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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For quarterly period ended September 30, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number 000-18547
 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
  North Carolina
(State or other jurisdiction of
incorporation or organization)
    
    56-1669199
(I.R.S. Employer
Identification No.)
 
 
 
 þ o
 o þ
 o o
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 o o
 APPLICABLE ONLY TO CORPORATE ISSUERS:




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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP   Form 10-Q
 FORWARD LOOKING STATEMENTS
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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1  FINANCIAL STATEMENTSITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4  CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITS AND REPORTS ON FORM 8-KSIGNATURESEX-31.1EX-31.2EX-32.1    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1  FINANCIAL STATEMENTS
 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
 BALANCE SHEETS
(Unaudited)
  September 30,
    
    
    December 31,2005
    
    
    2004ASSETSUnimproved land held for investment purposes
    
    $
    1,700,000
    
    
    
    1,700,000Cash and cash equivalents
    
    
    9,750
    
    
    
    11,327Total assets
    
    $
    1,709,750
    
    
    
    1,711,327LIABILITIES AND PARTNERS CAPITALLiabilitiesAccrued expenses
    
    
    1,752
    
    
    
    8,005Due to general partner
    
    
    131,863
    
    
    
    53,489Total liabilities
    
    
    133,615
    
    
    
    61,494Partners CapitalClass A limited partners interest
    
    
    1,576,334
    
    
    
    1,650,023(authorization, 9,588 units; issued and
outstanding, 7,650 units in 2004 and 2003)Subordinated limited partner interest
    
    
    59
    
    
    
    61General partners capital deficiency
    
    
    (258
    )
    
    
    (251
    )Total partners capital
    
    
    1,576,135
    
    
    
    1,649,833Total liabilities and partners capital
    
    $
    1,709,750
    
    
    
    1,711,327
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
 STATEMENTS OF OPERATIONS
(Unaudited)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004OPERATING REVENUEInterest
    
    $
    20
    
    
    
    82
    
    
    
    84
    
    
    
    337Total operating revenue
    
    
    20
    
    
    
    82
    
    
    
    84
    
    
    
    337OPERATING EXPENSEProfessional fees
    
    
    25,356
    
    
    
    19,038
    
    
    
    62,055
    
    
    
    75,852Property tax
    
    
    30
    
    
    
    28
    
    
    
    90
    
    
    
    84General and administrative
    
    
    8,426
    
    
    
    870
    
    
    
    11,637
    
    
    
    2,990Total operating expense
    
    
    33,812
    
    
    
    19,936
    
    
    
    73,782
    
    
    
    78,926Net loss
    
    $
    (33,792
    )
    
    
    (19,854
    )
    
    
    (73,698
    )
    
    
    (78,589
    )NET LOSS ALLOCATED TOClass A limited partners
    
    $
    (33,788
    )
    
    
    (19,852
    )
    
    
    (73,689
    )
    
    
    (78,579
    )Subordinated limited partner
    
    
    (1
    )
    
    
    (0
    )
    
    
    (2
    )
    
    
    (2
    )General partners
    
    
    (3
    )
    
    
    (2
    )
    
    
    (7
    )
    
    
    (8
    )Net loss
    
    $
    (33,792
    )
    
    
    (19,854
    )
    
    
    (73,698
    )
    
    
    (78,589
    )Weighted average Class A limited
partnership units outstanding
    
    
    7,650
    
    
    
    7,650
    
    
    
    7,650
    
    
    
    7,650Net loss per weighted average Class A
limited partnership unit
    
    $
    (4.42
    )
    
    
    (2.60
    )
    
    
    (9.63
    )
    
    
    (10.27
    )
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
 STATEMENTS OF PARTNERS CAPITAL
(Unaudited)
  Class A Limited Partners
    
    
    SubordinatedLimited
    
    
    GeneralUnits
    
    
    Capital
    
    
    Partner
    
    
    Partners
    
    
    TotalPartners capital (deficiency),
December 31, 2003
    
    
    7,650
    
    
    $
    1,966,038
    
    
    
    69
    
    
    
    (219
    )
    
    
    1,965,888Net loss
    
    
    
    
    
    
    (78,579
    )
    
    
    (2
    )
    
    
    (8
    )
    
    
    (78,589
    )Partners capital (deficiency),
September 30, 2004
    
    
    7,650
    
    
    
    1,887,459
    
    
    
    67
    
    
    
    (227
    )
    
    
    1,887,299Partners capital (deficiency),
December 31, 2004
    
    
    7,650
    
    
    
    1,650,023
    
    
    
    61
    
    
    
    (251
    )
    
    
    1,649,833Net loss
    
    
    
    
    
    
    (73,689
    )
    
    
    (2
    )
    
    
    (7
    )
    
    
    (73,698
    )Partners capital (deficiency),
Septermber 30, 2005
    
    
    7,650
    
    
    $
    1,576,334
    
    
    
    59
    
    
    
    (258
    )
    
    
    1,576,135
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
 STATEMENTS OF CASH FLOWS
(Unaudited)
  Nine Months Ended Septermber 30,2005
    
    
    2004OPERATING ACTIVITIESNet loss
    
    $
    (73,698
    )
    
    
    (78,589
    )Adjustments to reconcile net loss to net cash
provided by operating activities
Increase (decrease) in accrued expenses
    
    
    (6,253
    )
    
    
    16,609Net cash provided by operating activities
    
    
    (79,951
    )
    
    
    (61,980
    )FINANCING ACTIVITIESIncrease in due to general partner  related party
    
    
    78,374
    
    
    
    13,010Net cash provided by financing activities
    
    
    78,374
    
    
    
    13,010Cash and cash equivalents, beginning of period
    
    
    11,327
    
    
    
    60,261Cash and cash equivalents, end of period
    
    $
    9,750
    
    
    
    11,291
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
 NOTE TO FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
    NOTE 2: SALE OF PROPERTY
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ITEM 2
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 LIQUIDITY AND CAPITAL RESOURCES.
   RESULTS OF OPERATIONS.
 Three months ended September 30, 2005
    Nine months ended September 30, 2005
    
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  
 ITEM 4  CONTROLS AND PROCEDURES.
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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES.
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 ITEM 5. OTHER INFORMATION.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
 
 SIGNATURES
  INTERSTATE LAND INVESTORS II
 LIMITED PARTNERSHIP
 By: ISC REALTY CORPORATION
As Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer of the
RegistrantBy: /s/ James Christopher Boone
James Christopher Boone
President
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