UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-K

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

For the fiscal year ended December 31, 2000
Commission file number: 0-16832

IDM Participating Income Company-II
(A CALIFORNIA LIMITED PARTNERSHIP)

State of California 33-0177934
- ---------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

19401 South Vermont, Suite K100
TORRANCE, CALIFORNIA 90502
- ---------------------------------------- --------------------------------------
(Address of principal executive offices) (Zip Code)

(562) 590-1390
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Registrant's telephone number, including area code:

2424 S.E. Bristol Street, Suite 333, Newport Beach, California 92660
---------------------------------------------------------------------
(Former name or former address, if changed since last report)

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

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
None None

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

200,000 LIMITED PARTNERSHIP UNITS
---------------------------------

Title of class

Indicated 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 [X]. No [ ].

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K, not contained in this form, and no disclosure will 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. [X]

State the aggregate market value of the limited partnership units held by
non-affiliates computed by reference to the price at which the units were sold,
or the average bid and asked prices of such units, as of a specified date within
the past 60 days: $0. No broker or dealer currently makes a market in the units.

PART I

ITEM 1. BUSINESS

IDM Participating Income Company-II, a California Limited Partnership (the
"Partnership" or "Registrant"), is a California limited partnership formed in
1986 under the California Revised Limited Partnership Act to make participating
loans to affiliates of the original general partner and to other parties
("Borrowers"). The general partner of the Registrant is NewPic GP Corporation
("NewPic"). See "CHANGE IN CONTROL" and "LEGAL PROCEEDINGS" below for a
discussion of election of NewPic as the general partner and a discussion of
legal action (the "Legal Action") filed against the former general partner by
NewPic and the Registrant.

All units of the Registrant's Limited Partnership Interests have been sold for
cash resulting in proceeds of $20,000,000, all of which was invested in loans
made to the Borrowers. The Partnership's stated objectives are to preserve the
Partnership's investment capital, provide quarterly distributions, and provide
additional participating profits upon the sale, refinancing or other disposition
of the real estate that was to be used as collateral for the participating
loans. The Partnership loaned its original funds as construction and/or
permanent loans pursuant to standardized master loan agreement and participating
note forms.

Each participating loan was to be secured by a first or junior deed of trust and
assignment of rents on the respective property, and was to be non-recourse
against the Borrower upon completion of improvements to the real property. The
participating loans were to have a term of the earliest of five years from the
date the certificate of occupancy was issued or six years from the date of the
loan. Interest income received on the loans was not to be re-lent, but was
required to be distributed to the limited partners. Re-lending of principal is
prohibited with only one limited exception for an early payoff of principal
received within the first twelve months after the loan was made. Furthermore,
principal repayments could only be re-lent once, and the maximum aggregate term
on any loan, including any re-loaning of principal, shall not exceed 8 years.
The general partner is prohibited from making loans unless the Partnership
obtained an appraisal from an AIREA member dated within 90 days of the loan, is
prohibited from making loans where the aggregate amount of the Partnership loan
and the senior debt exceeds 85% of the appraised value of the property, and is
required to use only the Partnership's standard master loan agreement and
participating note forms.

IDM Corporation ("IDM"), a California corporation, was the original sponsor for
the Partnership. IDM, together with certain affiliates, which had borrowed money
from the Partnership, reorganized under Chapter 11 of the United States
Bankruptcy Code effective on March 22, 1993. As restructured in the bankruptcy
of some of the debtors of the Registrant, collection of the original notes held
by the Partnership was dependent upon both the value of the property securing
the loans and the continuing credit of the applicable Borrowers. The original
secured loans remaining after the IDM bankruptcy were non-recourse, and if there
was a default on the loan, the Partnership would only have recourse against the
respective property and not any Borrower.

PLAN OF REORGANIZATION

The order confirming the Reorganization Plan of IDM and some of the Borrowers of
the Registrant and certain other affiliates of IDM (the "Plan") was entered by
the United States Bankruptcy Court for the Central District of California,
Northern Division on March 10, 1993 and became effective on March 22, 1993. A
copy of the Plan was filed as Exhibit 28 to the 1992 Form 10-K and is
incorporated herein by reference. The Partnership received a total of 73,607
shares of IDM stock for its aggregate $6,418,355 of IDM under-secured debt which
have been distributed to the partners of the Partnership.

TAKEOVER OF IDM AND THE PARTNERSHIP

In April 1996, IDM Corporation, entered into a Stock Purchase Agreement with S-P
Properties, Inc. Under this agreement, S-P Properties, Inc. purchased 4,006,589
newly issued shares of IDM Corporation common stock, representing 47.5% of the
issued and outstanding common stock of IDM Corporation. Under this transaction,
S-P Properties, Inc. acquired a controlling interest in IDM Corporation, and its
affiliates. One of IDM Corporation's wholly owned subsidiaries includes IDM
Participating Income Corporation, the general partner of the former general
partner (IDM Participating Income General Partners' Co. - II, a California
limited partnership) of Registrant. S-P Properties, Inc. is controlled by
William J. Carden, who is an officer, director and shareholder thereof. Mr.
Carden is also the founder, President and a director of CGS Real Estate Company,
Inc. Mr. Carden was a consultant to IDM beginning in 1994.

CHANGE IN CONTROL

NewPic gained control of the Partnership through a solicitation of
proxy/consents which commenced in August, 2000. The proxy/consents granted
authority to (1) remove and expel the former general partner of the Registrant,
IDM Participating Income General Partners' Co. - II, and (2) elect NewPic as the
replacement general partner. NewPic was formed in 1999 by four limited partners
of the Partnership. NewPic obtained the proxy/consents of a majority of the
limited partnership Units, and on September 29, 2000, notified the former
general partner of the results of the voting. The former general partner
disputed the results of the vote, refused to turn over Partnership records to
NewPic, and refused to cease acting as general partner of the Registrant. As a
result, NewPic filed legal action (the "Legal Action") in the name of the
Partnership on October 25, 2000, and on February 2, 2001 the Partnership
obtained a preliminary injunction that, among other things, restrained the
former general partner and other defendants from acting or purporting to act as
general partner of the Registrant, and further ordered the defendants to provide
the Partnership's records to NewPic. See the detailed discussion of the Legal
Action under "LEGAL PROCEEDINGS" below. On February 21, 2001, the former general
partner began turning over Partnership records to NewPic.

LOAN SUMMARIES

The discussion below respecting loan summaries is based upon information
provided in part by the former general partner. The Partnership has not and
cannot vouch for the veracity or reliability of information and records provided
by the former general partner. Furthermore, certain required documents, such as
appraisals and deeds of trust, were missing from the records provided by the
former general partner. As more fully discussed below, as of the date hereof the
Partnership has only one loan outstanding, an unsecured note due from CGS Real
Estate Company, Inc. in the face amount of $1,643,530. That note is in default
and fully reserved at December 31, 2000.

HARBOR PLAZA LOAN. In October 1988, the Partnership funded a $1,380,000 loan to
Harbor Plaza, Ltd. (an affiliate of the former general partner) to refinance an
existing loan on the Harbor Plaza project located in Port Hueneme, California.
The project is comprised of an operating single-story garden office building
totaling approximately 14,000 square feet. The loan was secured by a first deed
of trust. At December 31, 1995,a reserve of $565,000 was outstanding against
this loan. At December 31, 1996, an additional provision of $400,000 was
recorded for a total reserve of $965,000. During 1997, the former general
partner wrote off $1,030,000 of the outstanding note balance and $24,000 of
outstanding interest receivable. The remaining note balance of $350,000 was paid
off in January 1998. The Registrant believes that the write off of the Harbor
Plaza loan was done in breach of the former general partner's fiduciary duty,
and the Partnership lost at least $700,000 due to the improper write off. The
Registrant is seeking recovery of the Partnership's losses on this loan in the
Legal Action.

MEADOW WOOD VILLAGE LOAN. In March 1987, the Partnership funded a $2,100,000
loan to Meadow Wood Village, Ltd. (an affiliate of the former general partner)
for a 206 unit apartment project in Long Beach, California, secured by a second
trust deed on the property. In its fiscal year end 1997 Form 10-K, the former
general partner stated it "sold" the note and deed of trust "effective September
1, 1996 for $100,000" and that an additional $150,000 was received "related to
this note" in January 1997 from an unnamed affiliate. The former general partner
then wrote off the balance of this note in 1996. The Registrant believes that
the write off of the Meadow Wood Village loan was done in breach of the former
general partner's fiduciary duty, and the Partnership lost at least $1,850,000
due to the improper write off. The Registrant is seeking recovery of the
Partnership's losses on this loan in the Legal Action.

VILLA REDONDO LOAN. In October 1989, the Partnership began funding a $12,000,000
loan ($7,100,000 at December 31, 1996) to IDM Apartments Corporation (an
affiliate of the former general partner) for the Villa Redondo Apartments
project located in Long Beach, California. The project is a 125 unit apartment
complex. The loan was secured by a junior deed of trust. Under the Plan, the
secured principal balance was reduced to $3,017,000. The remainder was converted
to an unsecured non-interest-bearing note due December 31, 1997. IDM Apartments
Corporation filed a second Chapter 11 bankruptcy in November 1994. This loan was
fully reserved at December 31, 1996 by the former general partner. During 1997,
the Partnership received a $300,000 principal payment. This payment was recorded
as a reserved receivable recovery. In the first quarter of 1997, the remaining
note receivable and interest receivable balances were written off by the former
general partner. The Registrant believes that the write off of the Villa Redondo
loan was done in breach of the former general partner's fiduciary duty, and the
Partnership lost at least $3,272,000 due to the improper write off. The
Registrant is seeking recovery of the Partnership's losses on this loan in the
Legal Action.

BEACH & LAMPSON LOAN. In December 1991, the Partnership funded a $3,500,000 loan
to IDM (an affiliate of the former general partner) on Pads A, E, and F of the
Beach and Lampson retail center. The loan was secured by a first deed of trust.
The borrower repaid $1,100,000 during 1992. Under the Plan, the secured
principal balance was reduced to $1,333,000 and the remainder was converted to
shares of IDM common stock and distributed to the limited partners of this
Partnership. During 1996, IDM sold Pad F of the Beach and Lampson retail center
for $525,000. The former general partner reported that the net sales proceeds
received of $474,085 were repaid to the Partnership and applied as a principal
reduction on this loan. During 1996, the remaining principal balance of $858,915
was reserved in its entirety by the former general partner. After the sale, the
Partnership still held a first deed of trust on the remaining pads of the
property and the balance of the loan to the Partnership was approximately
$859,000. In August, 2000 the former general partner reconveyed the deed of
trust covering the remaining pads. The Registrant believes that there was
sufficient equity to allow for a substantial payoff on the Partnership note in
August, 2000, but that the former general partner reconveyed the deed of trust
for no consideraton resulting in damages to the Partnership of at least
$859,000. The Registrant is seeking recovery of the Partnership's losses on this
loan in the Legal Action.

During the period from 1997 through 2000, the former general partner reported
that the Partnership funded a number of new participating loans to its
affiliates. These loans are described below.

SIERRA PACIFIC PENSION INVESTORS '84 LOAN. The former general partner reported
that on April 15, 1997 the Partnership funded a loan to Sierra Pacific Pension
Investors '84, an affiliate of the former general partner, in the amount of
$200,000. The loan was represented to be secured by a second trust deed on the
Sierra Valencia property located in Tucson, Arizona. Monthly payments of $6,659,
consisting of both interest and principal, were to commence on May 15, 1997 and
continue until April 15, 2000, when the indebtedness was due in full. As of
December 31, 1999, the loan balance was reported to be $32,000. The former
general partner reported that this loan was repaid in approximately March, 2000.

SORRENTO II LAND LOAN. The former general partner reported that the Partnership
entered into a loan agreement with CGS Real Estate Company, Inc., an affiliate
of the former general partner, on August 1, 1997. Under this loan the
Partnership purportedly funded $165,000 to secure financing for a land
acquisition in San Diego, California (the "Sorrento II Land"). The former
general partner reported that in 1998 the Partnership funded an additional
$585,000 to CGS Real Estate Company, Inc., and the note from CGS Real Estate
Company, Inc. was amended to increase the loan amount to $750,110. The former
general partner never obtained or recorded a deed of trust against the Sorrento
II Land. The former general partner reported that during the first quarter of
2000 the Sorrento II Land was sold. No principal or interest payments were made
to the Partnership on this loan during 2000. Sometime during the period from
approximately April, 2000 to August, 2000, the former general partner caused CGS
Real Estate Company, Inc. to issue a new promissory note to the Partnership in
the sum of $1,643,530, purporting to collapse the Sorrento II Land loan (and the
Bally Land loan and the EVA I Land loan discussed below), into one new
promissory note. The former general partner back-dated the new note to January
3, 2000. No deed of trust was ever recorded to secure this $1,643,530 loan. Some
partial payments of interest were made on this loan, but no principal payments
have been made and it is in default. In late February, 2001, the Partnership
made a demand on CGS Real Estate Company, Inc. to bring this loan current, but
it has failed to make any further payments. Because there is no recorded
security for the loan and the note is, by its terms, non-recourse against the
borrower, the Partnership believes the note is uncollectible. The Registrant is
seeking recovery of the Partnership's losses on this loan in the Legal Action.

BALLY LAND LOAN. The former general partner reported that on December 1, 1997,
$316,500 was loaned to CGS Real Estate Company, Inc. to provide financing for a
land acquisition in Long Beach, California (the "Bally Land"). The Partnership
believes this loan was not secured by a trust deed. No interest or principal
payments were made to the Partnership during 2000. Instead, the former general
partner collapsed this obligation into the new $1,643,530 note from CGS Real
Estate Company, Inc. in 2000, as more fully discussed above.

EVA I LAND LOAN. The former general partner reported that on December 24, 1997,
the Partnership funded a $372,500 loan to NO-SO, Inc., an affiliate of the
former general partner, which the former general partner reported would be
secured by vacant land in Phoenix, Arizona. It also reported that in 1999, CGS
Real Estate Company, Inc. purchased the land from NO-SO, Inc. and assumed the
loan. The former general partner never recorded a deed of trust securing this
loan. During 2000, the former general partner made an advance of approximately
$30,000 to CGS Real Estate Company, Inc. which the former general partner has
debited to this loan. The former general partner collapsed this obligation into
the new $1,643,530 note from CGS Real Estate Company, Inc. in 2000, as more
fully discussed above.

INDEMNIFICATION OF GENERAL PARTNER
Section 16 of the Partnership Agreement provides for indemnification of the
General Partner by the Partnership under certain circumstances. Generally, the
General Partner may be indemnified out of Partnership assets for any loss or
liability arising from its conduct whenever such course of conduct does not
constitute fraud, gross negligence, or gross misconduct. Indemnification for
securities laws violations may be allowed only in certain limited circumstances
(see Section 16.2 of the Partnership Agreement). In the case of a liability
arising from an alleged violation of the securities laws, the General Partner
may obtain indemnification only if the General Partner is successful in
defending the action and the court specifically approves the indemnification or,
if the action is settled, the court specifically approves the settlement and the
indemnification of such settlement. To the extent that any indemnification is
paid, the assets of the Partnership will be depleted and the return to a limited
partner on his investment may be impaired. As the result of this indemnification
arrangement, purchasers of Partnership Units may have a more limited right of
action than they would have absent the indemnification provisions in the
Partnership Agreement. Furthermore, purchasers of Partnership Units should bear
in mind that adequate legal remedies may not be available or affordable in the
event they believe that fiduciary obligations have been breached.

ITEM 2. PROPERTIES

The Partnership owns no physical properties.

ITEM 3. LEGAL PROCEEDINGS

The Partnership, along with NewPic, is the plaintiff in a legal action
originally filed in the Los Angeles Superior Court on October 25, 2000 (the
"Legal Action"). The Legal Action seeks, among other things, damages and
injunctive relief based upon allegations of, among other things, breach of
fiduciary duty, negligence and breach of the partnership agreement against the
Partnership's former general partner (IDM Participating Income General Partners'
Co. - II), the former general partner's general partner (IDM Participating
Income Corporation), and the directors and former directors (William J. Carden,
Morris Cohen and Steven Speier) of IDM Participating Income Corporation. Damages
sought in the Legal Action include recovery of loan balances written off,
forgiven, or re-lent by the former general partner. The Partnership estimates
that these damages total in excess of $8,500,000. The Complaint alleges, among
other things, that the defendants: improperly failed and refused to turn over
Partnership records to NewPic; failed to comply with the requirements of the
Partnership Agreement with respect to the maintenance of, preparation of, and
dissemination of books, records, and financial statements and reports pertaining
to the Partnership; failed to make distributions to the limited partners as
required by the Partnership Agreement; misappropriated Partnership funds, assets
and business opportunities to benefit themselves and their affiliates; re-loaned
interest and principal in violation of the Partnership Agreement, including
re-loaning principal more than once and for terms beyond the maximum aggregate
term specified in the Partnership Agreement; made loans without using the
Partnership's required Master Loan Agreement and Participating Note forms; made
loans without obtaining appraisals from an AIREA member within 90 days of their
loans; made loans where the aggregate amount of the Partnership loan and the
senior debt exceeded 85% of the appraised value of the property; and did not
collect participating profits on Partnership loans.

The former general partner removed the Legal Action to the United States
District Court, Central District of California. This removal was predicated upon
a counterclaim filed by the former general partner against NewPic and its
principals alleging a violation of federal Securities Laws in connection with
their solicitation of the consent/proxies. On January 29, 2001, the District
Court heard NewPic's application for a preliminary injunction, and on February
2, 2001 it issued a preliminary injunction that, among other things, restrained
the defendants from acting or purporting to act as general partner of the
Registrant, and further ordered the defendants to turn over Partnership records
to NewPic. The District Court Order granting the preliminary injunction is
attached as Exhibit 29 to this Form 10-K. The former general partner's requests
to stay the preliminary injunction have been denied by the District Court and
the Ninth Circuit Court of Appeals. An appeal of the grant of the preliminary
injunction is currently pending before the Ninth Circuit.

One of the issues in the Legal Action, aside from the Partnership's claim for
damages in excess of $8,500,000, is the validity of the vote to remove the
former general partner and elect NewPic as the replacement general partner. The
possibility exists that this vote may not be upheld, that NewPic would be banned
from continuing to act as general partner, that the Partnership would not
prevail in its claim for damages, and/or that the Partnership would not be able
to collect on a judgment it may receive in its favor. The Partnership believes
that the only asset left in the Partnership is the Legal Action. Trial in the
Legal Action is set for January 8, 2002.

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

None

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of December 31, 2000, the number of record holders of the 200,000 limited
partnership units is 1,645.

These securities are all of the same class, namely, limited partnership
interests (units) and were registered pursuant to a registration statement filed
under the Securities Act of 1934. The total offering was 200,000 units at
$100.00 per unit. No broker or dealer currently makes a market in the units of
the Partnership. Accordingly, there are no published price or trading volume
figures available for the units. The units have been transferred on an extremely
limited extent from time-to-time since the inception of the Partnership;
however, the market for the units is highly restricted and sporadic, especially
in view of the investor suitability requirements imposed on new purchasers by
the various state blue sky laws.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected historical financial data of the
Partnership. The selected operating and financial position data as of and for
each of the five years ended December 31, 2000 have been derived from the
audited financial statements of the Partnership. This information should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and Notes thereto.

Statement of Operations Information (in thousands, except per unit amounts)

Years Ended December 31,
--------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------

Interest income $ 200 $ 183 $ 159 $ 125 $ 254
Recovery of reserved
receivables 0 0 0 300 250
General and administrative (54) (58) (73) (61) (64)
Provision for possible
losses (1,828) 0 0 (89) (1,099)
--------- --------- --------- --------- ---------
Net income (loss) $ (1,682) $ 125 $ 86 $ (275) $ (659)
========= ========= ========= ========= =========
Net income (loss) per
limited partnership
units outstanding $ (8.41) $ .62 $ .43 $ (1.37) $ (3.26)
========= ========= ========= ========= =========
Cash distributions per
limited Partnership
units outstanding $ 0 $ 0 $ 0 $ 0 $ 0
========= ========= ========= ========= =========

Balance Sheet Information (in thousands)

December 31,
--------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Cash/interest receivable
(net of reserve) $ 1 $ 212 $ 9 $ 107 $ 633
Loans to affiliates
(net of reserve) 0 1,471 1,542 1,370 415
Receivables from affiliate 0 0 0 1 150
Prepaid expenses 0 0 7 0 0
-------- -------- -------- -------- --------
Total Assets $ 1 $ 1,683 $ 1,558 $ 1,478 $ 1,198
======== ======== ======== ======== ========

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations includes certain forward looking statements reflecting the
Partnership's expectations in the near future; however, many factors which may
affect the actual results, especially changing regulations, are difficult to
predict. Accordingly, there is no assurance that the Partnership's expectations
will be realized.

Overview:

The following discussion should be read in conjunction with the Selected
Financial Data (Item 6. of this Form 10-K) and the Partnership's Financial
Statements and Notes thereto beginning on page F-1 of this Form 10-K. The
bankruptcy proceeding and the Plan, which is discussed in detail in Item
1.Business, has had, and will continue to have, a material and substantial
impact on the Partnership's liquidity, capital resources and results of
operations, which are discussed below.

Results of Operations:

COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999.

Sometime during the period from approximately April 2000 to August 2000, the
former general partner caused CGS Real Estate Company, Inc. to issue a new
promissory note to the Partnership in the sum of $1,643,530, purporting to
collapse the Sorrento II land loan, the Bally land loan, and the Eva I land loan
discussed in Item I, page 5 above. The current general partner has fully
reserved this loan because it is in default, it is unsecured as a result of
never having been recorded against any specific property and the borrower has
shown no intention of repaying it.

COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998.

Interest income increased by $24,000 principally as a result of a full year of
interest recognized on the funding of an additional $585,000 in 1998 to an
affiliate on an existing loan. General and administrative expenses decreased by
$15,000, primarily due to a decrease in insurance and data processing costs.
Further, lower accounting fees were incurred in 1999 when compared to the prior
year.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the Index to Financial Statements on page F-1 of this Form
10-K.

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

In March 2001, Arthur Andersen LLP ("AA") resigned as the Registrant's
independent accountant. AA stated it had only been retained to conduct financial
statement reviews in connection with Registrant's year 2000 first, second and
third quarter SEC Form 10-Qs, and that in March 2001 IDM GP and its controlling
persons requested that AA not provide further auditing or other services to the
Registrant. AA reported that this request was based on the fact that Registrant
and NewPic were engaged in litigation with IDM GP, and AA was still engaged by
IDM GP's affiliates and controlling persons to perform auditing and other
services in connection with their proposed consolidation of IDM GP's affiliates
and controlling entities into a proposed real estate investment trust, American
Spectrum Realty, Inc. AA had been engaged by the Registrant effective May 3,
2000. During the period from May 2000 through March 2001, there were no
disagreements reported between the Registrant and AA on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report. The Registrant is currently undertaking a review of
services rendered by Registrant's prior auditors to ascertain the extent, if
any, of errors, negligence or breach of standard accounting practice or
procedures.

In March 2001 Registrant appointed Cacciamatta Accountancy Corporation ("CAC")
as independent auditor. The Registrant has not consulted CAC on items which (1)
involved the application of accounting principles to a specified transaction,
either completed or proposed, or involved the type of audit opinion that might
be rendered on the Registrant's financial statements, (2) concerned the subject
matter of a disagreement or a reportable event with Registrant's former
accountants, or (3) relate to a review of services rendered by Registrant's
prior auditors.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The officers and directors of NewPic, the General Partner of Registrant, are:

- ---------------------------------------------------------------------------------------------------------------
LIMITED
PARTNERSHIP
NEWPIC UNITS
NAME (1) BACKGROUND INFORMATION POSITION OWNED
- ---------------------------------------------------------------------------------------------------------------

Richard Meehan Age 65. For the last five years he has practiced President 1,000
as a dentist specializing in endontics. Owns 5 Director
apartment buildings (76 units) and 1 commercial
building (2 tenants). Investor in numerous IDM
partnerships. Member of IDM Bankruptcy
Unsecured Creditors Committee. Active in
IDM/Meadowood Village investors group that
obtained favorable settlement for investors.

- ---------------------------------------------------------------------------------------------------------------
Wesley Groom Age 65. Retired since 1996. Prior to 1996 he Secretary 3,077.86
was an insurance claims adjuster - 28 years with Director
Allstate Insurance & 5 years with independent adjusting
firm.
- ---------------------------------------------------------------------------------------------------------------
Jack Stellato Age 72. For the last five years he has been a Treasurer 152.27
retired real estate investor. From 1954-1970 he Director
was involved in buying, selling and managing
real estate (single family homes, large apartment
buildings, office buildings). Purchased
numerous IDM investments from 1970-1991.
Former director of IDM Corp. 1980-1989.
- ---------------------------------------------------------------------------------------------------------------
William Yetter Age 73. During the last five years he has been Director 118.73
retired. Aerospace Research Engineer 1951-
1984. Investor in numerous real estate limited
partnerships. Licensed representative for IDM
Securities 1984-1993.
- ---------------------------------------------------------------------------------------------------------------

(1) The address for all persons listed is: 19401 South Vermont, Suite K100,
Torrance, CA 90502

The principals of NewPic own an aggregate of 4348.86 units, approximately 2.17%
of the outstanding limited partnership units of Registrant. In addition, NewPic
controls 1% of the outstanding units by virtue of being the General Partner.

There have been no events under any bankruptcy act, no criminal proceedings, and
no judgments or injunctions material to the evaluation of the ability and
integrity of any current director or officer during the past five years. The
Partnership believes the issuance of the preliminary injunction in the Legal
Action is material to an evaluation of the ability and integrity of the
directors of the former general partner.

ITEM 11. MANAGEMENT REMUNERATION

The Registrant is a California Limited Partnership and has no officers or
directors. No options to purchase securities of the Registrant have been granted
to any person.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See Item 10 above for the beneficial ownership of limited partnership units by
officers and directors individually and by the General Partner. Management knows
of no holders of 5% or more of the units outstanding.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As described in Item 1. BUSINESS, and Item 3, LEGAL PROCEEDINGS, the Registrant
has loaned funds to IDM, the parent of the former general partner and to other
affiliates of the former general partner. All transactions undertaken by the
former general partner with its affiliates are under investigation and subject
to claims in the Legal Action.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

A. EXHIBITS:
(3) The Amended and Restated Agreement of Limited Partnership
previously filed as Exhibit 3 to the Registrant's Registration of Securities on
Form 10 dated April 28, 1988 (Registration No. 0-16832) which is incorporated
herein by reference.
(10) Master Loan Agreement and Participating Notes previously filed as
Exhibit 10 to the Registrant's Registration of Securities on Form 10 dated April
28, 1988 (Registration No. 0-16832) which is incorporated herein by reference.
(28) The Disclosure Statement and Joint Plan of Reorganization of IDM
Corporation and its Affiliated Debtors previously filed as Exhibit 28 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1992 filed on
April 14, 1993 (Commission No. 0-16832) which is incorporated herein by
reference.
(29) District Court Order Granting Application For Preliminary
Injunction filed January 29, 2001. *
- ---------------
* To be filed by amendment

B. FINANCIAL STATEMENT SCHEDULES

All schedules are omitted as they either are not required or are not applicable,
or the required information is set forth in the financial statements and notes
thereto.

C. REPORTS ON FORM 8-K

There were no reports on Form 8-K filed during the fourth quarter of fiscal
2000.

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.

IDM PARTICIPATING INCOME CO. - II,
A California Limited Partnership

NewPic GP Corporation
General Partner

April 17, 2001 /S/ Richard Meehan
------------------------
Richard Meehan
President and CEO

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 and on the dates indicated.

April 17, 2001 /S/ Richard Meehan
------------------------
Richard Meehan
Director
NewPic GP Corporation

April 17, 2001 /S/ Jack Stellato
------------------------
Jack Stellato
Director
NewPic GP Corporation

INDEX TO FINANCIAL STATEMENTS

PAGE

Independent Auditors' Report F-2

Balance Sheets - December 31, 2000 and 1999 F-3

Statements of Operations and Partners' Capital -
for the years ended December 31, 2000, 1999, and 1998 F-4

Statements of Cash Flows - for the years ended
December 31, 2000, 1999, and 1998 F-5

Notes to Financial Statements F-6

F-1

INDEPENDENT AUDITORS' REPORT

To the Partners of IDM Participating Income Company - II:

We have audited the accompanying balance sheets of IDM Participating Income
Company - II, a California limited partnership, (the "Partnership") as of
December 31, 2000 and the related statements of operations and 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 generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such statements present fairly, in all material respects, the
financial position of IDM Participating Income Company - II as of December 31,
2000 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

/S/ CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California
April 12, 2001

F-2

INDEPENDENT AUDITORS' REPORT

Registrant's financial statements for fiscal 1999 and 1998 were audited by
Deloitte & Touche LLP, Houston, Texas, whose report thereon dated February 25,
2000, was unqualified.

Registrant has been unable to obtain Deloitte & Touche's updated auditors'
report for inclusion in this Form 10-K in spite of attempts by Registrant to do
so.

F-2A

IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Balance Sheets
December 31, 2000 and 1999
(in thousands, except unit amounts)

ASSETS
2000 1999
------ ------

Cash ................................................. $ 1 $ 37

Loans to affiliates

Interest receivable, less allowance
of $179 and $0 .................................. 0 175

Principal, less allowance of $2,502
and $859 ........................................ 0 1,471

Other, less allowance of $6 and $0 .............. 0 0

------ ------
$ 1 $1,683
====== ======

LIABILITIES AND PARTNERS' CAPITAL

Commitments and contingencies - -

General partner ...................................... $ 0 $ 440

Limited partners
200,000 units authorized, issued and outstanding ..... 1 1,243
------ ------
Total partners' capital .............................. 1 1,683
------ ------
Total liabilities and partners' capital .............. $ 1 $1,683
====== ======
Limited partners' equity per unit .................... $ 0 $ 6.22
====== ======

The accompanying notes are an integral part of these financial statements.

F-3

IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Statement of Operations and Partners' Capital
For The Year Ended December 31, 2000
(in thousands, except unit and per unit amounts)

General Limited
Partner Partners Total
---------- ---------- ----------

Interest income ............................ $ 2 $ 198 $ 200

Provision for possible losses .............. (441) (1,387) (1,828)

General and administrative expenses ........ (1) (53) (54)
---------- ---------- ----------
Net loss .............................. (440) (1,242) (1,682)

Partners' capital - beginning of year ...... 440 1,243 1,683

Distributions to partners .................. 0 0 0
---------- ---------- ----------
Partners' capital - end of year ............ $ 0 $ 1 $ 1
========== ========== ==========
Net loss per limited partnership
unit outstanding ...................... $ 6.22
==========
Number of limited partnership
units outstanding ..................... 200,000
==========

The accompanying notes are an integral part of these financial statements.

F-4

IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Statement of Operations and Partners' Capital
For The Year Ended December 31, 1999
(in thousands, except unit and per unit amounts)

General Limited
Partner Partners Total
---------- ---------- ----------

Interest income (Note 2) ............. $ 2 $ 181 $ 183

General and administrative
expenses (Note 3) ............... (1) (57) (58)
---------- ---------- ----------
Net income ...................... 1 124 125

Partners' capital - beginning of
year ............................ 439 1,119 1,558

Distributions to partners ............ 0 0 0
---------- ---------- ----------
Partners' capital - end of year ...... $ 440 $ 1,243 $ 1,683
========== ========== ==========
Net income per limited
partnership unit outstanding .... $ .62
==========
Number of limited partnership
units outstanding ............... 200,000
==========

The accompanying notes are an integral part of these financial statements.

F-4A

IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Statement of Operations and Partners' Capital
For The Year Ended December 31, 1998
(in thousands, except unit and per unit amounts)

General Limited
Partner Partners Total
---------- ---------- ----------

Interest income (Note 2) ................... $ 2 $ 157 $ 159

General and administrative expenses (Note 3) (1) (72) (73)
---------- ---------- ----------
Net income ............................ 1 85 86

Partners' capital - beginning of year ...... 438 1,034 1,472

Distributions to partners .................. 0 0 0
---------- ---------- ----------
Partners' capital - end of year ............ $ 439 $ 1,119 $ 1,558
========== ========== ==========
Net income per limited partnership
unit outstanding ...................... $ .43
==========
Number of limited partnership
units outstanding ..................... 200,000
==========

The accompanying notes are an integral part of these financial statements.

F-4B

IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Statements of Cash Flows
For the Years Ended December 31, 2000, 1999, and 1998
(in thousands)

2000 1999 1998
-------- -------- --------
Cash flows from operating activities:

Net income (loss) ............................. $(1,682) $ 125 $ 86
Adjustments to reconcile net
income to net cash (used in)
provided by operating activities:
Provision for possible losses ............ 1,828 0 0
(Increase) decrease in interest receivable (178) (174) 12
(Increase) decrease in due from affiliate. (6) 0 1
Decrease (increase) in prepaid expenses .. 0 7 (7)
(Decrease) increase in accounts payable .. 0 0 (6)
-------- -------- --------
Net cash (used in) provided by operating
activities ............................ (38) (42) 86
-------- -------- --------
Cash flows from investing activities:

Loans to affiliates ........................ (30) 0 (585)
Collections from loans to affiliates ....... 32 71 413
-------- -------- --------
Net cash provided by (used in)
investing activities .................. 2 71 (172)
-------- -------- --------
Net increase (decrease) in cash ............... (36) 29 (86)

Cash at beginning of year ................ 37 8 94
-------- -------- --------
Cash at end of year ...................... $ 1 $ 37 $ 8
======== ======== ========

Supplemental schedule of non-cash investing and financing activities:

Rollup of outstanding loans and interest
receivable into a new loan .................. $ 174 $ 0 $ 0
======== ======== ========

The accompanying notes are an integral part of these financial statements.

F-5

IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Notes to Financial Statements

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

IDM Participating Income Company-II, a California limited partnership (the
"Partnership"), was formed in 1986 for the purpose of lending funds to various
affiliated companies. The former general partner, IDM Participating Income
General Partners' Co.-II, an affiliate of IDM Corporation ("IDM"), contributed
an amount equal to one percent of the limited partners' contributed capital. All
organizational, offering and operating expenses of the Partnership were borne by
the former general partner or its affiliates. Profits, losses and distributions
are allocated to the partners in accordance with their partnership interest
until the partners have received a 12% cumulative annual return, at which time
profits, losses and distributions will be allocated 85% among the limited
partners and 15% to the General Partner. The new General Partner is NewPic GP
Corporation (NewPic). See commitments and contingencies below for a discussion
of the election of NewPic as the General Partner and the legal action filed
against the former General Partner.

REORGANIZATION

IDM was impacted by an economic recession, especially the decline in real estate
values, the state of disarray in the savings and loan industry and the limited
availability of commercial real estate loans from domestic and international
banks. On July 10, 1992, IDM, together with certain affiliates, filed for
protection under Chapter 11 of the United States Bankruptcy Code. The Chapter 11
filing allowed IDM as debtor in possession to continue its business operations
without interruption under the supervision of the bankruptcy court. On March 10,
1993, an order confirming the Reorganization Plan of IDM (the "Plan") was
entered by the United States Bankruptcy Court for the Central District of
California, Northern Division. The Plan became effective on March 22, 1993.

BASIS OF FINANCIAL STATEMENTS

The Partnership maintains its books and prepares its financial statements in
accordance with generally accepted accounting principles. However, the
Partnership prepares its tax return on the accrual basis of accounting as
defined by the Internal Revenue Code with adjustments to reconcile book and
taxable income (loss) for differences in the treatment of certain income and
expense items. The accompanying financial statements do not reflect any
provision for federal or state income taxes since such taxes are the obligation
of the individual partners.

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the loans to affiliates at December 31, 1999 cannot be
determined due to the related party nature of these receivables.

F-6

IDM Participating Income Company - II
Notes to Financial Statements
Page two

LOANS TO AFFILIATES

The reserve for possible losses is established by provisions charged to expense.
The reserve is based on management's assessment of the loans outstanding, and on
prevailing and anticipated economic conditions. The valuation of the loans
outstanding depends on the valuation of the properties, if any, securing such
loans. Future undiscounted cash flows of the properties securing such loans
would normally be estimated and compared to the carrying amount of the loans to
determine if impairment has occurred. If the sum of the expected future
undiscounted cash flows is less than the carrying amount of the loans, the
Partnership shall recognize a reserve to reduce the carrying amount of the
outstanding loan.

Because the determination of fair value is based upon projection of future
economic events, the amounts ultimately realized at disposition may differ
materially from the net carrying value as of December 31, 2000. The cash flows
used to determine fair value and net realizable value are based on good faith
estimates and assumptions developed by management. Unanticipated events and
circumstances may occur and some assumptions may not materialize; therefore,
actual results may vary from the estimates and the variances may be material.

REVENUE RECOGNITION

Interest income is recognized as provided for under the Plan except for when, in
the opinion of management, such amounts are uncollectible. All interest
receivable at December 31, 2000 has been reserved.

CALCULATION OF NET INCOME PER LIMITED PARTNERSHIP UNIT

Net income per limited partnership unit is determined by dividing net income by
the 200,000 limited partnership units outstanding presented.

F-6A

IDM Participating Income Company - II
Notes to Financial Statements
Page three

2. LOANS TO AFFILIATES

The Partnership made loans to provide financing to IDM Corporation and its
affiliated companies as follows (in thousands):

2000 1999
------------------------------ ------------------------------
Balance Reserve Net Balance Reserve Net
-------- -------- -------- -------- -------- --------

IDM Corporation:

Beach & Lampson
Stanton, CA
(past due December 1997) ........... $ 859 $ (859) $ 0 $ 859 $ (859) $ 0

Other affiliated companies:

Sierra Pacific Pension Investors '84
Sierra Valencia, Tucson, AZ
(due April 2000) ................... 0 0 0 32 0 32

CGS Real Estate Company, Inc.
Sorrento II Land, San Diego, CA
(due December 2003) ................ 0 0 0 750 0 750

CGS Real Estate Company, Inc.
Bally Land, Long Beach, CA
(due December 2002) ................ 0 0 0 316 0 316

CGS Real Estate Company, Inc.
Land Development, Phoenix, AZ
(due January 2005) ................. 1,643 (1,643) 0 373 0 373
-------- -------- -------- -------- -------- --------
$ 2,502 $(2,502) $ 0 $ 2,330 $ (859) $ 1,471
======== ======== ======== ======== ======== ========

The loan activity for 2000, 1999 and 1998 follows (in thousands):

2000 1999 1998
------------ ------------ ------------
Balance at beginning of year $ 1,471 $ 1,542 $ 1,370

Additions:
Increase in loan balances 204 0 585

Deductions:
Collections of principal (32) (71) (413)
Provisions for possible losses (1,643) 0 0
------------ ------------ ------------
Balance at close of year $ 0 $ 1,471 $ 1,542
============ ============ ============

F-6B

IDM Participating Income Company - II
Notes to Financial Statements
Page four

The Beach & Lampson loan was reserved in its entirety during 1996 resulting in a
net book value of $0. To the extent that cash flow was available, the
Partnership was to receive all of its allowed Secured Debt of this loan with
interest at 8% per year through December 31, 1997. No interest has been accrued
on this loan since the bankruptcy filing. During 1996, IDM Corporation sold Pad
F of the Beach and Lampson retail center for $525,000. The net sales proceeds
received of $474,085 were repaid to the Partnership and applied as a principal
reduction on this loan.

In 1997, the Partnership funded four new participating loans to affiliates. Each
loan was to be secured by real property and bear interest at a variable rate
determined by the Federal Reserve of San Francisco's discount rate plus a 3%
premium with a minimum of 12.12% and a maximum of 15.15%. The interest rate was
to be adjusted the last day of March, June, September and December of each year
until note agreement is fulfilled. The current interest rate is 12.12%. Each
loan was to have a term of five years and is more fully described below.

On April 15, 1997, the Partnership funded a loan to Sierra Pacific Pension
Investors '84, an affiliate of the former general partner, in the amount of
$200,000. The loan was to be secured by a second trust deed on the Sierra
Valencia property located in Tucson, Arizona. Monthly payments of $6,659,
consisting of both interest and principal, commenced on May 15, 1997 and were to
continue until April 15, 2000, when the indebtedness was due in full. For the
years ended December 31, 2000, 1999, and 1998, the Partnership recognized
interest income of $1,000, $8,000, and $16,000, respectively, related to this
loan. The December 31, 1999 balance of $32,000 was repaid in March 2000.

The Partnership entered into two loan agreements with CGS Real Estate Company,
Inc., an affiliate of the former general partner. On August 1, 1997, the
Partnership funded $165,000 to finance a land acquisition in San Diego,
California (Sorrento II Land). On December 1, 1997, an additional $316,500 was
funded to provide financing for a land acquisition in Long Beach, California
(Bally Land). Both loans were to be secured by second trust deeds and have a
term of five years. Interest only payments were due monthly in arrears. In 1998,
the Partnership funded an additional $585,000 to CGS Real Estate Company, Inc.
The existing loan made in August 1997 was amended, increasing the loan amount to
$750,110. The loan term was extended to December 31, 2003. For the years ended
December 31, 2000, 1999, and 1998, the Partnership recognized interest income of
$0, $130,000, and $97,000, respectively, related to these loans. No interest or
principal payments were received on these loans in 2000. Rather, the principal
and accrued interest were collapsed into the Eva I loan discussed below.

On December 24, 1997, the Partnership funded a $372,500 loan to NO-SO, Inc., an
affiliate of the former general partner, to provide financing for a land
development in Phoenix, Arizona (Eva I). In 1999, CGS Real Estate Company, Inc.
purchased the land from NO-SO, Inc. and reportedly assumed the loan. The loan
was to be secured by a second deed of trust and has a term of five years.
Interest only payments are due monthly in arrears. For the years ended December
31, 2000, 1999, and 1998, the Partnership recognized interest income of
$199,000, $45,000, and $45,000, respectively, related to this loan. As of
January 3, 2000 this loan was re-written for an additional five years in the
principal amount of $1,643,530. No deed of trust was recorded. Only partial
payments totaling $21,000 of interest income were actually received on this loan
and the loan is in default. All principal and accrued interest have been
reserved.

F-6C

IDM Participating Income Company - II
Notes to Financial Statements
Page five

3. RELATED PARTY TRANSACTIONS

As described in Note 2, the Partnership has loaned funds to IDM Corporation, the
parent of the former general partner and to other affiliated entities of IDM
Corporation.

Affiliates of the general partner are reimbursed for accounting, legal and data
processing services provided to the Partnership. In 2000, 1999, and 1998, CGS
Real Estate Company, Inc. and its subsidiaries received $3,000, $7,000, and
$9,000 respectively, for such services.

4. COMMITMENTS AND CONTINGENCIES

Section 16 of the Partnership Agreement provides for indemnification of the
General Partner by the Partnership under certain circumstances. Generally, the
General Partner may be indemnified out of Partnership assets for any loss or
liability arising from its conduct whenever such course of conduct does not
constitute fraud, gross negligence, or gross misconduct. Indemnification for
securities laws violations may be allowed only in certain limited circumstances
(see Section 16.2 of the Partnership Agreement). In the case of liability
arising from an alleged violation of the securities laws, the General Partner
may obtain indemnification only if the General Partner is successful in
defending the action and the court specifically approves the indemnification or,
if the action is settled, the court specifically approves the settlement and the
indemnification of such settlement. To the extent that any indemnification is
paid, the assets of the Partnership will be depleted and the return to a limited
partner on his investment may be impaired. As the result of this indemnification
arrangement, purchasers of Partnership Units may have a more limited right of
action than they would have absent the indemnification provisions in the
Partnership Agreement. Furthermore, purchasers of Partnership Units should bear
in mind that adequate legal remedies may not be available or affordable in the
event they believe that fiduciary obligations have been breached.

LEGAL PROCEEDINGS
- -----------------

The former general partner removed the Legal Action to the United States
District Court, Central District of California. This removal was predicated upon
a counterclaim filed by the former general partner against NewPic and its
principals alleging a violation of federal Securities Laws in connection with
their solicitation of the consent/proxies. On January 29, 2001, the District
Court heard NewPic's application for a preliminary injunction, and on February
2, 2001 it issued a preliminary injunction that, among other things, restrained
the defendants from acting or purporting to act as general partner of the
Registrant, and further ordered the defendants to turn over Partnership records
to NewPic. The former general partner's requests to stay the preliminary

F-6D

IDM Participating Income Company - II
Notes to Financial Statements
Page six

injunction have been denied by the District Court and the Ninth Circuit Court of
Appeals. An appeal of the grant of the preliminary injunction is currently
pending before the Ninth Circuit.

F-6E