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, 2004

|_| 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)

                               470 John Young Way
                                 Exton, PA 19341
          (Address, including zip code, of principal executive offices)

                                 (610) 594-9600
               (Registrant's telephone number including area code)

           Securities registered pursuant to Section 12(b) of the Act:

          Title of each class to                  Name of exchange on
             be so registered                       which each class
                                                  is to be registered

                  None                                     N/A
                  ----                                     ---

          Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                                (Title of Class)

      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:
YES |X| NO |_|

<PAGE>

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12c-2 of the Act): YES |_| NO |X|

                       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).

                                    FORM 10-K
                                DECEMBER 31, 2004

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                           PART I
<S>         <C>                                                                      <C>
Item 1.     Business                                                                  3
Item 2.     Properties                                                               11
Item 3.     Legal Proceedings                                                        11
Item 4.     Submission of Matters to a Vote of Security Holders                      12

                                          PART II

Item 5.     Market for Registrant's Common Equity, Related Stockholder Matters       12
Item 6.     Selected Financial Data                                                  15
Item 7.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations                                                    16
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk               20
Item 8.     Financial Statements and Supplementary Data                              20
Item 9.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure                                                     20
Item 9A.    Controls and Procedures                                                  21
Item 9B.    Other Information                                                        21

                                          PART III

Item 10.    Directors and Executive Officers of the Registrant                       21
Item 11.    Executive Compensation                                                   24
Item 12.    Security Ownership of Certain Beneficial Owners and Management           24
Item 13.    Certain Relationships and Related Transactions                           24
Item 14.    Principal Accountant Fees and Services                                   31

                                          PART IV

Item 15.    Exhibits and Financial Statement Schedules                               32

            Index to Exhibits

            Signatures

            Certifications
</TABLE>


                                                                               2
<PAGE>

PART I

ITEM 1: BUSINESS

GENERAL

      Commonwealth  Income and Growth Fund I ( the  "Partnership") was formed on
August 26, 1993 under the Pennsylvania  Revised Uniform Limited Partnership Act.
The  Partnership  began  offering  $15,000,000  of Units of Limited  Partnership
("Units") to the public on December 17, 1993 (the "Offerings").  The Partnership
terminated  its  offering  of Units on May 11,  1995,  with  631,358  Units sold
($12,623,682) and 749 investors 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, Direct
Financing Leases and Conditional Sales Contracts.

      The Partnership's principal investment objectives are to:

      (a)   acquire,   lease  and  sell  Equipment  to  generate  revenues  from
            operations  sufficient  to  provide  annual  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, 2004,  substantially  all  Equipment  purchased by the
Partnership is subject to an Operating  Lease or an Operating  Lease was already
entered  into  with a third  party  when  the  Partnership  acquired  an item of
Equipment.  The  Partnership  may also  engage in  sale/leaseback  transactions,
pursuant


                                                                               3
<PAGE>

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,  Direct
Financing  Leases  or sold  under  Conditional  Sales  Contracts  at the time of
acquisition or the  Partnership  may enter into a Full Payout Net Lease,  Direct
Financing  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
that 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, 2004,
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.

      Commonwealth  Capital Corp. filed a lawsuit on the  Partnership's  behalf,
alleging that the named defendant has not returned the proper leased  equipment.
The lawsuit was  originally  filed in 2000. CCC was informed on or around August
30, 2004 that the judge presiding over the case granted summary  judgment to the
defendant.  It  should  be noted  that  the  judge  had  previously  denied  the
defendant's motions for summary judgment on two different occasions. CCC and our
attorney feel that the judgment  appears faulty in a number of areas and we have
filed an appeal. On March 10, 2005, CCC filed a reply brief to the United States
Court of Appeals  for the Third  Circuit,  related  to the case of  Commonwealth
Capital Corp vs. Gentronics, Inc. (F/K/A Wang Laboratories,  Inc.). Commonwealth
expects a  response  to the brief on or around  July  2005.  Due to the  ongoing
delays,  the General  Partner  feels that it may be in the best  interest of the
Partnership to start the  liquidation  process in 2005 and run out naturally all
remaining leases in the portfolio,  making  distributions  when possible,  after
expenses have been satisfied.  If the  Partnership's  cash is insufficient  from
operations,  the  General  Partner  and CCC  intend  to pay the  legal  expenses
associated  with the lawsuit on behalf on the  Partnership.  The General Partner
intends  to review and assess the  Partnership's  business  plan on a  quarterly
basis during 2005.

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, historically,
that the 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


                                                                               4
<PAGE>

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 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.  Through  December 31, 2004,  the  Partnership  has
acquired a diversified Equipment portfolio,  which it has leased to 32 different
companies located throughout the United States. The allocations are as follows:

               --------------------------------- -------------------
                         Equipment Type          Approximate %
               ----------------------------------------------------
                            Servers                    35%
               ----------------------------------------------------
                          Workstations                 23%
               ----------------------------------------------------
                         Tape Libraries                16%
               ----------------------------------------------------
                        Escon Directors                 9%
               ----------------------------------------------------
                        Tape Subsystems                 6%
               ----------------------------------------------------
                        Optical Storage                 6%
               ----------------------------------------------------
                       High-End Printers                2%
               ----------------------------------------------------
                            Routers                     2%
               ----------------------------------------------------
                        Low-End Printers                1%
               ----------------------------------------------------
                             Total                     100%
               ----------------------------------------------------

      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


                                                                               5
<PAGE>

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 retain a security interest in, the Equipment until
the  Purchase  Price of the  Equipment is paid.  As of December  31,  2004,  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. The Equipment
may also be leased pursuant to Capital  Leases.  Capital Leases are leases under
which the Equipment either transfers to the lessee at the end of the lease term,
contains a bargain purchase price option, the lease term is equal to 75% or more
of the  estimated  economic life of the  Equipment,  or the present value at the
beginning of the lease term of the minimum lease payments is equal to or exceeds
90% of the excess of the fair value of the  Equipment.  As of December 31, 2004,
we have entered into one Capital Lease.

      In general, the terms of the Partnership's  leases,  whether the Equipment
is leased  pursuant to an Operating  lease,  Capital  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 Operating, Capital Lease 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 Capital  Lease or 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  Capital  Lease or 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 Capital
Lease or Full Payout Net Lease.  Also, the annual rental payments received under
an Operating  Lease are  ordinarily  higher than those  received under a Capital
Lease or 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, 2004, all leases that have
been entered into are "triple net leases".

      The General  Partner has not established any standards for lessees to whom
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


                                                                               6
<PAGE>

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, 2004,  the  Partnership  has not
entered into any such agreements.

      Remarketing  fees  are  paid  to the  leasing  companies  from  which  the
Partnership  purchases  leases.  These are fees that are  earned by the  leasing
companies when the initial terms of the lease have been met. The General Partner
believes that this  strategy adds value since it entices the leasing  company to
"stay  with  the  lease"  for  potential  extensions,  remarketing  or  sale  of
equipment. This strategy potentially minimizes any conflicts the leasing company
may have with a potential  new lease and will  potentially  assist in maximizing
overall  portfolio   performance.   The  remarketing  fee  is  tied  into  lease
performance thresholds and is factored in the negotiation of the fee.

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  desired  or on terms  considered
reasonable  by the General  Partner.  As of December  31,  2004,  the  aggregate
nonrecourse  debt  outstanding  of $17,000 was 1.3% 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, 2004, 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 on the
same basis, to the fullest extent practicable. The Partnership may, from time to
time,  borrow  funds at rates,  which  vary  with the  "prime"  or "base"  rate,
however,  in such a case, 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.


                                                                               7
<PAGE>

      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,
2004, 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.  During
2002, the  Partnership  refinanced  one of its notes payable.  The note payable,
originally set to expire in February  2004,  currently will expire in June 2006.
Simultaneous  with  the  refinancing,  the  Partnership  entered  into a  Direct
Financing Capital Lease with the lessee for this Equipment.

      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 2006.  Notwithstanding the Partnership's
objective  to sell all of its assets and  dissolve by  December  31,  2006,  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.

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


                                                                               8
<PAGE>

sales agreements,  releasing and leasing-related services,  payment of operating
expenses,   periodic   physical   inspections  and  market  surveys,   servicing
indebtedness secured by Equipment, general supervision of lessees to assure that
they are properly utilizing and operating Equipment,  providing related services
with  respect to  Equipment,  supervising,  monitoring  and  reviewing  services
performed  by others in respect to Equipment  and  preparing  monthly  Equipment
operating statements and related reports.

COMPETITION

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

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

      The dominant  firms in the computer  marketplace  are Dell,  IBM,  Hewlett
Packard,  Sun  Systems  and Cisco.  Because  of the  substantial  resources  and
dominant  position of these  companies,  revolutionary  changes  with respect to
computer systems, pricing, marketing practices, technological innovation and the
availability  of new and  attractive  financing  plans  would occur at any time.
Significant  action  in any of  these  areas  by these  firms  might  materially
adversely affect the  partnerships'  business or the other  manufacturer's  with
whom the General  Partner might  negotiate  purchase and other  agreements.  Any
adverse affect on these  manufacturers  could be reflected in the overall return
realized by the Partnership on equipment from those manufacturers.

INVESTMENTS

      The  Partnership,  through CCC,  participates in the purchase of equipment
subject to associated debt obligations and lease agreements. The purchase price,
list  price  and  monthly  rentals   presented   below  are  the   Partnership's
participation  of the total amounts,  based on CCC's allocation of the equipment
to the Partnership, and in some instances, other affiliated partnerships.

      Through March 29, 2005, the  Partnership  has  purchased,  or has made the
commitment to purchase, the following Equipment:

<TABLE>
<CAPTION>
             LESSEE                    MFG       EQUIPMENT DESCRIPTION   LIST PRICE    PURCHASE    MONTHLY     LEASE
                                                                                        PRICE        RENTAL      TERM
<S>                                   <C>           <C>                    <C>          <C>           <C>         <C>
Xerox Corp.                            SUN          (32) Workstation       $440,800     $ 277,705     $   286     39
Xerox Corp.                            SUN            (4)SPARC2000          590,840       305,875       1,019     39
Fingerhut Corp.                       SIEMEN            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            HP9000/J200           202,680       157,635       4,115     36
Wang Laboratories Inc.                 PYR              NILE 150            937,290       589,287      16,639     36
Chrysler Corp.                         IBM              3745-31A            242,244       184,383       4,203     48
Sprint Communications Co.              STK            (9)9490-M32         1,335,897       703,968      15,501     36
</TABLE>


                                                                               9
<PAGE>

<TABLE>
<S>                                 <C>           <C>                     <C>           <C>            <C>        <C>
Honda R&D                              SGI              4XR10000            400,220       298,094       7,683     36
Sprint Communications Co.              IBM            (2) 3995-133          421,500       286,536      10,166     24
Equitable Life Assurance Co.           LEX             (80) N240            571,351       497,477      11,501     36
Chrysler Corp.                         STK        Tape Lib/Redwd/Timbl    1,693,479       997,891      22,520     36
Equitable Life Assurance Co.           LEX             (16)OPTRA             74,458        94,098       2,615     36
Kaiser                                 IBM         3745-611A/3746-900     2,149,234     1,191,555      29,786     36
Litton                                 SUN              (1)E3000            251,967       148,492       3,771     36
Sprint Communications Co.              SUN             (2)ES5000            371,640       231,551       7,199     30
Computer Science Corp.                 SGI          144Workstations       2,055,893       822,455      21,031     36
Paine Webber                           IBM            (2)9032-003           932,206       455,473      11,060     36
Charles Schwab                         IBM            (6) 9032-003          495,889       307,983       6,989     36
ADP                                    IBM        (3)3490-A20 (1)-B40       579,850       379,682       5,036     36
Lucent                                 SUN          (1) 3000 Server          70,300        45,892       1,181     36
Lucent                                 SUN          (1) 3500 Server          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 ES5000          21,400        14,491         602     25
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
GE Medical                            CISCO             Routers              88,000        58,465       1,565     36
GE Medical                            CISCO             Routers              59,917        35,570         950     35
GE Medical                            CISCO           (6) Routers            34,650        22,976         617     36
Thomson Consumer Electric           Thermojet          SOP System            14,770         9,794         382     24
McLeod Farms                          COMPAQ            Servers              67,175        56,318       1,685     31
Boeing Satellite Systems               SUN       (10)280R Sparclil 750       53,614        53,614       1,409     36
Kaiser                                 IBM             (1) Server             4,864         4,961         385     36
Capital Technology                   Various            Servers              75,687        75,687       2,069   24-36
Capital Technology                   Various            Servers              68,952        68,952       2,021   25-37
America Online                         SUN              Servers             434,387       283,067       7,720     35
GE Medical                             IBM              Printers             10,979        11,199         295     36
Thomson Consumer Electric              LEX         (2)PL4630 Printers        46,547        47,478       1,271     36
Raytheon                              Compaq             Server             215.215       154,103       6,642     24
ITT Night Vision                       Dell           Workstations           33,782        15,790         983     14
ITT Night Vision                       Dell           Workstations           45,071        29,832       1,320     22
Vatterott Educational                 Intel           Workstations           16,257        14,349         467     30
Keller Group                           Dell           Workstations            4,381         4,553         249     17
GE Medical                             Sun              Servers              12,459        10,000         261     36
XTS Corporation                        Dell           Workstations            6,989         5,000         142     36
</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


                                                                              10
<PAGE>

Equipment in an  aggregate  amount that does not exceed 30% of the assets of the
Partnership on the date of the investment;

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

      (c) acquire any Equipment for Units;

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

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

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

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

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

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

EMPLOYEES

      The  Partnership  has no employees and received  administrative  and other
services from a related party,  Commonwealth  Capital Corp. (CCC),  which has 34
employees as of December 31, 2004.

ITEM 2: PROPERTIES

            NOT APPLICABLE

ITEM 3: LEGAL PROCEEDINGS

            On or about May 8, 2000, a complaint captioned  Commonwealth Capital
            Corp V.  Getronics,  Inc.  was filed by  Commonwealth  Capital  Corp
            against Getronics, Inc. (formerly known as Wang Laboratories,  Inc.)
            with  the  Federal   District  Court  of  the  Eastern  District  of
            Pennsylvania,  No.  00-CV-2381  on  behalf of the  Partnership.  The
            complaint  alleges  that the named  defendant  has not  returned the
            proper equipment stated in the master lease agreement and is seeking
            restitution  for lost  monthly  rentals,  taxes,  attorney  fees and
            costs, plus interest.

            CCC was  informed  on or  around  August  30,  2004  that the  judge
            presiding over the case granted  summary  judgment to the defendant.
            It  should  be noted  that  the  judge  had  previously  denied  the
            defendant's motions for summary judgment on two different occasions.
            CCC and our  attorney  feel that the  judgment  appears  faulty in a
            number of areas and we have filed an appeal.  On March 10, 2005, CCC
            filed a reply  brief to the United  States  Court of Appeals for the
            Third


                                                                              11
<PAGE>

            Circuit,  related  to the  case of  Commonwealth  Capital  Corp  vs.
            Gentronics,  Inc.  (F/K/A  Wang  Laboratories,  Inc.).  Commonwealth
            expects a response to the brief on or around July 2005.

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, 2004,  there were 749 holders of Units.  The
Units  are  not  listed  on  any   exchange  or   permitted   to  trade  on  any
over-the-counter  market. In addition, there are substantial restrictions on the
transferability of Units.

GENERAL LIMITATIONS

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

REDEMPTION PROVISION

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


                                                                              12
<PAGE>

      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.  For the twelve  months  ending  December  31, 2004,  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 sub partnership);

      (2) transfers at death;

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

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

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

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

ADDITIONAL RESTRICTIONS ON TRANSFER

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

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

ALLOCATION AND DISTRIBUTION BETWEEN THE GENERAL PARTNER AND THE LIMITED PARTNERS

      Cash  distributions,  if any, are made quarterly on March 31, June 30, and
September 30, and December 31, 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.


                                                                              13
<PAGE>

      The  Priority  Return is  calculated  on the  Limited  Partners'  Adjusted
Capital  Contributions for their Units. The Adjusted Capital  Contributions will
initially  be equal to the amount paid by the Limited  Partners for their Units.
If distributions at any time exceed the Priority Return,  the excess will reduce
the Adjusted  Capital  Contributions,  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 38.6%
federal income tax bracket or, if lower,  the maximum federal income tax rate in
effect for individuals for such taxable year.

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

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

      There were no quarterly  distributions paid to the Limited Partners during
2004, 2003 and 2002.

ALLOCATIONS AND DISTRIBUTIONS AMONG THE LIMITED PARTNERS

      Except during the Offering Period, Cash Available for Distribution that 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


                                                                              14
<PAGE>

      The following table sets forth, in summary form,  selected  financial data
for the  Partnership  as of and for each of the five years in the period  ending
December 31, 2004.  This table is qualified in its entirety by the more detailed
information and financial  statements  presented  elsewhere in this report,  and
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operations" and the financial  statements and
related notes thereto included herein.

                             YEAR ENDED DECEMBER 31,

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Statements of Operations Data:      2004           2003           2002           2001          2000
--------------------------------------------------------------------------------------------------------
<S>                              <C>            <C>            <C>            <C>           <C>
Lease Income                     $   258,552    $   331,958    $   405,772    $   764,635   $ 1,790,339
--------------------------------------------------------------------------------------------------------

Net (Loss) / Income                 (136,479)      (114,587)      (237,111)       170,529      (205,279)
--------------------------------------------------------------------------------------------------------

Cash Distributions                        --             --             --        315,490     1,031,324
--------------------------------------------------------------------------------------------------------

Net (Loss) / Income Per                 (.22)          (.18)          (.38)           .27          (.34)
Limited Partner Unit
--------------------------------------------------------------------------------------------------------

Cash Distribution Per Limited             --             --             --            .50          1.62
Partner Unit
--------------------------------------------------------------------------------------------------------

<CAPTION>

                                                    AS OF DECEMBER 31,
--------------------------------------------------------------------------------------------------------

Other Data:                          2004           2003           2002           2001          2000
--------------------------------------------------------------------------------------------------------
<S>                              <C>            <C>            <C>            <C>           <C>
 Net cash (used in) provided
   by operating activities       $    27,849    ($   64,210)   ($    2,263)   $   256,758   $   513,403
--------------------------------------------------------------------------------------------------------

  Net cash provided by (used
   in) investing activities           16,989         65,181        (10,329)           678       365,210
--------------------------------------------------------------------------------------------------------

  Net cash provided by (used
   in) financing activities               --             --         11,948       (320,931)   (1,031,324)
--------------------------------------------------------------------------------------------------------

<CAPTION>

                                                            AS OF DECEMBER 31,
-------------------------------------------------------------------------------------------------------

                                     2004           2003           2002           2001          2000
-------------------------------------------------------------------------------------------------------

<S>                              <C>            <C>            <C>            <C>           <C>
Total Assets                     $   299,109    $   684,151    $   968,125    $ 1,108,320   $   839,551
-------------------------------------------------------------------------------------------------------

Notes Payable                         17,158        168,343        444,732        500,585        67,647
-------------------------------------------------------------------------------------------------------

Partners' Capital                    (49,906)        86,573        201,160        438,271       583,232
-------------------------------------------------------------------------------------------------------
</TABLE>


                                                                              15
<PAGE>

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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Partnership's discussion and analysis of its financial condition and results
of operations are based upon its financial  statements  which have been prepared
in  accordance  with  accounting  principles  generally  accepted  in the United
States. The preparation of these financial  statements  requires the Partnership
to make  estimates  and  judgments  that affect the reported  amounts of assets,
liabilities,  revenues and  expenses.  The  Partnership  bases its  estimates on
historical  experience and on various other  assumptions that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

The Partnership  believes that its critical  accounting policies affect its more
significant  judgments and estimates  used in the  preparation  of its financial
statements.

COMPUTER EQUIPMENT

CCC, on behalf of the Partnership and other  affiliated  partnerships,  acquires
computer  equipment  subject to associated debt obligations and lease agreements
and allocates a participation in the cost, debt and lease revenue to the various
partnerships based on certain risk factors.

REVENUE RECOGNITION

Through  December  31,  2004,  the  Partnership's   leasing  operations  consist
substantially  of operating  leases and one direct  financing  lease.  Operating
lease revenue is  recognized on a monthly basis in accordance  with the terms of
the lease  agreement.  Unearned  revenue  from direct  financing  agreements  is
amortized to revenue over the lease term.

The Partnership  reviews a customer's credit history before extending credit and
establishes a provision for  uncollectible  accounts  receivable  based upon the
credit risk of specific customers, historical trends and other information.

LONG-LIVED ASSETS

The  Partnership  evaluates its long-lived  assets when events or  circumstances
indicate  that the value of the asset may not be  recoverable.  The  Partnership
determines  whether  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 impairment  exists.  The amount of the
impairment is determined


                                                                              16
<PAGE>

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.

Depreciation on computer equipment for financial  statement purposes is based on
the straight-line method over estimated useful lives of four years.

REIMBURSABLE EXPENSES

Reimbursable expenses, which are charged to the Partnership by CCC in connection
with the administration  and operation of the Partnership,  are allocated to the
Partnership based upon several factors including, but not limited to, the number
of investors, compliance issues, and the number of existing leases.

LIQUIDITY AND CAPITAL RESOURCES

      For the year ended December 31, 2004, the  Partnership  provided cash flow
from operating  activities of $28,000,  which  includes a loss of $136,000,  and
loss  from the  sale of  computer  equipment  of  $13,000,  and was  reduced  by
depreciation and  amortization  expenses of $236,000.  Other noncash  activities
included in the  determination  of the net loss include direct payments of lease
income by lessees to banks of $142,000.

      The  Partnership's  primary sources of capital for the year ended December
31, 2004 was cash from  operations  of $28,000,  and  proceeds  from the sale of
computer  equipment  of $17,000,  $70,000,  and $24,000 in 2004,  2003 and 2002,
respectively. The primary uses of cash for the years ended December 31, 2003 and
2002 were  $64,000  and $2,000,  respectively,  used in  operations  and capital
expenditures for new equipment  totaling $5,000, and $25,000 for the years ended
December 31, 2003 and 2002,  respectively.  There were no distributions  paid in
2004, 2003 and 2002 mainly due to the litigation with Getronics, declining lease
revenues and declining cash from operations.

      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.

      The Partnership's  investment strategy of acquiring computer equipment and
generally  leasing it under  triple-net  leases to operators who generally  meet
specified financial standards minimizes the Partnership's operating expenses. As
of December 31, 2004,  future minimum  rentals on  noncancellable  operating and
capital leases decreased to $30,000, down from $215,000 and $545,000 in 2003 and
2002, respectively, due to the fact that more lease agreements have expired than
new  computer  equipment  leases  acquired in 2003 and 2002.  As of December 31,
2004, the  Partnership had future minimum  rentals on  noncancellable  operating
leases of $12,000 for the year ended 2004 and $5,000 thereafter.  As of December
31, 2004, the Partnership had future minimum rentals on  noncancellable  capital
leases of $9,000 for the year ended 2005 and $3,000 thereafter.  The Partnership
incurred debt in 2002 in the amount of $204,000,  down from $544,000 in 2001. No
debt was incurred in 2004 and 2003. At December 31, 2004, the  outstanding  debt
was $17,000,  with a weighted  average interest rate of 6.5% and will be payable
through June 2006.

      CCC,  on behalf of the  Partnership  and  other  affiliated  partnerships,
acquires  computer  equipment  subject to associated debt  obligations and lease
agreements and allocates a participation  in the cost, debt and lease revenue to
the various  partnerships based on certain risk factors. The Partnership's share
of the  computer  equipment in which they  participate  at December 31, 2004 and
2003 is approximately $399,000 and $448,000,  respectively, which is included in
the Partnership's fixed assets on their balance sheet, and the total cost of the
equipment shared by the Partnership with other partnerships at December 31, 2004
and  2003  was  approximately  $1,743,000  and  $2,258,000,   respectively.  The
Partnership's  share of the  outstanding  debt associated with this equipment at
December 31, 2004 and 2003 is approximately $0 and $96,000, respectively,  which
is included in the Partnership's liabilities on the balance sheet, and the total


                                                                              17
<PAGE>

outstanding  debt at December 31, 2004 and 2003 related to the equipment  shared
by the Partnership was approximately $0 and $537,000, respectively.

      The Partnership has suffered  recurring losses from operations,  declining
cash provided by operating activities,  has not paid partner distributions since
June 2001, has partners' capital of approximately $(51,000) at December 31, 2004
and CCC filed a lawsuit on the  Partnership's  behalf,  alleging  that the named
defendant has not returned the proper leased equipment.

      The lawsuit was  originally  filed in 2000.  CCC was informed on or around
August 30, 2004 that the judge presiding over the case granted summary  judgment
to the defendant.  It should be noted that the judge had  previously  denied the
defendant's motions for summary judgment on two different occasions. CCC and our
attorney feel that the judgment  appears faulty in a number of areas and we have
filed an appeal. On March 10, 2005, CCC filed a reply brief to the United States
Court of Appeals  for the Third  Circuit,  related  to the case of  Commonwealth
Capital Corp vs. Gentronics, Inc. (F/K/A Wang Laboratories,  Inc.). Commonwealth
expects a  response  to the brief on or around  July  2005.  Due to the  ongoing
delays,  the General  Partner  feels that it may be in the best  interest of the
Partnership to start the  liquidation  process in 2005 and run out naturally all
remaining leases in the portfolio,  making  distributions  when possible,  after
expenses have been satisfied.  If the  Partnership's  cash is insufficient  from
operations,  the  General  Partner  and CCC  intend  to pay the  legal  expenses
associated with the lawsuit on behalf on the Partnership.

      The  General  Partner  intends to review and  reassess  the  Partnership's
business plan on a quarterly basis during 2005.

RESULTS OF OPERATIONS

      For the years ended December 31, 2004,  2003 and 2002,  respectively,  the
Partnership recognized income of $334,000,  $383,000, and $443,000, and expenses
of  $471,000,  $498,000,  and  $680,000,  resulting  in a net loss of  $136,000,
$115,000 and 237,000 in 2004, 2003 and 2002, respectively.

      Lease income  decreased  22% to $259,000 in 2004,  down from  $332,000 and
$406,000  in 2003 and 2002,  respectively,  primarily  due to the fact that more
lease agreements  terminated than new lease agreements  entered into since 2002.
As of  January  1,  2002,  the  Partnership  stopped  recording  revenue  on its
Getronics  lease  arrangement.  This is due to the fact that the defendant  (see
Legal  Proceedings  in Part I, Item 3) has not returned the proper  equipment as
defined in the master lease agreement.

      The Partnership sold computer  equipment with a net book value of $30,000,
$19,000,  and $6,000  during the years ended  December 31, 2004,  2003 and 2002,
respectively,  for a net (loss) gain of  $(13,000),  $51,000 and $18,000 for the
years ended December 31, 2004, 2003 and 2002, respectively.

      Operating expenses, excluding depreciation,  consist of accounting, legal,
outside service fees and reimbursement of expenses to CCC for administration and
operation of the Partnership. The operating expenses at December 31, 2004, 2003,
and 2002 totaled approximately $41,000,  $196,000,  and $291,000,  respectively.
Consistent with the decline in lease revenues and lease activities  during 2004,
there was a  decrease  in  reimbursable  expenses  with the  administration  and
operation of the Partnership  charged by CCC, a related party, of  approximately
$73,000, and decreases in legal, accounting,  and due diligence of approximately
$14,000, $12,000, and $10,000 respectively.

      The equipment  management  fee is equal to  approximately  5% of the gross
lease  revenue  attributable  to  equipment,  which is subject to operating  and
capital  leases.  The  equipment  management  fee was $2,000 in 2004,  down from
$17,000 in 2003 and $20,000 in 2002,  which is  consistent  with the decrease in
lease income.

      Interest  expense  decreased to $6,000 in 2004, down from $23,000 in 2003,
down from  $40,000 in 2002,  as a result of some  leases  with  associated  debt
obligations having expired during 2004.


                                                                              18
<PAGE>

      Depreciation and amortization expenses consist of depreciation on computer
equipment,  impairment charges and equipment acquisition fees and debt placement
fees. Depreciation and amortization during 2004 decreased to $235,000, down from
$263,000 and $304,000 in 2003 and 2002, respectively, due to the older equipment
becoming fully depreciated and certain  acquisition and finance fees being fully
amortized and only a minimal amount of new additions.

      The  Partnership  has charged bad debt  expense of $174,000 and $25,000 as
additional  allowances against accounts receivable for the years ending December
31, 2004 and 2002, respectively.  There was no bad debt expense recorded for the
year ending December 31, 2003.

      The  Partnership  identified  specific  computer  equipment and associated
equipment  acquisition  costs,  which  were  reevaluated  due  to  technological
changes. In 2004, the Partnership determined that the carrying amount of certain
assets was greater  than the  undiscounted  cash flows to be  generated by these
assets.  The  Partnership  recorded  charges of $11,000 in the fourth quarter of
2004 to record the assets at their estimated fair value.  Such amounts have been
included in depreciation expense in the accompanying financial statements. There
was no impairment for 2003 and 2002.

NET LOSS

      Net loss increased in 2004 to $136,000,  up from a net loss of $115,000 in
2003, and decreased from $237,000 in 2002.

      The  changes in net income  (loss)  were  attributable  to the  changes in
revenues and expenses as discussed above.

COMMITMENTS AND CONTINGENCIES

      Contractual Cash Obligations

The following table presents our contractual cash obligations as of December 31,
2004:

                                       Total       2005       2006
                                      --------   --------   --------

Installment notes payable due 2005:

     Principal                        $     --   $     --   $     --

     Interest                               --         --         --

Installment notes payable due 2006:

     Principal                          17,158     11,252      5,906

     Interest                              896        784        112
                                      --------   --------   --------

Total                                 $ 18,054   $ 12,036   $  6,018
                                      ========   ========   ========

RECENT ACCOUNTING PRONOUNCEMENTS


                                                                              19
<PAGE>

                              Interpretation No. 46

In January 2003, FASB issued  Interpretation No. 46,  "Consolidation of Variable
Interest Entities" ("Interpretation No. 46"), which clarifies the application of
Accounting  Research Bulletin No. 51,  "Consolidated  Financial  Statements," to
certain entities in which equity investors do not have the  characteristics of a
controlling  financial interest or do not have sufficient equity at risk for the
entity to finance  its  activities  without  additional  subordinated  financial
support from the other parties.  Interpretation No. 46 is applicable immediately
for variable interest entities created after January 31, 2003. In December 2003,
FASB  issued a  revision  to  Interpretation  46 ("FIN  46-R")  to  clarify  the
provisions  of FIN 46.  The  application  of FIN 46-R is  effective  for  public
companies,  other than small business issuers,  after March 15, 2004. Management
believes that the adoption of Interpretation  No. 46-R did not have an impact on
the financial position and results of operations.

ITEM 7.A: 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 and its  associated  fixed
revenue streams.

ITEM 8: FINANCIAL STATEMENTS

      Our financial  statements for the fiscal years ended December 31, 2004 and
2003, and the reports  thereon of Asher and Company,  Ltd. and BDO Seidman,  LLP
respectively, are included in this annual report.

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

      Effective  October  11,  2004,  the  registrant  dismissed  its  principal
independent accounting firm, BDO Seidman, LLP. BDO Seidman, LLP's reports on the
registrant's  financial  statements for the two most recently  completed  fiscal
years did not contain any adverse  opinion or a disclaimer of opinion,  nor were
they  qualified  or  modified  as to  uncertainty,  audit  scope  or  accounting
principles.  The  decision to change  accountants  was  approved by the board of
directors of the registrant's general partner.  During the registrant's two most
recent  fiscal  years  and the  interim  period  prior  to such  dismissal,  the
registrant  had  no  disagreements  with  BDO  Seidman,  LLP 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
BDO Seidman,  LLP,  would have caused BDO Seidman,  LLP to make reference to the
subject  matter of the  disagreements  in connection  with its report.  Further,
during the  registrant's  two most recent  fiscal  years and the interim  period
prior to such dismissal,  there occurred no reportable  events,  as set forth in
Item 304(a)(1)(v) of Regulation S-K.

      The  registrant  has  provided  BDO  Seidman,  LLP  with  a copy  of  this
disclosure on or prior to the date hereof and has requested BDO Seidman,  LLP to
provide the  registrant  with a letter  addressed to the Securities and Exchange
Commission  stating whether it agrees with the statements  contained  herein.  A
copy of such letter will be filed by  amendment to this report when and if it is
received by the registrant.

      Also  effective  October 11, 2004,  the  registrant  has retained  Asher &
Company,  Ltd.  of  Philadelphia,  Pennsylvania  as  its  principal  independent
accounting  firm.  The  registrant  believes  that Asher & Company,  Ltd.  is an
accounting  firm  of a  size  and  scope  of  experience  better  suited  to the
registrant's current needs than the registrant's former accounting firm.

      During our two most recent fiscal years,  we have not consulted with Asher
& Company,  Ltd. on any matter that (i) involved the  application  of accounting
principles to a specific completed or contemplated


                                                                              20
<PAGE>

transaction,  or the  type of  audit  opinion  that  might  be  rendered  on our
financial  statements,  in each case where  written or oral advice was provided,
that was an important  factor  considered by us in reaching a decision as to the
accounting,  auditing  or  financial  reporting  issue;  or (ii) was  either the
subject  of a  disagreement  or  event,  as  that  term  is  described  in  item
304(a)(1)(iv)(A) of Regulation S-X.

ITEM 9A: CONTROLS AND PROCEDURES

      Our management,  under the supervision and with the  participation  of the
principal  executive  officer and principal  financial offer, have evaluated the
effectiveness  of our  controls  and  procedures  related to our  reporting  and
disclosure  obligations as of December 31, 2004,  which is the end of the period
covered  by this  Annual  Report on Form  10-K.  Based on that  evaluation,  the
principal  executive officer and principal financial officer have concluded that
our  disclosure  controls  and  procedures  are  sufficient  to provide that (a)
material information relating to us, including our consolidated subsidiaries, is
made known to these  officers  by our and our  consolidated  subsidiaries  other
employees,  particularly  material  information  related to the period for which
this periodic  report is being prepared;  and (b) this  information is recorded,
processed,  summarized,  evaluated and reported, as applicable,  within the time
periods  specified  in the rules and forms  promulgated  by the  Securities  and
Exchange Commission.

ITEM 9B: OTHER INFORMATION

      NOT APPLICABLE

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

GENERAL

      The Partnership does not have any Directors or executive officers.

      The  General  Partner,  a  wholly  owned  subsidiary  of  Commonwealth  of
Delaware,  Inc.,  a  Delaware  corporation,  which  is in  turn  a  wholly-owned
subsidiary of CCC, a Pennsylvania corporation,  was incorporated in Pennsylvania
on August 26, 1993.  The General  Partner  also acts as the General  Partner for
Commonwealth  Income and Growth Fund II, Commonwealth Income and Growth Fund III
and Commonwealth Income and Growth Fund IV. The principal business office of the
General  Partner is 470 John Young Way,  Suite  300,  Exton,  PA 19341,  and its
telephone number is  610-594-9600.  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 CCC
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
                           CCC

Kimberly A. Springsteen    Executive Vice President, Chief Operating Officer and Secretary of the General
                           Partner and CCC

Henry J. Abbott            Senior Vice President, Director and Portfolio Manager of the General
                           Partner & CCC

Jay Dugan                  Senior Vice President & IT Manager of the General Partner & CCC

Lynn A. Franceschina       Vice President and Controller of the General Partner and CCC

Donald Bachmayer           Assistant Vice President and Accounting Manager of the General Partner and CCC

Dorothy A. Ferguson        Assistant Vice President & Compliance Manager of the General Partner & CCC

Karen Tramontano           Assistant Vice President & Marketing Manager of the General Partner & CCC

David Borham               Assistant Vice President & Investor Relations Manager of the General
                           Partner & CCC
</TABLE>


                                                                              21
<PAGE>

      George S.  Springsteen,  age 70, is  President of both CCC and the General
Partner.   Mr.  Springsteen  is  also  President  of  the  general  partners  or
controlling  entities of several prior programs sponsored by CCC with objectives
similar to the  Partnership's.  He has been the sole shareholder and director of
CCC 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 CCC in
May of 1978.  Mr.  Springsteen  received a Bachelor  of Science  degree from the
University of Delaware in 1957.  (Mr.  Springsteen  is the spouse of Kimberly A.
Springsteen.)

      Kimberly  A.  Springsteen,  age 45, is  Executive  Vice  President,  Chief
Operating Officer and Secretary of CCC and the General Partner and joined CCC in
1997. She is also the President of Commonwealth  Capital  Securities  Corp. From
1980 to 1997, Ms.  Springsteen was employed with Wheat First Butcher  Singer,  a
broker/dealer headquartered in Richmond,  Virginia. While at Wheat First Butcher
Singer, Ms. Springsteen,  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.
Springsteen  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. (Ms. Springsteen is the spouse
of George S. Springsteen.)

      Henry J. Abbott, age 54, is Senior Vice President and Portfolio Manager of
CCC and has been  employed by CCC 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 CCC 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.

      Jay Dugan,  age 56, is Senior Vice  President and  Information  Technology
Manager of the General  Partner and CCC and has been employed by CCC since 2002.
Mr. Dugan is responsible for computer  network and  information  systems for the
General  Partner  and its  affiliates.  Mr.  Dugan was a  registered  securities
representative from 1988 until 1998. During that period, Mr. Dugan founded First
Securities  USA, a NASD member firm,  and operated that firm through 1998.  From
1999 until  joining CCC in 2002,  Mr.  Dugan was an  independent  due  diligence
consultant.


                                                                              22
<PAGE>

      Lynn A.  Franceschina,  age 33, is Vice  President  and  Controller of the
General Partner and CCC and certain of its  subsidiaries  after returning to the
organization  in 2004.  From the  period  of March  2004 to  October  2004,  Ms.
Franceschina  was employed at Wilmington  Trust Corp.  where she was part of the
policies & procedures team  responsible for Sarbanes Oxley  documentation.  From
November  2001 to  February  2004,  Ms.  Franceschina  was  Vice  President  and
Accounting   Manager  of  the  General  Partner  and  CCC  and  certain  of  its
subsidiaries.  Prior to that,  Ms.  Franceschina  served  as  Business  Controls
Manager for Liquent,  Inc.,  a regulatory  publishing  software  developer.  Ms.
Franceschina  received a Bachelor of Science  degree in  Accounting  from Robert
Morris University.  Ms.  Franceschina is a member of the Institute of Management
Accountants and the Equipment Leasing Association.

      Donald  Bachmayer,  age 40, is Assistant  Vice  President  and  Accounting
Manager of the General Partner and CCC and certain of its subsidiaries  where he
has been employed since 2004. From 1997 to 2001, Mr. Bachmayer was an accountant
with Fishbein & Company,  P.C.,  certified public accountants.  Prior to joining
Commonwealth,  Mr.  Bachmayer  was employed as  Accounting  Supervisor  for LEAF
Financial, an equipment leasing sponsor. Mr. Bachmayer received a B.S. degree in
Accounting from LaSalle University.

      Dorothy A.  Ferguson,  age 62, is Assistant  Vice President of CCC and has
been employed by CCC 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.

      Karen  Tramontano,  age 52,  Assistant Vice President & Marketing  Manger,
joined  Commonwealth  in 2000,  brining with her over a decade of  experience of
international  marketing and customer  relations.  Ms. Tramontano is responsible
for the generation and distribution of all marketing materials for the Manager's
investment programs.  Prior to joining Commonwealth,  Ms. Tramontano served from
1973 to 1983 as executive  liaison to the President of V&V  Noordland,  Inc., an
international  commercial  company,  and served as an office manager for a small
business in Florida from 1998 to 2000. Ms. Tramontano coordinates Commonwealth's
home office marketing  department,  which serves our broker dealer community and
registered  representatives  across the country. Ms. Tramontano attended Suffolk
College in New York, with a Major in Advertising/Promotion.

      David Borham, age 27, Assistant Vice President & Marketing Manager, joined
Commonwealth in 2000,  bringing with him 2 years of Customer Service experience.
Mr. Borham holds a Series 22 NASD license and is responsible  for the management
of investor database  maintenance and all investor inquiries and correspondence.
Prior to  joining  Commonwealth,  Mr.  Borham  served  as a  Customer  Relations
Representative  in the food service  industry for Dilworth Town Inn from 1996 to
2000. Mr. Borham attended Delaware County Community College.  (Mr. Borham is the
son of Kimberly A. Springsteen.)

      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.

      The Partnership has no audit committee  financial expert, as defined under
Section 229.401 of the Exchange Act,  serving on its audit  committee.  An audit
committee is not required  because the  Partnership is not a listed  security as
defined by Section 240.10A-3;  therefore, no audit committee financial expert is
required.

CODE OF ETHICS


                                                                              23
<PAGE>

      In view of the fiduciary  obligation  that the General  Partner has to the
Partnership, the General Partner believes an adoption of a formal code of ethics
is unnecessary and would not benefit the Partnership,  particularly, in light of
Partnership's limited business activities.

ITEM 11: EXECUTIVE COMPENSATION

      The Partnership does not have any Directors or executive officers.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      NONE

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      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  that  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 RECEIVING                                                  INCURRED        INCURRED         INCURRED
     COMPENSATION                 TYPE OF COMPENSATION             DURING 2004      DURING 2003      DURING 2002
<S>                     <C>                                            <C>             <C>              <C>
The General Partner     Equipment Acquisition Fee. An Equipment        $0              $1,000           $9,000
                        Acquisition  Fee of four percent of the
                        Purchase   Price   of   each   item  of
                        Equipment purchased as compensation for
                        the  negotiation of the  acquisition of
                        the  Equipment and the lease thereof or
                        sale   under   a   Conditional    Sales
                        Contract.  The fee was paid  upon  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.
</TABLE>


                                                                              24
<PAGE>

<TABLE>
<S>                     <C>                                             <C>             <C>              <C>
The General Partner     Reimbursable   Expenses.   The  General         $22,000         $194,000         $280,000
and its Affiliates      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   of   certain   expenses
                        incurred by the General Partner and its
                        affiliates  in   connection   with  the
                        administration  and  operation  of  the
                        Partnership.  The  amounts set forth on
                        this  table  do  not  include  expenses
                        incurred in the offering of Units.


The General Partner     Debt Placement Fee. As compensation for            $0              $0             $2,000
                        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 Partner     Equipment Management Fee. A monthly fee         $2,000          $17,000          $20,000
                        equal  to the  lesser  of (i) the  fees
                        which    would   be   charged   by   an
                        independent  third  party  for  similar
                        services for similar  equipment or (ii)
                        the sum of (a) two  percent  of (1) the
                        Gross Lease  Revenues  attributable  to
                        Equipment  which  is  subject  to  Full
                        Payout Net  Leases  which  contain  Net
                        Lease  provisions plus (2) the purchase
                        price   paid   on   Conditional   Sales
                        Contracts    as    received    by   the
                        Partnership and (b) five percent of the
                        Gross Lease  Revenues  attributable  to
                        Equipment which is subject to Operating
                        Leases.

The General Partner     Re-Lease  Fee.  As   Compensation   for            $0              $0               $0
                        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  Re-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 Partner     Equipment Liquidation Fee. With respect           $500           $2,000           $1,000
                        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.
                        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.
</TABLE>


                                                                              25
<PAGE>

<TABLE>
<S>                     <C>                                                <C>             <C>              <C>
The General Partner     Partnership   Interest.   The   General            $0              $0               $0
                        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>

      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 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

      CCC 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 CCC,  the General  Partner or such other  Affiliate as disclosed in this
Report. CCC, 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.  CCC, the General  Partner or such other  Affiliate will retain any
rent or other  payments  received for the  Equipment,  and bear all expenses and


                                                                              26
<PAGE>

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 CCC.

      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 Partner or such affiliates shall receive
no greater  interest rate and financing  charges from the Partnership  than that
which unrelated  lender charge on comparable  loans.  The  Partnership  will not
borrow  money from the General  Partner or any of its  affiliates  for a term in
excess of twelve months.

      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  than  equipment
Programs formed by the General Partner or its Affiliates,  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-Affiliate, and
(iii) there are no duplicate  fees; and (b) the  Partnership may invest in joint
venture arrangements with other equipment Programs formed by the General Partner
or its  Affiliates if such action is in the best interest of all Programs and if
all the following  conditions  are met: (i) all the Programs have  substantially
identical  investment  objectives;  (ii) there are no duplicate fees;  (iii) the
sponsor  compensation  is  substantially  identical  in each  Program;  (iv) the
Partnership has a right of first refusal to buy another Program's  interest in a
joint venture if the other Program  wishes to sell  equipment  held in the joint
venture;  (v) the investment of each Program is on substantially  the same terms
and  conditions;  and (vi) the joint venture is formed either for the purpose of
effecting  appropriated  diversification  for the Programs or for the purpose of
relieving the General Partner or its Affiliates  from a commitment  entered into
pursuant to certain provisions of the Partnership Agreement.

GLOSSARY

      The following terms used in this Report shall (unless otherwise  expressly
provided herein or unless the context otherwise  requires) have the meanings set
forth below.

"Acquisition  Expenses" means expenses relating to the prospective selection and
acquisition  of or  investment in Equipment by the  Partnership,  whether or not
actually  acquired,  including,  but not  limited to,  legal fees and  expenses,
travel and  communication  expenses,  costs of  appraisal,  accounting  fees and
expenses and other related expenses.

"Acquisition Fees" means the total of all fees and commissions paid by any party
in  connection  with  the  initial   purchase  of  Equipment   acquired  by  the
Partnership.  Included in the  computation of such fees or commissions  shall be
the Equipment  Acquisition Fee and any commission,  selection fee,  construction
supervision  fee,  financing fee,  non-recurring  management fee or any fee of a
similar nature, however designated.


                                                                              27
<PAGE>

"Adjusted  Capital  Contributions"  means Capital  Contributions  of the Limited
Partners  reduced by any cash  distribution  received  by the  Limited  Partners
pursuant to the Partnership  Agreement,  to the extent such distributions exceed
any unpaid Priority Return as of the date such distributions were made.

"Affiliate"  means,  when used with  reference  to a specified  Person,  (i) any
person, that directly or indirectly through one or more intermediaries  controls
or is controlled by or is under common control with the specified  Person,  (ii)
any Person that is a director or an executive  officer of, partner in, or serves
in a similar  capacity  to,  the  specified  Person,  or any Person of which the
specified Person is an executive officer or partner or with respect to which the
specified  Person  serves in a similar  capacity,  (iii)  any  Person  owning or
controlling 10% or more of the outstanding  voting  securities of such specified
Person,  or (iv) if such Person is an officer,  director or partner,  any entity
for which such Person acts in such capacity.

"Capital  Account" means the bookkeeping  account  maintained by the Partnership
for each Partner.

"Capital  Contributions"  means in the case of the  General  Partner,  the total
amount of money  contributed to the Partnership by the General  Partner,  and in
the case of Limited Partners,  $20 for each Unit, or where the context requires,
the total Capital Contributions of all the Partners.

"Capital  Leases" are leases under which the Equipment  either  transfers to the
lessee at the end of the lease term,  contains a bargain  purchase price option,
the lease  term is equal to 75% or more of the  estimated  economic  life of the
Equipment,  or the  present  value at the  beginning  of the  lease  term of the
minimum  lease  payments  is equal to or  exceeds  90% of the excess of the fair
value of the Equipment.

"Cash Available for Distribution" means Cash Flow plus Net Disposition  Proceeds
plus cash funds available for distribution from Partnership reserves,  less such
amounts as the General  Partner,  in accordance with the Partnership  Agreement,
causes the Partnership to reinvest in Equipment or interests  therein,  and less
such amounts as the General Partner,  in its sole discretion,  determines should
be set aside for the restoration or enhancement of Partnership reserves.

"Cash  Flow"  for any  fiscal  period  means the sum of (i) cash  receipts  from
operations,  including,  but not limited to, rents or revenues  arising from the
leasing or operation of the Equipment and interest,  if any,  earned on funds on
deposit for the Partnership,  but not including Net Disposition Proceeds,  minus
(ii) all cash  expenses  and  costs  incurred  and paid in  connection  with the
ownership, lease, management, use and/or operation of the Equipment,  including,
but not limited to, fees for handling and storage;  all interest  expenses  paid
and all repayments of principal  regarding borrowed funds;  maintenance;  repair
costs;  insurance  premiums;  accounting  and  legal  fees  and  expenses;  debt
collection expenses; charges,  assessments or levies imposed upon or against the
Equipment;  ad valorem,  gross  receipts and other property taxes levied against
the  Equipment;  and all  costs of  repurchasing  Units in  accordance  with the
Partnership Agreement; but not including depreciation or amortization of fees or
capital expenditures, or provisions for future expenditures,  including, without
limitation, Organizational and Offering Expenses.

"Closing Date" means May 11, 1995.

"Code"  means the  Internal  Revenue  Code of 1986,  as  amended,  and as may be
amended from tine to time by future federal tax statutes.

"Competitive  Equipment  Sale  Commission"  means  that  brokerage  fee paid for
services rendered in connection with the purchase or sale of Equipment, which is
reasonable,  customary, and competitive in light of the size, type, and location
of the Equipment.

"Conditional  Sales Contract" means an agreement to sell Equipment to a buyer in
which the seller  reserves  title to, and  retains a security  interest  in, the
Equipment until the Purchase Price of the Equipment is paid.

"Effective  Date" means December 17, 1993,  the date on which the  Partnership's
Registration  Statement on Form S-1 was declared  effective by the United States
Securities and Exchange Commission.


                                                                              28
<PAGE>

"Equipment"  means  each item of and all of the  computer  peripheral  and other
similar  capital  equipment  purchased,  owned,  operated,  and/or leased by the
Partnership  or in which the  Partnership  has  acquired  a direct  or  indirect
interest,  together  with  all  appliances,  parts,  instruments,   accessories,
furnishings,   or  other  equipment  included  therein  and  all  substitutions,
renewals,  or replacements of, and all additions,  improvements,  and accessions
to, any and all thereof.

"Full Payout Net Lease" means an initial Net Lease of the Equipment  under which
the  non-cancelable  rental  payments  due (and which can be  calculated  at the
commencement of the Net Lease) during the initial  noncancelable fixed term (not
including any renewal or extension period of the lease or other contract for the
use of the Equipment)  are at least  sufficient to recover the Purchase Price of
the Equipment.

"General  Partner"  means  Commonwealth  Income  &  Growth  Fund,  Inc.  and any
additional, substitute or successor general partner of the Partnership.

"Gross Lease  Revenues" means  Partnership  gross receipts from leasing or other
operation of the  Equipment,  except  that,  to the extent the  Partnership  has
leased the Equipment  from an  unaffiliated  party,  it shall mean such receipts
less any lease expense.

"IRS" means the Internal Revenue Service.

"Limited  Partner"  means a person who acquires Units and who is admitted to the
Partnership as a limited partner in accordance with the terms of the Partnership
Agreement.

"Majority in Interest" means, with respect to the Partnership,  Limited Partners
holding more than 50% of the outstanding  Units held by all Limited  Partners at
the Record Date for any vote or consent of the Limited Partners.

"Minimum Subscription Amount" means an aggregate of $2,500,000 in Subscriptions.

"Net  Dispositions  Proceeds" means the net proceeds realized by the Partnership
from  the  refinancing,  sale  or  other  disposition  of  Equipment,  including
insurance  proceeds  or  lessee  indemnity  payments  arising  from  the loss or
destruction of Equipment,  less such amounts as are used to satisfy  Partnership
liabilities.

"Net  Lease"  means a lease or other  contract  under  which the owner  provides
equipment to a lessee or other operator in return for a payment,  and the lessee
assumes all  obligations  and pays for the operation,  repair,  maintenance  and
insuring of the equipment.

"Net  Profits" or "Net  Losses"  shall be computed in  accordance  with  Section
703(a) of the Code  (including  all items of  income,  gain,  loss or  deduction
required to be stated separately pursuant to Section 703(a) (1) of the Code) for
each  taxable  year of the  Partnership  or shorter  period  prior to an interim
closing of the  Partnership's  books  with the  following  adjustments:  (I) any
income  of the  Partnership  that is  exempt  from  federal  income  tax and not
otherwise  taken into account in computing  Net Profits and Net Loss pursuant to
this  definition  shall be added to such  taxable  income or shall  reduce  such
taxable loss; (ii) any expenditure of the Partnership  described in Code Section
705(a) (2) (B) or treated as Code Section 705(a) (2) (B)  expenditures  pursuant
to Treasury  Regulations section 1.704-1(b) (2) (iv) (i) and not otherwise taken
into account in computing Net Profits and Net Losses pursuant to this definition
shall be  subtracted  from such taxable  income or loss;  (iii) items of income,
gain,  loss and  deduction  specially  allocated  pursuant to Section 7.3 of the
Partnership Agreement shall not be included in the computation of Net Profits or
Net Loss; and if property is reflected on the books of the Partnership at a book
value that differs  from the  adjusted  tax basis of the property in  accordance
with Treasury  Regulation Section 1.704-1(b) (2) (iv) (d) or (f),  depreciation,
amortization, and gain or loss with respect to such property shall be determined
by reference to such book value in a manner consistent with Treasury  Regulation
Section  1.704-1(b)  (2) (iv) (g). The terms "Net Profit" or "Net Losses"  shall
include  the  Partnership's  distributive  share  of the  profit  or loss of any
partnership or joint venture in which it is a partner or joint venturer.


                                                                              29
<PAGE>

"Offering" means the initial public offering of Units in the Partnership.

"Offering  Period" means the period commencing the Effective Date and ending the
last day of the calendar month in which the Closing Date occurs.

"Operating Distributions" means the quarterly distributions made to the Partners
pursuant to Article 8 of the Partnership Agreement.

"Operating Lease" means a lease or other contractual  arrangement under which an
unaffiliated  party agrees to pay the Partnership,  directly or indirectly,  for
the use of the Equipment, and which is not a Full Payout Net Lease.

"Organizational and Offering Expenses" means the expenses incurred in connection
with the  organization  of the  Partnership  and in preparation of the Offering,
including  Underwriting  Commissions,  listing  fees  and  advertising  expenses
specifically incurred in connection with the distribution of the Units.

"Partner(s)"  means  any one or  more of the  General  Partner  and the  Limited
Partners.

"Partnership" means Commonwealth Income & Growth Fund I, a Pennsylvania  limited
partnership.

"Partnership Agreement" means that Limited Partnership Agreement of Commonwealth
Income  &  Growth  Fund I by and  among  the  General  Partner  and the  Limited
Partners, pursuant to which the Partnership is governed.

"Person" means an individual,  partnership,  limited  liability  company,  joint
venture, corporation, trust, estate or other entity.

"Priority  Return" means an amount equal to a return at a rate of 10% per annum,
compounded  daily,  on the Adjusted  Capital  Contribution  for all  outstanding
Units,  which amount shall begin accruing at the end of the calendar  quarter in
which such Units are sold by the Partnership.

"Proceeds" means proceeds from the sale of the Units.

"Program" means a limited or general partnership, joint venture,  unincorporated
association  or  similar  organization,  other  than a  corporation  formed  and
operated for the primary  purpose of  investment in and the operation of or gain
from an interest in Equipment.

"Purchase  Price" means,  with respect to any Equipment,  an amount equal to the
sum of (i) the invoice  cost of such  Equipment or any other such amount paid to
the seller,  (ii) any closing,  delivery  and  installation  charges  associated
therewith  not  included  in such  invoice  cost and paid by or on behalf of the
Partnership, (iii) the cost of any capitalized modifications or upgrades paid by
on or  behalf  of  the  Partnership  in  connection  with  its  purchase  of the
Equipment,  and (iv) solely for  purposes of the  definition  of Full Payout Net
Lease,  the amount of the Equipment  Acquisition  Fee and any other  Acquisition
Fees.

"Retained  Proceeds"  means Cash  Available for  Distribution,  which instead of
being distributed to the Partners is retained by the Partnership for the purpose
of acquiring or investing in Equipment.

"Term  Debt"  means  debt of the  Partnership  with a term in  excess  of twelve
months,  incurred  with  respect to acquiring  or  investing  in  Equipment,  or
refinancing  non-Term  Debt,  but not debt incurred with respect to  refinancing
existing Partnership Term Debt.

"Unit" means a Limited Partnership interest in the Partnership.

ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES


                                                                              30
<PAGE>

AUDIT FEES

The aggregate  fees billed for each of the fiscal years ended  December 31, 2004
and 2003 for professional  services rendered by the principal accountant for the
audit of our annual financial  statements and review of the financial statements
included  in our  Form  10-Q or  services  that  are  normally  provided  by the
accountant in connection  with statutory and  regulatory  filings or engagements
for those fiscal years were $3,000 and $14,000, respectively.

AUDIT-RELATED FEES

The aggregate  fees billed in the fiscal years ended  December 31, 2004 and 2003
for  assurance  and  related  services  by the  principal  accountant  that  are
reasonably related to the performance of the audit or review of the registrant's
financial  statements and are not reported under the paragraph  captioned "Audit
Fees" above are $0 and $0, respectively.

TAX FEES

The aggregate  fees billed in the fiscal years ended  December 31, 2004 and 2003
for  professional   services  rendered  by  the  principal  accountant  for  tax
compliance, tax advice and tax planning were $0 and $0, respectively.

ALL OTHER FEES
The aggregate  fees billed in the fiscal years ended  December 31, 2004 and 2003
for products and services provided by the principal  accountant,  other than the
services  reported  above  under  other  captions of this Item 14 are $0 and $0,
respectively.

PRE-APPROVAL POLICIES AND PROCEDURES

All audit related services, tax planning and other services were pre-approved by
the General Partner,  which concluded that the provision of such services by the
Partnership's  auditors  was  compatible  with the  maintenance  of that  firm's
independence in the conduct of its auditing functions. The policy of the General
Partner provides for  pre-approval of these services and all audit related,  tax
or other services not prohibited under Section 10A(g) of the Securities Exchange
Act of 1934,  as amended to be  performed  for us by our  independent  auditors,
subject to the de minimus  exception  described in Section  10A(i)(1)(B)  of the
Exchange  Act.  on an annual  basis and on  individual  engagements  if  minimum
thresholds are exceeded.

The  percentage of  audit-related,  tax and other services that were approved by
the board of directors is zero (-0-).

PART IV

ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1)  Financial Statements


<TABLE>
<S>                                                                                              <C>
         Report of Independent Registered Public Accounting Firm                                  1

         Report of Independent Registered Public Accounting Firm                                  2

         Balance Sheets as of December 31, 2004 and 2003                                         3-4

         Statements of  Operations  for December 31, 2002 through the year ended
           December 31, 2004                                                                      5
</TABLE>


                                                                              31
<PAGE>

<TABLE>
<S>                                                                                               <C>
         Statements of Partners' Capital (Deficit) for the years ended December 31, 2004
            and 2003                                                                               6

         Statements of Cash Flows for December 31, 2002 through the year ended December 31, 2004  7-8

         Notes to Financial Statements                                                            9-21
</TABLE>

(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. 333-69996)

(b) Reports on Form 8-K

(c) Exhibits:

      31.1 Rule  13a-14(a)/15d-14(a)  Certifications by the Principal  Executive
Officer

      31.2 Rule  13a-14(a)/15d-14(a)  Certifications by the Principal  Financial
Officer

      32 Section 1350  Certifications  by the  Principal  Executive  Officer and
Principal Financial Officer

                                   SIGNATURES

      Pursuant to the  requirements of Section 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf March 30, 2005 by the undersigned thereunto duly authorized.

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


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

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities indicated on March 30, 2005.


                                                                              32
<PAGE>

SIGNATURE                                            CAPACITY


/s/ GEORGE S. SPRINGSTEEN           Chairman, President and Sole Director of
-------------------------           Commonwealth Income & Growth Fund, Inc.
George S. Springsteen


/s/ KIMBERLY A. SPRINGSTEEN         Executive Vice President, Chief Operating
---------------------------         Officer and Secretary
Kimberly A. Springsteen


                                                                              33

<PAGE>


 Report of Independent Registered Public Accounting Firm                1

 Report of Independent Registered Public Accounting Firm                2

 Financial statements
     Balance sheets                                                   3-4
     Statements of operations                                           5
     Statements of partners' capital (deficit)                          6
     Statements of cash flows                                         7-8

 Notes to financial statements                                       9-21

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

The Partners
Commonwealth Income & Growth Fund I
Exton, Pennsylvania

We have audited the accompanying balance sheet of Commonwealth Income & Growth
Fund I (the "Partnership") as of December 31, 2004 and the related statements of
operations, Partners' capital and cash flows for the year then ended. 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 the standards of the Public Company
Accounting Oversight Board (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 as of December 31, 2004 and the results of its operations and its cash
flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 2 to the financial  statements,  Commonwealth Capital Corp.
("CCC"), on behalf of the Partnership, initiated a lawsuit against a lessee. Due
to the ongoing delays in this proceeding,  the General Partner feels that it may
be in the best interest of the Partnership to start the  liquidation  process in
2005  and run out  naturally  all  remaining  leases  in the  portfolio,  making
distributions  when  possible,  after  expenses  have  been  satisfied.  If  the
Partnership's cash is insufficient from operations,  the General Partner and CCC
intend to pay the legal  expenses  associated  with the lawsuit on behalf of the
Partnership.   The  General   Partner   intends  to  review  and   reassess  the
Partnership's business plan on a quarterly basis during 2005.

/s/ Asher & Company, Ltd.

Philadelphia, Pennsylvania
March 29, 2005






                                                                               1
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners
Commonwealth Income & Growth Fund I
Exton, Pennsylvania

We have audited the accompanying balance sheets of Commonwealth Income & Growth
Fund I as of December 31, 2003 and the related statements of operations,
partners' capital, and cash flows for each of the two years in the period ended
December 31, 2003. 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
audits 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.

As described in Notes 2 and 9, Commonwealth Capital Corp, on behalf of the
Partnership, has initiated a lawsuit against a lessee. Due to the ongoing delays
in this proceeding, the General Partner feels that it may be in the best
interest of the Partnership to begin the liquidation process and, if necessary,
transfer the lawsuit and the related lease receivable to a trust on behalf of
the Partnership.

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, 2003 and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 2003, in conformity
with accounting principles generally accepted in the United States.


                                                   /s/ BDO Seidman, LLP

Philadelphia, Pennsylvania
March 12, 2004




                                                                               2
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                                  Balance Sheets
================================================================================
<TABLE>
<CAPTION>
December 31,                                                                  2004           2003
-------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>
Assets

Cash and cash equivalents                                              $    46,246    $     1,409
Lease income receivable, net of reserves of $473,578 and $299,578 at
     December 31, 2004 and 2003, respectively                               95,496        250,764
Net investment in direct financing lease                                    13,551         22,585
Other receivables and deposits                                                  --            200
-------------------------------------------------------------------------------------------------

                                                                           155,293        274,958
-------------------------------------------------------------------------------------------------

Computer equipment, at cost                                              1,345,200      2,610,749
Accumulated depreciation                                                (1,201,517)    (2,210,289)
-------------------------------------------------------------------------------------------------

                                                                           143,683        400,460
-------------------------------------------------------------------------------------------------

Equipment acquisition costs and deferred expenses, net of
     accumulated amortization of $928 and $34,127, at
     December 31, 2004 and 2003, respectively                                  133          8,733
-------------------------------------------------------------------------------------------------

Total assets                                                           $   299,109    $   684,151
=================================================================================================
</TABLE>



                                                                               3
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                                  Balance Sheets
================================================================================

December 31,                                                  2004        2003
------------------------------------------------------------------------------

Liabilities and Partners' Capital (Deficit)

Liabilities
     Accounts payable                                    $   8,620    $  2,097
     Accounts payable, General Partner                     229,840     261,756
     Accounts payable, Commonwealth Capital Corp.            2,886      21,220
     Accounts payable, affiliated limited partnerships      71,528     124,393
     Unearned lease income                                  18,983      19,769
     Notes payable                                          17,158     168,343
------------------------------------------------------------------------------

Total liabilities                                          349,015     597,578
------------------------------------------------------------------------------

Partners' capital (deficit)
     General Partner                                         1,000       1,000
     Limited partners                                      (50,906)     85,573
------------------------------------------------------------------------------

Total partners' capital (deficit)                          (49,906)     86,573
------------------------------------------------------------------------------

Total liabilities and partners' capital (deficit)        $ 299,109    $684,151
==============================================================================

                                 See accompanying notes to financial statements.



                                                                               4
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                        Statements of Operations
================================================================================
<TABLE>
<CAPTION>
Years ended December 31,                                              2004         2003         2002
----------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>          <C>
Income
     Lease                                                       $ 258,552    $ 331,958    $ 405,772
     Interest and other                                             75,977           21       19,334
     Gain on sale of computer equipment                                 --       51,374       17,628
----------------------------------------------------------------------------------------------------

Total income                                                       334,529      383,353      442,734
----------------------------------------------------------------------------------------------------

Expenses
     Operating, excluding depreciation                              40,501      195,617      290,736
     Equipment management fee, General Partner                       2,302       16,598       20,289
     Interest                                                        5,817       22,999       39,803
     Depreciation                                                  227,137      246,000      287,151
     Amortization of equipment acquisition costs, and deferred
         expenses                                                    8,600       16,726       17,301
     Provision for uncollectible lease income receivable           174,000           --       24,565
     Loss on sale of equipment                                      12,651           --           --
----------------------------------------------------------------------------------------------------

Total expenses                                                     471,008      497,940      679,845
----------------------------------------------------------------------------------------------------

Net loss                                                         $(136,479)   $(114,587)   $(237,111)
====================================================================================================

Net loss per equivalent limited partnership unit                 $    (.22)   $    (.18)   $    (.38)

Weighted average number of equivalent
     limited partnership units outstanding during the year         631,124      631,124      631,124
====================================================================================================
</TABLE>

                                 See accompanying notes to financial statements.


                                                                               5
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                       Statements of Partners' Capital (Deficit)
================================================================================
<TABLE>
<CAPTION>
                              General     Limited
                              Partner     Partner     General     Limited
                               Units       Units      Partner    Partners       Total
---------------------------------------------------------------------------------------
<S>                                 <C>    <C>       <C>         <C>          <C>
Balance, December 31, 2001          50     631,124   $   1,000   $ 437,271    $ 438,271

Net (loss)                          --          --          --    (237,111)    (237,111)

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

Balance, December 31, 2002          50     631,124       1,000     200,160      201,160

Net (loss)                          --          --          --    (114,587)    (114,587)
---------------------------------------------------------------------------------------

Balance, December 31, 2003          50     631,124       1,000      85,573       86,573

Net (loss)                          --          --          --    (136,479)    (136,479)
---------------------------------------------------------------------------------------

Balance, December 31, 2004          50     631,124   $   1,000   $ (50,906)   $ (49,906)
=======================================================================================
</TABLE>

                                 See accompanying notes to financial statements.



                                                                               6
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                        Statements of Cash Flows
================================================================================
<TABLE>
<CAPTION>
Years ended December 31,                                          2004         2003         2002
------------------------------------------------------------------------------------------------
<S>                                                          <C>          <C>          <C>
Cash flows from operating activities
     Net loss                                                $(136,479)   $(114,587)   $(237,111)
     Adjustments to reconcile net loss to net
         cash (used in) provided by operating activities
              Depreciation and amortization                    235,738      262,726      304,452
              (Gain) Loss on sale of computer
                  equipment                                     12,651      (51,374)     (17,628)
              Provision for uncollectible lease income
              receivable                                       174,000           --       24,565
              Other noncash activities included in
                  determination of net (loss)                 (142,151)    (267,354)    (273,464)
              Changes in assets and liabilities
                      Lease income receivable                  (18,732)        (623)      26,250
                      Other receivables                            200           --           --
                      Accounts payable                           6,523       (3,087)     (24,829)
                      Accounts payable, General
                           Partner                             (31,916)     108,643      123,189
                      Accounts payable,
                           Commonwealth Capital Corp.          (18,334)       3,579       35,545
                      Accounts payable,
                           affiliated limited partnerships     (52,865)      (2,133)      20,640
                      Unearned lease income                       (786)          --       16,128

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

Net cash (used in) provided by operating activities             27,849      (64,210)      (2,263)
------------------------------------------------------------------------------------------------
</TABLE>


                                                                               7
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                        Statements of Cash Flows
================================================================================
<TABLE>
<CAPTION>
Years ended December 31,                                   2004       2003        2002
--------------------------------------------------------------------------------------
<S>                                                    <C>        <C>         <C>
Cash flows from investing activities
     Capital expenditures                              $     --   $ (5,000)   $(25,000)
     Net proceeds from sale of computer
         equipment                                       16,989     70,381      23,816
     Equipment acquisition fees to the General
         Partner                                             --       (200)     (9,145)
--------------------------------------------------------------------------------------

Net cash provided by (used in) investing activities      16,989     65,181     (10,329)
--------------------------------------------------------------------------------------

Cash flows from financing activities
     Proceeds from notes payable                             --         --      13,984
     Debt placement fee to the General
         Partner                                             --         --      (2,036)
--------------------------------------------------------------------------------------

Net cash provided by financing activities                    --         --      11,948
--------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents
                                                         44,837        971        (644)

Cash and cash equivalents at beginning of year            1,409        438       1,082
--------------------------------------------------------------------------------------

Cash and cash equivalents at end of year               $ 46,246   $  1,409    $    438
======================================================================================
</TABLE>

                                 See accompanying notes to financial statements.



                                                                               8
<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. Commonwealth Capital
                        Corp  ("CCC"),  on behalf of the  Partnership  and other
                        affiliated  partnerships,  acquires  computer  equipment
                        subject  to  associated   debt   obligations  and  lease
                        agreements  and allocates a  participation  in the cost,
                        debt and lease revenue to the various partnerships based
                        on  certain  risk  factors.  The  Partnership's  General
                        Partner is Commonwealth  Income & Growth Fund, Inc. (the
                        "General Partner"), a Pennsylvania  corporation which is
                        an indirect  wholly  owned  subsidiary  of  Commonwealth
                        Capital  Corp.  Approximately  ten to twelve 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 approximately December 31, 2006.

                        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 2004
                        and 2003, the Partnership did not make any distributions
                        to the limited partners

2.    Business Plan     The  Partnership,  has  suffered  recurring  losses from
                        operations,   declining   cash   provided  by  operating
                        activities,  has not paid  partner  distributions  since
                        June   2001,   has  a  deficit   partners'   capital  of
                        approximately $50,000 at December 31, 2004 and CCC filed
                        a  lawsuit  on the  Partnership's  behalf  (see Note 9),
                        alleging  that the named  defendant has not returned the
                        proper leased equipment.

                        The  lawsuit  was  originally  filed  in  2000.  CCC was
                        informed  on or around  August  30,  2004 that the judge
                        presiding over the case granted summary  judgment to the
                        defendant.  It  should  be  noted  that  the  judge  had
                        previously  denied the  defendant's  motions for



                                                                               9
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

                        summary judgment on two different occasions. CCC and our
                        attorney  feel  that the  judgment  appears  faulty in a
                        number of areas and we have  filed an  appeal.  On March
                        10, 2005,  CCC filed a reply brief to the United  States
                        Court of Appeals for the Third  Circuit,  related to the
                        case of Commonwealth  Capital Corp vs. Gentronics,  Inc.
                        (F/K/A Wang Laboratories,  Inc.). Commonwealth expects a
                        response to the brief on or around July 2005. Due to the
                        ongoing delays, the General Partner feels that it may be
                        in the best  interest  of the  Partnership  to start the
                        liquidation  process in 2005 and run out  naturally  all
                        remaining leases in the portfolio,  making distributions
                        when possible,  after expenses have been  satisfied.  If
                        the Partnership's  cash is insufficient from operations,
                        the  General  Partner  and CCC  intend  to pay the legal
                        expenses  associated  with the  lawsuit on behalf of the
                        Partnership.

                        The General  Partner  intends to review and reassess the
                        Partnership's  business plan on a quarterly basis during
                        2005.

3.    Summary of        Revenue Recognition
      Significant
      Accounting        Through  December 31, 2004,  the  Partnership's  leasing
      Policies          operations consist substantially of operating leases and
                        one direct financing  lease.  Operating lease revenue is
                        recognized  on a monthly  basis in  accordance  with the
                        terms of the  lease  agreement.  Unearned  revenue  from
                        direct financing agreements is amortized to revenue over
                        the lease term.

                        The  Partnership  reviews a  customer's  credit  history
                        before  extending credit and establishes a provision for
                        uncollectible  accounts receivable based upon the credit
                        risk of specific customers,  historical trends and other
                        information.

                        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


                                                                              10

<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

                        amounts of revenues  and expenses  during the  reporting
                        period.   Actual   results   could   differ  from  those
                        estimates.

                        Fair Value of Financial Instruments

                        Statement of  Financial  Accounting  Standards  ("SFAS")
                        No.107,   Disclosures  about  Fair  Value  of  Financial
                        Instruments,  requires  disclosure  of the fair value of
                        certain  instruments.   The  carrying  values  of  cash,
                        receivables and payables  approximate  fair value due to
                        the short term maturity of these instruments.  For debt,
                        the carrying amounts  approximate fair value because the
                        interest rates approximate current market rates.

                        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 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 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.  In
                        2004  and  2003,  the  Partnership  determined  that the
                        carrying  amount of certain  assets was greater than the
                        undiscounted cash flows to be generated by these assets.
                        The Partnership  recorded charges of $12,000 and $8,000,
                        respectively in the fourth quarter of 2004, and 2003, to
                        record the assets at their  estimated  fair value.  Such
                        amounts have been  included in  depreciation  expense in
                        the  accompanying  financial  statements.  In 2002,  the
                        Partnership determined that no impairment had occurred.

                        Depreciation   on  computer   equipment   for  financial
                        statement purposes is based on the straight-line  method
                        over estimated useful lives of four years.

                        Intangible Assets



                                                                              11
<PAGE>
                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

                        Equipment  acquisition  costs and deferred  expenses are
                        amortized  on a  straight-line  basis over two-  to-four
                        year lives.  Unamortized  acquisition  fees and deferred
                        expenses  are charged to  amortization  expense when the
                        associated leased equipment is sold.

                        Cash and Cash Equivalents

                        The Partnership  considers all highly liquid investments
                        with a  maturity  of  three  months  or  less to be cash
                        equivalents.  Cash  equivalents  have been invested in a
                        money  market  fund   investing   directly  in  Treasury
                        obligations. Cash at December 31, 2004 and 2003 was held
                        in  the  custody  of  one  financial  institution.   The
                        balance,  at times, may exceed federally insured limits.
                        The Partnership  mitigates this risk by depositing funds
                        with a major financial institution.  The partnership has
                        not  experienced  any  losses  in  such  accounts,   and
                        believes  it is not  exposed to any  significant  credit
                        risk.

                        Accounts Receivable

                        Accounts    receivable    includes    current   accounts
                        receivable,  net of allowances and other  accruals.  The
                        Partnership  regularly reviews the collectability of its
                        receivables  and the credit  worthiness of its customers
                        and  adjusts  its   allowance   for  doubtful   accounts
                        accordingly.

                        Income Taxes

                        The  Partnership is not subject to federal income taxes;
                        instead,  any taxable income (loss) is passed through to
                        the partners and included on their respective income tax
                        returns.

                        Taxable  income  differs from  financial  statement  net
                        income  as a result  of  reporting  certain  income  and
                        expense  items for tax  purposes  in periods  other than
                        those used for financial statement purposes, principally
                        relating  to  depreciation,   amortization,   and  lease
                        income.

                        Offering Costs


                                                                              12
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

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

                        Net Income  (Loss) Per  Equivalent  Limited  Partnership
                        Unit

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

                        Reimbursable Expenses

                        Reimbursable   expenses,   which  are   charged  to  the
                        Partnership by CCC in connection with the administration
                        and operation of the  Partnership,  are allocated to the
                        Partnership  based upon several factors  including,  but
                        not  limited  to,  the number of  investors,  compliance
                        issues, and the number of existing leases.

                        Recent Accounting Pronouncements

                                            Interpretation No. 46

                        In January  2003,  FASB  issued  Interpretation  No. 46,
                        "Consolidation    of   Variable    Interest    Entities"
                        ("Interpretation   No.   46"),   which   clarifies   the
                        application  of  Accounting  Research  Bulletin  No. 51,
                        "Consolidated Financial Statements," to certain entities
                        in   which   equity    investors   do   not   have   the
                        characteristics  of a controlling  financial interest or
                        do not have sufficient  equity at risk for the entity to
                        finance its activities without  additional  subordinated
                        financial  support from the other  parties.  In December
                        2003,  a revision  was issued  (46-R) to clarify some of
                        the original provisions.  Management has determined that
                        the  adoption of  Interpretation  No. 46 did not have an
                        impact  on  the   financial   position  and  results  of
                        operations.



                                                                              13
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

4.    Net Investment    The following lists the components of the net investment
      in Direct         in a  direct  financing  lease  as  of December 31, 2004
      Financing Lease   and 2003:

<TABLE>
<CAPTION>
                        December 31,                                 2004      2003
                        ------------------------------------------------------------
<S>                                                                <C>       <C>
                        Minimum lease payments receivable          $18,054   $30,090
                        Less: Unearned Revenue                       4,503     7,505
                        ------------------------------------------------------------
                        Net investment in direct financing lease   $13,551   $22,585
                        ============================================================
</TABLE>

                        The following is a schedule of future minimum rentals on
                        the  noncancellable  direct  financing lease at December
                        31, 2004:

                        Year ending December 31,                      Amount
                        --------------------------------------------------------

                           2005                                       $12,036
                           2006                                         6,018

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

                        The following is a schedule of future minimum rentals on
                        noncancelable operating leases at December 31, 2004:

                        Year ending December 31,                         Amount
                        --------------------------------------------------------
                            2005                                       $  9,000
                            2006                                          3,000

                        --------------------------------------------------------
                                                                       $ 12,000
                        ========================================================

Significant             Lessees  exceeding  10% of lease   income  for the years
Customers               ended:

                         Lessee                         2004     2003    2002
                        -------------------------------------------------------
                         Lessee A                        33%      28%     23%
                         Lessee B                        23%      24%     18%
                         Lessee C                        12%      --      --
                        -------------------------------------------------------

                         Total % of Lease Income         68%      52%     41%
                        =======================================================


                                                                              14
<PAGE>

                        Lessees exceeding 10% of accounts receivable at December
                        31, (See Note 9):

                         Lessee                         2004            2003
                        -------------------------------------------------------

                         Lessee D                        79%             99%
                        -------------------------------------------------------

                         Total % of Accounts Receivable  79%             99%
                        =======================================================

6.    Related Party     Reimbursable Expenses
      Transactions
                        The General  Partner and its  affiliates are entitled to
                        reimbursement   by  the  Partnership  for  the  cost  of
                        supplies and  services  obtained and used by the General
                        Partner  in  connection  with  the   administration  and
                        operation  of  the   Partnership   from  third   parties
                        unaffiliated with the General Partner. In addition,  the
                        General  Partner  and its  affiliates  are  entitled  to
                        reimbursement  for  certain  expenses  incurred  by  the
                        General  Partner and its  affiliates in connection  with
                        the  administration  and  operation of the  Partnership.
                        During 2004,  2003, and 2002, the  Partnership  recorded
                        $22,000,   $194,000,  and  $280,000  respectively,   for
                        reimbursement  of expenses to the General  Partner.  The
                        amount due to CCC at  December  31,  2004 and 2003,  for
                        reimburseable  expenses  was  approximately  $70,000 and
                        $90,000, respectively.

                        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  2004,   2003  and  2002,   equipment
                        acquisition fees


                                                                              15
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

                        of  approximately  $0, $1,000 and $9,000,  respectively,
                        were earned by the General Partner.

                        Debt Placement Fee

                        As  compensation  for arranging term debt to finance the
                        acquisition of equipment by the Partnership, the General
                        Partner is paid a fee equal to 1% of such  indebtedness;
                        provided, however, that such fee shall be reduced to the
                        extent  the  Partnership   incurs  such  fees  to  third
                        parties,  unaffiliated  with the General  Partner or the
                        lender,  with respect to such  indebtedness  and no such
                        fee will be paid with  respect  to  borrowings  from the
                        General  Partner or its  affiliates.  No debt  placement
                        fees were  earned  by the  General  Partner  in 2004 and
                        2003.  During 2002, debt placement fees of approximately
                        $2,000 were earned by the General Partner.

                        Equipment Management Fee

                        The General Partner is entitled to be paid a monthly fee
                        equal  to the  lesser  of (i) the  fees  which  would be
                        charged  by  an  independent  third  party  for  similar
                        services  for similar  equipment  or (ii) the sum of (a)
                        two percent of (1) the gross lease revenues attributable
                        to equipment  which is subject to full payout net leases
                        which contain net lease provisions plus (2) the purchase
                        price paid on conditional sales contracts as received by
                        the  Partnership  and (b) 5% of the gross lease revenues
                        attributable  to equipment which is subject to operating
                        and  capital   leases.   During  2004,  2003  and  2002,
                        equipment  management  fees  of  approximately   $2,000,
                        $17,000 and  $20,000,  respectively,  were earned by 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


                                                                              16
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

                        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
                        were no such fees earned by the General Partner in 2004,
                        2003 and 2002.

                        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.  During
                        2004,  2003  and  2002,  equipment  liquidation  fees of
                        approximately  $500,  $2,000 and  $1,000,  respectively,
                        were earned by the General Partner.

7.    Notes Payable     Notes payable consisted of the following:

<TABLE>
<CAPTION>
                        December 31,                                               2004             2003
                        -----------------------------------------------------------------------------------
<S>                                                                            <C>               <C>
                        Installment   notes  payable  to  banks;   interest
                        ranging  from  6.25%  to  9.25%;   due  in  monthly
                        installments  ranging from $138 to $7,720 including
                        interest with final  payments due from January 2004
                        through December 2004.                                 $     --          $140,640

                        Installment  note  payable to a bank;  interest  at
                        6.5%;  due  in  monthly   installments   of  $1,003
                        including interest through June 2006.                    17,158            27,703

                        ----------------------------------------------------------------------------------
                                                                               $ 17,158          $168,343
                        ==================================================================================
</TABLE>

                        These notes are secured by specific  computer  equipment
                        and  are  nonrecourse  liabilities  of the  Partnership.
                        Aggregate  maturities  of notes  payable for each of the
                        years subsequent to December 31, 2004 are as follows:

                        Year ending December 31,                         Amount
                        --------------------------------------------------------

                            2005                                    $     11,252
                            2006                                           5,906

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

                                                                    $     17,158
                        ========================================================

8.      Supplemental    Other  noncash activities included  in the determination
        Cash Flow       of net  loss are as follows:
        Information

<TABLE>
<CAPTION>
Year ended December 31,                                  2004        2003        2002
-------------------------------------------------------------------------------------
<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         $ 145,654   $ 267,354   $ 273,464

=====================================================================================
</TABLE>

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


                                                                              17
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

                        Non-cash investing and financing  activities include the
                        following:

Year ended December 31,                               2004       2003       2002
--------------------------------------------------------------------------------

Debt assumed in connection with purchase
     of computer equipment                        $     --   $     --   $204,000
--------------------------------------------------------------------------------

Net book value of equipment converted to direct
     financing leases                             $     --   $     --   $ 38,916
--------------------------------------------------------------------------------

Notes payable refinanced                          $     --   $     --   $ 30,953
--------------------------------------------------------------------------------

9.    Commitments and   The  Partnership,  through CCC, has  initiated a lawsuit
      Contingencies     against  a  customer  for  the   non-return   of  leased
                        equipment.  The Partnership has approximately $75,000 of
                        unreserved  accounts receivable relating to this matter.
                        The complaint  alleges that the named  defendant has not
                        returned the proper equipment stated in the master lease
                        agreement  and is seeking  restitution  for lost monthly
                        rentals,  taxes, attorney fees and costs, plus interest.
                        A summary judgment was ordered in August 2004;  however,
                        an appeal  was filed on March 10,  2005 with the  United
                        States Court of Appeals.  Management  believes  that the
                        Partnership  will  prevail  in this  matter and that the
                        outcome of this  uncertainty  is not  expected to have a
                        material  adverse impact to the financial  statements of
                        the Partnership. A response to the appeal is anticipated
                        on or around July 2005.


                                                                              18
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

10.   Reconciliation of Net (Loss) Reported for Financial
      Reporting Purposes to Taxable (Loss) on the Federal
      Partnership Return

<TABLE>
<CAPTION>
Year ended December 31,                                   2004         2003         2002
----------------------------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>
     Net loss for financial reporting purposes       $(136,479)   $(114,587)   $(237,111)
     Adjustments
         Gain (loss) on sale of computer equipment      (5,317)      27,245       (9,911)
         Depreciation                                   89,947       64,017     (117,233)
         Amortization                                    7,200       13,937       14,289
         Bad debt expense                                   --      (14,587)      14,587
         Unearned lease income                          (3,788)     (27,665)      36,620
         Other                                         (14,574)      17,473     (117,943)
----------------------------------------------------------------------------------------
Taxable (loss) on the Federal
     Partnership return                              $ (63,011)   $ (34,167)   $(416,702)
========================================================================================
</TABLE>

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

                        Adjustment  for gain (loss) on sale of  equipment is due
                        to longer useful lives for tax reporting purposes.


                                                                              19
<PAGE>

                                             Commonwealth Income & Growth Fund I

                                                   Notes to Financial Statements
================================================================================

11.   Quarterly         Summarized  quarterly financial data for the years ended
      Results           December 31, 2004 and 2003 is as follows:
      of Operation
      (Unaudited)

<TABLE>
<CAPTION>
                                                                  Quarter ended
                                         ---------------------------------------------------------
                                           March 31         June 30   September  30    December 31
--------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>             <C>
2004

Revenues
     Lease and other                      $  64,953       $  83,518      $  62,268       $ 123,790
     Gain (loss) on sale of computer
        equipment                                --             949        (10,764)         (2,836)
--------------------------------------------------------------------------------------------------

Total revenues                               64,953          84,467         51,504         120,954

Costs and expenses                           73,771          65,254        146,710         172,622
--------------------------------------------------------------------------------------------------

Net (loss) income                         $  (8,818)      $  19,213      $ (95,206)      $ (51,668)
==================================================================================================

(Loss) income per limited
     partner unit                         $    (.01)      $     .03      $    (.15)      $    (.08)
==================================================================================================
</TABLE>

                                                                              20
<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>
2003

Revenues
     Lease and other                      $  88,281       $  83,494      $  80,818       $  79,386
     Gain (loss) on sale of computer
       equipment                              5,640           3,267         (6,421)         48,888
--------------------------------------------------------------------------------------------------

Total revenues                               93,921          86,761         74,397         128,274

Costs and expenses                          144,016         144,950        106,124          95,350
==================================================================================================

Net (loss) income                         $ (50,095)      $ (58,189)     $ (31,727)      $  32,924
==================================================================================================

(Loss) income per limited
     partner unit                         $    (.08)      $    (.09)     $    (.05)      $     .05
==================================================================================================
</TABLE>

                        The  cumulative   gain  or  loss  on  sale  of  computer
                        equipment   is   included   in   revenues  or  costs  as
                        appropriate.





                                                                              21