<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1998 Commission File Number 0-15363
COMMONWEALTH GROWTH FUND II
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
California 68-0088748
- ------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
705 University Avenue, Sacramento, California 95825
- --------------------------------------------------------------------------------
(Address or Registrant's Principal Executive Offices)
(916) 929-5433
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) had filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety (90) days.
[X] Yes [ ] No
<PAGE> 2
COMMONWEALTH GROWTH FUND II
INDEX
<TABLE>
<S> <C>
Part I. Financial Information
Balance Sheets - September 30, 1998 and December 31, 1997 3
Statements of Operations - For the Three Months and Nine
Months Ended September 30, 1998 and 1997 4
Statements of Cash Flows - For the Nine Months Ended
September 30, 1998 and 1997 5
Statement of Partners' Equity - For the Nine Months Ended
September 30, 1998 6
Notes to Financial Statements 7
Management's Discussion and Analysis of the Results of Operations 8
Part II. Other Information 9
</TABLE>
<PAGE> 3
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited) (Audited)
------------ ----------
<S> <C> <C>
Assets
Land $ 160,000 $ 160,000
Notes Receivable 1,096,000 1,096,000
Cash 99,185 97,727
Other Assets 27,172 11,645
---------- ----------
Total Assets $ 1,382,357 $1,365,372
Liabilities and Partners' Equity
Liabilities:
Accounts Payable and Accrued Expenses $ 1,514 $ 5,002
Deferred Gain 69,739 69,739
---------- ----------
Total Liabilities 71,253 74,741
Partners' Equity:
General Partners' Equity (831) (3,265)
Limited Partners' Equity; Authorized 1,000,000 Units;
Issued and Outstanding 459,698 in 1997 and 1996 1,581,620 1,293,896
---------- ----------
Total Partners' Equity 1,311,104 1,290,631
---------- ----------
Total Liabilities and Partners' Equity $ 1,382,357 $1,365,372
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE> 4
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
--------------------------------------------------------
<S> <C> <C> <C> <C>
Rental Income $ -0- -0- -0- -0-
Expenses:
Operating Expenses -0- -0- -0- -0-
Depreciation and Amortization -0- -0- -0- -0-
--------------------------------------------------------
Income From Rental Operations $-0- -0- -0- -0-
Interest Income 24,121 32,312 72,354 98,455
Gain (Loss) on Disposal of Note -0- -0- -0- -0-
General and Administrative Expenses 11,293 60,462 51,882 154,636
--------------------------------------------------------
Net Income (Loss) $ 12,828 (28,150) 20,472 (56,182)
Allocated to General Partners 641 (1,407) 1,024 (2,809)
Allocated to Limited Partners $ 12,187 (26,743) 19,448 (53,373)
Net Income (Loss) per Limited
Partnership Unit $ 0.03 (0.06) 0.04 (0.12)
Weighted Average Number of
Units Outstanding 459,698 459,698 459,698 459,698
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE> 5
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
-------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (Loss) $ 20,472 $ (56,182)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by Operating Activities:
Changes in Other Assets and Liabilities:
(Increase)/Decrease in Other Assets (15,526) 30,562
Increase/(Decrease) in Accounts Payable
and Accrued Expenses (3,488) (605)
-------- ---------
Total Adjustments to Net Income (19,014) 29,957
-------- ---------
Net Cash Provided by Operating Activities $ 1,458 $ (26,225)
Cash Flows from Financing Activities:
Contribution by Partners -0- 39,553
Distributions to Partners -0- (314,560)
---------
Net Cash Used by Financing Activities -0- (275,007)
---------
Net Increase (Decrease) in Cash 1,458 (301,232)
Cash, Beginning of Year 97,727 364,874
-------- ---------
Cash, End of Period $ 99,185 $ 63,642
</TABLE>
See Accompanying Notes to Financial Statements
5
<PAGE> 6
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Statement of Partners' Equity
For the Nine Months Ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Balance at December 31, 1997 $(3,265) 1,293,896 1,290,631
Net Income (Loss) 1,024 19,448 20,472
Contributions -0- -0- -0-
Distributions -0- -0- -0-
Balance at September 30, 1998 $(2,241) 1,313,344 1,311,103
</TABLE>
See Accompanying Notes to Financial Statements
6
<PAGE> 7
COMMONWEALTH GROWTH FUND II
NOTES TO FINANCIAL STATEMENTS
(1) In the opinion of the General Partners, the accompanying unaudited
financial statements contain all adjustments necessary to present fairly
the financial position as of September 30, 1998, and the results of its
operations for the three months and nine months ended September 30, 1998
and cash flows for the nine months ended September 30, 1998.
(2) The other accounting policies followed by the Partnership are set forth
in Note 1 to the Partnership's financial statements in the 1997 Form
10-K which is incorporated herein by reference.
7
<PAGE> 8
COMMONWEALTH GROWTH FUND II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
There was no rental income, rental-related operating expenses,
depreciation or amortization for the three and nine months ended
September 30, 1998 as the Partnership had totally divested itself of all
rental properties by the end of 1995. Interest income decreased $ 8,191
and $ 26,101 for the three months and nine months ended September 30,
1998, respectively, compared to the same periods in the prior year, due
to the sale of a note receivable in October, 1997.
General and administrative expenses decreased $49,169 and $102,754 for
the three months and nine months ended September 30, 1998, respectively,
compared to the same period in the prior year. Legal and accounting fees
decreased during the nine months ended September 30, 1998. Furthermore,
an adjustment to accrue operating expenses incurred by the General
Partners in prior years as well as a one-time adjustment to accrue
underpaid management fees were reflected in operating expenses for the
three and nine months ended September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has met its liquidity needs through cash reserves and
operating income. The Partnership currently has no material commitments
and anticipates that these sources will continue to be adequate to meet
the Partnership's future liquidity needs.
8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are being field as part of this report:
27 Financial Data Schedule
(b) The Partnership filed no reports on Form 8-K during the quarter
ended September 30, 1998.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has dually caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMONWEALTH GROWTH FUND II
(Registrant)
/s/ JEFFREY BERGER
Date: 1-14-99 -----------------------------------------
Jeffrey Berger
Individual General Partner
/s/ JEFFREY BERGER
Date: 1-14-99 -----------------------------------------
Jeffrey Berger
President, Managing General Partner
10
<PAGE> 11
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1998 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 3RD QUARTER 1998 10-Q.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 99,185
<SECURITIES> 0
<RECEIVABLES> 1,096,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,222,357
<PP&E> 160,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,382,357
<CURRENT-LIABILITIES> 71,253
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,311,104
<TOTAL-LIABILITY-AND-EQUITY> 1,382,357
<SALES> 0
<TOTAL-REVENUES> 72,354
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 51,882
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20,472
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,472
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,472
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
