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 June 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
----- -----
2
COMMONWEALTH GROWTH FUND II
INDEX
Part I. Financial Information
Balance Sheets - June 30, 1998 and December 31, 1997 3
Statements of Operations - For the Three Months and Six
Months Ended June 30, 1998 and 1997 4
Statements of Cash Flows - For the Six Months Ended
June 30, 1998 and 1997 5
Statement of Partners' Equity - For the Six Months Ended
June 30, 1998 6
Notes to Financial Statements 7
Management's Discussion and Analysis of the Results of Operations 8
Part II. Other Information 9
3
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Balance Sheets
June 30, December 31,
1998 1997
(Unaudited) (Audited)
----------- -----------
Assets
Land $ 160,000 $ 160,000
Notes Receivable 1,096,000 1,096,000
Cash 101,302 97,727
Other Assets 11,645 11,645
----------- -----------
Total Assets $ 1,368,946 $ 1,365,372
Liabilities and Partners' Equity
Liabilities:
Accounts Payable and Accrued Expenses $ 932 $ 5,002
Deferred Gain 69,739 69,739
----------- -----------
Total Liabilities 70,671 74,741
Partners' Equity:
General Partners' Equity (2,883) (3,265)
Limited Partners' Equity; Authorized 1,000,000 Units;
Issued and Outstanding 459,698 in 1998 and 1997 1,301,159 1,293,896
----------- -----------
Total Partners' Equity 1,298,276 1,290,631
----------- -----------
Total Liabilities and Partners' Equity $ 1,368,946 $ 1,365,372
See Accompanying Notes to Financial Statements
3
4
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
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 24,126 32,311 48,233 66,142
Gain (Loss) on Disposal of Note -0- -0- -0- -0-
General and Administrative Expenses 29,830 28,861 40,589 94,174
--------- --------- --------- ---------
Net Income (Loss) $ (5,704) 3,450 7,644 (28,032)
Allocated to General Partners (285) 173 382 (1,402)
Allocated to Limited Partners $ (5,419) 3,277 7,262 (26,630)
Net Income (Loss) per Limited
Partnership Unit $ (0.01) 0.01 0.02 (0.06)
Weighted Average Number of
Units Outstanding 459,698 459,698 459,698 459,698
See Accompanying Notes to Financial Statements
4
5
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1998 1997
--------- ---------
Cash Flows from Operating Activities
Net Income (Loss) $ 7,644 $ (28,032)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by Operating Activities:
Changes in Other Assets and Liabilities:
(Increase)/Decrease in Other Assets -0- 38,135
Increase/(Decrease) in Accounts Payable
and Accrued Expenses (4,070) (41,798)
--------- ---------
Total Adjustments to Net Income (4,070) (3,663)
--------- ---------
Net Cash Provided by Operating Activities $ 3,574 $ (31,695)
Cash Flows from Investing Activities:
Collections on Notes Receivable -0- -0-
Net Cash Provided by Investing Activities -0- -0-
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 3,574 (306,702)
Cash, Beginning of Year 97,727 364,874
--------- ---------
Cash, End of Period $ 101,301 $ 58,172
See Accompanying Notes to Financial Statements
5
6
COMMONWEALTH GROWTH FUND II
(A Limited Partnership)
Statement of Partners' Equity
For the Six Months Ended June 30, 1998
(Unaudited)
General Limited
Partners Partners Total
--------- --------- ---------
Balance at December 31, 1997 $ (3,265) 1,293,896 1,290,631
Net Income (Loss) 382 7,262 7,644
Distributions -0- -0- -0-
Balance at June 30, 1998 $ (2,883) 1,301,158 1,298,275
See Accompanying Notes to Financial Statements
6
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 June 30, 1998, and the results of its
operations for the three months and six months ended June 30, 1998 and
cash flows for the six months ended June 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
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 six months ended June
30, 1998 as the Partnership had totally divested itself of all rental
properties by the end of 1995.
Interest income decreased $ 8,185 and $ 17,909 for the three months and
six months ended June 30, 1998, respectively, compared to the same
periods in the prior year, due to the payment in full of one of the
outstanding notes receivable in October, 1997 and the fact that two
distributions reduced the amount of cash on hand earning interest.
General and administrative expenses increased $ 969 for the three
months ended June 30, 1998, and decreased $ 53,585 for the six months
ended June 30, 1998, compared to the same period in the prior year.
Accounting fees decreased during the six months ended June 30, 1998 due
to a reduction in fees charged for the December 31, 1997 audit.
Registrar and transfer agent fees decreased during the six months ended
June 30, 1998 due to the costs involved with a distribution to the
partners in February, 1997. An adjustment to accrue operating expenses
incurred by the General Partners in prior years was reflected in the
six months ended June 30, 1997 which did not recur in the six months
ended June 30, 1998.
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
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 June 30, 1998.
9
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)
Date: 8/1/98 /s/ JEFFREY BERGER
------------------ ---------------------------------------
Jeffrey Berger
Individual General Partner
Date: 8/1/98 /s/ JEFFREY BERGER
------------------ ---------------------------------------
Jeffrey Berger
President, Managing General Partner
10
11
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule