<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                                 #33-28493-A

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

      Florida                                     #59-2943405
-------------------------------          -------------------------------
(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 III, LTD.

                               Table of Contents

<TABLE>
<CAPTION>
                                                                                             Page No.
                                                                                             --------
<S>                                                                                          <C> 
Part I
   Item 1.    Business                                                                          1
   Item 2.    Properties                                                                        2
   Item 3.    Legal Proceedings                                                                 2
   Item 4.    Submission of Matters to a Vote of Security Holders                               2
 
Part II
   Item 5.    Market for Registrant's Common Equity and Related Security Holder Matters         3
   Item 6.    Selected Financial Data                                                           3
   Item 7.    Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                                             3
   Item 8.    Financial Statements and Supplementary Data                                       6
   Item 9.    Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosure                                                             25
 
Part III
   Item 10.  Directors and Executive Officers of the Registrant                                25
   Item 11.  Executive Compensation                                                            25
   Item 12.  Security Ownership of Certain Beneficial Owners and Management                    25
   Item 13.  Certain Relationships and Related Transactions                                    26
 
Part IV
   Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                  27

Signatures                                                                                     28

Annual Report to Limited Partners                                                              29
</TABLE> 
<PAGE>
 
                                    PART I

Item 1.

          Business:
          --------- 

          Condev Land Fund III, Ltd. (the "Partnership") is a Florida limited
          partnership formed on February 15, 1989 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 9,784 units of limited
          partnership interest at an initial offering price of $250 per unit.
          The Partnership had collected $2,446,000 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, 1996. In
          accordance with the Florida Limited Partnership Law and the
          Partnership Agreement, after December 31, 1996 the Partnership has
          been in liquidation with no change in the status of the limited
          partners or general partner. 

          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.

          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.

          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.

          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").

Item 2.

          Properties:
          ---------- 
 
          Since its inception, the Partnership has purchased two properties for
          investment in the Central Florida area. Part of one parcel was sold
          during 1994. There were no sales of land during 1995 and 1997, and
          another part of one property was sold during 1996. As of December 31,
          1997, the partnership owned or had an investment in two properties.

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

          Parcel 1:
          -------- 

          On May 31, 1991, Condev Osceola Joint Venture purchased two parcels of
          land aggregating 8.6 acres within the Kyng's Heath commercial
          subdivision on S.R. 535 near its intersection with Highway 192 in
          Osceola County, Florida. The property is zoned tourist-commercial in
          Osceola County, Florida. At the time of closing, the Partnership
          acquired a 90% interest in Condev Osceola Joint Venture.

          The purchase price of this property was $1,740,000 or $4.64 per square
          foot.

                                       1
<PAGE>
 
          During the third quarter of 1994, an international investment group
          purchased four parcels of land totaling approximately 9.4 acres
          adjacent to this parcel. As part of this transaction, Condev Osceola
          Joint Venture sold a small corner of its adjoining property to this
          group to accommodate a realignment of a road serving both properties.
          The total purchase price for the 28,607 square feet sold was $175,000,
          or $6.12 per square foot. The Partnership's share of this sale was
          90%, or $144,000. In November, 1994 a total of $44,028 was distributed
          to limited partners representing return of capital and profits on the
          sale of this parcel. The remaining proceeds were used to pay closing
          costs and to augment the Partnership's cash position.

          On August 28, 1996, Condev Osceola Joint Venture concluded the sale of
          a 5.08 acre part of this parcel. The purchase price was $1,250,000, or
          approximately $5.65 per square foot. The buyer made a cash payment at
          closing of $350,000 and issued its promissory note in the amount of
          $900,000 to the Joint Venture. The Joint Venture retained a mortgage
          on the land until the note was repaid. After closing expenses and real
          estate commissions paid to outside brokers, the net cash received by
          the Joint Venture was $266,000. Of this amount, $225,032 was
          distributed to limited partners of Condev Land Fund III, Ltd., and
          $25,000 was distributed to limited partners in Condev Osceola, Ltd.,
          the other 10% investor in the Joint Venture. The balance of $15,968
          was retained in the Joint Venture to provide for future anticipated
          costs and expenses. Upon repayment of the $900,000 note on April 2,
          1997, the Partnership received its share in the amount of $810,000 and
          distributed $799,940 to limited partners. The Joint Venture continues
          to own 2.94 acres of land in the Kyng's Heath subdivision.

<TABLE>
          <S>                                <C> 
          Date of Purchase:                  May 31, 1991
          Purchase Price:                      $1,740,000
          Additional Capitalized Costs:            30,697
          Partnership interest (90%):          $1,593,627
                                             
          Less: Sale of .66 acres              (   61,497)
                                               ----------
                                               $1,532,130
          Less: Sale of 5.08 acres             (  832,507)
                                               ----------
                                               $  534,372
</TABLE>

          Parcel 2:
          -------- 

          On August 6, 1993, the Partnership purchased a 10-acre parcel of
          commercially zoned land fronting on the east side of U.S. Highway 27
          in Lake County, Florida, approximately 1.5 miles north of the U.S. 192
          and U.S. 27 intersection. The southwest corridor of Orlando is an area
          that continues to experience rapid gain in employment, population and
          household growth and commercial development.

<TABLE> 
          <S>                                 <C> 
          Date of Purchase:                   August 6, 1993
          Purchase Price:                     $   400,000
          Additional Capitalized Costs:             5,467
</TABLE> 

          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.

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.

                                       2
<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 350 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. Limited partners
          received cash distributions totaling $799,940, $225,032 and $-0-
          during the years ended December 31, 1997, 1996 and 1995.

Item 6.

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

<TABLE> 
<CAPTION> 
                                                 Year Ended December 31,
                                                 -----------------------
 
                                  1997         1996        1995         1994        1993
                                  ----         ----        ----         ----        ----    
          <S>                  <C>          <C>         <C>          <C>         <C>
          Revenue              $    7,853   $   56,995  $    7,457   $   76,218  $    9,658
          Net Income (Loss)       (41,881)      38,476    ( 30,888)      63,976     (22,151)
          Total Assets          1,035,001    1,876,335   2,064,061    2,093,779   2,073,831
          Partners' Capital     1,034,514    1,876,335   2,062,891    2,093,779   2,073,831
</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:
          
          During 1997, the Partnership continued to manage the portfolio
          properties and direct its efforts towards positioning the remaining
          two properties for sale. The areas in which the properties are located
          continue to mature, and sales prospects are encouraging at this time.

          On April 2, 1997, Condev Osceola Joint Venture received payment in
          full of the $900,000 principal plus accrued interest on the mortgage
          note taken in connection with the sale of part of its property in the
          Kyng's Heath subdivision. See Item 2, Properties. After expenses,
          which included a deferred 5% consulting fee paid to a non-affiliated
          real estate broker, the net cash received by the Joint Venture was
          $861,270. A total of $810,000 was distributed by the Joint Venture to
          the Partnership and $799,940 was distributed to limited partners in
          April 1997.

          For the year ended December 31, 1997, the Partnership had total
          revenue of $7,853, consisting primarily of interest earned on cash and
          cash equivalents during the year. This compares to total revenues of
          $56,995 for the year ended December 31, 1996. The 1996 figure includes
          $50,650 in net income from the Partnership's joint venture, Condev
          Osceola Joint Venture, the owner of parcel #2. See Item 2, Properties.
          There were no sales of property by either the Partnership or the Joint
          Venture during 1997.

          Operating expenses totaled $18,227 for 1997 compared to $18,519 for
          1996. Most of these expenses relate to the management and
          administration of the Partnership. However, the equity in the loss of
          Condev Osceola Joint Venture was $31,507 for 1997. The reason for this
          loss was a consulting expense in the amount of $47,170 relating to the
          collection and subsequent payoff of a mortgage note held by the Joint
          Venture. This consulting expense was partially offset by interest
          income on the same mortgage note in the amount of $25,000. As
          mentioned in the preceding paragraph, Condev Osceola Joint Venture had
          a profit in 1996.

                                       3
<PAGE>
 
          Total Assets at December 31, 1997 were $1,035,001 compared to
          $1,876,335 at December 31, 1996. This represents a decrease of
          $841,334, and was primarily caused by the distribution of $799,940 to
          limited partners following repayment of the mortgage note held by
          Condev Osceola Joint Venture, plus reported operating losses. Assets
          will continue to decline as properties are sold and the proceeds are
          distributed to limited partners. Liquidity remained at a satisfactory
          level. Cash and cash equivalents at December 31, 1997 stood at $90,357
          as compared to $101,678 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 nature 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.

          For 1998, the General Partner estimates that approximately $15,500
          will be required to pay real estate taxes on the properties held by
          the Partnership and Condev Osceola Joint Venture. In addition, the
          General Partner estimates that property associated holding costs will
          total approximately $6,000 during 1998 and the costs of
          administration, legal and accounting will require approximately
          $9,000. These three categories of expense, totaling $30,500, will be
          paid from Partnership reserves which were $90,357 at 1997 year end.
          Should the Partnership not successfully conclude a property sale in
          1998 and add to reserves, reserves would fall to approximately $60,000
          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 three years of costs.

          The General Partner estimates that no property will be sold in 1998,
          even though the areas in which the Partnership's properties are
          located continue to mature and develop. This is due to the long period
          of time necessary for buyers to perform due diligence under a new
          contract for sale and to obtain the necessary governmental development
          permits. If this estimation proves to be accurate, there will be no
          distributions to partners during 1998. The General Partner regards the
          present level of reserves adequate to fund future expenses.

          The General Partner expects to place part of one or both of the
          Partnership's properties under contract in 1998 which are estimated to
          close during 1999. It is estimated that it will require another two
          (2) years to complete the sale of properties held by the Partnership
          or by the joint venture in which the Partnership is a participant.
          
          January 1, 1996 through December 31, 1996:

          The Partnership continued to manage the portfolio properties and to
          attempt to present the properties to potential purchasers.

          For the year ended December 31, 1996, the Partnership reported total
          revenue of $56,995. This included $50,650 equity in income of joint
          venture. This compares to total revenue of $7,457 for the year ended
          December 31, 1995. The 1996 equity income resulted from the sale of
          5.08 acres by the Joint Venture. Refer to Item 2, Properties, Parcel 1
          for details. The change in interest income reflects varying cash
          levels during the two years.

          Operating expenses totaled $18,519 for the year ended December 31,
          1996, compared to $16,904 for the year ended December 31, 1995. The
          1996 figure does not include $1,124 in net expenses incurred in Condev
          Osceola Joint Venture because the joint venture reported a profit for
          the year. The profit relates to the sale of the part of Parcel 1
          mentioned above and interest on the related purchase money mortgage.
          Total expenses for the Joint Venture, consisting primarily of real
          estate taxes were essentially unchanged from the previous year.

          The net profit reported for the year ended December 31, 1996 was
          $38,476, compared to a loss of $30,888 for the year ended December 31,
          1995.

          At year-end 1996, total assets of the Partnership were $1,876,335,
          compared with $2,064,061 at year-end 1995. This decline reflects the
          property sale and related distribution to limited partners during
          1996. The Partnership had no liabilities at December 31, 1996.
          Partners capital decreased from $2,062,891 at December 31, 1995 to
          $1,876,335 at December 31, 1996, again the result of Partnership
          profits offset by distributions to limited partners during the year.

                                       4
<PAGE>
 
          January 1, 1995 through December 31, 1995:

          The Partnership continued to manage the portfolio properties and to
          attempt to present the properties to potential purchasers. The areas
          where the Partnership's properties are located continue to mature
          through growth as well as area improvement, and it seems as though the
          properties are moving closer to the time when they will be attractive
          as development sites.

          For the year ended December 31, 1995, the Partnership reported total
          revenue of $7,457. This compares to total revenue of $76,218,
          including $70,647 recognized gain on the sale of land in the Joint
          Venture and $5,571 in interest and other income for the year ended
          December 31, 1994. There were no sales of land in 1995. Refer to Item
          2, Properties, Parcel 1. The change in interest income reflects
          varying cash levels during the two years.

          Operating expenses totaled $16,904 for the year ended December 31,
          1995, compared to $12,242 for the year ended December 31, 1994. The
          1994 figure does not include $21,698 in expenses incurred in Condev
          Osceola Joint Venture, because the joint venture reported a profit for
          the year. The profit relates to the sale of the part of Parcel 1
          mentioned above. Total expenses for the Joint Venture, consisting
          primarily of real estate taxes were essentially unchanged from the
          previous year. Of the other expenses, professional fees increased from
          $4,130 in 1994 to $8,170 in 1995 as a result of the final expenses of
          the planning and design effort required to conclude the sale of part
          of Parcel 1. The other expense categories remained essentially
          unchanged from the prior year.

          The net loss reported for the year ended December 31, 1995 was
          $30,888, compared to a profit of $63,976 for the year ended December
          31, 1994.

          At year-end 1995, total assets of the Partnership were $2,064,061,
          compared with $2,093,779 at year-end 1994. This decline reflects the
          operating loss for 1995. The Partnership had total liabilities of
          $1,170 at December 31, 1995. This is an amount due to an affiliate of
          the general partner for expenses paid on behalf of the Partnership.
          There were no outstanding liabilities as of December 31, 1994.
          Partners' capital decreased from $2,093,779 at December 31, 1994 to
          $2,062,891 at December 31, 1994, again the result from Partnership
          losses of $30,888 for the year.

                                       5
<PAGE>
 
Item 8.

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

<TABLE> 
<CAPTION> 
          I. Condev Land Fund III, Ltd.                          Page
          ---------------------------- 
          <S>                                               <C> 

             INDEPENDENT AUDITORS' REPORT                         7

             FINANCIAL STATEMENTS

               Balance sheets                                     8    
               Statements of operations                           9
               Statements of partners' capital                   10
               Statements of cash flows                          11
               Notes to financial statements                12 - 16


          II.  Condev Osceola Joint Venture
          ---------------------------------

             INDEPENDENT AUDITORS' REPORT                        17

             FINANCIAL STATEMENTS

               Balance sheets                                    18
               Statements of operations                          19
               Statements of partners' capital                   20
               Statements of cash flows                          21
               Notes to financial statements                22 - 26
</TABLE> 

                                       6
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
                         ----------------------------


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


    We have audited the accompanying balance sheets of Condev Land Fund III,
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 III, 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 15, 1998

                                       7
<PAGE>
 
                          CONDEV LAND FUND III, LTD.
                        (A Florida Limited Partnership)

                                BALANCE SHEETS
                          December 31, 1997 and 1996


<TABLE>
<CAPTION>
                                                     1997        1996      
                                                  ----------  ----------   
<S>                                               <C>         <C>          
      ASSETS                                                               
                                                                           
Cash and cash equivalents                         $   90,357  $  101,678   
Accounts receivable                                    2,494           -   
Land, at cost (Note 2)                               405,467     405,467   
Investment in joint venture (Note 3)                 534,372   1,366,879   
Organization costs, less accumulated                                       
  amortization of $2,190 in 1997 and                                       
  $2,190 in 1996                                       2,311       2,311   
                                                  ----------  ----------   
                                                                           
                                                  $1,035,001  $1,876,335   
                                                  ==========  ==========   
                                                                           
    LIABILITIES AND PARTNERS' CAPITAL                                      
                                                                           
Liabilities                                                                
  Accounts payable                                $      487   $        -  
                                                  ----------   ----------  
                                                                           
Partners' capital (deficit):                                               
  General partner                                       (738)        (319) 
  Limited partners                                 1,035,252    1,876,654  
                                                  ----------   ----------  
          Total partners' capital                  1,034,514    1,876,335  
                                                  ----------   ----------  
                                                                           
                                                  $1,035,001   $1,876,335  
                                                  ==========   ==========   
</TABLE>

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

                                       8
<PAGE>
 
                          CONDEV LAND FUND III, 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:
  Interest income                      $  6,053    $ 4,570  $  5,707
  Other income                            1,800      1,775     1,750
  Equity in income of joint venture
    (Note 3)                                  -     50,650         -
                                       --------    -------  --------
                                          7,853     56,995     7,457
                                       --------    -------  --------
Expenses:
  Professional fees                       7,000      7,000     8,170
  Other expenses                          8,452      9,264     6,334
  Taxes and permits                       2,775      2,255     2,400
  Equity in loss of joint venture
    (Note 3)                             31,507          -    21,441
                                       --------    -------  --------
                                         49,734     18,519    38,345
                                       --------    -------  --------
 
          Net income (loss)            $(41,881)   $38,476  $(30,888)
                                       ========    =======  ========
</TABLE>

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

                                       9
<PAGE>
 
                          CONDEV LAND FUND III, 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                $ 123   $2,093,656   $2,093,779
 
  Net income (loss)                         (309)     (30,579)     (30,888)
                                         -------   ----------   ----------
 
Balances (deficit), December 31, 1995       (186)   2,063,077    2,062,891
 
  Distributions to partners (Note 4)           -     (225,032)    (225,032)
 
  Net income (loss)                         (133)      38,609       38,476
                                         -------   ----------   ----------
 
Balances (deficit), December 31, 1996       (319)   1,876,654    1,876,335
 
  Distributions to partners (Note 4)           -     (799,940)    (799,940)
 
  Net income (loss)                         (419)     (41,462)     (41,881)
                                         -------   ----------   ----------
 
Balances (deficit), December 31, 1997      $(738)  $1,035,252   $1,034,514
                                         =======   ==========   ==========
</TABLE>

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

                                       10
<PAGE>
 
                          CONDEV LAND FUND III, 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)                              $ (41,881)  $  38,476    $(30,888)
  Adjustments to reconcile net income                                             
    (loss) to net cash provided by                                                
    (used in) operating activities:                                               
      Equity in (income) loss of                                                  
        joint venture                               31,507     (50,650)     21,441
      Amortization                                       -       2,075           -
      (Increase) decrease in accounts                                             
        receivable                                  (2,494)          -           -
      Increase (decrease) in accounts                                             
        payable                                        487      (1,170)      1,170
                                                 ---------   ---------    --------
          Net cash provided by                                                    
            (used in) operating                                                   
            activities                             (12,381)    (11,269)     (8,277)
                                                 ---------   ---------    --------
                                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:                                             
  Investment in joint venture                       (9,000)     (9,099)    (19,412)
  Distributions from joint venture                 810,000     225,000           -
  Land acquisitions and related costs                    -           -      (1,862)
                                                 ---------   ---------    --------
          Net cash provided by                                                    
            (used in) investing                                                   
            activities                             801,000     215,901     (21,274)
                                                 ---------   ---------    --------
                                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                                             
  Distributions to partners                       (799,940)   (225,032)          -
                                                 ---------   ---------    --------
                                                                                  
          Net increase (decrease) in                                              
            cash and cash equivalents              (11,321)    (20,400)    (29,551)
                                                                                  
CASH AND CASH EQUIVALENTS, BEGINNING               101,678     122,078     151,629
                                                 ---------   ---------    --------
                                                                                  
CASH AND CASH EQUIVALENTS, ENDING                $  90,357   $ 101,678    $122,078
                                                 =========   =========    ======== 
</TABLE>

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

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

                         NOTES TO FINANCIAL STATEMENTS


Note 1.   Summary of Significant Accounting Policies

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

               Condev Land Fund III, Ltd. (the Partnership) was formed on
               February 15, 1989 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 9,784 units of limited
               partnership interest at $250 per unit.

               The terms of the partnership agreement provided that the
               Partnership will continue in existence until December 31, 1996.
               However, the Partnership's operations 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. The
               accompanying statements of operations include $-0-, $2,075, and
               $-0- of organization costs amortization for the years ended 1997,
               1996 and 1995, respectively, from sales of land by the joint
               venture in which the Partnership has an investment. There was no
               organization costs amortization in 1995 as no land sales
               occurred. For tax purposes, the Partnership is amortizing
               organization costs over five years.

          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

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

                         NOTES TO FINANCIAL STATEMENTS



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

          Investments in Joint Ventures
          -----------------------------

               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 respective income tax returns.

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

               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
               include $87,200 invested in Goldman FS Federal Admin.

Note 2.   Land

          At December 31, 1997 and 1996, land consisted of a ten-acre parcel,
          zoned commercial, in Lake County, Florida.

Note 3.   Investment in Joint Venture

          The Partnership owns a 90% interest (which was acquired in 1991) in
          Condev Osceola Joint Venture (a Florida joint venture) (the Joint
          Venture) whose purpose is to acquire and hold one parcel of land,
          comprised of approximately 2.9 acres located in Osceola County,
          Florida, for investment purposes. The remaining 10% interest is owned
          by Condev Osceola, Ltd., an affiliate of the Partnership's general
          partner. The Partnership's investment in the Joint Venture as of
          December 31, and its equity in income (loss) of the Joint Venture for
          the years then ended are as follows:

<TABLE>
<CAPTION>
                                              EQUITY IN
                                                INCOME
                  YEAR         INVESTMENT        (LOSS)
                  ----         ----------     ----------
                  <S>          <C>            <C>
                  1997         $   534,372      $(31,507)
                  1996         $ 1,366,879      $ 50,650
                  1995         $ 1,532,130      $(21,441)
</TABLE>

CONTINUED ON NEXT PAGE

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

                         NOTES TO FINANCIAL STATEMENTS



Note 3.   Investment in Joint Venture - (Continued)

          During the year ended December 31, 1996, the Joint Venture sold a
          parcel of land at a gain of $57,526. Accordingly, the equity in income
          of joint venture includes a gain on sale of land of $51,774 and a loss
          from operations of the Joint Venture of $(1,124).

          A summary of the assets, liabilities, and venturers' capital of Condev
          Osceola Joint Venture as of December 31, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>
                                                               1997        1996        
                                                            ----------  ----------     
            <S>                                             <C>         <C>            
                         Assets                              
                         ------                              
            Cash                                              $  4,032  $   30,028  
            Note receivable                                          -     900,000  
            Investment in land                                 589,715     589,715  
                                                              --------  ----------     
                                                                                    
                                                              $593,747  $1,519,743     
                                                              ========  ==========      
 
               Liabilities and Venturers' Capital
               ---------------------------------
 
            Liabilities                                       $      -  $      988
            Venturers' capital                                 593,747   1,518,755
                                                              --------  ----------
 
                                                              $593,747  $1,519,743
                                                              ========  ==========
</TABLE>

          The Joint Venture had revenue of $25,000, $75,926 and $-0- during the
          years ended December 31, 1997, 1996 and 1995, respectively, and net
          income (loss) of $(35,008), $56,278 and $(23,824), 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.


CONTINUED ON NEXT PAGE

                                       14
<PAGE>
 
                          CONDEV LAND FUND III, 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 $799,940, $225,032
               and $-0- during the years ended December 31, 1997, 1996 and 1995,
               respectively, attributable to net cash proceeds from sales of
               land held through Condev Osceola Joint Venture.


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

                                       15
<PAGE>
 
                          CONDEV LAND FUND III, 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. No
          real estate commissions were paid during the years ended December 31,
          1997, 1996 and 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 and 1995.

          The general partner earned certain fees for administration and
          management services provided, pursuant to the partnership agreement.
          Such fees amounted to $3,744 for the year ended December 31, 1997 and
          $3,720 for the years ended December 31, 1996 and 1995.

                                       16
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
                         ----------------------------


The Venturers
Condev Osceola Joint Venture
Winter Park, Florida


     We have audited the accompanying balance sheets of Condev Osceola Joint
Venture (a Florida Joint Venture) as of December 31, 1997 and 1996, and the
related statements of operations, venturers' 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 Joint Venture's management.  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 Osceola Joint Venture
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 & COMPANY

Orlando, Florida
January 13, 1998

                                       17
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                                BALANCE SHEETS
                          December 31, 1997 and 1996


<TABLE>
<CAPTION>
                                                         1997        1996   
                                                       ---------  ----------
<S>                                                    <C>        <C>       
      ASSETS                                                                

Cash                                                    $  4,032  $   30,028
Note receivable (Note 3)                                       -     900,000
Land, at cost                                            589,715     589,715
                                                        --------  ----------
                                                                            
                                                        $593,747  $1,519,743
                                                        ========  ========== 
 
      LIABILITIES AND VENTURERS' CAPITAL
 
Due to related party (Note 2)                           $      -  $      988
                                                                            
Venturers' capital                                       593,747   1,518,755
                                                        --------  ----------
                                                                            
                                                        $593,747  $1,519,743
                                                        ========  ========== 
</TABLE>

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

                                       18
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                           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                            $      -    $57,526   $      -  
  Interest income                                25,000     18,400          -  
                                               --------    -------  ---------  
                                                 25,000     75,926          -  
                                               --------    -------  ---------  
Expenses:                                                                      
  Real estate taxes                              10,266     18,343     21,569  
  Consulting expense                             47,170                     -  
  Other expenses                                  2,572      1,305      2,255  
                                               --------    -------  ---------  
                                                 60,008     19,648     23,824  
                                               --------    -------  ---------  
                                                                               
          Net income (loss)                    $(35,008)   $56,278   $(23,824) 
                                               ========    =======  =========   
</TABLE>

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

                                       19
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                       STATEMENTS OF VENTURERS' CAPITAL
                 Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                  Condev Land        Condev
                                 Fund III, Ltd.   Osceola, Ltd.      Total
                                 ---------------  --------------  -----------
<S>                              <C>              <C>             <C>
 
Balances at December 31, 1994        $1,534,160        $170,462   $1,704,622
 
  Contributions                          19,412           2,157       21,569
 
  Net income (loss)                     (21,442)         (2,382)     (23,824)
                                     ----------        --------   ----------
 
Balances at December 31, 1995         1,532,130         170,237    1,702,367
 
  Contributions                           9,099           1,011       10,110
 
  Distributions                        (225,000)        (25,000)    (250,000)
 
  Net income (loss)                      50,650           5,628       56,278
                                     ----------        --------   ----------
 
Balances at December 31, 1996         1,366,879         151,876    1,518,755
 
  Contributions                           9,000           1,000       10,000
 
  Distributions                        (810,000)        (90,000)    (900,000)
 
  Net income (loss)                     (31,507)         (3,501)     (35,008)
                                     ----------        --------   ----------
 
Balances at December 31, 1997        $  534,372        $ 59,375   $  593,747
                                     ==========        ========   ==========
</TABLE>

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

                                       20
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                           STATEMENTS OF CASH FLOWS
                 Years Ended December 32, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                            1997        1996        1995
                                         ----------  ----------  ----------
<S>                                      <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                      $ (35,008)  $  56,278    $(23,824)
  Adjustments to reconcile net income
   (loss) to net cash (used in)
   operating activities:
     Gain on land sale                           -     (57,526)          -
     Decrease in due to
       related party                          (988)          -           -
                                         ---------   ---------    --------
          Net cash (used in)
            operating activities           (35,996)     (1,248)    (23,824)
                                         ---------   ---------    --------
 
CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from land sale, net of
    closing costs                                -     269,826           -
  Note receivable proceeds                 900,000           -           -
                                         ---------   ---------    --------
          Net cash provided by
            investing activities           900,000     269,826           -
                                         ---------   ---------    --------
 
CASH FLOWS FROM FINANCING ACTIVITIES
  Capital contributions                     10,000      10,110      21,569
  Distributions to partners               (900,000)   (250,000)          -
                                         ---------   ---------    --------
          Net cash provided by (used
            in) financing activities      (890,000)   (239,890)     21,569
                                         ---------   ---------    --------
 
          Net increase (decrease)
            in cash                        (25,996)     28,688      (2,255)
 
Cash, beginning                             30,028       1,340       3,595
                                         ---------   ---------    --------
 
Cash, ending                             $   4,032   $  30,028    $  1,340
                                         =========   =========    ========
</TABLE>

NONCASH INVESTING ACTIVITY:

     During 1996, the Joint Venture sold a parcel of land, receiving $269,826 in
     cash and a $900,000 note receivable.

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

                                       21
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                         NOTES TO FINANCIAL STATEMENTS



Note 1.   Summary of Significant Accounting Policies

          Organization/Business Interest
          ------------------------------

            On May 31, 1991, Condev Land Fund III, Ltd. (the Fund) and Condev
            Osceola, Ltd. (Osceola) (the Venturers), both of which are Florida
            Limited Partnerships in which Condev Associates is the general
            partner, entered into a joint venture agreement to form Condev
            Osceola Joint Venture (the Joint Venture). The Joint Venture owns
            one parcel of land totaling 2.9 acres in Osceola County, Florida,
            which is being held for investment purposes.

            Unless terminated earlier, as provided under the terms of the joint
            venture agreement, the Joint Venture will continue in existence
            until December 31, 1999.

          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.

          Funding
          -------

            The Fund and Osceola are required to contribute 90% and 10%,
            respectively, to the capital of the Joint Venture from time to time
            as required for the Joint Venture's operations. It is the intent of
            the Venturers that all cash requirements of the Joint Venture shall
            come from the Venturers and, therefore, the Joint Venture shall not
            be required to borrow funds.

          Land
          ----

            Land, held for investment, is stated at the lower of cost or fair
            value. Land is assessed for impairment when the Joint Venture
            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

                                       22
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                         NOTES TO FINANCIAL STATEMENTS



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

          Allocation/Distributions
          ------------------------

            Profits and losses shall be allocated 90% to the Fund and 10% to
            Osceola. Cash flow generated from the Joint Venture shall be
            distributed only at the discretion of Condev Associates. All such
            distributions shall be paid to the Venturers in the same percentages
            as profits and losses.

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

            The Joint Venture functions as a conduit for income tax purposes. As
            such, the Joint Venture files an information tax return on which it
            allocates its revenue and expenses among the Venturers as required
            by the joint venture agreement. The Venturers are required to report
            such items on their respective income tax returns.


Note 2.   Related Party Transactions

          The joint venture agreement permits the Venturers' general partner, or
          an affiliate of the general partner, 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 Joint Venture, 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 and 1995, as no properties were purchased.

          When properties are sold, an affiliate of the Venturers' general
          partner may be paid real estate commissions in the amounts customarily
          charged by others rendering similar services. Such commissions, plus
          commissions paid to nonaffiliates, are not to exceed 10% of the gross
          sales price. No real estate commissions were paid during the years
          ended December 31, 1997 and 1995, as no sales occurred. In connection
          with the sale of land during 1996, a total of 6.4% real estate
          commissions were paid to nonaffiliates.

          The amount due to related party at December 31, 1996 represents
          expenses paid by Condev Corporation on behalf of the Joint Venture and
          was paid in full during the year ended December 31, 1997.

                                       23
<PAGE>
 
                         CONDEV OSCEOLA JOINT VENTURE
                           (A Florida Joint Venture)

                         NOTES TO FINANCIAL STATEMENTS



Note 3.  Note Receivable

         During 1996, the Joint Venture sold land to Orlando Resort Development
         Group, Inc. for $1,250,000. The Joint Venture received cash and a
         mortgage note receivable of $900,000. The note receivable was paid in
         full during the year ended December 31, 1997.

                                       24
<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, 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.

     (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

     (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.

                                       25
<PAGE>
 
Item 13.

(a) and (b)

     Certain Relationships and Related 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 1997, 1996, or 1995 as no property was
     purchased.

     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 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 to the General Partner or any
     affiliates during 1997, 1996 or 1995 with respect to sales.

     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 period ended December 31, 1997, 1996, or
     1995.

     Pursuant to the Partnership agreement, the General Partner earned certain
     fees for administration and management services provided.  Such fees
     amounted to $3,744 for the year ended December 31, 1997 and $3,720 for each
     of the years ended December 31, 1996 and 1995.

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

     (d)  Not applicable.

                                       26
<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:

            I. Condev Land Fund III, Ltd.                                     
            ----------------------------                                   Page
                                                                               
            Independent Auditor's Report                                      7
                                                                              
            Financial Statements                                              
              Balance Sheets - December 31, 1997 and 1996                     8
                                                                              
              Statements of Operations - Years ended                          
               December 31, 1997, 1996 and 1995                               9
                                                                              
              Statements of Partners' Capital -                               
               Years ended December 31, 1997, 1996 and 1995                  10
                                                                              
              Statements of Cash Flows -                                      
               Years ended December 31, 1997, 1996 and 1995                  11
                                                                              
              Notes to Financial Statements                               12-16
                                                                              
            II. Condev Osceola Joint Venture                                  
            --------------------------------                                  
                                                                              
            Independent Auditor's Report                                     17
                                                                              
            Financial Statements                                              
              Balance Sheets - December 31, 1997 and 1996                    18
                                                                              
              Statements of Operations - Years ended                          
               December 31, 1997, 1996 and 1995                              19
                                                                              
              Statements of Partners' Capital -                               
               Years ended December 31, 1997, 1996 and 1995                  20
                                                                              
              Statements of Cash Flows -                                      
               Years ended December 31, 1997, 1996 and 1995                  21
                                                                              
              Notes to Financial Statements                               22-24
                                                                              
        (3) Exhibits included herein:                                        
              13 - Annual Report to Limited Partners                         29 
                                                                    
     (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.
                                                                       
                                       27                              
<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 of 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 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

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<PAGE>
 
                                                       February 6, 1998
Condev Land Fund III, Ltd.
1997 Annual Report

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 loss for the
year ended December 31, 1997 of $41,881.  This represents interest income from
short term investments and the Orlando Resort Development Group mortgage note,
less the normal costs of operating the partnership and managing the portfolio
properties.  There were no sales of property during 1997. However, the balance
of the outstanding mortgage note due from Orlando Resort Development Group in
the amount of $900,000 was repaid during the first quarter of 1997.  The
Partnership holds a controlling 90% interest in the joint venture which owns the
Kyng's Heath property and held the mortgage note.  Accordingly, the Partnership
received $810,000 from the joint venture, and $799,940 was distributed to
limited partners in April.  The balance was added to partnership reserves.  As
of December 31, 1997, the net asset value per unit of limited partner interest
was $105.81.  The following is a brief description of the status of each of the
partnership's two remaining properties:

Kyng's Heath.  This is a 2.94-acre property located in the Kyng's Heath
------------                                                           
subdivision on State Road 535 near U.S. Highway 192 in Kissimmee, Osceola
County, Florida.  This is the remainder of the property after the sale to
Orlando Resort Development Group last year.  The property is owned by Condev
Osceola Joint Venture, in which the Partnership holds a 90% interest. This
property is directly across SR 535 from the proposed World Expo Center, a $1
billion complex consisting of a convention center, 2.5 million square-foot trade
show building, a mall, a 2,000-room hotel and offices.   As reported in The
                                                                        ---
Orlando Sentinel, construction could begin as soon as July with completion in
----------------                                                             
the year 2000.

U.S. Highway 27.  This is a 10-acre commercially zoned parcel located
---------------                                                      
approximately 1 1/4 miles north of U.S. Highway 192 in Lake County, Florida.
This area has experienced heightened investor interest during recent months, and
significant new residential and commercial development is beginning in the
immediate area. The general partner is working with adjoining landowners to
bring water and sewer service to the property.

The properties owned by this partnership are well-positioned for sale.  We are
hopeful that favorable sales results will be achieved in the coming months.

Sincerely yours,

CONDEV ASSOCIATES

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