<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington D.C.  20549

                                  FORM 10-QSB


(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, 1996
                                      -----------------------------


[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT



   For the transition period from                  to
                                  ----------------   ----------------------

    Commission file number   0-15698                                      
                             -------------------------------------------   


          WINDSOR PARK PROPERTIES 2, A CALIFORNIA LIMITED PARTNERSHIP
   ------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)


          California                                       33-0054332
-------------------------------              ---------------------------------
(State or other jurisdiction of              (IRS Employer Identification No.) 
incorporation or organization)



         120 W. Grand Avenue, Suite 202, Escondido, California  92025
      -------------------------------------------------------------------
                    (Address of principal executive offices)
                                   


                                (619) 746-2411
      -------------------------------------------------------------------
                          (Issuer's telephone number)



 Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes  [x]     No  [_] 

                                       1
<PAGE>
 
                               TABLE OF CONTENTS

                                    PART I
                                    ------


                                                                            Page
                                                                            ----
                                                                                
Item 1.  Financial Statements                                                  3

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                  11

                                    PART II
                                    -------


Item 6.  Exhibits and Reports on Form 8-K                                     13


         SIGNATURE

                                       2
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                      ----------------------------------
                      (A California Limited Partnership)
                    STATEMENT OF NET ASSETS IN LIQUIDATION
                    --------------------------------------
                               Liquidation Basis
                               -----------------
<TABLE>
<CAPTION> 
                                             September 30, 1996
                                             ------------------
 
Assets
------
 
<S>                                          <C>   
Cash and cash equivalents                    $          236,600
Other assets                                              5,800
                                             ------------------
                                                        242,400
Liabilities
-----------
 
  Accounts payable and accrued expenses                  39,600
                                             ------------------
Net Assets In Liquidation                    $          202,800
                                             ==================
 
Comprised of:
  Partners' equity:
    Limited partners                         $          200,800
    General partners                                      2,000
                                             ------------------
 
                                             $          202,800
                                             ==================
</TABLE>
                See accompanying notes to financial statements.
                                       

                                       3
<PAGE>
 
                             WINDSOR PARK PROPERTIES 2
                             -------------------------
                      (A California Limited Partnership)
               STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
               -------------------------------------------------
                 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
                 ---------------------------------------------
                                 Liquidation Basis
                                 -----------------
<TABLE>
<CAPTION> 
                                   General Partners   Limited Partners     Total
                                   ----------------   ----------------   ----------
<S>                                <C>                <C>                <C>
 
Balance at June 30, 1996           $          2,000   $        198,000   $   200,000
 
Interest income                                                  2,800         2,800
                                   ----------------   ----------------   -----------
 
Balance at September 30, 1996      $          2,000   $        200,800   $   202,800
                                   ================   ================   ===========
</TABLE>

                See accompanying notes to financial statements.

                                       4
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                           -------------------------
                      (A California Limited Partnership)
                           STATEMENTS OF OPERATIONS
                           ------------------------
                              Going Concern Basis
                              -------------------
 
 
<TABLE>
<CAPTION> 
                                                  Six Months Ended
                                                    June 30, 1996
                                                  ----------------
<S>                                               <C>   
REVENUES
--------
 
Rent and utilities                                $        182,900
Interest                                                     8,700
Other                                                       13,100
                                                  ----------------
                                                           204,700
                                                  ----------------
COSTS AND EXPENSES
------------------
 
Property operating                                         174,400
Depreciation and amortization                                4,900
General and administrative:
  Related parties                                           15,400
  Other                                                     21,100
Provision for estimated costs of liquidation                37,300
                                                  ----------------
                                                           253,100
                                                  ----------------
Operating loss                                             (48,400)
 
Gain on sale of property held for sale                     109,100
                                                  ----------------
Net income                                        $         60,700
                                                  ================
Net income - general partners                     $            600
                                                  ================
Net income - limited partners                     $         60,100
                                                  ================
Net income per limited partnership unit           $           0.40
                                                  ================
</TABLE>
                See accompanying notes to financial statements.

                                       5
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                           -------------------------
                      (A California Limited Partnership)
                           STATEMENTS OF OPERATIONS
                           ------------------------
                              Going Concern Basis
                              -------------------
 
<TABLE>
<CAPTION> 
                                           Three Months Ended    Nine Months Ended
                                             September 30,         September 30,
                                                  1995                 1995
                                           ------------------    -----------------
REVENUES
--------
<S>                                        <C>                   <C> 
Rent and utilities                         $          117,600    $         355,600
Interest                                                6,400               21,700
Other                                                   3,500                9,800
                                           ------------------    -----------------
 
                                                      127,500              387,100
                                           ------------------    -----------------
 
COSTS AND EXPENSES
------------------
 
Property operating                                    139,400              348,300
Depreciation and amortization                          15,900               49,600
General and administrative:
  Related parties                                       8,100               24,900
  Other                                                 9,800               31,600
                                           ------------------    -----------------
                                                      173,200              454,400
                                           ------------------    -----------------
Net loss                                   $          (45,700)   $         (67,300)
                                           ==================    =================
Net loss - general partners                $             (500)   $            (700)
                                           ==================    =================
Net loss - limited partners                $          (45,200)   $         (66,600)
                                           ==================    =================
Net loss per limited partnership unit      $            (0.30)   $           (0.44)
                                           ==================    =================
</TABLE>
                See accompanying notes to financial statements.

                                       6
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                           -------------------------
                      (A California Limited Partnership)
                        STATEMENTS OF PARTNERS' EQUITY
                        ------------------------------
                      FOR THE PERIOD ENDED JUNE 30, 1996
                      ----------------------------------
                              Going Concern Basis
                              -------------------
<TABLE>
<CAPTION> 
                                         General Partners    Limited Partners        Total
                                         ----------------    ----------------    -------------
<S>                                      <C>                 <C>                 <C> 
 
Balance at January 1, 1995               $      (411,400)    $      2,023,800    $   1,612,400
                                                          
Cash distributions                                (3,000)            (300,000)        (303,000)
                                                          
Net loss                                          (1,600)            (155,600)        (157,200)
 
Repurchase of limited partnership
 units                                                                 (2,200)          (2,200)
 
                                         ---------------     ----------------    -------------
 
Balance at December 31, 1995                    (416,000)           1,566,000        1,150,000
 
Cash distributions                               (10,100)          (1,000,000)      (1,010,100)
 
Net income                                           600               60,100           60,700
 
Repurchase of limited partnership
 units                                                                   (600)            (600)
 
 
Reallocation of partners' equity                 427,500             (427,500)
                                         ---------------     ----------------    -------------
 
Balance at June 30, 1996                 $         2,000     $        198,000    $     200,000
                                         ================    ================    =============
</TABLE>
                See accompanying notes to financial statements.

                                       7
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                           -------------------------
                      (A California Limited Partnership)
                           STATEMENTS OF CASH FLOWS
                           ------------------------
                              Going Concern Basis
                              -------------------
<TABLE>
<CAPTION>
 
 
                                                                  Six Months Ended    Nine Months Ended
                                                                      June 30,          September 30,
                                                                        1996                 1995
                                                                  ----------------    -----------------
<S>                                                               <C>                 <C>
Cash flows from operating activities:
 Net income (loss)                                                $         60,700    $         (67,300)
 Adjustments to reconcile net income (loss) to net
 cash (used in) provided by operating activities:
   Depreciation and amortization                                             4,900               49,600
   (Gain) loss on sale of property held for sale and other
    assets                                                                (107,900)               6,000
 
 
   Changes in operating assets and liabilities:
     Other assets                                                           12,800               22,800
     Accounts payable and accrued expenses                                  (5,900)              40,700
                                                                  ----------------    -----------------
 
Net cash (used in) provided by operating activities                        (35,400)              51,800
                                                                  ----------------    -----------------
 
Cash flows from investing activities:
  Proceeds from sale of property held for sale and other
   assets                                                                  891,300                6,500
 
  Increase in property held for investment                                 (14,000)             (13,100)
                                                                  ----------------    -----------------
 
Net cash provided by (used in) investing activities                        877,300               (6,600)
                                                                  ----------------    -----------------
 
Cash flows from financing activities:
 Cash distributions                                                     (1,010,100)            (303,000)
 Repurchase of limited partnership units                                      (600)              (1,200)
                                                                  ----------------    -----------------
 
Net cash used in financing activities                                   (1,010,700)            (304,200)
                                                                  ----------------    -----------------
 
Net decrease in cash and cash equivalents                                 (168,800)            (259,000)
 
Cash and cash equivalents at beginning of period                           411,800              717,800
                                                                  ----------------    -----------------
 
Cash and cash equivalents at end of period                        $        243,000    $         458,800
                                                                  ================    =================
</TABLE>
                See accompanying notes to financial statements.

                                       8
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                           -------------------------
                      (A California Limited Partnership)
                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

NOTE 1.  PLAN OF LIQUIDATION AND DISSOLUTION AND BASIS OF ACCOUNTING
         -----------------------------------------------------------

In June 1996 the Partnership sold its last investment property. At that time,
the General Partners determined that it was in the best interests of the limited
partners to liquidate the Partnership.  It is currently expected that before
December 1996 all liabilities of the Partnership will be paid, the remaining
cash distributed to the partners, and the Partnership dissolved.

As a result of the plan to liquidate and dissolve the Partnership, the
Partnership changed its basis of accounting from the going concern basis to the
liquidation basis effective June 30, 1996.  Accordingly, assets are stated at
estimated net realizable value, and liabilities include estimated expenses of
liquidation.

NOTE 2.  SALES OF INVESTMENT PROPERTIES
         ------------------------------

In May 1996, the Partnership sold the Pinecrest manufactured home community
located in Shreveport, Louisiana.  The Partnership received proceeds of
$791,200, net of sale and closing costs of $8,800.  The Partnership realized a
gain on the sale of $116,500.  The community was sold to ROC Communities, Inc.,
a Maryland corporation (ROC).  ROC has provided day-to-day property management
services at the community since 1991 and has previously acquired properties from
the Partnership and its affiliates.  In addition, the corporate general partner
owns a nominal equity position in ROC.

In June 1996, the Partnership sold the Edgewood manufactured home community
located in Oklahoma City, Oklahoma.  The Partnership received proceeds of
$99,300, net of sale and closing costs of $10,700.  The Partnership realized a
loss on the sale of $7,400.

NOTE 3.  NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
         ----------------------------------------------

Net income (loss) per limited partnership unit is calculated based on the
weighted average number of limited partnership units outstanding during the
period and the net income (loss) allocated to the Limited Partners.  The
weighted average number of limited partnership units outstanding during the six
months ended June 30, 1996 was 149,735; and 150,231 and 150,290 during the three
and nine months ended September 30, 1995, respectively.

NOTE 4.  RELATED PARTY TRANSACTIONS
         --------------------------

The General Partners of the Partnership are The Windsor Corporation, a
California corporation, and John A. Coseo, Jr.  (Mr. Coseo is also the
president, chief executive officer and the principal stockholder of The Windsor
Corporation).

The General Partners are entitled to receive various fees and compensation from
the Partnership which are summarized as follows:

Operational Stage
-----------------

The net profits and losses of the Partnership during the operational stage are
allocated 99% to the Limited Partners and 1% to the General Partners.  Cash
distributions from operations are allocated 95% to the Limited Partners and 5%
to the General Partners.

                                       9
<PAGE>
 
The Partnership reimburses The Windsor Corporation for certain direct expenses,
and employee, executive and administrative time, which are incurred on the
Partnership's behalf.  The Partnership was charged $4,800 and $9,800 for such
costs during the three months ended September 30, 1996 and 1995, respectively;
and $23,900 and $30,300 during the nine months ended September 30, 1996 and
1995, respectively.

Liquidation Stage
-----------------

During the Partnership's liquidation stage, the total compensation paid to all
persons for the sale of investment properties is limited to competitive real
estate commissions, not to exceed 6% of the contract price for the sale of the
property.  The General Partners may receive up to one-half of the competitive
real estate commission, not to exceed 3%, if they provide a substantial amount
of services in the sales effort.  The General Partners' commission is
subordinated to the Limited Partners receiving a 9% cumulative, non-compounded,
annual return on their original capital investments.  No commissions were paid
to the General Partners during the three and nine months ended September 30,
1996 and 1995.

The General Partners also receive 1% of net income and cash distributions from
the sale of Partnership properties.

During the three months ended September 30, 1995 the General Partners received
cash distributions of $1,000; and $10,100 and $3,000 for the nine months ended
September 30, 1996 and 1995, respectively.  The General Partners received no
cash distributions during the three months ended September 30, 1996.

The limited partnership agreement does not require the General Partners to
restore a deficit balance in their book capital account.  Accordingly, a
reallocation of the partners' equity was made as of June 30, 1996 to reflect the
final amounts distributable to the partners.

                                       10
<PAGE>
 
                           WINDSOR PARK PROPERTIES 2
                           -------------------------
                      (A California Limited Partnership)
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               -------------------------------------------------
                      CONDITION AND RESULTS OF OPERATIONS
                      -----------------------------------


Changes in Financial Condition
------------------------------

September 30, 1996 as compared to December 31, 1995
---------------------------------------------------

The Partnership's primary source of cash during the nine months ended September
30, 1996 was proceeds from the sale of investment properties.  The primary use
of cash during the same period was for cash distributions to partners.

In May 1996, the Partnership sold the Pinecrest manufactured home community in
Shreveport, Louisiana.  The Partnership received proceeds of $791,200, net of
sale and closing costs of $8,800. Also in May 1996, the Partnership made a
$1,000,000 distribution to the limited partners consisting of sales proceeds and
cash reserves.

In June 1996, the Partnership sold the Edgewood manufactured home community
located in Oklahoma City, Oklahoma.  The Partnership received proceeds of
$99,300, net of sale and closing costs of $10,700.

In the opinion of the General Partners, both property sales were in the best
interests of the limited partners given the length of their holding periods and
the fact that there were no indications of any sustained strengthening in the
local economies.

In June 1996, subsequent to the final investment property sale, the General
Partners decided to liquidate the Partnership.  It is currently expected that
before December 1996 all liabilities of the Partnership will be paid, the
remaining cash distributed to the partners, and the Partnership dissolved.
As a result of the plan to liquidate and dissolve the Partnership, the
Partnership changed its basis of accounting from the going concern basis to the
liquidation basis effective June 30, 1996.

The future source of cash for the Partnership will be provided from cash
reserves.  The future uses of cash will be for Partnership administration and
distributions to partners.  The General Partners believe that the future sources
of cash are sufficient to meet the working capital requirements of the
Partnership until it is liquidated.

Results of Operations
---------------------

The results of operations for 1995 and 1996 are not comparable due to the sales
of the Pinecrest and Edgewood communities in May 1996 and June 1996,
respectively, and due to the Partnership's adoption of the liquidation basis of
accounting effective June 30, 1996, as discussed previously.

The Partnership incurred net losses of $45,700 ($0.30 per limited partnership
unit) and $67,300 ($0.44 per limited partnership unit) during the three and nine
months ended September 30, 1995, respectively.

The Partnership realized net income of $60,700 ($0.40 per limited partnership
unit) for the six months ended June 30, 1996.

The Partnership realized a gain on sale of investment property of $109,100 in
1996, consisting of a

                                       11
<PAGE>
 
$116,500 gain realized from the sale of the Pinecrest community, offset by a
$7,400 loss incurred on the sale of the Edgewood community.

The provision for estimated costs of liquidation of $37,300 in 1996 was recorded
in connection with the June 1996 change in basis of accounting from the going
concern basis to the liquidation basis.  The provision represents liquidation
costs expected to be incurred by the Partnership prior to its dissolution.

                                       12
<PAGE>
 
                                    PART II
                                    -------


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

   (a)         Exhibits and Index of Exhibits

               (27)  Financial Data Schedule

   (b)         Reports on Form 8-K

               There were no reports on Form 8-K filed
               during the period covered by this Form 10-QSB.

                                       13
<PAGE>
 
                                   SIGNATURE



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.


                         WINDSOR PARK PROPERTIES 2,
                         A California Limited Partnership
                         ---------------------------------
                              (Registrant)

                         By: The Windsor Corporation, General Partner


                         By  /s/ JOHN A. COSEO, JR.
                            ----------------------------------------
                           JOHN A. COSEO, JR.
                           Chief Financial Officer
                           (Principal Accounting Officer)


Date:  November 11, 1996

                                       14