<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 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, 2000

(_)  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 Number)
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, 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, 2000 are incorporated by reference as Exhibits in Part IV of this Report.


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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 and leases Equipment principally
to U.S. corporations and other institutions pursuant 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, 2000, 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


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Equipment. The Partnership may also engage in sale/leaseback transactions,
pursuant to which the 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, 2000,
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, 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


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technology equipment. The Partnership may not invest in any of such other types
of Equipment (i) to the 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, 2000, the Partnership has acquired a
diversified Equipment portfolio which it has leased to 22 different companies
located throughout the United States. Approximately 33% of the Equipment
acquired by the Partnership consists of tape storage. Approximately 38% of the
Equipment acquired by the Partnership consists of workstations, department
servers and enterprise servers. Approximately 14% of the Equipment acquired by
the Partnership consists of printers. Approximately 3% of the Equipment acquired
by the Partnership consists of communication controllers. Approximately 7% of
the Equipment acquired by the Partnership consists of Escon drivers.
Approximately another 4% of the Equipment acquired by the Partnership consists
of more traditional forms of disk storage. Approximately 1% of the Equipment
acquired by the Partnership consists of Routers.

      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, 2000, 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


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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, 2000, 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, 2000, 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


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desired or on terms considered reasonable by the General Partner. As of December
31, 2000, the aggregate nonrecourse debt outstanding of $68,000 was 1.11% 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, 2000, 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,
2000, 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, 2000, the Partnership has not refinanced any of its debt.


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      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

      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


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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 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 from IBM.


INVESTMENTS

      As of March 28, 2001, the Partnership has purchased the following
Equipment:


<TABLE>
<CAPTION>
                                             EQUIPMENT                     LIST        PURCHASE    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
Fingerhut Corp.                   SIEMEN    (2) 2240-004                 722,000       459,592       8,558         48
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
Chrysler Corp.                      IBM     (20%) 3745-31A               242,244       184,383       4,203         48
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
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
Chrysler Corp.                      STK     (55%) 28% tape libraries,
                                            30% redwd, 42% timberl     1,693,479       997,891      22,520         36
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       231,551       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       455,473      11,060         36
Charles Schwab                      IBM     (20%) (6) 9032-003           495,889       307,983       6,989         36
ADP                                 IBM     (3) 3490-A20
                                            (1) 3490-B40                 579,850       379,682       5,036         36
Lucent                              SUN     (1)3000server                 70,300        45,892       1,181         36
Lucent                              SUN     (1)3500server                 75,750        49,505       1,274         36
Pitney Bowes                        IBM     (1)3590                      526,390       299,832       5,852         40
Cendant                             SUN     (1)6000                      512,640       274,774       6,722         36
Sprint                              SUN     Upgrade to
                                            ES5000                        21,400        14,491         602         25
GE Medical                         CISCO    Routers                       59,917        38,803       1,157         36
Thomson                             HP      Workstation                   26,670        17,683         696         24
</TABLE>


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<TABLE>
<CAPTION>
<S>                                 <C>     <C>                          <C>           <C>             <C>         <C>
Kaiser                              CISCO   (33) Routers                  65,835        38,948       1,333         36
Morgan Stanley                      SUN     ENT4000                      184,144       122,751       3,018         24
Moore Business                      IBM     (2)3900-DW1/2                515,000       460,490       9,040         43
SMS                                 STK     TAPE DRIVE                 1,452,140       576,586      34,140         36
UNUM                                IBM     PRINTER                      343,010       343,010       6,338         48
Thomson Consumer Electric           HP      VISUALIZE C3600               26,670        17,682         696         24
</TABLE>


RESERVES

      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


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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 received administrative and other
services from the General Partner which has 12 employees as of December 31,
2000.

ITEM  2: PROPERTIES

                NOT APPLICABLE

ITEM  3: LEGAL PROCEEDINGS

                NOT APPLICABLE

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

                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, 2000, 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


--------------------------------------------------------------------------------

<PAGE>



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 and instructions to
complete the request. At December 31, 2000, 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;


--------------------------------------------------------------------------------

<PAGE>



      (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.

      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


--------------------------------------------------------------------------------

<PAGE>



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 paid to the Limited
Partners during 2000, 1999, and 1998.


<TABLE>
<CAPTION>
QUARTER ENDED                         2000            1999            1998
---------------------------------------------------------------------------
<S>                              <C>             <C>             <C>
     March 31                    $  242,529      $  315,678      $  315,678

     June 30                        466,259         315,678         315,678

     September 30                   156,205         315,678         315,678

     December 31                    156,207           2,439         315,678
                                 ------------------------------------------

                                 $1,021,200      $  949,473      $1,262,712
                                 ==========================================
</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.

      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, selected financial
data for the Partnership and for each of the five years in the period ended
December 31, 2000. This table is qualified in its entirety by the more
detailed information which have been derived in part from the audited
financial statements of the partnership and the notes thereto included
elsewhere herein, and should be read in

--------------------------------------------------------------------------------

<PAGE>



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
                                                          ----------------------
                                                  2000             1999             1998             1997             1996
                                              --------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>              <C>              <C>
     Lease Income                             $ 1,790,339      $ 2,995,506      $ 4,527,348      $ 5,195,139      $  5,908,389

     Net Loss                                    (205,279)        (478,168)        (334,254)        (906,123)       (1,319,747)

     Cash Distributions                         1,031,324          959,043        1,275,467        1,275,467         1,275,467

     Net Loss per

         Limited Partner Unit                        (.33)            (.77)            (.55)           (1.46)            (2.11)

     Cash Distribution per

        Limited Partner Unit                         1.62             1.50             2.00             2.00              2.00
</TABLE>


<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                               -----------
                                                  2000             1999             1998             1997             1996
                                              --------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>              <C>              <C>

     Total Assets                             $   839,551      $ 2,858,500      $ 5,906,884      $10,081,644      $11,373,203

     Notes Payable                                 67,647          716,792        2,401,080        4,968,748         3,502,523

     Partner's Capital                            583,232        1,819,835        3,257,046        4,866,767         7,048,357
</TABLE>



      Net loss per unit is computed based upon net loss allocated to the
Limited Partners and the weighted average number of equivalent Limited
Partner 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 Limited Partner Units outstanding
during the year.

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

LIQUIDITY AND CAPITAL RESOURCES

      The Partnership's primary sources of capital for the years ended December
31, 2000, 1999, and 1998 were cash from operations of $513,000, $752,000, and
$757,000, respectively and proceeds from the sale of computer equipment of
$365,000, $590,000, and $894,000 in the years ended December 31, 2000, 1999, and
1998 respectively. The primary uses of cash were for capital expenditures for
new equipment totaling $161,000, and $545,000 for the years ended December 31,
1999, and 1998, respectively, and for the payment of distributions to partners
totaling $1,031,000 for 2000, $959,000 for 1999, and $1,275,000, in 1998.


--------------------------------------------------------------------------------

<PAGE>



      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, 2000 and 1999 the Partnership had approximately
$65,000 and $200,000 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 decreased
to $89,000 in 2000, down from $1,153,000 in 1999 and $3,324,000 in 1998 due
to computer equipment leases expiring. 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, 2000, the Partnership had
future minimum rentals on noncancellable operating leases of $80,000 for the
year ended 2001 and $9,000 thereafter. No debt was incurred in 2000 or 1999.
At December 31, 2000, the outstanding debt was $68,000, with an interest rate
of 7% and will be payable through December 2001. 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 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.

      For the year ended December 31, 2000, the Partnership generated cash flow
from operating activities of $513,000, which includes a net loss of $205,000 and
was reduced by depreciation and amortization expenses of $1,476,000. Other
noncash activities included in the determination of the net loss includes direct
payments of lease income by lessees to banks of $649,000.

RESULTS OF OPERATIONS

      For the year ended December 31, 2000, 1999 and 1998, the Partnership
recognized income of $1,797,000, $3,005,000, and $4,620,000 and expenses of
$2,002,340, $3,483,000, and $4,955,000, resulting in net losses of $205,000,
$478,000 and $335,000, respectively.

      Lease income decreased to $1,790,000 in 2000 from $2,996,000 and
$4,527,000 in 1999 and 1998 respectively, primarily due to the expiration of
leases and no new leases entered into.

      Interest income decreased to $7,000 in 2000 from $10,000 in 1999 and
$22,000 in 1998, as a result of less invested cash as Partnership
distributions for the year ended December 31, 2000, were made, whereas, for
the year ended December 31, 1999 and 1998 the cash was temporarily being
invested in money market accounts until being utilized for equipment
purchases.

      Operating expenses, excluding depreciation, consist of accounting,
legal, outside service fees and reimbursement of expenses to Com Cap Corp., a
related party (see item 10), for administration and operation of the
Partnership. The operating expenses totaled approximately $193,000 in 2000,
$261,000 in 1999, and $176,000 in 1998. The decrease from 2000 to 1999 is
primarily attributable to a reduction in the annual calculation of the
overhead charges from Com Cap Corp. The increase in 1999 was primarily
attributable to an increase from the annual recalculation of the overhead
charges from Com Cap Corp.

      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 to $90,000 in


--------------------------------------------------------------------------------

<PAGE>



2000 from $150,000 and $226,000 for 1999 and 1998 respectively, which is
consistent with the decrease in lease income.

      Interest expense decreased to $22,000 for 2000, from $105,000 and
$273,000 for 1999 and 1998 respectively, as a result of reduced debt
resulting from monthly loan payments and the use of proceeds from the sale of
equipment.

      Depreciation and amortization expenses consist of depreciation on computer
equipment, amortization of organization costs (for 1999 and 1998 only),
equipment acquisition fees and debt placement fees. Depreciation and
amortization during 2000 decreased to $1,476,000 from $2,809,000 and $4,281,000
in 1999 and 1998 respectively, due to the reduction of the owned equipment.

      In 2000 and 1999, the Partnership recorded bad debt expenses of
$104,000 and $50,000, respectively, as a result of management's analysis that
certain accounts receivable were deemed uncollectible.

      The Partnership sold computer equipment with a net book value of $484,000,
$698,000, and $822,000 during the years ended December 31, 2000, 1999, and 1998,
respectively, for a net loss of $118,000 for the year ended December 31, 2000,
$108,000 for the year ended December 31, 1999 and a gain of $72,000 for the year
ended December 31, 1998.

      The Partnership identified specific computer equipment and associated
equipment acquisition costs, which were reevaluated due to technological
changes. The Partnership determined that no impairment had occurred for the year
ended December 31, 2000. In 1999 and 1998 the Partnership determined that the
carrying amount of certain assets was greater than the undiscounted cash flows
to be generated by these assets and therefore recorded a charge of $10,000 and
$135,000 to depreciation expense to record the assets at their estimated fair
value in the year ended December 31, 1999 and 1998, respectively.

NET LOSS

      As a result of the above factors, net loss decreased to $205,000 in
2000 from $478,000 and $334,000, in 1999 and 1998, respectively.


ITEM  7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Partnership believes its exposure to market risk is not material due
to the fixed interest rate of its long term debt.

ITEM  8: FINANCIAL STATEMENTS

      See financial statements commencing in part IV Item 14.


--------------------------------------------------------------------------------

<PAGE>



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

      On December 14, 2000 the Partnership informed the accounting firm of Ernst
& Young LLP ("E&Y") that the Partnership would not retain it to audit the
Partnership's financial statements for the year ended December 31, 2000. E&Y had
been the Partnerships' principal accountants since the fiscal year ended
December 31, 1993. The report of E&Y on the financial statements of the
Partnership for the two most recent fiscal years did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles. The Partnership has had no
disagreements with its former principal accountants on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure which disagreements, if not resolved to the satisfaction of the former
accountants, would have caused it to make reference to the subject matter of
disagreements in connection with its report relating to the audits for the
fiscal years ended December 31, 1999 and 1998 or during the period from January
1, 2000 to December 14, 2000.

The Partnership's decision not to retain E&Y was not based on the expectation
that any disagreement would arise in connection with the audit of its financial
statements for the year ended December 31, 2000. The decision not to retain E&Y
was made by the Partnership's Board of Directors.

On December 13, 2000 the Partnership approved the accounting firm of BDO Seidman
LLP as its principal accountants.

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.

Henry J. Abbott            Vice President and Portfolio Manager of Com Cap Corp.
</TABLE>


--------------------------------------------------------------------------------

<PAGE>


Salvatore R. Barila        Assistant Vice President and Controller of the
                           General Partner and Com Cap Corp.

John A. Conboy III         Assistant Vice President and Accounting Manager of
                           the General Partner and Com Cap Corp.

Dorothy A. Ferguson        Assistant Vice President of Com Cap Corp.

      George S. Springsteen, age 66, 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 41, wife of George Springsteen, is
Executive Vice President, Chief Operating Officer and Secretary of Com Cap
Corp. and the General Partner and joined Com Cap 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.

      Henry J. Abbott, age 49, is Vice President and Portfolio Manager of Com
Cap Corp. and has been employed by Com Cap Corp. since 1998. Mr. Abbot has been
active in the commercial lending industry, working primarily on asset-backed
transactions for more than twenty-seven years. Prior to joining Com Cap Corp.
Mr. Abbott was a founding partner of Westwood Capital LLC, in New York. Prior to
that, as Senior Vice President for IBJ Schroder Leasing Corporation where Mr.
Abbott managed a group specializing in providing operating lease financing
programs in the high technology sector. Mr. Abbott brings extensive knowledge
and experience in all facets of asset-backed financing and has successfully
managed $1.5 billion of secured transactions. Mr. Abbott attended St. John's
University. Mr. Abbott is a member of the Equipment Leasing Association.

      Salvatore R. Barila, age 30, is Controller of the General Partner and
Com Cap Corp. and certain of its subsidiaries where he has been employed
since 2000. From 1992 to 2000, Mr. Barila was employed as Corporate
Accounting Manager of RCG Information Technology, Inc. Mr. Barila received a
BS degree in Accounting from Pace University in 1992. Mr. Barila is a member
of the Equipment Leasing Association.

      John A. Conboy III, age 54, is Assistant Vice President and Accounting
Manager of the General Partner and Com Cap Corp. and certain of its subsidiaries
where he has been employed since 1999. From 1965 to 1996, Mr. Conboy was
employed as a Manager of Accounting Operations of Consolidated Rail Corporation.
Mr. Conboy received a BS/BA degree in Accounting and Business Administration
from the University of Phoenix in 1994. Mr. Conboy is a member of the Equipment
Leasing Association.

      Dorothy A. Ferguson, age 58, is Assistant Vice President of Com Cap Corp.
and has been employed by Com Cap Corp. since 1995. She brought with her over 20
years experience in commercial banking and finance. Prior to joining
Commonwealth, she held positions as a Banking Officer and Administrative
Assistant to the Chairman of a large Philadelphia based bank, as well as
Executive Secretary to the CEO of an international manufacturing management
group.


--------------------------------------------------------------------------------

<PAGE>



      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.

ITEM  11: EXECUTIVE COMPENSATION

      The following table summarizes the types, amounts and recipients of
compensation to be paid by the Partnership directly or indirectly to the General
Partner and its Affiliates. Some of these fees are paid regardless of the
success or profitability of the Partnership's operations and investments. While
such compensation and fees were established by the General Partner and are not
based on arm's-length negotiations, the General Partner believes that such
compensation and fees are comparable to those which would be charged by an
unaffiliated entity or entities for similar services. The Partnership Agreement
limits the liability of the General Partner and its Affiliates to the
Partnership and the Limited Partners and provides indemnification to the General
Partner and its Affiliates under certain circumstances.


<TABLE>
<CAPTION>
                                                      AMOUNT   AMOUNT   AMOUNT
ENTITY                                                INCURRED INCURRED INCURRED
RECEIVING                                             DURING   DURING   DURING
COMPENSATION   TYPE OF COMPENSATION                    2000     1999     1998
<S>            <C>                                     <C>      <C>       <C>

               OFFERING AND ORGANIZATION STAGE

The General    Organizational Fee. An Organization          $0        $0        $0
Partner        Fee 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. It is
               anticipated that 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. The General
               Partner pays all Organizational and
               Offering Expenses, other than
               Underwriter's Commissions and a
               non-accountable expense allowance
               payable to the Dealer Manager that
               is equal to the lesser of (i) one
               percent of the Offering proceeds or
               (ii) $50,000.

               OPERATIONAL AND SALE
               OR LIQUIDATION STAGES

The General    Reimbursement of Expenses. The          $76,000  $111,000  $100,000
Partner and    General and its Affiliates Partner
its            are entitled to reimbursement by
Affiliates     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 of
               certain expenses incurred by the
               General Partner and its affiliates
               in connection with the
               administration
</TABLE>


--------------------------------------------------

<PAGE>



<TABLE>
<CAPTION>

<S>            <C>                                     <C>      <C>       <C>

               and operation of the
               Partnership. The amounts set forth
               on this table do not include
               expenses incurred in the offering
               of Units.

The General    Equipment Acquisition Fee. An                $0   $60,000   $40,000
Partner        Equipment 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 each 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. If the
               Partnership acquires Equipment in
               an amount exceeding the net
               proceeds of the Offering available
               for investment in Equipment, the
               fee will be paid when such
               Equipment is acquired.

The General    Debt Placement Fee. As compensation          $0        $0    $4,000
Partner        for arranging Term Debt to finance
               the acquisition of Equipment to the
               Partnership, a fee equal to one
               percent of such indebtedness;
               provided, however, that such fee is
               reduced to the extent the
               Partnership incurs such fees to
               third Parties, un affiliated with
               the General Partner or the lender,
               with respect to such indebtedness
               and no such fee is paid with
               respect to borrowings from the
               General Partner or its Affiliates.

The General    Equipment Management Fee. A monthly     $90,000  $150,000  $226,000
Partner        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)
               five percent of the Gross Lease
               Revenues attributable to Equipment
               which is subject to Operating
               Leases.

The General    Re-Lease Fee. As Compensation for            $0        $0        $0
Partner        providing re-leasing services for
               any Equipment for which the General
               Partner has, following the
               expiration of, or default under,
               the most recent lease of
               Conditional Sales Contract,
               arranged a subsequent lease of
               Conditional Sales Contract for the
               use of such Equipment to a lessee
               or other party, other than the
               current or most recent lessee of
               other operator of such equipment or
               its Affiliates ("Re-lease"), the
               General Partner will receive, on a
               monthly basis, a Re3-lease Fee
               equal to the lesser of (a) the fees
               which would be charged by an
               independent third party of
               comparable services for comparable
               equipment or (b) two percent of
               Gross Lease Revenues derived from
               such Re-lease.

The General    Equipment Liquidation Fee. With              $0        $0        $0
Partner        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
</TABLE>


--------------------------------------------------

<PAGE>



<TABLE>
<CAPTION>
<S>            <C>                                     <C>      <C>       <C>

               price for 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 10%
               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.

The General    Partnership Interest. The General       $10,124    $9,565   $12,755
Partner        Partner has a present and
               continuing one percent interest of
               $1,000 in the Partnership's item 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

      The Partnership is subject to various conflicts of 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


--------------------------------------------------------------------------------

<PAGE>



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 may find 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 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


--------------------------------------------------------------------------------

<PAGE>



relieving the General Partner or its Affiliates from a commitment entered into
pursuant to certain provisions of the Partnership Agreement.


PART IV

ITEM  14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K

(a)(1)Financial Statements

      Commonwealth Income & Growth Fund I

      Reports of Independent Certified Public Accountants

      Balance Sheets as of December 31, 2000 and 1999

      Statements of Operations for each of the three years ended December 31,
      2000, 1999 and 1998

      Statements of Partners' Capital for each of the three years ended December
      31, 2000, 1999 and 1998

      Statements of Cash Flows for each of the three years ended December 31,
      2000, 1999 and 1998

      Notes to Financial Statements

      Commonwealth Income & Growth Fund, Inc.

      Report of Independent Auditors

      Balance sheet as of February 29, 2000

      Notes to Balance Sheet

      Commonwealth Capital Corp.


--------------------------------------------------------------------------------

<PAGE>



      Report of Independent Auditors

      Consolidated Balance Sheet as of February 29, 2000

      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

      *     Incorporated by reference from the Partnership's Registration
            Statement on Form S-1 (Registration No. 333-26933)

      **    Incorporated by reference from the Partnership's Annual Report on
            10-K for the year ended December 31, 1993


(b)   Reports on Form 8-K

         On December 15, 2000, the partnership filed Form 8-K indicating on
         Item 4, the registrant changed certifying accountants.

         The Board of Directors of the Company approved the engagement of BDO
         Seidman, LLP, at 1700 Market Street, Philadelphia, PA 19103-3592, as
         its independent auditors for the fiscal year ended December 31,
         2000. This is to replace the firm of Ernst & Young LLP, who were
         dismissed as auditors of the Company. The audit committee of the
         Board of Directors approved the change in auditors on December 13,
         2000.


<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I

                                                                        CONTENTS


<TABLE>
<CAPTION>

<S>                                                                     <C>
  REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                   3-4

  FINANCIAL STATEMENTS
      Balance sheets                                                    5-6
      Statements of operations                                            7
      Statements of partners' capital                                     8
      Statements of cash flows                                         9-10

  NOTES TO FINANCIAL STATEMENTS                                       11-22
</TABLE>



                                                                               2
<PAGE>




REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Partners
Commonwealth Income & Growth Fund I
Berwyn, Pennsylvania

We have audited the accompanying balance sheet of Commonwealth Income & Growth
Fund I as of December 31, 2000, and the related statements of operations,
partners' capital, and cash flows for the year ended December 31, 2000. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards
in the United States. 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 audit provides 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, 2000, and the results of its operations and its cash
flows for the year ended December 31, 2000, in conformity with generally
accepted accounting principles in the United States.


/s/ BDO Seidman, LLP
--------------------------
Philadelphia, Pennsylvania
April 3, 2001



                                                                               3
<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, 1999, and the related statements of operations,
partners' capital, and cash flows for each of the two years in the period ended
December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.


                                             /s/ Ernst & Young LLP

Philadelphia, Pennsylvania
March 24, 2000


                                                                               4

<PAGE>


================================================================================

<TABLE>
<CAPTION>
DECEMBER 31,                                                                             2000                1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                 <C>
ASSETS

Cash and cash equivalents                                                                 $    64,577         $   217,288
Lease income receivable                                                                       307,546             212,624
Other receivables and deposits                                                                    200               2,009
-------------------------------------------------------------------------------------------------------------------------
                                                                                              372,323             431,921
-------------------------------------------------------------------------------------------------------------------------

Computer equipment, at cost                                                                 6,107,056           9,551,365
Accumulated depreciation                                                                   (5,647,310)         (7,174,110)
-------------------------------------------------------------------------------------------------------------------------

                                                                                              459,746           2,377,255
-------------------------------------------------------------------------------------------------------------------------

EQUIPMENT ACQUISITION COSTS AND DEFERRED EXPENSES, net of
     accumulated amortization of $285,046 and $370,770, respectively                            7,482              49,324
-------------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                              $   839,551         $ 2,858,500
=========================================================================================================================
</TABLE>



                                                                               5
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                                  BALANCE SHEETS
================================================================================


<TABLE>
<CAPTION>
DECEMBER 31,                                                                             2000                1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                 <C>
LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
     Accounts payable                                                                     $    74,355         $    54,037
     Accounts payable, General Partner                                                          5,117              35,018
     Accounts payable, Commonwealth Capital Corp.                                                  25              29,288
     Accounts payable, affiliated limited partnerships                                        105,671              77,500
     Unearned lease income                                                                      3,504             101,030
     Other accrued expenses                                                                      --                25,000
     Notes payable                                                                             67,647             716,792
-------------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES                                                                             256,319           1,038,665
-------------------------------------------------------------------------------------------------------------------------

PARTNERS' CAPITAL
     General Partner                                                                            1,000               1,000
     Limited partners                                                                         582,232           1,818,835
-------------------------------------------------------------------------------------------------------------------------

TOTAL PARTNERS' CAPITAL                                                                       583,232           1,819,835
-------------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                                   $   839,551         $ 2,858,500
=========================================================================================================================
</TABLE>

                                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                                                               6
<PAGE>





                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                        STATEMENTS OF OPERATIONS
================================================================================

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                             2000              1999              1998
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>               <C>
     INCOME
          Lease                                                                $ 1,790,339       $ 2,995,506       $ 4,527,348
          Interest and other                                                         6,722             9,683            21,741
          Gain on sale of computer equipment                                          --                --              71,682
------------------------------------------------------------------------------------------------------------------------------

     TOTAL INCOME                                                                1,797,061         3,005,189         4,620,771
------------------------------------------------------------------------------------------------------------------------------

     EXPENSES
          Operating, excluding depreciation                                        192,622           261,038           175,833
          Equipment management fee, General Partner                                 89,517           149,675           226,367
          Interest                                                                  22,242           105,223           272,640
          Depreciation                                                           1,433,902         2,664,825         4,039,371
          Amortization of organization costs, equipment
              acquisition costs, and deferred expenses                              41,842           143,956           240,814
          Uncollectible accounts receivable                                        103,818            50,000              --
          Loss on sale of computer equipment                                       118,397           108,640              --
------------------------------------------------------------------------------------------------------------------------------

     TOTAL EXPENSES                                                              2,002,340         3,483,357         4,955,025
------------------------------------------------------------------------------------------------------------------------------

     NET (LOSS)                                                                $  (205,279)      $  (478,168)      $  (334,254)
==============================================================================================================================

     NET (LOSS) PER EQUIVALENT LIMITED PARTNERSHIP
          UNIT                                                                 $      (.33)      $      (.77)      $      (.55)

     WEIGHTED AVERAGE NUMBER OF EQUIVALENT
          LIMITED PARTNERSHIP UNITS OUTSTANDING DURING THE YEAR                    631,358           631,358           631,358
==============================================================================================================================
</TABLE>


                                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                                                               7
<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>
BALANCE, December 31, 1997                            50         631,358         $  1,000          $ 4,865,767          $ 4,866,767

Net income (loss)                                     --            --             12,755             (347,009)            (334,254)
Distributions                                         --            --            (12,755)          (1,262,712)          (1,275,467)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, December 31, 1998                            50         631,358            1,000            3,256,046            3,257,046

Net income (loss)                                     --            --              9,565             (487,733)            (478,168)
Distributions                                         --            --             (9,565)            (949,478)            (959,043)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, December 31, 1999                            50         631,538            1,000            1,818,835            1,819,835

Net income (loss)                                     --            --             10,124             (215,403)            (205,279)
Distributions                                         --            --            (10,124)          (1,021,200)          (1,031,324)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, December 31, 2000                            50         631,358         $  1,000          $   582,232          $   583,232
====================================================================================================================================
</TABLE>

                                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                                                               8
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                        STATEMENTS OF CASH FLOWS
================================================================================



<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                              2000               1999                1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net (loss)                                                                 $  (205,279)        $  (478,168)        $  (334,254)

     Adjustments to reconcile net (loss) to net cash
         provided by operating activities
              Depreciation and amortization                                       1,475,744           2,808,801           4,280,185
              Loss (gain) on sale of computer
                  equipment                                                         118,397             108,640             (71,682)
              Other noncash activities included in
                  determination of net loss                                        (649,145)         (1,706,647)         (3,094,256)
              Changes in assets and liabilities
                  (Increase) decrease in assets
                      Lease income receivable                                       (94,922)            (64,420)             (1,642)
                      Other receivables and deposits                                  1,809               1,294               5,264
                      Accounts receivable, General
                           Partner                                                     --                 9,199              (9,199)
                  (Decrease) increase in liabilities
                      Accounts payable                                               20,318               3,727              25,701
                      Accounts payable, General
                           Partner                                                  (29,901)             35,018             (18,810)
                      Accounts payable,
                           Commonwealth Capital Corp.                               (29,263)              6,808             (38,626)
                      Accounts payable,
                           affiliated limited partnerships                           28,171              77,500                --
                      Accrued expenses                                              (25,000)            (34,000)             59,000
                      Unearned lease income                                         (97,526)            (15,938)            (44,813)
------------------------------------------------------------------------------------------------------------------------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                           513,403             751,814             756,868
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                                                               9
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                        STATEMENTS OF CASH FLOWS
================================================================================

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                              2000               1999                1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                 <C>                 <C>
CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                       $      --           $  (160,935)        $  (544,691)

     Accounts payable, Commonwealth Capital
         Corp                                                                          --                  --                (1,823)
     Net proceeds from sale of computer
         equipment                                                                  365,210             590,355             893,739
     Equipment acquisition fees paid to the General
         Partner                                                                       --                (6,468)            (39,699)
------------------------------------------------------------------------------------------------------------------------------------

NET CASH PROVIDED BY INVESTING ACTIVITIES                                           365,210             422,952             307,526
------------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from short-term note payable                                             --                  --                78,804
     Advance from Commonwealth Capital Corp.                                           --                  --                22,000
     Distributions to partners                                                   (1,031,324)           (959,043)         (1,275,467)
     Debt placement fee paid to the General
         Partner                                                                       --                  --                (4,425)
------------------------------------------------------------------------------------------------------------------------------------

NET CASH (USED IN) FINANCING ACTIVITIES                                          (1,031,324)           (959,043)         (1,179,088)
------------------------------------------------------------------------------------------------------------------------------------

NET (DECREASE) INCREASE IN CASH AND CASH
     EQUIVALENTS                                                                   (152,711)            215,723            (114,694)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                      217,288               1,565             116,259
------------------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                        $    64,577         $   217,288         $     1,565
====================================================================================================================================
</TABLE>


                                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                                                              10
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

1.      BUSINESS                   Commonwealth Income & Growth Fund I (the
                                   "Partnership") is a limited partnership
                                   organized in the Commonwealth of Pennsylvania
                                   to acquire, own and lease various types of
                                   computer peripheral equipment and other
                                   similar capital equipment, which will be
                                   leased primarily to U.S. corporations and
                                   institutions. 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 sell or otherwise dispose of all
                                   of its computer equipment, make final
                                   distributions to partners, and to dissolve.
                                   Unless sooner terminated, the Partnership
                                   will continue until December 31, 2004.

                                   Allocations of income and distributions of
                                   cash are based on the Partnership's Limited
                                   Partnership Agreement (the "Agreement"). The
                                   various allocations under the Agreement
                                   prevent any limited 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. During 2000, the
                                   Partnership distributed to the limited
                                   partners $781,097, in addition to $240,103
                                   distributed in January 2000, which pertained
                                   to the 1999 fourth quarter. The 2000
                                   distributions, exclusive of the January
                                   2000 distributions were at an annual rate
                                   of 6.2% of the Limited Partners' original
                                   contributed capital. During 1999, the
                                   Partnership distributed to the limited
                                   partners, three quarterly distributions
                                   totaling $949,478. The three quarterly
                                   distributions in 1999 plus the payment in
                                   January 2000 noted above represented an
                                   annual rate of 9.4%. During 1998, cash
                                   distributions to limited partners have
                                   been made at a rate of 10% of their
                                   original contributed capital.
                                   Distributions during 2000 reflect an
                                   annual return of capital in the amount of
                                   approximately $1.62 per limited
                                   partnership unit, for units which were
                                   outstanding for the entire year, which
                                   includes $.38 per unit which was
                                   distributed in January 2000 for the fourth
                                   quarter of 1999. Distributions during 1999
                                   reflect an annual return of capital in the
                                   amount of approximately $1.50 per limited
                                   partnership unit for units, which were
                                   outstanding for the entire year.
                                   Distributions during 1998

                                                                              11
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

                                   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.

2.      SUMMARY OF                 REVENUE RECOGNITION
        SIGNIFICANT
        ACCOUNTING                 Through December 31, 2000, the Partnership
        POLICIES                   has only entered into operating leases. Lease
                                   revenue is recognized on a monthly basis in
                                   accordance with the terms of the operating
                                   lease agreements.

                                   USE OF ESTIMATES

                                   The preparation of financial statements in
                                   conformity with generally accepted accounting
                                   principles requires management to make
                                   estimates and assumptions that affect the
                                   reported amounts of assets and liabilities
                                   and disclosure of contingent assets and
                                   liabilities at the date of the financial
                                   statements and the reported amounts of
                                   revenues and expenses during the reporting
                                   period. Actual results could differ from
                                   those estimates.

                                   LONG-LIVED ASSETS

                                   The Partnership evaluates its long-lived
                                   assets when events or circumstances indicate
                                   that the value of the asset may not be
                                   recoverable. The Partnership determines
                                   whether an impairment exists by estimating
                                   the undiscounted cash flows to be generated
                                   by each asset. If the estimated undiscounted
                                   cash flows are less than the carrying value
                                   of the asset then an impairment exists. The
                                   amount of the impairment is determined based
                                   on the difference between the carrying value
                                   and the fair value. Fair value is determined
                                   based on estimated discounted cash flows to
                                   be generated by the asset.

                                   During 2000, 1999 and 1998, the Partnership
                                   identified specific computer equipment and
                                   associated equipment acquisition costs, which
                                   were reevaluated due to technological
                                   changes. In 2000, the Partnership determined
                                   that no impairment had occurred. In 1999 and
                                   1998, the Partnership determined that the
                                   carrying amount of



                                                                              12
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

                                   certain assets was greater than the
                                   undiscounted cash flows to be generated by
                                   these assets. The Partnership recorded
                                   charges of $10,000 and $135,000 in the
                                   fourth quarter of 1999 and 1998,
                                   respectively, to record the assets at their
                                   estimated fair value. 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 four years.

                                   INTANGIBLE ASSETS

                                   Equipment acquisition costs and deferred
                                   expenses are amortized on a straight-line
                                   basis over two- to-five 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, 2000 and 1999, 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.



                                                                              13
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================


                                   OFFERING COSTS

                                   Offering costs are payments for selling
                                   commissions, dealer manager fees,
                                   professional fees and other offering expenses
                                   relating to the syndication. Selling
                                   commissions are 7% of the partners'
                                   contributed capital and dealer manager fees
                                   are 2% of the partners' contributed capital.
                                   These costs are deducted from partnership
                                   capital in the accompanying financial
                                   statements.

                                   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 limited
                                   partners' equivalent units outstanding
                                   during the year.

3.      COMPUTER                   The Partnership is the lessor of equipment
        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. Typically, at the end of the
                                   operating lease periods, the lessees continue
                                   to lease the equipment on a month-to-month
                                   basis.

                                   The following is a schedule of future minimum
                                   rentals on noncancelable operating leases at
                                   December 31, 2000:

<TABLE>
<CAPTION>
                                   YEAR ENDING DECEMBER 31,              AMOUNT
                                   ---------------------------------------------

                                       <S>                        <C>
                                       2001                       $      79,764
                                       2002                               8,997
                                   ---------------------------------------------

                                                                  $      88,761
                                   ---------------------------------------------
</TABLE>



                                                                              14
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

                                   Lease income from three lessees, each
                                   exceeding 10% of lease revenue, aggregated
                                   38% of lease income for the year ended
                                   December 31, 2000. Lease income from one
                                   lessee, exceeding 10% of total lease income,
                                   approximated 12% of lease income for the year
                                   ended December 31, 1999. Lease income from
                                   two lessees, each exceeding 10% of total
                                   lease income, aggregated 27% of lease income
                                   for the year ended December 31, 1998.

                                   As of December 31, 2000, three lessees
                                   comprised approximately 78% of the
                                   Partnership's accounts receivable.

4.      RELATED PARTY              REIMBURSEMENT OF EXPENSES
        TRANSACTIONS
                                   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 2000, 1999 and 1998, the
                                   Partnership recorded $76,000, $111,000 and
                                   $100,000, respectively, for reimbursement of
                                   expenses to the General Partner.

                                   EQUIPMENT ACQUISITION FEE

                                   The General Partner is entitled to be paid an
                                   equipment acquisition fee of 4% of the
                                   purchase price of each item of equipment
                                   purchased as compensation for the negotiation
                                   of the acquisition of the equipment and lease
                                   thereof or sale under a conditional sales
                                   contract. During 1999 and 1998, equipment
                                   acquisition fees of approximately $60,000 and
                                   $40,000, respectively, were paid to the
                                   General Partner. No fees were paid to the
                                   General Partner in 2000.

                                   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



                                                                              15
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

                                   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 1998, debt
                                   placement fees of approximately $4,000 were
                                   paid to the General Partner. No debt
                                   placement fee was paid to the General Partner
                                   in 2000 and 1999.

                                   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 2000,
                                   1999 and 1998, equipment management fees of
                                   approximately $90,000, $150,000 and $226,000,
                                   respectively, were paid to the General
                                   Partner as determined pursuant to section
                                   (ii) above.

                                   RELEASE FEE

                                   As compensation for providing releasing
                                   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 ("Release"),
                                   the General Partner shall receive, on a
                                   monthly basis, a Release 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 Release. There



                                                                              16
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

                                   EQUIPMENT LIQUIDATION FEE

                                   With respect to each item of equipment sold
                                   by the General Partner (other than in
                                   connection with a conditional sales
                                   contract), a fee equal to the lesser of (i)
                                   50% of the competitive equipment sale
                                   commission or (ii) three percent of the sales
                                   price for such equipment is payable to the
                                   General Partner. The payment of such fee is
                                   subordinated to the receipt by the limited
                                   partners of the net disposition proceeds from
                                   such sale in accordance with the Partnership
                                   Agreement. Such fee will be reduced to the
                                   extent any liquidation or resale fees are
                                   paid to unaffiliated parties. There were no
                                   such fees paid to the General Partner in
                                   2000, 1999 and 1998.

5.      NOTES PAYABLE              Notes payable consisted of the following:

<TABLE>
<CAPTION>
                                  DECEMBER 31,                                        2000                1999
                                  -----------------------------------------------------------------------------
                                  <S>                                              <C>                <C>
                                  Installment note payable to a bank; interest
                                  at 7.0%; due in monthly installments of $5,852
                                  including interest through December 2001         $ 67,647           $ 130,758

                                  Installment note payable to a bank; interest
                                  at 7.5%; due in monthly installments of $6,597
                                  including interest through February 2000               --              13,069

                                  Installment note payable to a bank; interest
                                  at 7.10%; due in monthly installments of
                                  $29,786 including interest through May 2000            --             146,341

</TABLE>



                                                                              17
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<CAPTION>
                                  DECEMBER 31,                                        2000                1999
                                  -----------------------------------------------------------------------------
                                  <S>                                              <C>                <C>

                                  Installment note payable to a bank; interest
                                  at 7.3%; due in monthly installments of $9,040
                                  including interest through July 2000             $     --           $  61,778

                                  Installment note payable to a bank; interest
                                  at 6.4%; due in monthly installments of
                                  $21,031 including interest through September
                                  2000                                                   --             184,329

                                  Installment note payable to a bank; interest
                                  at 7.12%; due in monthly installments of
                                  $11,060 including interest through October
                                  2000                                                   --             107,075

                                  Installment note payable to a bank; interest
                                  at 6.5%; due in monthly installments of $6,989
                                  including interest through November 2000               --              73,442
                                  -----------------------------------------------------------------------------

                                                                                   $ 67,647           $ 716,792
                                  ==============================================================================
</TABLE>

                                  These notes are secured by specific computer
                                  equipment and are nonrecourse liabilities of
                                  the Partnership.



                                                                              18
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

6.      SUPPLEMENTAL               Other noncash activities included in the
        CASH FLOW                  determination of net loss are as follows:
        INFORMATION


<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                               2000               1999                1998
------------------------------------------------------------------------------------------------------------------------------------
<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                                         $649,145          $1,684,288          $3,088,868

Lease income paid to original lessor in lieu
     of cash payment for computer equipment acquired                                    --                22,359               5,388
------------------------------------------------------------------------------------------------------------------------------------

Total adjustment to net loss from other
     noncash activities                                                             $649,145          $1,706,647          $3,094,256
====================================================================================================================================



                                                   No interest or principal on notes payable was paid by the Partnership because
                                                   direct payment was made by lessee to the bank in lieu of collection of lease
                                                   income and payment of interest and principal by the Partnership.

                                                   Noncash investing and financing activities include the following:

<CAPTION>
YEAR ENDED DECEMBER 31,                                                               2000               1999                1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>               <C>                 <C>
Debt assumed in connection with purchase
     of computer equipment                                                          $   --            $     --            $  442,937
====================================================================================================================================
</TABLE>



                                                                              19
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================

7.      RECONCILIATION OF NET
        (LOSS) REPORTED FOR
        FINANCIAL
        REPORTING PURPOSES TO
        TAXABLE INCOME (LOSS) ON
        THE FEDERAL
        PARTNERSHIP RETURN

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                           2000                  1999                  1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                   <C>                   <C>

Net (loss) for financial reporting purposes                                   $(205,279)            $(478,168)            $(334,254)
Adjustments
     (Loss) on sale of computer equipment                                      (308,635)             (322,612)             (287,465)
     Depreciation                                                               533,443               480,316               405,303
     Amortization                                                                40,791               115,830               185,057
     Unearned lease income                                                      (23,447)              (11,074)              (38,829)
     Other                                                                      256,461               (94,843)               33,394
------------------------------------------------------------------------------------------------------------------------------------

Taxable income (loss) on the Federal
     Partnership return                                                       $ 293,334             $(310,551)            $ (36,794)
====================================================================================================================================
</TABLE>

The "Adjustments-Other" includes financial statement adjustments reflected on
the tax return in the subsequent year.



                                                                              20
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================


8.      QUARTERLY RESULTS          Summarized  quarterly  financial data for the
        OF OPERATION               years ended December 31,  2000 and 1999 is as
        (UNAUDITED)                follows:

<TABLE>
<CAPTION>
                                                                                          QUARTER ENDED *
                                                                 -------------------------------------------------------------------
                                                                  MARCH 31           JUNE 30       SEPTEMBER 30        DECEMBER 31
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>               <C>               <C>
2000
Revenues
   Lease and other                                              $   533,653         $ 518,910         $ 424,477         $   320,021
   Gain on sale of computer equipment                                63,135              --                --                  --
-----------------------------------------------------------------------------------------------------------------------------------
   Total revenues                                                   596,788           518,910           424,477             320,021
-----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
    Costs and expenses                                              590,149           493,387           412,353             388,054
    Loss on sale of computer equipment                                 --              68,408           101,309              11,815
-----------------------------------------------------------------------------------------------------------------------------------
    Total cost and expenses                                         590,149           561,795            513,62             399,869
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                               $     6,639         $ (42,885)        $ (89,185)        $   (79,848)
====================================================================================================================================

Income (loss) per limited
     partner unit                                               $      0.01         $   (0.07)        $   (0.14)        $     (0.13)
====================================================================================================================================
</TABLE>



                                                                              21
<PAGE>



                                             COMMONWEALTH INCOME & GROWTH FUND I


                                                   NOTES TO FINANCIAL STATEMENTS
================================================================================


<TABLE>
<CAPTION>
                                                                                          QUARTER ENDED *
                                                                 -------------------------------------------------------------------
                                                                  MARCH 31           JUNE 30       SEPTEMBER 30        DECEMBER 31
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>               <C>               <C>
1999
Revenues
   Lease and other                                              $   807,540         $ 806,718         $ 765,952         $   624,979
   Gain on sale of computer equipment                                  --                --                --                  --
-----------------------------------------------------------------------------------------------------------------------------------
   Total revenues                                                   807,540           806,718           765,952             624,979
-----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
    Costs and expenses                                            1,001,606           690,615           673,632           1,008,864
    Loss on sale of computer equipment                                 --               8,666            62,693              37,281
-----------------------------------------------------------------------------------------------------------------------------------
    Total costs and expenses                                      1,001,606           758,281           736,325             987,145
-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                               $  (194,066)        $ 107,437         $  29,627         $  (421,166)
===================================================================================================================================

Income (loss) per limited
     partner unit                                               $     (0.31)        $    0.17         $    0.05         $     (0.66)
===================================================================================================================================
</TABLE>

Net income (loss) for the quarter ended March 31, 2000 has been adjusted to
properly reflect the correction of misapplied proceeds from the sale of
computer equipment by decreasing revenues $87,000 and an increase in the gain
(loss) on sale of computer equipment by approximately $8,200. Net income
(loss) for the quarters ended June 30, 2000 and September 30, 2000 decreased
by approximately $150,000 and $210,000, respectively, due to decreases in the
gain (loss) on sale of computer equipment. The partnership will file new
quarterly reports to reflect these changes. The cumulative gain or loss on
sale of computer equipment is included in revenues or costs as appropriate.

Net income (loss) for the quarters ended June 30, 1999 and September 30, 1999
decreased by approximately $230,000 and $170,000, respectively, due to
decreases in the gain (loss) on sale of computer equipment.

* Restated for the first, second and third quarters for the year ended December
31, 2000 and the second and third quarters for the year ended December 31,
1999.


9.      FOURTH QUARTER             During the fourth quarter of 2000, the
        ADJUSTMENTS                Partnership recorded bad debts of
                                   approximately $104,000.


                                                                              22
<PAGE>


                     COMMONWEALTH INCOME & GROWTH FUND, INC.
                      (An Indirect Wholly-Owned Subsidiary
                         of Commonwealth Capital Corp.)

                                  BALANCE SHEET

                                FEBRUARY 29, 2000




















<PAGE>















                     COMMONWEALTH INCOME & GROWTH FUND, INC.
                      (An Indirect Wholly-Owned Subsidiary
                         of Commonwealth Capital Corp.)

                                FEBRUARY 29, 2000





                                TABLE OF CONTENTS


                                                            PAGE
                                                            ----

         INDEPENDENT AUDITOR'S REPORT                         1

         BALANCE SHEET                                        2

         NOTES TO BALANCE SHEET                               3










<PAGE>











                          INDEPENDENT AUDITOR'S REPORT


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 29, 2000. 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 financial statement 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. as of February 29, 2000, in conformity with generally accepted
accounting principles.




                                                  Fishbein & Company, P.C.


Elkins Park, Pennsylvania
May 22, 2000




<PAGE>





                     COMMONWEALTH INCOME & GROWTH FUND, INC
                      (An Indirect Wholly-Owned Subsidiary
                         of Commonwealth Capital Corp.)
                                  BALANCE SHEET
                                FEBRUARY 29, 2000


                                     ASSETS


Cash                                                                $       500

Investment in Partnerships                                                3,000
                                                                    -----------
                                                                    $     3,500
                                                                    -----------



                      LIABILITIES AND STOCKHOLDER'S EQUITY


LIABILITIES
         Accrued expenses                                           $       200
         Due to parent                                                      468
         Due to income funds                                              1,732
                                                                    -----------
                                                                          2,400
                                                                    -----------

STOCKHOLDER'S EQUITY
         Common stock - No par value
            Authorized 1,000 shares
                Issued and outstanding 100 shares                         1,000
         Additional paid - in capital                                 1,000,100
                                                                    -----------

                                                                      1,001,100
         Less note receivable                                        (1,000,000)
                                                                    -----------

                                                                          1,100
                                                                    -----------
                                                                    $     3,500
                                                                    ===========

See notes to balance sheet.



<PAGE>



                     COMMONWEALTH INCOME & GROWTH FUND, INC.
                      (An Indirect Wholly-Owned Subsidiary
                         of Commonwealth Capital Corp.)
                             NOTES TO BALANCE SHEET
                                FEBRUARY 29, 2000

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      a.    Nature of Business

            Commonwealth Income & Growth Fund, Inc. (the company) is a
            wholly-owned subsidiary of Commonwealth of Delaware, Inc. which is a
            wholly-owned subsidiary of Commonwealth Capital Corp. (CCC). The
            company is the sole General Partner of Commonwealth Income & Growth
            Fund I, Commonwealth Income & Growth Fund II, and Commonwealth
            Income & Growth Fund III, all Pennsylvania limited partnerships (the
            "Partnerships").

            CCC has provided additional capital by means of a non-interest
            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. The note receivable is reflected on the accompanying
            balance sheet as a reduction of the Company's equity.

            The Company's operations are included in the consolidated federal
            income tax return of CCC.

      b.    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 reported amounts of assets and
            liabilities and disclosure of contingent assets and liabilities at
            the date of the financial statements. Actual results could differ
            from those estimates.

2.    INVESTMENT IN PARTNERSHIPS

      The Company contributed $3,000 in cash 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 notes to balance sheet.



<PAGE>





















                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000
















<PAGE>



















                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

                                TABLE OF CONTENTS




                                                                     PAGE
                                                                     ----

INDEPENDENT AUDITOR'S REPORT                                          1


CONSOLIDATED FINANCIAL STATEMENTS

         Balance sheets                                               2

         Statements of operations and retained earnings               3

         Statements of cash flows                                     4

         Notes to financial statements                              5 - 11



<PAGE>






                          INDEPENDENT AUDITOR'S REPORT



Stockholder
Commonwealth Capital Corp.


      We have audited the accompanying consolidated balance sheets of
COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES as of February 29, 2000 and February
28, 1999, and the related consolidated statements of operations and retained
earnings and cash flows for the years then ended. These financial statements are
the responsibility of the Company'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 consolidated financial position of Commonwealth
Capital Corp. and Subsidiaries as of February 29, 2000 and February 28, 1999,
and the consolidated results of their operations and their consolidated cash
flows for the years then ended in conformity with generally accepted accounting
principles.


                                                        Fishbein & Company, P.C.

Elkins Park,  Pennsylvania
May 22,  2000



<PAGE>


                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                     ASSETS
                                                                                          February 29,             February 28,
                                                                                              2000                    1999
                                                                                           ----------              ----------
<S>                                                                                        <C>                     <C>
Cash and cash equivalents                                                                  $   27,162              $   28,544
Receivables from Income Funds                                                                 255,035                 346,272
Other receivables                                                                              59,736                  64,754
Minimum lease payments receivable - Net of
         unearned interest income of $ 1,725,985 - 2000
         and $ 2,804,813 - 1999                                                             4,715,000               5,260,000

Investment in income funds                                                                     12,666                  16,200
Office furniture and equipment - Net of
         accumulated depreciation of $ 112,918 - 2000
         and $ 108,789 - 1999                                                                   6,520                  10,649

Deferred offering costs                                                                         8,192                 257,673
Other assets                                                                                    6,890                   9,042
                                                                                           ----------              ----------
                                                                                           $5,091,201              $5,993,134
                                                                                           ==========              ==========

                      LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES
         Accounts payable and accrued expenses                                             $   75,713              $  141,265
         Due to Income Funds                                                                   61,255                  63,382
         Nonrecourse obligations                                                            4,715,000               5,260,000
                                                                                           ----------              ----------
                                                                                            4,851,968               5,464,647
                                                                                           ----------              ----------


STOCKHOLDER'S EQUITY
         Common stock - Par value $ 1
                  Authorized 1,000 shares
                  Issued and outstanding 10 shares                                                 10                      10
         Retained earnings                                                                    239,223                 528,477
                                                                                           ----------              ----------
                                                                                              239,233                 528,487
                                                                                           ----------              ----------
                                                                                           $5,091,201              $5,993,134
                                                                                           ==========              ==========
</TABLE>


See notes to consolidated financial statements

<PAGE>








                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS


<TABLE>
<CAPTION>
                                                                                                       Year Ended Year Ended
                                                                                               February 29,             February 28,
                                                                                                   2000                     1999
                                                                                               -----------              -----------
<S>                                                                                            <C>                      <C>
INCOME
         Fee income from Income Funds                                                          $   972,246              $ 1,079,691
         Commission income                                                                          49,432                   15,576
         Interest income on minimum lease
                  payments receivable                                                              358,828                  395,375
         Equity in income of Income Funds                                                           43,832                   44,231
         Interest and miscellaneous                                                                 21,822                   96,597
                                                                                               -----------              -----------
                                                                                                 1,446,160                1,631,470
                                                                                               -----------              -----------

EXPENSES
         Personnel                                                                                 669,538                  770,209
         General and administrative                                                                534,984                  512,862
         Selling                                                                                   167,935                  115,732
         Interest expense on nonrecourse obligations                                               358,828                  395,375
         Depreciation                                                                                4,129                   10,677
                                                                                               -----------              -----------
                                                                                                 1,735,414                1,804,855
                                                                                               -----------              -----------

NET LOSS                                                                                          (289,254)                (173,385)

RETAINED EARNINGS - BEGINNING                                                                      528,477                  701,862
                                                                                               -----------              -----------

RETAINED EARNINGS - ENDING                                                                     $   239,223              $   528,477
                                                                                               ===========              ===========
</TABLE>





See notes to consolidated financial statements.


<PAGE>



                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                  Year Ended          Year Ended
                                                                                                  February 29,        February 28,
                                                                                                      2000                 1999
                                                                                                   ---------           ---------
<S>                                                                                                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
         Net loss                                                                                  ($289,254)          ($173,385)
         Adjustments to reconcile net loss to net
               cash used in operating activities
                  Equity in income of Income Funds                                                   (43,832)            (44,231)
                  Depreciation                                                                         4,129              10,677
                  Changes in operating assets and liabilities :
                           Receivables from Income Funds                                              91,237            (155,523)
                           Other receivables                                                           5,018              49,853
                           Income tax refunds receivable                                                                  50,000
                           Deferred offering costs                                                   249,481             (34,003)
                           Other assets                                                                2,252               2,689
                           Accounts payable and accrued expenses                                     (65,552)           (111,722)
                                                                                                   ---------           ---------

                                   Net cash used in operating activities                             (46,621)           (405,645)
                                                                                                   ---------           ---------


CASH FLOWS FROM INVESTING ACTIVITIES
         Repayment of advances to Income Funds                                                                           232,000
         Distributions from Income Funds                                                              45,239              61,500
         Investment in Income Funds                                                                                       (1,000)
         Purchase of office furniture and equipment                                                                       (1,400)
                                                                                                   ---------           ---------

                  Net cash provided by investing activities                                           45,239             291,100
                                                                                                   ---------           ---------


CASH FLOWS FROM FINANCING ACTIVITIES - None
                                                                                                   ---------           ---------


NET DECREASE IN CASH AND CASH EQUIVALENTS                                                             (1,382)           (114,545)


CASH AND CASH EQUIVALENTS - BEGINNING                                                                 28,544             143,089
                                                                                                   ---------           ---------


CASH AND CASH EQUIVALENTS - ENDING                                                                 $  27,162           $  28,544
                                                                                                   =========           =========
</TABLE>



See notes to consolidated financial statements.

<PAGE>

                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


1. NATURE OF BUSINESS

   Commonwealth Capital Corp., through its wholly-owned subsidiary, Commonwealth
   of Delaware, Inc. (CDI), primarily leases various types of computer
   peripheral equipment and related equipment to U.S. corporations and
   institutions. Certain wholly-owned 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. CDI's 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 & 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.

   The Company is dependent on the compensation it receives from the Income
   Funds. This compensation may be reduced due to the financial performance of
   each Income Fund. There are certain Income Funds that have deferred the
   payment of fees to the Company, because distributions to the limited partners
   were reduced because of their financial performance. If the financial
   performance of additional Income Funds deteriorates and the distributions to
   the limited partners are reduced, there is no assurance that the Company
   would be able to continue to collect fees for services provided.

   Commission income is earned by Commonwealth Capital Securities Corp., which
   sells units of its affiliated partnerships through broker-dealer firms to
   their respective customers throughout the United States.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   a. Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of
      the Company, CDI, and CDI's subsidiaries (the Company) (see Note 1). All
      significant intercompany transactions and balances have been eliminated.
      The balance sheets are presented on an unclassified basis in accordance
      with leasing industry practice.




<PAGE>

                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   b. Use of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.

   c. Cash and Cash Equivalents

      The Company maintains its cash balances in several financial institutions.
      The balances in each institution are insured (up to $100,000) by the
      Federal Deposit Insurance Corporation or the Securities Investor
      Protection Corporation. At times, the balances may exceed federally
      insured limits. The Company has not experienced any losses in such
      accounts, and believes it is not exposed to any significant credit risk on
      cash.

      The Company considers all highly-liquid investments purchased with a
      maturity of three months or less to be cash equivalents. At February 29,
      2000 and February 28, 1999, cash equivalents consist of a money market
      fund which invests in U.S. Treasury obligations.

   d. Investment in Income Funds

      The Company accounts for its 1% interests in the Income Funds by the
      equity method. In 1999 and 1998, certain Income Funds had liabilities in
      excess of their assets. As the Company is obligated to fund any
      liabilities in excess of assets, the Company has reduced its investment in
      Income Funds and recorded a Due to Income Funds of $61,255 and $63,382 at
      February 29, 2000 and February 28, 1999, of which ($2,127) and $17,269 was
      incurred during the years ended February 29, 2000 and February 28, 1999,
      respectively. Financial information of the Income Funds as of December 31,
      1999 and 1998, is as follows:

<TABLE>
<CAPTION>
                                             December 31,
                                    ---------------------------------
                                       1999                  1998
                                    -----------           -----------
<S>                                 <C>                   <C>
      Total assets                  $18,025,000           $24,883,000
      Nonrecourse debt                7,214,000             9,234,000
      Other liabilities               2,216,000             1,068,000
      Partners' capital               8,595,000            14,581,000
      Net loss                       (1,692,000)             (721,000)
</TABLE>


<PAGE>

                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   d. Investment in Income Funds (Continued)

      The Company has guaranteed the performance of certain nonmonetary
      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 which it satisfies
      through noninterest-bearing demand notes. Such notes total approximately
      $4,166,000 at February 29, 2000 and February 28, 1999, and have been
      eliminated in consolidation.

      Fee income earned by the Company from the Income Funds consists of: (1)
      equipment acquisition fees (4% (as defined) of the purchase price of all
      equipment purchased by the Income Funds), (2) debt placement fees (1% of
      the cost of equipment financed by the Income Funds), (3) sales fees (3% of
      the gross proceeds of equipment sold by the Income Funds), and (4)
      equipment management fees (3% - 5% (as defined) of the gross operating
      lease revenues of the Income Funds). Ongoing acquisition fees and
      equipment management fees may be increased as an indirect result of
      company loans.

      Approximately 58% and 76% of fee income for the years ended February 29,
      2000 and February 28, 1999, was from three Income Funds.

   e. Office Furniture and Equipment

      Office furniture and equipment are stated at cost. Depreciation is
      provided using the declining balance method over the estimated useful
      lives of the assets (ranging from 5 to 7 years).

   f. Deferred Offering Costs

      Deferred offering costs represent amounts incurred by the Company for the
      organization of an Income Fund. These costs are recovered from the Income
      Fund through fees as cash proceeds are raised through the sale of Limited
      Partnership Units during the offering period or, if necessary, the future
      operations of the Income Fund. Deferred offering costs at February 29,
      2000 and February 28, 1999, relate to an Income Fund whose offering period
      expires in July, 2000.

   g. Revenue Recognition

      The Company recognizes fees as earned in accordance with the various
      Limited Partnership and Trust Agreements. The Company recognizes
      commission income and brokerage fee expense on an accrual basis based on
      the trade date of the underlying customer transactions. Interest income on
      minimum lease payments receivable is recognized as earned.



<PAGE>

                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   h. Income Taxes

      Deferred income taxes are provided as necessary for temporary differences
      between the financial and tax bases of investment in Income Funds and
      office furniture and equipment. The tax basis of investment in income
      funds differs from financial reporting due to temporary differences
      associated with ownership of general partnership interests in the various
      Income Funds. Also, for income tax reporting, the cost of property and
      equipment is being recovered using the methods and lives prescribed by the
      Internal Revenue Code.

      Deferred income tax assets are also recognized for net operating losses
      and investment tax credit carryforwards that are available to offset
      future income taxes. A valuation allowance is provided as necessary to
      reduce the deferred income tax assets to the amount that is more likely
      than not to be realized.

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 29, 2000 and February 28, 1999,
   under these leases and certificates of participation are $4,715,000 and
   $5,260,000, respectively, and are reflected as minimum lease payments
   receivable and nonrecourse obligations in the accompanying balance sheets.
   The certificates mature at various dates through 2011. The Company recognized
   interest income and interest expense in connection with these leases of
   $358,828 and $395,375 for the years ended February 29, 2000 and February 28,
   1999, respectively.



<PAGE>
                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


3. LEASE COMMITMENTS (Continued)

   Future minimum lease payments to be received as of February 29, 2000, are as
   follows:

<TABLE>
<CAPTION>
   Year Ending February 28,
   ------------------------
<S>                                                <C>
            2001                                    $  906,935
            2002                                       683,324
            2003                                       684,490
            2004                                       678,794
            2005                                       676,097
            Thereafter                               2,811,345
                                                    ----------
                                                     6,440,985
            Less amount representing interest        1,725,985
                                                    ----------
                                                    $4,715,000
                                                    ==========
</TABLE>

   The Company leases an automobile, certain office equipment and office space
   under noncancelable operating leases expiring in various dates through 2004.
   Rent expense under all operating leases was approximately $155,000 and
   $174,000 for the years ended February 29, 2000 and February 28, 1999,
   respectively. Future minimum lease payments under noncancelable operating
   leases as of February 29, 2000, are as follows:

<TABLE>
<CAPTION>
   Year Ending February 28,
   ------------------------
<S>                                   <C>
            2001                      $  146,000
            2002                         141,000
            2003                         143,000
            2004                         146,000
                                      ----------
                                      $  576,000
                                      ==========
</TABLE>

4. PROFIT SHARING PLAN

   The Company has a profit sharing plan which covers substantially all of its
   employees. Contributions to the plan may be made at the discretion of
   management. No contributions to the plan were made or accrued for the years
   ended February 29, 2000 and February 28, 1999.


<PAGE>

                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


5. RELATED PARTY TRANSACTIONS

   For the year ended February 28, 1999, certain of the General Partner
   Subsidiaries agreed to waive or forgive the related Income Funds' obligations
   to pay certain equipment management fees in the amount of $28,907.
   Accordingly, fee income from Income Funds is reflected net of these amounts.
   No fees were waived or forgiven for the year ended February 29, 2000.

6. INCOME TAXES

   The Company and its subsidiaries file a consolidated federal income tax
   return.

   The Company has net operating loss carryforwards of approximately $639,000
   and investment tax credit carryforwards of approximately $109,000 available
   to reduce future federal income taxes. If not used, the carryforwards will
   expire as follows:

<TABLE>
<CAPTION>
                                    Net Operating           Investment
   Year Ending February 28,            Losses              Tax Credits
   ------------------------         -------------          -----------
<S>                                 <C>                    <C>
         2001                                              $   57,000
         2002                                                  52,000
         2013                             38,000
         2019                            149,000
         2020                            452,000
                                      ----------           ----------
                                      $  639,000           $  109,000
                                      ==========           ==========
</TABLE>

   The Company also has net operating loss carryforwards of approximately
   $3,758,000 available to reduce future Pennsylvania state income taxes. If not
   used, the carryforwards will expire as follows:

<TABLE>
<CAPTION>
   Year Ending February 28,
   ------------------------
<S>                                   <C>
            2006                      $  147,000
            2007                         648,000
            2008                         973,000
            2009                         901,000
            2010                       1,089,000
                                      ----------
                                      $3,758,000
                                      ==========
</TABLE>


<PAGE>


                   COMMONWEALTH CAPITAL CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000


6. INCOME TAXES (Continued)

   At February 29, 2000 and February 28, 1999, the cumulative temporary
   differences resulted in net deferred tax assets or liabilities consisting
   primarily of:

<TABLE>
<CAPTION>
                                                February 29,      February 28,
                                                    2000              1999
                                                ------------      ------------
<S>                                             <C>               <C>
   Deferred tax assets:
      Other                                      $   4,500         $   4,500
      Investment tax credit carryforwards           37,100            52,400
      Net operating loss carryforwards             465,000           287,000

      Less valuation allowance                    (412,000)         (266,000)
                                                 ---------         ---------
         Deferred tax assets, net                   94,600            77,900
                                                 ---------         ---------
   Deferred tax liabilities:
      Investment in Income Funds                   (94,200)          (77,900)
      Office furniture and equipment                  (400)
                                                 ---------         ---------
         Deferred tax liabilities, net             (94,600)          (77,900)
                                                 ---------         ---------
   Net deferred tax assets (liabilities)         $    --           $    --
                                                 =========         =========
</TABLE>

   The valuation allowance was increased by $146,000 and $29,000, respectively,
   for the years ended February 29, 2000 and February 28, 1999.

7. SUPPLEMENTAL CASH FLOW INFORMATION

   Other noncash activities associated with lease transactions:

<TABLE>
<CAPTION>
                                                                           Year Ended             Year Ended
                                                                          February 29,           February 28,
                                                                              2000                   1999
                                                                          ------------           ------------
<S>                                                                       <C>                    <C>
   Reduction of minimum lease receivable and repayment of nonrecourse
    obligation associated with direct payment made by
    lessee to bank                                                          $  545,000             $  545,000
                                                                            ==========             ==========
</TABLE>