<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, 2002

( ) 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,
                                                                  2002               2001
                                                              -------------------------------
                                                              (unaudited)
<S>                                                           <C>                <C>
Assets

Cash and cash equivalents                                     $    169,722       $     14,425
Lease income receivable, net of allowance for doubtful
     accounts reserve of $91,059 as of June 30, 2002 and
     $54,200 as of December 31, 2001                               598,662            488,472
Accounts receivables - Commonwealth Capital Corp                      --              315,404
Accounts receivables - affiliated limited partnerships              21,843              2,761
Prepaid fees                                                         6,200              3,200
                                                              -------------------------------
                                                                   796,427            824,262
                                                              -------------------------------

Computer equipment, at cost                                     10,680,580         11,656,085
Accumulated depreciation                                        (7,309,509)        (7,769,975)
                                                              -------------------------------
                                                                 3,371,071          3,886,110
                                                              -------------------------------

Equipment acquisition costs and deferred expenses, net             138,964            148,988
Accounts receivables - Commonwealth Capital Corp                   301,038               --
                                                              -------------------------------
                                                                   440,002            148,988
                                                              -------------------------------

Total assets                                                  $  4,607,500       $  4,859,360
                                                              ===============================

Liabilities and Partners' Capital

Liabilities
Accounts payable                                              $    189,128       $     40,472
Accounts payable - General Partner                                     738             55,675
Unearned lease income                                              224,600             75,930
Notes payable                                                    2,288,777          2,380,383
                                                              -------------------------------
Total liabilities                                                2,703,243          2,552,460
                                                              -------------------------------

Partners' Capital
General partner                                                      1,000              1,000
Limited partners                                                 1,903,257          2,305,900

                                                              -------------------------------
Total partners' capital                                          1,904,257          2,306,900
                                                              -------------------------------

Total liabilities and partners' capital                       $  4,607,500       $  4,859,360
                                                              ===============================
</TABLE>

                 see accompanying notes to financial statements
<PAGE>

                      Commonwealth Income & Growth Fund II
                              Statements of Income


<TABLE>
<CAPTION>
                                                              Three Months Ended                   Six Months Ended
                                                                   June 30                              June 30
                                                           2002             2001              2002             2001
                                                       -----------------------------      -----------------------------
                                                                 (unaudited)                          (unaudited)
<S>                                                    <C>               <C>              <C>               <C>
Income
Lease                                                  $   685,831       $   745,767      $ 1,389,078       $ 1,575,966
Interest and other                                             323             3,199              793             5,208
(Loss) gain on sale of computer equipment                   (1,539)           95,628              303            72,383
                                                       -----------       -----------       ----------       -----------

Total Income                                               684,615           844,594        1,390,174         1,653,557
                                                       -----------       -----------       ----------       -----------

Expenses
Operating, excluding depreciation                          137,050            57,958          247,191           152,508
Equipment management fee - General Partner                  34,292            37,200           69,454            78,710
Interest                                                    43,171            24,676           82,239            55,448
Depreciation                                               471,266           482,441          993,604         1,226,211
Amortization of equipment
  acquisition costs and deferred expenses                   17,338            25,270           39,089            53,560
Bad debt expense                                            14,059              --             68,476              --


                                                       -----------       -----------       ----------       -----------
Total expenses                                             717,176           627,545        1,500,053         1,566,437
                                                       -----------       -----------       ----------       -----------

Net (loss) income                                      $   (32,561)      $   217,049      $  (109,879)      $    87,120
                                                       ===========       ===========      ===========       ===========

Net (loss) income per equivalent limited
  partnership unit                                     $     (0.07)      $      0.47      $     (0.24)      $      0.19
                                                       ===========       ===========      ===========       ===========

Weighted Average number of equivalent limited
  partnership units outstanding during the period          460,067           461,817          460,185           461,817
                                                       ===========       ===========      ===========       ===========
</TABLE>












                 see accompanying notes to financial statements
<PAGE>

                      Commonwealth Income & Growth Fund II
                         Statements of Partners' Capital

<TABLE>
<CAPTION>
                                                            For the Six Months ended June 30, 2002
                                                                         (unaudited)

                                            General          Limited
                                            Partner          Partner        General         Limited
                                             Units            Units         Partner         Partner           Total
                                           -------------------------------------------------------------------------
<S>                                        <C>               <C>           <C>           <C>              <C>
Partners' capital - December 31, 2001            50          460,567       $ 1,000       $ 2,305,900      $2,306,900
  Net income (loss)                                                          2,886          (112,765)       (109,879)
  Redemption                                                    (500)           --            (4,164)         (4,164)
  Distributions                                                             (2,886)         (285,714)       (288,600)
                                           -------------------------------------------------------------------------
Partners' capital - June 30, 2002                50          460,067       $ 1,000       $ 1,903,257      $1,904,257
                                           =========================================================================
</TABLE>







                 see accompanying notes to financial statements
<PAGE>

                      Commonwealth Income & Growth Fund II
                             Statements of Cash Flow
                 For the Six Months Ended June 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                                           2002                  2001
                                                                        -----------          -----------
Operating activities                                                              (unaudited)
<S>                                                                     <C>                  <C>
Net (loss) income                                                       $  (109,879)         $    87,120
Adjustments to reconcile net (loss) income to net cash
   provided by operating activities
       Depreciation and amortization                                      1,032,693            1,279,771
       Allowance for bad debts                                               68,476                 --
       (Gain) on sale of computer equipment                                    (303)             (72,383)
      Other noncash activities included in
        determination of net income                                        (595,229)            (690,687)
     Changes in assets and liabilities
       (Increase) decrease in assets
           Lease income receivable                                         (178,666)             208,396
           Prepaid fees                                                      (3,000)                --
       Increase (decrease) in liabilities
           Accounts payable                                                  33,216              (13,341)
           Accounts payable, Common Capital Corp.                              --                    (62)
           Accounts payable, General Partner                                (54,937)             (27,691)
           Accounts payable, affiliated limited partnerships                (19,082)              (5,529)
           Unearned lease income                                            148,670               41,181
                                                                        -----------          -----------

Net cash provided by operating activities                                   321,959              806,775
                                                                        -----------          -----------

Investing activities:


Capital Expenditures                                                        (97,107)            (146,678)
Net proceeds from the sale of computer equipment                            122,468              119,245
Equipment acquisition fees paid to General Partner                          (24,029)              (8,092)
                                                                        -----------          -----------

Net cash provided by (used in) investing activities                           1,332              (35,525)
                                                                        -----------          -----------

Financing activities:
Distributions to partners                                                  (173,160)            (462,008)
Redemption of limited partner's interest                                     (4,164)                --
Other receivables-Commonwealth Capital Corp                                  14,366             (280,007)
Debt placement fee paid to the General Partner                               (5,036)                (556)
                                                                        -----------          -----------

Net cash (used in) financing activities                                    (167,994)            (742,571)
                                                                        -----------          -----------

Net increase in cash and equivalents                                        155,297               28,679
Cash and cash equivalents, beginning of period                               14,425              277,719
                                                                        -----------          -----------

Cash and cash equivalents, end of period                                    169,722          $   306,398
                                                                        ===========          ===========
</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,
                     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. 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
                     Commonwealth Capital Corp. 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 any date other
   Policies          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, 2001. Operating results for the six-month
                     period ended June 30, 2002 are not necessarily indicative
                     of financial results that may be expected for the full year
                     ended December 31, 2002.

                     Revenue Recognition

                     Through June 30, 2002, the Partnership has only entered
                     into operating leases. Lease revenue is recognized on a
                     monthly basis in accordance with the terms of the operating
                     lease agreements.

                     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.
<PAGE>

                     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, 2002, 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 are charged to
                     amortization expense when the associated leased equipment
                     is sold.

                     Cash and Cash Equivalents

                     The Company considers all highly liquid investments with a
                     maturity of six months or less to be cash equivalents. At
                     June 30, 2002, cash equivalents were invested in a money
                     market fund investing directly in Treasury obligations.

                     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.
<PAGE>

                     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.

3. Computer          The Partnership is the lessor of equipment under operating
   Equipment         leases with periods ranging from 24 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, 2002
                     and December 31, 2001 was approximately $3,211,000 and
                     $2,969,000, 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, 2002 and December 31, 2001
                     was approximately $6,294,000 and $5,526,000, respectively.
                     The Partnership's share of the outstanding debt associated
                     with this equipment at June 30, 2002 and December 31, 2001
                     was approximately $1,429,000 and $1,581,000, respectively,
                     which is included in the Partnership's liabilities on the
                     balance sheet, and the total outstanding debt at June 30,
                     2002 and December 31, 2001 related to the equipment shared
                     by the Partnership was approximately $2,478,000 and
                     $4,895,000, respectively.

                     The following is a schedule of future minimum rentals on
                     noncancellable operating leases at June 30, 2002:

                                                                   Amount
                     --------------------------------------------------------
                       Six Months ended December 31, 2002        $  794,000
                       Year Ended December 31, 2003               1,338,000
                       Year Ended December 31, 2004                 774,000
                       Year Ended December 31, 2005                  16,000
                     --------------------------------------------------------
                                                                 $2,922,000
                     ========================================================

4. Related Party     Other Receivables
   Transactions
                     At June 30, 2002, the Partnership has a receivable from
                     Commonwealth Capital Corp ("CCC"), a related party to the
                     Partnership, in the amount of approximately $301,000. CCC,
                     thru its indirect subsidiaries, including the General
                     Partner of the Partnership, earns fees based on revenues
                     and new lease purchases from this fund and other funds.
                     This is a non-interest bearing receivable that CCC plans to
                     repay over the next two and a half fiscal years from
                     acquisition and debt placement fees earned by the General
                     Partner of the Partnership. For the six months ended June
                     30, 2002, CCC has repaid approximately $14,000 to the
                     Partnership.
<PAGE>

5. Notes Payable     Notes payable consisted of the following:

<TABLE>
<CAPTION>
                                                               June 30,      December 31,
                                                                2002            2001
                     ---------------------------------------------------------------------
<S>                                                           <C>            <C>
                     Installment notes payable
                     to banks; interest ranging
                     from 8.50% to 9.18%, due in
                     monthly installments ranging
                     from $152 to $2,578, including
                     interest, with final payments
                     due from July through
                     November 2002.                           $    9,794     $   81,833

                     Installment notes payable to
                     banks; interest ranging from
                     7.25% to 9.75%, due in
                     monthly installments ranging
                     from $72 to $5,975, including
                     interest, with final payments
                     due from February through
                     December 2003.                              368,200        490,762

                     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
                     December 2004.                            1,752,184      1,807,788

                     Installment notes payable to
                     banks; interest ranging from
                     6.25% to 6.80%, due in
                     monthly installments ranging
                     from $240 to $1,875, including
                     interest, with final payments
                     due from February through
                     April 2005.                                 158,599             --

                                                              -------------------------
                                                              $2,288,777     $2,380,383
                     =====================================================================
                          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,
                          2002 are as follows:
                                                                              Amount
                         -----------------------------------------------------------------
                          Six months ended December 31, 2002                 $  577,606
                          Year ended December 31, 2003                        1,080,526
                          Year ended December 31, 2004                          617,326
                          Year ended December 31, 2005                           13,319
                                                                             ----------
                                                                              2,288,777
                         =================================================================
</TABLE>
<PAGE>

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

===============================================================================

Six months ended June 30, 2002                       2002            2001
----------------------------------------------------------------------------

Lease income, net of interest expense on
  notes payable realized as a result of
  direct payment of principal by lessee
  to bank                                         $  595,229      $  690,687

      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, 2002                       2002            2001
-----------------------------------------------------------------------------

Debt assumed in connection with purchase
     of computer equipment                        $  503,623      $   55,631
=============================================================================

7. Litigation        The Partnership, through Commonwealth Capital Corp, has
                     initiated a lawsuit against a customer, for approximately
                     $750,000 in addition to ongoing monthly rentals, for
                     failure to make monthly lease payments on the existing
                     terms. Management believes that the Partnership will
                     prevail in this matter. The outstanding receivable is
                     approximately $499,000, which the Partnership believes is
                     fully collectible.

                     The Partnership received a rental payment during the second
                     quarter of 2002 from the above-mentioned broker relating to
                     a July 2001 invoice, for approximately $37,000.

                     During June, 2002, in connection with the above matter, the
                     Partnership filed for Summary Judgment against an unrelated
                     third party broker to collect payments of approximately
                     $307,500 made by Avon Products, Inc. to this broker. The
                     Partnership anticipates a scheduled court date sometime in
                     the third quarter of 2002 in connection with the Summary
                     Judgment.

      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
Consolidated 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:
<PAGE>

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.

REVENUE RECOGNITION

Through June 30, 2002, the Partnership has only entered into operating leases.
Lease revenue is recognized on a monthly basis in accordance with the terms of
the operating lease agreements.

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,
2002 and 2001 were from cash from operations of $322,000 and $807,000,
respectively, and net proceeds received from sale of equipment totaling $122,000
for the period ending June 30, 2002 and $119,000 for the period ending June 30,
2001. The primary use of cash for the six months ended June 30, 2002 and 2001,
was for capital expenditures for new equipment totaling $97,000 and $147,000,
and the payment of preferred distributions to partners for the six months ended
June 30, 2002 and 2001 of $173,000 and $462,000, respectively.

For the six month period ended June 30, 2002, the Partnership generated cash
flows from operating activities of $322,000, 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.

For the six month period ended June 30, 2001, the Partnership generated cash
flows from operating activities of $807,000, which includes net income of
$87,000, a gain on sale of equipment totaling $72,000, and depreciation and
amortization expenses of $1,280,000. Other noncash activities included in the
determination of net income include direct payments of lease income by lessees
to banks of $691,000.
<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. At June 30, 2002, the Partnership had approximately $171,000 invested
in these money market accounts.

Included in accounts receivable is approximately $499,000 of receivables from
Avon Products Inc., in which the Partnership has initiated a lawsuit. Management
believes we will collect in full the balance due to the Partnership, therefore,
no reserves have been booked. During June, 2002, in connection with the above
matter, the Partnership filed for Summary Judgment against an unrelated third
party broker to collect payments of approximately $307,500 made by Avon
Products, Inc. to this broker. The Partnership anticipates a scheduled court
date sometime in the third quarter of 2002 in connection with the Summary
Judgment. Revenue from the Avon Products, Inc. lease approximates to 15% of the
revenues for the six months ended June 30, 2002 and 2001.

At June 30, 2002, the Partnership has a receivable from Commonwealth Capital
Corp ("CCC"), a related party to the Partnership, in the amount of approximately
$301,000. CCC, thru its indirect subsidiaries, including the General Partner of
the Partnership, earns fees based on revenues and new lease purchases from this
fund and other funds. This is a non-interest bearing receivable that CCC plans
to repay over the next two an a half fiscal years from acquisition and debt
placement fees earned by the General Partner of the Partnership. For the six
months ended June 30, 2002, CCC has repaid approximately $14,000 to the
Partnership.

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, 2002, the Partnership had future minimum rentals on non-cancelable
operating leases of $794,000 for the balance of the year ending December 31,
2002 and $2,128,000 thereafter. At June 30, 2002, the outstanding debt was
$2,289,000, with interest rates ranging from 6.25% to 9.75%, and will be payable
through April 2005.

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, 2002 and December 31, 2001 was approximately
$3,211,000 and $2,969,000, 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, 2002 and December 31,
2001 was approximately $6,294,000 and $5,526,000, respectively. The
Partnership's share of the outstanding debt associated with this equipment at
June 30, 2002 and December 31, 2001 was approximately $1,429,000 and $1,581,000,
respectively, which is included in the Partnership's liabilities on the balance
sheet, and the total outstanding debt at June 30, 2002 and December 31, 2001
related to the equipment shared by the Partnership was approximately $2,478,000
and $4,895,000, respectively.
<PAGE>

Results of Operations

Three Months Ended June 30, 2002 compared to Three Months Ended June 30, 2001
-----------------------------------------------------------------------------

For the quarter ended June 30, 2002, the Partnership recognized income of
$685,000 and expenses of $717,000, resulting in a net loss of $32,000. For the
quarter ended June 30, 2001, the Partnership recognized income of $844,000 and
expenses of $627,000, resulting in net income of $217,000.

Lease income decreased by 8% to $686,000 for the quarter ended June 30, 2002,
from $746,000 for the quarter ended June 30, 2001, primarily due to the fact
that more lease agreements ended than new lease agreements acquired since the
quarter ended June 30, 2001.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expense increased 136% to approximately
$137,000 for the quarter ended June 30, 2002, from $58,000 for the quarter ended
June 30, 2001, 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 $17,000, and an increase in remarketing fees of
$28,000, an increase in promotions/advertising of $2,000, an increase in outside
services of $5,000, an increase in recruiting fees of $3,000, an increase in
insurance of $5,000, an increase in due diligence of $11,000, an increase in
postage of $3,000, an increase in supplies of $2,000, and an increase in
equipment shipping cost of $3,000.

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 8% to approximately $34,000 for the quarter ended June
30, 2002, from $37,000 for the quarter ended June 30, 2001, 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
4% to approximately $489,000 for the quarter ended June 30, 2002, from $508,000
for the quarter ended June 30, 2001 due to equipment and acquisition fees being
fully depreciated/amortized and not being replaced with as many new purchases.

The partnership recorded bad debt expenses of approximately $14,000 related to
disputed accounts receivables balances for the quarter ended June 30, 2002.

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. The Partnership sold
computer equipment with a net book value of $10,000 for the quarter ended June
30, 2001, for a net gain of $96,000.

Interest expense increased 75% to $43,000 for the quarter ended June 30, 2002
from $25,000 for the quarter ended June 30, 2001, primarily due to the
acquisitions of new computer leases and the outstanding debt associated with it.
<PAGE>

Six Months Ended June 30, 2002 compared to Six Months Ended June 30, 2001
-------------------------------------------------------------------------

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. For
the six months ended June 30, 2001, the Partnership recognized income of
$1,654,000 and expenses of $1,567,000, resulting in net income of $87,000.

Lease income decreased by 12% to $1,389,000 for the six months ended June 30,
2002, from $1,576,000 for the six months ended June 30, 2001, primarily due to
the fact that more lease agreements ended than new lease agreements acquired
since the six months ended June 30, 2001.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expense increased 61% to approximately
$247,000 for the six months ended June 30, 2002, from $153,000 for the six
months ended June 30, 2001, 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 $34,000, and an increase in
remarketing fees of $30,000, an increase in promotions/advertising of $2,000, an
increase in legal fees of $8,000, an increase in due diligence of $11,000, an
increase in equipment shipping cost of $4,000, and an increase in marketing of
approximately $5,000.

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 11% to approximately $70,000 for the six months ended
June 30, 2002, from $79,000 for the six months ended June 30, 2001, 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
19% to approximately $1,033,000 for the six months ended June 30, 2002, from
$1,280,000 for the six months ended June 30, 2001 due to equipment and
acquisition fees being fully depreciated/amortized and not being replaced with
as many new purchases.

The partnership recorded bad debt expenses of approximately $68,000 related to
disputed accounts receivables balances for the six months ended June 30, 2002.

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 $300. The Partnership sold
computer equipment with a net book value of $47,000 for the six months ended
June 30, 2001, for a net gain of $72,000.

Interest expense increased 48% to $82,000 for the six months ended June 30, 2002
from $55,000 for the six months ended June 30, 2001, primarily due to the
acquisitions of new computer leases and the outstanding debt associated with it.
<PAGE>

                        RECENT ACCOUNTING PRONOUNCEMENTS

                                    SFAS 145

In April 2002, the FASB issued SFAS No. 145, "Recission of FASB statements No.
4, 44 and 64, Amendment of FASB statement No. 13, and Technical Corrections"
("SFAS 145"). FASB No. 4 required that gains and losses from extinguishments of
debt that were included in the determination of net income be aggregated and, if
material, be classified as an extraordinary item, net of related income tax.
Effective January 1, 2003, pursuant to SFAS 145, the treatment of debt is to be
included in "Other Income" in the Financial Statements. SFAS 145 has no affect
on our financial statements at this time.

Part II: OTHER INFORMATION

                      Commonwealth Income & Growth Fund II

     Item 1.  Legal Proceedings.

              On or about December 21, 2001, a complaint captioned Commonwealth
              Capital Corp V. Avon Products, Inc. was filed by Commonwealth
              Capital Corp against Avon Products Inc. with the Federal District
              Court of the Eastern District of Pennsylvania, No. 01-CV-6915. The
              initial claim is approximately $750,000, plus ongoing monthly
              rentals of approximately $37,000 per month. The complaint alleges
              that the named defendant has failed to make monthly payments on
              the existing lease terms. The case is still in discovery and no
              court date has been set.

              On or about April 26, 2002, the Federal District Court of the
              Eastern District of Pennsylvania has denied Avon's request for
              Summary Judgment to join two brokers in the above-mentioned
              lawsuit.

              On or about June 15, 2002, in connection with the above matter,
              the Partnership filed for Summary Judgment against an unrelated
              third party broker to collect payments of approximately $410,000
              made by Avon Products, Inc. to this broker. The Partnership
              anticipates a scheduled court date sometime in the third quarter
              of 2002 in connection with the Summary Judgment.

     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
<PAGE>

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

              a) Exhibits:
                 1. SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Commonwealth Income & Growth Fund II,
(the "Company") on Form 10-Q for the period ending June 30, 2002, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
George S. Springsteen, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act
of 2002, that:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

/s/ George S. Springsteen
-------------------------
George S. Springsteen
Chief Executive Officer
August 19, 2002

In connection with the Quarterly Report of Commonwealth Income & Growth Fund II,
(the "Company") on Form 10-Q for the period ending June 30, 2002, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Salvatore R. Barila, Controller of the Company, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

/s/ Salvatore R. Barila
-----------------------
Salvatore R. Barila
Controller
August 19, 2002

              b) Report on Form 8-K:   None
<PAGE>


    Item 7.A  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.

                                    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 19, 2002                      By: /s/ George S. Springsteen
---------------                      ------------------------------
Date                                 George S. Springsteen
                                     President