<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                   FORM 10-Q

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

                 For the quarterly period ended March 31, 1999
                       Commission File Number 33-28493-A

                          CONDEV LAND FUND III, LTD.
                          --------------------------
            (Exact name of registrant as specified in its charter)

                    FLORIDA                                59-2943405
                    -------                                ----------
       (State or other jurisdiction of                 (I.R.S. Employer
        incorporation of organization)                Identification No.)

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

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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 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 report), and (2) has been subject to such filing
requirements for the past 90 days.  YES  X     NO ______.
                                       ------            
<PAGE>
 
                          CONDEV LAND FUND III, LTD.

                                     INDEX

<TABLE> 
<CAPTION> 
                                                               PAGE
                                                              NUMBER
<S>                                                           <C> 
PART I.   FINANCIAL INFORMATION:

          Statement of Assets, Liabilities and
          Partner's Capital - March 31, 1999
          and December 31, 1998                                  1

          Statement of Income & Expense -
          Three Months Ended March 31, 1999
          and March 31, 1998                                     2
 
          Statement of Cash Flows -
          Three months ended March 31, 1999
          and March 31, 1998                                     3
 
          Notes to Financial Statements                          4 - 5
 
          Management's Discussion and Analysis of
          Financial Condition and Results of Operations          6 - 7
 
PART II.  OTHER INFORMATION:
 
          Item 1.   Legal Proceedings                            7
 
          Item 6.   Exhibits and Reports on Form 8-K             7

Signatures                                                       8

First Quarter 1999 Report to Limited Partners                    9
</TABLE> 
<PAGE>
 
                        PART I.  FINANCIAL INFORMATION



                          CONDEV LAND FUND III, LTD.
            STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
                     MARCH 31, 1999 AND DECEMBER 31, 1998
                                        


                                    ASSETS
                                    ------

<TABLE>
<CAPTION>
                                               March 31, 1999   December 31, 1998
                                               ---------------  -----------------
                                                 (Unaudited)            *        
<S>                                            <C>              <C>               
Cash and Cash Equivalents                          $   57,606        $   67,118
Accounts Receivable                                         -                 -
Investment in Joint Venture (2)                       533,596           533,596
Land, at cost (3)                                     405,625           405,625
Organization Costs                                      2,311             2,311
                                                   ----------        ----------
                                          
Total Assets:                                      $  999,138        $1,008,650
                                                   ==========        ==========
 
                       LIABILITIES AND PARTNERS' CAPITAL
                       ---------------------------------
 
 
Liabilities                                        $        -        $         -  
                                                   ----------        -----------
                                                                                
Partner's Capital:                                                              
            General Partner                       ($    1,091)      ($      996)
            Limited Partners                        1,000,229         1,009,646 
                                                   ----------        ---------- 
             Total Partners' Capital:              $  999,138        $1,008,650 
                                                   ----------        ---------- 
                                                                                
Total Liabilities and Partners'                                                 
 Capital:                                          $  999,138        $1,008,650 
                                                   ==========        ==========  
</TABLE>

* Condensed from audited financial statements.



   The accompanying notes are an integral part of these financial statements

                                       1
<PAGE>
 
                           CONDEV LAND FUND III, LTD.
                        STATEMENT OF INCOME AND EXPENSE
              THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                     March 31, 1999   March 31, 1998
                                     ---------------  ---------------
<S>                                  <C>              <C>
          INCOME
          ------
 
Interest and Other Income                 $     704        $   1,249
 
Equity in Income of Joint Venture                 -                -
                                          ---------        ---------
 
Total Income                              $     704        $   1,249
                                          ---------        ---------
 
 
          OPERATING EXPENSES
          ------------------
 
Professional fees                             7,000            7,100
 
Equity in loss of Joint Venture               1,800            2,250
 
Management fees                                 936              936
 
Other expense                                   250               28
 
Office expense                                  230              533
                                          ---------        ---------
 
     Total Operating Expenses:            $  10,216        $  10,847
                                          ---------        ---------
                             
     Net Profit (Loss)                   ($   9,512)      ($   9,598)
                                          =========        =========
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       2
<PAGE>
 
                          CONDEV LAND FUND III, LTD.
                            STATEMENT OF CASH FLOWS
             THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998

<TABLE>
<CAPTION>
                                                 March 31, 1999   March 31, 1998
                                                 --------------   --------------
<S>                                              <C>              <C> 
Cash Flows from Operating Activities:
     Net Income (Loss)                              ($    9,512)   ($   9,598)
     Adjustments to reconcile net income
     (loss) to net cash provided by (used
     in) operating activities:
          Equity in (income) loss of
            joint venture                                 1,800         2,250   
          Cash provided by changes in:                                          
               Accounts receivable                            -         2,494   
               Accounts payable                     (         -)   (      487)  
                                                     ----------    ----------
Net Cash Provided in Operating Activities:          ($    7,712)   ($   5,341)


Cash Flows from Investing Activities:

     Distributions from joint venture, net           $        -     $       -
     Investments in joint venture                   (     1,800)            -
                                                     ----------    ----------

Net Cash Used in Investing Activities:              ($    1,800)    $       -
                                                     ----------    ----------


Cash Flows from Financing Activities:
     Distributions to Partners                      ($        -)   ($       -)
                                                     ----------     --------- 

Net Cash Provided by Financing Activities:          ($        -)   ($       -)
                                                     ----------     --------- 

Net increase (decrease) in Cash                     ($    9,512)   ($   5,341)
 
Cash and cash equivalents, beginning of year             67,118        90,357
                                                     ----------     ---------
 
Cash and cash equivalents, end of period             $   57,606     $  85,016
                                                     ==========     =========
</TABLE> 

The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
 
                          CONDEV LAND FUND III, LTD.
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)


Note 1         BASIS OF PRESENTATION.
               --------------------- 

               The accompanying financial statements, in the opinion of Condev
               Associates, the general partner of Condev Land Fund III, Ltd.,
               reflect all adjustments (which include only normal recurring
               adjustments) necessary to a fair statement of the financial
               position, the results of operations and the changes in cash
               position for the periods presented.

Note 2         INVESTMENT IN JOINT VENTURE:
               --------------------------- 

               The Partnership owns a 90% interest in Condev Osceola Joint
               Venture.  The joint venture partner, Condev Osceola, Ltd., is a
               private partnership sponsored by the general partner. On May 31,
               1991, Condev Osceola Joint Venture purchased two parcels of land
               aggregating 8.6 acres and related sewer capacity 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.

               On August 28, 1996, the Joint Venture sold 5.08 acres of this
               parcel to Orlando Resort Development Group for $350,000 cash and
               a promissory note in the amount of $900,000.  The note was repaid
               in full in April 1997.

               The Joint Venture continues to own 2.94 acres of land in this
               location. On March 9, 1999 the Partnership contracted for the
               sale of this property to the owner of the adjoining property to
               the east. Closing is scheduled for April 23, 1999.

          A summary of the assets, liabilities and venturers' capital of Condev
          Osceola Joint Venture as of March 31, 1999 are as follows:



                               ASSETS
                               ------

               Cash                         $     1,948
               Due from Affiliate                 1,222
               Investments in land              589,714
                                            -----------

                                            $   592,884
                                            ===========
 

                 LIABILITIES AND VENTURERS' CAPITAL
                 ----------------------------------
 
               Venturers' Capital               594,884
               Current Profit (Loss)       (      2,000)
                                            ----------- 

                                            $   592,884
                                            ===========
 
                                        4
<PAGE>
 
Note 3         INVESTMENT IN LAND:
               -------------------

               At March 31, 1999 and December 31, 1998, land consisted of a ten-
               acre parcel, zoned commercial in Lake County, Florida.  As part
               of the Partnership's commitment to design and construct an entry
               road from US Hwy 27 to service the property, approximately 0.354
               acres of land was used for construction of the spine road. This
               road was dedicated to Lake County on December 29, 1998, reducing
               the property size to 9.646 acres. On March 8, 1999, the
               Partnership entered into a contract for sale of this parcel with
               the neighboring property owner. Closing is currently scheduled
               for June 30, 1999.

Note 4         DISTRIBUTIONS TO PARTNERS:
               --------------------------

               Pursuant to the partnership agreement, cash flow generated each
               year by the Partnership is to be distributed 99% to the limited
               partners and 1% to the general partner. There were no cash flow
               distributions during the first three months of 1999.

               Pursuant to the partnership agreement, proceeds realized from the
               sale of properties, after the establishment of reserves for
               future operating costs, are to be distributed at least annually.
               There were no such distributions to limited partners during the
               first quarter of 1999.

 
Note 4         RELATED PARTY TRANSACTIONS:
               ---------------------------

               The Partnership Agreement provides for the reimbursement to the
               general partner of administrative expenses incurred in the direct
               operation of the partnership. For the three months ended March
               31, 1999, a total of $184 was reimbursed to the general partner
               for direct expenses incurred.

               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 nonaffiliated brokers not to exceed 10% of
               the gross sales price. No real estate commissions were paid to
               the general partner or any affiliate during the three months
               ended March 31, 1999.

               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 three
               months ended March 31, 1999.

                                       5
<PAGE>
 
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               -----------------------------------------------------------
               AND RESULTS OF OPERATIONS
               -------------------------

               During the quarter ended March 31, 1999, the Partnership
               continued to manage the portfolio properties with the objective
               of selling the properties at fair market prices. As discussed
               under Notes 2 and 3 above, all of the Partnership's and Joint
               Venture's properties are currently under contract for sale. While
               the sale of these properties is not a certainty, both contracts
               are with buyers who know and understand the properties, and there
               is a good probability that both of these contracts will close as
               scheduled. If that is the case, there will be a final
               distribution to limited partners and the Partnership will be
               terminated

               Year 2000
               ---------

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

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

               Total revenues for the three months ended March 31, 1999 were
               $704, compared with total revenues of $1,249 for the three months
               ended March 31, 1998. Income is generated from short-term cash
               investments, and income can be expected to fluctuate, depending
               on the level of cash reserves in the Partnership and prevailing
               interest rates. Operating expenses for the three months ended
               March 31, 1999 were $10,216, a very slight decrease from $10,847
               for the three months ended March 31, 1998. In both periods,
               operating expenses represent the normal costs of operating the
               Partnership and managing the Partnership properties.

                                       6
<PAGE>
 
                    Liquidity and Capital Resources at March 31, 1999
                    -------------------------------------------------
 
                    Total assets decreased from $1,008,650 at December 31, 1998
                    to $999,138 at March 31, 1999. This reflects the net results
                    of operations for the period. Assets can be expected to
                    decline in the future as properties are sold and
                    distributions are made to limited partners.

                    Liquidity remained at a satisfactory level. Cash and cash
                    equivalents decreased slightly from $67,118 at 1998 year-end
                    to $57,606 at March 31, 1999.

                    All of the remaining property owned by the Partnership or
                    its Joint Venture is under contract for sale at this time.
                    If the Partnership is successful in closing these
                    transactions as scheduled, the Partnership will finalize all
                    of its financial obligations and will make a final
                    distribution to the partners, whereupon the Partnership will
                    be terminated.



                                    PART II

Item 1.  LEGAL PROCEEDINGS:
         ----------------- 

              As of March 31, 1999, there were no legal proceedings in process,
              nor to the knowledge of the general partner, threatened against
              the Partnership

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

         (A)  Exhibits

              First Quarter 1999 Report to Limited Partners

         (B)  Reports on Form 8-K

              There were no reports of Form 8-K for the period ended March 31,
              1999.

                                       7
<PAGE>
 
                          CONDEV LAND FUND III, LTD.
                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned.


                                   CONDEV LAND FUND III, LTD.
                                   BY: Condev Associates, General Partner






April 19, 1999                     /s/ Robert N. Gardner
----------------------             ---------------------------------
       DATE                        Robert N. Gardner, Partner



April 19, 1999                     /s/ Joseph J. Gardner
----------------------             ----------------------------------
       DATE                        Joseph J. Gardner, Partner

                                       8
<PAGE>
 
                                                                  April 13, 1999

Condev Land Fund III, Ltd.
First Quarter 1999

The financial statements of the Partnership for the first quarter of 1999 are on
the reverse side hereof. There were no sales of property and no distributions to
limited partners during the quarter. As of March 31, 1999, the net asset value
(book value) per unit of limited partner interest was $102.23. As of March 31,
1999, the Partnership owned or had an interest in two remaining properties:

Kyng's Heath.  During the first quarter of 1999, the general partner was
------------                                                            
successful in negotiating an acceptable price for this property with an adjacent
property owner. The terms of the agreement for sale include an inspection period
of 30 days and cash closing on or before April 23, 1999.

US Highway 27.  On March 8, 1999, the Partnership entered into a contract for
-------------                                                                
sale of this parcel, also with an adjacent property owner. Terms of this
contract include an inspection period until May 7, 1999, and closing on or
before June 30, 1999.

While the sale of these properties is not a certainty, both contracts are with
buyers who know and understand the properties, and we feel that there is a good
probability that both of these contracts will close as scheduled. If that is the
case, there will be a final distribution to limited partners and the Partnership
will be terminated.

Please feel free to contact the Investor Relations office if you have any
questions or would like additional information concerning your investment.

Sincerely yours,


CONDEV ASSOCIATES

                                       9