U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A
                                   (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, 1997
                                       OR
   (  ) 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:

                                     0-21604

             Common Goal Health Care Pension and Income Fund L.P. II
        (Exact name of small business issuer as specified in its charter)

                  Delaware                         36-3644837
               (State or other                  (I.R.S. Employer
               Jurisdiction of               Identification Number)
              incorporation or
                organization)

                            215 Main Street
                        Penn Yan, New York 14527
          (Address of principal executive offices) (Zip Code)
                            (315)536-5985
                      (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interests

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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. NO as to (1) YES as to
(2)

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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-KSB or any
amendment to this Form 10-KSB.
[X]

Isssuer's revenues for the fiscal year ended December 31, 1997 were $279,251.

The aggregate sales price of the units of Limited  Partnership  Interest held by
non-affiliates  of the  Registrant  as of March  31,  1999 was  $5,221,160  (490
investors).  As of March 31,  1999,  there was no market for these  Units and no
market is expected to develop.  The  aggregate  sales price is  accordingly  not
necessarily indicative of the price at which these Units would trade.

                  DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Prospectus of the  Registrant  dated January 12, 1990, and filed
pursuant to Rule 424(b) and Rule 424(c)  under the  Securities  Act of 1933,  as
amended,  are  incorporated  by reference into Part III of this Annual Report on
Form 10-KSB.


<PAGE>


                                PART I

Item 1.    Description of Business.

      General.

Common Goal HealthCare  Pension and Income Fund L.P. II (the  "Partnership") was
organized on May 9, 1989 as a limited  partnership  under the  Delaware  Revised
Uniform Limited  Partnership Act. The Partnership's  general partners are Common
Goal Capital Group, Inc. II ("Common Goal II" or the "Managing General Partner")
and  Common  Goal  Limited  Partnership  II (the  "Associate  General  Partner")
(collectively,  the "General Partners"). With limited exceptions, Common Goal II
has exclusive control over the business of the Partnership,  including the right
to manage the Partnership's assets. The Partnership commenced operations on July
2, 1990 after having accepted  subscriptions  for more than the requisite number
of 117,650  units of limited  partnership  interest  (the  "Units")  in a public
offering  registered  with the Securities and Exchange  Commission  (the "Public
Offering").  The  Partnership  raised a total  of  $5,221,160  when  the  Public
Offering terminated.

The Partnership's  primary business is to invest in or make mortgage loans which
to date were  secured by junior  mortgages  or deeds of trust  (and may,  in the
future include first  mortgages or deeds of trust,  but not wrap-around or other
liens which are more junior than second positions,  except where approved by the
Board of Directors) on fee or leasehold  interests in health  care-related  real
estate, including properties owned or acquired by affiliated borrowers, or other
collateral,  including  interests  in  borrowers  satisfactory  to the  Managing
General Partner (the "Mortgage Loans").  To a lesser extent, the Partnership may
make Mortgage Loans through joint ventures  formed as general  partnerships  and
may make Mortgage Loans secured by interests in  partnerships,  corporate stock,
joint ventures or leasehold interests;  provided, however, that the aggregate of
such  Mortgage  Loans  shall  be less  than  45% of the  aggregate  value of the
Partnership's  assets.  The Partnership may not make Mortgage Loans in excess of
$4,000,000  to any one entity.  In  addition,  the  Partnership  will not make a
Mortgage Loan if the amount of the aggregate mortgage  indebtedness  exceeds 90%
of the  appraised  value of the  property  underlying  the  Mortgage  Loan.  The
Partnership does not intend to make Mortgage Loans on properties with respect to
which  the debt  service  coverage  ratio is less  than 1.3 to 1,  unless  other
underwriting criteria support the Mortgage Loan. Underwriting criteria which may
be considered  include whether  loan-to-value  ratios are less than 85%, whether
there is additional collateral securing the Mortgage Loan, whether guarantees of
repayment or other credit enhancements have been provided and such other factors
as  the  Managing  General  Partner  may  deem  appropriate.  Additionally,  the
Partnership  will  require that any  Mortgage  Loan to an Affiliate  provide the
following:

(a)  Inclusion  of  a  provision  making  the  Mortgage  Loan  a  full  recourse
     obligation  of the  Affiliate  until the debt service  coverage is not less
     than 1.3 to 1 for at least 12 consecutive months;

(b)  Subordination of management fees payable to facility managers;

(c)  Subordination  of mortgage  servicing  fees payable to Common Goal Mortgage
     Company;

(d)  With  respect  to  Mortgage  Loans of which the  proceeds  will be used for
     renovations,  approval by the applicable state medical reimbursement agency
     of the renovations prior to funding;

(e)  Approval by a majority of the Board of Directors  of the  Managing  General
     Partner (including all Independent Directors);

(f)  Receipt of a fairness opinion from the Independent Advisor;

(g)  Inclusion of a yield maintenance provision for prepayments; and

(h)  Delivery by  independent  accountants of a report to the Board of Directors
     evaluating certain parameters of the proposed Mortgage Loan.

The Partnership has adhered to these  requirements in making its Mortgage Loans.
Mortgage  Loans  which  are  deemed  to have  substantially  the same  risks and
potential  rewards  as  an  owner  of  an  underlying   property  by  virtue  of
characteristics  such as participation in expected residual profits or where the
lender provided all or substantially all necessary funds to acquire the property
(such that the  borrower  has little or no equity  therein),  must be treated as
investments in the underlying properties for financial accounting purposes.  All
Mortgage Loans previously  characterized as investments in underlying properties
were paid in full in April 1995, and  therefore,  at December 31, 1997 and 1996,
no Mortgage  Loans were treated as  investments  in underlying  properties.  The
Partnership  treats its Mortgage  Loans as mortgage loans for federal income tax
purposes. See "Item 7. Financial Statements."

The existing  Mortgage Loans are, and future  Mortgage Loans are expected to be,
secured by nursing homes  (characterized  as private  institutions  that provide
fundamental  health and  rehabilitation  services  for the aged and the infirm).
Mortgage   Loans   also  may  be  secured  by   intermediate   care   facilities
(characterized  as private  institutions that serve patients with lesser degrees
of disability).  For further  information  concerning the Partnership's  present
investments in Mortgage Loans, see "Existing Mortgage Loans" below.

The Partnership's  objectives in making  investments of the type described above
are:  (i) to preserve  and protect the  Partnership's  capital;  (ii) to provide
quarterly  distributions  from  investment  income;  and  (iii) to  provide  for
potential long-term  appreciation of its Mortgage Loan investments,  principally
through participations payable at maturity of the Mortgage Loan or upon the sale
or  refinancing  of the  underlying  property  (the  "Participations").  Because
Participations  in  facility  appreciation  are paid  only  upon  maturity  of a
Mortgage Loan or a sale of the underlying facility, increased cash distributions
as a result of such  Participations are not expected to commence for a period of
five years or more from the date that the related  Mortgage  Loan is made, if at
all. It is not an objective of the Partnership to provide tax-sheltered income.

Funds  held  pending  investment  in  Mortgage  Loans  may  be  invested  by the
Partnership,  at the direction of the Managing General Partner, in United States
government securities, certificates of deposit of United States banks with a net
worth of at least $20,000,000,  repurchase agreements covering the securities of
the United States  government or governmental  agencies,  bankers'  acceptances,
commercial paper rated A-1, Prime-1 or better by Standard and Poor's Corporation
or Moody's  Investors  Service,  Inc.,  respectively,  money market funds having
assets in excess of  $100,000,000,  interest-bearing  time deposits in banks and
thrift institutions or any combination of these investments.

The  Partnership is conducting and intends to continue to conduct its operations
so that it will not become subject to regulation  under the  Investment  Company
Act of  1940.  Generally,  the  term  "investment  company"  might  include  the
Partnership if, after a one-year period,  the  Partnership,  among other things,
were to be  engaged  primarily,  or were to hold  itself  out as  being  engaged
primarily, or were to propose to engage primarily, in the business of investing,
reinvesting or trading in securities, or if it were to have more than 40% of its
total assets, excluding cash and government securities,  invested in "investment
securities" as that term is defined in the  Investment  Company Act of 1940. The
Partnership does not currently meet this test.

Basic Policies for Mortgage Loan  Investments.  In making  Mortgage  Loans,  the
Managing General Partner  considers such relevant factors as (1) the quality and
experience of the management operating the facility; (2) the geographic area and
type of facility  (nursing home or intermediate  care or a mix of both); (3) the
location,  construction,  quality, condition and design of the facility; (4) the
current  and  anticipated  cash  flow  from  the  facility  and its  ability  to
sufficiently  cover debt service  (including the  Partnership's  Mortgage Loan),
meet operational  needs and generate  revenues  sufficient to provide  investors
with  significant   Additional   Interest,   as  defined  in  the  Partnership's
prospectus,  and potential  value to the  Partnership's  Participation;  (5) the
growth,  tax and regulatory  environment of the community in which a facility is
located;  (6) occupancy and demand for similar health care facilities with which
the  facility  would  compete;  and (7) the mix of private  and  government  pay
patients.  As a general rule,  the  Partnership  will not make Mortgage Loans on
facilities  which are located in states  which do not  restrict  the issuance of
certificates of need, unless supported by additional  factors,  such as borrower
guarantees.  Further, it is intended that Mortgage Loans will be made in various
geographic  locations  in order to achieve  portfolio  diversification,  thereby
minimizing potential effects of changes in local economic conditions and similar
risks.

Types of Mortgage Loans.  The Partnership  makes Mortgage Loans on fee interests
(or other  beneficial  interest  essentially  equivalent  to a mortgage  on real
property).  All real estate underlying Mortgage Loans is used in the health care
industry,  particularly  real estate used as nursing home and intermediate  care
facilities.   The  Partnership  will  not  make  construction  loans  except  in
connection with renovation or additions to existing facilities.  The Partnership
may also make Mortgage  Loans to enable  borrowers to acquire newly  constructed
properties  and may commit to invest in or make  Mortgage  Loans with respect to
properties  under  construction  or prior  to  construction,  provided  any such
commitment is subject to satisfactory  completion of construction (and licensure
by regulatory agencies, as applicable) by a specified date. However, in no event
will  such  construction  loans,  other  than  those  made  in  connection  with
renovations or additions to existing facilities, in the aggregate, exceed 20% of
the gross proceeds received from the Public Offering. As with the Mortgage Loans
made to date, the  Partnership  expects that any future Mortgage Loans will have
terms of not less than  three nor more than ten  years.  Mortgage  Loans of five
years or less may be subject to one or more extensions,  which together with the
original loan term will not exceed ten years in duration, with all principal and
deferred  interest,  if any,  payable upon maturity of the Mortgage  Loans.  The
General Partners do not, however,  generally intend to structure  Mortgage Loans
to provide for deferred interest except when it is payable in lieu of additional
interest and/or participations.

Federal Income Taxes.  The Partnership is not subject to federal income taxes as
the  liability  for  such  taxes  is  that  of  the  partners  rather  than  the
Partnership.

Other  Operating and  Investment  Policies.  Affiliates of the General  Partners
(including  partners,  officers and directors investing for their own account or
that of others) have formed, and may in the future form, limited partnerships or
other  entities  with  the  same  investment  objectives  and  policies  as  the
Partnership,  which  may  compete  with the  Partnership  for  investments.  The
Partnership's  amended and restated  agreement of limited  partnership  provides
that neither the General  Partners nor their  Affiliates  have any obligation to
present any particular  investment  opportunity to the  Partnership,  subject to
certain limitations set forth below.

The General  Partners  believe that conflicts of interest will arise only if the
Partnership  is seeking  investments  at a time when an  Affiliate  with similar
investment  objectives is seeking to make Mortgage  Loans.  In such an event, if
affiliated  entities have similar  investment  objectives  and policies and have
funds  available  at the same  time as the  Partnership,  the  Managing  General
Partner  will review the  investment  portfolio of each entity and will make the
investment on the basis of such factors,  among others,  as size of  investment,
anticipated cash flow, yield,  portfolio  diversification,  type and location of
the property on which the Mortgage Loan will be made,  proposed loan terms,  the
amount of funds  available  and the length of time the funds of each entity have
been available, as further described below.

The Managing  General  Partner will attempt to resolve any conflicts of interest
between the  Partnership  and others by  exercising  the good faith  required of
fiduciaries.  The Managing  General  Partner  believes that generally it will be
able to resolve conflicts on an equitable basis and will adhere to the following
criteria in  determining  whether the  Partnership  or one of the other entities
with which it or its Affiliates have a relationship  or obligation,  should seek
to make a  particular  Mortgage  Loan:  (i)  whether the cash  required  for the
particular  Mortgage  Loan is more  or  less  than  the  amount  that  would  be
appropriate for that entity to commit to an investment;  (ii) whether the nature
of the potential cash flow to be derived from the particular  Mortgage Loan will
conform with that  entity's  investment  objectives;  (iii)  whether that entity
already has  Mortgage  Loans with the same  borrower;  (iv) whether the Mortgage
Loan would satisfy that entity's  objective of geographic  diversification;  (v)
whether the Mortgage  Loan can be  structured  to meet that  entity's  principal
investment  objectives;  (vi) whether the Mortgage  Loan is being  acquired in a
transaction  together with other Mortgage Loans not suitable for  acquisition by
that  entity;  (vii) the  estimated  income tax  effects,  if any, on the entity
resulting  from the  proposed  structure of the  Mortgage  Loan;  and (viii) the
length of time since  that  entity has made a  Mortgage  Loan  investment.  Such
conflicts will be resolved in the best judgment of the Managing General Partner.
If, based on the foregoing  criteria,  the Managing  General Partner  determines
that the making of a particular  Mortgage Loan is equally  appropriate  for more
than one entity  affiliated  with the General  Partners,  then the Mortgage Loan
will be made by the  entity  which was  formed  first or which has had its funds
available  for  investment  for the longest  period as determined by the General
Partners in their  discretion.  The principal  purpose of these provisions is to
enable the General Partners and their Affiliates, while arranging the investment
portfolios of the  Partnership  and any affiliated  entities which might then be
seeking suitable  Mortgage Loans and other  investments,  to select the Mortgage
Loan or other  investment  which they believe is most suitable for investment by
the Partnership or by any such other affiliated entity. The foregoing provisions
are not intended to relieve the General Partners of their fiduciary  obligations
to the  Partnership.  The General  Partners and their  Affiliates  will have the
right to make an investment  after the  Partnership  has declined an investment,
even if the Partnership still has uncommitted funds available.

In connection  therewith,  Common Goal Health Care  Participating  Mortgage Fund
L.P. ("Common Goal I"), an affiliated, publicly-offered limited partnership with
investment  objectives  that  are  substantially   identical  to  those  of  the
Partnership,  has  substantially  completed  acquisition of its initial mortgage
loan  portfolio.  Should  Common Goal I determine  to make funds  available  for
reinvestment  in additional  Mortgage  Loans,  Common Goal I could have priority
over the  Partnership  in  acquiring  or making the next  Mortgage  Loan  deemed
suitable  for its  investment  objectives,  subject to the  conflict  resolution
policies  set  forth  above.  In the  event  that  Common  Goal I is  unable  to
consummate  additional mortgage loans, the Partnership will have the opportunity
to make those loans.

Existing Mortgage Loans.

The principal balances  outstanding for mortgage loan receivables as of December
31, 1997 were as follows:

                                                   Second         Third
                                                  Mortgage      Mortgage
                                                    Loan          Loan
                                                  --------      --------

    Joint Venture Loan                            $ 50,950      $     -
    St. Catherine's of Tiffin                       51,500        48,313
    St. Catherine's of Bloomville                   36,000       110,887
    St. Catherine's of Fostoria                    102,000       106,979
    St. Catherine's of Findlay                     142,500       106,979
    St. Catherine's of Washington Court House       68,000       334,201
    Unallocated                                         -         47,341
                                                  --------      --------
                                  Subtotal         450,590       754,700
                                                  --------      --------

                                         TOTAL                $1,205,290
                                                              ==========

In November 1998, the St. Catherine's  facilities were leased to the Third Party
Lessee. The Third Party Lessee did not assume the St. Catherine's loans.

Joint  Venture  Loan.  In 1989,  the  Partnership  entered into a joint  venture
agreement with Common Goal Health Care Participating Mortgage Fund, L.P. ("CGI")
to make a mortgage loan (the "Joint Venture Loan") to two unaffiliated Tennessee
limited  partnerships  (the  "Borrowers").  The Joint Venture Loan was funded on
August 1, 1990, in the original  principal  amount of $3,430,114  ($3,400,114 at
December  31, 1991) with Common Goal I  contributing  100% of such amount to the
joint venture at that time.  The  Partnership  contributed  $95,600 to the joint
venture.  The Joint Venture Loan requires payment of Basic Interest at a rate of
13.7% per annum. The loan also requires payment of additional interest at a rate
of 1.95% of gross revenues from the  collateral  securing the Joint Venture Loan
in excess of  $1,694,000  per annum.  The loan also  provides  for  payment of a
participation  equal to 30% of the  first  $1,000,000  of  increase  in the fair
market value (or gross sales price) of the  Facilities  over  aggregate  secured
indebtedness (including the Joint Venture Loan) as of the date of funding of the
Joint  Venture  Loan  and  17%  of  the  balance  of  any  such  increase.   The
participation would be payable upon sale,  refinancing of a senior mortgage loan
or at  maturity  of the Joint  Venture  Loan with the fair  market  values to be
determined at that time. The Joint Venture Loan is secured by a second  mortgage
on a  100-bed  skilled  and  intermediate  care  facility  owned  by  one of the
Borrowers as well as a collateral  assignment  of 100% of the general  partners'
and limited partners' interest in each Borrower. The security interest was taken
in the Borrowers  insofar as the  retirement and assisted care facility owned by
the other  Borrower is subject to a HUD  regulatory  agreement  which  prohibits
junior  encumbrances.  The CGI  balance  has been  paid down to  $1,567,664.  In
connection with the repayment of principal,  the Partnerships  agreed to release
the  mortgage  on  the  skilled  care  and  intermediate   care  facility.   The
Partnership's  principal balance as of December 31, 1997 was $50,590. The entire
principal balance is due at the maturity date of January 1, 2000.

At December  31,  1997,  the loan was current as to regular  interest and annual
gross revenue interest.

St.  Catherine's  Loans. The Partnership made and funded three mortgage loans to
affiliated entities (the "St. Catherine's Loans"). The Partnership's affiliation
with these entities is a result of the President and Chief Executive  Officer of
the  Managing  General  Partner  also  serving as the  President of the entities
receiving the loans.  As a result of the  refinancing of the senior debt secured
by the St.  Catherine's  Court House and Findlay  facilities,  the Partnership's
mortgage loans for these same  facilities  were refinanced on April 13, 1995 and
the outstanding  principal and Additional  Interest were  subsequently paid off.
The refinancing of the senior debt did not provide sufficient  proceeds to allow
payment in cash of the  participations  owing  under the St.  Catherine's  Court
House and Findlay Loans (the "SC Participations") in the total amount of The St.
Catherine's  borrowers  paid the SC  Participations  through (i) the issuance of
notes in the total  amount of $400,000  bearing an  interest  rate of 11.00% per
annum (a)  maturing  on the  earlier of the sale or  refinancing  of the Tiffin,
Bloomville,  Fostoria,  Washington  Court House and Findlay  Facilities (the "SC
Facilities")  or the maturity of the refinanced  senior debt (August,  2000) and
(b) cross-collateralized by second mortgage liens on the SC Facilities; and (ii)
the issuance of a contingent  payment  obligation by St.  Catherine's of Seneca,
Inc.  in the amount of  $202,500  and a  contingent  payment  obligation  by St.
Catherine's   Care  Centers  of  Fostoria,   Inc.  in  the  amount  of  $238,000
(collectively, the "CPOs").

The CPOs bear interest at an annual rate of 11.00%, which is due quarterly,  and
mature on the earlier of the sale or  refinancing  of the SC  Facilities  or the
maturity of the senior debt with South Trust  (August,  2000).  The CPOs provide
that  interest  is payable on a current  basis  provided  that the debt  service
coverage  ratios on each of the SC  Facilities is 1.2 to 1.0. In the event these
debt service coverage ratios are not maintained, the interest shall accrue until
the debt service  coverage  ratio is at least 1.2 to 1.0 or  maturity.  The CPOs
further  provide that principal is payable only to the extent that upon a resale
or refinancing of the SC Facilities,  there are sufficient proceeds to repay the
senior debt and the amounts owing under the CPOs.  The CPOs are being assumed by
an  affiliated  entity,  Will Care of Ohio,  Inc.,  and will be secured,  to the
extent they become  payable and are not paid, by a pledge of 30 shares of common
stock of St. Catherine's of Seneca, Inc.

In accordance with FASB Statement of Standards No. 66,  "Accounting for Sales of
Real Estate", the $840,500  participation cannot be recognized as income at this
time. The Partnership has recorded $400,000 of the participation amount, related
to the mortgage loan receivable,  as Deferred Revenue,  and the interest thereon
will be recognized as it is earned. Due to the contingent nature of the $440,500
in participation income due to the Partnership related to the CPO'S, such amount
has not  been  recorded  as an asset of the  Partnership  and the  participation
income and interest earned on the CPO's will be recognized only when received.

On March 13, 1997 the Managing General Partner approved loans of $425,000 to St.
Catherine's  Care  Center  of  Tiffin,  Inc.,  St.  Catherine's  Care  Center of
Bloomville,  Inc., St.  Catherine's Care Center of Washington Court House, Inc.,
St. Catherine's Care Center of Fostoria, Inc. and St. Catherine's Care Center of
Findlay, Inc., (collectively, "St. Catherine's Care Centers"), affiliates of the
Managing  General  Partner and to be secured by mortgages on the real properties
owned by each of the foregoing,  said  mortgages  being  subordinated  to senior
indebtedness  in the amount of $10,650,000  held by South Trust Bank of Alabama,
N.A. and  indebtedness of the  Partnership in the amount of $400,000.  The loans
bear interest at the rate of 13% per annum and will mature August 31, 2000.  The
Partnership  funded  the loans on April 10,  1997.  On  November  3,  1997,  the
Managing  General  Partner  approved  an  increase  in  the  loans  by  up to an
additional $425,000 to St. Catherine's Care Centers. As of December 31, 1997 the
aggregate loan balances were $739,859.  Notwithstanding approval of the increase
in the loans in November 1997, the St. Catherine's  borrowers suspended payments
of interest during the fourth quarter of 1997. Payments recommenced in February,
1998 at the default  rate of 16% per annum.  As of December  31,  1997,  the St.
Catherine's borrowers were $42,877 behind in interest payments.

The following  charts provide  certain summary  information  with respect to the
Partnership's Mortgage Loans.

                              Common Goal II Second
                                 Mortgage Loans

<TABLE>
<CAPTION>

                                                                                       St. Catherine's                 
                 Joint Venture        St. Catherine's  St. Catherine's St. Catherine's of Washington    St. Catherine's
                    Loan (1)             of Tiffin     of Bloomville    of Fostoria     Court House       of Findlay
                -----------------      -------------   --------------  --------------  ------------    ---------------
<S>                   <C>                   <C>             <C>             <C>             <C>              <C> 
Date of Loan          1990                  1995            1995            1995            1995             1995

Type of Loan       Collateral              Second          Second          Second          Second           Second
                   Assignment            Mortgage         Mortgage        Mortgage        Mortgage          Mortgage
                  of Interest             on one           on one          on one          on two            on one
                in one facility (2)      facility         facility        facility       facilities         facility

Current Principal
 Amount
 Outstanding as
 of December 31,
 1997                $50,590               $51,500         $36,000          $102,000         $68,000         $142,500

Interest Rate         13.70% (3)          11.00%(4)       11.00%(4)         11.00%(4)       11.00%(4)         11.00%(4)

Maturity           January 1, 2000     April 30, 2000   April 30, 2000   April 30, 2000   April 30, 2000    April 30, 2000

Type of Property;  100-bed skilled     44-bed nursing   30-bed nursing  102-bed nursing   50-bed nursing   40-bed and 60- 
 Location of         care and          home in Tiffin,  home in         home in Fostoria, home in           bed nursing       
 Property          intermediate care   OH               Bloomville, OH  OH                Washington        home in Findlay,
 Securing           facility in                                                           Court House, OH   OH
 Loan             Honeybrook, PA (2)

Origination Fee
 Paid to an
 Affiliate (Paid
 by Borrower)         $101,900(1)            None              None            None            None               None

Relationship to
 Partnership         Non-Affiliate        Affiliate         Affiliate       Affiliate        Affiliate         Affiliate
</TABLE>


(1)  Pursuant  to the terms of the Joint  Venture,  the  Partnership  originally
     contributed  $95,600 to the Joint Venture in connection  with a loan in the
     original principal amount of $3,430,114.  The remaining portion of the note
     was funded by Common  Goal  Health Care  Participating  Mortgage  Fund L.P.
     ("CGI").  On March 29, 1993, CGI received a principal paydown in the amount
     of  $70,000.  On November 3, 1993,  both CGI and the  Partnership  received
     principal  paydowns in conjunction  with a  restructuring  of the Loan. The
     balance of the Joint Venture Loan  attributable  to the  Partnership  as of
     December 31, 1997 was $50,590.


(2)  The Joint Venture Loan is secured by collateral  assignments of 100% of the
     general  partners  and limited  partners'  interest in each  Borrower.  The
     security  interest was taken in the Borrowers  insofar as a retirement  and
     assisted  care  facility  owned  by  the  Borrowers  is  subject  to a  HUD
     regulatory agreement which prohibits junior encumbrances on the facility.


(3)  In  addition  to Basic  Interest of 13.7%,  this loan  requires  payment of
     additional  interest at a rate of 1.95% of the  increase in gross  revenues
     from the  collateral  securing  the Joint  Venture loan over the sum of per
     annum payable in full within 45 days after the end of such fiscal year. The
     loan also  requires  additional  interest in an amount  equal to 30% of the
     first  $1,000,000  of increase in the fair market  value of the  collateral
     securing the Joint Venture Loan over its aggregate secured indebtedness and
     17% of the balance of any such  increase  in the fair market  value of such
     facilities in excess of $1,000,000 over the aggregate secured indebtedness.


(4)  Interest on the affiliated St.  Catherine's  Mortgage Loans is at a rate of
     11% per annum,  calculated  on a 365-day year for the actual number of days
     lapsed, and paid quarterly.




<PAGE>




<TABLE>
<CAPTION>
                      Common Goal II Third Mortgage Loans


                                                                      St. Catherine's                      
                     St. Catherine's  St. Catherine's St. Catherine's of Washington    St. Catherine's
                        of Tiffin     of Bloomville    of Fostoria      Court House      of Findlay      Unallocated
                     -------------   --------------  --------------  ------------    ---------------    --------------
<S>                        <C>             <C>             <C>             <C>              <C> 
Date of Loan               1997            1997            1997            1997             1997              1997

Type of Loan              Third           Third           Third           Third             Third        Third Mortgage
                         Mortgage         Mortgage       Mortgage        Mortgage          Mortgage
                          on one          on one          on one          on two            on two
                         facility        facility        facility       facilities        facilities

Current Principal
 Amount
 Outstanding as
 of December 31, 
 1997                    $48,353         $110,887         $106,979        $334,201          $106,979          $47,341

Interest Rate           13.00%(1)       13.00%(1)         13.00%(1)       13.00%(1)         13.00%(1)       13.00%(1)

Maturity              August 2000      August 2000      August 2000      August 2000      August 2000      August 2000

Type of Property;   44-bed nursing   30-bed nursing  102-bed nursing   50-bed nursing    40-bed and 60-       N/A
 Location of        home in Tiffin,  home in         home in Fostoria, home in Washington bed nursing      
 Property           OH               Bloomville, OH  OH                Court House,       home in Findlay,
 Securing                                                              OH                 OH
 Loan            

Origination Fee
 Paid to an
 Affiliate (Paid
 by Borrower)             None              None            None            None               None           None

Relationship to
 Partnership           Affiliate         Affiliate       Affiliate        Affiliate         Affiliate        Affiliate
</TABLE>

(1)  Interest on the affiliated St.  Catherine's  Mortgage Loans is at a rate of
     13.00% per annum,  calculated  on a 365-day  year for the actual  number of
     days lapsed, and paid quarterly.




Partnership Allocation of Income and Loss and Distribution.

Net Income and Net Loss.  Net income  (except with  respect to a  "Disposition,"
which includes any  Partnership  transaction  not in the ordinary  course of its
business,  including,  without  limitation,  collections of principal  payments,
equity  participation  payments,   prepayments,   prepayment  penalties,  sales,
exchanges,  foreclosures  or other  dispositions  of Mortgage  Loans held by the
Partnership,  recoveries of damage awards and insurance proceeds (other than the
receipt of subscriptions for Units),  all forms of interest payments when due on
Mortgage Loans or business or rental  interruption  insurance  proceeds) and net
loss of the Partnership is allocated  97.5% to Limited  Partners and 2.5% to the
General  Partners.  Net income arising from a Disposition is allocated  97.5% to
Limited  Partners and 2.5% to the General Partners to the extent of any negative
balances in the  capital  accounts  of the  Limited  Partners,  and then 100% to
Limited Partners in an amount necessary to bring the Limited  Partners'  capital
accounts up to an amount equal to their Original Contributions,  which means the
amount of $10.00 for each Unit less the return of any amount of uninvested funds
returned,  as defined in the  prospectus,  plus the 11.5%  preferred  cumulative
return thereon (less previous  distributions  to the Limited Partners in payment
of such  amounts).  The  remainder  of such net income is  allocated  85% to the
Limited Partners and 15% to the General Partners.

Distributions  of Cash From  Operations.  Distributions  of  Adjusted  Cash From
Operations,  defined as all receipts of interest payments on Mortgage Loans less
cash receipts used to pay operating  expenses and to repurchase  any Units (Cash
Flow) less any  amount  set aside for the  restoration  or  creation  of working
capital reserves,  are distributed 97.5% to the Limited Partners and 2.5% to the
General Partners, and are apportioned quarterly among Limited Partners of record
as of the record date declared  within 30 days after the end of each quarter and
will be paid quarterly.  No  distributions of Adjusted Cash From Operations with
respect  to any  calendar  year  are  made to the  General  Partners  until  the
following occurs:

     First,  distributions  to the  Limited  Partners  equal  to  the 9%  annual
     cumulative  return on their  Adjusted  Contributions,  defined as  Original
     Contributions  attributable  to a  Unit,  reduced  by  the  total  of  cash
     distributed  from Disposition  Proceeds and from working capital  reserves,
     for such year (plus any amounts accrued from prior years) have been made to
     the Limited Partners; and

     Second,  payment of all previously  subordinated  management  fees, if any,
     have been made.

Thereafter,  all previously subordinated amounts payable to the General Partners
with  respect to their 2.5%  interest  are paid in full to the extent  funds are
available,  and if not  available,  are  deferred  and paid  out of  Disposition
Proceeds, defined as receipts from Dispositions net of related expenses, amounts
necessary for the payment of debts and  obligations of the  Partnership  and any
amount  set  aside  for  working  capital   reserves.   The   Partnership   made
distributions  to the  Limited  Partners  in excess of the 9% annual  cumulative
return on Adjusted Contributions during 1996. The Partnership made distributions
below the 9% annual cumulative return an adjusted contributions during 1997.

Distributions  of Disposition  Proceeds.  The Managing  General  Partner has the
right to reinvest or distribute all Disposition  Proceeds  received  through the
second  anniversary  of the  final  closing  date and may  reinvest  disposition
proceeds  as  necessary  thereafter  to avoid  classification  as an  investment
company under the Investment Company Act of 1940. Non- liquidating distributions
of  Disposition  Proceeds are  distributed  in the following  order of priority,
except as otherwise required by law:

     First,  100% to the  Limited  Partners  until  the  Limited  Partners  have
     received an amount which, when added to prior  distributions of Disposition
     Proceeds and cash from reserves attributable  thereto,  equals the Original
     Contributions of the Limited Partners;

     Second,  100% to the  Limited  Partners  until  each  Limited  Partner  has
     received an amount which, when added to all prior  distributions to Limited
     Partners from all sources (including prior distributions in satisfaction of
     the 9% annual  cumulative  return but excluding  distributions  pursuant to
     above),  equals the 11.5% per annum  preferred  cumulative  return on their
     Adjusted  Contributions,  (calculated  from the first  day of the  calendar
     quarter   succeeding  the  quarter  in  which  Capital   Contributions  are
     received);

     Third,  100% to the General  Partners until they have been paid 100% of the
     subordinated  portion,  if any, of (a) the management fee, if any, and then
     (b) their 2.5% interest in Adjusted Cash From Operations;  and Fourth,  the
     remainder, 85% to the Limited Partners and 15% to the General Partners.

Dissolution.

Since it is the  intention of the  Managing  General  Partner to  liquidate  the
Partnership's  assets  between  the tenth and  fifteenth  years  after the final
closing date (the "Final Closing Date"), the Managing General Partner will adopt
the  following  procedures to provide for an orderly  liquidation:  the Managing
General Partner intends to confine the  Partnership's  investment  activities to
Mortgage  Loans with terms ending prior to the end of the tenth  anniversary  of
the Final  Closing Date and will try to sell any property  the  Partnership  has
acquired by  foreclosure or otherwise in an orderly  fashion.  Any such sales to
affiliates  of the  Partnership  or the General  Partners  ("Affiliates")  would
require the  approval of a majority of the  independent  members of the Board of
Directors of the Managing General Partner. To the extent that any Mortgage Loans
will not mature by their  terms prior to the end of such tenth  anniversary,  it
may become necessary to sell such investments.  It can be reasonably anticipated
that the  Partnership  may be  required to sell such  investments  for less than
their  outstanding  principal  balances as of the date of sale. The  Partnership
intends to reinvest  loan  proceeds  received  only as and if necessary to avoid
classification  as an  investment  company under the  Investment  Company Act of
1940.  See "Item 6.  Management's  Discussion and Analysis or Plan of Operation"
regarding possible reinvestment of mortgage loan proceeds.

Proceeds from the  liquidation  will be applied and distributed in the following
order:

     First, to the payment of creditors of the Partnership but excluding secured
     creditors whose obligations will be assumed or otherwise transferred on the
     liquidation of Partnership assets; and

     Second,  after allowance for the expenses of liquidation and the setting up
     of any  reserves  for  contingencies  which the  Managing  General  Partner
     considers  necessary,  to the  General  Partners  and  Limited  Partners in
     proportion  to and to the extent of the positive  balances in their capital
     accounts,  after net income or loss  arising  from a  Disposition  has been
     allocated,  with any excess being  distributed in accordance with the order
     of priority for non-liquidating distributions.

Notwithstanding  anything to the contrary,  the Managing General Partner has the
right to defer  liquidation if, in the opinion of the Managing  General Partner,
the sale of Partnership  assets in liquidation  would result in a material under
realization on the Partnership's assets.

Item 2. Description of Property.

The Partnership did not own any real property as of December 31, 1997.

Item 3. Legal Proceedings.

The Partnership is not a party to any material legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security  holders during the last quarter
of 1997.


                                PART II

Item 5. Market for Units of Limited  Partnership  Interest and Related  Security
Holder Matters.

The  units  of  limited  partnership  interest  (the  "Units")  are not  readily
transferable.  There is no public  market for the Units and it is not  currently
expected that any will develop.  There are restrictions upon the transferability
of Units,  including the requirement  that the General  Partners  consent to any
transferee  becoming a substituted  Unit holder (which consent may be granted or
withheld  at  the  sole  discretion  of  the  General  Partners).  In  addition,
restrictions on transfer may be imposed under state securities laws.

The Revenue Act of 1987 contains  provisions which may have an adverse impact on
investors in certain" publicly traded  partnerships." If the Partnership were to
be classified as a "publicly  traded  partnership,"  income  attributable to the
Units  would  be   characterized  as  portfolio  income  and  the  gross  income
attributable  to Units  acquired by tax-exempt  entities after December 17, 1987
would be unrelated business income, with the result that the Units could be less
marketable.  The General Partners will, if necessary,  take appropriate steps to
ensure that the Partnership will not be deemed a "publicly traded partnership."

At March 31, 1998, 522,116 Units were outstanding,  and were held by 488 holders
of record.

The Partnership made distributions to Limited Partners of $1,222,290  (including
$1,027,726 as principal distribution) or $2.34 per Unit during 1997, $482,515 or
$.92 per Unit during 1996, and $403,747 or $.77 per Unit during 1995.

Item 6. Management's Discussion and Analysis or Plan of Operation.

Liquidity and Capital Resources.

Common  Goal Health Care  Pension  and Income Fund L.P.  II, a Delaware  limited
partnership (the "Partnership"),  was formed to make mortgage loans secured by a
mix of first and junior liens on health care-related properties. The Partnership
commenced its offering of Units to the public on January 12, 1990, authorized to
sell up to 1,000,000 Units at $10 per Unit. Total gross offering proceeds raised
were  $5,221,160.  The  Partnership  commenced  operations on July 2, 1990 after
having sold the Minimum Number of Units. The offering  terminated on January 11,
1992. As of December 31, 1997,  all  available  Net Offering  Proceeds have been
invested in Mortgage  Loans and/or  short-term  investments  in accordance  with
Partnership  guidelines.   The  General  Partner  is  currently  evaluating  the
possibilities of additional investment opportunities.

As of December 31, 1997, the Partnership had made six Mortgage Loans directly or
through a joint venture.  The three Mortgage Loans  previously  characterized as
investments in the underlying  properties for financial accounting purposes were
paid off in April 1995 and  replaced by five smaller  Mortgage  Loans to various
St.  Catherine's  Facilities,  which are not characterized as investments in the
underlying properties for financial accounting purposes.

The  placement of available Net Offering  Proceeds in Mortgage Loan  investments
should result in higher  returns than are earned on temporary  investments.  The
Mortgage  Loans pay Basic  Interest  which is payable  at higher  rates than are
being earned on  temporary  investments  and provide for payments of  Additional
Interest and  Participations.  The interest  derived from the Mortgage Loans and
repayments of Mortgage Loans contribute to the  Partnership's  liquidity.  These
funds are used to make cash distributions to the Limited Partners, to pay normal
operating  expenses as they arise and, in the case of repayment  proceeds,  may,
subject to certain  exceptions,  be used to make additional  Mortgage Loans. The
movement of funds from Mortgage  Loans to short-term  investments  has increased
the Partnership's  overall liquidity,  but has lowered expected interest income.
The  Partnership  has  structured  its Mortgage  Loans to provide for payment of
quarterly distributions to Limited Partners from investment income.

The  Partnership  intends  to  maintain  initial  working  capital  reserves  of
approximately  2% of gross proceeds of the offering  (approximately  $104,423 at
December 31, 1997),  an amount which is  anticipated to be sufficient to satisfy
liquidity   requirements.   The  Managing  General  Partner,  in  its  continued
monitoring  of the level of working  capital  reserves,  had reduced the rate of
distributions  during  1997 below the 9% annual  cumulative  return an  Adjusted
Contributions.  See  "Item 1.  Description  of  Business"  and the  Notes to the
Financial  Statements  for  further  information   regarding  the  Partnership's
Mortgage Loans.

On April 13, 1995,  the St.  Catherine's,  Court House,  and Findlay  facilities
refinanced  their  senior  debt  and  the  Partnership's   mortgage  loans.  The
outstanding  principal and Additional  Interest were  subsequently paid off. The
refinancing  of the senior  debt did not  provide  sufficient  proceeds to allow
repayment of the Participations owing under the St. Catherine's Washington Court
House  and  Findlay  Loans  (the "SC  Participations")  in the  total  amount of
$840,500.  The SC  Borrowers  repaid  the SC  Participations  through:  (i)  the
issuance of notes in the total  amount of $400,000  bearing an interest  rate of
11.00% per annum (a) maturing on the earlier of the sale of  refinancing  of the
Tiffin, Bloomville, Fostoria, Washington Court House and Findlay Facilities (the
"SC  Facilities")  or the maturity of the senior debt with South Trust  (August,
2000)  and  (b)  cross-  collateralized  by  second  mortgage  liens  on  the SC
Facilities;  and (ii) the issuance of a  contingent  payment  obligation  by St.
Catherine's of Seneca,  Inc. in the amount of $202,500 and a contingent  payment
obligation by St.  Catherine's  Care Centers of Fostoria,  Inc. in the amount of
$238,000 (collectively, the "CPOs").

In accordance with FASB Statement of Standards No. 66,  "Accounting for Sales of
Real Estate", the $840,500  participation cannot be recognized as income at this
time. The Partnership has recorded $400,000 of the participation amount, related
to the mortgage loan receivable,  as Deferred Revenue,  and the interest thereon
will be recognized as it is earned. Due to the contingent nature of the $440,500
in participation income due to the partnership related to the CPO'S, such amount
has not  been  recorded  as an asset of the  Partnership  and the  participation
income and interest earned on the CPO's will be recognized only when received.

The Partnership's  balance of cash and cash equivalents at December 31, 1997 and
December 31, 1996 was $1,647,623 and $3,464,102,  respectively,  which consisted
of operating cash and working  capital  reserves.  The decrease in cash and cash
equivalents  from December 31, 1996 to December 31, 1997 of $1,816,479  resulted
from cash provided by operating activities, $160,511, net cash used in investing
of 754,700 and net cash used in financing activities,  $1,222,290. This decrease
was  partially  caused by the net cash  distributed  as dividends to the limited
partners,  $1,222,290 ($2.34 per Unit), which included $750,000 ($1.44 per Unit)
return of capital. Dividend distributions noted as a return of capital represent
those  distributions  which are in excess of current year earnings.  Part of the
expenses  for  1995  included  $116,094  paid  out in  mortgage  placement  fees
authorized by the Partnership's  Partnership Agreement. The Agreement authorized
payment of a 3% mortgage placement fee to Common Goal Mortgage Company ("CGMC"),
an affiliate of the General Partners,  in connection with the original placement
of the  Partnership  mortgage loans with the various St.  Catherine's  entities.
CGMC elected to defer the decision of whether to take such fees until  repayment
of such loans.  An aggregate  of  $4,248,841  of loans were  funded,  with their
principal  amounts fully repaid in April 1995,  for which CGMC was entitled to a
mortgage  placement fee of up to $127,468.  As consideration  for immediate cash
payment, CGMC agreed to a fee of $116,094 by the Partnership at the time of such
refinancing,  representing  payment in full of its deferred  mortgage  placement
fee. The decrease in Total Assets is a direct result of net cash  distributed as
a dividend to the limited partners.

The   Partnership  is  required  to  maintain   working   capital   reserves  of
approximately 2% of gross proceeds of the offering (approximately $104,423), but
had a balance  of  $1,647,623  at  December  31,  1997.  The  proceeds  from the
repayments are being  retained in working  capital  pending  future  investment.
These  additional  funds are being  invested  per  partnership  guidelines.  The
General  Partner  is  currently   evaluating  the  possibilities  of  additional
investment opportunities.

Results of Operations.

The Partnership commenced operations July 2, 1990, and funded its first Mortgage
Loan in  November  of 1990 (see "Item 1.  Description  of  Business" - "Existing
Mortgage  Loans").  As of June 30,  1991,  the  Partnership  had  completed  its
portfolio  of  Mortgage  Loans.  Accordingly,  the General  Partners  expect the
Partnership's earnings to remain relatively constant.

During the years ended December 31, 1997 and 1996, the Partnership  reported net
income of $199,553 and $181,568 based on total revenues of $279,251 and $268,703
and total expenses of $79,698 and $87,135,  respectively.  The Partnership's net
income per Limited  Partner  Unit was $.37 per Unit in 1997 and $.34 per Unit in
1996. The Partnership's distributions to Limited Partners were $2.34 per Unit in
1997  and $.92 per Unit in 1996.  The 1997  dividend  distributions  to  Limited
Partners  included  a return of  capital  of $1.97 per Unit.  The 1996  dividend
distributions to Limited Partners included a return of capital of $.58 per Unit.
Also, all interest  received on the Mortgage Loans is currently being recognized
as interest income as earned.

Most of the cash  received  as  interest  payments  in  previous  years  was not
recognized  as interest  income,  rather it was  recorded as a reduction  of the
related  investments.  Therefore,  when the Partnership received the pay offs on
the  properties,  the  reduction of the related  investment  balances,  caused a
greater amount of the proceeds to be recorded as income in 1995.

Expenses  decreased  in  1997  by  $7,437.  There  was a  decrease  of  $436  in
professional  fees and a decrease of $7,219 in management fees caused by drop in
mortgage balances being serviced.  Other expenses increased by $218 from 1996 to
1997.

Additionally,  under the terms of the Partnership Agreement,  the Partnership is
required to  reimburse  the  Managing  General  Partner  for  certain  operating
expenses.  In an  effort to  maintain  the yield to the  Limited  Partners,  the
Managing  General  Partner  did not charge  the  Partnership  for such  expenses
through  December 31, 1990. In 1997 and 1996, the Managing  General  Partner was
reimbursed by the  Partnership  for $34,457,  $38,656,  $29,615,  and $31,543 of
these expenses,  respectively.  The Managing  General Partner believes that such
charges have not adversely affected the current yield to Limited Partners.

The  Partnership's  success and the resultant rate of return to Limited Partners
will be dependent  upon,  among other things,  (a) the result of the Refinancing
and the terms of the repayment of the St.  Catherine's,  Court House and Findlay
Loans,  (b) the ability of the  Managing  General  Partner to identify  suitable
opportunities  for the Partnership to reinvest its assets and (c) the ability of
the borrowers to pay the current interest,  additional interest and principal of
the Mortgage Loans.

Year 2000 Compliance.

Information   provided  within  this  note  constitute  a  year  2000  readiness
disclosure pursuant to the provisions of the Year 2000 Information Readiness and
Disclosure Act.

The year 2000  issue is the  result  of  computer  programs  being  written  and
microchips  being  programmed  using two digits  rather  than four to define the
applicable year. If not corrected, any program having time-sensitive software or
equipment  incorporating  embedded microchips may recognize a date using "00" as
the year 1900 rather than the year 2000 or may not  recognize the year 2000 as a
leap year. This could result in a variety of problems including miscalculations,
loss of data and  failure  of  entire  systems.  Critical  areas  that  could be
affected  are  accounts  receivable,  accounts  payable,  general  ledger,  cash
management,   computer  hardware,   telecommunications  and  property  operating
systems.

The Partnership  receives quarterly interest payments from only a limited number
of  borrowers  and its bank.  The  Partnership  is in the  process of  obtaining
documentation related to year 2000 readiness from its outside vendors, including
its banks.  The  Partnership has received  documentation  from an outside vendor
that  maintains its books and records,  indicating  that the vendor is year 2000
compliant.  The  Partnership  expects to  complete  the  documentation  phase by
September 30, 1999. However,  the Partnership  believes that based on the status
of the  Partnership's  portfolio and its limited number of  transactions,  aside
from catastrophic failures of banks, governmental agencies, etc., it could carry
out substantially all of its critical  administrative and accounting  operations
on a manual basis or easily convert to systems that are year 2000 ready.

Some statements in this Form 10-KSB/A are forward looking and actual results may
differ materially from those stated. As discussed herein, among the factors that
may affect actual results are changes in the financial condition of the borrower
and/or anticipated changes in expenses or capital expenditures.

Item 7. Financial Statements.

See Financial Statements.


        COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II







                           Table of Contents

                                                                     Page

Independent Auditors' Reports.........................................1

Financial Statements

     Balance Sheet....................................................3

     Statements of Income.............................................4

     Statements of Partners' Capital..................................5

     Statements of Cash Flows.........................................6

Notes to Financial Statements.........................................7



<PAGE>









                     INDEPENDENT AUDITORS' REPORT



To the Partners
Common Goal Health Care
 Pension and Income Fund L.P. II
Penn Yan, New York


We have  audited  the  accompanying  balance  sheet of Common  Goal  Health Care
Pension and Income Fund L.P. II (a limited partnership) as of December 31, 1997,
and the related  statements of income,  partners' capital and cash flows for the
year then  ended.  These  financial  statements  are the  responsibility  of the
management  of Common  Goal  Health  Care  Pension  and  Income  Fund  L.P.  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,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Common Goal Health Care Pension
and  Income  Fund L.P.  II as of  December  31,  1997,  and the  results  of its
operations  and its cash  flow  for the  year  then  ended  in  conformity  with
generally accepted accounting principles.

As  described  in Note 2 to the  financial  statements,  Common Goal  Healthcare
Pension and Income Fund L.P. II has a  significant  portion of its mortgage loan
receivables  concentrated  in properties  in which it holds a third  position on
such loans.



                                 /s/Ehrhardt Keefe Steiner & Hottman PC
                                    Ehrhardt Keefe Steiner & Hottman PC
April 1, 1999
Denver, Colorado

<PAGE>













                     Independent Auditors' Report



The Partners
Common Goal Health Care
   Pension and Income Fund L.P. II:

We have audited the  accompanying  statements of income,  partners'  capital and
cash flows of Common Goal Health Care Pension and Income Fund L.P. II (a limited
partnership)  for the year ended December 31, 1996.  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,  the financial  statements  referred to above present fairly, in
all material  respects,  the results of operations  and the cash flows of Common
Goal Health Care Pension and Income Fund L.P. II for the year ended December 31,
1996, in conformity with generally accepted accounting principles.




/s/KPMG LLP
KPMG LLP


Denver, Colorado
March 31, 1997


<PAGE>




             COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II

                                  Balance Sheet
                                December 31, 1997


                                     Assets

Cash and cash equivalents ...............................     $1,647,623
Accrued interest receivable from affiliates and other ...         62,152
Due from affiliates .....................................          3,517
Mortgage loans from affiliates receivable (Note 2) ......      1,205,290
                                                              ----------

Total assets ............................................     $2,918,582
                                                              ==========

                        Liabilities and Partners' Capital

Due to affiliates .......................................     $   13,334
Deferred revenue (Note 2) ...............................        400,000
                                                              ----------
      Total liabilities .................................        413,334
                                                              ----------

Partners' capital (Note 4)
   General partners .....................................         39,827
   Limited partners .....................................      2,465,421
                                                              ----------
      Total partners' capital ...........................      2,505,248
                                                              ----------

Total liabilities and partners' capital                       $2,918,582
                                                              ==========

                       See notes to financial statements.

                                     - 3 -

<PAGE>

             COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II

                              Statements of Income


                                              For the Years Ended
                                                  December 31,
                                             ---------------------
                                               1997         1996
                                             --------     --------

Revenue
  Interest income from affiliates ......     $279,251     $268,703
                                              279,251      268,703
Expenses
  Professional fees ....................       20,269       20,705
  Fees to affiliates
    Management .........................       29,031       36,250
    Mortgage servicing .................        1,126        1,126
  Other ................................       29,272       29,054
                                               79,698       87,135
                                             --------     --------

Net income .............................     $199,553     $181,568
                                             ========     ========

Net income allocated to general partners     $  4,989     $  4,539
Net income allocated to limited partners      194,564      177,029
                                             --------     --------

                                             $199,553     $181,568
                                             ========     ========

Basic earnings per limited partner unit      $    .37     $    .34
                                             ========     ========

Weighted average limited partner
 units outstanding .....................      522,116      522,116
                                             ========     ========


                       See notes to financial statements.

                                     - 4 -

<PAGE>


            COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II

                         Statements of Partners' Capital
                 For the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>


                                                                            Total
                                           General        Limited         Partners'
                                          Partners       Partners          Capital
                                       -----------     -----------      -----------

<S>                                    <C>             <C>              <C>
Balance at December 31, 1995 .....     $    30,299     $ 3,798,633      $ 3,828,932

Net income .......................           4,539         177,029          181,568

Distributions to limited partners
 ($.92 per unit) .................            --          (482,515)        (482,515)

Balance at December 31, 1996 .....          34,838       3,493,147        3,527,985

Net income .......................           4,989         194,564          199,553

Principal distributions to limited
 partners ($1.97 per unit) .......            --        (1,027,726)      (1,027,726)

Distributions to limited partners
 ($.37 per unit) .................            --          (194,564)        (194,564)
                                       -----------     -----------      ------------

Balance at December 31, 1997 .....     $    39,827     $ 2,465,421      $ 2,505,248
                                       ===========     ===========      ============

</TABLE>

                       See notes to financial statements.

                                     - 5 -

<PAGE>



            COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II

                            Statements of Cash Flows

<TABLE>
<CAPTION>

                                                         For the Years Ended
                                                            December 31,
                                                    ----------------------------
                                                        1997             1996
                                                    -----------      -----------

<S>                                                 <C>              <C>
Cash flows from operating activities
  Net income ..................................     $   199,553      $   181,568
                                                    -----------      -----------
  Adjustments to reconcile net income to net
  cash provided by operating activities -
   Accrued interest receivable ................         (51,064)           1,166
   Accrued expenses ...........................            --             (7,422)
   Due to/from affiliates .....................          12,022           (2,696)
                                                    -----------      -----------
                                                        (39,042)          (8,952)
                                                    -----------      -----------
      Net cash provided by operating activities         160,511          172,616
                                                    -----------      -----------

Cash flows from investing activities
  Loans to affiliates .........................        (754,700)            --
                                                    -----------      -----------
      Net cash used in investing activities ...        (754,700)            --
                                                    -----------      -----------

Cash flows from financing activities
  Distributions to partners ...................      (1,222,290)        (482,515)
                                                    -----------      -----------
      Net cash used in financing activities ...      (1,222,290)        (482,515)

Net decrease in cash and cash equivalents .....      (1,816,479)        (309,899)

Cash and cash equivalents, beginning of year ..       3,464,102        3,774,001
                                                    -----------      -----------

Cash and cash equivalents, end of year ........     $ 1,647,623      $ 3,464,102
                                                    ===========      ===========
</TABLE>

Supplemental disclosure of cash flow information:  Interest paid was $0 for 1997
and 1996.

Income taxes paid was $0 for 1997 and 1996.

                       See notes to financial statements.

                                     - 6 -


<PAGE>


        COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II

                          Notes to Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies

Common Goal  Health Care  Pension  and Income  Fund L.P.  (the  Partnership),  a
Delaware  Limited  Partnership,  was formed on May 9, 1989 to invest in and make
mortgage loans to third parties and affiliates  involved in health care.  Having
previously sold more than the specified  minimum of 117,650 units  ($1,176,500),
the Partnership commenced operations on July 2, 1990. The Partnership's offering
terminated on January 11, 1992, with the  Partnership  having sold 522,116 units
($5,221,160).  There is no  active  public  trading  market  for the  units.  At
December 31, 1997, there were 488 unit holders.

The General  Partners  are Common Goal  Capital  Group,  Inc.  II, the  Managing
General Partner,  and Common Goal Limited  Partnership II, the Associate General
Partner. Under the terms of the Partnership agreement,  the General Partners are
not required to make any additional capital  contributions  except under certain
limited circumstances upon termination of the Partnership.

Under the terms of the Partnership  agreement,  the  Partnership  reimbursed the
General Partners for certain offering and  organizational  expenses  incurred in
connection with the issuance and distribution of the units in an amount fixed at
5% of gross  offering  proceeds.  These  offering  and  organizational  expenses
excluded   broker/dealer   selling  commissions  and  included  accountable  due
diligence  expense  reimbursements.  Health  Care  Securities,  Inc.  (HCS),  an
affiliate acting as managing dealer,  received selling  commissions of 8% of the
gross  offering  proceeds on all units sold directly by HCS.  Additionally,  HCS
received  a  non-accountable  expense  allowance  of 2% of  gross  proceeds  for
expenses  incurred  in  connection  with the sale of  Units,  and also  received
reimbursement  of up to .5% of gross  proceeds  for  accountable  due  diligence
expenses.  Offering and  organization  expenses  were recorded as a reduction of
partners' capital.

Use of Estimates

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

For entities  investing in and making mortgage loans to businesses in the health
care industry,  certain  inherent  risks may increase the  possibility of actual
results  differing from  management's  estimates.  These inherent risks include,
among other things, the following:

o    Substantial  dependence  on  revenues  derived  from  reimbursement  by the
     Federal Medicare and state Medicaid programs;

o    Government  regulation,   government  budgetary  constraints  and  proposed
     legislative and regulatory changes; and


<PAGE>




Note 1 - Organization and Summary of Significant Accounting Policies (continued)

o    Lawsuits alleging malpractice and related claims.

Partnership Management Fees and Operating Expenses

Under the terms of the Partnership agreement, the Partnership is required to pay
a quarterly management fee to the Managing General Partner equal to 1% per annum
of adjusted contributions,  as defined.  Additionally,  a mortgage and investing
servicing fee equal to .25% per annum of the Partnership's  outstanding mortgage
loan  receivable and  investment  amounts are to be paid to Common Goal Mortgage
Company (CGMC), an affiliate of the General Partners.

Additionally,  under the terms of the Partnership agreement,  the Partnership is
required to  reimburse  the  Managing  General  Partner  for  certain  operating
expenses.  In an  effort to  maintain  the yield to the  Limited  Partners,  the
Managing  General  Partner  did not charge  the  Partnership  for such  expenses
through  December  31, 1990.  In 1997 and 1996,  the  Managing  General  Partner
charged the Partnership for $34,457 and $38,656 of these expenses, respectively.
The Managing  General  Partner  believes  that such  charges have not  adversely
affected the current yield to Limited Partners.

Mortgage loans that have virtually the same risk and potential  rewards as joint
ventures  are  accounted  for  and   classified  as   investments  in  operating
properties.  The Partnership  agreement  authorized the payment of a 3% mortgage
placement  fee to CGMC in  connection  with  the  original  placement  of  these
mortgage loans. CGMC elected to defer the receipt of the fee until the repayment
of the mortgage  loans.  CGMC was entitled to a mortgage  placement fee of up to
$127,468 at the time of repayment in April 1995;  however,  as consideration for
immediate cash payment,  CGMC agreed to a fee of $116,094,  representing payment
in full.  Cash  received  related to  investments  in  operating  properties  is
recognized as interest  income to the extent that such  properties have earnings
prior  to the  recognition  of the  distributions  of cash  to the  Partnership;
otherwise, such cash is recorded as a reduction of the related investments.

Partnership Allocation of Income and Losses and Distributions

Net Income

Net income (except with respect to a Disposition, as defined, which includes any
Partnership  transaction not in the ordinary  course of its business,  including
without  limitation,  collections of principal  payments,  equity  participation
payments,  prepayments,  prepayment penalties,  sales,  exchanges,  foreclosures
other  dispositions  of Mortgage  Loans held by the  Partnership,  recoveries of
damage awards and insurance  proceeds  (other than the receipt of  subscriptions
for Units, all forms of interest payments when due on Mortgage Loans or business
or rental  interruption  insurance  proceeds) and net loss of the Partnership is
allocated 97.5% to Limited Partners and 2.5% to the General Partners.


<PAGE>




Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Partnership Allocation of Income and Losses and Distributions (continued)

Net Income (continued)

Net income arising from a Disposition is allocated 97.5% to Limited Partners and
2.5% to the  General  Partners  to the extent of any  negative  balances  in the
capital accounts of the Limited  Partners,  and then 100% to Limited Partners in
an amount  necessary to bring the Limited  Partners'  capital  accounts up to an
amount equal to their Original Contributions, as defined, which means the amount
of $10.00  for each  unit less the  return  of any  amount of  uninvested  funds
returned,  as defined,  plus the 11.5% preferred cumulative return thereon (less
previous  distribution is to the Limited Partners in repayment of such amounts).
Remaining  net income is  allocated  85% to the Limited  Partners and 15% to the
General Partners.

Distributions of Cash from Operations

Distributions  of  adjusted  cash from  operations,  defined as all  receipts of
interest  payments on Mortgage  Loans less cash  receipts  used to pay operating
expenses and to  repurchase  any units (cash flow) less any amount set aside for
the restoration or creation of working capital  reserves,  are distributed 97.5%
to the Limited  Partners and 2.5% to the General  Partners,  and are apportioned
quarterly among Limited Partners of record as of the record date declared within
30  days  after  the  end of  each  quarter  and  will  be  paid  quarterly.  No
distributions of adjusted cash from operations with respect to any calendar year
are made to the General Partners until the following occurs:

    First,  distributions  to the  Limited  Partners  equal  to  the  9%  annual
    cumulative  return on their adjusted  contributions,  as defined as original
    contributions  attributable  to  a  unit,  reduced  by  the  total  of  cash
    distributed from disposition proceeds and from working capital reserves, for
    such year (plus any amounts  accrued from prior years) have been made to the
    Limited Partners; and

    Second, payment of all previously subordinated management fees, if any, have
    been made.

Thereafter,  all previously subordinated amounts payable to the General Partners
with  respect to their 2.5%  interest  are paid in full to the extent  funds are
available,  and if not  available,  are  deferred  and paid  out of  Disposition
Proceeds, defined as receipts from dispositions net of related expenses, amounts
necessary for the payment of debts and  obligations of the  Partnership  and any
amount set aside for working capital  reserves.  The Partnership has been making
distributions  to the  Limited  Partners  in excess of the 9% annual  cumulative
return on adjusted  contributions,  with the exception of the four distributions
made  during  the period  October  5, 1994 to  October 5, 1995,  when the annual
cumulative return was reduced to 7.25%.


<PAGE>




Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Distributions of Disposition Proceeds

The  Managing  General  Partner  has the right to  reinvest  or  distribute  all
disposition  proceeds  received  through  the  second  anniversary  of the final
closing date and may reinvest  disposition  proceeds as necessary  thereafter to
avoid  classification as an investment  company under the Investment Company Act
of 1940.  Non-liquidating  distributions of disposition proceeds are distributed
in the following order of priority, except as otherwise required by law;

    First, 100% to the Limited Partners until the Limited Partners have received
    an amount which, when added to prior  distributions of disposition  proceeds
    and  cash  from   reserves   attributable   thereto,   equals  the  original
    contributions of the limited partners;

    Second, 100% to the limited partners until each limited partner has received
    an amount which,  when added to all prior  distributions to limited partners
    from all sources  (including  prior  distributions in satisfaction of the 9%
    annual  cumulative  return but excluding  distributions  pursuant to above),
    equals the 11.5% per annum  preferred  cumulative  return on their  adjusted
    contributions,  (calculated  from  the  first  day of the  calendar  quarter
    succeeding the quarter in which capital contributions were received);

    Third,  100% to the general  partners  until they have been paid 100% of the
    subordinated portion, if any, of (a) the partnership management fee, if any,
    and then (b) their 2.5% interest in adjusted cash from operations; and

    Fourth,  the remainder,  85% to the limited partners and 15% to  the general
    partners.

Dissolution and Returns of Principal

Since it was the  intentions  of the managing  general  partner to liquidate the
partnership's  assets  between the tenth and  fifteenth  years after the closing
date (the "Final Closing  Date"),  the managing  general  partner will adopt the
following procedures to provide for an orderly liquidation; the managing general
partner intends to confine the Partnership's  investment  activities to mortgage
loans with terms ending prior to the end of the tenth  anniversary  of the final
closing date and will try to sell any property the  Partnership  has acquired by
foreclosure or otherwise in an orderly fashion.  Any such sales to affiliates of
the Partnership or the general partners would require the approval of a majority
of the  independent  members of the board of directors  of the managing  general
partner.  To the extent that any  mortgage  loans will not mature by their terms
prior to the end of such tenth anniversary, it may become necessary to sell such
investments.  It can be  reasonably  anticipated  that  the  Partnership  may be
required  to sell such  investments  for less than their  outstanding  principal
balances  as of the date of sale.  The  Partnership  intends  to  reinvest  loan
proceeds  received  only  as and if  necessary  to  avoid  classification  as an
investment company under the Investment Company Act of 1940.


<PAGE>




     Note 1 -  Organization  and  Summary  of  Significant  Accounting  Policies
     (continued)

Dissolution and Returns of Principal (continued)

Proceeds from the  liquidation  will be applied and distributed in the following
order:

    First, to the payment of creditors of the Partnership but excluding  secured
    creditors whose obligations will be assumed or otherwise  transferred on the
    liquidation of partnership assets; and

    Second,  after  allowance for the expenses of liquidation and the setting up
    of any  reserves  for  contingencies  which  the  managing  general  partner
    considers  necessary,  to the  general  partners  and  limited  partners  in
    proportion  to and to the extent of the positive  balances in their  capital
    accounts,  after net  income or loss  arising  from a  disposition  has been
    allocated, with any excess being distributed in accordance with the order of
    priority for non-liquidating distributions.

Notwithstanding  anything to the contrary,  the managing general partner has the
right to defer  liquidation if, in the opinion of the managing  general partner,
the sale of  partnership  assets  in  liquidation  would  result  in a  material
underrealization on the partnership's assets.

Allowance for Losses

An allowance  for loan losses is provided,  if  necessary,  at a level which the
Partnership's  management  considers  adequate based upon an evaluation of known
and inherent risks in the loan  portfolio.  There was no allowance for losses at
December 31, 1997.

Federal Income Taxes

There were no  significant  differences  between  net income as  reported in the
accompanying  financial  statements  and  taxable  income  as  reported  on  the
partnership's  tax returns for the years ended December 31, 1998 and 1997. There
were also no significant  differences  between the financial reporting basis and
tax basis of the partnership's assets and liabilities at December 31, 1998.

No income tax  provision has been  included in the  financial  statements  since
income or loss of the  Partnership is required to be reported by the partners on
their respective income tax returns.

Basic Earnings Per Limited Partner Unit

Basic  earnings  per  limited  partner  unit is computed  based on the  weighted
average  limited  partner  units  outstanding  for the year divided into the net
income applicable to the Limited Partners.

There were no dilutive limit partner units during 1996 or 1997.


<PAGE>




Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

The Partnership  classifies all short-term  investments with maturities of three
months or less at the date of purchase  as cash  equivalents.  At  December  31,
1997, cash equivalents consisted of money market accounts.

Recently Issued Accounting Pronouncements

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130, "Reporting  Comprehensive  Income" (SFAS 130), which establishes  standards
for  reporting  and  display  of  comprehensive   income,   its  components  and
accumulated balances.  Comprehensive income is defined to include all changes in
equity except those resulting from  investments by owners and  distributions  to
owners.  Among  other  disclosures,  SFAS 130  requires  that all items that are
required to be recognized  under current  accounting  standards as components of
comprehensive  income,  be reported in a financial  statement  that is displayed
with  the  same  prominence  as  other  financial   statements.   Currently  the
Partnership's only component,  which would comprise comprehensive income, is its
results of operations.

Also, in June 1997, the FASB issued Statement of Financial  Accounting Standards
No. 131,  "Disclosures about Segments of an Enterprise and Related  Information"
(SFAS 131), which supersedes Statement of Financial Accounting Standards No. 14,
"Financial   Reporting  for  Segments  of  a  Business   Enterprise."  SFAS  131
establishes standards for the way that public companies report information about
operating  segments in annual  financial  statements  and requires  reporting of
selected  information about operating  segments in interim financial  statements
issued to the public.  It also establishes  standards for disclosures  regarding
products and services,  geographic areas and major  customers.  SFAS 131 defines
operating  segments as components of a company  about which  separate  financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.

SFAS  No.'s 130 and 131 are  effective  for  financial  statements  for  periods
beginning  after  December 15, 1997,  and require  comparative  information  for
earlier periods to be restated.

In February of 1998, the FASB issued Statement of Financial Accounting Standards
No.  132,  "Employers'  Disclosures  about  Pensions  and  Other  Postretirement
Benefits" (SFAS No. 132),  which supercedes SFAS No.'s 87, 88, and 106. SFAS No.
132 addresses  disclosure only and is effective for fiscal years beginning after
December 15, 1997. Restatement of disclosures for prior periods is required. The
adoption  of SFAS No.  132 will  have no  current  impact  on the  Partnership's
financial statements, as no prior disclosures under SFAS No. 87, 88, or 106 were
applicable.


<PAGE>




Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Recently Issued Accounting Pronouncements (continued)

In June of 1998, the FASB issued Statement of Financial Accounting Standards No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities"(SFAS  No.
133).  SFAS  No.  133  addresses  the  accounting  for  derivative  instruments,
including  certain  derivative  instruments  embedded  in other  contracts,  and
hedging  activities.  SFAS No. 133 is effective  for all fiscal  quarters of all
fiscal years beginning after June 15,1999.  Initial  application of SFAS No. 133
shall be as of the  beginning  of an  entity's  fiscal  quarter,  on that  date,
hedging  relationships  shall  be  designated  anew  and  documented  under  the
provisions  of this  statement.  The  adoption  of SFAS  No.  133  shall  not be
retroactively  applied.  This statement currently has no impact on the financial
statements of the  Partnership,  as the Partnership does not hold any derivative
instruments or participate in any hedging activities.

Concentration of Credit Risk

The  Partnership's  financial  instruments  that are exposed to concentration of
credit risk consist  primarily of cash and cash  equivalents,  accrued  interest
receivable  and  mortgage  loans  receivable.  The  Partnership  maintains  cash
balances in bank deposit accounts,  which at times, may exceed federally insured
limits. At December 31, 1997, the Partnership's  cash balances were in excess of
such limits by approximately $1,549,000.

The  accrued  interest  receivable  and  mortgage  loan  receivable  balances at
December 31, 1997 are from the various mortgage described in Note 2.


Note 2 - Mortgage Loans Receivable from Affiliates

On March 7, 1997,  the  Partnership  entered into a loan  agreement with the St.
Catherine entities  (Washington Court House,  Fostoria,  Tiffin,  Bloomville and
Findlay),  whereby the Partnership would fund $425,000 for the renovation of the
St.  Catherine  facilities.  The loan,  which is  secured  by the St.  Catherine
facilities,  bears interest at a rate of 13% per annum with the entire principal
balance due on the maturity date of August 31, 2000.

On March 31,  1998,  the  Partnership,  the  Partnership  and the St.  Catherine
entities  amended  the  March 7, 1997 loan in order to  increase  the  principal
amount of the loan to $850,000. No other terms of the loan were altered pursuant
to the amendment.


<PAGE>




Note 2 - Mortgage Loans Receivable (continued)

The additions to mortgage loan balances  during the year ended December 31, 1997
were to the  affiliated  St.  Catherine  entities  and totaled  $754,700  which,
represent  third  mortgages on the underlying  properties'  located in Ohio. The
Partnership's  ability to recover  interest and principal on these  mortgages is
dependent  upon  the  underlying  properties  ability  and  generate  sufficient
operating income and/or appreciation in fair values.

A summary of mortgage loan  receivable  activity for the year ended December 31,
1997 is as follows:

Balance at December 31, 1996                        $  450,590

Mortgage loan advances (renovation loans)              754,700
                                                    ----------

Balance at December 31, 1997                        $1,205,290
                                                    ==========

Investments in Operating Properties

The Partnership made and funded three mortgage loans to affiliated entities (the
"St. Catherine's Loans"). The Partnership's affiliation with these entities is a
result of the  President  and Chief  Executive  Officer of the Managing  General
Partner also serving as the President of the entities  receiving the loans.  The
Partnership's  mortgage  loans to the  affiliated  entities  were related to the
operating  facilities  and  were  accounted  for  as  investments  in  operating
properties.  These mortgage loans were repaid on April 13, 1995 upon refinancing
by the owners of their senior debt with an unrelated  lender. In connection with
the repayment of these mortgage loans, the Partnership recognized a gain on sale
of investment in operating  properties of  $1,632,719.  The  refinancing  of the
senior  debt did not  provide  sufficient  proceeds  to allow  repayment  of the
participations  owing  under  the St.  Catherine's  Washington  Court  House and
Findlay Loans (the "SCC Participations") in the total amount of $840,500.


<PAGE>




Note 2 - Mortgage Loans Receivable (continued)

The St.  Catherine's  Washington Court Borrowers  repaid the SCC  Participations
through:

(i)  the issuance of notes in the total amount of $400,000 (a) bearing  interest
     rate of 11.00%  per  annum,  which is due  quarterly  (b)  maturing  on the
     earlier of the sale or refinancing of the Tiffin,
          Bloombille,  Fostoria,  Court  House and Findlay  Facilities  (the "SC
          Facilities")  or the  maturity  of the senior  debt with  South  Trust
          (August 2000) and
     (c)  cross-collateralized  by second  mortgage  liens on the SC Facilities;
          and

(ii) the  issuance  of  contingent  payment  obligation  by St.  Catherine's  of
     Senecca, Inc. in the amount of $202,500 and a contingent payment obligation
     by St. Catherine's Care Centers of Fostoria, Inc. in the amount of $238,000
     (collectively, the "CPOs")
     (a)  bearing an interest rate of 11% per annum, which is due quarterly
     (b)  maturing  on  the  earlier  of  the  sale  or  refinancing  of  the SC
          Facilities or the maturity of the senior debt with South Trust (August
          2000).

     The CPOs provide that interest is payable on a current basis  provided that
     the debt service  coverage  ratios on each of the SC  Facilities  is 1.2 to
     1.0. In the event these debt service  coverage  ratios are not  maintained,
     the interest shall accrue until the debt service coverage ratio is at least
     1.2 to 1.0 or maturity.  The CPOs further provide that principal is payable
     only to the extent that upon a resale or  refinancing of the SC Facilities,
     there are  sufficient  proceeds  to repay the senior  debt and the  amounts
     owing under the CPOs.  The CPOs are being assumed by an affiliated  entity,
     Will Care of Ohio,  Inc.,  and will be  secured,  to the extent they become
     payable and are not paid,  by a pledge of 30 shares of St.  Catherine's  of
     Seneca, Inc. common stock.

     In  accordance  with FASB  Statement of Standards No. 66,  "Accounting  for
     Sales of Real Estate",  the $840,500  participation  was not  recognized as
     income  during  1995.  The  Partnership   has  recorded   $400,000  of  the
     participation amount, related to the mortgage loan receivable,  as deferred
     revenue,  and the interest thereon will be recognized as it is earned.  Due
     to the contingent nature of the $440,500 due to the Partnership  related to
     the CPOs,  such amount has not been recorded as an asset of the Partnership
     and the  participation  income  and  interest  earned  on the CPOs  will be
     recognized  only  when  received.  Interest  received  by  the  Partnership
     relating  to the CPOs  amounted  to $49,006 and $48,455 for the years ended
     December 31, 1997 and 1996, respectively.


<PAGE>




Note 2 - Mortgage Loans Receivable (continued)

Investments in Operating Properties (continued)

At  December  31,  1997,  the  mortgage  loans  receivable   included   $50,590,
representing the  Partnership's  participation  in a $1,618,254  second mortgage
loan made by an affiliated  limited  partnership.  The loan, which is secured by
two nursing home facilities in  Pennsylvania,  bears interest at a rate of 13.7%
per annum and provides for the payment of  participation  interest  based on the
increase in the fair value of the  properties  at maturity or  redemption of the
loan or  pursuant  to any  sale of the  facilities.  Participation  interest  is
recorded as revenue when  determinable,  generally at maturity or  redemption of
the loan or pursuant to any sale of the  facilities.  The loan also provides for
the  payment  of  additional  interest  based  upon the  gross  revenues  of the
facilities.  The entire principal balance is due at the maturity date of January
1, 2000.

The repayment  terms of the mortgage  loans in affiliated  operating  properties
resulted in new second mortgage loans on the St. Catherine's Facilities totaling
$400,000 at December 31, 1997. These new second mortgage loans are appropriately
classified as mortgage  loan  receivables  as they do not contain  virtually the
same risk and potential rewards as joint ventures.


Note 3 - Fair Value of Financial Instruments

The fair value of the  Partnership's  mortgage  loans  receivable  differed from
their carrying value as follows:
                                                    Carrying        Fair
                                                     Value         Value
                                                    --------     ---------


December 31, 1997                                   $1,205,290   $1,213,595

The  Partnership  estimates the fair value of its mortgage  loans  receivable by
discounting future cash flows using an appropriate interest rate.

The carrying amounts at December 31, 1997 for cash and cash equivalents, accrued
interest  receivable,   due  from  and  to  affiliates,   and  accrued  expenses
approximated their fair values due to the short maturity of these instruments.


Note 4 - Partners' Capital

During 1996, the Partnership  declared and paid  distributions of $482,515 ($.92
per unit) to the limited partner unitholders.


<PAGE>




Note 4 - Partners' Capital (continued)

During 1997, the Partnership  declared and paid  distributions of $194,564 ($.37
per unit) to the Limited Partner unitholders.  The Partnership also declared and
paid distributions during 1997 of $1,027,726 ($1.97 per unit) which was a return
of  principal  to  the  Limited  Partner  unitholders  in  accordance  with  the
Partnership's policy, as such amounts were in excess of current year net income.



<PAGE>




Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
financial Disclosure.

On March 20, 1999, the Partnership  engaged  Ehrhardt Keefe Steiner & Hottman PC
as its independent auditors for fiscal years 1998 and 1997. Reports on Form 8-K,
8K/A and 8-K/A-2 reporting the event were filed on March 24, 1999, April 2, 1999
and April 9,  1999,  respectively.  There  were no  disagreements  on  financial
statement  disclosures or accounting matters covering the prior two fiscal years
up through March 20, 1999 with the predecessor auditors.


                               PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
with Section 16(a) of the Exchange Act.

The Partnership does not have directors or officers.  The following is a list of
the officers and directors of the Managing General Partner as of March 31, 1998:

      Name                     Age        Position

      Albert E. Jenkins III     51        Chairman of the Board,  Chief
      Executive                            Officer, President and Director
      Richard R. Wood           75        Secretary and Treasurer
      William E. Jasper         82        Director
      Rev. Terry A. Steinhauer 
       Sr.                      41        Director
      Linda R. Robison          51        Director

Albert E.  Jenkins  III is the  President  and Chief  Executive  Officer  of the
Managing  General  Partner and Common Goal Mortgage  Company.  Mr.  Jenkins also
serves on the boards of  directors  of the  above-referenced  corporations.  Mr.
Jenkins is a  co-general  partner of Common  Goal  Limited  Partnership  II, the
Associate  General  Partner,  and Common Goal Management  Company.  In 1986, Mr.
Jenkins formed Common Goal Capital Group,  Inc. to act as the corporate  general
partner of Common Goal I. That partnership  successfully raised $19,129,110 from
1,533  investors  and  placed  seven  mortgages  in  six  states  secured  by 13
facilities.  Mr.  Jenkins  is also  President,  Chief  Executive  Officer  and a
director of St.  Catherine's  of Seneca,  Inc., St.  Catherine's  Care Center of
Tiffin,  Inc.,  St.  Catherine's  Care  Center  of  Bloomville,   Inc.  and  St.
Catherine's Care Centers of Fostoria, Inc. In addition, Mr. Jenkins is President
and a director of St. Catherine's Health Care Management,  Inc., St. Catherine's
Care Center of Washington Court House,  Inc. and St.  Catherine's Care Center of
Findlay,  Inc.  He is also  president  and  sole  director  and  shareholder  of
HealthCare  Securities,  Inc.  which  served  as the  Managing  Dealer  for  the
distribution  of limited  partner  interests.  Mr.  Jenkins  has been a licensed
securities  salesman since 1971 and an investment  advisor  registered under the
Investment Advisers Act of 1940 since 1978.

William E. Jasper,  Jr. is a director of Common Goal Capital Group,  Inc. II and
has been a member of the Board of Directors of Madison  Square  Federal  Savings
Bank  since  1964.  Prior to 1980,  when Mr.  Jasper  retired,  he had served as
president of a multi-line insurance agency and brokerage. Mr. Jasper is a Deputy
Regional Director for a fraternal organization that is dedicated to the Maryland
Special Olympics which provides  health-care training and specialized sports for
the mentally  handicapped.  Mr. Jasper  attended  Baltimore City College and has
taken numerous  extended courses at Loyola College and Johns Hopkins  University
in real estate,  appraisals,  inspections,  financial  planning,  mortgages  and
management.

Richard R. Wood, is a general partner of Common Goal Limited  Partnership II and
a former director and officer of the Managing General Partner.  Mr. Wood is also
a director of Common Goal Capital  Group,  Inc. and a general  partner of Common
Goal  Limited  Partnership  I, which is a general  partner  of Common  Goal I, a
publicly-held  limited  partnership  with  investment  objectives  substantially
identical  to those of the  Partnership,  each of which was formed in 1986.  Mr.
Wood is president,  a director and owner, along with his brother R. Norman Wood,
of Renwood  Properties,  Inc. Mr. Wood has, either individually or together with
or through  Renwood,  sponsored  thirty-one  prior private limited  partnerships
which have acquired real estate.  These  partnerships have raised  approximately
$30,762,525,   with   approximately   81%  of  the  properties   acquired  being
government-subsidized  low income housing  projects for families and the elderly
and  handicapped.  In addition,  Mr. Wood is also a controlling  shareholder  of
Renwood,  Inc.  and several of the Renwood  companies,  which act as  co-general
partners of certain of the  above-referenced  syndications.  Mr. Wood received a
B.A.  from Harvard  University in 1943 and attended  Massachusetts  Institute of
Technology from 1947-1948.

Rev. Terry A.  Steinhauer  Sr. is a director of Common Goal Capital Group,  Inc.
II. He is the founder and Senior Pastor of Fostoria New Covenant  Church Inc. an
independent congregation established in 1984. He is a duly ordained and licensed
minister  with the State of Ohio.  Rev.  Steinhauer is also the president of the
board of  directors  for the  Fostoria  Bureau of  Concern,  a  referral  agency
affiliated  with the Red Cross,  United Way, Senior  Citizens  Center,  Meals on
Wheels,  Sharing Kitchen and Habitat for Humanity. He is also a board member for
Bettsville Local School District where he serves as the Legislative  Liaison for
the Ohio School Boards  Association,  in addition to the Technology and Strategy
Planning  Committees.  Rev. Steinhauer is also a member and former editor of the
Northwest Ohio Christian  Writer's  Group.  He is also presently a member of the
Advisory  Board  of St.  Catherine's  of  Fostoria  where  is  has  consistently
ministered  for the last 19 years.  He is a member of the  Fostoria  Chamber  of
Commerce  and  has  been  actively  involved  with  the  Gideons,  the  Fostoria
Ministerial  Association,  Habitat for Humanity,  and the Fostoria Framework for
Progress Committee.

Linda R.  Robison,  is a director of Common Goal  Capital  Group,  Inc.  II. Ms.
Robison  is an  attorney  and  practices  primarily  in the  areas of  corporate
transactions,  corporate  finance,  tax,  estate  planning and real estate.  She
represents such industries as manufacturing,  health care, construction, retail,
distribution, and computer software. Ms. Robison has been admitted to the Bar in
Massachusetts,  Illinois,  and  Florida.  She is a member  of the  American  Bar
Association,  and the U.S. Tax Court,  and past chair of the ABA Small  Business
Committee's  subcommittee  on corporate  tax. She has published  articles in the
Practical   Tax   Lawyer,   Securities   &   Commodities   Regulation,   Smith's
Review-Federal,  Estate and Gift Taxation,  Taxation for Lawyers,  and a Matthew
Bender treatise on real estate transactions. She earned her undergraduate degree
from the  University  of Georgia  where she  attained a B.S. in  psychology  and
graduated  cum laude and Phi Beta Kappa.  Ms.  Robison has a L.L.M.  in taxation
from Boston  University.  She is a co-founder  and  director of a wholesaler  of
sportswear, and a co-founder and director of a firm which finishes plastic parts
for the computer and automotive industries.  From 1983 to 1990 she was a Partner
and Board  Member of the  Chicago  based firm of  Sachnoff & Weaver.  She is the
immediate  Past-President and Chairman of U.S. Committee for  UNICEF/Chicago;  a
past  President  and  Board  Member of the  Chicago  Finance  Exchange;  and the
Treasurer and Board Member of Chicago Midwest  Women's  Center.  In addition she
has served on the Advisory  Board of YMCA;  Board Member of Women in  Management
and a member of Business and Professional Women's Board.

Item 10. Executive Compensation.

The Partnership has no executive  officers or directors.  The Partnership is not
required to pay the officers and  directors of the General  Partners any current
nor any proposed  compensation in such capacities.  However,  the Partnership is
required to pay certain  fees,  make  distributions  and allocate a share of the
profits or losses of the Partnership to the General  Partners as described under
the caption "Management Compensation" on pages 8 through 11 of the Partnership's
Prospectus,  which  description is incorporated  herein by reference.  Set forth
below are the fees, compensation and other reimbursements paid or accrued to the
Managing  General  Partner and its  Affiliates  for the year ended  December 31,
1997.

                              Capacities in
                           Which Compensation
Name of Affiliate             Was Received          Remuneration
-----------------          -------------------     --------------

Managing General Partner      Management fee         $29,031

Common Goal Mortgage          Mortgage loan          $ 1,126
Company                       servicing fees

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

No form of non-cash remuneration was paid by the Partnership.

For further  information on compensation paid to Common Goal and its Affiliates,
see "Management Compensation" on pages 8-11 of the Prospectus.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The  Partnership,  as an entity,  does not have any  directors or officers.  The
following is information concerning Unit ownership as of March 31, 1998.

To the best  knowledge  of the  Partnership,  no person owns more than 5% of the
outstanding Units.  Messrs.  Jenkins and Wood each own less than 1% of the total
outstanding  Units  and all  officers  and  directors  of the  Managing  General
Partner,  as a group, own less than 1% of the total outstanding  Units. No other
officer or director of the Managing General Partner owns any Units.

Item 12. Certain Relationships and Related Transactions.

The Partnership made and funded three Mortgage Loans (the St.  Catherine's Loan,
the Court House Loan and the Findlay Loan) to affiliated entities. In connection
with  these  Mortgage  Loans,  the  Partnership   obtained  the  opinion  of  an
independent  third party that the terms and conditions of the  respective  loans
were  fair  and at  least  as  favorable  to  the  Partnership  as a loan  to an
unaffiliated party in similar  circumstances.  See "Management's  Discussion and
Analysis or Plan of Operation" for further  information  regarding the repayment
and refinancing of these Mortgage Loans.  The Partnership has made an additional
loan to an  unaffiliated  party  through a joint  venture with Common Goal I, an
affiliated,   publicly-offered   limited  partnership  with  similar  investment
objectives (the Joint Venture Loan).  For further  information  concerning those
Mortgage Loans, see "Item 1. Description of Business."

The  Partnership  engages  the  services  of Common Goal  Mortgage  Company,  an
affiliate of the General Partners,  in connection with servicing  Mortgage Loans
for which Common Goal Mortgage Company  generally is paid a fee by the borrower.
See "Item 10. Executive Compensation," for the information concerning such fees.


Exhibits and Reports on Form 8-K.

      (a)  Exhibits

      The following exhibits are included herein or incorporated by reference:

      Number

     3.1 (a) Amended and Restated  Limited  Partnership  Agreement of Registrant
     dated as of December 6, 1989  (incorporated  by reference from Exhibit 3.1,
     included in Registrant's Form S-11 Registration Statement S.E.C. File No.
     33-31358)

     3.2 (b) Pages 8-11 of the  Registrant's  final Prospectus dated January 12,
     1990, as filed with the Securities and Exchange Commission pursuant to Rule
     424(b)  under the  Securities  Act of 1933,  as  amended  (Incorporated  by
     reference from the Registrants Form S-11 Registration Statement S.E.C. File
     No. 33-31358).

     27. Financial Data Schedule.

(b)   Reports on Form 8-K

      The  Partnership  did not file any  reports on Form 8-K during the quarter
      ended December 31, 1997.




<PAGE>




                              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.

                          COMMON GOAL HEALTH CARE PENSION AND
                          INCOME FUND L.P. II

                          By:  Common Goal Capital Group, Inc., II,
                               General Partner

                          By:  /s/ Albert E. Jenkins          
                               Albert E. Jenkins III
                               Chairman and Chief Executive
                               Officer

Date: May 10, 1999

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.

Name                       Position                  Date
/s/ Albert E. Jenkins      Chairman (Principal       May 10, 1999
Albert E. Jenkins III        Executive Officer),
                             President, Principal
                             Financial and
                             Accounting Officer
                             and Director of
                             Managing General
                             Partner
/s/ William E. Jasper, Jr. Director of Managing      May 10, 1999
William E. Jasper, Jr.       General Partner

/s/ Richard R. Wood        Director of Managing      May 10, 1999
Richard R. Wood              General Partner

/s/ Terry Steinhauer       Director of Managing      May 10, 1999
Terry Steinhauer             General Partner

/s/ Linda Robison          Director of Managing      May 10, 1999
Linda Robison                General Partner

(A Majority of the Board of Directors of the Managing General Partner)