<PAGE>

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


                                    FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

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

                        Commission File Number: 33-69996

                      COMMONWEALTH INCOME & GROWTH FUND II
             (Exact name of registrant as specified in its charter)

         Pennsylvania                                23-2795120
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
incorporation or organization)

                          470 John Young Way Suite 300
                                 Exton, PA 19341
          (Address, including zip code, of principal executive offices)

                                 (610) 594-9600
               (Registrant's telephone number including area code)

         Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (ii) has been subject to such filing
requirements for the past 90 days:


                           YES  [X]                            NO   [ ]








<PAGE>



                               Commonwealth Income & Growth Fund II
                                          Balance Sheets
<TABLE>
<CAPTION>
                                                        June 30                       December 31,
                                                          2003                           2002
                                                       ------------------------------------------
                                                       (unaudited)
<S>                                                    <C>                             <C>
Assets

Cash and cash equivalents                              $   169,857                     $   33,361
Lease income receivable                                    405,512                        409,516
Net investment in direct financing leases                  165,585                        191,426
Other Receivables - affiliated limited partnerships          5,475                          8,434
Prepaid Fees                                                 3,200                          6,219
                                                       ------------------------------------------
                                                           749,629                        648,956
                                                       ------------------------------------------



Computer equipment, at cost                              6,337,633                     10,350,520
Accumulated depreciation                                (4,359,749)                    (7,819,423)
                                                       ------------------------------------------
                                                         1,977,884                      2,531,097
                                                       ------------------------------------------


Equipment acquisition costs and deferred expenses, net      73,573                        105,025
Accounts receivable, Commonwealth Capital Corp             226,117                        307,404
                                                       ------------------------------------------
                                                           299,690                        412,429
                                                       ------------------------------------------
Total assets                                           $ 3,027,203                     $3,592,482
                                                       ==========================================


Liabilities and Partners' Capital

Liabilities
Accounts payable                                       $    68,056                     $   72,658
Accounts payable - General Partner                         102,727                         27,457
Other accrued expenses                                           -                          7,362
Unearned lease income                                       97,807                        172,692
Notes payable                                            1,216,043                      1,780,299
                                                       ------------------------------------------
Total liabilities                                        1,484,633                      2,060,468
                                                       ------------------------------------------
Partners' Capital


General partner                                              1,000                          1,000
Limited partners                                         1,541,570                      1,531,014
                                                       ------------------------------------------
Total partners' capital                                  1,542,570                      1,532,014
                                                       ------------------------------------------
Total liabilities and partners' capital                $ 3,027,203                     $3,592,482
                                                       ==========================================
</TABLE>



                          see accompanying notes to financial statements


<PAGE>




                                        Commonwealth Income & Growth Fund II
                                              Statements of Operations
<TABLE>
<CAPTION>
                                                            Three Months Ended              Six Months Ended
                                                                  June 30                          June 30
                                                            2003            2002            2003            2002
                                                          --------        --------       ----------      ----------
<S>                                                       <C>             <C>            <C>             <C>
                                                                 (unaudited)                     (unaudited)
Income
Lease                                                     $409,334        $685,831       $  951,860      $1,389,078
Interest and other                                           1,298             323            1,473             793
Gain (loss) on sale of computer equipment                  323,511          (1,539)         318,319             303
                                                          --------        --------       ----------      ----------

Total Income                                               734,143         684,615        1,271,652       1,390,174
                                                          --------        --------       ----------      ----------

Expenses
Operating, excluding depreciation                          143,741         137,050          337,604         247,191
Equipment management fee - General Partner                  20,466          34,292           47,593          69,454
Interest                                                    24,427          43,171           54,377          82,239
Depreciation                                               234,607         471,266          500,869         993,604
Amortization of equipment
  acquisition costs and deferred expenses                   15,674          17,338           32,052          39,089

Bad debt expense                                                 -          14,059                -          68,476
                                                          --------        --------       ----------      ----------
Total expenses                                             438,915         717,176          972,495       1,500,053
                                                          --------        --------       ----------      ----------
Net income (loss)                                         $295,228        $(32,561)      $  299,157      $ (109,879)
                                                          ========        ========       ==========      ==========

Net income (loss) per equivalent limited
  partnership unit                                        $   0.64        $  (0.07)      $     0.65      $    (0.24)
                                                          ========        ========       ==========      ==========

Weighted Average number of equivalent limited
  partnership units outstanding during the period          460,067         460,067          460,067         460,185
                                                          ========        ========       ==========      ==========
</TABLE>


                 see accompanying notes to financial statements


<PAGE>

<TABLE>
<CAPTION>

                                                Commonwealth Income & Growth Fund II
                                                   Statements of Partners' Capital
                                                                         For the Six Months Ended June 30, 2003
                                                                                      (unaudited)

                                                General               Limited
                                                Partner               Partner         General           Limited
                                                 Units                 Units          Partner           Partner          Total
                                            --------------------------------------------------------------------------------------
<S>                                         <C>                       <C>             <C>              <C>             <C>    <C>
Partners' capital - December 31, 2002             50                 460,067          $ 1,000          $1,531,014      $1,532,014
  Net income                                                                            2,886             296,271         299,157
  Distributions                                                                        (2,886)           (285,715)       (288,601)
                                                 ---                 -------          --------         ----------      ----------
Partners' capital - June 30, 2003                 50                 460,067          $ 1,000          $1,541,570      $1,542,570
                                                 ===                 =======          =======          ==========      ==========
</TABLE>





                 see accompanying notes to financial statements



<PAGE>



                            Commonwealth Income & Growth Fund II
                                   Statements of Cash Flow
                       For the Six Months Ended June 30, 2003 and 2002
<TABLE>
<CAPTION>
                                                                      2003         2002
                                                                    ---------    ----------
<S>                                                                 <C>          <C>
Operating activities                                               (unaudited)
Net income (loss)                                                   $ 299,157    $ (109,879)
Adjustments to reconcile net income (loss) to net cash
   (used in) provided by operating activities
       Depreciation and amortization                                  532,921     1,032,693
       Allowance for bad debts                                              -        68,476
       Gain on sale of computer equipment                            (318,319)         (303)
       Other noncash activities included in
          determination of net income                                (536,047)     (595,229)
       Changes in assets and liabilities
         (Increase) decrease in assets
              Lease income receivable                                   4,004      (178,666)
              Other receivables - affiliated limited partnerships       2,959       (19,082)
              Minimum lease receivables                                   978             -
              Prepaid Items                                             3,019        (3,000)
         Increase (decrease) in liabilities
              Accounts payable                                         (4,602)      148,656
              Accounts payable, General Partner                        75,270       (54,937)
              Other accrued expenses                                   (7,362)            -
              Unearned lease income                                   (74,885)      148,670
                                                                    ---------    ----------

Net cash (used in) provided by operating activities                   (22,907)      437,399
                                                                    ---------    ----------

Investing activities:

Capital Expenditures                                                  (15,000)      (97,107)
Net proceeds from the sale of computer equipment                      382,317       122,468
Equipment acquisition fees paid to General Partner                       (600)      (24,029)
                                                                    ---------    ----------

Net cash provided by investing activities                             366,717         1,332
                                                                    ---------    ----------
Financing activities:
Distributions to partners                                            (288,601)     (288,600)
Redemption of limited partners                                              -        (4,164)
Accounts receivables-Commonwealth Capital Corp                         81,287        14,366
Debt placement fee paid to the General Partner                              -        (5,036)
                                                                    ---------    ----------

Net cash (used in) financing activities                              (207,314)     (283,434)
                                                                    ---------    ----------


Net increase in cash and equivalents                                  136,496       155,297
Cash and cash equivalents, beginning of period                         33,361        14,425
                                                                    ---------    ----------
Cash and cash equivalents, end of period                            $ 169,857    $  169,722
                                                                    =========    ==========
</TABLE>



                 see accompanying notes to financial statements


<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

1.      Business                   Commonwealth Income & Growth Fund II (the
                                   "Partnership") is a limited partnership
                                   organized in the Commonwealth of Pennsylvania
                                   to acquire, own and lease various types of
                                   computer peripheral equipment and other
                                   similar capital equipment, which will be
                                   leased primarily to U.S. corporations and
                                   institutions. Commonwealth Capital Corp
                                   ("CCC"), on behalf of the Partnership and
                                   other affiliated partnerships, acquires
                                   computer equipment subject to associated debt
                                   obligations and lease agreements and
                                   allocates a participation in the cost, debt
                                   and lease revenue to the various partnerships
                                   based on certain risk factors. The
                                   Partnership's General Partner is Commonwealth
                                   Income & Growth Fund, Inc. (the "General
                                   Partner"), a Pennsylvania corporation which
                                   is an indirect wholly owned subsidiary of
                                   CCC. CCC is a member of the Investment
                                   Program Association (IPA), Financial Planning
                                   Association (FPA), and the Equipment Leasing
                                   Association (ELA). Approximately ten years
                                   after the commencement of operations, the
                                   Partnership intends to sell or otherwise
                                   dispose of all of its computer equipment,
                                   make final distributions to partners, and to
                                   dissolve. Unless sooner terminated, the
                                   Partnership will continue until December 31,
                                   2006.

2.      Summary of                 Basis of Presentation
        Significant
        Accounting                 The  financial  information  presented as of
        Policies                   any date other than December 31 has been
                                   prepared from the books and records without
                                   audit. Financial information as of December
                                   31 has been derived from the audited
                                   financial statements of the Partnership, but
                                   does not include all disclosures required by
                                   generally accepted accounting principles. In
                                   the opinion of management, all adjustments,
                                   consisting only of normal recurring
                                   adjustments, necessary for a fair
                                   presentation of the financial information for
                                   the periods indicated have been included. For
                                   further information regarding the
                                   Partnership's accounting policies, refer to
                                   the financial statements and related notes
                                   included in the Partnership's annual report
                                   on Form 10-K for the year ended December 31,
                                   2002. Operating results for the six-month
                                   period ended June 30, 2003 are not
                                   necessarily indicative of financial results
                                   that may be expected for the full year ended
                                   December 31, 2003.










<PAGE>


                                   Revenue Recognition

                                   Through June 30, 2003, the Partnership's
                                   leasing operations consist substantially of
                                   operating leases and seven direct-financing
                                   leases. Operating lease revenue is recognized
                                   on a monthly basis in accordance with the
                                   terms of the lease agreement. Unearned
                                   revenue from direct financing agreements is
                                   amortized to revenue over the lease term.
                                   Gains or losses on the sales of equipment are
                                   recognized on the date of the sale agreement.

                                   The Partnership reviews a customer's credit
                                   history before extending credit and
                                   establishes a provision for uncollectible
                                   accounts receivable based upon the credit
                                   risk of specific customers, historical trends
                                   and other information.

                                   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
                                   revenues and expenses during the reporting
                                   period. Actual results could differ from
                                   those estimates.

                                   Long-Lived Assets

                                   The Partnership evaluates its long-lived
                                   assets when events or circumstances indicate
                                   that the value of the asset may not be
                                   recoverable. The Partnership determines
                                   whether an impairment exists by estimating
                                   the undiscounted cash flows to be generated
                                   by each asset. If the estimated undiscounted
                                   cash flows are less than the carrying value
                                   of the asset then an impairment exists. The
                                   amount of the impairment is determined based
                                   on the difference between the carrying value
                                   and the fair value. The fair value is
                                   determined based on estimated discounted cash
                                   flows to be generated by the asset. As of
                                   June 30, 2003, there is no impairment.

                                   Depreciation on computer equipment for
                                   financial statement purposes is based on the
                                   straight-line method over estimated useful
                                   lives of four years.

                                   Intangible Assets

                                   Equipment acquisition costs and deferred
                                   expenses, are amortized on a straight-line
                                   basis over two- to-four year lives.
                                   Unamortized acquisition fees and deferred
                                   expenses are charged to amortization expense
                                   when the associated leased equipment is sold.

                                   Cash and Cash Equivalents

                                   The Partnership considers all highly liquid
                                   investments with a maturity of three months
                                   or less to be cash equivalents. Cash
                                   equivalents have been invested in a money
                                   market fund investing directly in Treasury
                                   obligations.




<PAGE>

                                   Income Taxes

                                   The Partnership is not subject to federal
                                   income taxes; instead, any taxable income
                                   (loss) is passed through to the partners and
                                   included on their respective income tax
                                   returns.

                                   Taxable income differs from financial
                                   statement net income as a result of reporting
                                   certain income and expense items for tax
                                   purposes in periods other than those used for
                                   financial statement purposes, principally
                                   relating to depreciation, amortization, and
                                   lease income.

                                   Offering Costs

                                   Offering costs are payments for selling
                                   commissions, dealer manager fees,
                                   professional fees and other offering expenses
                                   relating to the syndication. Selling
                                   commissions are 7% of the partners'
                                   contributed capital and dealer manager fees
                                   are 2% of the partners' contributed capital.
                                   These costs have been deducted from
                                   partnership capital in the accompanying
                                   financial statements.

                                   Net Income (Loss) Per Equivalent Limited
                                   Partnership Unit

                                   The net income (loss) per equivalent limited
                                   partnership unit is computed based upon net
                                   income (loss) allocated to the limited
                                   partners and the weighted average number of
                                   equivalent units outstanding during the
                                   period.

                                   Reimbursable Expenses

                                   Reimbursable expenses, which are charged to
                                   the Partnership by CCC in connection with the
                                   administration and operation of the
                                   Partnership, are allocated to the Partnership
                                   based upon several factors including, but not
                                   limited to, the number of investors,
                                   compliance issues, and the number of existing
                                   leases.

3.      Net Investment in
        Direct Financing           The following lists the components of the net
        Leases                     investment in direct financing leases as of
                                   June 30, 2003 and December 31, 2002:
<TABLE>
<CAPTION>
                                                                               June 30,        December 31,
                                                                                 2003              2002
                                                                               -----------------------------
                                   <S>                                         <C>               <C>
                                   Minimum lease payments
                                   receivable                                  $203,264          $236,208
                                   Less: Unearned revenue                        37,679            44,782
                                   ----------------------------------------------------------------------
                                   Net investment in direct financing
                                   leases                                      $165,585          $191,426
                                   ----------------------------------------------------------------------
</TABLE>






<PAGE>

                                   The following is a schedule of future minimum
                                   rentals on noncancellable direct financing
                                   leases at June 30, 2003:
<TABLE>
<CAPTION>
                                                                                                  Amount
                                                                                                 --------
                                   <S>                                                           <C>
                                   Six Months Remaining December 31, 2003                        $ 34,544
                                   Year Ended December 31, 2004                                    67,488
                                   Year Ended December 31, 2005                                    67,488
                                   Year Ended December 31, 2006                                    33,744
                                                                                                 --------
                                                                                                 $203,264
                                   ----------------------------------------------------------------------
</TABLE>
4.      Computer                   The Partnership is the lessor of equipment
        Equipment                  under operating leases with periods ranging
                                   from 14 to 37 months. In general, the lessee
                                   pays associated costs such as repairs and
                                   maintenance, insurance and property taxes.

                                   The Partnership's share of the computer
                                   equipment in which they participate with
                                   other partnerships at June 30, 2003 and
                                   December 31, 2002 was approximately
                                   $1,660,000 and $1,645,000, respectively,
                                   which is included in the Partnership's fixed
                                   assets on their balance sheet, and the total
                                   cost of the equipment shared by the
                                   Partnership with other partnerships at June
                                   30, 2003 and December 31, 2002 was
                                   approximately $2,813,000 and $2,765,000,
                                   respectively. The Partnership's share of the
                                   outstanding debt associated with this
                                   equipment at June 30, 2003 and December 31,
                                   2002 was approximately $676,000 and $801,000,
                                   respectively, which is included in the
                                   Partnership's liabilities on the balance
                                   sheet, and the total outstanding debt at June
                                   30, 2003 and December 31, 2002 related to the
                                   equipment shared by the Partnership was
                                   approximately $1,137,000 and $1,353,000,
                                   respectively.

                                   The following is a schedule of future minimum
                                   rentals on noncancellable operating leases at
                                   June 30, 2003:
<TABLE>
<CAPTION>
                                                                                                 Amount
                                   ----------------------------------------------------------------------
                                   <S>                                                         <C>
                                      Six Months ended December 31, 2003                       $  553,000
                                      Year Ended December 31, 2004                                657,000
                                      Year Ended December 31, 2005                                 46,000
                                      Year Ended December 31, 2006                                 13,000
                                                                                               ----------
                                                                                               $1,269,000
                                   ----------------------------------------------------------------------
</TABLE>

5.      Related Party              Other Receivables
        Transactions
                                   As of June 30, 2003, the Partnership has a
                                   non-interest bearing receivable from CCC, a
                                   related party to the Partnership, in the
                                   amount of approximately $226,000. This
                                   receivable, as well as any potential future
                                   receivables, was and will be made at the
                                   discretion of the General Partner, per the
                                   prospectus, and was substantially advanced in
                                   2001. CCC, through its indirect subsidiaries,
                                   including the General Partner of the
                                   Partnership, earns fees based on revenues and
                                   new lease purchases from this fund. CCC
                                   intends to repay the receivable via the
                                   offsetting of acquisition and debt placement
                                   fees, over the next several fiscal years,
                                   with a minimum payment of $5,000 per month,
                                   commencing January 1, 2003.



<PAGE>


6. Notes Payable                   Notes payable consisted of the following:
<TABLE>
<CAPTION>

                                                                                       June 30,              December 31,
                                                                                         2003                   2002
                                   --------------------------------------------------------------------------------------
<S>                                                          <C>                      <C>                       <C>
                                   Installment notes payable to banks; interest
                                   ranging from 7.25% to 9.75%, due in monthly
                                   installments ranging from $72 to $5,408,
                                   including interest, with final payments due from
                                   February through December 2003.                    $   84,562                224,172

                                   Installment notes payable to banks; interest
                                   ranging from 6.50% to 8.75%, due in monthly
                                   installments ranging from $96 to $22,799,
                                   including interest, with final payments due from
                                   February through November 2004.                       844,302              1,213,397

                                   Installment notes payable to banks; interest
                                   ranging from 6.25% to 6.75%, due in monthly
                                   installments ranging from $240 to $1,875,
                                   including interest, with final payments due from
                                   February through April 2005.                          103,231                131,353

                                   Installment notes payable to banks, interest
                                   ranging from 5.95% to 6.50%: due in monthly
                                   installments ranging from $507 to $1,892,
                                   including interest, with final payments due June
                                   2006.                                                 183,948                211,377
                                                                                      ---------------------------------
                                                                                      $1,216,043             $1,780,299
                                   ------------------------------------------------------------------------------------

                                    These notes are secured by specific computer
                                    equipment and are nonrecourse liabilities of
                                    the Partnership. Aggregate maturities of
                                    notes payable for each of the periods
                                    subsequent to June 30, 2003 are as follows:
                                                                                                               Amount
                                                                                                             ----------
                                       Six months ended December 31, 2003                                    $  487,678
                                       Year ended December 31, 2004                                             618,764
                                       Year ended December 31, 2005                                              76,535
                                       Year ended December 31, 2006                                              33,066
                                                                                                             ----------
                                                                                                             $1,216,043
                                   --------------------------------------------------------------------------------------
</TABLE>



<PAGE>



7.      Supplemental               Other noncash activities included in the
        Cash Flow                  determination of net loss are as follows:
        Information

Six months ended June 30,                                   2003         2002
-------------------------------------------------------------------------------

Lease income, net of interest expense on
   notes payable realized as a result of
   direct payment of principal by lessee to
   bank                                                   $536,047     $595,229
-------------------------------------------------------------------------------

           No interest or principal on notes payable was paid by the Partnership
           because direct payment was made by lessee to the bank in lieu of
           collection of lease income and payment of interest and principal by
           the Partnership.

                              Noncash investing and financing activities include
                              the following:

Six months ended June 30,                                   2003         2002
-------------------------------------------------------------------------------

Net book value of equipment converted to direct
     financing leases                                     $  3,346     $      -
-------------------------------------------------------------------------------

8.      Litigation                 In June 2003, the Partnership, through CCC,
                                   reached a favorable settlement in a lawsuit
                                   against a customer for failure to make
                                   monthly lease payments based on the existing
                                   lease terms. The settlement did not have a
                                   material adverse impact to the financial
                                   statements of the Partnership. As of December
                                   31, 2002, the Partnership had recorded a
                                   receivable from the customer of approximately
                                   $404,000, net of an allowance of
                                   approximately $330,000. In July 2003, the
                                   Partnership has received approximately
                                   $405,000 in proceeds relating to this
                                   receivable.

Item 2: Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was released by the Securities and
Exchange Commission, requires all companies to include a discussion of critical
accounting policies or methods used in the preparation of financial statements.
Our significant accounting policies are described in Note 1 of the Notes to the
Financial Statements. The significant accounting policies that we believe are
the most critical to aid in fully understanding our reported financial results
include the following:

COMPUTER EQUIPMENT

Commonwealth Capital Corp, on behalf of the Partnership and other affiliated
partnerships, acquires computer equipment subject to associated debt obligations
and lease revenue and allocates a participation in the cost, debt and lease
revenue to the various partnerships based on certain risk factors.





<PAGE>

REVENUE RECOGNITION

Through June 30, 2003, the Partnership's leasing operations consist
substantially of operating leases and seven direct-financing leases. Operating
lease revenue is recognized on a monthly basis in accordance with the terms of
the lease agreement. Unearned revenue from direct financing agreements is
amortized to revenue over the lease term. Gains or losses on the sales of
equipment are recognized on the date of the sale agreement.

The Partnership reviews a customer's credit history before extending credit and
establishes a provision for uncollectible accounts receivable based upon the
credit risk of specific customers, historical trends and other information.

LONG-LIVED ASSETS

The Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable. The Partnership
determines whether an impairment exists by estimating the undiscounted cash
flows to be generated by each asset. If the estimated undiscounted cash flows
are less than the carrying value of the asset then an impairment exists. The
amount of the impairment is determined based on the difference between the
carrying value and the fair value. Fair value is determined based on estimated
discounted cash flows to be generated by the asset. Depreciation on computer
equipment for financial statement purposes is based on the straight-line method
over estimated useful lives of four years.

Liquidity and Capital Resources

The Partnership's primary sources of capital for the six months ended June 30,
2003 and June 30, 2002 were from net proceeds received from sale of equipment
totaling $382,000 and $122,000, respectively, and cash from operations of
$437,000 for the six months ended June 30, 2002. The primary uses of cash for
the six months ended June 30, 2003 and June 30, 2002, were for capital
expenditures for new equipment totaling $15,000 and $97,000, respectively, the
payment of preferred distributions to partners of $289,000 for both periods and
operating activities of $23,000 for the six months ended June 30, 2003.

For the six month period ended June 30, 2003, the Partnership used cash flows
from operating activities of $23,000, which includes net income of $299,000, a
gain on sale of equipment totaling $318,000, and depreciation and amortization
expenses of $533,000. Other noncash activities included in the determination of
net loss include direct payments of lease income by lessees to banks of
$536,000.

For the six month period ended June 30, 2002, the Partnership generated cash
flows from operating activities of $437,000, which includes a net loss of
$110,000 and depreciation and amortization expenses of $1,033,000. Other noncash
activities included in the determination of net loss include direct payments of
lease income by lessees to banks of $595,000.





<PAGE>

Cash is invested in money market accounts that invest directly in treasury
obligations pending the Partnership's use of such funds to purchase additional
computer equipment, to pay Partnership expenses or to make distributions to the
Partners.

In June 2003, the Partnership, through CCC, reached a favorable settlement in a
lawsuit against a customer for failure to make monthly lease payments based on
the existing lease terms. The settlement did not have a material adverse impact
to the financial statements of the Partnership. As of December 31, 2002, the
Partnership had recorded a receivable from the customer of approximately
$404,000, net of an allowance of approximately $330,000. In July 2003, the
Partnership has received approximately $405,000 in proceeds relating to this
receivable.

As of June 30, 2003, the Partnership has a non-interest bearing receivable from
CCC, a related party to the Partnership, in the amount of approximately
$226,000. This receivable, as well as any future receivables, was and will be
made at the discretion of the General Partner, per the prospectus, and was
substantially advanced in 2001. CCC, through its indirect subsidiaries,
including the General Partner of the Partnership, earns fees based on revenues
and new lease purchases from this fund. CCC intends to repay the receivable via
the offsetting of acquisition and debt placement fees, over the next several
fiscal years, with a minimum payment of $5,000 per month, commencing January 1,
2003.

The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses. As
of June 30, 2003, the Partnership had future minimum rentals on non-cancelable
operating leases of $553,000 for the balance of the year ending December 31,
2003 and $716,000 thereafter. At June 30, 2003, the outstanding debt was
$1,216,000, with interest rates ranging from 5.95% to 9.75%, and will be payable
through June 2006.

The Partnership's cash from operations is expected to continue to be adequate to
cover all operating expenses, liabilities, and preferred distributions to
Partners during the next 12-month period. If available Cash Flow or Net
Disposition Proceeds are insufficient to cover the Partnership expenses and
liabilities on a short and long term basis, the Partnership will attempt to
obtain additional funds by disposing of or refinancing Equipment, or by
borrowing within its permissible limits. The Partnership may, from time to time,
reduce the distributions to its Partners if it deems necessary. Since the
Partnership's leases are on a "triple-net" basis, no reserve for maintenance and
repairs are deemed necessary.

The Partnership's share of the computer equipment in which they participate with
other partnerships at June 30, 2003 and December 31, 2002 was approximately
$1,660,000 and $1,645,000, respectively, which is included in the Partnership's
fixed assets on their balance sheet, and the total cost of the equipment shared
by the Partnership with other partnerships at June 30, 2003 and December 31,
2002 was approximately $2,813,000 and $2,765,000, respectively. The
Partnership's share of the outstanding debt associated with this equipment at
June 30, 2003 and December 31, 2002 was approximately $676,000 and $801,000,
respectively, which is included in the Partnership's liabilities on the balance
sheet, and the total outstanding debt at June 30, 2003 and December 31, 2002
related to the equipment shared by the Partnership was approximately $1,137,000
and $1,353,000, respectively.


<PAGE>



Results of Operations

Three Months Ended June 30, 2003 compared to Three Months Ended June 30, 2002
-----------------------------------------------------------------------------

 For the quarter ended June 30, 2003, the Partnership recognized income of
$734,000 and expenses of $439,000, resulting in net income of $295,000. For the
quarter ended June 30, 2002, the Partnership recognized income of $684,000 and
expenses of $717,000, resulting in a net loss of $33,000.

Lease income decreased by 40% to $409,000 for the quarter ended June 30, 2003,
from $686,000 for the quarter ended June 30, 2002, primarily due to the fact
that more lease agreements ended than new lease agreements acquired since the
quarter ended June 30, 2002.

The Partnership sold computer equipment with a net book value of $56,000 for the
quarter ended June 30, 2003, for a net gain of $324,000. The Partnership sold
computer equipment with a net book value of $16,000 for the quarter ended June
30, 2002, for a net loss of $2,000.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, outside service fees and reimbursement of expenses to CCC for
administration and operation of the Partnership. The expense increased 5% to
approximately $144,000 for the quarter ended June 30, 2003, from $137,000 for
the quarter ended June, 2002, which is primarily attributable to an increase in
the amount charged by CCC, a related party, to the Partnership for the
administration and operation of approximately $2,000, and an decrease in
remarketing fees of approximately $5,000, an increase in accounting fees of
approximately $5,000 and an increase in legal fees of approximately $7,000.

The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 40% to approximately $20,000 for the quarter ended June
30, 2003, from $34,000 for the quarter ended June 30, 2002, which is consistent
with the decrease in lease income.

Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
49% to approximately $250,000 for the quarter ended June 30, 2003, from $489,000
for the quarter ended June 30, 2002 due to equipment and acquisition fees being
fully depreciated/amortized and not being replaced with as many new purchases.

Interest expense decreased 43% to $24,000 for the quarter ended June 30, 2003
from $43,000 for the quarter ended June 30, 2002, primarily due to the decrease
in debt relating to the purchase of computer equipment.

Six Months Ended June 30, 2003 compared to Six Months Ended June 30, 2002
-------------------------------------------------------------------------

For the six months ended June 30, 2003, the Partnership recognized income of
$1,272,000 and expenses of $973,000, resulting in net income of $299,000. For
the six months ended June 30, 2002, the Partnership recognized income of
$1,390,000 and expenses of $1,500,000, resulting in a net loss of $110,000.






<PAGE>


Lease income decreased by 31% to $952,000 for the six months ended June 30,
2003, from $1,389,000 for the six months ended June 30, 2002, primarily due to
the fact that more lease agreements ended than new lease agreements acquired
since the six months ended June 30, 2002.

The Partnership sold computer equipment with a net book value of $64,000 for the
six months ended June 30, 2003, for a net gain of $318,000. The Partnership sold
computer equipment with a net book value of $122,000 for the six months ended
June 30, 2002, for a net gain of $1,000.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, outside service fees and reimbursement of expenses to CCC for
administration and operation of the Partnership. The expense increased 37% to
approximately $338,000 for the six months ended June 30, 2003, from $247,000 for
the six months ended June, 2002, which is primarily attributable to an increase
in the amount charged by CCC, a related party, to the Partnership for the
administration and operation of approximately $22,000 and an increase in
remarketing fees of approximately $73,000.

The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee decreased 31% to approximately $48,000 for the six months ended
June 30, 2003, from $69,000 for the six months ended June 30, 2002, which is
consistent with the decrease in lease income.

Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses decreased
48% to approximately $533,000 for the six months ended June 30, 2003, from
$1,033,000 for the six months ended June 30, 2002 due to equipment and
acquisition fees being fully depreciated/amortized and not being replaced with
as many new purchases.

Interest expense decreased 34% to $54,000 for the six months ended June 30, 2003
from $82,000 for the six months ended June 30, 2002, primarily due to the
decrease in debt relating to the purchase of computer equipment.


                        RECENT ACCOUNTING PRONOUNCEMENTS

                                    SFAS 150

In May 2003, the FASB issued FASB Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity, which
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. SFAS is applicable immediately for
financial instruments entered into or modified after May 31, 2003 and otherwise
shall be effective at the beginning of the first interim period beginning after
June 15, 2003. The Partnership believes that the adoption of SFAS 150 will not
have an impact on its financial position and results of operations.






<PAGE>


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership believes its exposure to market risk is not material due to the
fixed interest rate of its long- term debt and its associated fixed revenue
streams.

Item 4. Controls and Procedures

The Chief Executive Officer and A Financial Officer of the Partnership have
conducted a review of the Partnership's disclosure controls and procedures as of
June 30, 2003.

The Company's disclosure controls and procedures include the Partnership's
controls and other procedures designed to ensure that information required to be
disclosed in this and other reports filed under the Securities Exchange Act of
1934, as amended (the " Exchange Act") is accumulated and communicated to the
Partnership's management, including its chief executive officer and a financial
officer, to allow timely decisions regarding required disclosure and to ensure
that such information is recorded, processed, summarized and reported with the
required time periods.

Based upon this review, the Partnership's Chief Executive Officer and the A
Financial Officer have concluded that the Partnership's disclosure controls (as
defined in pursuant to Rule 13a-14 c promulgated under the Exchange Act) are
sufficiently effective to ensure that the information required to be disclosed
by the Partnership in the reports it files under the Exchange Act is recorded,
processed, summarized and reported with adequate timeliness.

Part II: OTHER INFORMATION

                      Commonwealth Income & Growth Fund II

         Item 1.           Legal Proceedings.

                           Commonwealth Capital Corp filed a complaint on
                           December 21, 2001 with Avon Products, Inc. with the
                           Federal District Court of the Eastern District of
                           Pennsylvania, No. 01-C2-6915. The complaint alleges
                           that the defendants illegally purchased/sold leased
                           equipment without the Partnership's authorization,
                           along with suing for late fees on various lease
                           payments.

                           In December 2002, the representatives of CCC, along
                           with representatives from El Camino (the original
                           broker for the Avon lease) and consultants for Avon,
                           met for a reconciliation meeting. This meeting was
                           designed to reconcile all accounting issues (rentals
                           due) related to the Avon lease. A final
                           reconciliation was not submitted by all parties until
                           around February 15, 2003. At that time, CCC
                           reconciled, via payments histories, the amounts owed
                           by each party. A settlement conference with the judge
                           was then scheduled for March 6, 2003. Prior to the
                           conference, CCC submitted their reconciliation of
                           amounts due. At the conference, a reasonable
                           settlement could not be reached on various issues
                           involved in the litigation. Avon was granted another
                           90 days for discovery.





<PAGE>

                           As of December 31, 2002, the Partnership had recorded
                           a receivable from Avon of approximately $404,000, net
                           of an allowance of approximately $330,000. In June
                           2003, a settlement was reached between all parties.
                           As part of the settlement, title to the equipment was
                           transferred to Avon. In July 2003, the Partnership
                           has received approximately $405,000 in proceeds
                           relating to this receivable. The checks were received
                           on July 3, 2003 and July 14, 2003.

         Item 2.           Changes in Securities.

                           Inapplicable

         Item 3.           Defaults Upon Senior Securities.

                           Inapplicable

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

                           Inapplicable

         Item 5.           Other Information.

                           Inapplicable

         Item 6.           Exhibits and Reports on Form 8-K.

                           (a) Exhibits:

                              31.1 THE RULE 15d-14(a)

                              31.2  THE RULE 15d-14(a)

                              32.1 SECTION 1350 CERTIFICATION OF CEO

                              32.2 SECTION 1350 CERTIFICATION OF CFO















<PAGE>

                                    SIGNATURE

Pursuant to the requirements 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.

                                    COMMONWEALTH INCOME & GROWTH FUND II
                                    BY: COMMONWEALTH INCOME & GROWTH
                                    FUND, INC. General Partner


August 12, 2003                     By: /s/ George S. Springsteen
---------------                         --------------------------
Date                                    George S. Springsteen
                                        President