-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kc7EKHs5e/eUxXvCseoWDRj7p6LhKMepJbe8g2xOFpNQqPxahhba1yGQnIYeV3Zy 3bs6+C7cs73Aas7oowMbpg== 0000711642-03-000160.txt : 20030416 0000711642-03-000160.hdr.sgml : 20030416 20030416143316 ACCESSION NUMBER: 0000711642-03-000160 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20030416 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL TAX CREDIT INVESTORS II CENTRAL INDEX KEY: 0000859921 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS [6510] IRS NUMBER: 931017959 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20610 FILM NUMBER: 03652366 BUSINESS ADDRESS: STREET 1: 9090 WILSHIRE BLVD 2ND FLR STREET 2: STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 BUSINESS PHONE: 3102782191 MAIL ADDRESS: STREET 1: 9090 WILSHIRE BLVD SUITE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 10QSB/A 1 ntci2a.txt NCTI2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB/A (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 0-20610 NATIONAL TAX CREDIT INVESTORS II (A California Limited Partnership) California 95-1017959 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Explanatory Note This document amends the Form 10-QSB for the quarter ended September 30, 2002 to reflect an impairment loss with respect to an investment in a limited partnership and to include financial statements that have been reviewed by an independent accountant as required by Rule 10-01(d) of Regulation S-X. The Partnership's investment in Limited Partnerships was overstated by $834,000 at September 30, 2002, due to an unrecognized impairment loss. The Partnership determined that it was appropriate to recognize an impairment of one of its equity method investments as of September 30, 2002. In addition, legal expenses were underaccrued by approximately $778,000. The Form 10-QSB previously filed reflects an understatement of net loss of approximately $1,612,000 for the three and nine months ended September 30, 2002 and an overstatement of its investment balance of $834,000, an understatement of its accrued liabilities of $778,000 and an overstatement of partner's equity of approximately $1,612,000 as of September 30, 2002. These errors have been corrected in the restated financial statements. This document is accompanied by the certifications required by the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended. NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) INDEX TO FORM 10-QSB/A FOR THE QUARTER ENDED SEPTEMBER 30, 2002 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Balance Sheet, September 30, 2002 1 Statements of Operations Three and Nine Months Ended September 30, 2002 and 2001 2 Statement of Partners' (Deficit) Equity, Nine Months Ended September 30, 2002 3 Statements of Cash Flows Nine Months Ended September 30, 2002 and 2001 4 Notes to Financial Statements 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 13 ITEM 3. CONTROLS AND PROCEDURES 16 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18 SIGNATURES 19 CERTIFICATIONS 20 EXHIBIT 22 The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. The discussions of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, do not take into account the effects of any changes to the Registrant's business and results of operations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) BALANCE SHEET SEPTEMBER 30, 2002 (Unaudited)
ASSETS (Restated) Investments in limited partnerships (Note 2) $ 9,502,331 Cash and cash equivalents 1,145,650 Restricted cash (Note 3) 264,865 Total assets $10,912,846 LIABILITIES AND PARTNERS' (DEFICIT) EQUITY Liabilities: Accrued fees due to partners (Note 4) $ 1,144,750 Accounts payable and accrued expenses 819,949 1,964,699 Commitments and Contingencies (Note 5) Partners' (deficit) equity: General partner $ (539,442) Limited partners 9,487,589 8,948,147 Total liabilities and partners' (deficit) equity $10,912,846 The accompanying notes are an integral part of these financial statements.
NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 2002 2001 2002 2001 (Restated) (Restated) OPERATING INCOME: Gain on legal settlement (Note 7) $ -- $ -- $ 107,900 $ -- Interest and other income 4,876 7,112 9,260 24,020 Total operating income 4,876 7,112 117,160 24,020 operating Expenses: Management fees - partners (Note 4) 167,031 185,115 501,093 551,741 General and administrative (Note 4) 26,233 41,234 91,636 107,905 Legal and accounting 1,041,624 80,153 1,560,648 159,052 Total operating expenses 1,234,888 306,502 2,153,377 818,698 Loss from Partnership operations (1,230,012) (299,390) (2,036,217) (794,678) Impairment loss (Note 2) (834,000) -- (834,000) -- Gain on sale of limited partnership interest (Note 2) 143,927 -- 1,759,539 -- Distributions from limited partnerships recognized as income (Notes 2 and 7) 1,499,957 2,300 1,499,957 64,447 Equity in loss of limited partnerships and amortization of acquisition costs (Note 2) (195,986) (462,830) (786,306) (1,345,236) Net loss $ (616,114) $ (759,920) $ (397,027) $(2,075,467) Net loss allocated to general partner (1%) $ (6,161) $ (7,599) $ (3,970) $ (20,755) Net loss allocated to limited partners (99%) (609,953) (752,321) (393,057) (2,054,712) $ (616,114) $ (759,920) $ (397,027) $(2,075,467) Net loss per limited partnership interest (Note 1) $ (8) $ (10) $ (5) $ (28) The accompanying notes are an integral part of these financial statements.
NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) STATEMENT OF PARTNERS' (DEFICIT) EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (Unaudited) (Restated)
General Limited Partner Partners Total Partnership interests 72,404 Partners' (deficit) equity, January 1, 2002 $ (535,472) $ 9,880,646 $ 9,345,174 Net loss for the nine months ended September 30, 2002 (3,970) (393,057) (397,027) Partners' (deficit) equity, September 30, 2002 $ (539,442) $ 9,487,589 $ 8,948,147 The accompanying notes are an integral part of these financial statements.
NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (Unaudited)
2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: (Restated) Net loss $ (397,027) $(2,075,467) Adjustments to reconcile net loss to net cash used in operating activities: Equity in loss of limited partnerships and amortization of acquisition costs 786,306 1,345,236 Impairment loss 834,000 -- Gain on sale of limited partnership interest (1,759,539) -- Increase (decrease) in: Accounts payable and accrued expenses 465,268 21,548 Capital contributions payable 5 -- Accrued fees due to partners (1,401,269) 502,445 Net cash used in operating activities (1,472,256) (206,238) Cash flows from investing activities: Distributions from limited partnerships recognized as a reduction of investment balance 105,481 177,213 Proceeds from sale of limited partnership interests 2,106,172 -- Advances to properties (157,077) (289,172) Capital contributions (12,160) -- Decrease in restricted cash (1,607) -- Net cash provided by (used in) investing activities 2,040,809 (111,959) CASH FLOWS FROM FINANCING ACTIVITIES: Advances from affiliates 200,310 -- Repayment of advances from affiliates (200,310) -- Net cash provided by financing activities -- -- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 568,553 (318,197) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 577,097 864,951 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,145,650 $ 546,754 The accompanying notes are an integral part of these financial statements.
NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General The information contained in the following notes to the financial statements is condensed from that which would appear in the annual audited financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the annual report for the fiscal year ended December 31, 2001 prepared by National Tax Credit Investors II (the "Partnership" or "Registrant"). Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. In the opinion of the Partnership, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals) necessary to present fairly the financial position as of September 30, 2002 and the results of operations and changes in cash flows for the three and nine months ended September 30, 2002 and 2001, respectively. Organization The Partnership was formed under the California Revised Limited Partnership Act on January 12, 1990. The Partnership was formed to invest primarily in other limited partnerships ("Limited Partnerships") which own and operate multifamily housing complexes that are eligible for low income housing tax credits ("Tax Credits"). The general partner of the Partnership is National Partnership Investments Corp. (the "General Partner" or "NAPICO"), a California corporation. On December 3, 2001, Casden Properties Inc., entered into a merger agreement and certain other transaction documents with Apartment Investment and Management Company, a Maryland corporation ("AIMCO") and certain of its subsidiaries, pursuant to which, on March 11, 2002, AIMCO acquired Casden Properties Inc. and its subsidiaries, including 100% of the outstanding capital stock of NAPICO. Prior to March 11, 2002, Casden Properties Inc. owned a 95.25% economic interest in NAPICO, with the balance owned by Casden Investment Corporation ("CIC"). CIC, which is wholly owned by Alan I. Casden, owned 95% of the voting common stock of NAPICO prior to March 11, 2002. The special limited partner of the Partnership (the "Special Limited Partner") is PaineWebber TC Partners, L.P., a Virginia limited partnership. The General Partner has a one percent interest in operating profits and losses of the Partnership. The limited partners will be allocated the remaining 99 percent interest in proportion to their respective investments. Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents Cash and cash equivalents consist of cash invested in interest bearing accounts. The Partnership has its cash and cash equivalents on deposit primarily in one concentration account. Such cash and cash equivalents may be in excess of the FDIC insurance limit. Method of Accounting for Investment in Limited Partnerships The Partnership's investment in Limited Partnerships are accounted for using the equity method. Acquisition, selection and other costs related to the Partnership's investments are capitalized and are being amortized by the straight line method over the estimated lives of the underlying assets, which is generally 30 years. Net Loss Per Limited Partnership Interest Net loss per limited partnership interest was computed by dividing the limited partners' share of net loss by the number of limited partnership interests outstanding during the period. The number of limited partner interests was 72,404 for the periods presented. Impairment of Long-Lived Assets The Partnership reviews long-lived assets to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows is less than the carrying amount of the assets, the Partnership recognizes an impairment loss. For both the three and nine month periods ended September 30, 2002, impairment charges of $834,000 were recognized with respect to the investment in one limited partnership. Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which established standards for the way that public business enterprises report information about long-lived assets that are either being held for sale or have already been disposed of by sale or other means. The standard requires that results of operations for a long-lived asset that is being held for sale or has already been disposed of be reported as a discontinued operation on the statement of operations. As a result, the unaudited combined statements of operations in Note 2 have been restated as of January 1, 2001 to reflect the operations of Cottonwood, Wade Walton and Cottages of North St. Paul Limited Partnerships as loss from discontinued operations. Recent Accounting Pronouncements In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN46"), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN46 must be applied for the first interim or annual period beginning after June 15, 2003. The Partnership is currently evaluating the effect, if any, that the adoption of FIN46 will have on its results of operations and financial condition. NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS The Partnership failed to recognize an impairment loss with respect to an investment in a limited partnership in the amount of $834,000 during the three and nine months ended September 30, 2002. In addition, legal expenses were underaccrued by approximately $778,000. As a result, the net loss for the period was understated by $1,612,000 and investment in limited partnerships was overstated by $834,000, accrued liabilities were understated by approximately $778,000 and partners' equity was overstated by approximately $1,612,000 as of September 30, 2002. These errors have been corrected in the restated financial statements. The following table sets forth the adjustments to the balance sheet as of September 30, 2002 and the statements of operations for the three and nine months ended September 30, 2002. The only financial statement line items included here are those that have been restated from the originally reported amounts. As of September 30, 2002 As previously reported As restated Balance sheet data: Investments in limited partnerships $10,336,331 $ 9,502,331 Total assets 11,746,846 10,912,846 Accounts payable and accrued liabilities 41,949 819,949 Partners' equity 10,560,147 8,948,147 Total liabilities and partners' equity 11,746,846 10,912,846
Three Months Ended Nine Months Ended September 30, 2002 September 30, 2002 As previously As previously reported As restated reported As restated Statement of operations data: Legal and accounting $ 263,624 $1,041,624 $ 782,648 $1,560,648 Impairment loss -- (834,000) -- (834,000) Net income (loss) 995,886 (616,114) 1,214,973 (397,027) Net income (loss) allocated to general partners 9,959 (6,161) 12,150 (3,970) Net income (loss) allocated to limited partners 985,927 (609,953) 1,202,823 (393,027) Net income (loss) per limited partnership interest 14 (8) 17 (5)
The Partnership currently holds limited partnership interests in 33 Limited Partnerships (the "Limited Partnerships"), located in 22 different states. As a limited partner of the Limited Partnerships, the Partnership does not have authority over day-to-day management of the Limited Partnerships or their properties (the "Apartment Complexes"). The general partners responsible for management of the Limited Partnerships (the "Local Operating General Partners") are not affiliated with the General Partner of the Partnership, except as discussed below. At September 30, 2002, the Limited Partnerships own residential projects consisting of 3,325 apartment units. The Partnership, as a limited partner, is generally entitled to 99 percent of the operating profits and losses of the Limited Partnerships. National Tax Credit, Inc. II ("NTC-II") an affiliate of the General Partner, typically serves either as a special limited partner or non-managing administrative general partner in which case it receives .01 percent of operating profits and losses of the Limited Partnerships. NTC-II or another affiliate of the General Partner may serve as the Local Operating General Partner of the Limited Partnership in which case it is typically entitled to .09 percent of the operating profits and losses of the Limited Partnership. The Partnership is generally entitled to receive 50 percent of the net cash flow generated by the Apartment Complexes, including any excess cash flows that may result from the sale of an investment property under certain circumstances subject to repayment of any loans made to the Limited Partnerships (including loans made by NTC-II or an affiliate), repayment for funding of development deficit and operating deficit guarantees by the Local Operating General Partners or their affiliates (excluding NTC-II and its affiliates), and certain priority payments to the Local Operating General Partners other than NTC-II or its affiliates. The Partnership, as a limited partner, does not exercise control over the activities and operations, including refinancing or selling decisions, of the Local Partnerships. Accordingly, the Partnership accounts for its investments in the Local Partnerships using the equity method. The Partnership is allocated profits and losses of the Local Partnerships based upon its respective ownership percentage (between 5% and 99%). The Partnership is allocated profits and losses and receives distributions from refinancings and sales in accordance with the Local Partnerships' partnership agreements. These agreements usually limit the Partnership's distributions to an amount substantially less than its ownership percentage in the Local Partnership. The individual investments are carried at cost plus the Partnership's share of the Local Partnership's profits less the Partnership's share of the Local Partnership's losses, distributions and impairment charges. See "Note 1 - Organization and Summary of Significant Accounting Policies" for a description of the impairment policy. The Partnership is not legally liable for the obligations of the Local Partnerships and is not otherwise committed to provide additional support to them. Therefore, it does not recognize losses once its investment in each of the Local Partnerships reaches zero. Distributions from the Local Partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying statements of operations. For those investments where the Partnership has determined that the carrying value of its investments approximates the estimated fair value of those investments, the Partnership's policy is to recognize equity in income of the Local Partnerships only to the extent of distributions received and amortization of acquisition costs from those Local Partnerships. Therefore, the Partnership limits its recognition of equity earnings to the amount it expects to ultimately realize. As of September 30, 2002, the investment balance in 20 of the 33 Local Partnerships had been reduced to zero. During the three and nine months ended September 30, 2002, the Partnership determined that its investment in one Local Partnership, Wedgewood Commons Apartments, was impaired. Management is actively attempting to sell the property and is currently in negotiations with a potential buyer. The Partnership expects to ultimately realize $100,000 upon the sale, which is less than its current investment value. As a result, the investment balance was reduced to the estimated fair value for the Partnership interest and an impairment loss of approximately $834,000 was recognized during the three and nine months ended September 30, 2002. At September 30, 2002, the Partnership has approximately $100,000 investment balance remaining in this Local Partnership. The following is a summary of the investments in Limited Partnerships for the nine months ended September 30, 2002: Balance, beginning of period $11,184,234 Advances to Limited Partnerships 147,957 Impairment loss (834,000) Equity in losses of limited partnerships (716,414) Distributions recognized as a reduction of investment balance (105,481) Amortization of capitalized acquisition costs and fees (69,892) Sale of partnership interest (104,073) Balance, end of period $ 9,502,331 The following are unaudited condensed combined estimated statements of operations for the three and nine months ended September 30, 2002 and 2001 for the Limited Partnerships in which the Partnership has investments.
Three Months Ended Nine Months Ended September 30, September 30, 2002 2001 2002 2001 (Restated) (Restated) Revenues Rental and other $ 4,451,000 $ 4,428,000 $13,354,000 $13,284,000 Expenses Depreciation 1,126,000 1,131,000 3,379,000 3,392,000 Interest 1,194,000 1,197,000 3,583,000 3,592,000 Operating 3,089,000 3,091,000 9,266,000 9,272,000 5,409,000 5,419,000 16,228,000 16,256,000 Net loss $ (958,000) $ (991,000) $(2,874,000) $(2,972,000)
In addition to being the General Partner of the Partnership, NAPICO, or one of its affiliates, is the general partner and property management agent for certain of the Limited Partnerships included above. Cottages of North St. Paul During the nine months ended September 30, 2002, the Partnership sold its investment in the Cottages of North St. Paul. As the Partnership had no investment balance related to this Limited Partnership, the proceeds of approximately $1,636,892 that were received are being reported as gain on sale of investment in limited partnership on the accompanying statements of operations. Cottonwood During 2001, the Partnership sold its investment in the Cottonwood Limited Partnership. Of the total proceeds, approximately $221,280 was due to the Partnership as of December 31, 2001. This amount was received during the nine months ended September 30, 2002. Wade Walton Due to operating deficits, the Wade Walton Limited Partnership which owns a property in Clarksdale, Mississippi has been unable to service its mortgage and the lender commenced foreclosure proceedings. The Wade Walton Limited Partnership then commenced bankruptcy proceedings on July 20, 1999 in order to stay the foreclosure sale and reorganize under Chapter 11 of the United States Bankruptcy Code. The bankruptcy court subsequently terminated the automatic stay and a foreclosure sale occurred on May 31, 2002. The Partnership had no investment balance related to the Wade Walton Limited Partnership. Sheboygan Apartments During the nine months ended September 30, 2002, the Partnership sold 89% of its investment in the Sheboygan Regency House Limited Partnership. Total proceeds received were $248,000. A gain on sale of investment in limited partnership of $143,927 was reported on the accompanying statements of operations which is the amount received in excess of the remaining investment balance related to this Limited Partnership. NOTE 3 - RESTRICTED CASH Restricted cash represents funds in escrow to be used to fund operating deficits, if any, of one of the Limited Partnerships, as defined in the Limited Partnership Agreement. NOTE 4 - RELATED PARTY TRANSACTIONS Under the terms of its Partnership Agreement, the Partnership is obligated to the General Partner for the following fees: (a) An annual Partnership management fee in an amount equal to 0.5 percent of invested assets (as defined in the Partnership Agreement) is payable to the General Partner. For the nine months ended September 30, 2002 and 2001, $501,093 and $551,741, respectively, has been expensed. The unpaid balance at September 30, 2002 is $984,687 and is non-interest bearing. (b) A property disposition fee is payable to the General Partner in an amount equal to the lesser of (i) one-half of the competitive real estate commission that would have been charged by unaffiliated third parties providing comparable services in the area where the apartment complex is located, or (ii) 3 percent of the sale price received in connection with the sale or disposition of the apartment complex or local partnership interest, but in no event will the property disposition fee and all amounts payable to affiliated real estate brokers in connection with any such sale exceed in the aggregate, the lesser of the competitive rate (as described above) or 6 percent of such sale price. Receipt of the property disposition fee will be subordinated to the distribution of sale or refinancing proceeds by the Partnership until the limited partners have proceeds in an aggregate amount equal to (i) their 6 percent priority return for any year not theretofore satisfied (as defined in the Partnership Agreement) and (ii) an amount equal to the aggregate adjusted investment (as defined in the Partnership Agreement) of the limited partners. No disposition fees have been paid. (c) The Partnership reimburses NAPICO for certain expenses. The reimbursement to NAPICO was approximately $48,000 and $49,000 for the nine months ended September 30, 2002 and 2001, respectively, and is included in general and administrative expenses. NTC II or another affiliate of the General Partner is the Local Operating General Partner in ten of the Partnership's 33 Limited Partnerships. In addition, NTC II is typically either a special limited partner or an administrative general partner in each Limited Partnership. An affiliate of the General Partner is currently managing four properties owned by Limited Partnerships. The Limited Partnerships pay the affiliate property management fees in the amount of five percent of their gross rental revenues and data processing fees. The amounts paid were $95,503 and $115,724 for the nine months ended September 30, 2002 and 2001, respectively. During the nine months ended September 30, 2002, an affiliate of the General Partner advanced $200,310 to the Partnership for operating expenses. This advance was non-interest bearing and was repaid during the nine months ended September 30, 2002. NOTE 5 - CONTINGENCIES On March 28, 2002, the local operating general partner of Sheboygan Apartments Limited Partnership brought action against the Partnership and the General Partner alleging that the parties breached the purchase agreement by refusing to close a transaction regarding the sale of the property. The parties were engaged in settlement discussions regarding the dilution of a portion of the Partnership's interest to the local operating general partner and entered into a settlement agreement whereby the limited partner diluted a portion of its interest in the Partnership (see "Note 2"). The case was dismissed in August 2002. One of the local Limited Partnerships, East Ridge Apartments, filed for bankruptcy in December 2002 in an effort to restructure its debt. The Partnership's investment balance in this Local Partnership had previously been reduced to zero, consequently, this action has no effect on the Partnership's investment balance on the accompanying balance sheet. On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in Real Estate Associates Limited III (an affiliated partnership in which NAPICO is the corporate general partner) and two investors holding an aggregate of five units of limited partnership interests in the Partnership commenced an action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other defendants. The complaint alleged that the defendants breached their fiduciary duty to the limited partners of certain NAPICO managed partnerships and violated securities laws by making materially false and misleading statements in the consent solicitation statements sent to the limited partners of such partnerships relating to approval of the transfer of partnership interests in limited partnerships, owning certain of the properties, to affiliates of Casden Properties Inc., organized by an affiliate of NAPICO. The plaintiffs sought equitable relief, as well as compensatory damages and litigation related costs. On August 4, 1999, one investor holding one unit of limited partnership interest in Housing Programs Limited (another affiliated partnership in which NAPICO is the corporate general partner) commenced a virtually identical action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other entities. The second action was subsumed in the first action, and was certified as a class action. On August 21, 2001, plaintiffs filed a supplemental complaint, which added new claims, including a rescission of the transfer of partnership interests and an accounting. The matter was tried in October and November 2002. In November 2002, the jury returned special verdicts against NAPICO and certain other defendants in the amount of approximately $25.2 million for violations of securities laws and against NAPICO for approximately $67.3 million for breaches of fiduciary duty. In addition, the jury awarded the plaintiffs punitive damages against NAPICO of approximately $92.5 million. On April 3, 2003, the judge entered certain orders in connection with the litigation that denied defendants' motion for a new trial and set April 28, 2003 as the date for entry of judgment against NAPICO and certain other defendants in the amount of $25.2 million for violations of securities laws and against NAPICO for $67.3 million for breaches of fiduciary duty, both amounts plus interest, subject to plaintiffs' agreement to reducing the jury award for punitive damages against NAPICO from $92.5 million to $2.6 million. While the case is expected to be appealed, the entire matter is the responsibility of the former shareholder of Casden Properties Inc. pursuant to the documents related to AIMCO's acquisition of Casden Properties Inc., which was completed in March 2002. The General Partner of the Partnership is involved in various other lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the General Partner, the claims will not result in any material liability to the Partnership. NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments. The carrying amount of other assets and liabilities reported on the balance sheet that require such disclosure approximates fair value due to their short-term maturity. NOTE 7 - GAIN ON LEGAL SETTLEMENT During 2001, the Partnership and an affiliated partnership filed a suit against several parties for breach of fiduciary duties and breach of the partnership agreements of Quivera Limited Partnership, in which the Partnership has invested, and another Limited Partnership in which the affiliated partnership is invested. The property in each respective Limited Partnership had been refinanced during 2001; however, the proceeds from the refinancing were being held within the Quivera Limited Partnership instead of being distributed. On June 28, 2002, the Partnership received $107,900 from the judgment arising from the conclusions of the lawsuit. This amount is shown as gain on legal settlement for the nine months ended September 30, 2002 on the accompanying statements of operations. On August 6, 2002, the Partnership received $1,499,957 as its share of the refinancing proceeds of Quivera Limited Partnership. This amount is reported as distribution from limited partnerships recognized as income during the three months ended September 30, 2002 as the Partnership's investment in this Limited Partnership was zero. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The General Partner monitors developments in the area of legal and regulatory compliance and is studying new federal laws, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance, including increased legal and audit fees. Liquidity and Capital Resources The Partnership raised $72,404,000 from investors by a public offering. The proceeds were used to invest in Limited Partnerships which own and operate Apartment Complexes that are eligible for Tax Credits. It is not expected that any of the Limited Partnerships in which the Partnership invests will generate cash from operations sufficient to provide distributions to the Limited Partners in any material amount. Such cash from operations, if any, would first be used to meet operating expenses of the Partnership. The Partnership's investments will not be readily marketable and may be affected by adverse general economic conditions which, in turn, could substantially increase the risk of operating losses for the Apartment Complexes, the Limited Partnerships and the Partnership. These problems may result from a number of factors, many of which cannot be controlled by the General Partner. The Partnership does not have the ability to assess Limited Partners for additional capital contributions to provide capital if needed by the Partnership or Limited Partnerships. Accordingly, if circumstances arise that cause the Limited Partnerships to require capital in addition to that contributed by the Partnership and any equity of the local general partners, the only sources from which such capital needs will be able to be satisfied (other than the limited reserves available at the Partnership level) will be (i) third-party debt financing (which may not be available if, as expected, the Apartment Complexes owned by the Limited Partnerships are already substantially leveraged), (ii) other equity sources (which could reduce the amount of Tax Credits being allocated to the Partnership, adversely affect the Partnership's interest in operating cash flow and/or proceeds of sale or refinancing of the Apartment Complexes and possibly even result in adverse tax consequences to the Limited Partners), or (iii) the sale or disposition of Apartment Complexes. There can be no assurance that any of such sources would be readily available in sufficient proportions to fund the capital requirements of the Limited Partnerships. If such sources are not available, the Limited Partnerships would risk foreclosure on their Apartment Complexes if they were unable to renegotiate the terms of their first mortgages and any other debt secured by the Apartment Complexes, which would have significant adverse tax consequences to the Limited Partners. Reserves of the Partnership and reserves of the Limited Partnerships may be increased or decreased from time to time by the General Partner or the local general partner, as the case may be, in order to meet anticipated costs and expenses. The amount of cash flow available for distributions and/or sale and refinancing proceeds, if any, which is available for distribution to the Limited Partners may be affected accordingly. Results of Operations The Partnership was formed to provide various benefits to its Limited Partners. It is not expected that any of the Limited Partnerships in which the Partnership has invested will generate cash flow sufficient to provide for distributions to Limited Partners in any material amount. The Partnership accounts for its investments in the Limited Partnerships on the equity method, thereby adjusting its investment balance by its proportionate share of the income or loss of the Limited Partnerships. The investments in all but thirteen of the Limited Partnerships have been reduced to zero as of September 30, 2002. In general, in order to avoid recapture of Housing Tax Credits, the Partnership does not expect that it will dispose of its Limited Partnership Interests or approve the sale by a Limited Partnership of any Apartment Complex prior to the end of the applicable 15-year Compliance Period. Because of (i) the nature of the Apartment Complexes, (ii) the difficulty of predicting the resale market for low-income housing 15 or more years in the future, and (iii) the inability of the Partnership to directly cause the sale of Apartment Complexes by local general partners, but generally only to require such local general partners to use their respective best efforts to find a purchaser for the Apartment Complexes, it is not possible at this time to predict whether the liquidation of substantially all of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the partnership agreement will be able to be accomplished promptly at the end of the 15-year period. If a Limited Partnership is unable to sell an Apartment Complex, it is anticipated that the local general partner will either continue to operate such Apartment Complex or take such other actions as the local general partner believes to be in the best interest of the Limited Partnership. In addition, circumstances beyond the control of the General Partner may occur during the Compliance Period which would require the Partnership to approve the disposition of an Apartment Complex prior to the end of the Compliance Period. Except for interim investments in interest bearing accounts, the Partnership's investments are entirely interests in other Limited Partnerships owning Apartment Complexes. Funds temporarily not required for such investments in projects are invested in these interest bearing accounts earning interest income as reflected in the statements of operations. These interim investments can be readily converted to cash to meet obligations as they arise. The Partnership, as a Limited Partner in the Limited Partnerships in which it has invested, is subject to the risks incident to the construction, management, and ownership of improved real estate. The Partnership investments are also subject to adverse general economic conditions, and accordingly, the status of the national economy, including substantial unemployment and concurrent inflation, could increase vacancy levels, rental payment defaults, and operating expenses, which in turn, could substantially increase the risk of operating losses for the Apartment Complexes. Distributions received from Limited Partnerships are recognized as reduction of investment balances until the investment balance has been reduced to zero or to a negative amount equal to future capital contributions required. Subsequent distributions received are recognized as income. An annual partnership management fee in an amount equal to 0.5 percent of invested assets is payable to the General Partner. The management fee represents the annual recurring fee which will be paid to the General Partner for its continuing management of Partnership affairs. Management fees were $501,093 and $551,741 for the nine months ended September 30, 2002 and 2001, respectively. Operating expenses, exclusive of the management fee, consist of legal and accounting fees for services rendered to the Partnership and general and administrative expenses. Legal and accounting fees were $1,560,648 and $159,052 for the nine months ended September 31, 2002 and 2001, respectively. The increase in 2002 is primarily due to legal fees incurred in settling the lawsuit with the General Partner of Quivera Limited Partnership discussed in "Item 1. Financial Statements - Note 7". General and administrative expenses were $91,636 and $107,905 for the nine months ended September 30, 2002 and 2001, respectively. The decrease in general and administrative expenses is due to a decrease in the costs associated with communicating with the Partnership's investors. The Partnership, as a limited partner, does not exercise control over the activities and operations, including refinancing or selling decisions of the Local Partnerships. Accordingly, the Partnership accounts for its investment in the Local Partnerships using the equity method. Thus the individual investments are carried at cost plus the Partnership's share of the Local Partnership's profits less the Partnership's share of the Local Partnership's losses and distributions and impairment charges. However, since the Partnership is not legally liable for the obligations of the Local Partnerships, or is not otherwise committed to provide additional support to them, it does not recognize losses once its investment in each of the Local Partnerships reaches zero. Distributions from the Local Partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. Subsequent distributions received are recognized as income in the accompanying statements of operations. For those investments where the Partnership has determined that the carrying value of its investments approximates the estimated fair value of those investments, the Partnership's policy is to recognize equity in income of the Local Partnerships only to the extent of distributions received, and amortization of acquisition costs from those Local Partnerships. During the nine months ended September 30, 2002 and 2001, the Partnership recognized equity in loss of $786,306 and $1,345,236, respectively, from Local Partnerships. During the nine months ended September 30, 2002 and 2001, the Partnership received $1,499,957 and $64,447, respectively, in distributions from Local Partnerships that were recognized as income in the statements of operations since the Partnership's investment in the Local Partnerships has been reduced to zero. During the nine months ended September 30, 2002, the Partnership sold its investment in the Cottages of North St. Paul. As the Partnership had no investment balance related to this Limited Partnership, the proceeds of $1,636,892 that were received are being reported as gain on sale of investment in limited partnership on the accompanying statement of operations. During 2001, the Partnership sold its investment in the Cottonwood Limited Partnership. Of the total proceeds, $221,280 was due to the Partnership as of December 31, 2001. This amount was received during the nine months ended September 30, 2002. Due to operating deficits, the Wade Walton Limited Partnership which owns a property in Clarksdale, Mississippi has been unable to service its mortgage and the lender commenced foreclosure proceedings. The Limited Partnership then commenced bankruptcy proceedings on July 20, 1999 in order to stay the foreclosure sale and reorganize under Chapter 11 of the United States Bankruptcy Code. The bankruptcy court subsequently terminated the automatic stay and a foreclosure sale occurred on May 31, 2002. The Partnership had no investment balance related to this Limited Partnership. During 2001, the Partnership and an affiliated partnership filed a suit against several parties for breach of fiduciary duties and breach of the partnership agreements of Quivera Limited Partnership, in which the Partnership has invested, and another Limited Partnership in which the affiliated partnership is invested. The property in each respective Limited Partnership had been refinanced during 2001; however, the proceeds from the refinancing were being held by the Quivera Limited Partnership instead of being distributed. On June 28, 2002, the Partnership received $107,900 from one of the parties involved in this legal action as part of a settlement agreement. This amount is shown as gain on legal settlement for the nine months ended September 30, 2002 on the accompanying statements of operations. On August 6, 2002, the Partnership received $1,499,957 as its share of the refinancing proceeds of Quivera Limited Partnership. This amount is reported as distribution from limited partnerships recognized as income during the three months ended September 30, 2002 as the Partnership's investment in this Limited Partnership was zero. During the nine months ended September 30, 2002, the Partnership sold 89% of its investment in the Sheboygan Regency House Limited Partnership. Total proceeds received were $248,000. After recognizing $104,073 as a reduction of investment balance, the Partnership's investment in Sheboygan Regency House Limited Partnership had been reduced to zero. The remaining proceeds of $143,927 was reported as gain on sale of investment property on the accompanying statements of operations. During the three and nine months ended September 30, 2002, an impairment change of $834,000 was recognized with respect to the investment in one Local Partnership, Wedgewood Commons. Management is actively attempting to sell the property and is currently in negotiations with a potential buyer. The Partnership expects to ultimately realize $100,000 upon the sale, which was less than its current investment value. As a result, the investment balance was reduced to the estimated fair value for the investment. ITEM 3. CONTROLS AND PROCEDURES The principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have, within 90 days of the filing date of this amended quarterly report, evaluated the effectiveness of the Partnership's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls and procedures are adequate, except that, as indicated in the Explanatory Note introducing this quarterly report, the Partnership is in the process of verifying that the equity method of accounting has been properly applied to its investments in limited partnerships. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect the Partnership's internal controls since the date of evaluation. The Partnership does not believe any significant deficiencies or material weaknesses exist in the Partnership's internal controls. Accordingly, no corrective actions have been made. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On March 28, 2002, the local operating general partner of Sheboygan Apartments Limited Partnership brought action against the Partnership and the General Partner alleging that the parties breached the purchase agreement by refusing to close a transaction regarding the sale of the property. The parties were engaged in settlement discussions regarding the dilution of a portion of the Partnership's interest to the local operating general partner and entered into a settlement agreement whereby the limited partner diluted a portion of its interest in the Partnership (see "Note 2"). The case was dismissed in August 2002. One of the local Limited Partnerships, East Ridge Apartments, filed for bankruptcy in December 2002 in an effort to restructure its debt. The Partnership's investment balance in this Local Partnership had previously been reduced to zero so this action has no effect on the Partnership's investment balance on the accompanying balance sheet. On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in Real Estate Associates Limited III (an affiliated partnership in which NAPICO is the corporate general partner) and two investors holding an aggregate of five units of limited partnership interests in the Partnership commenced an action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other defendants. The complaint alleged that the defendants breached their fiduciary duty to the limited partners of certain NAPICO managed partnerships and violated securities laws by making materially false and misleading statements in the consent solicitation statements sent to the limited partners of such partnerships relating to approval of the transfer of partnership interests in limited partnerships, owning certain of the properties, to affiliates of Casden Properties Inc., organized by an affiliate of NAPICO. The plaintiffs sought equitable relief, as well as compensatory damages and litigation related costs. On August 4, 1999, one investor holding one unit of limited partnership interest in Housing Programs Limited (another affiliated partnership in which NAPICO is the corporate general partner) commenced a virtually identical action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other entities. The second action was subsumed in the first action, and was certified as a class action. On August 21, 2001, plaintiffs filed a supplemental complaint, which added new claims, including a rescission of the transfer of partnership interests and an accounting. The matter was tried in October and November 2002. In November 2002, the jury returned special verdicts against NAPICO and certain other defendants in the amount of approximately $25.2 million for violations of securities laws and against NAPICO for approximately $67.3 million for breaches of fiduciary duty. In addition, the jury awarded the plaintiffs punitive damages against NAPICO of approximately $92.5 million. On April 3, 2003, the judge entered certain orders in connection with the litigation that denied defendants' motion for a new trial and set April 28, 2003 as the date for entry of judgment against NAPICO and certain other defendants in the amount of $25.2 million for violations of securities laws and against NAPICO for $67.3 million for breaches of fiduciary duty, both amounts plus interest, subject to plaintiffs' agreement to reducing the jury award for punitive damages against NAPICO from $92.5 million to $2.6 million. While the case is expected to be appealed, the entire matter is the responsibility of the former shareholder of Casden Properties Inc. pursuant to the documents related to AIMCO's acquisition of Casden Properties Inc., which was completed in March 2002. The General Partner of the Partnership is involved in various other lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the General Partner, the claims will not result in any material liability to the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 3, Partnership Agreement (herein incorporated by reference to the Partnership's Form S-11 Registration No. 33-27658) Exhibit 99, Certification of Chief Executive Officer and Chief Financial Officer. b) Reports on Form 8-K filed during the quarter ended September 30, 2002: Current Report on Form 8-K dated August 29, 2002 and filed on September 6, 2002, disclosing the dismissal of Deloitte & Touche LLP as the Partnership's certifying auditor and the appointment of Ernst & Young LLP as the certifying auditor for the year ending December 31, 2002. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NATIONAL TAX CREDIT INVESTORS II (a California limited partnership) By: National Partnership Investments Corp. General Partner By: /s/David R. Robertson David R. Robertson President and Chief Executive Officer By: /s/Brian H. Shuman Brian H. Shuman Senior Vice President and Chief Financial Officer Date: April 16, 2003 CERTIFICATION I, David R. Robertson, certify that: 1. I have reviewed this quarterly report on Form 10-QSB/A of National Tax Credit Investors II; 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 that 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 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 registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses 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. Date: April 16, 2003 /s/David R. Robertson David R. Robertson President and Chief Executive Officer of National Partnership Investments Corp., equivalent of the chief executive officer of the Partnership CERTIFICATION I, Brian H. Shuman, certify that: 1. I have reviewed this quarterly report on Form 10-QSB/A of National Tax Credit Investors II; 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 that 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 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 registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses 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. Date: April 16, 2003 /s/Brian H. Shuman Brian H. Shuman Senior Vice President and Chief Financial Officer of National Partnership Investments Corp., equivalent of the chief financial officer of the Partnership Exhibit 99 Certification of CEO and CFO 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 on Form 10-QSB/A of National Tax Credit Investors II (the "Partnership"), for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David R. Robertson, as the equivalent of the chief executive officer of the Partnership, and Brian H. Shuman, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (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 results of operations of the Partnership. /s/David R. Robertson Name: David R. Robertson Date: April 16, 2003 /s/Brian H. Shuman Name: Brian H. Shuman Date: April 16, 2003 This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----