<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 SEPTEMBER 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>
                                                                      September 30,      December 31,
                                                                          2002              2001
                                                                 ------------------------------------------
                                                                     (unaudited)
<S>                                                               <C>                   <C>
Assets

Cash and cash equivalents                                         $        149,126      $     14,425
Lease income receivable, net of allowance for doubtful
     accounts reserve of $208,534 as of September 30, 2002
     and $54,200 as of December 31, 2001                                   504,524           488,472

Other receivables - Commonwealth Capital Corp                                    -           315,404

Other receivables - Other LP's                                              11,671             2,761

Prepaid fees                                                                 6,200             3,200
                                                                 ------------------------------------------

                                                                           671,521           824,262
                                                                 ------------------------------------------



Computer equipment, at cost                                             10,665,351        11,656,085

Accumulated depreciation                                               (7,625,048)       (7,769,975)

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

                                                                         3,040,303         3,886,110
                                                                 ------------------------------------------


Equipment acquisition costs and deferred expenses, net                     121,718           148,988

Other receivables - Commonwealth Capital Corp                              284,366                 -
                                                                 ------------------------------------------

                                                                           406,084           148,988
                                                                 ------------------------------------------


Total assets                                                      $      4,117,908     $   4,859,360
                                                                 ==========================================

Liabilities and Partners' Capital

Liabilities
Accounts payable                                                  $         80,813      $     40,472

Accounts payable - General Partner                                          56,532            55,675

Unearned lease income                                                      408,296            75,930

Notes payable                                                            1,836,101         2,380,383

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

Total liabilities                                                        2,381,742         2,552,460
                                                                 ------------------------------------------
Partners' Capital


General partner                                                              1,000             1,000

Limited partners                                                         1,735,166         2,305,900

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

Total partners' capital                                                  1,736,166         2,306,900
                                                                 ------------------------------------------

Total liabilities and partners' capital                           $      4,117,908     $   4,859,360
                                                                 ==========================================
</TABLE>

                 see accompanying notes to financial statements
<PAGE>

                      Commonwealth Income & Growth Fund II

                              Statements of Income

<TABLE>
<CAPTION>
                                                              Three Months Ended                   Nine` Months Ended
                                                                 September 30                         September 30
                                                            2002              2001               2002              2001
                                                           ------------------------------  -----------------------------------
                                                                  (unaudited)                             (unaudited)
<S>                                                          <C>              <C>               <C>               <C>
Income
Lease                                                        $  667,730       $  748,172        $ 2,056,808       $ 2,324,138

Interest and other                                                  421            2,731              1,214             7,939

Gain on sale of computer equipment                                    -          182,389                  -           254,772
                                                           ------------------------------  ----------------- -----------------

                                                                668,151
Total Income                                                                     933,292          2,058,022         2,586,849
                                                           ------------------------------  ----------------- -----------------

Expenses

Operating, excluding depreciation                               188,642           75,434            435,833           227,942

Equipment management fee - General Partner                       33,402           37,409            102,856           116,119

Interest                                                         36,658           20,342            118,897            75,790

Depreciation                                                    326,326          396,568          1,319,930         1,622,779
Amortization of equipment

  acquisition costs and deferred expenses                        17,246           16,581             56,335            70,141

Bad debt expense                                                117,917                -            186,393                 -

Loss on sale of computer equipment                                  611                -                308                 -


                                                           ------------------------------  ----------------- -----------------
                                                                720,802
Total expenses                                                                   546,334          2,220,552         2,112,771
                                                           ------------------------------  ----------------- -----------------

Net (loss) income                                           $  (52,651)       $  386,958       $  (162,530)        $  474,078
                                                           ==============================  ================= =================

Net (loss) income per equivalent limited
  partnership unit                                          $    (0.11)       $     0.84       $     (0.35)        $    1.03
                                                           ==============================  ================= =================

Weighted Average number of equivalent limited
                                                                460,067
  partnership units outstanding during the period                                460,567            460,145           461,400
                                                           ==============================  ================= =================
</TABLE>


                 see accompanying notes to financial statements
<PAGE>

                      Commonwealth Income & Growth Fund II
                         Statements of Partners' Capital


<TABLE>
<CAPTION>
                                                                     For the Nine Months ended September 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)                                                                 4,040            (166,570)        (162,530)
  Redemption                                                     (500)                  -              (4,164)          (4,164)
  Distributions                                                                    (4,040)           (400,000)        (404,040)
                                         ----------------------------------------------------------------------------------------
Partners' capital - September 30, 2002              50        460,067             $ 1,000         $ 1,735,166       $1,736,166
                                         =============    ===========             =======         ===========       =============
</TABLE>

                 see accompanying notes to financial statements
<PAGE>

                      Commonwealth Income & Growth Fund II
                             Statements of Cash Flow
              For the Nine Months Ended September 30, 2002 and 2001
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                    2002            2001
                                                             ---------------  ------------
<S>                                                          <C>              <C>
Operating activities
Net (loss) income                                            $     (162,530)  $   474,078
Adjustments to reconcile net (loss) income to net cash
   provided by operating activities
       Depreciation and amortization                              1,376,265     1,692,920
       Amortization of unearned lease income                        (14,333)            -
       Loss (gain) on sale of computer equipment                        308      (254,772)
      Other noncash activities included in
          determination of net (loss) income                       (865,622)     (936,003)
     Changes in assets and liabilities
         (Increase) decrease in assets
              Lease income receivable                               (16,052)       68,313
              Other receivable, General Partner                           -       (21,466)
              Other receivables - Other LP's                         (8,910)       19,936
              Other receivables                                           -          (982)
              Prepaid Items                                          (3,000)            -
         Increase (decrease) in liabilities
              Accounts payable                                       40,341        11,858
              Accounts payable, General Partner                         857             -
              Accounts payable, Common Capital Corp.                      -           (62)
              Unearned lease income                                 117,372        67,841
                                                             ---------------  ------------
Net cash provided by operating activities                           464,696     1,121,661
                                                             ---------------  ------------
Investing activities:
Capital Expenditures                                                (97,107)     (444,847)
Net proceeds from the sale of computer equipment                    126,299       364,200
Long term unearned lease income                                      47,044           -
Equipment acquisition fees paid to General Partner                  (24,029)      (39,552)
                                                             ---------------  ------------
Net cash provided by (used in) investing activities                  52,207      (120,199)
                                                             ---------------  ------------
Financing activities:
Distributions to partners                                          (404,040)     (692,269)
Redemption of partners                                               (4,164)      (10,577)
Other receivables-Commonwealth Capital Corp                          31,038      (494,324)
Debt Placement fee paid to the General Partner                       (5,036)       (5,439)
                                                             ---------------  ------------
Net cash (used in) financing activities                            (382,202)   (1,202,609)
                                                             ---------------  ------------
Net increase (decrease) in cash and equivalents                     134,701      (201,147)
Cash and cash equivalents, beginning of period                       14,425       277,719
                                                             ---------------  ------------
Cash and cash equivalents, end of period                     $      149,126   $    76,572
                                                             ===============  ============
</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 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 Commonwealth Capital Corp.
                  Commonwealth Capital Corp. 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 any date other than
   Policies       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 nine-month period ended September 30, 2002 are
                  not necessarily indicative of financial results that may be
                  expected for the full year ended December 31, 2002.

                  Revenue Recognition

                  Through September 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.
<PAGE>

                  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
                  September 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 three months or less to be cash equivalents. At
                  September 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.
<PAGE>

                  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. Computer       The Partnership is the lessor of equipment under operating
   Equipment      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 September 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 September 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 September 30, 2002 and December 31, 2001 was
                  approximately $1,267,000 and $1,581,000, respectively, which
                  is included in the Partnership's liabilities on the balance
                  sheet, and the total outstanding debt at September 30, 2002
                  and December 31, 2001 related to the equipment shared by the
                  Partnership was approximately $2,219,000 and $2,406,000,
                  respectively.

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

                                                                       Amount
                  --------------------------------------------------------------
                  Three Months ended December 31, 2002          $     386,000
                  Year Ended December 31, 2003                      1,328,000
                  Year Ended December 31, 2004                        782,000
                  Year Ended December 31, 2005                         45,000
                  --------------------------------------------------------------

                                                                $   2,541,000
                  ==============================================================
<PAGE>

4. Related Party  Other Receivables
   Transactions
                  At September 30, 2002, the Partnership has a receivable from
                  Commonwealth Capital Corp ("CCC"), a related party to the
                  Partnership, in the amount of approximately $284,000. 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 nine months ended September 30, 2002, CCC
                  has repaid approximately $31,000 to the Partnership.

5. Notes Payable  Notes payable consisted of the following:

                                                    September 30,   December 31,
                                                       2002           2001
                  --------------------------------------------------------------
                  Installment notes payable to
                  banks; interest ranging from
                  6.60% to 9.18%, due in monthly
                  installments ranging from $152
                  to $2,578, including interest,
                  with final payments due from
                  January through November 2002.    $     818        $   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.     297,004           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.    1,393,195        1,807,788

                  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.         145,084               -
                                                    ---------------------------
                                                    $1,836,101       $2,380,383
                  =============================================================
<PAGE>

                  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 September 30, 2002 are as follows:

                                                                        Amount
                                                                     ----------
                  Three months ended December 31, 2002               $  267,179
                  Year ended December 31, 2003                          996,197
                  Year ended December 31, 2004                          559,406
                  Year ended December 31, 2005                           13,319
                                                                     ----------
                                                                     $1,836,101

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

Nine months ended September 30,               2002               2001
-------------------------------------------------------------------------------
Leaseincome, net of interest expense on
 notes payable realized as a result of
 direct payment of principal by lessee
 to bank                                      $1,047,905      $  934,241

Lease income paid to original lessor in
 lieu of cash payment for computer
 equipment acquired                           $        -      $    1,762

                  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:

Nine months ended September 30,                2002               2001
-------------------------------------------------------------------------------
Debt assumed in connection with purchase
     of computer equipment                    $  503,623     $   136,524


Debt paid off in connection with extension
     of unearned lease income                 $  182,283     $         -

===============================================================================
<PAGE>

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 $616,000,
                  which the Partnership believes is fully collectible.

                  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
                  fourth quarter of 2002 in connection with the Summary
                  Judgment.

                  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.

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.

REVENUE RECOGNITION

Through September 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.
<PAGE>

Liquidity and Capital Resources

The Partnership's primary sources of capital for the nine months ended September
30, 2002 and 2001 were from cash from operations of $465,000 and $1,122,000,
respectively, payment of an advance made by the Partnership to Commonwealth
Capital Corp ("CCC"), a related party to the Partnership, of approximately
$31,000 as of September 30, 2002, and net proceeds received from sale of
equipment totaling $126,000 for the period ending September 30, 2002 and
$364,000 for the period ending September 30, 2001. The primary uses of cash for
the nine months ended September 30, 2002 and 2001, were for capital expenditures
for new equipment totaling $97,000 and $445,000, an advance to CCC of
approximately $494,000 for the period ending September 30, 2001, and the payment
of preferred distributions to partners for the nine months ended September 30,
2002 and 2001 of $404,000 and $692,000, respectively.

For the nine month period ended September 30, 2002, the Partnership generated
cash flows from operating activities of $465,000, which includes a net loss of
$163,000, depreciation and amortization expenses of $1,376,000, and unearned
income of $117,000. Other noncash activities included in the determination of
net (loss) include direct payments of lease income by lessees to banks of
$866,000.

For the nine month period ended September 30, 2001, the Partnership generated
cash flows from operating activities of $1,122,000, which includes net income of
$474,000, a gain on sale of equipment totaling $255,000, and depreciation and
amortization expenses of $1,693,000. Other noncash activities included in the
determination of net income include direct payments of lease income by lessees
to banks of $936,000.

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 September 30, 2002, the Partnership had approximately $146,000
invested in these money market accounts.

Included in accounts receivable is approximately $617,000 of receivables from
Avon Products Inc., in which the Partnership, through CCC, has initiated a
lawsuit. Management believes we will collect in full the balance due to the
Partnership. 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
fourth quarter of 2002 in connection with the Summary Judgment. Revenue from the
Avon Products, Inc. lease approximates to 17 % of the revenues for the nine
months ended September 30, 2002 and approximates to 15 % for the nine months
ended September 30, 2001.

At September 30, 2002, the Partnership has a receivable from CCC, a related
party to the Partnership, in the amount of approximately $284,000. 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 nine months ended September 30,
2002, CCC has repaid approximately $31,000 to the Partnership.
<PAGE>

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 September 30, 2002, the Partnership had future minimum rentals on
non-cancelable operating leases of $386,000 for the balance of the year ending
December 31, 2002 and $2,155,000 thereafter. At September 30, 2002, the
outstanding debt was $1,836,000, 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 September 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 September 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
September 30, 2002 and December 31, 2001 was approximately $1,267,000 and
$1,581,000, respectively, which is included in the Partnership's liabilities on
the balance sheet, and the total outstanding debt at September 30, 2002 and
December 31, 2001 related to the equipment shared by the Partnership was
approximately $2,219,000 and $2,406,000, respectively.

Results of Operations

Three Months Ended September 30, 2002 compared to Three Months Ended
September 30, 2001

For the quarter ended September 30, 2002, the Partnership recognized income of
$668,000 and expenses of $721,000, resulting in a net loss of $53,000. For the
quarter ended September 30, 2001, the Partnership recognized income of $933,000
and expenses of $546,000, resulting in net income of $387,000.

Lease income decreased by 11% to $668,000 for the quarter ended September 30,
2002, from $748,000 for the quarter ended September 30, 2001, primarily due to
the fact that more lease agreements ended than new lease agreements acquired
since the quarter ended September 30, 2001.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expense increased 150% to approximately
$189,000 for the quarter ended September 30, 2002, from $75,000 for the quarter
ended September 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 $77,000, and an increase in
outside office services of $5,000, an increase in legal fees of $14,000, an
increase in insurance of $7,000, an increase in due diligence of $5,000, an
increase in postage of $3,000, and an increase in supplies of $3,000. The main
reason there is an increase in operating expenses this quarter related to the
recalculation of the amount charged by CCC, a related party, to the Partnership
for the administration and operation. This increase is necessary to operate the
fund, especially due to the ongoing lawsuit, as mentioned in the litigation
section of this document.
<PAGE>

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 $33,000 for the quarter ended
September 30, 2002, from $37,000 for the quarter ended September 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
17% to approximately $344,000 for the quarter ended September 30, 2002, from
$413,000 for the quarter ended September 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 $118,000 related to
disputed accounts receivables balances for the quarter ended September 30, 2002.

The Partnership sold computer equipment with a net book value of $4,000 for the
quarter ended September 30, 2002, for a net loss of $1,000. The Partnership sold
computer equipment with a net book value of $63,000 for the quarter ended
September 30, 2001, for a net gain of $182,000.

Interest expense increased 80% to $37,000 for the quarter ended September 30,
2002 from $20,000 for the quarter ended September 30, 2001, primarily due to the
acquisitions of new computer leases and the outstanding debt associated with it.

Nine Months Ended September 30, 2002 compared to Nine Months Ended
September 30, 2001

For the nine months ended September 30, 2002, the Partnership recognized income
of $2,058,000 and expenses of $2,221,000, resulting in a net loss of $163,000.
For the nine months ended September 30, 2001, the Partnership recognized income
of $2,587,000 and expenses of $2,113,000, resulting in net income of $474,000.

Lease income decreased by 12% to $2,057,000 for the nine months ended September
30, 2002, from $2,324,000 for the nine months ended September 30, 2001,
primarily due to the fact that more lease agreements ended than new lease
agreements acquired since the nine months ended September 30, 2001.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The expense increased 91% to approximately
$436,000 for the nine months ended September 30, 2002, from $228,000 for the
nine months ended September 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 $111,000, an increase in
remarketing fees of $28,000, an increase in promotions/advertising of $2,000, an
increase in legal fees of $23,000, an increase in due diligence of $18,000, an
increase in outside office services of $13,000, an increase in postage/shipping
of $7,000, and an increase in marketing of approximately $6,000. The main reason
there is an increase in operating expenses for 2002 is related to the
recalculation of the amount charged by CCC, a related party, to the Partnership
for the administration and operation. This increase is necessary to operate the
fund, especially due to the ongoing lawsuit, as mentioned in the litigation
section of this document.
<PAGE>

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 $103,000 for the nine months ended
September 30, 2002, from $116,000 for the nine months ended September 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 $1,376,000 for the nine months ended September 30, 2002,
from $1,693,000 for the nine months ended September 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 $186,000 related to
disputed accounts receivables balances for the nine months ended September 30,
2002.

The Partnership sold computer equipment with a net book value of $127,000 for
the nine months ended September 30, 2002, for a net loss of $300. The
Partnership sold computer equipment with a net book value of $109,000 for the
nine months ended September 30, 2001, for a net gain of $255,000.

Interest expense increased 57% to $119,000 for the nine months ended September
30, 2002 from $76,000 for the nine months ended September 30, 2001, primarily
due to the acquisitions of new computer leases and the outstanding debt
associated with it.

                        RECENT ACCOUNTING PRONOUNCEMENTS

                                    SFAS 146

On July 30, 2002, the FASB issued FASB Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which nullifies EITF Issues No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred an a Restructuring)"
and No. 88-10, Costs Associated with Lease Modification or Termination."
Statement 146 fundamentally changed how a company should account for future
"restructurings." The Partnership believes that the adoption of SFAS 146 will
not have an impact on its financial position and results of operations.

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.

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
September 30, 2002.

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.
<PAGE>

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, through CCC, 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 fourth 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


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

a) Exhibits:

   99.1 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 September 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
November 27, 2002
<PAGE>

   99.2  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                  CERTIFICATION OF PRINCIPAL FINANCIAL 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 September 30, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Kimberly A. Springsteen, Principal Financial 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/ Kimberly A. Springsteen
---------------------------
Kimberly A. Springsteen
Principal Financial Officer
November 27, 2002

b) Report on Form 8-K: None

                                    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


November 27, 2002                        By: /s/ George S. Springsteen
-----------------                        --------------------------
Date                                     George S. Springsteen
                                         President
<PAGE>

                                 CERTIFICATIONS

I, George Springsteen certify that:

1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income &
Growth Fund II (the Registrant);

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:


                  a) designed such disclosure controls and procedures to ensure
                  the material information relating to the Registrant, including
                  its consolidated subsidiaries, is made known to us by others
                  within those entities, particularly during the period in which
                  this quarterly report is being prepared;

                  b) evaluated the effectiveness of the Registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the" Evaluation
                  Date" ); and

                  c) presented in this quarterly report our conclusions about
                  the effectiveness of the disclosure controls and the
                  procedures based on our evaluation as of the Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors ( or persons performing the equivalent
function):

                  a) all significant deficiencies in the design or the operation
                  of internal controls which could adversely affect the
                  Registrant's ability to record, process, summarize and report
                  financial data we have identified for the Registrant's
                  auditors any material weakness in internal
                        controls; and

                  b) any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the Registrant's internal controls; and

6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

/s/ George S. Springsteen
-------------------------
George S. Springsteen
Chief Executive Officer
November 27, 2002
<PAGE>

I, Kimberly A. Springsteen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income &
Growth Fund II (the Registrant);

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

                  a) designed such disclosure controls and procedures to ensure
                  the material information relating to the Registrant, including
                  its consolidated subsidiaries, is made known to us by others
                  within those entities, particularly during the period in which
                  this quarterly report is being prepared;

                  b) evaluated the effectiveness of the Registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the" Evaluation
                  Date" ); and

                  c) presented in this quarterly report our conclusions about
                  the effectiveness of the disclosure controls and the
                  procedures based on our evaluation as of the Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the Registrant's auditors and the audit committee of
the Registrant's board of directors ( or persons performing the equivalent
function):

                  a) all significant deficiencies in the design or the operation
                  of internal controls which could adversely affect the
                  Registrant's ability to record, process, summarize and report
                  financial data we have identified for the Registrant's
                  auditors any material weakness in internal controls; and

                  b) any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the Registrant's internal controls; and

6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

/s/ Kimberly A. Springsteen
---------------------------
Kimberly A. Springsteen
Principal Financial Officer
November 27, 2002