<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-Q
(Mark One)
[X]               Quarterly Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                                       or
[ ]           Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                    for Quarterly Period Ended MARCH 31, 1998
                         Commission file number 33-30312

                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

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

                                INTERSTATE TOWER
                                 P. O. BOX 1012
                            CHARLOTTE, NC 28201-1012
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (704) 379-9164
              (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 has (1) 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 
                                       ---      ---

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

7,650 limited partnership units outstanding at April 30, 1998

                     Page 1 of 8 Sequentially Numbered Pages



<PAGE>   2

                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
                            CONDENSED BALANCE SHEETS
                   AS OF MARCH 31, 1998, AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                        March 31,
                                                           1998          December 31,
                                                       (Unaudited)           1997
                                                       -----------       ------------
<S>                                                    <C>               <C>        

     ASSETS:

Land Held for Sale                                     $ 6,534,310       $ 6,534,310
Cash and Cash Equivalents                                        0                 0
Other                                                       34,962            34,962
                                                       -----------       -----------

                                                       $ 6,569,272       $ 6,569,272
                                                       ===========       ===========




     LIABILITIES AND PARTNERS' EQUITY (DEFICIT):

Checks Written in Excess of Recorded Bank Balance      $     3,133       $         0
Accrued Liabilities                                        162,742           158,975
Note Payable                                               149,655           142,331
                                                       -----------       -----------

                                                           315,530           301,306
                                                       -----------       -----------


Class A Limited Partners' Interest                       6,253,931         6,268,013
Subordinated Limited Partners' Interest                         89                89
General Partners' Interest                                    (278)             (136)
                                                       -----------       -----------

                                                         6,253,742         6,267,966
                                                       -----------       -----------

                                                       $ 6,569,272       $ 6,569,272
                                                       ===========       ===========
</TABLE>

                  See Notes to Condensed Financial Statements



                                       2
<PAGE>   3

                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
                       CONDENSED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                          Three          Three
                                         Months          Months
                                          Ended          Ended
                                        March 31,      March 31,
                                          1998            1997
                                       (Unaudited)    (Unaudited)
                                       -----------    -----------
<S>                                     <C>            <C>     

INCOME:
  Interest Income                       $     25       $    554
                                        --------       --------
                                              25            554

EXPENSES:
  Professional and Legal Fees              9,412          8,757
  Property Tax Expense                        44             44
  Insurance Expense                            0            146
  General and Administrative Costs         1,071          1,464
  Interest Expense                         3,722          3,379
                                        --------       --------
                                        $ 14,249       $ 13,790
                                        --------       --------

NET LOSS                                 (14,224)       (13,236)
                                        ========       ========


NET LOSS ALLOCATION:

General Partners                            (142)          (142)
Class A Limited Partners                 (14,082)       (13,235)
                                        --------       --------
                                        ($14,224)      ($13,377)
                                        ========       ========


CLASS A LIMITED PARTNERSHIP
 UNITS OUTSTANDING                         7,650          7,650
                                        --------       --------

NET LOSS PER CLASS A UNIT               ($  1.84)      ($  1.73)
                                        ========       ========
</TABLE>

                  See Notes to Condensed Financial Statements


                                       3
<PAGE>   4

                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
               CONDENSED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                 Subordinated
                                   General        Limited          Limited
                                  Partners        Partners         Partner          Total
                                  ---------      -----------     ------------    -----------
<S>                               <C>            <C>               <C>           <C>        

Partners' Equity (Deficit)
  at December 31, 1996             ($  132)      $ 6,310,092       $   90        $ 6,310,050

Net Loss for the Three Months
  Ended March 31, 1997                  (1)          (14,223)           0            (14,224)
                                   -------       -----------       ------        -----------

Partners' Equity (Deficit)
  at March 31, 1997                ($  133)      $ 6,295,869       $   90        $ 6,295,826
                                   =======       ===========       ======        ===========






Partners' Equity (Deficit)
  at December 31, 1997             ($  136)      $ 6,268,013       $   89      $ 6,267,966

Net Loss for the Three Months
  Ended March 31, 1998                (142)          (14,082)           0          (14,224)
                                   -------       -----------       ------      -----------

Partners' Equity (Deficit)
  at March 31, 1998                ($  278)      $ 6,253,931       $   89      $ 6,253,742
                                   =======       ===========       ======      ===========
</TABLE>

                  See Notes to Condensed Financial Statements



                                       4
<PAGE>   5

                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
                       CONDENSED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                               Three Months     Three Months
                                                  Ended            Ended
                                              March 31, 1998   March 31, 1997
                                               (Unaudited)      (Unaudited)
                                             ---------------   --------------
<S>                                             <C>            <C>      

CASH FLOW FROM OPERATING
 ACTIVITIES:

Net Loss                                        ($14,224)      ($13,236)

Adjustments to reconcile net loss to net
cash used for operations:

 Increase in Accrued Liabilities                   3,767          7,621
 Increase in Other Assets                              0           (530)
                                                --------       --------
                                                   3,767          7,091

 Net Cash Used for Operating Activities          (10,457)        (6,145)
                                                --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:

 Increase in Note Payable                          7,324          8,499
                                                --------       --------
 Net Cash Provided by Financing Activities         7,324          8,499

 Increase in Cash and Cash Equivalents            (3,133)         2,354

Cash and Cash Equivalents at Beginning
 of Period                                             0              0
                                                --------       --------

Cash and Cash Equivalents at End of Period      ($ 3,133)      $  2,354
                                                ========       ========
</TABLE>

                  See Notes to Condensed Financial Statements



                                       5
<PAGE>   6

                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 1998


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 three month period ended March 31, 1998, are not
necessarily indicative of the results that may be expected for the year to end
December 31, 1998.


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 April 30, 1998, there were 774
unit holders of record. The Partnership's business now consists of holding for
investment, disposing and otherwise dealing in 145 acres of undeveloped land
("the Property") located in York County, South Carolina. As of April 30, 1998,
the Partnership held all 145 acres of the Property.



                  ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1.       LIQUIDITY AND CAPITAL RESOURCES


As of March 31, 1998, the Registrant had $0 on hand in the form of cash and cash
equivalents. The Registrant has executed a note payable to the General Partner
in the amount of $150,000 which will provide any additional funds needed for
working capital. The note will extend through the term of the partnership and
accrue interest at prime plus two percent.

Until the Registrant disposes of the Property, its only sources of additional
capital are additional loans and proceeds from the sale of resources on the
property.


                                       6
<PAGE>   7

2.       RESULTS OF OPERATIONS

The Registrant's net loss increased from $13,236 for the three months ended
March 31, 1997, to $14,224 for the three months ended March 31, 1998. The change
is primarily due to the following:

Professional and legal fees increased $655 due to a market analysis performed
for the area around the property. This increase was partially offset by savings
in the tax and audit services. Interest expense increased $343 due to the
increased outstanding balance on the note payable. All other costs were roughly
in line with the 1997 first quarter.


                           PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         Under Paragraph 9.1(f) of the limited partnership agreement, Gary
Allen was required, upon exercise of the Put Option, to use his best effort to
sell the Property. If the Property had not been sold by the specified date,
then Allen was obligated to either purchase the Property or forfeit his right
to receive distributions as the subordinated limited partner and withdraw as a
general partner. The Property was not sold and Allen failed to purchase the
Property. On September 22, 1997, Allen forfeited his rights and withdrew from
the Partnership in accordance with the stipulations of the partnership
agreement.

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. There were no matters submitted for vote during the quarter
         covered by this report.


ITEM 5. OTHER INFORMATION.

         None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

         (a)   Exhibits

               EX-27    FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)

         (b)   Reports on Form 8-K

               No reports on Form 8-K were required to be filed during the
               three months ended March 31, 1998.


                                       7
<PAGE>   8


                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
                                   (REGISTRANT)



                                   BY:  /s/ J. CHRISTOPHER BOONE
                                        ---------------------------------------
                                        J. CHRISTOPHER BOONE
                                        ISC REALTY CORPORATION,
                                        GENERAL PARTNER AND PRINCIPAL EXECUTIVE
                                        OFFICER, PRINCIPAL FINANCIAL OFFICER OF 
                                        THE REGISTRANT


DATE:     MAY 11, 1998
      --------------------

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