<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 JUNE 30, 1997
                         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 July 31, 1997

                    Page 1 of 11 Sequentially Numbered Pages


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                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

                            Condensed Balance Sheets
                   As of June 30, 1997, and December 31, 1996

<TABLE>
<CAPTION>
                                                            June 30,
                                                              1997             December 31,
                                                          (Unaudited)              1996
                                                          -----------          -----------
<S>                                                       <C>                  <C>        
     ASSETS:

Land Held for Sale                                        $ 6,534,310          $ 6,534,310
Cash and Cash Equivalents                                       3,309                    0
Other                                                          33,902               32,842
                                                          -----------          -----------

                                                          $ 6,571,521          $ 6,567,152
                                                          ===========          ===========




     LIABILITIES AND PARTNERS' EQUITY (DEFICIT):

Checks Written in Excess of Recorded Bank Balance         $         0          $        95
Accrued Liabilities                                           144,573              129,351
Note Payable                                                  142,155              127,656
                                                          -----------          -----------

                                                              286,728              257,102
                                                          -----------          -----------


Class A Limited Partners' Interest                          6,284,838            6,310,092
Subordinated Limited Partners' Interest                            90                   90
General Partners' Interest                                       (135)                (132)
                                                          -----------          -----------

                                                            6,284,793            6,310,050
                                                          -----------          -----------

                                                          $ 6,571,521          $ 6,567,152
                                                          ===========          ===========
</TABLE>


                  See Notes to Condensed Financial Statements


                                       2
<PAGE>   3


                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

                       Condensed Statements of Operations


<TABLE>
<CAPTION>
                                            Three             Three              Six               Six
                                           Months             Months            Months            Months
                                            Ended             Ended             Ended             Ended
                                           June 30,          June 30,          June 30,          June 30,
                                             1997              1996              1997              1996
                                          (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited)
                                          -----------       -----------       -----------       -----------

<S>                                        <C>               <C>               <C>               <C>     
INCOME:
  Interest Income                          $    578          $    552          $  1,132          $  1,110
                                           --------          --------          --------          --------
                                                578               552             1,132             1,110

EXPENSES:
  Property Taxes                                 43                43                87                87
  Insurance Expense                             146               146               292               292
  Professional and Legal Fees                 7,546             7,438            17,768            16,963
  General and Administrative Costs            1,153               359             1,153             1,237
  Interest Expense                            3,710             3,221             7,089             6,233
                                           --------          --------          --------          --------
                                             12,598            11,207            26,389            24,812
                                           --------          --------          --------          --------

NET LOSS                                   ($12,020)         ($10,655)         ($25,257)         ($23,702)
                                           ========          ========          ========          ========


NET LOSS ALLOCATION:

General Partners                                  1                 1                (3)               (2)
Class A Limited Partners                     12,019            10,654           (25,254)          (23,700)
                                           --------          --------          --------          --------
                                           $ 12,020          $ 10,655          ($25,257)         ($23,702)
                                           ========          ========          ========          ========


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

NET LOSS PER CLASS A UNIT                  $   1.57          $   1.39          ($  3.30)         ($  3.10)
                                           ========          ========          ========          ========
</TABLE>

                  See Notes to Condensed Financial Statements


                                       3
<PAGE>   4


                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

               Condensed Statements of Partners' Equity (Deficit)
                For the Six Months Ended June 30, 1997, and 1996

                                   (Unaudited)


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

<S>                                 <C>            <C>                  <C>         <C>        
Partners' Equity (Deficit)
  at December 31, 1995              ($128)         $ 6,354,010          $91         $ 6,353,973

Net Loss for the Six Months
  Ended June 30, 1996                  (2)             (23,700)           0         ($   23,702)
                                    -----          -----------          ---         -----------

Partners' Equity (Deficit)
  at June 30, 1996                  ($130)         $ 6,330,310          $91         $ 6,330,271
                                    =====          ===========          ===         ===========






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

Net Loss for the Six Months
  Ended June 30, 1997                  (3)             (25,254)           0         ($   25,257)
                                    -----          -----------          ---         -----------
Partners' Equity (Deficit)
  at June 30, 1997                  ($135)         $ 6,284,838          $90         $ 6,284,793
                                    =====          ===========          ===         ===========
</TABLE>


                  See Notes to Condensed Financial Statements


                                       4
<PAGE>   5


                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

                       Condensed Statements of Cash Flows
                For the Six Months Ended June 30, 1997, and 1996


<TABLE>
<CAPTION>
                                                                          Six Months         Six Months
                                                                            Ended              Ended
                                                                        June 30, 1997      June 30, 1996
                                                                         (Unaudited)        (Unaudited)
                                                                         -----------        -----------

<S>                                                                        <C>               <C>     
CASH FLOW FROM OPERATING
 ACTIVITIES:

Net Loss                                                                  ($ 25,257)        ($ 23,702)

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

 Increase in Accrued Liabilities                                             15,222            14,337
 Increase in Other Assets                                                    (1,060)           (1,060)
                                                                           --------          --------

 Net Cash Used for Operating Activities                                     (11,095)          (10,425)
                                                                           --------          --------


CASH FLOWS FROM FINANCING ACTIVITIES:

 Increase in Note Payable                                                    14,499            11,000
                                                                           --------          --------
 Net Cash Provided by Financing Activities                                   14,499            11,000

 Increase (Decrease) in Cash and Cash Equivalents                             3,404               575

Cash and Cash Equivalents at Beginning
 of Period                                                                      (95)              591
                                                                           --------          --------

Cash and Cash Equivalents at End of Period                                 $  3,309          $  1,166
                                                                           ========          ========

</TABLE>

                  See Notes to Condensed Financial Statements


                                       5
<PAGE>   6


                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 30, 1997


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, 1997, are not
necessarily indicative of the results that may be expected for the year to end
December 31, 1997.


2.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 July 31, 1997, there were 772
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 July 31, 1997,
the Partnership held all 145 acres of the Property.

Until January 1, 1993, the Managing General Partner was Performance Investments,
Inc. (PII), which is 100% owned by Mr. William Garith Allen and a family member.
Mr. Allen and ISC Realty Corporation (ISCR) are also General Partners in the
Partnership and effective January 1, 1993, assumed the role of co-managing
partners. Mr. Allen also holds all of the Subordinated Limited Partner interest,
which may be assigned to one of his affiliates at any time.

The General Partners are solely responsible for the day-to-day management and
operation of the property. ISCR is responsible for certain administrative
functions of the Partnership and beginning in November, 1989, is entitled to an
annual administrative fee equal to .25% of the cost of the property acquired.
Payment of such administrative fee is deferred until the sale of the property
and the return of the Class A Limited Partners' invested capital plus their
preferred return, as defined.


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<PAGE>   7

3.   RELATED PARTY TRANSACTIONS

At June 30, 1997, the Registrant had an account receivable from Performance
Investments, Inc. ("PII") which is 100% owned Mr. William Garith Allen and a
family member, of $17,427 plus accrued interest receivable of $16,475 related to
the reimbursement of certain costs required in connection with organizing the
Partnership and the property. In connection with the consent order entered into
in November 1991, the amount will be offset against any amounts due PII or Mr.
Allen in connection with the sale of the property.

The Partnership incurred expense of $8,105 for the six months ended June 30,
1997, and 1996, respectively, for service rendered by ISCR in connection with
certain administrative functions of the Partnership. Since payments of these
fees is deferred, they are included in accrued liabilities in the accompanying
balance sheets.




                                       7
<PAGE>   8


                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

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

1.   LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1997, the Registrant had $3,309 on hand in the form of cash and
cash equivalents. These funds will be maintained as working capital reserves to
fund the costs of ad valorem taxes, insurance, administrative expenses and other
costs and expenses associated with owning the Property. The Registrant
anticipates that it will incur operating expenses during 1997 in excess of the
cash and cash equivalents on hand as of June 30, 1997. On May 23, 1995, the
General Partner, ISCR, paid off an existing line of credit with First Citizens
Bank and entered into an agreement to advance up to $150,000 to the Partnership
as needed. The advances accrue interest at Prime plus 2% and will only be repaid
upon the sale of the property in accordance with Section 8.2 of the Agreement of
Limited Partnership.

Until the Registrant disposes of the Property, its only sources of additional
capital are loans and advances.

2.   RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1997, AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

For the six months ended June 30, 1997, the Partnership reported a net loss of
$25,257 as compared to a net loss of $23,702 for the six months ended June 30,
1996.

The Registrant incurred total expenses of $26,389 for the six month period,
compared to $24,812 for the same period in 1996. Interest expense increased $856
for the six months ended June 30, 1997, compared to the same period in 1996 due
to a higher level of borrowings outstanding. Professional and legal fees
increased $805 due primarily to higher charges for investor processing services.

THREE MONTHS ENDED JUNE 30, 1997, AS COMPARED TO THREE MONTHS ENDED
JUNE 30, 1996

The Partnership reported a net loss of $12,020 for the three months ended June
30, 1997, as compared to a net loss of $10,655 for the same period in 1996.
Total operating expenses increased from $11,207 to $12,598 for the three months
ended June 30, 1997.

Interest expense increased $489 and general and administrative costs increased
$794 for the three months ended June 30, 1997, compared to the same period in
1996. Interest expense increased as a result of higher borrowings. General and
administrative costs increased due to the timing of payments for fees associated
with SEC-required filings.


                                       8
<PAGE>   9


                INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

                           PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         In May, 1996, the Partnership filed a Complaint in the General Court of
Justice, Superior Court Division against William Garith Allen, a General
Partner, seeking in the alternative, damages for Mr. Allen's failure to purchase
the Property at the Put Price or an order, in accordance with the provisions of
the Partnership Agreement, that Mr. Allen has forfeited his right to a
distribution as the subordinated Limited Partner, that Mr. Allen is required to
withdraw as a General Partner and transfer his general partnership interest to
ISCR, and that he is required to cause Performance Investments Inc. to withdraw
as a general partner and transfer its general partnership interest to ISCR. In
the alternative, the Partnership is seeking damages equal to the difference
between the current value of the Property and the Put Price. The lawsuit is in
the preliminary discovery stage. Mr. Allen has not asserted any claims against
the Partnership and the Partnership believes that its claims against Mr. Allen
have merit. Mr. Allen has asserted that he is insolvent and will be unable to
satisfy any award that the Partnership may recover. The Partnership is
investigating that assertion and will continue to evaluate the claim and the
likelihood of any recovery based upon the information received from Mr.
Allen.

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.

         None.


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<PAGE>   10

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
                  six months ended June 30, 1997.


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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/ J. Christopher Boone
                                        -------------------------------------
                                        J. Christopher Boone
                                        President

Date: August 13, 1997



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