SECURITIES AND EXCHANGE COMMISSION

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 March 31, 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

ISC REALTY CORPORATION
1329 EAST MOREHEAD STREET, SUITE 201
CHARLOTTE, NC 28204
(Address of principal executive offices)
(Zip Code)

(704) 383-7918
(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 12 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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)
Form 10-Q

FORWARD LOOKING STATEMENTS

     Statements in this Quarterly Report on Form 10-Q include “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”). Forward looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industry and economies in which we operate and other information that is not historical information. You can identify a forward looking statement by our use of the words “anticipate”, “estimate”, “expect”, “intend”, “plan”, “may”, “will”, “continue”, “believe”, “objective”, “projection”, “forecast”, “goal”, and similar expressions. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward looking statements.

2

PART I. FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)

BALANCE SHEETS
(Unaudited)

March 31, 2005 and December 31, 2004

See accompanying notes to financial statements.

3

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)

STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended March 31, 2005 and 2004

See accompanying notes to financial statements.

4

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)

STATEMENTS OF PARTNERS’ CAPITAL
(Unaudited)

Three Months Ended March 31, 2005 and 2004

See accompanying notes to financial statements.

5

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)

STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended March 31, 2005 and 2004

See accompanying notes to financial statements.

6

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)

NOTE TO FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2005 and 2004

     Interstate Land Investors II Limited Partnership (“Registrant” or “Partnership”) is a North Carolina limited partnership. The Partnership’s business consists of holding for investment, disposing and otherwise dealing in approximately 48 acres of undeveloped land (the “Property”) located in York County, South Carolina.

     The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, the financial statements do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements of the Registrant, include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such financial statements for all periods presented. The financial position and results of operations as of and for the three months ended March 31, 2005, are not necessarily indicative of the results of operations that may be expected in the future. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions during the reporting period that affect the amounts reported in the financial statements and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

     Please refer to the Registrant’s 2004 Annual Report on Form 10-K for additional information related to the Registrant’s organization and to the Registrant’s audited financial statements for the two years ended December 31, 2004, including the related notes to financial statements.

7

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES.

     As of March 31, 2005, the Registrant had $11,355 in cash and cash equivalents. The Registrant will retain this cash to pay ongoing partnership expenses. Until the Registrant disposes of the remaining approximately 48 acres of Property, its only sources of additional capital are from general partner advances or other borrowings. A line of credit of $200,000 has been established by the general partner for the purpose of making advances to the Registrant to cover future operating expenses of the Registrant. The general partner advanced $7,990 to the Registrant from this line of credit during the quarter.

     As of March 31, 2005, the amount due to general partner was $63,121 compared to $53,489 on December 31, 2004. This increase from the end of 2004 was driven by expenses incurred by the Registrant during the first three months of 2005.

RESULTS OF OPERATIONS.

Three months ended March 31, 2005

     The Registrant’s net loss was $26,572 for the first quarter of 2005 as compared to a net loss of $42,936 for the same period in 2004. The decreased loss for the current quarter was primarily due to lower professional fees.

     Interest income of $38 for the first quarter 2005 decreased from $128 for the same quarter last year due to lower cash on hand in 2005.

     Professional fees decreased to $25,239 in the first quarter of 2005 compared to $42,716 for the first quarter of 2004. This decrease primarily reflects lower database management.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM 4 — CONTROLS AND PROCEDURES.

     As of March 31, 2005, the end of the period covered by this Quarterly Report on Form 10-Q, the Registrant’s general partner (the Partnership’s principal executive officer and principal financial officer), acting through its President, evaluated the effectiveness of the Registrant’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the President concluded that as of March 31, 2005, the end of the period covered by this Quarterly Report on Form 10-Q, the Registrant maintained effective disclosure controls and procedures. In addition, no change in the Registrant’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter to which this Quarterly Report on Form 10-Q relates that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

8

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     None.

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES.

     None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

ITEM 5. OTHER INFORMATION.

     On February 10, 2005, the Partnership entered into a contract to sell all remaining assets, approximately 48 acres of unimproved land. The total proposed sales price is $2,080,000, including earnest money of $20,000 which the purchaser deposited with a title agency on the contract date. Under the terms of the contract, the purchaser has up to 90 days from the contract date to conduct its due diligence, at which time it is required to deposit an additional $50,000 of earnest money to proceed with the purchase.

     The transaction is currently subject to a due diligence period of 90 days, during which the purchaser has the right to terminate the agreement. Accordingly, there are no assurances this transaction will close.

     Effective August 13, 2004, ISC Realty Corporation (“ISCR”), which is the general partner of Interstate Land Investors II Limited Partnership, was sold to Vineyard Capital Advisors, LLC, which is a wholly-owned limited-liability company of J. Christopher Boone, who was a former President of ISCR.

9

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

     (a) Exhibits

     Exhibit 31.1 Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     Exhibit 31.2 Certification by Principal 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

     None.

10

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)

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 thereunto duly authorized.

11