SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended December 31, 1996

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from _______________________ to ______________________

Commission file number 0-21464

PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II
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(Exact name of Registrant as specified in its charter)

California 13-3268435
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(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)

440 Mission Court, Suite 250, Fremont, California 94539
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (510) 656-1855

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

None
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Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest

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(Title of class)

Indicate by check mark whether the Registrant (1) 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 (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 90 days. Yes CK No __

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

DOCUMENTS INCORPORATED BY REFERENCE

Registrant's Annual Report to Limited Partners for the year ended December
31, 1996 is incorporated by reference into Parts I, II and IV of this Annual
Report on Form 10-K.

Agreement of Limited Partnership, included as part of the Registration
Statement on Form S-1 (File No. 2-94273) filed with the Securities and Exchange
Commission on March 4, 1985 pursuant to Rule 424(b) of the Securities Act of
1933, and amended on May 31, 1990, is incorporated by reference into Part IV of
this Annual Report on Form 10-K.

Index to exhibits can be found on pages 8 and 9.

CAUTIONARY STATEMENT FOR PURPOSES OF
THE ``SAFE HARBOR'' PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

When used in this Annual Report on Form 10-K, the words ``Believes,''
``Anticipates,'' ``Expects'' and similar expressions are intended to identify
forward-looking statements. Statements looking forward in time are included in
this Annual Report on Form 10-K pursuant to the ``Safe Harbor'' provision of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially, including, but not limited to, those set forth in ``Management's
Discussion and Analysis of Financial Condition and Results of Operations.''
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Registrant undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.

PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II
(a limited partnership)
TABLE OF CONTENTS

PART I PAGE

Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 4
Item 4 Submission of Matters to a Vote of Limited Partners.............................. 4

PART II
Item 5 Market for the Registrant's Units and Related Limited Partner Matters............ 4
Item 6 Selected Financial Data.......................................................... 5
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 6
Item 8 Financial Statements and Supplementary Data...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6

PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 7
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 7
Item 13 Certain Relationships and Related Transactions................................... 7

PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements and Financial Statement Schedules........................... 8
Exhibits......................................................................... 8
Reports on Form 8-K.............................................................. 9
SIGNATURES.................................................................................. 10

PART I

Item 1. Business

General

PruTech Research and Development Partnership II (the ``Registrant''), a
California limited partnership, was formed on October 4, 1984 and will terminate
in accordance with the Plan of dissolution and liquidation (the ``Plan'')
approved by the limited partners as discussed below. The Registrant was formed
to seek cash flow from the research and development of new technologies with
potential commercial applications with proceeds raised from the initial sale of
100,000 limited partnership interests (``Units''). R&D Funding Corp (the
``General Partner'') also contributed an amount equal to 10% of the gross
proceeds raised by the sale of Units. The Registrant's fiscal year for book and
tax purposes ends on December 31.

The Registrant entered into total commitments of approximately $91 million
for 18 research and development projects in both publicly and privately held
companies, all of which have been fully funded. At December 31, 1996, the
Registrant held equity investments and/or royalty rights, which had value at
December 31, 1996 or were active during the year then ended, relating to six
companies. For more information regarding the Registrant's operations, see Item
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations.

In September 1996, the General Partner mailed to all limited partners a
consent solicitation statement (the ``Statement'') asking for their written
consent to approve the Plan, as more fully described in the Statement. On
October 30, 1996, holders of 68.4% of the Units approved the Plan. Accordingly,
the Plan has been adopted. In accordance with the terms of the Plan, the General
Partner is proceeding to sell or otherwise dispose of the Registrant's remaining
investments and distribute the resulting proceeds (reduced by a working capital
reserve to satisfy any liabilities or contingencies of the Registrant) to the
partners in accordance with the terms of the Agreement of Limited Partnership,
as amended (the ``Partnership Agreement''). Due to the nature of certain
remaining investments of the Registrant, the General Partner is not able to
predict with any degree of certainty the timing of sales, the proceeds that will
be received or the cash amounts that may ultimately be available for
distribution by the Registrant, except as otherwise disclosed herein. It is not
expected that the Registrant's eventual total distributions will equal the
partners' initial investment. The General Partner estimates that the final
liquidation of the Registrant's remaining investments will occur by December 31,
1997; however, due to the nature of certain remaining investments, liquidation
may take longer.

As a result of the adoption of the Plan, the Registrant adopted the
liquidation basis of accounting effective December 31, 1996, whereby assets are
valued at their estimated net realizable values and liabilities stated at their
estimated settlement amounts. For more information regarding the effects of the
liquidation basis of accounting, see Note B to the financial statements in the
Registrant's annual report to limited partners for the year ended December 31,
1996 (``Registrant's 1996 Annual Report'') which is filed as an exhibit hereto.

The Registrant is engaged solely in the business of research and development;
therefore, presentation of industry segment information is not applicable.

For the years ended December 31, 1996, 1995, and 1994, respectively, revenue
from the following portfolio company investments exceeded 15% of the
Registrant's total revenue (inclusive of liquidating activities for 1996):

1996 1995 1994
---- ---- ----

Biocompatibles International plc 76% 37% --%
Navigation Technologies Corporation -- 25 --
Boston Scientific Corporation -- -- 19
Silicon Valley Research, Inc. -- -- 45
Tridom Corporation -- -- 21

General Partner

The General Partner of the Registrant is an affiliate of Prudential
Securities Incorporated (``PSI''). Both the General Partner and PSI are
wholly-owned subsidiaries of Prudential Securities Group Inc. In its capacity as
general partner, R&D Funding Corp was responsible for locating, evaluating,
negotiating and structuring the Registrant's research and development projects.
R&D Funding Corp was also responsible for the management of and provided the
administrative services necessary for the operation of the Registrant. In its
capacity as liquidating agent with respect to the Registrant's assets, the
General Partner is proceeding to complete the liquidation of the Registrant's
remaining assets and effect the complete voluntary dissolution of the Registrant
in accordance with the Plan.

Competition

The companies in which the Registrant holds equity investments and royalty
rights faced substantial competition in the markets for their products and
technologies. There are no assurances that the Registrant's investments will not
decline in value due to the development by others of technologically superior
products.

Employees

The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partner and its affiliates pursuant
to the Partnership Agreement. See Notes B and G to the financial statements in
the Registrant's 1996 Annual Report which is filed as an exhibit hereto.

Investment Portfolio Summary

For a description of the companies in which the Registrant's equity
investments or royalty rights were active during 1996 or had value at December
31, 1996, see pages 2 and 3 of the Registrant's 1996 Annual Report which is
filed as an exhibit hereto.

Item 2. Properties

The Registrant does not own or lease any property.

Item 3. Legal Proceedings

This information is incorporated by reference to Note H to the financial
statements in the Registrant's 1996 Annual Report which is filed as an exhibit
hereto.

Item 4. Submission of Matters to a Vote of Limited Partners

No matters were submitted to a vote of limited partners during the fourth
quarter of 1996; however, on September 4, 1996, the General Partner solicited
the consent of the limited partners to approve the Plan. On October 30, 1996,
holders of a majority of the Units voted to approve the Plan as follows: 68.4%
voted in favor of the Plan, 2.7% voted against the Plan and 2.0% abstained. For
further information, see Note A to the financial statements in the Registrant's
1996 Annual Report which is filed as an exhibit hereto.

PART II

Item 5. Market for the Registrant's Units and Related Limited Partner Matters

As of March 3, 1997, there were 9,168 holders of record owning 100,000 Units.
A significant secondary market for the Units has not developed and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in Article 8 of the Partnership Agreement limiting the
ability of a limited partner to transfer Units. Consequently, holders of Units
may not be able to liquidate their investments in the event of an emergency or
for any other reason.

The following per Unit cash distributions were paid to limited partners
during the following calendar quarters:

Quarter Ended 1996 1995

- --------------------- ------ ------
March 31 $ -- $ --
June 30 40.00 --
September 30 -- 20.00
December 31 -- 10.00

There are no material restrictions upon the Registrant's present or future
ability to make distributions in accordance with the provisions of the
Partnership Agreement. The Registrant paid distributions of $4,444,444 during
1996 of which $4,000,000 ($40 per unit) was paid to the limited partners and the
remainder to the General Partner. The sources for the distribution were proceeds
from the termination of Boston Scientific Corporation royalty rights, the sales
of a portion of the Registrant's equity position in Biocompatibles International
plc, and the sale of the Registrant's remaining equity position in Somatix
Therapy Corporation. In February 1997, the Registrant made distributions of
$16,666,667 and $4,444,444 of which $15,000,000 ($150 per unit) and $4,000,000
($40 per unit), respectively, were paid to the limited partners and the
remainder to the General Partner. The sources for the distributions were
proceeds from the sale of the Registrant's remaining equity position in
Biocompatibles International plc, which represented the liquidation of the
Registrant's most significant asset, and the sale of a portion of the
Registrant's equity position in Synbiotics Corporation.

The Registrant plans to sell or otherwise dispose of its few remaining assets
and distribute any remaining cash with a single, final distribution. It is not
expected that the Registrant's eventual total distributions will equal the
partners' initial investments.

Item 6. Selected Financial Data

The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 4 through 16 of the Registrant's 1996
Annual Report which is filed as an exhibit hereto.

Year Ended December 31,
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1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
Gain on sale of investments in
equity securities $ 1,680,522 $ 5,058,228 $ -- $ 1,346,953 $ 3,932,657
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Royalty income $ 299,180 $ 1,516,735 $ 474,663 $ 493,252 $ 525,353
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Interest and other income $ 1,220,545 $ 301,339 $ 503,557 $ 339,337 $ 587,828
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total operating revenues $ 6,672,247 $ 7,859,432 $ 1,670,074 $ 2,982,778 $ 5,970,952
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Write-down of investments
in equity securities $ -- $ -- $(1,489,410) $(1,417,712) $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Liquidating activities:
Investments in equity
securities $19,128,500 $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Estimated liquidation costs $(1,593,996) $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) $21,863,750 $ 5,570,951 $(2,130,645) $ (651,120) $ 3,765,143
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per Unit $ 196.77 $ 50.14 $ (19.18) $ (5.86) $ 33.89
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets (1) $24,797,746 $ 8,142,500 $ 6,837,750 $12,039,000 $10,029,026
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total limited partner
distributions $ 4,000,000 $ 3,000,000 $ 2,000,000 $ -- $ 4,050,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Limited partner distributions
per Unit $ 40.00 $ 30.00 $ 20.00 $ -- $ 40.50
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------

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(1) Includes $2,357,754, $1,798,977 and $3,423,329 of unrealized gain on
investments in equity securities at December 31, 1995, 1994 and 1993,
respectively. Total assets at December 31, 1996 reflects estimated net
realizable values as more fully described in Notes B, C and D to the financial
statements in the Registrant's 1996 Annual Report which is filed as an exhibit
hereto.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

This information is incorporated by reference to pages 17 through 19 of the
Registrant's 1996 Annual Report which is filed as an exhibit hereto.

Item 8. Financial Statements and Supplementary Data

The financial statements are incorporated by reference to pages 4 through 16
of the Registrant's 1996 Annual Report which is filed as an exhibit hereto.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None

PART III

Item 10. Directors and Executive Officers of the Registrant

There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partner.

The General Partner's directors and executive officers, and any persons
holding more than ten percent of the Registrant's Units (``Ten Percent Owners'')
are required to report their initial ownership of such Units and any subsequent
changes in that ownership to the Securities and Exchange Commission on Forms 3,
4 and 5. Such executive officers, directors and Ten Percent Owners are required
by Securities and Exchange Commission regulations to furnish the Registrant with
copies of all Forms 3, 4 or 5 they file. All of these requirements were
satisfied on a timely basis. In making these disclosures, the Registrant has
relied solely on written representations of the General Partner's directors and
executive officers or copies of the reports they have filed with the Securities
and Exchange Commission during and with respect to its most recent fiscal year.

The directors and executive officers of R&D Funding Corp and their positions
with regard to managing the Registrant are as follows:

Name Position

Thomas F. Lynch, III Chief Executive Officer, Chairman of the Board of
Directors and Director
Michael S. Hasley President
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Steven Carlino Vice President and Chief Accounting Officer
Frank W. Giordano Director
Nathalie P. Maio Director

THOMAS F. LYNCH, III, age 38, is the Chief Executive Officer, Chairman of the
Board of Directors and a Director of R&D Funding Corp. He is a Senior Vice
President of PSI. Mr. Lynch also serves in various capacities for other
affiliated companies. Mr. Lynch joined PSI in November 1989.

MICHAEL S. HASLEY, age 42, is the President of R&D Funding Corp. He is also a
Senior Vice President of PSI. Mr. Hasley joined R&D Funding Corp and PSI in
October 1986.

BARBARA J. BROOKS, age 48, is the Vice President-Finance and Chief Financial
Officer of R&D Funding Corp. She is a Senior Vice President of PSI. Ms. Brooks
also serves in various capacities for other affiliated companies. She has held
several positions within PSI since 1983. Ms. Brooks is a certified public
accountant.

STEVEN CARLINO, age 33, is a Vice President of R&D Funding Corp. He is a
First Vice President of PSI. Mr. Carlino also serves in various capacities for
other affiliated companies. Prior to joining PSI in October 1992, he was with
Ernst & Young for six years. Mr. Carlino is a certified public accountant.

FRANK W. GIORDANO, age 54, is a Director of R&D Funding Corp. He is a Senior
Vice President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc., an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.

NATHALIE P. MAIO, age 46, is a Director of R&D Funding Corp. She is a Senior
Vice President and Deputy General Counsel of PSI and supervises non-litigation
legal work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in various capacities for other affiliated companies.

During July 1996, Michael S. Hasley replaced Russell L. Allen as President of
R&D Funding Corp and Russell L. Allen and Barbara J. Brooks resigned as
Directors.

There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.

Item 11. Executive Compensation

The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partner for their
services. Certain officers and directors of the General Partner receive
compensation from affiliates of the General Partner, not from the Registrant,
for services performed for various affiliated entities, which may include
services performed for the Registrant; however, the General Partner believes
that any compensation attributable to services performed for the Registrant is
immaterial. See Item 13 Certain Relationships and Related Transactions for
information regarding compensation to the General Partner.

Item 12. Security Ownership of Certain Beneficial Owners and Management

As of March 3, 1997, no director or officer of the General Partner owns
directly or beneficially any interest in the voting securities of the General
Partner.

As of March 3, 1997, no director or officer of the General Partner owns
directly or beneficially any of the Units issued by the Registrant.

As of March 3, 1997, no owner of Units beneficially owns more than five
percent (5%) of the outstanding Units of the Registrant.

Item 13. Certain Relationships and Related Transactions

The Registrant has and will continue to have certain relationships with the
General Partner and its affiliates. However, there have been no direct financial
transactions between the Registrant and the directors or officers of the General
Partner.

Reference is made to Notes B and G to the financial statements in the
Registrant's 1996 Annual Report which is filed as an exhibit hereto, which
identify the related parties and discuss the services provided by these parties
and the amounts paid or payable for their services.

PART IV

Page Number
in Annual
Report
--------------

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Independent Auditors' Report--Incorporated by
reference to the Registrant's 1996 Annual Report which is filed as an
exhibit hereto
Independent Auditors' Report 4
Financial Statements:
Statement of Net Assets--December 31, 1996 5
Statement of Financial Condition--December 31, 1995 6
Statements of Operations--Three years ended December 31, 1996 7
Statements of Changes in Partners' Capital--Three years ended December 31,
1996 7
Statements of Cash Flows--Three years ended December 31, 1996 8
Notes to Financial Statements 10

2. Financial Statement Schedules and Independent Auditors' Report on Schedules
All schedules have been omitted because they are not applicable or the
required information is included in the financial statements or the notes
thereto.

3. Exhibits
Description:
PruTech Research and Development Partnership II Agreement of Limited
Partnership (Incorporated by reference to Exhibit 3.1 included with
Registrant's Form S-1 Registration Statement (No. 2-94273) filed on
November 9, 1984)
Escrow Agreement (Incorporated by reference to Exhibit 10.1 included with
Registrant's Amendment No. 1 to Form S-1 Registration Statement (No.
2-94273) filed on March 4, 1985)
Form of Agreement for Services (Incorporated by reference to Exhibit 10.2
included with Registrant's Amendment No. 1 to Form S-1 Registration
Statement (No. 2-94273) filed on March 4, 1985)
First Amendment to the Agreement of Limited Partnership of PruTech Research
and Development Partnership II (Incorporated by reference to Exhibit 3
included with Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991)
Registrant's 1996 Annual Report (with the exception of the information and
data incorporated by reference in Items 3, 7 and 8 of this Annual Report on
Form 10-K, no other information or data appearing in the Registrant's 1996
Annual Report is to be deemed filed as part of this report) (filed
herewith)
Consent Statement dated September 4, 1996 regarding solicitation of Limited
Partner approval of the Plan of Dissolution and Liquidation of Registrant
as filed with the Securities and Exchange Commission on September 4, 1996
(incorporated by reference)
Financial Data Schedule (filed herewith)

(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report; however, a report on Form 8-K dated February 7,
1997 was filed with the Securities and Exchange Commission on February 24,
1997, relating to Item 2 and the sale of Registrant's remaining 942,045
shares of Biocompatibles International plc common stock, which represented
the liquidation of the most significant remaining asset of the Registrant.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

PruTech Research and Development Partnership II

By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: March 27, 1997
----------------------------------------
Steven Carlino
Vice President and Chief Accounting
Officer

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 (with respect to the General Partner) and on
the dates indicated.

By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Thomas F. Lynch, III Date: March 27, 1997
----------------------------------------
Thomas F. Lynch, III
Chief Executive Officer, Chairman of the
Board of Directors and Director
By: /s/ Michael S. Hasley Date: March 27, 1997
----------------------------------------
Michael S. Hasley
President
By: /s/ Barbara J. Brooks Date: March 27, 1997
----------------------------------------
Barbara J. Brooks
Vice President--Finance and Chief
Financial Officer
By: /s/ Steven Carlino Date: March 27, 1997
----------------------------------------
Steven Carlino
Vice President
By: /s/ Frank W. Giordano Date: March 27, 1997
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: March 27, 1997
----------------------------------------
Nathalie P. Maio
Director