<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, 1997                                 #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, constant 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 was sold. There were no sales of
          land during 1995. During 1996, three parcels were sold, and during
          1997, one entire parcel was sold. As of December 31, 1997, the
          Partnership owned or had an investment in two remaining properties. At
          year end 1997, the Partnership had a contract for sale of part of one
          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.

          The Agreement for the remainder of this parcel was terminated by the
          Buyer in November, 1997, at which time the property was put under
          contract with another prospective purchaser. This second agreement was
          canceled by the contract holder in January, 1998.

<TABLE>
<CAPTION>
          Date of Purchase:                    August 31, 1988
          <S>                                  <C>
          Purchase Price:                           $1,500,000
          Additional Capitalized Costs:             $  130,776
          Less: Sale of 2.81 acres to FDOT:         (  753,899)
                                                    ----------
                                                    $  876,877
          Less: Sale of .54 acres                   (   51,143)
                                                    ----------
                                                    $  825,734
</TABLE>

          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:                $  115,306
</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 359 apartment units on
          the site. Closing is currently scheduled to occur shortly before year-
          end 1998.

          Based on developments in the immediate area of this property, it is
          clear that the Partnership will be in a better competitive position to
          sell the property if sewer and water service is available to the
          property limits. Accordingly, the General Partner has engaged an
          engineering firm to design and estimate the costs of extending such
          service to the property. Preliminary estimates have been completed,
          and the general partner is now in the process of obtaining the
          necessary development permits. If all goes as scheduled, construction
          should begin in mid-1998 with completion anticipated by September. The
          costs of these improvements will be reimbursed to the partnership by
          buyers of the property.

          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 purchase 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, 1997, 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, 1997.
 
    

                                       3
<PAGE>
 
                                PART II
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.

          (b)  As of December 31, 1997, there were approximately 973 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 $978,110, $2,965,000 and $-0-
          during the years ended December 31, 1997, 1996, and 1995.

Item 6.

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

                            Year Ended December 31,
                            -----------------------
<TABLE>
<CAPTION>
                                      1997        1996        1995         1994        1993
                                   ----------  ----------  -----------  ----------  -----------
          <S>                      <C>         <C>         <C>          <C>         <C>
 
          Revenue                  $  589,654  $  913,179  $   19,549   $  516,468  $   17,435
          Net Income (Loss)           517,779     842,315     (62,680)     422,902     (68,683)
          Total Assets              2,692,772   3,151,702    5,271,40    5,335,562   6,131,464
          Partnership          
               Capital              2,686,952   3,147,283   5,269,968    5,332,648   6,131,464
</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:
          --------------------- 

          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.

          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.

          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.

                                       4
<PAGE>
 
     For 1997, 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 $26,000 during 1998 and
     the costs of administration, legal and accounting will require
     approximately $20,000. These three categories of expense, totaling $56,000,
     will be paid from Partnership reserves which were $168,069 at 1997 year-
     end. Interest and other income is projected at $30,000 for 1998. Should the
     Partnership not successfully conclude a property sale in 1998 and add to
     reserves, reserves would fall to approximately $113,000 by year end 1998.
     At the level of costs associated with the Partnership's business as set out
     above the Partnership has reserves at year end 1997 to fund approximately
     two and one-half years 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 two properties will be sold in 1997,
     resulting in cash to the Partnership in the approximate amount of
     $2,000,000. If concluded as estimated, the sale proceeds would result in a
     distribution to the limited partners in the approximate amount of
     $2,000,000, 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 $1,446,812 by December 31, 1998.

     In addition to the projected sales above, the General Partner reasonably
     expects to place the remaining Partnership properties under contract in
     1998. However, it is expected that one of these contracts would not close
     until 1999. Another of these sales is likely to be over an extended period
     as is typical in the single-family residential market. If that is the case,
     it is estimated that it will require another three (3) years to complete
     the sale of properties held by the Partnership.
 
     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.
 
     On April 22, 1996, Condev/McCulloch Road Joint Venture, in which the
     Partnership had a 49.9% interest, concluded the sale of its 19.10-acre
     property located on McCulloch Road in Seminole County, Florida. The buyer
     was a group of investors who intend to construct a 192-unit student housing
     complex on the site. The Purchase Price for this parcel was $1,190,000,
     which includes an amount of $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. Distributions
     aggregating $1,080,000 were made to limited partners in May, 1996, $540,000
     to limited partners of Condev Land Growth Fund '86, Ltd. and $540,000 to
     limited partners of Condev Land Fund II, Ltd.

     On June 14, 1996, the Partnership concluded the sale of two parcels
     aggregating 17.75 acres located on U.S. Highways 441/27 near the Lake
     County Mall in Lake County, Florida.  The Purchase Price for these parcels
     was $2,750,000.  After expenses of the sale, the net 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.

     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.

                                       5
<PAGE>
 
     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.

     January 1, 1995 through December 31, 1995:

     The Partnership continued to manage the affairs of the Partnership and the
     portfolio properties to position them for sale.
 
     For the year ended December 31, 1995, the Partnership reported total income
     of $19,549.  This compares to total income in 1994 of $516,468, including
     $499,719 recognized gain on the sale of land and $16,749 in interest and
     other income.  There were no sales of land in 1995.  The 1994 gain on sale
     of land was the net result of the sale relating to 2.81 acres of the
     Partnership's 12.04 acre parcel of land in Seminole County, Florida, and
     the net profit from the sale of the Partnership's 2.83 acre parcel in Lady
     Lake, Florida.

     Operating expenses totaled $82,229 for the year ended December 31, 1995,
     compared to $93,566 in 1994. The primary reason for the decrease was a
     reduction in professional fees, which decreased from $14,625 in 1994 to
     $7,462 in 1995.  The higher level in 1994 relates to professional services
     needed in connection with the FDOT condemnation of Parcel No. 1. In
     addition, there was no amortization of organizational expenses in 1995
     because no properties were sold.  The other expense categories remained
     essentially unchanged from the prior year.

     The net loss reported for the year ended December 31, 1995 was $62,680
     compared to a net profit of $422,902 for the year ended December 31, 1994.

     At year-end 1995, total assets of the Partnership were $5,271,404, compared
     with $5,335,562 at year-end 1994. This decrease reflects the net operating
     costs of managing the Partnership. Liabilities at December 31, 1995 were
     $1,436, compared to total liabilities of $2,914 at December 31, 1994.
     Partners capital declined from $5,332,648 at December 31, 1994 to
     $5,269,968 at December 31, 1995, a decrease of $62,680.  This decline
     resulted from the net loss reported for 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, 1997 and 1996, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1997. 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, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.



                                                  OSBURN, HENNING AND COMPANY

Orlando, Florida
January 16, 1998

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

                                BALANCE SHEETS
                          December 31, 1997 and 1996


<TABLE>
<CAPTION>
                                                      1997        1996   
                                                   ----------  ----------
<S>                                                <C>         <C>       
      ASSETS                                                             
                                                                         
Cash and cash equivalents                          $  168,989  $  169,876
Accounts receivable                                         -         105
Land, at cost (Note 2)                              2,515,801   2,972,413
Organization costs, less accumulated                                     
  amortization of $10,390 and $9,064                                     
  in 1997 and 1996                                      7,982       9,308
                                                   ----------  ----------
                                                                         
                                                   $2,692,772  $3,151,702
                                                   ==========  ========== 
 
      LIABILITIES AND PARTNERS' CAPITAL

Liabilities
  Accounts payable                                 $    5,820  $    4,419
                                                   ----------  ----------
 
Partners' capital (deficit):

  General partner                                      (2,649)     (2,465)
  Limited partners                                  2,689,601   3,149,748
                                                   ----------  ----------
 
          Total partners' capital                   2,686,952   3,147,283
                                                   ----------  ----------

                                                   $2,692,772  $3,151,702
                                                   ==========  ==========
</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, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                         1997       1996        1995
                                       ---------  ---------  --------- 
<S>                                    <C>        <C>        <C>
Revenue:
  Gain on land sale                     $536,132   $737,235   $      -
  Equity in income of joint venture            -    146,799          -
  Interest income                         10,022      9,379      7,065
  Forfeited deposits                           -     13,000          -
  Other income                            43,500      6,766     12,484
                                        --------   --------   --------
                                         589,654    913,179     19,549
                                        --------   --------   --------
Expenses:
  Taxes and permits                       10,159     29,400     46,031
  Office expenses                         18,746     18,819     16,794
  Professional fees                       32,738     11,197      7,462
  Amortization                             1,326      5,904          -
  Other expenses                           8,906      5,544      6,818
  Equity in loss of joint venture              -          -      5,124
                                        --------   --------   --------
                                          71,875     70,864     82,229
                                        --------   --------   --------

          Net income (loss)             $517,779   $842,315   $(62,680)
                                        ========   ========   ========
</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, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                General     Limited
                                Partner     Partners       Total
                               ---------  -----------   ----------- 
<S>                            <C>        <C>           <C>
 
Balances, December 31, 1994     $ 3,969   $ 5,328,679   $ 5,332,648
 
  Net income (loss)                (627)      (62,053)      (62,680)
                                -------   -----------   -----------
 
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
                                =======   ===========   ===========
</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>
                                             1997          1996         1995
                                          ----------   -----------   ----------
<S>                                       <C>          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                       $  517,779   $   842,315    $(62,680)
  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)      5,124
      Amortization                             1,326         5,904           -
      (Increase) decrease in accounts
        receivable                               105          (105)          -
      Increase (decrease) in
        accounts payable                       1,401         2,983      (1,478)
                                          ----------   -----------    --------
          Net cash used in operating
            activities                       (15,521)      (32,937)    (59,034)
                                          ----------   -----------    --------
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Land acquisitions and related costs        (15,719)       (7,406)    (52,875)
  Proceeds from land sale, net of
    closing costs                          1,008,463     2,444,875     166,530
  Distribution from joint venture                  -       549,200
  Investment in joint venture                      -        (3,139)     (4,818)
                                          ----------   -----------    --------
          Net cash provided by
           investing activities              992,744     2,983,530     108,837
                                          ----------   -----------    --------
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions to partners                 (978,110)   (2,965,000)          -
                                          ----------   -----------    --------
 
          Net increase (decrease) in
            cash                                (887)      (14,407)     49,803
 
CASH AND CASH EQUIVALENTS, BEGINNING         169,876       184,283     134,480
                                          ----------   -----------    --------
 
CASH AND CASH EQUIVALENTS, ENDING         $  168,989   $   169,876    $184,283
                                          ==========   ===========    ========
</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. 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. No amortization of organization costs
               was recorded during the year ended December 31, 1995, as no sales
               occurred.

          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)

          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. At
               December 31, 1997, cash and cash equivalents included $113,807
               invested in the Goldman FS Federal Admin. Fund.

Note 2.   Land

          At December 31, 1997 and 1996, land consisted of the following:

<TABLE>
<CAPTION>
                                                       1997        1996
                                                    ----------  ----------
         <S>                                        <C>         <C>
 
         8.659 and 9.22 acre parcel, in 1997
           and 1996, respectively, (zoned
           commercial) in southeast Seminole
           County, Florida                          $  825,734  $  876,877
         111.64 acre parcel in 1997 and 1996
           (zoned PUD) in Lake County, Florida       1,690,067   1,681,373
         0 and 15 acre parcel, in 1997 and 1996,
           respectively, (zoned office)in Orange
           County, Florida (sold in 1997)                    -     414,163
                                                    ----------  ----------

                                                    $2,515,801  $2,972,413
                                                    ==========  ==========
</TABLE>

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

                         NOTES TO FINANCIAL STATEMENTS



Note 3.   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 owned the remaining 50.1% interest '86, Ltd., an
          affiliate of the Partnership's general partner. 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:

<TABLE>
<CAPTION>
                                                     EQUITY IN
                    YEAR              INVESTMENT   (INCOME) LOSS
                    ----              ----------   -------------
                    <S>               <C>          <C> 
                    1996              $        -    $ (146,799)
                    1995              $  399,262    $    5,124
</TABLE>

          The Joint Venture had revenue of $300,900 and $-0- during the years
          ended December 31, 1996 and 1995, respectively, and net income (loss)
          for each year was $295,826 and $(10,270) respectively.


Note 4.   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, 1997, 1996 or 1995.

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

                         NOTES TO FINANCIAL STATEMENTS



Note 4.   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 $978,110, $2,965,000,
            and $-0- attributable to net cash proceeds from the sales of land
            during the years ended December 31, 1997, 1996 and 1995,
            respectively.

Note 5.   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, 1997, 1996 or 1995, 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 5.   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. 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, real estate commissions of 10% and
          5.8%, respectively, were paid to nonaffiliates. No real estate
          commissions were paid during 1995 with respect to sales, as no sales
          occurred.

          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, 1997, 1996 or 1995.

          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 year ended December 31, 1997,
          and $11,676 for each of the years ended December 31, 1996 and 1995.
 

                                       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 63 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 Nations Bank of Central Florida, N.A.,
          and Schroeder-Manatee, Inc.

          Joseph J. Gardner, age 60 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 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, 1997:
 
                                     NONE

     (b)  The following is a list of units beneficially owned by all partners of
     the General Partner as of December 31, 1997:

                                     NONE

                                       18
<PAGE>
 
     (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.

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 year ended December 31,
     1997, and $11,676 for each of the years ended December 31, 1996, and 1995.

     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 1997, 1996, or
     1995, 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, 1997, 1996 or 1995.

     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, 1997, 1996, or
     1995.

     (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, 1997 and 1996               9  
                                                                           
                 Statements of Operations - Years ended                      
                   December 31, 1997, 1996 and 1995                       10   
                                                                           
                 Statements of Partners' Capital -                           
                   Years ended December 31, 1997, 1996 and 1995           11   
                                                                           
                 Statements of Cash Flows -                                  
                   Years ended December 31, 1997, 1996 and 1995           12   
                                                                           
                 Notes to Financial Statements                           12-17
                                                                           
          (3) Exhibits included herein:                                   22
                 13 - Annual Report to Limited Partners                       
                                                                           
       (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:____________________          By:  /s/ Robert N. Gardner
                                       ----------------------------
                                       Robert N. Gardner, Partner

Date:____________________          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              
---------------------------------      ____________________________
Robert N. Gardner, Partner             Date


 /s/ Joseph J. Gardner               
---------------------------------      ____________________________
Joseph J. Gardner, Partner             Date

                                       21
<PAGE>
 
Condev Land Fund II, Ltd.                          February 6, 1998
1997 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, 1997.  This Schedule is for your use in preparing
your 1997 income tax return.

The financial statement, on the reverse side hereof, shows a net profit for the
year ended December 31, 1997 of $517,779. This represents the income from
property sales less the normal costs of operating the partnership and managing
the portfolio properties. There were two sales of property during 1997. On July
31, 1997 the Partnership sold approximately 1/2 acre of its property at Alafaya
Trail and McCulloch Road in Seminole County, Florida. On August 20, 1997, the
Partnership concluded the sale of its 15.38 acre parcel of land in Maitland,
Florida. Net proceeds from these two sales were $1,008,463, and $978,110 was
distributed to limited partners in September. As of December 31, 1997, the net
asset value per unit of limited partner interest was $90.26. The following is a
brief description of the status of each of the partnership's two remaining
properties:

Alafaya Trail/McCulloch Road.  This property consists of approximately 8.67
----------------------------                                               
acres of land at the intersection of Alafaya Trail and McCulloch Road in
Seminole County, Florida. During 1997, the property was under contract with a
developer who intended to construct a retail center on the site.  In November,
1997 the Partnership was advised that the prospective purchaser chose not to
proceed with closing. A deposit of $40,000 plus interest was forfeited and was
added to Partnership reserves.  The property is actively being marketed at this
time.

Glenbrook P.U.D..  This is a 111-acre parcel zoned as a Planned Development and
----------------                                                               
located on U.S. Highway 27 approximately 1 1/2 miles north of U.S. Highway 192
in Lake County. In January, 1998, the Partnership entered into a contract
providing for the sale of the 20-acre tract of land zoned for 359 apartment
units. This contract is currently in the inspection stage. The Partnership has
completed preliminary engineering for the extension of sewer and water utilities
to the site, and is in the process of arranging a $500,000 line of credit to
finance these improvements if necessary. These improvements will accelerate the
sale of this property at higher prices.

The properties in which the Partnership has an interest are well-positioned and
in growing markets.  We hope to achieve significant sales during the coming
year.

Sincerely yours,


CONDEV ASSOCIATES

                                       22