<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 September 30, 1998
                       Commission File Number 33-19736-A

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

             Florida                               59-2862457
             -------                               ----------
      (State or other jurisdiction of            (I.R.S. Employer
      incorporation or 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 II, LTD.

                                     INDEX

                                                           PAGE
                                                          NUMBER
PART I.  FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
<S>                                                        <C>
 
         Statement of Assets, Liabilities and
         Partner's Capital - September 30, 1998
         and December 31, 1997                                1
                                                 
         Statement of Income & Expense -                  
         Three Months Ended September 30, 1998            
         and September 30, 1997                               2
                                                 
         Statement of Income & Expense -                  
         Nine Months Ended September 30, 1998             
         and September 30, 1997                               3
                                                 
         Statement of Cash Flows -                        
         Nine months ended September 30, 1998             
         and September 30, 1997                               4
                                                 
         Notes to Financial Statements                        5 - 6
                                                 
         Management's Discussion and Analysis             
         of Financial Condition and Results of Operations     6 - 7
 
PART II. OTHER INFORMATION:
           
         Item 1.        Legal Proceedings                     8
           
         Item 6         Exhibits and Reports on Form 8-K      8

Signatures                                                    9

Third Quarter 1998 report to Limited Partners                 10
</TABLE>

                                       
<PAGE>
 
                        PART I.  FINANCIAL INFORMATION



                           CONDEV LAND FUND II, LTD.
            STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
                   SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
 
 
                                     ASSETS
                                     ------       
<S>                            <C>                  <C>
 
                               September 30, 1998   December 31, 1997
                               ------------------   -----------------
                                    (Unaudited)               *
 
Cash & Cash Equivalents                $  106,877          $  168,989
Investment in Land (Note 2)             2,560,521           2,515,801
Organization Costs                          7,982               7,982
                                       ----------          ----------
 
Total Assets                           $2,675,380          $2,692,772
                                       ==========          ==========
 
</TABLE>
                         LIABILITIES AND PARTNER'S CAPITAL
                         ---------------------------------
<TABLE>
<CAPTION>
 
<S>                                            <C>                 <C>
Mortgage Note Payable                  $    9,333          $        -
Accounts Payable                                -               5,820
                                       ----------          ----------
 
Total Liabilities                      $    9,333          $    5,820
 
Partners' Capital -
  General Partner                     (     2,858)        (     2,649)
  Limited Partner                       2,668,905           2,689,601
                                       ----------          ----------
 
  Total Partners' Capital               2,666,047           2,686,952
                                       ----------          ----------
 
Total Liabilities and
        Partners' Capital              $2,675,380          $2,692,772
                                       ==========          ==========
 
</TABLE>
* Condensed from audited financial statements.



The accompanying notes are an integral part of these financial statements

                                       1
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        STATEMENT OF INCOME AND EXPENSE
         THREE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997

                                 (UNAUDITED)
<TABLE>
<CAPTION>
 
 
                             September 30, 1998   September 30, 1997
                             -------------------  ------------------
<S>                          <C>                  <C>
INCOME
------
 
Net Gain on Sale of Land         $       -            $   517,218
Interest and Other Income            1,032                  5,053
                                 ---------            -----------
                             
Total Income                     $   1,032            $   522,271
                                 ---------            -----------
                             
                             
OPERATING EXPENSES           
------------------           
                             
Professional Services            $       -            $     7,470
                             
Office Expense                       1,201                  1,530
                             
Management Fees                      3,021                  3,021
                             
Other                                4,109                  3,303
                                 ---------            -----------
                             
Total Operating Expenses         $   8,331            $    15,324
                                 ---------            -----------
                             
Net Income (Loss)               ($   7,299)           $   506,947
                                 =========            ===========
 
</TABLE>
 

The accompanying notes are an integral part of these financial statements

                                       2
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                        STATEMENT OF INCOME AND EXPENSE
         NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997 
                                  (UNAUDITED)

<TABLE>
<CAPTION>
 
 
                                  September 30, 1998   September 30, 1997
                                  -------------------  ------------------
<S>                               <C>                  <C>
INCOME
------
 
Net Gain on Sale of Land             $        -            $517,217 
Interest and Other Income                 6,183              11,437 
                                     ----------            -------- 
                                                              
Total Income                         $    6,183            $528,654 
                                     ----------            -------- 
                                                              
                                                              
OPERATING EXPENSES                                            
------------------                                            
                                                              
Professional Services                $    9,493            $ 16,670 
                                                              
Office Expense                            3,883               4,902 
                                                              
Management Fees                           9,063               9,063 
                                                              
Other                                     4,649               3,950 
                                     ----------            -------- 
                                                              
Total Operating Expenses             $   27,088            $ 34,585 
                                     ----------            -------- 
                                                              
Net Income (Loss)                   ($   20,905)           $494,069 
                                     ==========            ======== 
 
</TABLE>
 

The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                            STATEMENT OF CASH FLOWS
          NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
 
 
                                             Sept. 30, 1998   Sept. 30, 1997
                                             --------------   --------------
<S>                                          <C>              <C>

Cash Flows from Operating Activities:

      Net Income                               ($  20,905)      $  464,069 
      Adjustments to reconcile net income                               
      (loss) to net cash provided by (used                              
      in) operating activities:                                         
           Gain on land sale                   (        -)     (   517,217)
           Cash provided by changes in:                                 
              Accounts Receivable                       -              105 
              Accounts payable                 (    5,820)     (     4,419)
                                                ---------       ---------- 
                                                                        
Net cash from Operating Activities             (   26,725)     (    27,462)
                                                ---------       ---------- 
                                                                        
Cash flows from Investing Activities:                                   
      Land development costs                   (   44,720)     (    32,498)
      Proceeds of Land sale, net                        -        1,008,463 
                                                ---------       ---------- 
                                                                        
Net cash from Investing Activities             (   44,720)     (   975,965)
                                                ---------       ---------- 
                                                                        
Cash flows from Financing Activities:                                   
      Distributions to Partners                     9,333      (   978,110)
                                                ---------       ---------- 
                                                                        
Net cash provided by Financing Activities           9,333      (   978,110)
                                                ---------       ---------- 
                                                                        
Net increase (decrease) in cash                (   62,112)     (    29,607)
                                                                ---------- 
                                                                        
Cash and cash equivalents, beginning of year      168,989          169,876 
                                                ---------       ---------- 
                                                                        
Cash and cash equivalents, end of period        $ 106,877       $  140,269 
                                                =========       ========== 
 
</TABLE>

The accompanying notes are an integral part of these financial statements

                                       4
<PAGE>
 
                           CONDEV LAND FUND II, LTD.
                         NOTES TO FINANCIAL STATEMENTS

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

               The accompanying financial statements, in the opinion of Condev
               Associates, the general partner of Condev Land Fund II, 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 LAND:
               ------------------ 
 
               At September 30, 1998 land consisted of the following:

                    8.659 acre parcel (zoned commercial) in
                       southeast Seminole County, Florida    $  825,734(a)
                    111.64 acre parcel (zoned PUD)
                       in Lake County, Florida                1,733,920(b)
                                                              ---------   
                                                             $2,559,654
                                                             ==========

                    (a)  On May 8, 1998, the Partnership entered into a contract
               for sale of this parcel with a successful area developer who has
               prospective tenants for the site. The contract provided for an
               inspection period of three months, with closing 10 days
               thereafter. The contract was amended to extend the inspection
               period to December 6, 1998 to allow both the buyer and the seller
               time to work out design and engineering issues which affected the
               buyer's ability to use the site. The contract has been further
               amended to extend the closing date to June, 1999, with
               appropriate amendments to the terms and conditions of the
               contract.

                    (b) In January 1998, the Partnership entered into a contract
               for sale of the 20-acre multi-family site in this planned
               development. The buyer intends to erect 358 apartments on the
               site. The contract has passed the inspection period, and the
               project is now in the permitting stage. Closing of this
               transaction is expected in December. The Partnership has also
               signed a contract for sale of the 71-acre single family site. The
               buyer is conducting its inspection of the property at this time.
               Closing of the sale is currently scheduled to take place before
               the end of the year. Both transactions are subject to the
               extension of water and sewer utilities to the site as well as
               certain other off-site improvements for which the buyers are
               obligated to pay their pro rata share. Finally, the Partnership
               has received an offer to purchase the remaining 20-acre parcel
               zoned commercial at this location. The General Partner is
               negotiating a final contract for sale and purchase of the land.
 

                                       5
<PAGE>
 
Note 3         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 nine months of 1998.

               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 three quarters of 1998.


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

               The Partnership Agreement provides for the reimbursement to the
               general partner for direct administrative expenses incurred in
               the operation of the partnership.  For the nine months ended
               September 30, 1998, $3,291 was reimbursed to the general partner
               for direct expenses incurred.
 
               When properties are sold, under certain circumstances 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 any affiliate of the
               general partner during the nine months ended September 30, 1998.

               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 nine months
               ended September 30, 1998.

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

                    During the periods ended September 30, 1998, the Partnership
               continued to manage the portfolio properties with the objective
               of selling the properties at fair market prices.  As of September
               30, 1998, one entire property and two separate parts of another
               property were under contract for sale. Refer to Note 2.
               Investment in Land for details.
               ------------------             

                    The area of Lake County, Florida in which the Partnership's
               111.64-acre parcel is located has experienced heightened activity
               in recent months, with significant new residential and commercial
               development beginning in the immediate area. The key to selling
               this site appears to be the availability of utilities to support
               commercial development. The Partnership completed design of the
               extension of sewer and water utilities to the site, a lift
               station, and a spine road into the development, and has filed for
               the necessary building 
                                       6
<PAGE>
 
               permits. The general partner is working with the area utility
               company and neighboring landowners to insure that every
               property's needs are met and that the costs of these improvements
               are shared equitably. The Partnership's pro rata share of the
               costs of utility extensions and other improvements will be paid
               from a line of credit arranged by the general partner. Borrowings
               under the line of credit will be repaid from future land sales.

               Offer to Purchase Units. In September, LP Investors, LLC, an
               -----------------------                                     
               investment company based in Atlanta, Georgia, exercised their
               rights as a limited partner and requested a list of all
               beneficial owners and the number of units owned by each. As
               required by the Partnership Agreement, this information was
               provided. LP Investors paid a fee of $100 to the Partnership in
               reimbursement of the Partnership's costs associated with
               providing the list. LP Investors subsequently wrote to each
               beneficial owner offering to purchase their units for $62.50 per
               unit, less the $25 transfer fee charged by the Partnership. As of
               September 30, 1998, there have been no transfers as a result of
               this offer. Neither the Partnership, the General Partner, nor any
               of its officers, employees or affiliates is in any way connected
               with this offer.

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

               Total revenues for the nine months ended September 30, 1998 were
               $6,183, compared with total revenues of $528,654 for the nine
               months ended September 30, 1997. The 1997 figure includes a gain
               on the sale of land in the amount of $517,217. 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. There were no
               sales of land during the first nine months of 1998. Operating
               expenses for the nine months ended September 30, 1998 were
               $27,088, a decrease from $34,585 for the nine months ended
               September 30, 1997. The primary  reason for the decrease was a
               $7,177 drop in the cost of professional services from $16,670 for
               the first nine months of 1997 to $9,493 for the same period in
               1998. The Partnership had a net loss of $20,905 for the nine
               months ended September 30, 1998. This compares to a net profit of
               $494,069 for the nine months ended September 30, 1997.

               Liquidity and Capital Resources at September 30, 1998
               -----------------------------------------------------
 
               Total assets increased slightly from $2,692,772 at December 31,
               1997 to $2,675,380 at September 30, 1998.  This reflects the
               costs of improvements to the land on US Highway 27 financed by
               bank debt and the 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.

                                       7
<PAGE>
 
               Liquidity remained at a satisfactory level.  Cash and
               equivalents decreased  from $168,989 at 1997 year-end to $106,877
               at September 30, 1998.

               As discussed above, the Partnership anticipates the need to
               expend Partnership funds to extend sewer and water utilities
               to one of its properties during 1998.  The Partnership has
               arranged a $500,000 secured line of credit with a commercial bank
               to pay for its pro rata share of expenses. Borrowings under the
               line of credit will be repaid from future sales proceeds.


                                     PART II


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

            As of September 30, 1998, 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:

              Third Quarter 1998 Report to Limited Partners

         (B)  Reports on Form 8-K:

              There were no reports of Form 8-K for the period ended September
              30, 1998

                                       8
<PAGE>
 
                           CONDEV LAND FUND II, 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 II, LTD.
                           BY: Condev Associates, General Partner




October 22, 1998               /s/ Robert N. Gardner
----------------------         ----------------------------------
    DATE                       Robert N. Gardner, Partner



October 22, 1998               /s/ Joseph J. Gardner
----------------------         ----------------------------------
    DATE                       Joseph J. Gardner, Partner

                                       9
<PAGE>
 
                                                                October 15, 1998
Condev Land Fund II, Ltd.
Third Quarter 1998

Dear Limited Partner:

The financial statement, on the reverse side hereof, shows a net loss for the
nine months ended September 30, 1998 of $20,905. This represents normal income
less costs of operating the partnership and managing the portfolio properties.
There were no sales of property during the quarter. As of September 30, 1998,
the net asset value per unit of limited partner interest was $89.57. The
following is a brief description of the status of each of the partnership's
remaining properties:

Alafaya Trail/McCulloch Road. On May 8, 1998, the Partnership entered into a
----------------------------                                                
contract for sale of the remainder of this entire parcel with a successful area
developer. The contract holder has requested additional time to close on the
transaction now that a letter of intent has been received from a prospective
tenant for the project. The extension is requested to provide time to obtain the
necessary development permits for the site. The Partnership has extended the
Closing date on the contract to June, 1999, with appropriate amendments to the
terms and conditions of the contract, in the belief that the current contract
holder represents the best opportunity for the Partnership to sell this property
in the shortest possible time.

Glenbrook P.U.D..  In January 1998, the Partnership entered into a contract for
----------------                                                               
sale of the 20-acre multi-family in this planned development.  The buyer intends
to erect 358 apartments on the site. The contract has passed the inspection
period, and the project is in the final permitting stage. Closing of this
transaction is expected before the end of 1998. The Partnership has also signed
a contract for sale of the 71-acre single family site. The buyer is conducting
its inspection of the property at this time, and has until October 30 to make a
commitment to purchase the site. Closing of the sale should take place before
the end of the year. Only the commercially zoned acreage is not under contract,
and we are working with a number of prospects for this parcel. Work continues on
extending sewer and water utilities to this site, with completion expected
before the end of the year.

Many of the Limited Partners have called with questions regarding the recent
tender offer for their units made by LP Investors, LLC. Please be advised that
neither Condev nor any of its officers, employees or affiliates is in any way
connected with this offer. The decision on whether or not to sell is entirely up
to each limited partner. We will be pleased to answer any questions you may have
regarding this offer or any other matters related to the Partnership.

Sincerely yours,
CONDEV ASSOCIATES

                                       10