##### 



SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549


FORM 10-Q


(Mark One)

|  |  |                                                                                                                                  | 
|- |  | -------------------------------------------------------------------------------------------------------------------------------- | 
|x |  | Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for Quarterly Period Ended June 30, 2003
| 
|  |  | or                                                                                                                              
| 
|o |  | Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934                                        

Commission file number 33-30312

INTERSTATE LAND INVESTORS IILIMITED PARTNERSHIP

(Exact Name of Registrant as Specified in Its Charter)


|                                                                              |  |                                                
|----------------------------------------------------------------------------- |  | -----------------------------------------------
|NORTH CAROLINA
(State or other jurisdiction of
incorporation or organization) |  | 56-1681116
(I.R.S. Employer
Identification No.)

Wachovia Securities, NC0170
301 S. College St.  17th Floor, Charlotte, NC 28288-0170
(Address of principal executive offices)(Zip Code)

(704) 715-7616
(Registrants telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 twelve 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 o

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes o   No x

Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date.

The Registrant has 7,650 limited partnership units outstanding at August 11,
2003.

Page 1 of 9 Sequentially Numbered Pages



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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Balance Sheets

As of June 30, 2003, and December 31, 2002


|                                             |                                      |   |             |           |              |   |           |           | 
|-------------------------------------------- | ------------------------------------ | - | ----------- | --------- | ------------ | - | --------- | --------- | 
|                                             |                                      |   | June 30,    |           |              |   |          
|                                             |                                      |   | 2003        |           | December 31,
|                                             |                                      |   | (Unaudited) |           | 2002        
|                                             |                                      |   |             |           |             
|ASSETS:                                      |                                      |   |             |           |              |   |           |          
|Unimproved Land Held for Investment Purposes |                                      | $ | 1,911,500   |           |              | $ | 1,911,500 |          
|Cash and Cash Equivalents                    |                                      |   | 97,651      |           |              |   | 97,478    |          
|                                             |                                      |   |             |           |              |   |           |          
|                                             | Total Assets                         |   | $           | 2,009,151 |              |   | $         | 2,008,978 | 
|                                             |                                      |   |             |           |              |   |           |          
|LIABILITIES AND PARTNERS EQUITY (DEFICIT):  |                                      |   |             |           |              |   |           |          
|Accrued Liabilities                          |                                      | $ | 280         |           |              | $ | 20        |          
|Due to General Partner                       |                                      |   | 25,132      |           |              |   | 356       |          
|                                             |                                      |   |             |           |              |   |           |          
|                                             | Total Liabilities                    |   |             | 25,412    |              |   |           | 376       | 
|                                             |                                      |   |             |           |              |   |           |          
|Class A Limited Partners Interest           |                                      |   | 1,983,886   |           |              |   | 2,008,747 |          
|Subordinated Limited Partners Interest      |                                      |   | 70          |           |              |   | 70        |          
|General Partners Interest                   |                                      |   | (217        | )         |              |   | (215      | )        
|                                             |                                      |   |             |           |              |   |           |          
|                                             | Total Partners Equity               |   |             | 1,983,739 |              |   |           | 2,008,602 | 
|                                             |                                      |   |             |           |              |   |           |          
|                                             | Total Liabilities & Partners Equity |   | $           | 2,009,151 |              |   | $         | 2,008,978 | 
|                                             |                                      |   |             |           |              |   |           |          

See Notes to Condensed Financial Statements

2



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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Statements of Operations

|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |       | 
|--------------------------------------------- | -------------------------------- |  | ----------- | ----- | ----------- |  | ----------- | ----- | ----------- |  | -------- | ------ |  |  | -------- | ----- | 
|                                              |                                  |  | Three       |       | Three       |  | Six         |       | Six        
|                                              |                                  |  | Months      |       | Months      |  | Months      |       | Months     
|                                              |                                  |  | Ended       |       | Ended       |  | Ended       |       | Ended      
|                                              |                                  |  | June 30,    |       | June 30,    |  | June 30,    |       | June 30,   
|                                              |                                  |  | 2003        |       | 2002        |  | 2003        |       | 2002       
|                                              |                                  |  | (Unaudited) |       | (Unaudited) |  | (Unaudited) |       | (Unaudited)
|                                              |                                  |  |             |       |             |  |             |       |            
|INCOME:                                       |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|                                              | Interest Income                  |  | $           | 53    |             |  | $           | 284   |             |  | $        | 173    |  |  | $        | 650   | 
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|                                              |                                  |  | 53          |       |             |  | 284         |       |             |  | 173      |        |  |  | 650      |      
|EXPENSES:                                     |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|                                              | Property Taxes                   |  |             | 0     |             |  |             | 0     |             |  |          | 10     |  |  |          | 10    | 
|                                              | Insurance Expense                |  |             | 250   |             |  |             | 250   |             |  |          | 250    |  |  |          | 250   | 
|                                              | Professional and Legal Fees      |  |             | 3,148 |             |  |             | 2,475 |             |  |          | 11,540 |  |  |          | 9,680 | 
|                                              | General and Administrative Costs |  |             | 7,239 |             |  |             | 4,157 |             |  |          | 13,236 |  |  |          | 7,822 | 
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|                                              |                                  |  | 10,637      |       |             |  | 6,882       |       |             |  | 25,036   |        |  |  | 17,762   |      
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|NET LOSS                                      |                                  |  | ($10,584    | )     |             |  | ($6,598     | )     |             |  | ($24,863 | )      |  |  | ($17,112 | )    
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|NET LOSS ALLOCATION:                          |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|General Partners                              |                                  |  | (1          | )     |             |  | (1          | )     |             |  | (2       | )      |  |  | (2       | )    
|Class A Limited Partners                      |                                  |  | (10,583     | )     |             |  | (6,597      | )     |             |  | (24,861  | )      |  |  | (17,110  | )    
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|                                              |                                  |  | ($10,584    | )     |             |  | ($6,598     | )     |             |  | ($24,863 | )      |  |  | ($17,112 | )    
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING |                                  |  | 7,650       |       |             |  | 7,650       |       |             |  | 7,650    |        |  |  | 7,650    |      
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      
|NET LOSS PER CLASS A UNIT                     |                                  |  | ($1.38      | )     |             |  | ($0.86      | )     |             |  | ($3.25   | )      |  |  | ($2.24   | )    
|                                              |                                  |  |             |       |             |  |             |       |             |  |          |        |  |  |          |      

See Notes to Condensed Financial Statements

3



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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Statements of Partners Equity (Deficit)

For the Six Months Ended June 30, 2003 and 2002


(Unaudited)

|                                                |  |          |       |          |  |         |           |       |  |              |    |  |  |   |           |  
|----------------------------------------------- |  | -------- | ----- | -------- |  | ------- | --------- | ----- |  | ------------ | -- |  |  | - | --------- | -
|                                                |  |          |       |          |  |         |           |       |  | Subordinated |    |  |  |  
|                                                |  | General  |       | Limited  |  | Limited |           |       |  |             
|                                                |  | Partners |       | Partners |  | Partner |           | Total
|                                                |  |          |       |          |  |         |           |      
|Partners Equity (Deficit)
at December 31, 2001 |  |          | ($212 | )        |  | $       | 2,041,315 |       |  | $            | 71 |  |  | $ | 2,041,174 |  
|Net Loss for the Six Months
Ended June 30, 2002 |  |          | (2    | )        |  |         | (17,110   | )     |  |              | 0  |  |  |   | (17,112   | )
|                                                |  |          |       |          |  |         |           |       |  |              |    |  |  |   |           |  
|Partners Equity (Deficit)
at June 30, 2002     |  |          | ($214 | )        |  | $       | 2,024,205 |       |  | $            | 71 |  |  | $ | 2,024,062 |  
|                                                |  |          |       |          |  |         |           |       |  |              |    |  |  |   |           |  
|Partners Equity (Deficit)
at December 31, 2002 |  |          | ($215 | )        |  | $       | 2,008,747 |       |  | $            | 70 |  |  | $ | 2,008,602 |  
|Net Loss for the Six Months
Ended June 30, 2003 |  |          | (2    | )        |  |         | (24,861   | )     |  |              | 0  |  |  |   | (24,863   | )
|                                                |  |          |       |          |  |         |           |       |  |              |    |  |  |   |           |  
|Partners Equity (Deficit)
at June 30, 2003     |  |          | ($217 | )        |  | $       | 1,983,886 |       |  | $            | 70 |  |  | $ | 1,983,739 |  
|                                                |  |          |       |          |  |         |           |       |  |              |    |  |  |   |           |  

See Notes to Condensed Financial Statements

4



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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Statements of Cash Flows

For the Six Months Ended June 30, 2003 and 2002


|                                                                   |                                                  |  |               |         |               |  |          |         |  
|------------------------------------------------------------------ | ------------------------------------------------ |  | ------------- | ------- | ------------- |  | -------- | ------- | -
|                                                                   |                                                  |  | Six Months    |         | Six Months   
|                                                                   |                                                  |  | Ended         |         | Ended        
|                                                                   |                                                  |  | June 30, 2003 |         | June 30, 2002
|                                                                   |                                                  |  | (Unaudited)   |         | (Unaudited)  
|                                                                   |                                                  |  |               |         |              
|CASH FLOW FROM OPERATING
ACTIVITIES:                               |                                                  |  |               |         |               |  |          |        
|Net Loss                                                           |                                                  |  | ($24,863      | )       |               |  | ($17,112 | )      
|Adjustments to reconcile net loss to net
cash used for operations: |                                                  |  |               |         |               |  |          |        
|                                                                   | (Decrease)Increase in Accrued Liabilities        |  |               | 260     |               |  |          | 10      |  
|                                                                   |                                                  |  |               |         |               |  |          |        
|                                                                   | Net Cash Used for Operating Activities           |  |               | (24,603 | )             |  |          | (17,102 | )
|                                                                   |                                                  |  |               |         |               |  |          |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                              |                                                  |  |               |         |               |  |          |        
|                                                                   | Advance from Related Party                       |  |               | 24,776  |               |  |          | 0       |  
|                                                                   |                                                  |  |               |         |               |  |          |        
|                                                                   | Net Cash Provided by Financing Activities        |  |               | 24,776  |               |  |          | 0       |  
|                                                                   | Increase (Decrease) in Cash and Cash Equivalents |  |               | 173     |               |  |          | (17,102 | )
|                                                                   |                                                  |  |               |         |               |  |          |        
|                                                                   | Cash and Cash Equivalents at Beginning
of Period |  |               | 97,478  |               |  |          | 129,674 |  
|                                                                   |                                                  |  |               |         |               |  |          |        
|                                                                   | Cash and Cash Equivalents at End of Period       |  | $             | 97,651  |               |  | $        | 112,572 |  
|                                                                   |                                                  |  |               |         |               |  |          |        

See Notes to Condensed Financial Statements

5



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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2003

1. BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 2003, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003.

2. ORGANIZATION:

Interstate Land Investors II Limited Partnership (Registrant or
Partnership) is a North Carolina limited partnership. The Partnership filed
registration statements in 1989 and 1990 and offered the sale of the limited
partnership interests to persons who were admitted as limited partners. The
initial offering became effective September 29, 1989, and was terminated
November 3, 1989. The post effective amendment was filed in August 1990,
approved in November 1990, and closed November 30, 1990. Capital contributions
of $100 were received from the general partners and $7,650,000 from the limited
partners. The limited partnership units were sold in $1,000 units. On August
11, 2003, there were 775 unit holders of record. The Partnerships business now
consists of holding for investment, disposing and otherwise dealing in
approximately 48 of the original 145 acres of undeveloped land (the Property)
located in York County, South Carolina. On May 10, 2001, the Partnership sold
approximately 97 acres of the property to Greenfield Development Company and
the Partnership now holds approximately 48 of the remaining acres of the
Property for sale.

ITEM 2MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1. Liquidity and Capital Resources

As of June 30, 2003, the Registrant had cash on hand of $97,651. The Registrant
will retain this cash to pay ongoing partnership expenses. Until the Registrant
disposes of the Property, its only sources of additional capital are additional
loans and proceeds from the sale of resources (i.e., timber) on the property,
if any.

On May 11, 2001, the Partnership sold 96.9 acres of the property to Greenfield
Development Company LLC. The gross sale price of the property was $4,338,360. A
portion of the sale proceeds in the amount of $313,543 was used to pay debts to
the General Partner. Closing costs and pro-rations incurred at settlement
totaled $447,609 leaving net cash proceeds to the partnership of $3,577,208. On
June 14, 2001, a .33 acre right-of-way was purchased by South Carolina Dept. of
Transportation for $15,000.

On June 29, 2001, a distribution of $3,467,975 (representing $453 per unit) was
distributed to the limited partners.

6



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2. Results of Operations

Results of Operations for the Three Months Ended June 30, 2003 Compared to the
Three Months Ended June 30, 2002.The Registrants net loss was $10,584 for the
three months ended June 30, 2003 as compared to a net loss of $6,598 for the three months
ended June 30, 2002. The difference between the two periods is due to higher
general and administrative and professional and legal fees paid during the 2003
period as well as the timing of the payments of the bills.

Results of Operations for the Six Months Ended June 30, 2003 Compared to the
Six Months Ended June 30, 2002.The Registrants net loss was $24,863 for the
six months ended June 30, 2003 as compared to a net loss of $17,112 for the six months ended
June 30, 2002. The difference between the two periods is due to higher general
and administrative and professional and legal fees paid during the 2003 period.

Professional and legal fees increased from $9,680 for the six months ended June
30, 2002, to $11,540 for the six months ended June 30, 2003. This
increase is due to higher accounting fees paid for K-1 preparation and filing
during 2003. General and administrative costs increased to $13,236 for the six
months ended June 30, 2003 compared to $7,823 for the same
period in 2002. This
increase is due to the higher cost of outsourced database maintenance fees as
well as the cost of printing partnership-addressed envelopes to mail K-1s to
the limited partners. All other expenses were in line with those incurred
during the same period in 2002.

3. Quantitative and Qualitative Disclosures About Market Risk.

The Partnership does not hold any financial instruments with market risk
exposure.

4. Controls and Procedures

The General Partners Senior Vice
President (the Partnerships principal executive officer
and principal financial officer) has concluded, as of the end of the period
covered by this report, based on his evaluation as required by Rules 13a-15 or
15d-15 of the Securities Exchange Act of 1934, as amended, that the
Partnerships disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Partnership in the reports filed or
submitted by it under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within the time periods specified
in the SECs rules and forms, and include controls and procedures designed to
ensure that information required to be disclosed by the Partnership in such
reports is accumulated and communicated to the Partnerships management,
including the General Partners Senior Vice President, as appropriate to allow
timely decisions regarding required disclosure.

There were no changes in the Partnerships internal control over financial
reporting identified in connection with the evaluation required by paragraph
(d) of Rules 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as
amended, that occurred during the Partnerships last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the
Partnerships internal control over financial reporting.

7



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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submissions of Matters to a vote of Securities Holders

None.

Item 5. Other Information.

The remaining approximate 48 acres of the Property is listed for sale with
Bissell Patrick. Should a sale of the Property occur from this contractual
listing agreement, the past president of ISCR, J. Christopher Boone, may
receive a sales commission through a separate agreement between Mr. Boone and
Bissell Patrick. As the purchase price of the Property is not known, the
Partnership is unable to determine the amount of the sales commission, if any,
that Mr. Boone may receive.

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



| | (a) |  | Exhibits
| | --- |  | --------



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Exhibit 31.1 Certification by Principal Executive and Financial
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
| | Exhibit 32.1 Certification by Principal Executive and Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------

No reports on Form 8-K were filed during the three months ended June 30,
2003.

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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

SIGNATURE

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 thereunto duly authorized.

|      |  |                 |  |                                                  |  |                                                                                                                
|----- |  | --------------- |  | ------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------
|      |  |                 |  | INTERSTATE LAND INVESTORS II
LIMITED PARTNERSHIP
|      |  |                 |  |                                                  |  |                                                                                                                
|      |  |                 |  | By:                                              |  | ISC REALTY CORPORATION                                                                                         
|      |  |                 |  |                                                  |  | As Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer of
the Registrant
|      |  |                 |  |                                                  |  |                                                                                                                
|      |  |                 |  | By:                                              |  | /s/ Jeffrey K. Harpel                                                                                          
|      |  |                 |  |                                                  |  |                                                                                                                
|      |  |                 |  |                                                  |  | Jeffrey K. Harpel                                                                                              
|      |  |                 |  |                                                  |  |                                                                                                                
|Date: |  | August 13, 2003 |  |                                                  |  |                                                                                                                
|      |  |                 |  |                                                  |  |                                                                                                                

9