SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

    X_                  QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934.

                For the quarterly period ending  September 30, 1998

                                        OR

   ___                  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 1-4719

                             THE DELTONA CORPORATION
             (Exact name of registrant as specified in its charter)


            DELAWARE                                    59-0997584
--------------------------------------------------------------------------------
(State of other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                     Identification Number)

 8014 SW 135 STREET ROAD, OCALA, FLORIDA                   34473
------------------------------------------------------------------------------
(Address of principal executive office)                  (Zip Code)

Registrant's telephone number, including area code      (352)307-8100
                                                        -------------

            Indicate  by check mark  whether  the  registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of 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 ___

            Indicate the number of shares outstanding of the issuer's classes of
common stock, as of the latest  practicable  date:  13,544,277  shares of common
stock, $1 par value, excluding treasury stock, as of September 30, 1998.



<PAGE>



PART I FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS


                    THE DELTONA CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                                 ($000 Omitted)

<TABLE>
<CAPTION>
                                                   September 30,    December 31,
                                                       1998              1997
                                                   -------------    ------------
<S>                                                  <C>              <C> 
Cash and temporary cash investments,
 including escrow deposits and restricted
 cash of $591 in 1998 and $1293 in 1997......        $      899       $   1,397
                                                     ----------       ---------
Contracts receivable for land sales - net....             1,956           2,698
                                                     ----------       ---------
Mortgages and other receivables - net........                64           1,291
                                                     ----------       ---------

Inventories (b):
 Land and land improvements..................             7,354           7,449
 Other.......................................                99              99
                                                     ----------       ---------
            Total inventories................             7,453           7,548
                                                     ----------       ---------

Property, plant, and equipment at cost - net.               409             374
                                                     ----------       ---------
Prepaid expenses and other...................               588             252
                                                     ----------       ---------
            Total............................        $   11,369       $  13,560
                                                     ==========       =========



                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)


Mortgages and similar debt(c):
 Mortgage notes payable.......................       $    6,670       $   6,693
 Other loans .................................            1,430           2,294
                                                     ----------       ---------
   Total mortgages and similar debt...........            8,100           8,987

Accounts payable, accrued expenses,
 customers' deposits..........................            8,466           6,676
Deferred revenue..............................            2,666           3,511
                                                     ----------       ---------
            Total liabilities.................           19,232          19,174
                                                     ----------       ---------

Commitments and contingencies (d):
 Stockholders' equity (deficiency):
  Common stock, $1 par value - authorized
  15,000,000 shares; outstanding: 1998 and
  1997 - 13,544,277 shares and 6,734,939 shares
  (excluding 12,228 shares held in treasury
  in 1998 and 1997)............................          13,544          13,544
 Capital surplus...............................          51,441          51,495
 Accumulated deficit...........................         (72,848)        (70,653)
                                                     ----------       --------- 
            Total stockholders' (deficiency)...          (7,863)         (5,614)
                                                     ----------       --------- 
                        Total..................      $   11,369       $  13,560
                                                     ==========       =========
</TABLE>


                                        2

<PAGE>



                    THE DELTONA CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
                            FOR THE PERIODS INDICATED
                     ($000 Omitted Except Per Share Amounts)
<TABLE>
<CAPTION>


                                Nine Months Ended        Three Months Ended
                             September    September   September     September 
                             30, 1998     30, 1997    30, 1998      30, 1997
                             --------     --------    --------      --------
<S>                          <C>          <C>         <C>           <C> 
Revenues (a):
 Net land sales............. $  2,238     $  2,947    $    718      $    856
 House and apartment sales..      949          787         289           225
 Recognized improvement
  revenue/ prior period
  sales.....................      845          908         161           147
 Interest income............      433        1,009         119           330
 Other revenues.............      197          343          51            73
                             --------     --------    --------      --------
     Total..................    4,663        5,994       1,338         1,631
                             --------     --------    --------      --------

Costs and expenses (a):
 Cost of sales and
  improvements..............    1,776        1,770         565           505
 Selling, general and
  administrative and other
  expenses..................    4,461        4,068       1,843         1,285
 Interest expense (c)(e)....      620        1,386         199           468
                             --------     --------    --------      --------
     Total..................    6,857        7,224       2,607         2,258
                             --------     --------    --------      --------

Loss from operations .......   (2,194)      (1,230)     (1,269)         (627)
                             --------     --------    --------      -------- 
Net Income (Loss)........... $ (2,194)    $ (1,230)   $ (1.269)     $   (627)
                             ========     ========    ========      ======== 
Earning (Loss) per share:
 From operations............ $   (.16)    $   (.18)   $   (.09)     $   (.09)
                             --------     --------    --------      -------- 
Net Income (Loss)........... $   (.16)    $   (.18)   $   (.09)     $   (.09)
                             ========     ========    ========      ======== 
Number of common and common
 equivalent shares.......... 13,544,277   6,734,928   13,544,277    6,734,939
                             ========     ========    ========      ========

<FN>



No dividends have been paid on Common Stock.
Results of operations  for the first six months may not be indicative of results
which  may be  expected  for the full  year.  See Notes to  Unaudited  Condensed
Consolidated Financial Statements.
See Management's Analysis of Quarterly Statements of Operations included herein.
Certain amounts have been reclassified for comparative purposes.
</FN>
</TABLE>


                                        3

<PAGE>



                    THE DELTONA CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                    SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
                                 ($000 Omitted)

<TABLE>
<CAPTION>

                                                        Nine Months Ended
                                                        -----------------
                                                   September 30,   September 30,
                                                       1998             1997
                                                       ----             ----
<S>                                                <C>             <C> 

Cash flows from operating activities.............. $     (430)     $    (227)
                                                   ----------      --------- 

Cash flows from investing activities:
  Proceeds from sale of property, plant
  and equipment...................................          0              3
 Payment for acquisition and construction
  of property plant and equipment.................        (68)            (2)
                                                   ----------      --------- 
Net cash provided by (used in) investing
 activities.......................................        (68)             1
                                                   ----------      ---------

Cash flows from financing activities:
  New borrowings..................................          0            138
  Repayment of borrowings.........................          0              0
                                                   ----------      ---------

Net cash provided by (used in) financing
 activities.......................................          0            138
                                                   ----------      ---------
Net increase (decrease) in cash and
 temporary cash investments (including
 escrow deposits and restricted cash).............       (498)           (88)

Cash and temporary cash investments at
 December 31, 1997 and December 31, 1996..........      1,397            907
                                                   ----------      ---------

Cash and temporary cash investments at
 September 30, 1998 and September 30, 1997........ $      899      $     819
                                                   ==========      =========


<FN>
See Notes to Unaudited Condensed Consolidated Financial Statements.
Certain amounts have been reclassified for comparative purposes.
</FN>
</TABLE>


                                        4

<PAGE>


                    THE DELTONA CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                            FOR THE NINE MONTHS ENDED
                    SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
                                 ($000 Omitted)

<TABLE>
<CAPTION>

                                                       Nine Months Ended
                                           September 30,           September 30,
                                               1998                    1997
                                           -------------           -------------
<S>                                        <C>                     <C>

Reconciliation of net income (loss)
 to net cash provided by (used in)
 operating activities:

  Net loss...............................  $  (2,194)              $   (429)
                                           ---------               -------- 

Adjustments to reconcile net loss
 to net cash provided by (used in)
 operating activities:

  Depreciation and amortization..........         33                     52
  Provision for estimated uncollectible
   sales-net.............................        797                  1,068
  Contract valuation discount, net of
   amortization..........................        132                    178
  Net Gain on sale of property, plant &
    equipment............................          0                     (3)
  Net change in assets and liabilities...        802                   (292)
                                           ---------               -------- 
            Total adjustments............  $   1,764               $  1,003
                                           ---------               --------

  Net cash provided by (used in) operating
    activities...........................  $    (430)              $   (227)
                                           =========               ======== 

  Supplemental disclosure of non cash
    investing and financing activities:

  Reduction of debt as a result of the 
    conveyance of contracts receivable...  $     887               $      0
                                           =========               ========
</TABLE>


                                        5

<PAGE>



                    THE DELTONA CORPORATION AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998

(a)         SIGNIFICANT ACCOUNTING POLICIES

            The  condensed  unaudited  financial  statements of the Company have
            been  prepared   pursuant  to  the  rules  and  regulations  of  the
            Securities  and  Exchange  Commission  (the  "Commission").  Certain
            information and footnote  disclosures normally included in financial
            statements prepared in accordance with generally accepted accounting
            principles  have been  condensed or omitted  pursuant to  Commission
            rules and regulations.  The information  furnished reflects,  in the
            opinion of the Company,  all adjustments  (consisting only of normal
            recurring adjustments) necessary for a fair statement of the results
            for the interim  periods  presented.  These  condensed  consolidated
            financial   statements  should  be  read  in  conjunction  with  the
            financial statements and the notes thereto included in the Company's
            latest Annual Report on Form 10-K.

(b)         INVENTORIES

            Information with respect to the  classification of inventory of land
            and  improvements  including  land held for sale or  transfer  is as
            follows (in thousands):
<TABLE>
<CAPTION>
             
                                  Land and Improvements
                                  ---------------------

                                                      September 30, December 31,
                                                           1998         1997
                                                      ------------- ------------
<S>                                                   <C>           <C>     
            Unimproved land.........................  $     420     $    420
            Land in various stages of development...      2,756        1,888
            Fully improved land.....................      4,178        5,141
                                                      ---------     --------
                        Total.......................  $   7,354     $  7,449
                                                      =========     ========
</TABLE>
            Other inventories consists primarily of completed vacation ownership
            units.

(c)         MORTGAGES AND SIMILAR DEBT

            Indebtedness  under a mortgage and loan agreements is collateralized
            by  substantially  all of the Company's  assets,  including stock of
            certain wholly-owned subsidiaries.

            The following table presents  information  with respect to mortgages
            and similar debt (in thousands):
<TABLE>
<CAPTION>
                                                      September 30, December 31,
                                                           1998         1997
                                                      ------------- ------------
<S>                                                   <C>           <C>
            Mortgage Notes Payable .................. $   6,670     $  6,693
            Other Loans..............................     1,430        2,294
                                                      ---------     --------
               Total mortgages and similar debt...... $   8,100     $  8,987
                                                      =========     ========
</TABLE>
            Included in Mortgage Notes Payable is the Yasawa Loan ($6,670,000 as
            of September 30, 1998);  included in Other Loans is the  Scafholding
            Loan  ($1,430,000 as of September 30, 1998). The Scafholding Loan is
            secured by a first  lien on the  Company's  receivables.  The Yasawa
            Loan is secured by a second lien on the Company's  receivables and a
            mortgage on all of the Company's property. As of September 30, 1998,
            loans outstanding to Yasawa and Scafholding totaled $8,100,000.  The
            terms of repayment of this debt have been  restructured  to provided
            for a monthly payment of principal in the amount of $100,000 payable
            monthly in cash or with contracts  receivable at 100% of face value,
            plus interest  payable monthly on the declining  balance of the rate
            of 9.6% per  annum in cash or with  contracts  receivable  at 65% of
            face value.  Yasawa and Scafholding have not required the company to
            pay interest for the period September 1, 1998 to the present.


                                        6

<PAGE>



(d)         COMMITMENTS AND CONTINGENCIES

            Homesite sales  contracts  provide for the return of all monies paid
            in (including paid-in interest) should the Company be unable to meet
            its contractual  obligations after the use of reasonable  diligence.
            If a refund is made,  the Company will recover the related  homesite
            and any improvement thereto.

            As a result of the delays in  completing  the land  improvements  to
            certain  property  sold in certain of its Central and North  Florida
            communities,  the Company  fell  behind in meeting  its  contractual
            obligations to its customers.  In connection with these delays,  the
            Company,  in February,  1980,  entered into a Consent Order with the
            Division which provided a program for notifying affected  customers.
            The  Consent  Order,  which was  restated  and  amended,  provided a
            program for notifying  affected  customers of the anticipated delays
            in the completion of improvements  (or, in the case of purchasers of
            unbuildable  lots in  certain  areas of the  Company's  Sunny  Hills
            community,  the transfer of  development  obligations to core growth
            areas of the  community);  various  options which may be selected by
            affected purchasers; a schedule for completing certain improvements;
            and a deferral  of the  obligation  to  install  water  mains  until
            requested by the purchaser. Under an agreement with Topeka, Topeka's
            utility  companies  agreed to furnish  utility service to the future
            residents of the Company's  communities  on  substantially  the same
            basis as such  services  were  provided by the Company.  The Consent
            Order also  required  the  establishment  of an  improvement  escrow
            account as assurance for completing such improvement obligations.

            In June,  1992, the Company entered into the 1992 Consent Order with
            the Division,  which replaced and  superseded  the original  Consent
            Order, as amended and restated. Among other things, the 1992 Consent
            Order  consolidated  the  Company's   development   obligations  and
            provided for a reduction in its required  monthly escrow  obligation
            to $175,000 from September,  1992 through December,  1993. Beginning
            January, 1994 and until development is completed or the 1992 Consent
            Order is amended,  the Company was required to deposit  $430,000 per
            month  into the escrow  account.  As part of the  assurance  program
            under the 1992  Consent  Order,  the  Company  and its  lenders  had
            granted  the  Division  a lien on  certain  receivables  and  future
            receivables.  The  Company  defaulted  on its  obligation  to escrow
            $430,000 per month for the period of January,  1994 through November
            1997.  In accordance  with the 1992 Consent  Order,  collections  on
            Division  receivables  were  escrowed for the benefit of  purchasers
            from March 1, 1994 through  April 30, 1994. In May, 1994 the Company
            implemented  a  program  to have  customers  who had  contracted  to
            purchase  property which is  undeveloped  exchange such property for
            developed property.  As of September 30, 1998,  approximately 87% of
            such customers  have opted to exchange or have had their  situations
            otherwise resolved.

            On December 30, 1997,  the Division  approved the formation of a Lot
            Exchange Trust into which the Company conveyed  sufficient  exchange
            inventory to provide  exchanges to customers with undeveloped  lots.
            Concurrently,  the  Division  released  its  lien  on the  Company's
            contracts  receivable,  satisfied  its  mortgage  on  the  Company's
            property and approved a settlement of all remaining issues under the
            1992  Deltona  Consent  Order.  The 1992 Deltona  Consent  Order was
            terminated on April 13, 1998.

            As of September  30,  1998,  the Company had  estimated  development
            obligations of approximately  $25,000 on sold property, an estimated
            liability to provide title  insurance and deeding  costing  $390,000
            and an estimated cost of street maintenance,  prior to assumption of
            such  obligations by local  governments,  of $335,000 , all of which
            are  included  in  deferred  revenue.  The  total  cost to  complete
            improvements  as of September  30, 1998,  including  the  previously
            mentioned obligations,  was estimated to be approximately  $750,000.
            The Company's  development  obligation was substantially  reduced in
            1997  by  the   consummation  of  the  Agreement   approved  by  the
            stockholders  on November 4, 1997.  Approximately  $7,400,000 of the
            development  obligation at St. Augustine Shores was assumed by Swan.
            In  addition,  the  creation  of a Lot  Exchange  Trust  reduced the
            development   obligation   at  Marion   Oaks  and  Sunny   Hills  by
            approximately $5,800,000.

            The  Company's  continuing  liquidity  problems  have  precluded the
            timely  payment of the full  amount of certain  real  estate  taxes.
            Delinquent real estate taxes aggregated  approximately $1,864,000 as
            of  September  30,  1998.  On  properties   where   customers   have
            contractually  assumed  the  obligation  to pay  into  a tax  escrow
            maintained by the Company,  the Company has and will continue to pay
            delinquent real estate taxes as monies are collected from customers.
            Of the  $1,864,000  in delinquent  real estate taxes,  approximately
            $28,000  relates to sold lots on which the  customer has assumed the
            obligation to pay but has not done so.

                                        7

<PAGE>


            In  addition  to the  matters  discussed  above and in Note 9 to the
            Company's   Consolidated   Financial   Statements  included  in  the
            Company's Annual Report on Form 10-K for the year ended December 31,
            1997,  the  Company is a party to other  litigation  relating to the
            conduct  of its  business  which is routine  in nature  and,  in the
            opinion of the  management,  should have no material effect upon the
            Company's operation.

(e)         CAPITALIZED INTEREST

            The Company  capitalizes  interest cost incurred  during a project's
            construction   period.  Of  the  total  interest  cost  incurred  of
            $1,386,000, none was capitalized for the nine months ended September
            30, 1997. Of the total interest cost incurred of $620,000,  none was
            capitalized for the nine months ended September 30, 1998.

(f)         EARNINGS OR LOSS PER SHARE

            Basic earnings  (loss) per common and common  equivalent  share were
            computed  by  dividing  net income  (loss) by the  weighted  average
            number  of  shares of Common  Stock  and  common  stock  equivalents
            outstanding  during each period. The earnings (loss) and the average
            number of shares of Common Stock and common stock  equivalents  used
            to calculate  earnings per share for the nine months ended September
            30, 1998 and September 30, 1997 were  $(2,194,000)  and $(1,230,000)
            and 13,544,277 and 6,734,928, respectively.

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

On November 4, 1997,  at the 1997 Annual  Meeting,  the  Company's  stockholders
approved  an   Agreement   between  the  Company  and  its  lenders  that  would
substantially reduce the Company's  outstanding debt obligation of $25.3 million
(the "Agreement").  The Agreement,  consummated effective December 30, 1997 upon
approval of the Division of Florida Land Sales,  Condominiums  and Mobile Homes,
resulted in a reduction in the Company's outstanding debt obligation through the
conveyance of all remaining land inventory and  obligations in the Company's St.
Augustine  Shores  Subdivision  and the  issuance of  approximately  6.8 million
shares of Common Stock at $1.00 per share (par value). Additionally, the lenders
purchased  $7.5  million in  contracts  receivable  from the Company to generate
working capital and further reduce the debt obligation.
Specifically:

            1. Selex sold its remaining debt ($2,664,736),  including the Empire
note,  to Yasawa and the Company  owes no further duty or  obligation  to Selex,
which provided the Company a release. The debt purchased by Yasawa was satisfied
through  Yasawa's  purchase of  2,664,736  shares of Common  Stock issued by the
Company at a per share conversion price of One Dollar ($1.00), which is equal to
par value.

            2. Swan had  previously  acquired  $5,529,501 of the Company's  debt
from Selex.  This $5,529,501 was satisfied  through the Company's  conveyance of
all of the  Company's  remaining  land  inventory  and  obligations  in its  St.
Augustine  Shores  Subdivision to Swan . The price,  based upon appraised value,
was  adjusted to take into  account  the  development  obligations  on sold lots
assumed by Swan.

            3.  Scafholding  purchased  approximately  $7.5 million in contracts
receivable  from the Company at  seventy-five  percent  (75%) of face value with
recourse for non-performing  contracts.  This sale generated  approximately $5.6
million,  $1,982,457 of which was used to reduce outstanding debt to Yasawa. The
balance  (of  which  $1  million  is in  the  form  of a  promissory  note  from
Scafholding to the Company) has been used by the Company to pay a portion of the
delinquent real estate taxes, to implement its marketing  programs,  to initiate
development   of  TimberWalk   and  to  meet  the  Company's   working   capital
requirements.

            4. A  $4,144,602  portion  of  the  Company's  debt  to  Yasawa  was
satisfied  through Yasawa's  purchase of 4,144,602 shares of Common Stock issued
by the Company at a per share conversion  price of One Dollar ($1.00),  which is
equal to par value.



                                        8

<PAGE>



As of September 30, 1998,  the Company's  outstanding  debt to  Scafholding  was
$1,430,000,  secured by a first lien on the Company's receivables; the Company's
outstanding  debt to  Yasawa  was  $6,670,000  secured  by a second  lien on the
Company's  receivables  and a mortgage on all of the Company's  property.  As of
September  30,  1998,  loans  outstanding  to  Yasawa  and  Scafholding  totaled
$8,100,000.  The terms of  repayment  of this debt  have  been  restructured  to
provide for  monthly  payments of  principal  in the amount of $100,000  payable
monthly  in cash or  with  contracts  receivable  at  100% of face  value,  plus
interest payable monthly on the declining  balance at the rate of 9.6% per annum
in  cash  or  with  contracts  receivable  at  65% of  face  value.  Yasawa  and
Scafholding  have not  required  the  company  to pay  interest  for the  period
September 1, 1998 to the present.

Prior to November 4, 1997 and independent of the Agreement outlined above, Selex
and Yasawa  agreed to forgive  $2,050,818  in accrued  interest on the Company's
debt to them.

Through  Yasawa's  acquisition  of the  6,809,338  shares of Common Stock of the
Company referenced above, Mr. Antony Gram's beneficial  ownership increased from
3,109,703 shares to 9,919,041 shares (73.23% of the outstanding shares of Common
Stock of the Company as of September 30, 1998).

As a consequence of its liquidity position,  the Company has not paid delinquent
real estate taxes which aggregate  approximately  $1,864,000 as of September 30,
1998.  Non-payment of these  delinquent taxes may adversely affect the financial
condition of the Company.

On March 10, 1998, the Company  entered into a related party agreement with Swan
Development Corporation ("Swan") whereby Swan acquired approximately $375,000 in
property in Marion Oaks in exchange  for its  obligation  to construct an office
building to house the Company's  corporate  office and TimberWalk  sales center.
The sales contract provides for rent credits for approximately four and one-half
years to the Company.

As part of the Agreement,  if the Company elects to do so, Scafholding agreed to
purchase contracts  receivable at 65% of face value, with recourse,  to meet the
Company's  ongoing  capital  requirements.  Scafholding  purchased the following
contracts  receivables  from the  Company to  generate  working  capital for the
Company:

                                                           Approximate
             Date of Purchase                           Amount Purchased
             ----------------                           ----------------
             June 30, 1998                                   $200,100
             July 15, 1998                                   $115,200
             July 31, 1998                                   $179,900
             August 31, 1998                                 $250,400
             September 10, 1998                              $153,400
             September 29, 1998                              $497,100

RESULTS OF OPERATIONS
---------------------
For the nine months ended September 30, 1998 and September 30, 1997.

Revenues
--------

Total  revenues  were  $4,663,000  for the first nine months of 1998 compared to
$5,994,000 for the comparable 1997 period.

Gross land  sales  were  $3,245,000  for the first  nine  months of 1998  versus
$4,402,000 for the comparable 1997 period. Net land sales (gross land sales less
estimated  uncollectible  installment  sales and  contract  valuation  discount)
decreased to $2,238,000  for the first nine months of 1998 from  $2,947,000  for
the first nine months of 1997.  For the three months ended  September  30, 1998,
net land sales  decreased  to $718,000  from  $856,000 for the  comparable  1997
period. The decrease in sales reflects lower sales by the Company's  independent
dealer network.

There  were no bulk land  sales for the first  nine  months of 1998 or 1997.  In
light of the Company's  diminished  bulk land sales  inventory it is anticipated
that the  Company  will  produce a  negligible  volume of bulk land  sales.  See
"Liquidity and Capital Resources -- Mortgages and Similar Debt".

                                        9

<PAGE>



Housing  revenues were $949,000 for the nine months ended June 30, 1998 compared
to  $787,000  for the same  period in 1997.  Revenues  are not  recognized  from
housing sales until the completion of construction and passage of title. Housing
revenues  increased  as of result of higher sales by the  Company's  independent
dealer network. The backlog of houses under contract was $3,420,000 and $874,000
as of  September  30, 1998 and  September  30, 1997,  respectively.  The Company
recently opened TimberWalk, a new housing community in Ocala, Florida.

The  following  table  reflects the  Company's  real estate  product mix for the
periods indicated (in thousands):
<TABLE>
<CAPTION>

                                Nine Months Ended        Three Months Ended
                             September    September   September     September 
                             30, 1998     30, 1997    30, 1998      30, 1997
                             --------     --------    --------      --------
<S>                          <C>          <C>         <C>           <C> 

  Gross Land Sales:
  Retail Sales*              $ 3,245      $ 4,402     $ 1,075       $ 1,236
                             -------      -------     -------       -------

  Housing Sales:
   Single Family                 949          787         289           225
                             -------      -------     -------       -------
        Total Real Estate    $ 4,194      $ 5,189     $ 1,364       $ 1,461                 
                             =======      =======     =======       =======
<FN>
---------- 
*          New retail land sales contracts entered into, including deposit sales
on which the  Company  has  received  less than 20% of the sales  price,  net of
cancellations,  for the nine months ended  September  30, 1998 and September 30,
1997 were $3,216,000 and $4,085,000, respectively, and $1,135,000 and $1,228,000
for the third quarters of 1998 and 1997, respectively. The Company had a backlog
of approximately  $923,000 in unrecognized  sales as of September 30, 1998. Such
contracts are not included in retail land sales until the applicable  rescission
period has expired and the Company has  received  payments  totaling  20% of the
contract sales price.
</FN>
</TABLE>

Improvement  revenues  result from  recognition of revenues  deferred from prior
period sales.  Recognition occurs as development work proceeds on the previously
sold  property  or  customers  are  exchanged  to a developed  lot.  Improvement
revenues  totaled  $845,000 for the first nine months of 1998  ($161,000 for the
third  quarter of 1998),  as compared  to $907,000  for the first nine months of
1997 ($147,000 for the third quarter 1997).

Interest  income was  $433,000  for the first nine months of 1998 as compared to
$1,009,000  for the first nine months of 1997.  The  decrease is the result of a
decrease  in the  Company's  contracts  receivable,  resulting  from the sale of
$7,500,000 in contracts  receivable  for the fourth  quarter 1997 and subsequent
sales.

Other  revenues were $197,000 for the first nine months of 1998 ($51,000 for the
third  quarter of 1998),  as compared  to $342,000  for the first nine months of
1997 ($73,000 for the third quarter of 1997).  Other revenues for the first nine
months of 1997 included $154,000 of revenue from timbering  operations (none for
the third quarter of 1997). Other revenues are currently  generated  principally
by the Company's title insurance and real estate brokerage subsidiaries.

Costs and Expenses
------------------

Costs and expenses were $6,857,000 for the first nine months of 1998 ($2,607,000
for the third  quarter of 1998),  as compared to  $7,224,000  for the first nine
months of 1997  ($2,258,000  for the third quarter of 1997).  Cost of sales were
$1,776,000  for the first nine months of 1998 ($565,000 for the third quarter of
1998), as compared to $1,770,000 for the first nine months of 1997 ($505,000 for
the third quarter of 1997).

Commissions,  advertising and other selling expenses totaled  $1,899,000 for the
nine months ended  September 30, 1998 compared to $1,786,000 for the nine months
ended  September 30, 1997 ($629,000 for the third quarter of 1998 as compared to
$536,000 for the third quarter of 1997).  Advertising and  promotional  expenses
increased to $840,000 for the nine month period ended  September 30, 1998 versus
$523,000 for the same nine month period in 1997  ($284,000 for the third quarter
of 1998 as compared to  $174,000  for the third  quarter of 1997) as a result of
increased   marketing  efforts  for  the  Company's  new  housing  community  in
TimberWalk.

General and administrative expenses were $1,792,000 for the first nine months of
1998 ($955,000 for the third quarter of 1998), as compared to $1,291,000 for the
first nine months of 1997 ($401,000 for the third quarter of 1997).  General and
administrative  expenses have remained constant from period to period.  Included
in the third quarter of 1998 is approximately

                                       10

<PAGE>



$569,000  relating to compensation to be paid pursuant to the resignation of the
former President and Senior Vice President of Marketing Administration.

Real  estate  tax  expenses  were  $771,000  for the first  nine  months of 1998
($257,000 for the third quarter of 1998),  as compared to $990,000 for the first
nine months of 1997  ($348,000 for the third quarter of 1997).  Included in real
estate tax expense is interest  and  administrative  fees on  delinquent  taxes,
which accrue interest at 18% per annum.

Interest  expense was $620,000 for the first nine months of 1998  ($199,000  for
the second quarter of 1998), as compared to $1,386,000 for the first nine months
of 1997  ($468,000  for the second  quarter of 1997).  The  decrease in interest
expense  is the  result  of a lower  outstanding  debt  resulting  from the debt
reduction accomplished in the fourth quarter of 1997.

Net Income (Loss)
-----------------

The Company  reported a net loss of $2,194,000 for the first nine months of 1998
($1,269,000  for the third quarter of 1998),  as compared to $1,230,000  for the
first nine months of 1997 ($627,000 for the third quarter of 1997).

Regulatory Developments which may affect Future Operations
----------------------------------------------------------

In Florida,  as in many growth areas,  local governments have sought to limit or
control  population  growth in their  communities  through  restrictive  zoning,
density reduction,  the imposition of impact fees and more stringent development
requirements.  Although the Company has taken such factors into consideration in
its master plans,  the  increased  regulation  has  lengthened  the  development
process and added to development costs.

On a statewide  level,  the Florida  Legislature  adopted  and  implemented  the
Florida  Growth  Management  Act of 1985 (the  "Act")  to aid local  governments
efforts to  discourage  uncontrolled  growth in Florida.  The Act  precludes the
issuance  of  development  orders  or  permits  if  public  facilities  such  as
transportation,  water and sewer services will not be available  concurrent with
development.  Development  orders  have been  issued for,  and  development  has
commenced  in,  the  Company's  existing  communities  (with  development  being
virtually completed in certain of these communities). Thus, such communities are
less  likely to be affected by the new growth  management  policies  than future
communities.  Any future  communities  developed by the Company will be strongly
impacted by new growth management  policies.  Since the Act and its implications
are consistently being re-examined by the State, together with local governments
and various state and local  governmental  agencies,  the Company cannot further
predict  the  timing  or the  effect  of new  growth  management  policies,  but
anticipates  that such  policies  may  increase  the  Company's  permitting  and
development costs.

In addition to Florida,  other  jurisdictions in which the Company's  properties
are  offered  for  sale  have   recently   strengthened,   or  are   considering
strengthening,  their regulation of subdividers and subdivided lands in order to
provide  further  assurances  to the  public,  particularly  given  the  adverse
publicity  surrounding  the  industry  which  existed in 1990.  The  Company has
attempted  to take  appropriate  steps to  modify  its  marketing  programs  and
registration  applications  in the face of such  increased  regulation,  but has
incurred  additional  costs  and  delays  in the  marketing  of  certain  of its
properties  in certain  states and  countries.  For  example,  the  Company  has
complied with  regulations of certain states which require that the Company sell
its  properties  to residents  of those  states  pursuant to a deed and mortgage
transaction,  regardless of the amount of the down payment.  The Company intends
to continue to monitor any  changes in  statutes or  regulations  affecting,  or
anticipated  to  affect,  the sale of its  properties  and  intends  to take all
necessary and  reasonable  action to assure that its properties and its proposed
marketing programs are in compliance with such regulations,  but there can be no
assurance  that the Company  will be able to timely  comply with all  regulatory
changes in all  jurisdictions  in which the Company's  properties  are presently
offered for sale to the public.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Mortgages and Similar Debt
--------------------------

Indebtedness   under  mortgage  and  loan   agreements  is   collateralized   by
substantially  all  of  the  Company's   assets,   including  stock  of  certain
wholly-owned subsidiaries.

The loan modifications  consummated on December 31, 1997,  satisfied all Company
obligations to Selex and the  outstanding  loans to Scafholding  and Yasawa were
restructured. The following table presents information with respect to mortgages
and similar debt (in thousands):
                                       11

<PAGE>
<TABLE>
<CAPTION>
                                                      September 30, December 31,
                                                           1998         1997
                                                      ------------- ------------
<S>                                                   <C>           <C>
            Mortgage Notes Payable .................. $   6,670     $  6,693
            Other Loans..............................     1,430        2,294
                                                      ---------     --------
               Total mortgages and similar debt...... $   8,100     $  8,987
                                                      =========     ========
</TABLE>
  
Included  in  Mortgage  Notes  Payable  is the  Yasawa  Loan  ($6,670,000  as of
September 30, 1998); included in Other Loans is the Scafholding Loan ($1,430,000
as of September 30, 1998).

            CONTRACTS AND MORTGAGES RECEIVABLE SALES

In June, 1992 and February,  1990, the Company  completed sales of contracts and
mortgages receivable totaling $13,500,000 and $17,000,000,  respectively,  which
generated approximately $8,000,000 and $13,900,000 respectively, in net proceeds
to the  Company.  The  anticipated  costs of the  June,  1992  transaction  were
included in the  extraordinary  loss from debt  restructuring for 1991 since the
restructuring was dependent on the sale. The Company recorded a loss of $600,000
on the February,  1990 sale. In conjunction with these sales the Company granted
the purchaser a security interest in certain additional  contracts receivable of
approximately  $2,700,000 and conveyed all of its rights,  title and interest in
the property  underlying  such contracts to a collateral  trustee.  In addition,
these  transactions,  among other  things  require  that the Company  replace or
repurchase any receivable  that becomes 90 days  delinquent  upon the request of
the  purchaser.  Such  requirement  can be satisfied from contracts in which the
purchaser holds a security  interest  (approximately  $2,424,000 as of September
30, 1998). The purchaser of these receivables  experienced  financial difficulty
and filed in 1994 for  protection  under  Chapter 11 of the  Federal  Bankruptcy
Code. In November 1995, the purchaser of these receivables sold the portfolio to
Finova Capital Corporation.  The Company is unable to determine what effect this
will have, if any, on future cancellations,  since it is unable to determine how
the bankruptcy or the subsequent sale of the portfolio will impact servicing and
collection procedures and the customers'  determination to continue to pay under
those  contracts.  The Company has fully reserved for the amount of the holdback
account and the estimated future cancellations based on the Company's historical
experience for receivables the Company services. However, due to the uncertainty
noted  above,  the  Company  does not feel there is  sufficient  information  to
estimate  future  cancellations  and is unable to determine  the adequacy of its
reserves to replace or repurchase  receivables that become delinquent.  In 1996,
the Company replaced $293,000 in delinquent  receivables.  During the first nine
months of 1998,  the Company did not replace any delinquent  receivables.  As of
September  30, 1998 and 1997,  $1,287,000  and  $1,138,000 in  receivables  were
delinquent, respectively.

In December, 1992, as described above, the Company sold $10,800,000 of contracts
and mortgages  receivable to an affiliate of Yasawa at face value,  applying the
proceeds therefrom to reduce the Bank Loan acquired by Yasawa.

In March,  1993, the Company  transferred  $1,600,000 in contracts and mortgages
receivable generating approximately $1,059,000 in proceeds to the Company, which
was used for  working  capital  and the  creation  of a holdback  account in the
amount of $150,000.  As of September , 1998, the holdback account was terminated
with a $0 balance.

In December 1997,  Scafholding purchased  approximately  $7,500,000 in contracts
receivable  from the Company at  seventy-five  percent  (75%) of face value with
recourse for non-performing  contracts.  This sale generated  approximately $5.6
million,  $1,982,457 of which was used to reduce outstanding debt to Yasawa. The
balance  (of  which  $1  million  is in  the  form  of a  promissory  note  from
Scafholding to the Company expected to be satisfied by mid-1998) was used by the
Company to pay a portion of the delinquent  real estate taxes,  to implement its
marketing  programs,  to  initiate  development  of  TimberWalk  and to meet the
Company's working capital requirements.

                                       12

<PAGE>


The Company sold to Scafholding  and  Scafholding  agreed to purchase  contracts
receivable at 65% of face value,  with recourse,  to meet the Company's  ongoing
capital requirements.  Scafholding purchased the following contracts receivables
from the Company to generate working capital for the Company:


                                                           Approximate
             Date of Purchase                           Amount Purchased
             ----------------                           ----------------
             June 30, 1998                                   $200,100
             July 15, 1998                                   $115,200
             July 31, 1998                                   $179,900
             August 31, 1998                                 $250,400
             September 10, 1998                              $153,400
             September 29, 1998                              $497,100

The  Company  was  the  guarantor  of  approximately   $8,503,000  of  contracts
receivable  sold or transferred  as of September 30, 1998, for the  transactions
described  above and had no money on deposit with  purchasers of the receivables
as  security to assure  collectibility  as of such date.  A  provision  has been
established for the Company's  obligation under the recourse provisions of which
$1,445,000  remains at September  30, 1998.  The Company has been in  compliance
with all receivable transactions since the consummation of receivable sales.

            OTHER OBLIGATIONS

As of September 30, 1998, the Company had estimated  development  obligations of
approximately  $25,000 on sold property, an estimated liability to provide title
insurance  and  deeding  costing  $390,000  and  an  estimated  cost  of  street
maintenance,  prior to assumption of such obligations by local  governments,  of
$335,000 , all of which are  included  in  deferred  revenue.  The total cost to
complete  improvements  at September 30, 1998 was estimated to be  approximately
$750,000. The Company's development obligation was substantially reduced in 1997
by the consummation of the Agreement approved by the stockholders on November 4,
1997.  Approximately  $7,400,000 of the development  obligation at St. Augustine
Shores was assumed by Swan.  In addition,  the creation of a Lot Exchange  Trust
reduced  the   development   obligation  at  Marion  Oaks  and  Sunny  Hills  by
approximately $ 5,800,000.

The Company's continuing liquidity problems have precluded the timely payment of
the  full  amount  of its  real  estate  taxes.  Delinquent  real  estate  taxes
aggregated  approximately  $1,864,000  as of September  30, 1998.  On properties
where  customers  have  contractually  assumed the  obligation to pay into a tax
escrow  maintained  by the  Company,  the Company  has and will  continue to pay
delinquent  real estate taxes as monies are  collected  from  customers.  Of the
$1,864,000 in delinquent  real estate taxes,  approximately  $28,000  relates to
sold lots on which the  customer has assumed the  obligation  to pay but has not
done so.

            LIQUIDITY

Retail land sales have  traditionally  produced  negative  cash flow through the
point of sale as a result of the regulatory  requirement to sell fully developed
lots and the additional  requirement to pay marketing and selling expenses prior
to or shortly  after the point of sale. In an effort to offset the negative cash
effects of installment  land sales,  the Company is now attempting to direct its
marketing  efforts  to  selling  homes and lots  together.  The  success of this
direction will be dependent upon the Company's dealer recruiting program and the
availability of funds for an advertising and promotion program.

In December 1997, the Company  announced the start of construction on its newest
housing  development:  TimberWalk.  TimberWalk features a model home center with
models built by three premier central Florida home builders. At TimberWalk, home
buyers  enjoy the  benefits of  Deltona's  newest  design  concept,  "Everything
Included",  with  features  that are often  considered  extra cost  upgrades and
options by other home  builders but are included in  TimberWalk's  basic prices.
Models  range  from one to two  story  homes  with two,  three or four  bedrooms
ranging  in size from 1,200  square  feet to over  2,200  square  feet of living
space.

                                       13

<PAGE>


Due to its  liquidity  problems  over the last five years,  the Company has been
forced to delay payment of certain real estate taxes.  The Company's  ability to
continue retail land sales and re-establish  itself in the housing business will
be substantially dependent on its ability to sell or otherwise finance contracts
receivable and/or secure other financing sources to meet its cash  requirements.
Since  1992,  the  Company has been  largely  dependent  upon Yasawa and related
parties for financing of its operations.  Although  Yasawa and Scafholding  have
committed to provide the Company with financing of its contracts  receivables at
the rate of 65% of face value, with recourse, there can be no guarantee that the
Company will be able to generate  sufficient  receivables  to meet its cash flow
requirements.

In October  1998,  the Company  received a loan in the amount of  $500,000  from
parties  related  to  Antony  Gram.  In  addition,   in  November  1998,  Citony
Development Corporation advanced $200,000 to the Company for sales and marketing
services to be rendered by the Company.


            YEAR 2000

The  Company  utilizes  a number of  software  systems in  conjunction  with its
community  development,  contract processing and contract servicing  operations.
The Company has and will  continue to make certain  investments  in its software
systems  and  applications  to ensure the  Company is Year 2000  compliant.  The
financial  impact  of  becoming  Year  2000  compliant  has not  been and is not
expected  to be  material  to the  Company's  financial  position  or results of
operations in a given year.




                                       14

<PAGE>



PART II - OTHER INFORMATION
---------------------------

Item 5.  OTHER MATERIALLY IMPORTANT EVENTS.

On September  29,  1998,  Earle D.  Cortright,  Jr. and  the  Company  agreed to
terms for his resignation as President of the Company effective October 1, 1998.
Mr.  Cortright will receive the sum of $400,000 as compensation  for termination
of his Employment Agreement:  $200,000 of which was paid in October 1998 and the
remaining $200,000 to be paid in January 1999.

In addition,  on September 29, 1998,  David M. Harden and the Company  agreed to
terms for his resignation as Senior Vice President - Marketing Administration of
the Company effective October 1, 1998.

On October 2, 1998,  the Board of  Directors  appointed  Mr.  Antony Gram to the
position of  President  of the Company , in addition to his position as Chairman
of the Board and Chief  Executive  Officer.  On October  2,  1998,  the Board of
Directors promoted Sharon J. Hummerhielm from her position as Vice President and
Corporate  Secretary to the position of Executive  Vice  President and Corporate
Secretary.

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

                (a)  Exhibits

                     None.

                (b)  Reports on Form 8-K

                     A  Report  on  Form  8-K  was   filed  by  the  Company  on
                     April 7, 1998.


                                       15

<PAGE>


                                    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.

                                            THE DELTONA CORPORATION



Date: November 13, 1998                     By: /s/Donald O. McNelley
      -----------------                        ---------------------
                                               Donald O. McNelley
                                               Treasurer
                                               (Principal Financial Officer)







                                       16

<PAGE>