<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION

                               Washington, D.C.

                                   Form 10-K

                 Annual Report Pursuant to Section 13 or 15(d)
                         of the Securities Act of 1934

For the Fiscal Year Ended                             Commission File Number
December 31, 1998                                          #33-19736-A

                           Condev Land Fund II, Ltd.
                           -------------------------
                         (Exact Name of Registrant as
                           specified in its charter)

      Florida                         #59-2862457
-------------------------------  ------------------------
(State or other jurisdiction     (IRS Employer ID #)
of incorporation or
organization)



2479 Aloma Avenue
Winter Park, Florida               32792
-------------------------------  ---------------
(Address of principal executive    (Zip Code)
offices)

Registrant's telephone number, including area code (407) 679-1748
                                                   --------------


Securities registered pursuant to Section 12(b) of the Act:

                                     None
                                     ----

Securities registered pursuant to Section 12(g) of the Act:

                                     None
                                     ----

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 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_______
                  -------               

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.        [X]

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant:
                                Not Applicable
                                --------------
<PAGE>
 
                           CONDEV LAND FUND II, LTD.

                               Table of Contents

<TABLE>
<CAPTION>
                                                                                         Page No.
                                                                                         --------
<S>                                                                                      <C>
Part I
   Item 1.    Business                                                                       1
   Item 2.    Properties                                                                     2
   Item 3.    Legal Proceedings                                                              3
   Item 4.    Submission of Matters to a Vote of Security Holders                            3
 
Part II
   Item 5.    Market for Registrant's Common Equity and Related Security Holder Matters      4
   Item 6.    Selected Financial Data                                                        4
   Item 7.    Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                                          4
   Item 8.    Financial Statements and Supplementary Data                                    7
   Item 9.    Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosure                                                          18
 
Part III
   Item 10.   Directors and Executive Officers of the Registrant                            18
   Item 11.   Executive Compensation                                                        18
   Item 12.   Security Ownership of Certain Beneficial Owners and Management                18
   Item 13.   Certain Relationships and Related Transactions                                19
 
Part IV
   Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K              20

Signatures                                                                                  21

Annual Report to Limited Partners                                                           22
</TABLE> 
<PAGE>
 
                                    PART I

Item l.

     Business:
     -------- 

     Condev Land Fund II, Ltd. (the "Partnership") is a Florida limited
     partnership formed on December 16, 1987 under the Florida Revised Uniform
     Partnership Act. The Partnership was formed for the purpose of acquiring
     and holding for investment pre-development land in Central Florida. The
     Partnership registered with the Securities and Exchange Commission and sold
     to investors a total of 29,798 units of limited partnership interest at an
     initial offering price of $250 per unit. The Partnership had collected
     $7,449,500 in Limited Partnership capital as of December 31, 1989.

     As provided under the terms of the Partnership Agreement the Partnership
     was to be in existence until December 31, 1995. In accordance with the
     Florida Limited Partnership Law and the Partnership Agreement, after
     December 31, 1995 the Partnership has been in liquidation with no change in
     the status of the limited partners or General Partner.

     The Partnership has purchased seven properties to be held for investment in
     the Central Florida area. One parcel was purchased during 1988, five
     parcels were purchased during 1989 and one parcel was purchased during
     1990. Refer to Item 2. Properties for full details.

     Since the Partnership is in liquidation, the primary objective of the
     Partnership is to sell properties at current market prices and distribute
     the net proceeds to partners.  To this end, the General Partner is
     constantly monitoring area developments which are likely to effect the
     salability of each property. This includes area commercial and residential
     development, comparable sales transactions, road and highway improvements,
     requests for zoning or comprehensive land use changes, and changes in the
     availability of utilities.  The General Partner or its representatives
     attend county commission meetings, planning and zoning hearings and
     community information meetings as part of this endeavor. Properties are
     priced after consideration is given to all of these factors.

     Properties are marketed through a combination of direct advertising,
     including "For Sale" signs located on each property, contact with the
     local, national and international brokerage communities, and direct contact
     with potential purchasers.  Extensive marketing materials and relevant
     development information is maintained and constantly updated for use by
     potential buyers.

     In addition to trying to sell the portfolio properties, the Partnership
     must manage  the properties in the best interest of the partners. This
     includes traditional property maintenance such as insuring the property
     against liability, paying and appealing for adjustment, when appropriate,
     real estate taxes, mowing and trash removal.  It also entails reacting
     promptly to area developments to insure that vested development rights are
     preserved or marketability of the property is enhanced. In some cases, it
     is necessary to retain consultants to assist with this effort. In other
     cases, expenditure of partnership reserves is required to keep the property
     properly positioned for sale.

     The Partnership has no employees.  Messrs. Robert N. Gardner and Joseph J.
     Gardner are the general partners of Condev Associates, a Florida general
     partnership, which is the General Partner of the Partnership (the "General
     Partner").

                                       1
<PAGE>
 
Item 2.

     Properties:
     ---------- 
 
     Since its inception, the Partnership has purchased seven properties for
     investment in the Central Florida area. During 1994, one entire property
     and part of another property were sold. There were no sales of land during
     1995. During 1996, three parcels were sold, and during 1997, one entire
     parcel was sold. There were no sales of land during 1998. As of December
     31, 1998, the Partnership owned or had an investment in two remaining
     properties. At year end 1998, the Partnership had contracts for sale of
     both of these properties.

     The following is a summary of all properties acquired by the Partnership:

     Parcel 1:
     -------- 

     This was originally a 12.04-acre parcel of vacant land located at the
     northwest corner of Alafaya Trail and McCulloch Road in Seminole County,
     Florida.

     During the first quarter of 1994, the Florida Department of Transportation
     (FDOT) condemned 2.81 acres of the 12.04-acre commercial parcel. The FDOT
     paid $676,800 as compensation for the taking. Of the compensation awarded,
     the Partnership received $608,635; the balance paid attorney's fees costs
     and taxes.

     The Partnership sued the FDOT for additional compensation for the taking of
     the property. This suit was settled on September 27, 1994 by mediation
     which resulted in an additional $388,200 cash payment by FDOT to the
     Partnership.  Of this amount, $97,050 was used to pay legal fees. As
     provided by Florida State law, these legal fees were refunded to the
     Partnership during the first quarter of 1995.

     On November 19, 1996 the Partnership entered into an Agreement of Sale
     relating to this parcel with a developer who intended to construct a retail
     center on the site. The Agreement was subsequently restructured to provide
     for the sale in two separate transactions. On July 31, 1997, the sale of
     approximately 23,690 square feet of this site was concluded. The purchase
     price was $350,000. In addition, the Partnership sold sewer capacity which
     had been reserved for the site. After expenses of the sale, the Partnership
     realized net proceeds of $312,120.

<TABLE>
<CAPTION>
     Date of Purchase:                         August 31, 1988
     <S>                                       <C>
     Purchase Price:                              $1,500,000
     Additional Capitalized Costs:                $  133,136
     Less: Sale of 2.81 acres to FDOT:            (  753,899)
                                                  ----------
                                                  $  879,237
     Less: Sale of .54 acres                      (   51,143)
                                                  ----------
                                                  $  828,094
</TABLE>
 
     The remaining 8.659 acres at this location are under contract with a
     developer who intends to erect a grocery store on the site. The tenant has
     agreed to the site, and permitting is in process. This transaction is
     expected to close in May, 1999.

     Parcel 2:
     -------- 

     On February 6, 1989, the Partnership purchased, in joint venture with an
     affiliated partnership, Condev Land Growth Fund '86, Ltd., a 19+ acre tract
                                                                    -           
     located immediately north of the University of Central Florida for
     $737,355.

     On April 22, 1966, the joint venture sold this property to Royal Apartments
     USA based in Champaign, Illinois. The purchase price for this parcel was
     $1,190,000, which included $35,000 paid by the purchaser as additional
     consideration to extend the closing date.  After expenses of the sale, the
     net proceeds realized by the Joint Venture were $1,104,330.  A total of
     $1,080,000 was distributed to limited partners in May, 1993, $540,000 to
     limited partners of Condev Land Growth Fund '86, Ltd., and $540,000 to
     limited partners of Condev Land Fund II, Ltd. The balance was added to
     Partnership reserves.

     After payment of all final expenses Condev/McCulloch Road Joint Venture was
     terminated.

     Parcel 3:
     -------- 

     This is a 15.938 acre, commercially zoned parcel located in Lake County,
     Florida between Tavares and Leesburg on U.S. Highway 441. The Partnership
     paid $1,275,000 for this parcel in March, 1989. Together with Parcel 4,
     this property was sold in June, 1996. See Parcel 4 below.

                                       2
<PAGE>
 
     Parcel 4:
     -------- 

     This is a 1.85-acre commercial parcel which adjoins parcel 3 and squares
     off the property. The property was acquired in June, 1989 for $395,000.

     On June 14, 1996, the Partnership concluded the sale of this parcel, along
     with parcel 3 described above, to Home Depot USA, Inc. The purchase price
     for these two parcels was $2,750,000. After the expenses of the sale, the
     net cash proceeds realized by the Partnership were $2,433,823. A total of
     $2,425,000 was distributed to limited partners in July 1996. The balance
     was added to partnership reserves.
 
     Parcel 5:
     -------- 

     This parcel originally consisted of 4.6512 acres of commercially zoned
     property located on the north side of U.S. Highway 27-441 in Lady Lake,
     Lake County, Florida. The Partnership received an appraisal of $2.50 per
     square foot or $535,000 for the property at the time of purchase.

     On June 5, 1990 the Partnership sold 1.785 acres of the total 4.6512 acre
     site to SunBank N.A. for $375,000.

     On October 10, 1994, the Partnership sold the remaining portion of this
     parcel to First Federal Savings Bank of Lake County for $475,000.

     Parcel 6:
     -------- 

     This is a 111.64-acre parcel located on U. S. Highway 27 in Lake County
     approximately one mile north of U.S. 192 and five miles from Walt Disney
     World.  The property is zoned as a Planned Development comprised of single-
     family, multi-family and commercial uses.

<TABLE>
<CAPTION>
 
     Date of Purchase:                     November 11, 1989
     <S>                                   <C>
     Total Purchase Price:                   $1,574,761
     Additional Capitalized Costs:              168,919
                                             ----------
                                             $1,743,680
</TABLE>

     In January, 1998, the Partnership entered into a Contract for Sale and
     Purchase of 20 acres of this parcel zoned for multi-family development. The
     buyer anticipates developing 358 apartment units on the site. Closing was
     originally scheduled to occur shortly before year-end 1998. However delays
     in obtaining the water, sewer and entrance road permits have delayed the
     anticipated closing until the spring of 1999.

     The 71 acre single family section of this property is currently under
     contract with an investor who plans to develop single family lots for sale
     to residential builders. Closing is currently scheduled for June 30, 1999.

     The 20 acre commercially zoned parcel at this location is under contract
     with a regional developer, with the inspection period ending on March 3,
     1999. Closing on this contract will occur in September if the buyer elects
     to proceed.

     Parcel 7:
     -------- 

     Parcel 7 is a tract of land consisting of approximately 7 developable and
     15.57+ total acres in the City of Maitland. The property was acquired in
          -                                                                  
     June, 1990 for $375,000.

     On August 30, 1997, the Partnership concluded the sale of the majority of
     this parcel to Highwoods, Florida Holdings, L.P. The sale price was
     $715,000. In addition the Partnership sold a small piece of this property
     to a non-affiliated owner of a property abutting this property for $30,000,
     making the total gross proceeds of the combined sale $745,000. After
     expenses of the two sales, the net proceeds realized by the Partnership
     were $696,342.57.

Item 3.

     Legal Proceedings:
     ----------------- 

     As of December 31, 1998, the Partnership was not subject to any pending
     legal proceedings.

Item 4.
 
     Submission of Matters to a Vote of Security Holders:
     --------------------------------------------------- 

     No matter was submitted to Unit Holders for a vote during the fourth
     quarter of the year ended December 31, 1998.
 
                                    PART II

                                       3
<PAGE>
 
Item 5.

     Markets for Registrant's Common Equity and Related Security Holder Matters:
     -------------------------------------------------------------------------- 

     (a)  There has not been a public secondary market and it is not anticipated
     that a public secondary market for the Units will develop. In September, LP
     Investors, LLC, an investment company based in Atlanta, Georgia, exercised
     their rights as a limited partner and requested a list of all beneficial
     owners and the number of units owned by each. As required by the
     Partnership Agreement, this information was provided. LP Investors paid a
     fee of $100 to the Partnership in reimbursement of the Partnership's costs
     associated with providing the list. LP Investors subsequently wrote to each
     beneficial owner offering to purchase their units for $62.50 per unit, less
     the $25 transfer fee charged by the Partnership. Neither the Partnership,
     the General Partner, nor any of its officers, employees or affiliates is in
     any way connected with this offer.

     (b)  As of December 31, 1998, there were approximately 840 holders of
     record of the Units of the Partnership.

     (c)  There are no regularly scheduled distributions to limited partners.
     Distributions are made subsequent to sale of Partnership properties after
     provision has been made for adequate reserves to cover anticipated future
     expenses of the Partnership. Unit holders received cash distributions
     totaling $-0-, $978,110, and $2,965,000 during the years ended December 31,
     1998, 1997, and 1996.

Item 6.

     Selected Financial Data:
     ----------------------- 

                                 Year Ended December 31,
                                 -----------------------
<TABLE>
<CAPTION>
                                  1998           1997           1996             1995            1994
                                  ----           ----           ----             ----            ----
<S>                          <C>             <C>             <C>             <C>             <C>
     Revenue                 $    6,750      $  589,654      $  913,179      $   19,549      $  516,468
     Net Income (Loss)          (54,066)        517,779         842,315         (62,680)        422,902
     Total Assets             2,681,594       2,692,772       3,151,702       5,271,404       5,335,562
     Partnership
        Capital               2,632,886       2,686,952       3,147,283       5,269,968       5,332,648
</TABLE>

     The above selected financial data should be read in conjunction with the
     financial statements and related notes appearing elsewhere in this annual
     report.

Item 7.

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

     Year 2000
     ---------

     The Partnership is heavily dependent upon a computer system to accurately
     maintain limited partner records, including name and address information,
     number of units owned, and distribution historical records. The Partnership
     is utilizing a system which was specially designed for the Partnership in
     1990, and it is possible that the system will be affected by the date
     change which will occur at the end of 1999. The Partnership has engaged a
     computer consultant to evaluate the potential problems, and make system
     changes if necessary so the operation of the Partnership will not be
     affected by the date change. Testing on the system is expected to be
     completed by March, 1999. It is anticipated that the cost of evaluating the
     current system and bringing it up to date to be year 2000 compliant will be
     less than $1,000. The Partnership's computer records are backed up on a
     weekly basis, so all of the stored information is available from a
     secondary source. Even if the system were to be completely shut down by the
     date change at the end of 1999, the data necessary to continue operation of
     the Partnership is available and could readily be adapted to a new system
     which is year 2000 compliant, so no significant interruption in the
     operations of the Partnership is anticipated.


     January 1, 1998 through December 31, 1998:
     ----------------------------------------- 

     For the year ended December 31, 1998, total revenues were $6,750.  This
     compares to total revenues of $589,654 for the year ended December 31,
     1997.  In 1997, gains on the sale of land totaled $536,132. There were no
     sales of land during 1998. Other income in 1998 included interest on cash
     and cash equivalents in the amount of $4,675, down from $10,022 in 1997,
     reflecting an overall lower level of cash balances during 1998. In 1997 the
     Partnership recognized income from forfeited deposits from potential buyers
     of land amounting to $40,000.

                                       4
<PAGE>
 
     Expenses of the Partnership decreased from $71,875 for the year ended
     December 31, 1997 to $60,816 for the year ended December 31, 1998. The
     primary reason for the decrease was a decline in professional fees which
     decreased from $32,738 in 1997 to $12,964 in 1998. Professional fees will
     vary from year to year, depending on the engineering, architectural or
     environmental requirements of each property. Other expenses remained
     relatively constant from 1997 to 1998.

     Total assets of the Partnership declined slightly from $2,692,772 at
     December 31, 1997 to $2,681,594 at December 31, 1998. Total assets can be
     expected to decline as properties are sold and the proceeds are distributed
     to limited partners. Liquidity remained at an adequate level to meet
     anticipated costs of managing the partnership.  Cash and cash equivalents
     were $168,989 at December 31, 1997, and decreased to $94,530 by year-end
     1998. The General Partner may elect to augment liquid reserves to meet
     future costs from the proceeds of anticipated land sales during 1999.

     The business of the Partnership is to own, manage and sell, as market
     conditions permit, pre-development land in the Central Florida area.  Due
     to the unpredictability of the commercial real estate market in the Central
     Florida area, it is difficult to project when individual properties will
     sell or when the entire portfolio will be liquidated.  Because of these
     uncertainties, the General Partner has established reserves to fund real
     estate taxes, costs associated with maintaining the properties and other
     required services such as partnership administration, accounting and legal.
     The reserve will be replenished from future land sales as needed.

     Financial projections - 1999
     ----------------------------

     For 1999, the General Partner estimates that approximately $10,000 will be
     required to pay real estate taxes on the remaining properties held by the
     Partnership. In addition, the General Partner estimates that property
     associated holding costs will total approximately $20,000 during 1999 and
     the costs of administration, legal and accounting will require
     approximately $20,000.  These three categories of expense, totaling
     $50,000, will be paid from Partnership reserves which were $94,530 at 1998
     year-end.  Interest and other income is projected at $5,000 for 1999.
     Should the Partnership not successfully conclude a property sale in 1999,
     reserves would fall to approximately $49,530 by year end 1999.  At the
     level of costs associated with the Partnership's business as set out above
     the Partnership has reserves at year end 1998 to fund approximately one
     year and nine months of costs. In the event the Partnership is unable to
     generate adequate reserves through the sale of properties, the General
     Partner is obligated to lend to the Partnership up to an aggregate amount
     of $100,000 to fund operating expenses.  See Item 13, Certain Relationships
     and Related Transactions.

     The General Partner estimates that three sales will occur in 1999, in spite
     of the fact that there are contracts in place for four sales. History
     dictates a conservative view when predicting the likelihood of sales. These
     three sales should result in cash to the Partnership in the approximate
     amount of $3,000,000.  If concluded as estimated, the sale proceeds would
     result in a distribution to the limited partners in the approximate amount
     of $2,900,000, as the General Partner feels the majority of sale proceeds
     could be distributed.  If the sale and distribution are concluded as
     estimated above, Partnership assets and Partners' Capital would fall to
     approximately $500,000 by December 31, 1999.

     In addition to the projected sales above, the General Partner reasonably
     expects to conclude the sale of the remaining Partnership property in 2000.
     After the final sale of the Partnership properties and repayment of any
     outstanding debts, the General Partner will complete a final accounting of
     the affairs of the Partnership and all remaining proceeds will be
     distributed to partners in accordance with the Partnership Agreement.

     January 1, 1997 through December 31, 1997:
     ------------------------------------------

     For the year ended December 31, 1997, total revenues were $589,654.  This
     compares to total revenues of $913,179 for the year ended December 31,
     1996.  In 1997, gains on the sale of land totaled $536,132, down from
     $737,235 in 1996.  In addition, in 1996, the Partnership's joint venture,
     Condev McCulloch Road Joint Venture, sold its property and reported a gain
     of $146,799. Other income in 1997 included interest on cash and cash
     equivalents in the amount of $10,022, essentially unchanged from $9,379 in
     1996, and forfeited deposits from potential buyers of land amounted to
     $40,000 in 1997 and $13,000 in 1996.

     Expenses of the Partnership increased very slightly between 1996 and 1997,
     rising from $70,864 to $71,875.  However, the composition of expenses
     incurred changed.  Taxes and permits, which were $29,400 in 1996, declined
     to $10,159 in 1997. Real estate taxes can be expected to decline as
     portfolio properties are sold. Professional fees offset the decrease in
     taxes and permits, rising from $11,197 in 1996 to $32,738 in 1997. This was
     the result of the need for additional engineering work on the Partnership's
     property in Lake County, plus the additional legal fees associated with
     terminated contracts.

                                       5
<PAGE>
 
     Total assets of the Partnership declined from $3,151,702 at December 31,
     1996 to $2,692,772 at December 31, 1997.  This reflects net profit of the
     Partnership for the year less distributions to limited partners in the
     amount of $978,110 during the year. Liquidity remained at an adequate level
     to meet anticipated costs of managing the partnership.  Cash and cash
     equivalents were $168,989 at December 31, 1997, compared to $169,876 a year
     earlier.


     January 1, 1996 through December 31, 1996:
     ----------------------------------------- 

     The Partnership continued to manage the affairs of the Partnership and the
     portfolio properties. Emphasis was placed on positioning the portfolio
     properties for sale and on preserving property development rights.
 
     For the year ended December 31, 1996, the Partnership reported total income
     of $913,179, including $737,235 gain on sale of land and $146,799 equity in
     income of joint venture, and $29,145 in other revenues. This compares to
     total income in 1995 of $19,549. The 1996 revenues reflect sale of the
     Partnership's land in Leesburg (Parcel #s 3 and 4) and Condev/McCulloch
     Road Joint Venture's sale of its 19.10 acre parcel in Seminole County
     (Parcel #2). There were no sales of land by the Partnership in 1995.

     Operating expenses totaled $70,864 for the year ended December 31, 1996,
     compared to $82,229 in 1995. The primary reason for the decrease was a
     reduction in taxes and permits, which decreased from $46,031 in 1995 to
     $29,400 in 1996.  This is a result of properties being sold during the
     year. The other decrease was the elimination of the $5,124 equity loss in
     the joint venture in 1995. These decreases were partially offset by slight
     increases in professional fees and office expenses in 1996, and by
     amortization of organizational expenses totaling $4,905. There was no
     amortization of organizational expenses in 1995 because no properties were
     sold.

     The net profit reported for the year ended December 31, 1996 was $842,315,
     compared to a net loss of $62,680 for the year ended December 31, 1995.

     At year-end 1996, total assets of the Partnership were $3,151,702, compared
     with $5,271,404 at year-end 1995.  This decrease reflects the sale of two
     properties during the year and the net operating costs of managing the
     Partnership.  Liabilities at December 31, 1996 were $4,419, compared to
     total liabilities of $1,436 at December 31, 1995.  Partners' capital
     declined from $5,269,968 at December 31, 1995 to $3,147,283 at December 31,
     1996. This decline resulted from the net profit  for the year less the
     $2,965,000 in distributions to limited partners during the year.

                                       6
<PAGE>
 
Item 8.

     Financial Statements and Supplementary Data:
     ------------------------------------------- 


                                                            Page

      INDEPENDENT AUDITORS' REPORT                           8

      FINANCIAL STATEMENTS

        Balance sheets                                       9
        Statements of operations                            10
        Statements of partners' capital                     11
        Statements of cash flows                            12
        Notes to financial statements                  13 - 17

                                       7
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
                         ----------------------------



The Partners
Condev Land Fund II, Ltd.
Winter Park, Florida


    We have audited the accompanying balance sheets of Condev Land Fund II, Ltd.
(a Florida Limited Partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1998.  These financial
statements are the responsibility of the General Partner.  Our responsibility is
to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Condev Land Fund II, Ltd. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.



                                    OSBURN, HENNING AND COMPANY


Orlando, Florida
January 15, 1999

                                       8
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                                BALANCE SHEETS
                          December 31, 1998 and 1997


<TABLE>
<CAPTION>
                                                 1998        1997
                                              ----------  ----------
     ASSETS
<S>                                           <C>         <C>
Cash and cash equivalents                     $   94,530  $  168,989
Accounts receivable                                3,347           -
Prepaid expense                                      867           -
Land, at cost (Note 2)                         2,571,774   2,515,801
Loan costs, less accumulated amortization
  of $5,940 and $-0- in 1998 and 1997,
    respectively                                   3,094           -
Organization costs, less accumulated
  amortization of $10,390 in 1998 and 1997         7,982       7,982
                                              ----------  ----------
 
                                              $2,681,594  $2,692,772
                                              ==========  ==========
 
     LIABILITIES AND PARTNERS' CAPITAL

Liabilities
 Accounts payable                             $   14,874  $    5,820
 Mortgage note payable (Note 3)                   33,834           -
                                              ----------  ----------
                                                  48,708       5,820
Partners' capital (deficit):
 General partner                                  (3,190)     (2,649)
 Limited partners                              2,636,076   2,689,601
                                              ----------  ----------
 
  Total partners' capital                      2,632,886   2,686,952
                                              ----------  ----------
 
                                              $2,681,594  $2,692,772
                                              ==========  ==========
</TABLE> 


  The Notes to Financial Statements are an integral part of these statements.

                                       9
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                           STATEMENTS OF OPERATIONS
                 Years Ended December 31, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                           1998       1997       1996
                                        ---------   --------   --------
<S>                                     <C>         <C>        <C>
Revenue:
  Gain on land sale                     $      -    $536,132   $737,235
  Equity in income of joint venture            -           -    146,799
  Interest income                          4,675      10,022      9,379
  Forfeited deposits                           -           -     13,000
  Other income                             2,075      43,500      6,766
                                        --------    --------   --------
                                           6,750     589,654    913,179
                                        --------    --------   --------
 
Expenses:
  Taxes and permits                       14,065      10,159     29,400
  Office expenses                         18,547      18,746     18,819
  Professional fees                       12,964      32,738     11,197
  Amortization                             5,940       1,326      5,904
  Interest expense                           724           -          -
  Other expenses                           8,576       8,906      5,544
                                        --------    --------   --------
                                          60,816      71,875     70,864
                                        --------    --------   --------
 
          Net income (loss)             $(54,066)   $517,779   $842,315
                                        ========    ========   ========
</TABLE>


  The Notes to Financial Statements are an integral part of these statements.

                                       10
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                        STATEMENTS OF PARTNERS' CAPITAL
                 Years Ended December 31, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                General     Limited
                                Partner     Partners       Total
                               ---------  ------------  ------------
<S>                            <C>        <C>           <C>
Balances, December 31, 1995       3,342     5,266,626     5,269,968
 
  Distributions                       -    (2,965,000)   (2,965,000)
 
  Net income (loss)              (5,807)      848,122       842,315
                                -------   -----------   -----------
 
Balances, December 31, 1996      (2,465)    3,149,748     3,147,283
 
  Distributions                       -      (978,110)     (978,110)
 
  Net income (loss)                (184)      517,963       517,779
                                -------   -----------   -----------
 
Balances, December 31, 1997     $(2,649)  $ 2,689,601   $ 2,686,952
 
  Net income (loss)                (541)      (53,525)      (54,066)
                                -------   -----------   -----------
 
Balances, December 31, 1998     $(3,190)  $ 2,636,076   $ 2,632,886
                                =======   ===========   ===========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

                                       11
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                           STATEMENTS OF CASH FLOWS
                 Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                             1998        1997          1996
                                          ----------  -----------  ------------
<S>                                       <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                       $ (54,066)  $  517,779   $   842,315
  Adjustments to reconcile net income
    (loss) to net cash used in
    operating activities:
      Gain on land sale                           -     (536,132)     (737,235)
      Equity in (income) loss of joint
        venture                                   -            -      (146,799)
      Amortization                            5,940        1,326         5,904
      (Increase) decrease in accounts
        receivable                           (3,347)         105          (105)
      (Increase) decrease in prepaid
        expense                                (867)           -             -
      Increase (decrease) in
        accounts payable                      9,054        1,401         2,983
                                          ---------   ----------   -----------
          Net cash used in operating
            activities                      (43,286)     (15,521)      (32,937)
                                          ---------   ----------   -----------
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Capitalized land related costs            (55,973)     (15,719)       (7,406)
  Proceeds from land sale, net of
    closing costs                                 -    1,008,463     2,444,875
  Distribution from joint venture                 -            -       549,200
  Investment in joint venture                     -            -        (3,139)
                                          ---------   ----------   -----------
          Net cash provided by
            (used in) investing
              activities                   ( 55,973)     992,744     2,983,530
                                                      ----------   -----------
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions to partners                       -     (978,110)   (2,965,000)
  Advances on mortgage note payable          24,800            -             -
                                          ---------   ----------   -----------
          Net cash provided by
            (used in) financing
              activities                     24,800     (978,110)   (2,965,000)
                                          ---------   ----------   -----------
Net (decrease) in cash                      (74,459)        (887)      (14,407)
 
CASH AND CASH EQUIVALENTS, BEGINNING        168,969      169,876       184,283
                                          ---------   ----------   -----------
 
CASH AND CASH EQUIVALENTS, ENDING         $  94,530   $  168,969   $   169,876
                                          =========   ==========   ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
 FINANCING ACTIVITIES
  Loan costs added to note payable
    financing                             $    9,034  $       -    $         -
                                          ==========  =========    ===========
</TABLE> 

  The Notes to Financial Statements are an integral part of these statements.

                                       12
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

        Organization
        ------------

          Condev Land Fund II, Ltd. (the Partnership) was formed on December 16,
          1987 pursuant to the provisions of the Florida Revised Uniform Limited
          Partnership Act for the purpose of acquiring and holding unimproved
          land in Central Florida for investment. The Partnership was formed
          with an initial capital contribution of $1,000 from the general
          partner, Condev Associates, and the issuance of 29,798 units of
          limited partnership interest at $250 per unit.

          The terms of the partnership agreement provided that the Partnership
          was to continue in existence until December 31, 1995. However, the
          Partnership's operation will continue until all investments of the
          Partnership are sold and proceeds distributed to the partners.

        Use of Estimates
        ----------------

          In preparing the financial statements, management is required to make
          estimates and assumptions that affect the reported amounts of assets
          and liabilities as of the date of the financial statements and
          revenues and expenses for the period. Actual results could differ
          significantly from those estimates.

        Organization Costs
        ------------------

          The Partnership has capitalized all organization costs. Upon sale of
          land, each parcel is allocated a portion of these costs based on the
          ratio of total acquisition cost to the net proceeds of the offering
          available to purchase properties for investment. No amortization of
          organization costs was recorded during the year ended December 31,
          1998, as no sales occurred. In connection with the sales of land
          during the years ended December 31, 1997 and 1996, amortization of
          organization costs amounted to $1,326 and $5,904 which is reflected in
          the accompanying statements of operations.

        Land
        ----

          Land, held for investment, is stated at the lower of cost or fair
          value. Land is assessed for impairment when the Partnership believes
          that events or changes in circumstances indicate that its carrying
          amount may not be recoverable. Costs that clearly relate to land
          development projects are capitalized. Interest costs, real estate
          taxes and insurance are capitalized while development is in progress.
          When development is complete, these costs are expensed.

CONTINUED ON NEXT PAGE

                                       13
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies - (Continued)

        Loan  Costs
        -----------

          Loan costs are amortized over the period of the mortgage note payable.

        Investments in Joint Venture
        ----------------------------

          Investments in joint ventures are accounted for using the equity
          method.

        Income Taxes
        ------------

          The Partnership functions as a conduit for income tax purposes. As
          such, the Partnership files an information tax return on which it
          allocates its revenue and expenses among the partners as required by
          the partnership agreement. The partners are required to report such
          items on their individual income tax returns.

        Cash and Cash Equivalents
        -------------------------

          For purposes of the statement of cash flows, the Partnership considers
          all highly liquid debt instruments purchased with a maturity of three
          months or less to be cash equivalents.
 
Note 2. Land

        At December 31, 1998 and 1997, land consisted of the following:

<TABLE>
<CAPTION>
                                                     1998        1997
                                                  ----------  ----------
<S>                                               <C>         <C>
         8.659 acre parcel, in 1998 and 1997,
           (zoned commercial) in southeast
           Seminole County, Florida               $  828,094  $  825,734
         111.64 acre parcel in 1998 and 1997
           (zoned PUD) in Lake County, Florida     1,743,680   1,690,067
                                                  ----------  ----------
 
                                                  $2,571,774  $2,515,801
                                                  ==========  ==========
</TABLE>

        The Partnership has contracts for all remaining parcels of land totaling
        $5,545,726, which are scheduled to close in 1999.

        Subsequent to year end, the Partnership committed to bring sewer and
        water to one of the parcels of land at a cost of $542,000.

CONTINUED ON NEXT PAGE

                                       14
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS


Note 3.   Mortgage Note Payable

          The Partnership established a $500,000 line of credit with Citrus Bank
          during the year ended December 31, 1998. This line of credit, which is
          secured by the land and its improvements in Lake County, Florida, is
          due on demand, and interest on borrowings is charged at a variable
          rate of prime plus .5%, and is payable monthly. At December 31, 1998,
          the Partnership had a balance of $33,834 on this line of credit.

          The interest expensed on the line of credit for the year ended
          December 31, 1998 was $724.

Note 4.   Investment in Joint Venture

          The Partnership owned a 49.9% interest (which was acquired in 1989) in
          Condev/McCulloch Road Joint Venture (a Florida Joint Venture) (the
          Joint Venture) whose purpose was to acquire and hold a 19 acre parcel
          of land in Seminole County, Florida for investment purposes. Condev
          Land Growth Fund '86, Ltd., an affiliate of the Partnership's general
          partner, owned the remaining 50.1% interest. During the year ended
          December 31, 1996, the Joint Venture sold its parcel of land and
          recognized a gain of $300,900. The Joint Venture made a complete
          distribution to its venturers of $1,100,602, of which the Partnership
          received $549,200, thereby terminating the Joint Venture.

          The Partnership's investment in the Joint Venture as of December 31,
          and its equity in loss of the Joint Venture for the years then ended
          are as follows:

                                                       EQUITY IN
                  YEAR                INVESTMENT     (INCOME) LOSS
                  ----                ----------     -------------

                  1996                $        -       $(146,799)
 
          The Joint Venture had revenue of $300,900 during the year ended
          December 31, 1996 and net income for the year was $295,826.


Note 5.   Allocations and Distributions to Partners

          Operations (excluding land sales)
          -------------------------------- 

               Pursuant to the partnership agreement, cash flow and profits and
               losses from operations are allocated and distributed 99% to the
               limited partners and 1% to the general partner. No distributions
               attributable to cash flow were made during the years ended
               December 31, 1998, 1997 or 1996.

CONTINUED ON NEXT PAGE

                                       15
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 5.   Allocations and Distributions to Partners - (Continued)

          Land sales
          ----------

               With respect to disposition of parcels of land, the allocations
               and distributions shall be made as follows:

               1. To the limited partners, an amount equal to the Partnership's
                    cost of the parcel disposed of.

               2. To the limited partners, an amount equal to real estate taxes,
                    and organization and syndication expenses allocable to the
                    parcel disposed of.

               3. To the limited partners, an amount equal to 10% per year non-
                    compounded return on such distributions minus previous
                    distributions of cash flows.

               4. To the general partner and limited partners, 20% and 80%,
                    respectively, of the net cash proceeds after the above
                    distributions.

               For purposes of making the above described computations, the
               Partnership books will be deemed to close as of the month-end
               closest to the date of sale.

               The limited partners received distributions of $-0-, $978,110,
               and $2,965,000 attributable to net cash proceeds from the sales
               of land during the years ended December 31, 1998, 1997 and 1996,
               respectively.


Note 6.   Related Party Transactions

          The partnership agreement permits the general partner or its
          affiliates to receive an acquisition fee or a real estate commission
          from sellers in an amount not to exceed 5% of the gross purchase price
          of land purchased by the Partnership, so long as the total acquisition
          fee, including that paid to unaffiliated parties, does not exceed 10%
          of the gross purchase price. No acquisition fees were paid during the
          years ended December 31, 1998, 1997 or 1996, as no properties were
          purchased.

CONTINUED ON NEXT PAGE

                                       16
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        (A Florida Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS



Note 6.   Related Party Transactions - (Continued)

          When properties are sold, an affiliate of the general partner may be
          paid real estate commissions in amounts customarily charged by others
          rendering similar services, with such commissions, plus commissions
          paid to nonaffiliates, not to exceed 10% of the gross sales price. No
          real estate commissions were paid during 1998 with respect to sales,
          as no sales occurred. In connection with the two land sales in 1997,
          commissions paid to nonaffiliates amounted to 10% and 5%,
          respectively. In connection with the two land sales during 1996,
          commissions paid to nonaffiliates amounted to 10% and 5.8%,
          respectively.

          The general partner is obligated to loan up to $100,000 to the
          Partnership during its term to meet working capital requirements. No
          such loans were made to the Partnership during the years ended
          December 31, 1998, 1997 or 1996.

          The general partner earned certain fees for administration and
          management services provided, pursuant to the partnership agreement.
          Such fees amounted to $12,084 for the years ended December 31, 1998
          and 1997, respectively, and $11,676 for the year ended December 31,
          1996.

                                       17
<PAGE>
 
Item 9.

       Changes in and Disagreements with Accountants on Accounting and Financial
       -------------------------------------------------------------------------
       Disclosure:
       ---------- 

       There were no disagreements on accounting and financial disclosures
       required to be disclosed by Item 304 of Regulation S-K.



                                   PART III
Item 10.

       Directors and Executive Officers of the Registrant
       --------------------------------------------------

       (a)  The Registrant does not have a Board of Directors. Condev
       Associates, A Florida general partnership consisting of Messrs. Robert N.
       Gardner and Joseph J. Gardner, is the General Partner of the Partnership.

       (b), (c), (d) and (e)

       Robert N. Gardner and Joseph J. Gardner are brothers. The background and
       experience of the partners of the General Partner are as follows:

       Robert N. Gardner, age 64 has been president, a director and shareholder
       -----------------   
       of Condev Corporation and it's predecessors since 1961. A Florida
       licensed real estate broker and Class A Contractor, he serves on the
       boards of directors of NationsBank of Central Florida, N.A., and
       Schroeder-Manatee, Inc.

       Joseph J. Gardner, age 61 has been an officer, a director and shareholder
       -----------------                                                        
       of Condev Corporation and its predecessors since 1961.  Prior to joining
       Condev Corporation, he was employed in the land department of Continental
       Oil Company.  Mr. Gardner is a director of Protection One, Inc. and is a
       licensed real estate broker.

       Condev Corporation, which has its offices located at the same address of
       the General Partner and Partnership, has been operating in the Florida
       real estate market since 1961. It has two active affiliates. PCD, Inc. is
       a development company specializing in horizontal land development. Condev
       Realty, Inc. is a Florida licensed real estate broker which concentrates
       on site acquisition, land assemblage and land investment.

Item 11.

       Executive Compensation
       ----------------------

       (a), (b), (c) and (d)

       The Registrant has not paid and does not plan to pay any executive
       compensation to the General Partners or their affiliates (other than
       described in Item 13 below).

Item 12.

       Security Ownership of Certain Beneficial Owners and Management:
       -------------------------------------------------------------- 

       (a)  The following is a list of persons who are known to the Registrant
       to be the beneficial owners of more than 5% of the total units
       outstanding as of December 31, 1998:

                                     NONE

       (b)  The following is a list of units beneficially owned by all partners
       of the General Partner as of December 31, 1998:

                                     NONE

       (c)  There are no arrangements known to the registrant, including any
       pledge by any person of security of the registrant or any of its parents
       or affiliates, the operation of which may at a subsequent date result in
       a change in control of the registrant.

                                       18
<PAGE>
 
Item 13.

        Certain Relationships and Related Transactions
        ----------------------------------------------

        (a) and (b)

        The Partnership Agreement provides for the reimbursement to the General
        Partner for direct administrative expenses incurred in the operation of
        the Partnership. Such fees amounted to $12,084 for the years ended
        December 31, 1998 and 1997, respectively, and $11,676 for the year ended
        December 31, 1996.

        The Partnership Agreement permits the general partner or an affiliate to
        receive an acquisition fee or a real estate commission from sellers in
        an amount not to exceed 5% of the gross purchase price of land purchased
        by the Partnership so long as the total acquisition fee, including that
        paid to unaffiliated parties, does not exceed 10% of the gross purchase
        price. No acquisition fees were paid to the General Partner during 1998,
        1997, or 1996, as no properties were acquired during these years.

        When properties are sold, under certain circumstances, an affiliate of
        the General Partner may be paid real estate commissions in amounts
        customarily charged by others rendering the same services not to exceed
        10% of the gross sales price. No real estate commissions were paid to
        the General Partner or any affiliate of the General Partner during the
        years ended December 31, 1998, 1997 or 1996.

        The General Partner is obligated to loan up to $100,000 to the
        Partnership during its term to meet working capital requirements. No
        such loans were made to the Partnership during the years ended December
        31, 1998, 1997, or 1996.

        (c)  No management person is indebted to the Registrant.

        (d)  Not applicable.

                                       19
<PAGE>
 
                                    PART IV


Item 14.

     Exhibits, Financial Statement Schedules and Reports on Form 8-K:
     --------------------------------------------------------------- 

     (a)(1) The following financial statements and supplementary data are
     included in Part II Item 8:
                                                                  Page

          Independent Auditor's Report                                8

          Financial Statements
            Balance Sheets - December 31, 1998 and 1997               9

            Statements of Operations - Years ended
             December 31, 1998, 1997 and 1996                        10

            Statements of Partners' Capital -
             Years ended December 31, 1998, 1997 and 1996            11

            Statements of Cash Flows -
             Years ended December 31, 1998, 1997 and 1996            12

            Notes to Financial Statements                         13-17

       (3) Exhibits included herein:
            13 - Annual Report to Limited Partners                   22

     (b)  Reports on Form 8-K
            No reports on Form 8-K have been filed by the Registrant during the
            last quarter of the period covered by this report.
 

                                       20
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.


                              CONDEV ASSOCIATES, General Partner


Date: February 24, 1999      By: /s/ Robert N. Gardner
     --------------------       ----------------------------
                                Robert N. Gardner, Partner

Date: February 24, 1999      By: /s/ Joseph J. Gardner
     --------------------       ----------------------------
                                Joseph J. Gardner, Partner


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.


CONDEV ASSOCIATES, General Partner


 /s/ Robert N. Gardner                February 24, 1999
---------------------------------    --------------------------
Robert N. Gardner, Partner           Date


 /s/ Joseph J. Gardner                 February 24, 1999
---------------------------------    --------------------------
Joseph J. Gardner, Partner           Date

                                       21
<PAGE>
 
                                                                February 8, 1999
Condev Land Fund II, Ltd.
1998 Annual Report

Dear Limited Partner:

Enclosed is your Schedule K-1 (Form 1065) relating to the Fund's operations for
the year ended December 31, 1998. If your investment is held by a custodian, the
K-1 is for information purposes only. A copy of this form has been sent to your
custodian.

The financial statement, on the reverse side hereof, shows a net loss for the
year ended December 31, 1998 of $54,066. This represents normal income less
costs of operating the partnership and managing the portfolio properties. There
were no sales of property during the year. However, all of the property owned by
the Partnership was under contract for sale as of year-end. At December 31,
1998, the net asset value per unit (book value) of limited partner interest was
$88.46. The following is a brief description of the status of each of the
partnership's remaining properties:

Alafaya Trail/McCulloch Road. This property is under contract with a developer
----------------------------                                                  
who intends to erect a grocery-anchored retail development on the site. A
commitment has been received from the main tenant, and the buyer is in the
process of obtaining the necessary development permits. Closing on this contract
is scheduled for June, 1999.

Glenbrook P.U.D.. This property consists of three separate parcels: multi-
----------------                                                         
family, commercial, and single-family. The multi-family parcel is under contract
with a developer of affordable apartments. Originally scheduled to close in
December, this contract has been extended to allow the general partner time to
complete the required sewer, water and other off-site improvements pursuant to
the terms of the sales contract. The 71-acre single family site is under
contract with a closing date of June 30, 1999 scheduled. On December 3, 1998,
the Partnership entered into a contract for sale of the commercial parcel with
an experienced developer of anchored shopping centers. Terms of the contract
call for an inspection period until March 3, 1999, and closing 120 days
thereafter.

We hope that the remaining parcels will be sold during 1999. If that is the
case, there will be a final distribution to limited partners and the Partnership
will be terminated. We appreciate the patience of the limited partners while we
work to sell the remaining properties consistent with our objective of obtaining
reasonable returns for the investors.


Sincerely yours,


CONDEV ASSOCIATES

                                       22