are not responsible for ensuring 
that the computer peripheral equipment that it leases to customers is Year 
2000 compliant, however, this equipment may be subject to declines in value 
or technological obsolescence due to the equipment not being Year 2000 
compliant.  The Year 2000 issue may also affect the carrying value of the 
equipment when it comes off of lease or be detrimental in negotiating release 
rates which may lead to equipment write downs or less than favorable lease 
recoveries.  Management has considered these factors in determining the 
recovery of its equipment at December 31, 1997 in accordance with FASB 
Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for 
Long-Lived Assets to be Disposed Of".  Based on its current assessment of the 
Partnership does not believe that the reduction in carrying values of 
equipment, if any, due to the Year 2000 issue will have a significant effect 
on operations.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                     16
<PAGE>

                              Commonwealth Income &
                                  Growth Fund I

                              Financial Statements

                  Years ended December 31, 1997, 1996, and 1995

                                    Contents

<TABLE>
<S>                                                                          <C>
Report of Independent Auditors................................................18

Audited Financial Statements

Balance Sheets................................................................19
Statements of Operations......................................................20
Statements of Partners' Capital...............................................21
Statements of Cash Flows......................................................22
Notes to Financial Statements.................................................23
</TABLE>



                                     17

<PAGE>




                         Report of Independent Auditors


The Partners
Commonwealth Income & Growth Fund I

We have audited the accompanying balance sheets of Commonwealth Income & Growth
Fund I as of December 31, 1997 and 1996, and the related statements of
operations, partners' capital, and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Commonwealth Income & Growth
Fund I at December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.

As discussed in Note 2 to the financial statements, in 1996 the Partnership
changed its method of accounting for impairment of long-lived assets.

                                                         /s/ Ernst & Young LLP

Philadelphia, Pennsylvania
February 6, 1998


                                     18
<PAGE>




                       Commonwealth Income & Growth Fund I

                                 Balance Sheets
<TABLE>
<CAPTION>

                                                                             December 31
                                                                      1997                 1996
                                                              ------------------------------------------
<S>                                                             <C>                  <C>            
Assets

Cash and cash equivalents                                       $       116,259      $     1,082,795
Lease income receivable                                                 146,562              259,050
Other receivables and deposits                                            8,567               23,584
Accounts receivable - General Partner                                        --                6,772

Computer equipment, at cost                                          17,355,551           16,080,646
Accumulated depreciation                                             (7,928,798)          (6,527,143)
                                                              ------------------------------------------

                                                                      9,426,753            9,553,503

Organization costs and deferred expenses, net of
    accumulated amortization of $532,265 in 1997
    and $435,215 in 1996                                                383,503              447,499
                                                              ------------------------------------------

Total assets                                                    $    10,081,644      $    11,373,203
                                                              ------------------------------------------
                                                              ------------------------------------------

Liabilities and partners' capital

Accounts payable                                                $        24,609      $        64,382
Accounts payable - General Partner                                       18,810                   --
Accounts payable - Commonwealth Capital Corp.                            40,929                   --
Unearned lease income                                                   161,781              228,817
Payables for computer equipment                                               -              529,124
Notes payable                                                         4,968,748            3,502,523
                                                              ------------------------------------------
Total liabilities                                                $    5,214,877            4,324,846

Partners' capital:

    General partner                                                       1,000                1,000
    Limited partners                                                  4,865,767            7,047,357
                                                              ------------------------------------------
Total partners' capital                                               4,866,767            7,048,357
                                                              ------------------------------------------
Total liabilities and partners' capital                         $    10,081,644      $    11,373,203
                                                              ------------------------------------------
                                                              ------------------------------------------
                  
</TABLE>



                            See accompanying notes.

                                     19
<PAGE>


                       Commonwealth Income & Growth Fund I

                            Statements of Operations



<TABLE>
<CAPTION>
                                                       Year ended 
                                                       December 31
                                                           1997             1996              1995
                                                    ---------------------------------------------------
<S>                                                   <C>                 <C>               <C> 
Income:
    Lease                                             $ 5,195,139          $  5,908,389     $ 4,144,609
    Interest                                               34,525                46,753         172,913
                                                     --------------------------------------------------
                                                        5,229,664             5,955,142       4,317,522
                                                                      
Expenses:                                                             
    Operating, excluding depreciation                     111,263                80,883          93,265
    Equipment management fee - General                                
       Partner                                            259,757               295,420         207,230
    Interest                                              348,681               311,247         212,365
    Depreciation                                        4,912,073             5,555,331       3,636,163
    Amortization of organization costs and                            
       deferred expenses                                  307,323               340,200         213,734
    Loss on sale of computer equipment                    196,690               691,808              --
                                                    ---------------------------------------------------
                                                        6,135,787             7,274,889       4,362,757
                                                    ---------------------------------------------------
Net loss                                              $  (906,123)         $ (1,319,747)    $   (45,235)
                                                    ---------------------------------------------------
                                                    ---------------------------------------------------

Net loss per equivalent limited
    partnership unit                                  $        (1.46)   $        (2.11)  $          (.10)
                                                    ------------------------------------------------------
                                                    ------------------------------------------------------

Weighted average number of equivalent limited
partnership units outstanding during the year                631,358           631,358          594,446
                                                    ------------------------------------------------------
                                                    ------------------------------------------------------

</TABLE>


                              See accompanying notes.


                                     20
<PAGE>


                       Commonwealth Income & Growth Fund I

                         Statements of Partners' Capital
<TABLE>
<CAPTION>

                               General     Limited
                               Partner     Partner        General         Limited
                                Units       Units         Partner         Partners         Total

                             -------------------------------------------------------------------------
<S>                               <C>      <C>          <C>           <C>             <C>
Partners' capital - 
 December 31, 1994                50       413,719      $   1,000     $    6,990,641     $    6,991,641
     Contributions                 -       217,639              -          4,352,171          4,352,171
     Offering costs                                             -           (459,421)          (459,421)
     Net income (loss)                                     11,956            (57,191)           (45,235)
     Distributions                                        (11,956)        (1,183,629)        (1,195,585)
                             ----------------------------------------------------------------------------
Partners' capital - 
 December 31, 1995                50       631,358          1,000          9,642,571          9,643,571
     Net income (loss)                                     12,755         (1,332,502)        (1,319,747)
     Distributions                                        (12,755)        (1,262,712)        (1,275,467)
                             ----------------------------------------------------------------------------
Partners' capital -     
 December 31, 1996                50       631,358          1,000          7,047,357          7,048,357
     Net income (loss)                                     12,755           (918,878)          (906,123)
     Distributions                                        (12,755)        (1,262,712)        (1,275,467)
                             ----------------------------------------------------------------------------
Partners' capital -                                                                     
 December 31, 1997                50       631,358      $   1,000     $    4,865,767     $    4,866,767
                             ----------------------------------------------------------------------------
                             ----------------------------------------------------------------------------

</TABLE>

                            See accompanying notes.

                                     21
<PAGE>


                       Commonwealth Income & Growth Fund I

                            Statements of Cash Flows
<TABLE>

                                                                                 Year ended December 31,
                                                             1997                  1996                   1995
                                                     ------------------------------------------------------------
<S>                                                    <C>                        <C>            <C> 
Operating activities
Net loss                                               $   (906,123)      $    (1,319,747)       $      (45,235)
Adjustments to reconcile net loss to  
    net cash provided by operating activities: 
       
       Depreciation and amortization                      5,219,396             5,895,531             3,849,897
       Loss on sale of computer equipment                   196,690               691,808                     -
       Other non-cash activities included in
          determination of net loss                      (2,848,893)           (2,689,616)           (1,514,550)
       Changes in operating assets and
          liabilities: 
          Lease income receivable                           112,488                51,405              (174,362)
          Other receivables and deposits                     15,017                12,193                49,453
          Accounts receivable -                                        
            General Partner                                   6,772                (6,772)               74,139
          Accounts payable                                  (39,773)              (11,741)               39,419
          Accounts payable - General Partner                 57,916               (83,874)               57,005
          Unearned lease income                             (67,036)              (13,536)              112,152
          Organization cost paid to the                                
             General Partner                                     --                     --               (36,734)
                                                     --------------------------------------------------------------
Net cash provided by operating activities                 1,746,454             2,525,651             2,411,184
                                                                       
Investing activities                                                   
                                                                       
Capital expenditures                                     (1,347,809)           (1,035,293)           (6,353,404)
Accounts payable - Commonwealth                                        
 Capital Corp.                                                1,823               (22,222)                   --
Net proceeds from sale of computer                                     
    equipment                                               347,654               748,241                    --
Payment of computer equipment payable                      (195,864)               (9,624)                   --
Equipment acquisition fees paid to the                                 
    General Partner                                        (213,186)             (156,616)             (403,549)
                                                     --------------------------------------------------------------
Net cash used in investing activities                    (1,407,382)             (475,514)           (6,756,953)

Financing activities                                                   
Limited partners' contributions                                   -                     -             4,352,171
Offering costs                                                    -                     -              (391,829)
Offering costs paid to the General Partner                        -                     -               (67,592)
Distributions to partners                                (1,275,467)           (1,275,467)           (1,195,585)
Debt placement fee paid to the                                         
    General Partner                                         (30,141)              (33,713)              (29,920)
                                                     --------------------------------------------------------------
                                                     --------------------------------------------------------------
Net cash (used in) provided by financing                               
    activities                                           (1,305,608)           (1,309,180)            2,667,245
                                                     --------------------------------------------------------------
                                                                       
Net (decrease) increase in cash and cash                               
    equivalents                                            (966,536)              740,957            (1,678,524)
                                                     --------------------------------------------------------------
Cash and cash equivalents at beginning                                 
    of year                                               1,082,795               341,838             2,020,362
                                                     --------------------------------------------------------------
Cash and cash equivalents at end of year               $    116,259       $     1,082,795        $      341,838
                                                     --------------------------------------------------------------
                                                     --------------------------------------------------------------
</TABLE>

                                                 See accompanying notes.

                                      22
<PAGE>


                       Commonwealth Income & Growth Fund I

                          Notes to Financial Statements

  

1. Business

Commonwealth Income & Growth Fund I (the "Partnership") is a limited 
partnership. The Partnership was declared effective by the Securities and 
Exchange Commission on December 17, 1993, and began offering up to 750,000 
units of the limited partnership at the purchase price of $20 per unit. The 
offering terminated on May 11, 1995 after it sold 631,358 units at a price of 
$20 per unit. The Partnership was organized in the Commonwealth of 
Pennsylvania to acquire, own, lease, and sell various types of computer 
peripheral equipment and other similar capital equipment, which will be 
leased primarily to U.S. corporations and institutions. The Partnership's 
general partner is Commonwealth Income & Growth Fund, Inc. (the "General 
Partner"), a Pennsylvania corporation which is an indirect wholly-owned 
subsidiary of Commonwealth Capital Corp. Approximately ten years after the 
commencement of operations, the Partnership intends to have sold or otherwise 
disposed of all of its computer equipment, make final distributions to 
partners, and to dissolve. Unless sooner terminated, the Partnership will 
continue until December 31, 2004.

Allocations of income and distributions of cash are based on Commonwealth 
Income & Growth Fund I, Limited Partnership Agreement (the "Agreement"). The 
various allocations prevent any partner's capital account from being reduced 
below zero and ensure the capital accounts reflect the anticipated sharing 
ratios of cash distributions, as defined in the Agreement. Annual cash 
distributions to limited partners have been made at a rate of 10% (Preferred 
Distribution) of their original contributed capital. Distributions during 
1997, 1996, and 1995 reflect an annual return of capital in the amount of 
approximately $2.00 per limited partnership unit, for units which were 
outstanding for the entire year. (For a limited partner's unit acquired 
during 1995 the return of capital would be less than these amounts.) In the 
event the Partnership is unable to distribute sufficient cash to meet the 
intended preferred distribution, such amounts will be deferred with no 
interest until sufficient cash flow is available, as determined by the 
General Partner or until the liquidation of the Partnership. The Partnership 
may also reduce distributions to its partners if it deems necessary. Further, 
ongoing acquisition fees, equipment management fees, and financing fees 
payable to the General Partner (Note 4) will also be deferred until payment 
of any unpaid Preferred Distribution.

                                     23

<PAGE>


                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)

1. Business (continued)

Use of Estimates

The preparation of the financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the amounts reported in the financial statements and 
accompanying notes. Actual results could differ from those estimates.

2. Accounting Policies

Revenue Recognition

Through December 31, 1997, 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

In 1996, the Partnership adopted FASB Statement No. 121, "Accounting for the 
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." 
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.

During 1997 and 1996, the Partnership identified specific computer equipment 
and associated equipment acquisition costs which were evaluated due to 
technological changes. The Partnership determined that the carrying amount of 
certain assets was greater than the undiscounted cash flows to be generated 
by these assets. The Partnership recorded charges of $154,000 and $904,000 in 
the fourth quarters of 1997 and 1996, respectively, to record the assets at 
their estimated fair value. Such amounts have been included in depreciation 
expense in the accompanying financial statements.

                                     24

<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


2. Accounting Policies (continued)

Additionally in 1995, the Partnership identified specific computer equipment 
whose lives were reduced from the established useful lives, to reflect the 
impact of technological changes. These changes in estimates reduced net 
income by approximately $299,000 in 1995. Such amounts have been included in 
depreciation expense in the accompanying financial statements.

Depreciation on computer equipment for financial statement purposes is based 
on the straight-line method over estimated useful lives of 4 years. Other 
assets, consisting of organization costs and other deferred expenses, are 
amortized on a straight-line basis over 2 to 5 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 December 31, 1997 and 1996, 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 of 7% and dealer manager 
fees of 2% of the partners' contributed capital, professional fees and other 
offering expenses relating to the syndication. These costs are deducted from 
partnership capital in the accompanying financial statements.

                                     25

<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


2. Accounting Policies (continued)

Net Loss per Equivalent Limited Partnership Unit

The net loss per equivalent limited partnership unit is computed based upon 
net loss allocated to the limited partners and the weighted average number of 
equivalent units outstanding during the year.

3. Computer Equipment

The Partnership is the lessor of equipment under operating leases with 
periods ranging from 18 to 48 months. In general, associated costs such as 
repairs and maintenance, insurance and property taxes are paid by the lessee.

The following is a schedule of future minimum rentals on noncancelable operating
leases at December 31, 1997:
<TABLE>

                  <S>                                   <C>           
                  1998                  $    4,244,000
                  1999                       2,093,000
                  2000                         415,000
                                     ----------------------
                                        $    6,752,000

                                     ----------------------
                                     ----------------------
</TABLE>

Lease income from two lessees, each exceeding 10% of total lease income, 
aggregated 23% of lease income for the year ended December 31, 1997. Lease 
income from two lessees, each exceeding 10% of total lease income, aggregated 
35% of lease income for the year ended December 31, 1996. Lease income from 
three lessees, each exceeding 10% of total lease income, aggregated 40% of 
lease income for the year ended December 31, 1995.

4. Related Party Transactions

Organizational Fee

The General Partner was entitled to be paid an Organizational Fee equal to 
three percent of the first $10,000,000 of Limited Partners' Capital 
Contributions and two percent of the Limited Partners' Capital Contributions 
in excess of $10,000,000, as compensation for the organization of the 
Partnership. During 1995, such organizational fees of approximately $104,000 
were paid to the General Partner.

                                     26

<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


4. Related Party Transactions (continued)

Reimbursement of Expenses

The General Partner and its Affiliates are entitled to reimbursement by the 
Partnership for the cost of goods, supplies or 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 1997, 1996 and 1995 the Partnership paid $54,000, $0, and 
$7,000 to the General Partner for reimbursement of expenses.

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 the lease thereof or sale
under a Conditional Sales Contract. During 1997, 1996, and 1995, equipment
acquisition fees of approximately $213,000, $157,000, and $404,000,
respectively, were paid to the General Partner.

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.
During 1997, 1996, and 1995, debt placement fees of approximately $30,000,
$33,000, and $30,000, respectively, were paid to the General Partner.

                                     27

<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


4. Related Party Transactions (continued)

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 Leases. During 1997, 1996, and 1995, equipment 
management fees of approximately $260,000, $295,000, and $207,000, 
respectively, were paid to the General Partner as determined pursuant to 
section (ii) above.

Re-lease Fee

As compensation for providing re-leasing services for any Equipment for which 
the General Partner has, following the expiration of, or default under, the 
most recent lease or Conditional Sales Contract, arranged a subsequent lease 
or Conditional Sales Contract for the use of such Equipment to a lessee or 
other party, other than the current or most recent lessee or other operator 
of such equipment or its Affiliates ("Re-lease"), the General Partner shall 
receive, on a monthly basis, a Re-lease Fee equal to the lesser of (a) the 
fees which would be charged by an independent third party for comparable 
services for comparable equipment or (b) two percent of Gross Lease Revenues 
derived from such Re-lease. There were no such fees paid to the General 
Partner in 1997, 1996, or 1995.

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 (i) a return of their Capital Contributions and a 10% per 
annum cumulative return, compounded daily, on Adjusted Capital Contributions 
("Priority Return") and (ii) 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. There 
were no such fees paid to the General Partner in 1997, 1996 or 1995.

                                     28
<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


5. Notes Payable

Notes payable consisted of the following:
<TABLE>

                                                                          1997                 1996
                                                                   -----------------------------------------

<S>                                                                   <C>                 <C>           
Installment note payable to a bank; interest at 8.6%; due in monthly
    installments of $10,072 including interest through
    September 1997                                                    $            -      $       87,483
Installment note payable to a bank; interest at 8.6%; due in
    monthly installments of $6,204 including interest through
    November 1997                                                                  -              71,084
Installment note payable to a bank; interest at 8.5%; due in
    monthly installments of $8,315 including interest through
    December 1997                                                                  -              95,334
Installment note payable to a bank; interest at 8.8%; due in
    monthly installments of $4,949 including interest through
    December 1997                                                                  -              56,664
Installment note payable to a bank; interest at 6.3%; due in
    monthly installments of $5,254 including interest through
    December 1997                                                                  -              60,946
Installment note payable to a bank; interest at 8.8%; due in
    monthly installments of $5,607 including interest through
    August 1998                                                               43,415             103,986
Installment note payable to a bank; interest at 8.6%; due in
    monthly installments of $16,639 including interest through
    September 1998                                                           144,501             323,228
Installment note payable to a bank; interest at 7.8%; due in
    monthly installments of $10,166 including interest through
    November 1998                                                            107,746             217,161
Installment note payable to a bank; interest at 7.5%; due in
    monthly installments of $4,115 including interest through
    December 1998                                                             47,751              92,629
Installment note payable to a bank; interest at 6.5%; due in
    monthly installments of $15,983 including interest through
    February 1999                                                            214,928             386,648
Installment note payable to a bank; interest at 8.5%; due in
    monthly installments of $29,191 including interest through
    March 1999                                                               414,018             715,078
Installment note payable to a bank; interest at 7.9%; due in
    monthly installments of $7,683 including interest through
    June 1999                                                                130,042             208,614
Installment note payable to a bank; interest at 7.5%; due in
    monthly installments of $15,501 including interest through
    June 1999                                                                276,895             435,618
Installment note payable to a bank; interest at 7.2%; due in
    monthly installments of $10,711 including interest through
    July 1999                                                                191,795             302,166
Installment note payable to a bank; interest at 6.7%; due in
    monthly installments of $11,501 including interest through
    September 1999                                                           227,363             345,884
</TABLE>

                                     29
<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


5. Notes Payable (continued)

Notes payable consisted of the following: (continued)
<TABLE>
<CAPTION>

                                                                          1997         1996
                                                                   -----------------------------

<S>                                                                   <C>            <C> 
Installment note payable to a bank; interest at 6.8%; due in monthly
    installments of $22,520 including interest through
    November 1999                                                     $ 484,578      $        -
Installment note payable to a bank; interest at 6.4%; due in
    monthly installments of $14,749 including interest through
    December 1998                                                       171,020               -
Installment note payable to a bank; interest at 7.0%; due in
    monthly installments of $34,621 including interest through
    October 1998                                                        335,433               -
Installment note payable to a bank; interest at 7.5%; due in
    monthly installments of $6,597 including interest through
    February 2000                                                       157,855               -
Installment note payable to a bank; interest at 7.10%; due in
    monthly installments of $29,786 including interest through
    May 2000                                                            792,084               -
Installment note payable to a bank; interest at 7.3%; due in
    monthly installments of $9,040 including interest through
    July 2000                                                           254,862               -
Installment note payable to a bank; interest at 6.4%; due in
    monthly installments of $21,031 including interest through
    September 2000                                                      634,833               -
Installment note payable to a bank; interest at 7.12%; due in
    monthly installments of $11,060 including interest through
    October 2000                                                        339,629               -
                                                                   ------------------------------
                                                                     $4,968,748      $3,502,523
                                                                   ===============================
</TABLE>

These notes are secured by specific computer equipment and are nonrecourse
liabilities of the Partnership. Aggregate maturities of notes payable for each
of the three years subsequent to December 31, 1997 are as follows:
<TABLE>

                  <S>                              <C>           
                  1998            $2,911,551
                  1999             1,544,605
                  2000               512,592
                               ---------------
                                  $4,968,748
                               ---------------
                               ---------------
</TABLE>

The fair market value of debt approximates its carrying value at December 31,
1997 and 1996.

                                     30
<PAGE>

                      Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)


6. Supplemental Cash Flow Information

Other non-cash activities included in the determination of net loss are as
follows:
<TABLE>

                                                              1997                   1996                   1995
                                                     --------------------------------------------------------------
<S>                                                    <C>                    <C>                   <C>           
Lease income, net of interest expense on
    notes payable realized as a result of direct
    payment of principal by lessee to bank             $    2,848,893         $    2,674,867        $    1,464,632
Lease income paid to original lessor in lieu
    of cash payment for computer equipment
    acquired                                                        -                 14,749                49,918
                                                     ---------------------------------------------------------------
Total adjustment to net loss from other
    noncash activities                                 $    2,848,893         $    2,689,616        $    1,514,550
                                                     ---------------------------------------------------------------
                                                     ---------------------------------------------------------------
</TABLE>

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.

Non-cash investing and financing activities include the following:
<TABLE>
<CAPTION>

                                                                 1997                     1996                     1995
                                                     -------------------------------------------------------------------------------
<S>                                                    <C>                         <C>                   <C>          
Debt assumed in connection with purchase
    of computer equipment                              $    3,981,858              $    2,344,453        $   3,127,691
                                                     -------------------------------------------------------------------------------
                                                     -------------------------------------------------------------------------------
Accounts payable in connection with the
    purchase of computer equipment                                  -              $      529,124        $     559,473
                                                     -------------------------------------------------------------------------------
                                                     -------------------------------------------------------------------------------
Computer equipment payable converted to a
    note payable                                       $      333,260              $      527,627        $           -
                                                     -------------------------------------------------------------------------------
                                                     -------------------------------------------------------------------------------
</TABLE>

                                     31
<PAGE>

                       Commonwealth Income & Growth Fund I

                    Notes to Financial Statements (continued)

7. Reconciliation of Net Loss Reported for Financial Reporting Purposes to
Taxable (Loss) Income

<TABLE>
<CAPTION>

                                                              1997                 1996                    1995
                                                     ----------------------------------------------------------------------

<S>                                                    <C>                   <C>                   <C>            
Net loss for financial reporting purposes              $      (906,123)      $    (1,319,747)      $      (45,235)
       Adjustments:
       Loss on sale of computer equipment                   (1,224,887)           (1,177,731)                   -
       Depreciation                                            241,706               469,401              203,759
       Amortization                                            248,516               287,516              171,728
       Unearned lease income                                    27,603                14,055               (3,321)
       Penalties and other                                      39,161                     -                    -
                                                     ----------------------------------------------------------------------
Taxable (loss) income                                  $    (1,574,024)      $    (1,726,506)      $      326,931
                                                     ----------------------------------------------------------------------
                                                     ----------------------------------------------------------------------
</TABLE>

                                     32

<PAGE>


                     Commonwealth Income & Growth Fund, Inc.
       (an indirect wholly-owned subsidiary of Commonwealth Capital Corp.)

                                  Balance Sheet

                                February 28, 1997

                                    Contents
<TABLE>
<S>                                                                        <C>
Report of Independent Auditors.............................................38

Balance Sheet..............................................................39
Notes to Balance Sheet.....................................................40
</TABLE>

                                      33
<PAGE>


                         Report of Independent Auditors

To the Stockholder
Commonwealth Income & Growth Fund, Inc.

We have audited the accompanying balance sheet of Commonwealth Income & Growth
Fund, Inc. (an indirect wholly-owned subsidiary of Commonwealth Capital Corp.)
as of February 28, 1997. This balance sheet is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Commonwealth Income & Growth Fund,
Inc. at February 28, 1997, in conformity with generally accepted accounting
principles.

                                                         /s/ Ernst & Young LLP

Philadelphia, Pennsylvania
April 28, 1997

                                      34


<PAGE>


                     Commonwealth Income & Growth Fund, Inc.
       (an indirect wholly-owned subsidiary of Commonwealth Capital Corp.)

                                  Balance Sheet


<TABLE>
<CAPTION>
                                                                    February 28
                                                                        1997
                                                                    -----------
<S>                                                                 <C>        
Assets
Cash .........................................................      $       500
Accounts receivable from Income Funds and
    Commonwealth Capital Corp. ...............................            2,069
Investment in Partnerships ...................................            2,000
                                                                    -----------
                                                                    $     4,569
                                                                    -----------
                                                                    -----------

Liabilities
Accounts payable to Income Funds and
    Commonwealth Capital Corp. ...............................      $     3,469

Stockholders' equity 
Common stock at $1 stated value:
    Authorized shares--1,000
    Issued and outstanding shares--100 .......................              100
Additional paid-in capital ...................................        1,001,000
                                                                    -----------
                                                                      1,001,100
Less: note receivable ........................................       (1,000,000)
                                                                    -----------
                                                                          1,100
                                                                    -----------
                                                                    $     4,569
                                                                    -----------
                                                                    -----------
</TABLE>


See accompanying notes.

                                      35
<PAGE>


                     Commonwealth Income & Growth Fund, Inc.
       (an indirect wholly-owned subsidiary of Commonwealth Capital Corp.)

                             Notes to Balance Sheet

                                February 28, 1997

1. The Company

Commonwealth Income & Growth Fund, Inc. (the "Company") is a wholly-owned
subsidiary of Commonwealth of Delaware, Inc. which in turn is a wholly-owned
subsidiary of Commonwealth Capital Corp. ("CCC"). The Company is the sole
General Partner of Commonwealth Income & Growth Fund I, a Pennsylvania limited
partnership and the sole General Partner of Commonwealth Income & Growth Fund
II, a Pennsylvania limited partnership. On April 28, 1997 the Company
contributed $1,000 in cash to become the sole General Partner of Commonwealth
Income & Growth Fund III, a Pennsylvania limited Partnership. The three limited
partnerships described above are collectively referred to herein as the
"Partnerships."

CCC has provided additional capital by means of a noninterest-bearing demand
note in the amount of $1,000,000, so that the Company will at all times have a
net worth (which includes the net equity of the Company and the demand note
receivable from CCC) of at least $1,000,000. In computing the Company's net
worth for this purpose, its interest in the Partnerships and any amounts and
notes receivable from and payable to the Partnerships will be excluded. The
Company's equity has been reduced by the note receivable from CCC resulting in
net equity of $1,100, which may be different for tax purposes. The Company's
operations will be included in the consolidated federal income tax return of
CCC.

2. Investment in Partnerships

The Company contributed $2,000 in cash through February 28, 1997 to the
Partnerships for its general partner interests. The Company may, at its sole
discretion, purchase a limited partnership interest in the Partnerships
("Units") for an additional capital contribution of $20 per Unit with a minimum
investment of 125 Units.

3. Related Party Transactions

The Company and its affiliates receive substantial fees and compensation in
connection with the offering of Units and the management of the Partnerships'
assets. See "Compensation of General Partner and Affiliates," and "Allocations
and Distributions" elsewhere in the Prospectus of Commonwealth Income & Growth
Fund III for information with respect to the compensation to be paid to the
Company and its affiliates and the allocations of income, losses, and cash
distributions.

                                      36
<PAGE>


                           Commonwealth Capital Corp.

                           Consolidated Balance Sheet

                             As of February 28, 1997

                                    Contents

<TABLE>
<S>                                                                          <C>
Report of Independent Auditors...............................................38

Audited Consolidated Balance Sheet...........................................39

Notes to Consolidated Balance Sheet..........................................40

</TABLE>


                                      37
<PAGE>






                         Report of Independent Auditors

The Stockholder
Commonwealth Capital Corp.

We have audited the accompanying consolidated balance sheet of Commonwealth
Capital Corp. as of February 28, 1997. This balance sheet is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the consolidated financial position of Commonwealth Capital
Corp. at February 28, 1997, in conformity with generally accepted accounting
principles.

                                                         /s/ Ernst & Young LLP

Philadelphia, Pennsylvania
April 28, 1997


                                      38
<PAGE>


                           Commonwealth Capital Corp.

                           Consolidated Balance Sheet

                                February 28, 1997

<TABLE>
<S>                                                                  <C>        
Assets
Cash and cash equivalents ..................................         $   162,028
Receivables from Income Funds ..............................             308,686
Advances to Income Funds ...................................             317,400
Other receivables ..........................................             134,335
Income taxes receivable ....................................              33,000
Minimum lease payments receivable, net of
    unearned interest income of $4,316,972 .................           9,045,000
Deferred tax asset .........................................             122,000
Investment in Income Funds .................................              18,200
Other assets ...............................................              10,976
Office furniture and equipment, net of
    accumulated depreciation of $84,668 ....................              32,323
                                                                     -----------
Total assets ...............................................          10,183,948
                                                                     -----------
                                                                     -----------
Liabilities and stockholder's equity
Accounts payable and accrued expenses ......................             118,144
Nonrecourse obligations ....................................           9,045,000
                                                                     -----------
Total liabilities ..........................................           9,163,144

Stockholder's equity:
    Common stock, $1 par value:
       Authorized shares - 1,000
       Issued and outstanding shares - 10 ..................                  10
    Retained earnings ......................................           1,020,794
                                                                     -----------
Total stockholder's equity .................................           1,020,804
                                                                     -----------
Total liabilities and stockholder's equity .................         $10,183,948
                                                                     -----------
                                                                     -----------
</TABLE>

See accompanying notes.

                                      39
<PAGE>


                           Commonwealth Capital Corp.

                       Notes to Consolidated Balance Sheet

                                February 28, 1997

1. Business

Commonwealth Capital Corp. (the Company), through its subsidiary, Commonwealth
of Delaware, Inc. (CDI), is primarily engaged in leasing various types of
computer peripheral equipment and other similar equipment, which are leased
primarily to U.S. corporations and institutions. Certain subsidiaries of CDI
were formed for the purpose of functioning as general partners/managing trustees
which own a 1% interest in limited partnerships/trusts (the "Income Funds"),
which were organized to acquire, own and act as lessor with respect to certain
computer equipment. As of February 28, 1997, the subsidiaries include
Commonwealth Capital Fund 1987-I, Inc., Commonwealth Capital Fund 1988-I, Inc.,
Commonwealth Capital Fund No. 3, Inc., Commonwealth Capital Fund No. 4, Inc.,
Commonwealth Capital Fund V, Inc., Commonwealth Capital Private Fund-I, Inc.,
Commonwealth Capital Fund VI, Inc., Commonwealth Capital Fund VII, Inc.,
Commonwealth Capital Private Fund - II, Inc., Commonwealth Capital Trustee VIII,
Inc., Commonwealth Capital Trustee IX, Inc., Commonwealth Capital Trustee X,
Inc., Commonwealth Capital Private Fund-III, Inc., Commonwealth Income and
Growth Fund, Inc., Commonwealth Capital Private Fund IV, Inc., Commonwealth
Capital Private Fund V, Inc., and Commonwealth Capital Private Fund VI, Inc.
(collectively the "General Partner Subsidiaries"), Commonwealth Capital
Securities Corp., Garden State Facilities Funding, Inc. (GSFF) and Commonwealth
Capital Delaware Trustee, Inc.

2. Accounting Policies

Basis of Presentation

The accompanying consolidated balance sheet includes the accounts of the
Company, its wholly-owned subsidiary, CDI, and its wholly-owned subsidiaries
(Note 1). All significant intercompany accounts and transactions have been
eliminated in the accompanying consolidated balance sheet. The balance sheet is
presented on an unclassified basis in accordance with leasing industry practice.

Use of Estimates

The preparation of the balance sheet in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the balance sheet and accompanying notes. Actual
results could differ from those estimates.


                                      40
<PAGE>


                           Commonwealth Capital Corp.

                 Notes to Consolidated Balance Sheet (continued)



2. Accounting Policies (continued)

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. At February 28, 1997, cash
equivalents were invested in a money market fund investing directly in treasury
obligations.

Office Furniture and Equipment

Office furniture and equipment are carried at cost and are depreciated over the
estimated useful lives of the related assets ranging from 5 to 7 years using
accelerated methods.

Investment in Income Funds

The Company accounts for its 1% interests in the Income Funds by the equity
method. Distributions were received from these Income Funds and approximated the
Company's equity in the income of the Income Funds. Financial information of the
Income Funds as of December 31, 1996 is as follows:

<TABLE>
<S>                                                                  <C>        
Total assets .........................................               $34,502,000
Nonrecourse debt .....................................                10,450,000
Other liabilities ....................................                 2,952,000
Partners' capital ....................................                21,067,000
</TABLE>

The Company has guaranteed the performance of certain non-monetary obligations
of the General Partner Subsidiaries to the respective Income Funds, primarily
the responsibility for management of the Income Funds. In addition, the Company
is responsible for certain capital funding requirements of the General Partner
Subsidiaries and, accordingly, holds noninterest-bearing demand notes of
approximately $4,166,000 at February 28, 1997. Such notes have been eliminated
in the consolidation of the accompanying balance sheet.

The compensation to the Company from the Income Funds includes: (1) Equipment
Acquisition Fees (4% of the purchase price of all equipment purchased by the
Income Funds); (2) Debt Placement Fees (1% of financed equipment by the Income
Funds); (3) Sales Fees Expense (3% of gross proceeds of sold equipment by the
Income Funds); and (4) Equipment Management Fees (5% of the gross operating
lease revenues of the Income Funds). The Company earned approximately $1,509,000
in fees for managing the Income Funds during the year ended February 28, 1997.


                                      41
<PAGE>

                           Commonwealth Capital Corp.

                 Notes to Consolidated Balance Sheet (continued)


3. Lease Commitments

GSFF acted as lessor in a series of lease purchase transactions whereby the 
underlying assets were funded by investors through certificates of 
participation in the lease payments. All of GSFF's rights as lessor were 
assigned to a third-party agent which administers the collection of rentals 
paid by the lessee. The obligations under the certificates are nonrecourse to 
GSFF. Accordingly, any reduction in the minimum lease payments receivable for 
uncollectible accounts would result in an equal reduction of the nonrecourse 
obligations. Amounts outstanding at February 28, 1997 under the leases and 
certificates of participation are approximately $9,045,000. These amounts are 
included in minimum lease payments receivable and nonrecourse obligations in 
the accompanying balance sheet. Of these amounts, $7,690,000 are secured by 
mortgage insurance policies maintained by the lessee. The certificates mature 
from 1997 to 2011.

Future minimum lease payments to be received as of February 28, 1997 are as 
follows:


<TABLE>
<C>                                                                  <C>        
1998 ........................................................        $ 1,190,923
1999 ........................................................          1,202,479
2000 ........................................................          1,190,739
2001 ........................................................          1,192,935
2002 ........................................................           972,677
Thereafter ..................................................          7,675,669
                                                                     -----------
                                                                      13,425,422
Less amount representing interest                                      4,380,422
                                                                     -----------
Total                                                                $ 9,045,000
                                                                     -----------
                                                                     -----------
</TABLE>


The Company leases an automobile, certain office equipment and office space
under noncancelable operating leases expiring in 1998 through 2000. Future
minimum lease payments under noncancelable operating leases at February 28, 1997
are $184,000 in 1998; $143,000 in 1999; and $3,000 in 2000.

4. Profit-Sharing Plan

The Company has a profit-sharing plan covering all employees with one year of
service and 21 years of age. Profit-sharing contributions are made at the
discretion of management. It is the Company's policy to fund profit-sharing
costs as accrued.


                                      42
<PAGE>


5. Income Taxes

The Company files a consolidated federal income tax return with CDI and its
subsidiaries. The Company has investment tax credit carryforwards of $266,000 at
February 28, 1997. The investment tax credits expire in 1998 through 2001 and
are available to reduce future federal income tax liabilities. The Company also
has state net operating loss carryforwards of approximately $508,000, which
expire during 1997 through 1999.

The Company has a federal deferred tax asset of $259,000 at February 28, 1997,
arising primarily from the carryforward of investment tax credits. At February
28, 1997, the Company recorded a valuation allowance of approximately $137,000
because the Company concluded the future realization of all of the tax benefits
underlying the asset could not be reasonably assured based on current and
expected operating results. The Company believes that the remaining asset of
$122,000 is more likely than not to be realized. In addition, the Company has a
state deferred tax asset of $48,000 at February 28, 1997; however, the future
realization of the tax benefits underlying the state deferred tax asset could
not be reasonably assured and, accordingly, a valuation allowance was recorded
in the amount of $48,000.

6. Related Party Transactions

During 1997, the Company made $373,388 in cash advances to certain Income Funds
to fund cash distributions to limited partners. The remaining advances of
$317,400 are due on demand.

7. Legal Settlement

In 1997, the Company settled a dispute over contract terms with a former lessee,
whereby the lessee agreed to pay $190,000 for release of all future liability.
The Company received $95,000 through February 28, 1997 and the remaining
$95,000, included in other receivables at February 28, 1997, was subsequently
received.

                                      43

<PAGE>

ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING        
     AND FINANCIAL DISCLOSURE

     NOT APPLICABLE

PART III

ITEM 10:  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

GENERAL

     The General Partner, a wholly-owned subsidiary of Commonwealth of 
Delaware, Inc., a Delaware corporation, which is in turn a wholly-owned 
subsidiary of Commonwealth Capital Corp., a Pennsylvania corporation ("Com 
Cap Corp."), was incorporated in Pennsylvania on August 26, 1993.  The 
General Partner also acts as the General Partner for Commonwealth Income and 
Growth Fund I and Commonwealth Income and Growth Fund II.  The principal 
business office of the General Partner is 1160 West Swedesford Road, Suite 
340, Berwyn, PA 19312, and its telephone number is 610-647-6800.  The General 
Partner manages and controls the affairs of the Partnership and has sole 
responsibility for all aspects of the Partnership's operations.  The officers 
of the General Partner devote such time to the affairs of the Partnership as 
in the opinion of the General Partner is necessary to enable it to perform 
its function as General Partner.  The officers of the General Partner are not 
required to spend their full time in meeting their obligations to the 
Partnership.

     The directors and officers of the General Partner and key employees of 
Com Cap Corp. are as follows:

<TABLE>
<CAPTION>

NAME                      TITLE
-------------------      ------------------------------------------------
<S>                      <C>
George S. Springsteen    Chairman of the Board of Directors and President
                         of the General Partner and  Com Cap Corp.
Kimberly A. MacDougall   Executive Vice President, Chief Operating Officer
                         and Secretary of the General Partner and Com Cap Corp.

                                        44
<PAGE>


David A. Kintzer         Vice President and Chief Financial Officer of the
                         General Partner and Com Cap Corp.



Kathleen S. Enscoe       Assistant Vice President and Controller of the General
                         Partner and Com Cap Corp.

Gregory M. Lorenz        Vice President of Com Cap Corp.

Magdalia Cruz            Assistant Vice President of Com Cap Corp.

</TABLE>

     George S. Springsteen, age 63, is President of both Com Cap Corp. and 
the General Partner.  Mr. Springsteen is also President of the general 
partners or controlling entities of several prior programs sponsored by Com 
Cap Corp. with objectives similar to the Partnership's.  He has been the sole 
shareholder and director of Com Cap Corp. since its formation in 1978. From 
1971 to 1978, Mr. Springsteen was involved in the computer leasing business 
of Granite Computer Corporation.  Mr. Springsteen served as Vice President of 
Marketing, in addition to other capacities, and managed a portfolio of 
approximately $120,000,000 of IBM computers and peripherals. In 1978, Granite 
Computer Corporation sold its equipment portfolio and left the equipment 
leasing business.  Mr. Springsteen acquired a portion of Granite's portfolio, 
client base, employees and corporate offices in Jenkintown, Pennsylvania.  
The new company began operations as Com Cap Corp. in May of 1978.  Mr. 
Springsteen received a Bachelor of Science degree from the University of 
Delaware in 1957.

     Kimberly A. MacDougall, age 38, is Executive Vice President, Chief 
Operating Officer and Secretary of Com Cap Corp. and the General Partner and 
joined ComCap Corp. in 1997.  She is also the President of Commonwealth 
Capital Securities Corp.  From 1980 to 1997, Ms. MacDougall was employed with 
Wheat First Butcher Singer, a broker/dealer headquartered in Richmond, 
Virginia.  While at Wheat First Butcher Singer, Ms. MacDougall, Senior Vice 
President, served as Marketing Manager for the Direct Investments Department, 
with over $450,000,000 of investments under management in real estate, 
equipment leasing and energy-related industries.  Ms. MacDougall holds Series 
7, 63 and 39 NASD licenses and is a member of the Equipment Leasing 
Association, Investment Partnership Association, and International 
Association for Financial Planning.

     David A. Kintzer, age 38, is Vice President and Chief Financial Officer 
of both Com Cap Corp. and the General Partner and has been employed at Com 
Cap Corp. since 1991.  Mr. Kintzer also serves as Vice President and Chief 
Financial Officer of the general partners or controlling entities of several 
prior programs sponsored by Com Cap Corp. with objectives similar to the 
Partnership's.  From 1984 to 1990, Mr. Kintzer was employed by Continental 
Computer Leasing Corporation, a computer leasing company with an equipment 
lease portfolio of $40,000,000 and annual revenue of $20,000,000.  While at 
Continental, Mr. Kintzer served as Controller and Chief Financial Officer and 
managed its accounting, financial, EDP, banking relationships and personnel 
functions.  Prior to 1984, Mr. Kintzer was employed by the international 
public accounting firm of Ernst & Young LLP. Mr. Kintzer is a member of both 
the American Institute of Certified Public Accountants and The Pennsylvania 
Institute of Certified Public Accountants. Mr. Kintzer received an A.B. 
degree in accounting from Franklin & Marshall College in 1981.

     Kathleen S. Enscoe, age 32, is Assistant Vice President and Controller 
of Com Cap Corp. and certain of its subsidiaries where she has been employed 
since 1992.  Ms. Enscoe is an active member of the Equipment Leasing 
Association.  From 1988 to 1992, Ms. Enscoe was employed as a staff 
accountant in the financial reporting department of WWF Paper Corporation. 
Ms. Enscoe received a B.S.B.A. degree in 1988 from Geneva College with dual 
majors in accounting and business administration.

                                        46


<PAGE>


     Gregory M. Lorenz, age 35, is Vice President of Com Cap Corp. and has 
been employed by Com Cap Corp. since April of 1994. From 1985 to 1993, Mr. 
Lorenz was employed by Daley Marketing Corp. where he served as Vice 
President of Marketing and Director of Sales and Marketing.  Mr. Lorenz is a 
member of the Equipment Leasing Association and received an Associates of 
Arts degree from Orange Coast College in 1984.

     Magdalia Cruz, age 29, is Assistant Vice President of Com Cap Corp. and 
Vice President of Commonwealth Capital Securities Corp.  Ms. Cruz has been 
employed by Com Cap Corp. since 1993. From 1990 to 1993, Ms. Cruz was 
employed as Marketing Coordinator for Shafer DeSouza Brown.  Prior to that, 
as a Computer Equipment Analyst for the Defense Industrial Supply Center, a 
government agency based in Philadelphia.  She is completing her studies for a 
B.S. degree in Business Management at West Chester University. Ms. Cruz is a 
member of the Equipment Leasing Association, Investment Planning Association, 
and holds her Series 22, 63, and 39 NASD licenses. 

     The directors and officers of the General Partner are required to spend 
only such time on the Partnership's affairs as is necessary in the sole 
discretion of the directors of the General Partner for the proper conduct of 
the Partnership's business.  A substantial amount of time of such directors 
and officers is expected to be spent on matters unrelated to the Partnership, 
particularly after the Partnership's investments have been selected.  Under 
certain circumstances, such directors and officers are entitled to 
indemnification from the Partnership.

                                       47

<PAGE>
 
<TABLE>
<CAPTION>
                                                                                               AMOUNT    AMOUNT      AMOUNT     
                   ENTITY                                                                     INCURRED  INCURRED    INCURRED    
                 RECEIVING                                                                     DURING    DURING      DURING     
                COMPENSATION                              TYPE OF COMPENSATION                  1997      1996        1995      
--------------------------------------------  --------------------------------------------    --------- --------- ----------  
<S>                                           <C>                                             <C>       <C>       <C>

                                              OFFERING AND ORGANIZATION STAGE

The General Partner                           Organizational Fee. An Organization Fee           $0          $0    $104,000   
                                              equal to three percent of the first
                                              $10,000,000 of Limited Partners' Capital
                                              Contributions and two percent of the Limited
                                              Partners' Capital Contribution in excess of
                                              $10,000,000, as compensation for the
                                              organization of the Partnership. The General
                                              Partner paid all Organizational and Offering
                                              Expenses which include legal, accounting and
                                              printing expenses; various registration and
                                              filing fees; miscellaneous expenses related
                                              to the organization and formation of the
                                              Partnership; other costs of registration;
                                              and costs incurred in connection with the
                                              preparation, printing and distribution of
                                              this Report and other sales literature,
                                              other than underwriter's commissions and a
                                              non-accountable expense allowance payable to
                                              the Dealer Manager.                           
 
                                              OPERATIONAL AND SALE OR LIQUIDATION STAGES
 
The General Partner and its Affiliates        Reimbursement of Expenses. The General          $54,000        $0    $7,000
                                              Partner and its Affiliates are entitled to
                                              reimbursement by the Partnership for the
                                              cost of goods, supplies or 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.
 
The General Partner                           Equipment Acquisition Fee. An Equipment         $213,000  $157,000  $404,000
                                              Acquisition Fee of four percent of the
                                              Purchase Price of each item of Equipment
                                              purchased as compensation for the
                                              negotiation of the acquisition of the
                                              Equipment and the lease thereof or sale
                                              under a Conditional Sales Contract. The fee
                                              was paid upon closing of the Offering with
                                              respect to the Equipment purchased by the
                                              Partnership with the net proceeds of the
                                              Offering available for investment in
                                              Equipment. When the Partnership acquired
                                              Equipment in an amount exceeding the net
                                              proceeds of the Offering available for
                                              investment in Equipment, the fee was paid
                                              when such Equipment was acquired.

The General Partner                           Debt Placement Fee. As compensation for         $30,000   $33,000   $30,000
                                              arranging Term Debt to finance the
                                              acquisition of Equipment by the Partnership,
                                              a fee equal to one percent of such
                                              indebtedness; provided, however,

                                       48

<PAGE>

                                              that such fee is reduced to the extent
                                              the Partnership incurred such fees to
                                              third parties, unaffiliated with the
                                              General Partner or the lender, with respect
                                              to such indebtedness and no such fee was
                                              paid with respect to borrowings from the
                                              General Partner or its Affiliates.
 
The General Partner                           Equipment Management Fee. A monthly fee         $260,000  $295,000  $207,000
                                              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) five percent of
                                              the Gross Lease Revenues attributable to
                                              Equipment which is subject to Operating
                                              Leases.
 
The General Partner                           Re-Lease Fee. As compensation for providing       $0          $0         $0
                                              re-leasing services for any Equipment for
                                              which the General Partner has, following the
                                              expiration of, or default under, the most
                                              recent lease or Conditional Sales Contract,
                                              arranged a subsequent lease or Conditional
                                              Sales Contract for the use of such Equipment
                                              to a lessee or other party, other than the
                                              current or most recent lessee or other
                                              operator of such equipment or its Affiliates
                                              ("Re-lease"), the General Partner will
                                              receive, on a monthly basis, a Re-lease Fee
                                              equal to the lesser of (a) the fees which
                                              would be charged by an independent third
                                              party for comparable services for comparable
                                              equipment or (b) two percent of Gross Lease
                                              Revenues derived from such Re-lease.       


The General Partner                           Equipment Liquidation Fee. With respect to        $0          $0        $0
                                              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 of such
                                              Equipment. The payment of such fee is
                                              subordinated to the receipt by the Limited
                                              Partners of (i) a return of their Capital
                                              Contributions and a 10% per annum cumulative
                                              return, compounded daily, on Adjusted
                                              Capital Contributions ("Priority Return")
                                              and (ii) the Net Disposition Proceeds from
                                              such sale in accordance with the Partnership
                                              Agreement. Such fee is reduced to the extent
                                              any liquidation or resale fees are paid to
                                              unaffiliated parties.

                                       49

<PAGE>


                                              INTEREST IN THE PARTNERSHIP

The General Partner                           Partnership Interest. The General Partner       $12,755   $12,755   $11,956
                                              has a present and continuing one percent
                                              interest of $1,000 in the Partnership's
                                              items of income, gain, loss, deduction,
                                              credit, and tax preference. In addition, the
                                              General Partner receives one percent of Cash
                                              Available for Distribution until the
                                              Limited Partners have received distributions
                                              of Cash Available for Distribution equal to
                                              their Capital Contributions plus the 10%
                                              Priority Return and thereafter, the General
                                              Partner will receive 10% of Cash Available
                                              for Distribution.                          
</TABLE>
 
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    NOT APPLICABLE

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



                                       50


<PAGE>

     The Partnership is subject to various conflicts on interest arising out 
of its relationships with the General Partner and its Affiliates.  These 
conflicts include the following:

     COMPETITION WITH GENERAL PARTNER AND AFFILIATES: COMPETITION FOR 
MANAGEMENT'S TIME

     The General Partner and its Affiliate sponsor other investor programs 
which are in potential competition with the Partnership in connection with 
the purchase of Equipment as well as opportunities to lease and sell such 
Equipment.  Competition for Equipment has occurred and is likely to occur in 
the future.  The General Partner and its Affiliates may also form additional 
investor programs which may be competitive with the Partnership.

     If one or more investor programs and the Partnership are in a position 
to acquire the same Equipment, the General Partner will determine which 
program will purchase the Equipment based upon the objectives of each and the 
suitability of the acquisition in light of those objectives.  The General 
Partner will generally afford priority to the program or entity that has had 
funds available to purchase Equipment for the longest period of time.  If one 
or more investor programs and the Partnership are in a position to enter into 
lease with the same lessee or sell Equipment to the same purchaser, the 
General Partner will generally afford priority to the Equipment which has  
been available for lease or sale for the longest period of time.

     Certain senior executives of the General Partner and its Affiliates also 
serve as officers and directors of the other programs and are required to 
apportion their time among these entities.  The Partnership is, therefore, in 
competition with the other programs for the attention and management time of 
the General Partner and Affiliates.  The officers and directors of the 
General Partner are not required to devote all or substantially all of their  
time to the affairs of the Partnership.

ACQUISITIONS

     Com Cap Corp. and the General Partner or other Affiliates of the General 
Partner may acquire Equipment for the Partnership provided that (i) the 
Partnership has insufficient funds at the time the Equipment is acquired, 
(ii)the acquisition is in the best interest of the partnership and (iii) no 
benefit to the General Partner or its Affiliates arises from the acquisition 
except for compensation paid to Com Cap Corp., the General Partner or such 
other Affiliate as disclosed in this Report. Com Cap Corp., the General 
Partner or their Affiliates will not hold Equipment for more than 60 days 
prior to transfer to the Partnership.  If sufficient funds become available 
to the Partnership within such 60 day period, such Equipment may be resold to 
the Partnership for a price not in excess of the sum of the cost of the 
Equipment to such entity and any accountable Acquisition Expenses payable to 
third parties which are incurred by such entity and interest on the Purchase 
Price from the date of purchase to the date of transfer to the Partnership.  
Com Cap Corp., the General Partner or such other Affiliate will retain any 
rent or other payments received for the Equipment, and bear all expenses and 
liabilities, other than accountable Acquisition Expenses payable to third 
parties with respect to such Equipment, for all periods prior to the 
acquisition of the Equipment by the Partnership.  Except as described above, 
there will be no sales of Equipment to or from any Affiliate of Com Cap Corp.

     In certain instances, the Partnership finds it necessary, in connection 
with the ordering and acquisition of Equipment, to make advances to 
manufacturers or vendors with funds borrowed from the General Partner for 
such purpose.  The Partnership does not borrow money from the General Partner 
or any of its Affiliates with a term in excess of twelve months.  Interest is 
paid on loans or advances (in the form of deposits with manufacturers or 
vendors of Equipment or otherwise) from the General Partner of its Affiliates 
from their own funds at a rate equal to that which would be charged by third 
party financing institutions on comparable loans from the same purpose in the 
same geographic area, but in no event in excess of the General Partner's or 
Affiliate's own cost of funds.  In addition, if the General Partner or its 
Affiliates borrow money and loan or advance it on a short-term basis to or on 
behalf of the Partnership, the General Partnership than that which the 
General Partner or such Affiliates are paying.  The Partnership 

                                51

<PAGE>

does not loan money to any Person including the General Partner or its 
Affiliates except to the extent that a Conditional Sales Contract constitutes 
a loan.

     If the General Partner or any of its Affiliates purchases Equipment in  
its own name and with its own funds in order to facilitate ultimate purchase 
by the Partnership, the purchaser is entitled to receive interest on the 
funds expended for such purchase on behalf of the Partnership.  Simple 
interest on any such temporary purchases is charged on a floating rate basis 
not in excess of three percent over the "prime rate" from time to time 
announced by PNC Bank, from the date of initial acquisition to the date of 
repayment by the Partnership/ownership transfer.

     The Partnership does not invest in equipment Limited Partnerships, 
general partnerships or joint ventures, except that (a) the Partnership may 
invest in general partnerships or joint ventures with persons other that 
equipment Programs formed by the General Partner or its Affiliates, which 
partnerships or joint ventures own specific equipment; provided that (i) the 
Partnership has or acquires a controlling interest in such ventures or 
partnerships, (ii) the non-controlling interest is owned by a non-Affiliated, 
and (iii) the are no duplicate fees; and (b) the Partnership may invest in 
joint venture arrangements with other equipment Programs formed by the 
General Partner or its Affiliates if such action is in the best interest of  
all Programs and if all the following conditions are met: (i) all the 
Programs have substantially identical investment objectives; (ii) there are 
no duplicate fees; (iii) the sponsor compensation is substantially identical 
in each Program; (iv) the Partnership has a right of first refusal to buy 
another Program's interest in a joint venture if the other Program wishes to 
sell equipment held in the joint venture; (v) the investment of each Program 
is on substantially the same terms and conditions; and (vi) the joint venture 
is formed either for the purpose of effecting appropriated diversification 
for the Programs or for the purpose of relieving the General Partner or its 
Affiliates from a commitment entered into pursuant to certain provisions of 
the Partnership Agreement.

     As of December 31, 1997, the Partnership was indebted to Com Cap Corp. 
for approximately $41,000 in connection with the Partnership's reimbursable 
expenses.  The entire debt was satisfied in January 1998.

     As of December 31, 1995, the Partnership was indebted to Com Cap Corp. 
for approximately $22,000 in connection with the Partnership's acquisition of 
Equipment.  The entire debt was satisfied in January 1996.

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<PAGE>
                                   GLOSSARY
 
    The following terms used in this Report shall (unless otherwise expressly 
provided herein or unless the context otherwise requires) have the meanings 
set forth below.
 
    "Acquisition Expenses" means expenses relating to the prospective 
selection and acquisition of or investment in Equipment by the Partnership, 
whether or not actually acquired, including, but not limited to, legal fees 
and expenses, travel and communication expenses, costs of appraisal, 
accounting fees and expenses and other related expenses.
 
    "Acquisition Fees" means the total of all fees and commissions paid by 
any party in connection with the initial purchase of Equipment acquired by 
the Partnership. Included in the computation of such fees or commissions 
shall be the Equipment Acquisition Fee and any commission, selection fee, 
construction supervision fee, financing fee, non-recurring management fee or 
any fee of a similar nature, however designated.
 
    "Adjusted Capital Contributions" means Capital Contributions of the 
Limited Partners reduced by any cash distribution received by the Limited 
Partners pursuant to the Partnership Agreement, to the extent such 
distributions exceed any unpaid Priority Return as of the date such 
distributions were made.
 
    "Affiliate" means, when used with reference to a specified Person, (i) 
any Person, that directly or indirectly through one or more intermediaries 
controls or is controlled by or is under common control with the specified 
Person, (ii) any Person that is a director or an executive officer of, 
partner in, or serves in a similar capacity to, the specified Person, or any 
Person of which the specified Person is an executive officer or partner or 
with respect to which the specified Person serves in a similar capacity, 
(iii) any Person owning or controlling 10% or more of the outstanding voting 
securities of such specified Person, or (iv) if such Person is an officer, 
director or partner, any entity for which such Person acts in such capacity.
 
    "Capital Account" means the bookkeeping account maintained by the 
Partnership for each Partner.
 
    "Capital Contributions" means in the case of the General Partner, the 
total amount of money contributed to the Partnership by the General Partner, 
and in the case of Limited Partners, $20 for each Unit, or where the context 
requires, the total Capital Contributions of all the Partners.
 
    "Cash Available for Distribution" means Cash Flow plus Net Disposition 
Proceeds plus cash funds available for distribution from Partnership 
reserves, less such amounts as the General Partner, in accordance with the 
Partnership Agreement, causes the Partnership to reinvest in Equipment or 
interests therein, and less such amounts as the General Partner, in its sole 
discretion, determines should be set aside for the restoration or enhancement 
of Partnership reserves.
 
    "Cash Flow" for any fiscal period means the sum of (i) cash receipts from 
operations, including, but not limited to, rents or other revenues arising 
from the leasing or operation of the Equipment and interest, if any, earned 
on funds on deposit for the Partnership, but not including Net Disposition 
Proceeds, minus (ii) all cash expenses and costs incurred and paid in 
connection with the ownership, lease, management, use and/or operation of the 
Equipment, including, but not limited to, fees for handling and storage; all 
interest expenses paid and all repayments of principal regarding borrowed 
funds; maintenance; repair costs; insurance premiums; accounting and legal 
fees and expenses; debt collection expenses; charges, assessments or levies 
imposed upon or against the Equipment; ad valorem, gross receipts and other 
property taxes levied against the Equipment; and all costs of repurchasing 
Units in accordance with the Partnership Agreement; but not including 
depreciation or amortization of fees or capital expenditures, or provisions 
for future expenditures, including, without limitation, Organizational and 
Offering Expenses.
 
    "Closing Date" means May 11, 1995.
 
    "Code" means the Internal Revenue Code of 1986, as amended, and as may be 
amended from time to time by future federal tax statutes.
 
                                       53

<PAGE>

    "Competitive Equipment Sale Commission" means that brokerage fee paid for 
services rendered in connection with the purchase or sale of Equipment which 
is reasonable, customary, and competitive in light of the size, type, and 
location\of the Equipment.     "Conditional Sales Contract" means an 
agreement to sell Equipment to a buyer in which the seller reserves title to, 
and retains a security interest in, the Equipment until the Purchase Price of 
the Equipment is paid.
 
    "Effective Date" means December 17, 1993, the date on which the 
Partnership's Registration Statement on Form S-1 was declared effective by 
the United States Securities and Exchange Commission.
 
    "Equipment" means each item of and all of the computer peripheral and 
other similar capital equipment purchased, owned, operated, and/or leased by 
the Partnership or in which the Partnership has acquired a direct or indirect 
interest, together with all appliances, parts, instruments, accessories, 
furnishings, or other equipment included therein and all substitutions, 
renewals, or replacements of, and all additions, improvements, and accessions 
to, any and all thereof.
 
    "Full Payout Net Lease" means an initial Net Lease of the Equipment 
underwhich the non-cancelable rental payments due (and which can be 
calculated at the commencement of the Net Lease) during the initial 
noncancellable fixed term (not including any renewal or extension period of 
the lease or other contract for the use of the Equipment are at least 
sufficient to recover the Purchase Price of the Equipment.
 
    "General Partner" means Commonwealth Income & Growth Fund, Inc. and any 
additional, substitute or successor general partner of the Partnership.
 
    "Gross Lease Revenues" means Partnership gross receipts from leasing or 
other operation of the Equipment, except that, to the extent the Partnership 
has leased the Equipment from an unaffiliated party, it shall mean such 
receipts less any lease expense.
 
    "Initial Closing" means March 14, 1994, the date after the Minimum 
Subscription Amount was received on which funds to acquire Units were 
released from the Escrow Account and distributed to the Partnership for the 
acqusition of Units by Limited Partners.
 
    "IRS" means the Internal Revenue Service.
 
    "Limited Partner" means a Person who acquires Units and who is admitted 
to the Partnership as a limited partner in accordance with the terms of the 
Partnership Agreement.
 
    "Majority in Interest" means, with respect to the Partnership, Limited 
Partners holding more than 50% of the outstanding Units held by all Limited 
Partners at the Record Date for any vote or consent of the Limited Partners.

    "Minimum Subscription Amount" means an aggregate of $2,500,000 in 
Subscriptions.
 
    "Net Disposition Proceeds" means the net proceeds realized by the 
Partnership from the refinancing, sale or other disposition of Equipment, 
including insurance proceeds or lessee indemnity payments arising from the 
loss or destruction of Equipment, less such amounts as are used to satisfy 
Partnership liabilities.
 
    "Net Lease" means a lease or other contract under which the owner 
provides equipment to a lessee or other operator in return for a payment, and 
the lessee assumes all obligations and pays for the operation, repair, 
maintenance and insuring of the equipment.
 
    "Net Profits" or "Net Losses" shall be computed in accordance with 
Section 703(a) of the Code (including all items of income, gain, loss or 
deduction required to be stated separately pursuant to Section 703(a)(1) of 
the Code) for

                                       54

<PAGE>

each taxable year of the Partnership or shorter period prior or subsequent to 
an interim closing of the Partnership's books with the following adjustments: 
(i) any income of the Partnership that is exempt from federal income tax and 
not otherwise taken into account in computing Net Profits and Net Loss 
pursuant to this definition shall be added to such taxable income or shall 
reduce such taxable loss; (ii) any expenditure of the Partnership described 
in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) 
expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) 
and not otherwise taken into account in computing Net Profits and Net Losses 
pursuant to this definition shall be subtracted from such taxable income or 
loss; (iii) items of income, gain, loss and deduction specially allocated 
pursuant to Section 7.3 of the Partnership Agreement shall not be included in 
the computation of Net Profits or Net Loss; and if property is reflected on 
the books of the Partnership at a book value that differs from the adjusted 
tax basis of the property in accordance with Treasury Regulation Section 
1.704-1(b)(2)(iv)(d) or (f), depreciation, amortization, and gain or loss 
with respect to such property shall be determined by reference to such book 
value in a manner consistent with Treasury Regulation Section 
1.704-1(b)(2)(iv)(g). The terms "Net Profit" or "Net Losses" shall include 
the Partnership's distributive share of the profit or loss of any partnership 
or joint venture in which it is a partner or joint venturer.
 
    "Offering" means the initial public offering of Units in the Partnership. 

    "Offering Period" means the period commencing the Effective Date and 
ending the last day of the calendar month in which the Closing Date occurs.
 
    "Operating Distributions" means the quarterly distributions made to the 
Partners pursuant to Article 8 of the Partnership Agreement.
 
    "Operating Lease" means a lease or other contractual arrangement under 
which an unaffiliated party agrees to pay the Partnership, directly or 
indirectly, for the use of the Equipment, and which is not a Full Payout Net 
Lease.
 
    "Organizational and Offering Expenses" means the expenses incurred in 
connection with the organization of the Partnership and in preparation of the 
Offering, including Underwriting Commissions, listing fees and advertising 
expenses specifically incurred in connection with the distribution of the 
Units.
 
    "Partner(s)" means any one or more of the General Partner and the Limited 
Partners.
 
    "Partnership" means Commonwealth Income & Growth Fund I, a Pennsylvania 
limited partnership.
 
    "Partnership Agreement" means that Limited Partnership Agreement of 
Commonwealth Income & Growth Fund I by and among the General Partner and the 
Limited Partners, pursuant to which the Partnership is governed.
 
    "Person" means an individual, partnership, limited liability company, 
joint venture, corporation, trust, estate or other entity.
 
    "Priority Return" means an amount equal to a return at a rate of 10% 
perannum, compounded daily, on the Adjusted Capital Contribution for all 
outstanding Units, which amount shall begin accruing at the end of the 
calendar quarter in which such Units are sold by the Partnership.
 
    "Proceeds" means proceeds from the sale of the Units.
 
    "Program" means a limited or general partnership, joint venture, 
unincorporated association or similar organization, other than a corporation 
formed and operated for the primary purpose of investment in and the 
operation of or gain from an interest in Equipment.
 
    "Purchase Price" means, with respect to any Equipment, an amount equal to 
the sum of (i) the invoice cost of such Equipment or any other such amount 
paid to the seller, (ii) any closing, delivery and installation charges 
associated therewith not included in such invoice cost and paid by or on 
behalf of the Partnership, (iii) the cost of any capitalized

                                       55

<PAGE>

modifications or upgrades paid or on behalf of the Partnership in connection 
with its purchase of the Equipment, and (iv) solely for purposes of the 
definition of Full Payout Net Lease, the amount of the Equipment Acquisition 
Fee and any other Acquisition Fees.
 
    "Retained Proceeds" means Cash Available for Distribution, which instead 
of being distributed to the Partners is retained by the Partnership for the 
purpose of acquiring or investing in Equipment.
 
    "Term Debt" means debt of the Partnership with a term in excess of twelve 
months, incurred with respect to acquiring or investing in Equipment, or 
refinancing non-Term Debt, but not debt incurred with respect to refinancing 
existing Partnership Term Debt.
 
    "Unit" means a Limited Partnership interest in the Partnership 



                                       56

<PAGE>

                                    PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
  (a)(1) Financial Statements.
 
         Commonwealth Income & Growth Fund I
           Report of Independent Auditors
           Balance Sheets as of December 31, 1997 and 1996
           Statements of Operations for each of the three years ended 
            December 31, 1997
           Statements of Partners' Capital for each of the three years ended 
            December 31, 1997
           Statements of Cash Flows for each of the three years ended 
            December 31, 1997
           Notes to Financial Statements
 
         Commonwealth Income & Growth Fund, Inc.
           Report of Independent Auditors
           Balance Sheet as of February 28, 1997
           Notes to Balance Sheet
 
         Commonwealth Capital Corp.
           Report of Independent Auditors
           Consolidated Balance Sheet as of February 28, 1997
           Notes to Consolidated Balance Sheet

 (a)(2)  Schedules.

         Schedules are omitted because 
         they are not applicable, not required, 
         or because the required information is included 
         in the financial statements and notes thereto.
 
 (a)(3)  Exhibits.

         * 3.1 Certificate of Limited Partnership
         **3.2  Agreement of Limited Partnership
              
            27 Financial Data Schedule
               ----------------

         *     Incorporated by reference from the Partnership's
                  Registration Statement on Form S-1 (Registration No. 33-69996)
        **     Incorporated by reference for the Partnership's Annual Report on
                  Form 10-K for the year ended December 31, 1994.
 
  (b)   Reports on Form 8-K.
 
        NOT APPLICABLE

  (c)   Exhibits.

                                       57

<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of Section 15(d) of the Securities Exchange 
Act of 1934, the Registrant has duly caused this Report to be signed on its 
behalf on April 9, 1998 by the undersigned thereunto duly authorized.

                                            COMMONWEALTH INCOME & GROWTH FUND I
                                              By: COMMONWEALTH INCOME & GROWTH
                                                  FUND, INC., General Partner



                                           By: /s/ George S. Springsteen
                                               --------------------------------
                                               George S. Springsteen, President
 

    Pursuant to the requirements of the Securities Exchange Act of 1934, this 
Report has been signed below by the following persons on behalf of the 
Registrant and in the capacities indicated on April 9, 1998.
 
          SIGNATURE                                CAPACITY
------------------------------            ---------------------------
 
 
  /s/ GEORGE S. SPRINGSTEEN         Chairman, President and Sole  Director of
------------------------------      Commonwealth Income & Growth Fund, Inc.
    George S. Springsteen         


  /s/ KIMBERLY A. MACDOUGALL        Executive Vice President Chief Operating 
------------------------------      Officer and Secretary
     Kimberly A. MacDougall


     /s/ DAVID A. KINTZER           Vice President, and Chief Financial Officer
------------------------------      of Commonwealth Income & Growth Fund, Inc.
       David A. Kintzer             
 
 
    /s/ KATHLEEN S. ENSCOE          Controller of Commonwealth
------------------------------      Income & Growth Fund,
      Kathleen S. Enscoe            Inc.

                                       58