UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

                    ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year Ended September 30, 1996
                          Commission File Number 1-8893

                            ROYAL PALM BEACH COLONY,
                               LIMITED PARTNERSHIP
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        DELAWARE                                            59-2501059
--------------------------------------------------------------------------------
(State or other jurisdiction                           (I.R.S. Employer 
of incorporation or organization)                      Identification Number)

     2501 S. Ocean Drive
     Hollywood, Florida                                      33019
--------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)

        Registrant's telephone number, including area code (305) 927-3080 

           Securities registered pursuant to Section 12(b) of the Act: 

                                                       Name of Each Exchange
               Title of Each Class                     on which Registered

          Limited Partnership Units                           None

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by checkmark  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  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.   YES   [ X ]     NO     [    ]
                                

Indicate by checkmark if disclosure of delinquent filers pursuant to item 405 of
Regulation S-K (ss. 229.405 of this chapter) is not contained  herein,  and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information statement incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [XX]

The  aggregate   market  value  of  the  limited   partnership   units  held  by
non-affiliates  of  Registrant  computed by the last  reported sale price of the
Units over-the-counter on December 31, 1996 was approximately $1,592,649.

<PAGE>                                                        
                                     PART I


Item 1. Business

(a)  General Development Of Business

         Royal Palm Beach Colony,  Limited Partnership (the "Partnership" or the
"Registrant")   was  organized  under  the  Delaware   Revised  Uniform  Limited
Partnership  Act. The  Partnership  is a successor  to Royal Palm Beach  Colony,
Inc.,  (the  "Predecessor  Company") a Florida  corporation  organized  in 1963.
Pursuant to a Plan of Complete Liquidation (the "Plan"), the Predecessor Company
transferred  all of its  assets,  subject  to  all  of its  liabilities,  to the
Partnership  in exchange for a number of  partnership  units  ("Units")  exactly
equal to the  number  of  shares  of  common  stock of the  Predecessor  Company
outstanding on July 11, 1985 (the "Effective  Date"). On the Effective Date, the
Units were  distributed to the former holders of common stock of the Predecessor
Company  on the  basis of one (1) Unit for  each  share of  common  stock of the
Predecessor Company. The Partnership, as a successor to the Predecessor Company,
has registered its Units under Section 12 (b) of the Securities  Exchange Act of
1934. Under the Amended Agreement of Limited Partnership of the Registrant,  the
term of the Partnership  expires December 31, 2005, unless extended by vote of a
majority of the partnership units.

American Stock Exchange Listing

         On January 16, 1996 the American Stock  Exchange  halted trading in the
Partnership's Units pending a review of, among other matters,  the Partnership's
inability to meet the Exchange's listing standards.  The Partnership's units did
not resume trading on the Exchange and, following such review,  were delisted on
March 28, 1996.  See Item 5. The Units are  currently  trading  over-the-counter
under the symbol "YYGHA."

Results of Liquidation Activities

         The Partnership's  principal  business has been to operate,  manage and
dispose of the assets which were  transferred to it on the Effective Date by the
Predecessor Company.

         Since the Effective Date of the Predecessor Company's liquidation,  the
Partnership has engaged in a program of asset disposition  resulting in the sale
of assets for an aggregate gross  consideration  of $65,298,575.  As of December
31, 1996, the Partnership had distributed an aggregate of $29,156,000,  or $6.50
per  Unit,  to the  general  and  limited  partners.  See Item 5 Market  for the
Registrant's    Common   Equity   and   Related   Stockholder   Matters   "Prior
Distributions."

         As of September 30, 1996, the Partnership's  remaining assets consisted
principally  of; (1) a 165 acre tract of land in the Village of Royal Palm Beach
(the  "Village"),  (a portion of which is now under  development  -see Item 2 --
Properties  --  "Village of Royal Palm  Beach"),  which land was  reacquired  in
January,  1992 by foreclosure of a mortgage and which is included in the balance
sheet at $4,476,742  (this tract is hereinafter  referred to as the  "Crestwood"
tract),  (3) unsold land in Palm Beach County,  Florida which is included in the
<PAGE>
balance sheet at its book value of $485,596,  (4) a tract of land in the Village
reacquired by foreclosure in 1993 and included in the balance sheet at $287,650,
(5)  contingent  receivables  relating to a prior sale of utility  assets with a
maximum  future  undiscounted  value of  $5,603,000  (which  amount,  other than
$129,000  earned as of  September  30, 1996 but not  payable to the  Partnership
until  January,  1997,  has not been  included in the  balance  sheet due to its
contingent nature -- see Note 11 to the Financial  Statements),  and (6) cash in
the amount of $41,451.  Through  December 31,  1996,  there had been no material
changes in the Partnership's real estate assets.

Factors Affecting Future Operations and Distributions

         The  availability  of cash for  distribution  in the future will depend
upon a variety of factors not currently determinable.

(1)  Recent Efforts to Resume Active Business Activities

         In early 1992,  a large  portion of the  Partnership's  remaining  land
consisted of the undeveloped 165 acre "Crestwood"  Tract described above,  which
had been sold during the process of the Partnership's liquidation but reacquired
by the Partnership in 1992 when the purchaser was unable to service the interest
and  amortization  payments to the  Partnership  on a $5,039,952  purchase money
mortgage.  Management's attempts to remarket the Crestwood Tract on a bulk basis
were  unsuccessful.  Management  perceived that due to changes in the market for
real estate in  southern  Florida,  the  Crestwood  Tract  would  continue to be
difficult to market at acceptable  prices.  Among other factors  depressing  the
local market was the  "overhang" of large  undeveloped  tracts which were on the
market as the result of bank insolvencies.

         Management also concluded that the market for developed land -- defined
for purposes of this discussion as buildable lots which have been properly zoned
and  developed  with  grading,  roads and utility  lines brought to the property
boundaries -- was tightening,  with local and national builders  competing for a
shrinking supply of such developed land. With the liquidation of the Partnership
having  progressed to the point at which the major portion of the  Partnership's
assets had been  liquidated,  management  began to consider  the most  effective
means  to  maximize  unitholder  value  with  respect  to  the  balance  of  the
Partnership's assets.

         After study,  management  concluded that the  Partnership's  continuing
liquidation should proceed along two tracks.

         First, it was determined that unitholder  values could most effectively
be increased if some or all of the  Crestwood  Tract were  temporarily  withheld
from  sale  and  selectively  developed.  In the  judgment  of  management,  the
prospective  incremental  increase  in  selling  prices of  developed  land over
amounts which might  reasonably be anticipated  from the sale of the land in its
raw state  would  substantially  exceed the cost of  developing  such land,  and
warranted   investment  of  a  portion  of  the  Partnership's  cash  assets  in
development  activities.  Management  therefore commenced the development of one
portion of the Crestwood  Tract,  consisting of originally of 170 lots zoned for
single family housing  (increased in a revised  site-plan to 198 lots), in order
to enhance its sale value.  Management's  decision to commence  development  was
influenced,  in part, by an appraisal  obtained in 1992 of the  Crestwood  Tract
which  indicated  that such tract had a then  current  fair market  value in the
<PAGE>
approximate amount of $4,500,000 and could have a significantly  higher value if
rezoning and re-permitting work were accomplished. Management was further of the
opinion that the  Crestwood  Tract would have an  indefinite  but  substantially
higher value if developed with roads and a utility infrastructure. See Item 2 --
Properties -"Village of Royal Palm Beach."

         Second, management concluded that generally strengthening conditions in
the south  Florida  real  estate  market  might  present an  opportunity  to the
Partnership to capitalize on its status as a publicly  traded  entity.  In early
1994  the  Partnership  retained  a  private  consultant  to  determine  whether
unitholder values could further be enhanced by utilizing the Partnership's  cash
and  remaining  land  as  a  vehicle  for  the  resumption  of  active  business
operations,  either  in  the  land  development  business  or by  expanding  its
activities into home building and other real estate-related  fields.  Management
also wished to obtain an independent  review of its  assumption  that the market
value  of  the  Partnership's  units  might  be  enhanced  over  time  were  the
Partnership to convert from a liquidating to an active business mode.

         Management also concluded that its decision to develop  portions of its
remaining  Palm Beach  County  real  estate  would be  consistent  either with a
decision  to proceed  with the  Partnership's  complete  liquidation,  to resume
business   operations,   or  to  complete  its   liquidation  by  acquiring  and
distributing  to unitholders the securities of another entity in connection with
a business  combination.  It  therefore  proceeded  with the  development  plans
described above, and at the same time explored the business and tax implications
of the  resumption  of business  activities  and/or  business  combination  with
another entity.  The progress of such land development,  and financing  recently
obtained therefor,  is discussed under Item 2 -- Properties -- "Village of Royal
Palm Beach."

         Management  ultimately  concluded  that the most logical course for the
Partnership  to follow would involve the addition of home  building  operations.
After  several  potential   affiliations   were  identified,   a  memorandum  of
understanding   was   executed   with   Regency   Homes,   Inc.,   a  prominent,
privately-owned  South Florida home builder,  envisioning a business combination
of  the  two  entities.  However,  protracted  negotiations  with  Regency  were
suspended in early December 1995 and terminated in late December, 1995.

         While  management  might  consider  a  business   combination  with  an
appropriate operating business, it is not actively seeking such transactions and
no discussions concerning any such transaction have taken place. The Partnership
is proceeding  with the liquidation of the its remaining  assets.  In connection
therewith,  the Partnership is continuing to develop the residential lots in the
Crestwood  tract,  and may develop other  properties if such  development  would
enhance   liquidation  values.  The  status  of  real  estate  dispositions  and
development is discussed in Item 2 below.

(2)  Cash Available for Distribution

         Management intends to continue to invest in the development of portions
of the Partnership's remaining land in Palm Beach County as a means of achieving
a higher return upon sale. Because of a substantial  reduction in sales revenues
in 1993 and 1994, and the cash requirements for such land development activities
in 1995,  together  with  cash  expenditures  in  connection  with the  proposed
transaction with Regency Homes, Inc. and normal operating expenses,  no cash has
<PAGE>
been  available for  distribution  since  December  1992.  Although at currently
targeted sales prices the Partnership  could realize cash proceeds from the sale
of the Crestwood lots in a range exceeding $5,000,000, there can be no assurance
that currently targeted prices will be realized, and initial sales proceeds will
be  applied  to  repayment  of  debt,  including  bank  financing  incurred  for
development  work  expected to total  approximately  $2,625,000  It is therefore
considered  doubtful that cash will be available for  distribution  in 1997. See
Item 2 - Properties - Development  and Sale of  Residential  Lots; and Item 7 --
Management  Discussion  and  Analysis of Financial  Condition  -- Liquidity  and
Capital Resources.

         The timing of the resumption of liquidating  distributions  will depend
largely  upon the timing of future  sales of the  Partnership's  remaining  land
(developed or  undeveloped)  and future  collections  of contingent  receivables
relating to a prior sale of a utility  plant.  See Item 2 --  Properties,  for a
discussion of other sources of and anticipated  timing of the receipt of revenue
which will affect future distributions.


(b)  Financial Information About Industry Segments

         Not applicable.


(c)  Narrative Description Of The Business


Regulation

         Development  and sales  operations of the  Partnership  or by potential
purchasers of real estate from the  Partnership  have been subject to regulation
by a number of local,  state and  federal  agencies  concerning  the  nature and
extent of improvements, and compliance with zoning regulations,  building codes,
health requirements and environmental protection.  The Partnership believes that
it has been in substantial  compliance with all such laws and regulations  which
affect its  properties  and that it has developed  the  properties to the extent
required  by  contract  or law.  If such laws or  regulations  are  amended,  in
particular those  concerning  environmental  protection,  the cost of compliance
could be increased. Reference is made to the discussion concerning the impact of
land use regulatory issues affecting  salability of certain properties remaining
in Palm Beach County in Item 2 --  Properties -- "Acreage in the Vicinity of the
Village."

Competition

         The  real  estate  business  conducted  by the  Partnership  is  highly
competitive.  The  Partnership's  sales of its remaining  land will compete with
surrounding  developments,  and with owners of tracts of land in the area of all
its  properties.  There are  substantial  tracts of vacant  land and land  under
development  in the general  area of most of the  Partnership's  remaining  real
estate. These competitive considerations could affect the decisions of potential
purchasers of the Partnership's remaining properties.
<PAGE>
         The Partnership has historically marketed its properties through direct
mail  advertising  to major  brokers  and  developers,  advertisements  in major
regional newspapers and direct contacts between officers of the Managing General
Partner and real estate  developers  and brokers.  The  Partnership is currently
marketing its remaining properties through local real estate brokers,  including
Randy Rieger,  who served as interim Vice President and Chief Operating  Officer
of the  Partnership's  managing  general  partner  between  September  1995  and
February  1996.  Mr.  Rieger  currently  provides  services  as  an  independent
consultant to the  Partnership  for  management  services in addition to ongoing
brokerage  services.   See  Item  13  --  "Certain   Relationships  and  Related
Transactions."

Impact of General Economic Conditions

         The  development  and sale of real estate occurs within a  historically
cyclical market, and is significantly influenced by general economic conditions.
Sales of housing units and sales of tracts to builders are particularly affected
by the costs and  availability  of mortgage  financing  and the rise and fall of
interest  rates in general.  Interest  rates have moved in a narrow range during
the past year, and declined slightly in December 1995. If significant  increases
occur in the future, the real estate market could suffer as a result.

Personnel

         As of January 31, 1997, Stein Management Company,  Inc. ("Steinco") the
Managing General Partner, employed 2 persons.

Office Facilities

         The Partnership's  executive  headquarters are located at 2501 S. Ocean
Drive, Hollywood, Florida 33019. The premises are owned by an affiliate of Hasam
Realty Limited Partnership ("Hasam L.P."), a general partner of the Partnership,
and are being made  available to the  Partnership  as an  accommodation  without
charge.


Item 2.  Properties

Palm Beach County, Florida

         The Company originally owned  approximately  28,000 acres in Palm Beach
County,  in  southeastern  Florida,  approximately  4,200 of which were  located
within the Village.

The Villaqe of Royal Palm Beach

         The Village, an incorporated municipality, is approximately eight miles
from the Palm Beach  International  Airport and eleven miles west of Palm Beach.
Two major area highways,  Southern  Boulevard and Okeechobee Road, lead directly
from Palm  Beach  through  West Palm Beach to the  Village.  The  Village  has a
population of approximately 16,000 and is primarily residential. The Village has
been developed in accordance with a master plan and includes  schools,  shopping
facilities, community recreation areas, and its own police and fire departments.
<PAGE>
The Crestwood Tract

         Although the  Partnership had previously sold nearly all of its land in
the Village,  it reacquired in 1992, through foreclosure of a defaulted purchase
money mortgage, the 165 acre Crestwood Tract of undeveloped land in the Village.
When reacquired, the Crestwood Tract was zoned and preliminary approval had been
obtained for the development of 172 single-family  homesites (the "Single Family
Tract")  and 625  multi-family  units.  The  Crestwood  Tract is  bisected  by a
principal  Village  road  and has  access  to all  utilities,  but is  otherwise
undeveloped  with the  exception  of the  existence  of  portions  of a drainage
system.

Commercial Land within the Crestwood Tract

         In order to  enhance  the  market  value of the  Crestwood  Tract,  the
Partnership  obtained the rezoning of a 28 acre portion of the  Crestwood  Tract
previously zoned for multi-family housing to permit the Partnership to develop a
14 acre portion for use as a shopping  center  site.  The  Partnership  received
site-plan  approval in mid-1996.  The  Partnership  has executed an agreement to
sell the entire 28 acre portion to an  unaffiliated  shopping  center  developer
("Purchaser") in four phases.

         The first phase  relates to an 11.8 acre tract to be sold for $3.00 per
square foot (approximately  $1,542,024 subject to final survey).  The closing on
this phase was  subject to soil  testing,  availability  of  sufficient  utility
connections,  environmental  matters,  site-plan  approval  and  approval of the
premises by a major  supermarket  chain as a site for a new supermarket.  All of
such conditions  have now been satisfied,  the parties are awaiting the issuance
of a  building  permit  and the  satisfaction  of  other  conditions  which  are
considered  likely to occur  during  January,  1997.  The  closing is  therefore
expected  to take place by the end of  February,  1997.  Were the  Purchaser  to
refuse to close,  which is considered highly unlikely,  its only liability would
be its loss of deposits presently aggregating $71,000.

         The second and third phases consist of two additional parcels in the 14
acre portion  rezoned as described  above,  and adjoin the shopping center site,
but  as  to  which  building  permits  are  not  expected  to be  available  for
approximately four years. As to such parcels, the Partnership has agreed, during
a five-year  period  following the pending closing on the first phase, to accord
an option to the  Purchaser  to acquire the  parcels,  with the price to be paid
dependent on the terms upon which the Purchaser  leases or sells such parcels to
an  unaffiliated  third  party.  In such  event  the  Purchaser  will pay to the
Partnership,(i)  in the  event of a lease,  a sum  equal to the five  times  the
average  annual rental under the lease,  and (ii) in the event of a sale, 50% of
the net proceeds of the sale;  provided that the  Partnership is not required to
accept less than $3.50 per square foot.  If the  Partnership  itself  obtains an
unsolicited offer to lease or purchase the parcels which the Partnership desires
to accept, the Purchaser may exercise a right of first refusal in which case the
Partnership  must accept (i) in the event of a lease,  a sum equal to five times
the average  annual  rental to be paid by the third party  during the first five
years of the  proposed  lease,  and (ii) in the event of a sale,  50% of the net
proceeds to be paid by the third party.
<PAGE>
         The final  phase  relates to a  contiguous  14-acre  parcel as to which
rezoning  from the current  multi-family  to  commercial  use is not  considered
feasible for several years. The Purchaser has been granted an option ending four
years  after the first  closing to acquire  this parcel at $3.50 per square foot
(approximately  $2,129,000 subject to survey). However, after two years from the
first closing, the Partnership for multi-family residential purposes only, for a
price which is less than the option price,  subject to the Purchaser's  right of
first refusal at the same price.

         Randy Rieger, who became  vice-president of the Partnership's  managing
general partner in September,  1995 for an interim period following the death of
its  President,  is entitled to a  commission  of 10% of the net proceeds to the
Partnership on all of the above-described transactions. See Item 13.

Residential Lots within the Crestwood Tract

         As a  result  of  management's  decision  to  develop  portions  of the
Crestwood Tract,  the Partnership has replanned the  configuration of the entire
tract.  This project has included a redesign of the Single Family Tract, and the
Partnership  has now received  final plat approval to increase to 198 the number
of  residential  lots which may be developed for single family use  (hereinafter
the "Residential Tract." "Development," as such term is applied to single-family
lots,  entails the completion of all necessary zoning,  land use,  environmental
and other required regulatory procedures,  the installation of roads and utility
connections to each lot and the provision of drainage facilities.

         In 1995, the Partnership completed the off-site utility  infrastructure
for the entire  Crestwood Tract.  The cost of such  construction,  approximating
$975,000,  was financed with the proceeds of a $975,000  construction  loan from
Union  Bank  of  Florida,   ("Union  Bank  Loan  "  --  See  Item  13  -"Certain
Relationships and Related Transactions").  See Item 7 -Management Discussion and
Analysis -- "Liquidity." Under the terms of the Union Bank Loan, the Partnership
is paying  interest at a rate equal to 2% above the bank's prime  lending  rate.
The Union  Bank's  aggregate  commitment  in respect of the  Residential  Tract,
originally  $2,175,000,  has been  increased to $2,625,000  (which  includes the
$975,000 advanced for infrastructure for the entire Crestwood Tract and $350,000
advanced  for  on-site  improvement  of Phase I of the  Residential  Tract  (see
below.)  The Union Bank Loan,  which is secured by a first  mortgage  on the 198
undeveloped  homesites,  is due in full on January 31, 1998. The  Partnership is
required  to apply  $20,000 of the  proceeds  of each lot sale to payment of the
Union Bank Loan.

         The Partnership is developing the residential lots in three phases,  of
which Phase I, comprising 32 lots, has been developed with on-site improvements,
financed  by  $350,000  in  borrowings  under the Union Bank  Loan.  Five of the
residential  lots in Phase I were purchased for the aggregate sum of $170,000 by
Regency Homes,  Inc. under an option which covered all 32 lots. The option as to
the balance of the lots has terminated  because of Regency's failure to purchase
a specified minimum number of lots per month, although the Partnership continues
to negotiate with Regency and others for the sale of individual lots.
<PAGE>
         In addition,  on August 12, 1996, the Partnership executed an agreement
with Lennar Homes, Inc. ("Lennar"), a prominent South Florida developer, for the
purchase of 86 lots in Phase II of the  Residential  Tract for an  aggregate  of
$2,451,000.  The Partnership holds deposits under letters of credit  aggregating
$490,200.  The agreement  contemplates  that all lots will be taken and paid for
over an 18-month period after completion by the Partnership of development work.
It is anticipated  that closing on at least 22 of the lots will occur during the
summer of 1997,  resulting in gross proceeds to the Partnership of approximately
$612,000.

         The Partnership  intends to finance on-site development of the 166 lots
in Phases II and III of the Residential Tract,  anticipated to cost in the range
of $1.9  million,  with the balance of the borrowing  available  under the Union
Bank Loan and the net proceeds of a public bond financing  effected in November,
1996 by the Indian Trail Water Control District (the "District"), which produced
net available funds for the project of approximately $1,074,000. The bonds are a
direct  obligation of the District and not of the Partnership,  and interest and
principal  on the  bonds  will  payable  from  taxes  levied  on the lots in the
Residential  Tract. Such bond issue resulted in an increase in an aggregate real
estate tax of approximately  $117,000 per annum on the entire Residential Tract,
of which amount $600 is allocable to each lot individually.

Other Acreage within the Village

         In March,  1993 the  Partnership  reacquired  a separate  tract of 4.54
acres in the Village by  accepting a deed in lieu of  foreclosure  on a mortgage
with a principal balance of $300,000 (See Item 7 --"Foreclosure  Transactions").
This parcel is bordered by a golf course and a principal  Village road, is zoned
for  approximately  100 multi-family  residential units and is being offered for
sale in its present state without further development. An agreement to sell this
acreage for $325,000 was  terminated  by the  purchaser in November 1996 and the
property is currently being remarketed

Utility Contingent Receivable

         In 1983 the  Partnership's  Predecessor  Company sold to the Village of
Royal Palm Beach a water and sewage  treatment  system  servicing  the  Village.
Pursuant to the agreement of sale ("Utility Contract"),  the Predecessor company
received $2,510,000 on closing, and was entitled to future payments to a maximum
of $10,900,000 as future connections,  measured by consumption  increases,  were
made to the system over a period ending August,  2001. As of September 30, 1995,
$5,365,000 had not been received or earned.  The Utility  Contract also provided
for contingent  extension  periods  aggregating  not more than three  additional
years to compensate for possible  future  governmental  building  moratoriums or
water use restrictions.  The Partnership's  consultants have advised it that the
term has been  extended  through  2003 as a result of water  usage  restrictions
imposed by the South  Florida  Water  Management  District  in 1990 and 1991 and
moratorium  actions  taken by the  Village of Royal Palm Beach in 1985 and 1986.
The Utility Contract also calls for payments to the Partnership  equal to 25% of
any  "Guaranteed   Revenues"   (payment  by  developers  to  secure   guaranteed
allocations of plant capacity)  collected by the Village to a maximum payment of
$500,000,  of which  $262,657 has already been  received.  It is not possible to
predict the amount or timing of future  revenues to the  Partnership  under this
program.
<PAGE>
         To date, the  Partnership has received the following  Utility  Contract
payments:


<TABLE>
<CAPTION>

                                  Amount Received Based On
          Fiscal Year Ended             consumption            Guaranteed
           September 30,                 Increases              Revenues
           -------------                 ---------              --------
               <S>                      <C>                    <C>
               1984                     $  919,000
               1985                        830,000
               1986                        637,000
               1987                        859,000
               1988                        240,000             $ 30,000
               1989                        761,000               45,000
               1990                            -0-               35,000
               1991                        293,000               21,000
               1992                        357,000               37,000
               1993                        168,000               47,000
               1994                         58,000               27,000
               1995                        413,000               20,000
               1996*                       
               Total                    $5,535,000             $262,000
                                        ==========             ======== 
</TABLE>
----------------------------------
* The Partnership anticipates receipt of $129,000 in late January, 1997.

 

         The Utility Contract with extensions  management  believes have already
accumulated  will expire in 2003,  subject to extensions of up to one additional
year.  The ability of the  Partnership to realize the maximum price is dependent
upon the rate at which the population in the Village grows,  and levels of water
consumption  which in turn depends upon  economic,  social and climatic  factors
which cannot be predicted.  Historically,  water  consumption  tends to increase
based upon increases in population.  During most of fiscal 1990, however, due to
drought  conditions  existing in most Southern Florida,  the South Florida Water
Management District imposed mandatory water usage  restrictions.  The imposition
of these  restrictions  resulted in a decrease in aggregate water consumption in
the area from which the  Partnership's  receipts are projected while  population
was increasing.

         Management  believes  that there remain  sufficient  potential new home
water  hookups in the area  served by the utility to enable the  Partnership  to
realize  the maximum  remaining  $5,365,000  in  contingent  payments  under the
Utility Contract. There can be no assurance, particularly in view of the decline
in  payments  from  1995 to 1996,  that the  rate of new  construction  or water
consumption in such area will be sufficient to enable the Partnership to receive
the full  amount or even a  substantial  portion of such  payments  prior to the
expiration of the contingent payment term.
<PAGE>
Acreage in the Vicinity of the Village

         Substantially  all of the property  previously owned by the Predecessor
Company  in  Palm  Beach  County  outside  of  the  Village  limits,  originally
aggregating approximately 23,800 acres, was sold under the Predecessor Company's
retail installment sales program, which terminated prior to the inception of the
Partnership.  The Partnership  currently retains three tracts in the vicinity of
the Village.

         The first tract  originally  consisted  of 206  one-acre  lots  located
approximately  eight  miles  northwest  of the  Village.  These  lots  have been
improved with graded unpaved access roads and drainage facilities.  One lot from
this tract was sold during 1996 for $12,000.

         In  October,   1996,  the  County  of  Palm  Beach  Nature  Conservancy
purchased,  for approximately  $100,000, 18 lots within this parcel for use as a
conservation  easement.  The County has also agreed to purchase an additional 16
such  lots for  $84,000,  with a closing  anticipated  in late  February,  1997.
Assuming that this sale is closed,  the Partnership will retain 171 lots in this
tract.

         Palm Beach County has adopted land development  regulations under which
new development will not be permitted unless adequate public facilities (such as
roads) will be in place  concurrently with the impacts of such development.  The
Indian  Trail Water  Control  District  ("District")  is  currently  preparing a
revised  drainage  plan which would  result in an  exemption  for such lots from
further  compliance  with such  concurrency  requirements  and  would  allow the
issuance of building  permits for  single-family  residences on such lots.  Such
plan has  been  opposed  by  other  governmental  agencies,  however,  and it is
uncertain  whether the plan will be adopted.  If the plan is not approved  these
lots may not be usable  for  residential  purposes.  Further,  even  assuming  a
favorable  result,  the  administrative  process leading to the  availability of
building permits cannot be expected to be completed before mid-1998.

         The second tract, consisting of 470 acres, had been reserved for use by
the District, in part, as a water retention area for such revised drainage plan.
The Partnership is presently evaluating possible alternative uses of this tract,
which contains a significant  amount of wetlands.  Since the use of this land is
also dependent on the extension of roads, and development activity on this tract
may meet with opposition from governmental  agencies concerned with wildlife and
wetlands  preservation,  it is not possible to estimate the realizable  value of
this land. However, in 1996 the Partnership  rejected an offer of $1,100,000 for
this  tract and  alternatives  to such sale are  being  examined  with a view to
obtaining a higher  price.  Accordingly,  management  is of the opinion that its
realizable value is in excess of its current book value of $213,421.

         The timing of future sales of the land discussed  above,  the manner in
which they may be developed and the ultimate realizable prices for this land are
dependent  upon a complex  and  interrelated  number of factors  arising  out of
governmental regulations concerning permissible land use.

         The  third  tract  in the  vicinity  of  the  Village  the  Partnership
previously held a disputed claim to approximately 24 acres of undeveloped  land.
This claim had not originally been accorded value on the  Partnership's  balance
sheet and was considered to have little or no value.  During 1994, in connection
with the resolution of this claim with  adjoining  land owners,  and in order to
give value to such claim,  the Partnership  relinquished a portion of its claim,
<PAGE>
acquired 5  adjoining  acres for  $141,879,  and  executed  a joint  development
agreement with one of such adjoining  landowners  relating to the  Partnership's
acreage and such landowner's acreage  (comprising  approximately 22 acres in the
aggregate  of which  the  Partnership  now owns  approximately  12  acres).  The
Partnership  and the joint  developer have entered into an agreement to sell the
entire combined parcel for a price of $1.90 per square foot,  subject to survey,
which would result in a gross selling price of  approximately  $1,986,000  (less
selling  commissions) of which the  Partnership's  share would be  approximately
$993,000.  The sale is subject to the  purchaser's  ability to have the premises
rezoned for use as a shopping  center,  approval of the premises as a site for a
supermarket  by a major  supermarket  chain,  and the issuance of all  necessary
building  and  other  permits,  with  a  closing  date  (subject  to  all of the
foregoing)  no later than June 30,  1997.  The  agreement  is also  subject  the
ability of the Partnership to cause the owner of an adjoining  residence,  which
is not owned by the Partnership or its joint  developer,  to sell such residence
to the purchaser.  There is no assurance that such permits will be obtained, nor
can the  Partnership  predict  whether  the  rezoning  process,  which  involves
proceedings  before several  governmental  bodies,  or the sale of the aforesaid
residence, could be completed or obtained within the required time frame.

Hernando County, Florida

         The Predecessor Company originally owned approximately  17,600 acres in
Hernando  County,  Florida,  located 56 miles from Tampa,  with 13 miles of road
frontage along U.S.  Highway 19, a major area highway.  In 1994 the  Partnership
sold a 14 acre  tract  in this  area for  $125,000.  The  Partnership  presently
retains approximately 20 acres in this area with negligible value.

Lake County,  Florida

         The Predecessor Company originally owned approximately  12,300 acres in
Lake County,  Florida,  located in Central Florida on the outskirts of the Ocala
National Forest  approximately 39 miles from Ocala and 6 miles from Deland. Lake
County is  predominantly  rural with a population of  approximately  14,000.  At
September 30, 1992, the Partnership  owned no property in Lake County;  however,
in March of 1993 the  Partnership  accepted a deed in lieu of  foreclosure  on a
mortgage on a 1400 acre  portion of this  property  with a principal  balance of
$706,000. See Item 7 -- "Foreclosure Transactions." Approximately 1,000 acres of
this  property  which  are  remote,  undeveloped  and  may be  unsuited  for any
development,  were sold by the Partnership for a cash price of $350,000 in June,
1993. The balance of the tract was sold in 1994 in two  transactions  for prices
aggregating  $360,000,  of which  $248,000 was  represented  by a purchase money
mortgage  payable over a five year term. In November 1995 this mortgage having a
principal  balance of $222,471  and  deferred  profit of  $48,958,  was sold for
$168.962.


Item 3. Pending Legal Proceedings.

         There  are  no  pending  legal  proceedings,  other  than  routine  and
immaterial  litigation incidental to its business, to which the Partnership is a
party or to which its property is subject.


Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable.
<PAGE>
                                     PART II


Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
Matters

         On January 16, 1996 the American Stock  Exchange  halted trading in the
Partnership's Units pending a review of, among other matters,  the Partnership's
inability to meet the Exchange's listing standards.  The Partnership's units did
not resume trading on the Exchange and, following such review,  were delisted on
March 28, 1996.  The following  table sets forth,  for the fiscal periods of the
Partnership  indicated,  the  reported  high  and  low  closing  prices  for the
Partnership's  Units as reported on the American Stock Exchange  through January
15,  1996;  information  for  periods  thereafter  relates  to  over-the-counter
trading.

         The  Partnership's  Units  were held by  approximately  649  holders of
record as of December 31, 1996. Based on its tax records,  including  beneficial
owners, the Partnership  believes that there are a total of approximately  1,000
unit holders.
<TABLE>
<CAPTION>

Fiscal Year  Ended:

September 30, 1996

                     Quarter             High             Low
                     -------             ----             ---
                     <S>                 <C>              <C>
                     First               1 1/2            3/4
                     Second                13/16          7/8
                     Third                 9/16           17/20
                     Fourth                9/16           3/4


September 30, 1995
<CAPTION>
                     <S>                 <C>              <C>
                     First                 15/16          3/4
                     Second              1                13/16
                     Third               2                13/16
                     Fourth              1-11/16          1 3/8

</TABLE>

Prior Distributions

         The  Partnership  Agreement  requires the Managing  General  Partner to
consider  quarterly  whether the Partnership has Cash Available for Distribution
in respect of the Partnership Units, and to make distributions  unless the costs
of the  distribution  would be  disproportionately  high in relation to the Cash
Available for  Distribution.  "Cash Available for Distribution" in general means
the  excess  cash held by the  Partnership  over  anticipated  expenditures  and
reserves for  anticipated or contingent  liabilities.  The  Partnership is not a
party  to any  agreements  which  would  restrict  its  ability  to make  future
distributions.  No  distributions  were made since December of 1992, in light of
<PAGE>
management's  judgment that  Partnership cash should be conserved and applied to
the  development  activities  discussed in Item 2, and, during 1994 and 1995, in
light of the  possibility  that the  Partnership  might resume  active  business
operations  as discussed in Item 1. It is unlikely  that  distributions  will be
made during fiscal 1996, although management, in reviewing the Partnership's use
of cash,  will  consider  the tax  effect  on  partners  in the  event  that the
Partnership  generates  taxable income from its development and sale activities.
See Item 1 -- "Factors Affecting Future Operations and Distributions."

         At the  inception of the  Partnership,  its assets were  assigned a tax
basis in the hands of the  Partnership  based upon the net fair market  value of
the assets  transferred from the Predecessor  Company as determined by reference
to the  aggregate  market  value of the Units at the time of original  issuance.
Each Unit's pro rata share of such net fair market  value  resulted in a capital
account of $6.31 per Unit, which also became the original tax basis of each Unit
in the hands of the original Unitholders. As a result of taxable income and loss
and   distributions   since  inception,   the  capital  account  and  tax  basis
attributable  to each  Unit  which  has  remained  in the  hands of an  original
Unitholder  has been  reduced to $1.85 as of  September  30,  1996.  Each person
acquiring a Unit after  inception  has a tax basis in such Unit equal to the net
price paid therefor. Such basis is thereafter increased by such Unit's allocable
share of the  Partnership's  income  and  decreased  by the  allocable  share of
taxable loss and by any cash distributions  made. A distribution itself is not a
taxable  event  except  to  the  extent  that  the   distribution   reduces  the
Unitholder's basis below zero.

         Section  17-607(a) of the Delaware Revised Uniform Limited  Partnership
Act provides generally that a limited  partnership shall not make a distribution
to a partner if, after giving effect to the distribution, all liabilities of the
partnership  exceed the fair value of its assets. A limited partner who receives
such a distribution is liable to the limited partnership for the amount thereof,
but  only if such  limited  partner  knew at the time of the  distribution  that
distribution  violated  said  Section  17-607(a).  No  claim  based  on any such
wrongful distribution may be made more than three years after such distribution.
In the normal course of events,  however,  the Managing General Partner does not
anticipate  that the liabilities of the  Partnership  immediately  following any
future  distribution will ever exceed the fair value of its net assets. See also
"Factors Affecting Future Operations and Distributions" under Item 1.
<PAGE>
         The  Partnership  has  declared  and  paid  the  following  liquidating
distributions:
<TABLE>
<CAPTION>
         Payment Date                         Amount Per Unit
         ------------                         ---------------
         <S>                                      <C>
         April 15, 1986                           $ .25
         August 15, 1986                            .35
         December 15, 1986                          .40
         January 15, 1988                           .50
         July 15, 1988                              .50
         January 15, 1989                           .50
         July 17, 1989                             1.00
         September 29, 1989                         .75
         March 30, 1990                             .75
         July 31, 1990                              .50
         August 30, 1991                            .50
         December 15, 1991                          .25
         December 16, 1992                          .25
                                                    ---
                                                   6.50
</TABLE>
Item 6.  Selected Financial Data

         The following is a summary of selected  financial data (in thousands of
dollars  except as to per unit  amounts) as of and for the periods  ended on the
dates indicated:
<TABLE>
<CAPTION>

                                          Fiscal Years Ended September 30,
                           ----------------------------------------------------------
                              1996         1995         1994        1993        1992
                              ----         ----         ----        ----        ----
<S>                        <C>          <C>          <C>          <C>         <C>
Selected Income
Statement Data

Revenues                   $   397      $   497      $   832      $ 1,717     $ 1,510
Net income (loss)             (690)        (787)        (554)         773         398
Income (loss) per unit        (.15)        (.18)        (.12)         .17         .09

Selected Balance
Sheet Data

Total assets                 5,486        5,425        4,650        5,090       5,361
Mortgage notes payable       2,065        1,511         --           --          --

Partners' equity             2,370        3,060        3,847        4,401       4,750
Cash distributions
   per unit                    -0-          -0-          .25          .25        --
</TABLE>

         Since the  Partnership's  sole business has been the disposition of its
assets and the  distribution  of  proceeds  to its  Unitholders,  results in any
period are not  comparable  with any other period and are not  indicative of the
results  which may be  anticipated  in any  future  period.  See Item 5 -- Prior
Distributions (relating to prior returns of capital)
<PAGE>
Item 7. MANAGEMENT`S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Liquidity and Capital Resources

         During the fiscal year, the Partnership  continued to incur substantial
expenses in the planning and development of its properties in addition to normal
ongoing  administrative  costs. The Partnership had withheld its properties from
sale during the fiscal year ended  September  30,  1995,  and during most of the
quarter ended December 31, 1995, in anticipation of a business combination which
was being negotiated  throughout most of that year, but which  negotiations were
terminated in December, 1995. The only revenues for the year ended September 30,
1996, were the proceeds of $182,000  received upon the sale of five  residential
lots  and one  undeveloped  lot,  offset  in part by  approximately  $71,000  of
terminated  merger expense.  In addition,  the Partnership  received $433,000 in
payment of an installment  on a contingent  note held in respect of a prior sale
of the utility system.
See Item 1.

         During  the  quarter  ended  December  31,  1995 the  Partnership  also
received $168,962 in satisfaction of a mortgage note receivable.

         The  Partnership  is obligated  to repay a working  capital loan in the
amount of $527,000 due to Hasam Realty Limited Partnership, a general partner of
the Partnership, on February 28, 1997. See Item 13 -- "Certain Relationships and
Related Transactions."

         In June 13, 1996 the Partnership obtained an additional working capital
loan in the amount of $300,000  from an affiliate of Jack  Friedland and $25,000
from Mr.  Friedland  directly.  Mr.  Friedland is  affiliated  with Hasam Realty
Limited  Partnership,  a  general  partner  of the  Partnership.  The  loan  was
originally  for a term ending  October 31, 1996,  at an interest rate of 2% over
the prime rate of Union Bank,  and is secured by a first mortgage lien on a 4.54
acre tract of undeveloped land in Palm Beach County and a tract of approximately
14 acres of commercially  zoned land in the Crestwood tract described in Item 2.
As a result of the  deferral of closing on several  transactions  which had been
anticipated to produce substantial cash proceeds,  the maturity date of the note
was extended through February 28, 1997.

         As a result of the foregoing,  the Partnership's cash balances declined
from $84,000 at September 30, 1995 to $41,000 at September 30, 1996.

         During the current  fiscal year, and based upon  management's  judgment
that ordinary operating expenses will not increase, the Partnership  anticipates
that cash flow and liquidity requirements will be satisfied by current cash, the
bank  financing  described  in Item 2 --  Properties  --  "Village of Royal Palm
Beach", and land sales and contingent utility receipts described under Item 2 --
Properties -- "Utility Contingent  Receipts." In the event of a deferral of land
sales beyond currently  anticipated dates,  management  believes that additional
financing  arrangements  will be available  from, or guaranteed by, Hasam Realty
Limited Partnership,  a general partner of the Partnership,  or an institutional
lender.
<PAGE>
Affect of Land Sales on Future Cash Flow

         Assuming that the  Partnership  continues to liquidate,  total net cash
flow which might become available for distribution remains  unpredictable due to
uncertain  conditions  in the  South  Florida  real  estate  market in which the
Partnership's  remaining  real estate is located,  and the  competitive  factors
described in Item 1 -- Business -- "Competition." These conditions will continue
to affect the realizable value of the  Partnership's  remaining land,  including
decisions by parties holding options on the Partnership's  land to exercise such
options in whole or in part. See Item 2.

         Certain of the Partnership's  land in Palm Beach County located outside
of the Village of Royal Palm Beach (see Item 2 --  Properties -- "Acreage in the
Vicinity  of the  Village")  has  been the  subject  of  substantial  regulatory
concerns  relating to land use issues,  and the salability of such land has been
adversely  affected by doubts  concerning  the future  availability  of building
permits. At the inception of the Partnership,  such land, in the aggregate,  was
assigned  appraised or estimated values  aggregating  approximately $1.7 million
and is carried on the  Partnership's  balance  sheet at  $343,000.  As indicated
under Item 2 -- " Acreage  in the  Vicinity  of the  Village,"  the  Partnership
recently  rejected an offer of $1.1 million for a 483 acre portion of this land.
While the Partnership believes that all or a major portion of the acreage in the
vicinity of the Village will  ultimately be sold,  aggregate  realizable  values
cannot  be  estimated.  It  also  remains  possible,  on the  other  hand,  that
continuing  development  and  possible  future  road  building  activity  in the
vicinity  of this land could have a  favorable  impact on the value of the land,
although such impact is entirely  speculative.  For a discussion of the land use
issues  which could  affect  future  development  of this  acreage see Item 2 --
Properties -- "Acreage in the Vicinity of the Village."

         As indicated in Item 2, the  Partnership is committed to the continuing
development of phases II and III of the Crestwood Residential Tract, as the most
efficacious  manner in which to enhance  liquidation  values. As indicated under
Item  1 --  "Factors  Affecting  Future  Operations  and  Distributions,"  it is
unlikely, in view of management's decision to continue development activities as
an  aid  to  the  enhancement  of  ultimate   liquidation   proceeds,   and  the
Partnership's   obligation  to  repay  indebtedness  incurred  to  finance  such
development and for working capital, that distributions to partners will be made
during fiscal 1997.

Environmental Matters

         There are no environmental  contingencies in respect of the Partnership
or its  properties.  Use of all of the  Partnership's  properties  is subject to
compliance with state and county land use regulations  relating to environmental
matters,  which the Partnership  takes into account in considering the values of
its properties. See Item 1 -- Business -"Factors Affecting Future Operations and
Distributions"  and  "Regulation"  and Item 2 --  Properties  -- "Acreage in the
Vicinity of the Village."
<PAGE>
Results of Operations
<TABLE>
<CAPTION>  
                                             Fiscal Years Ended September 30 
                                         --------------------------------------
                                           1996           1995          1994
                                         --------      --------       --------
       <S>                               <C>           <C>            <C>                                                
       Revenues                              
       Sales of land, net                $182,000            -0-      $520,000
       Recognized profit on
        installment and cost 
        recovery sales (a)                  1,000        31,000         18,000
       Interest income (b)                  5,000        32,000         67,000
       Sale of utility system (c)         129,000       432,000         86,000
       Other (d)                           80,000         2,000        141,000
                                         --------      --------       --------
Total revenues                           $397,000      $497,000       $832,000
                                         ========      ========       ========
</TABLE>


a) Recognized  profit on  installment  and cost recovery  sales has changed from
year to year as  collections  of the  Partnership's  mortgage  notes  receivable
related to sales reported on the installment and cost recovery basis decreased.

b) Interest  income  decreased from 1994 to 1996 as the  Partnership's  mortgage
notes receivable decreased.

c) As discussed in Note 11 to the financial statements, income recognized on the
sale of the utility system varies with water consumption and other factors.

d) Other income in 1996 includes $74,000  received as a foreclosure  settlement,
net of related expenses.  Other income in 1994 includes $119,000  recovered as a
litigation settlement for breach of contract against a third party.

Cost of sales

         Cost of sales  relates to the sales of land as  discussed  above.  This
item varies as a result of  dissimilar  profit  margins  and income  recognition
methods on the various sales of land and buildings as discussed above.

Selling, administrative and other expenses

         Selling,   general  and  administrative   expenses,   have  not  varied
significantly during the last three years. However, in 1996 and 1995 the Company
incurred  $70,720 and  $405,261,  respectively,  in costs  related to a proposed
merger, as to which negotiations have been terminated.

Provision for doubtful accounts

         In 1994 a provision for doubtful accounts and an allowance for doubtful
accounts of $48,500 was recorded.  In 1995 it was determined that this allowance
of $48,500 was no longer required.
<PAGE>
Depreciation and property taxes

         The increase in this item from 1994 to 1995 relates to  assessments  of
penalties and interest on delinquent 1994 taxes not yet paid.
 
Item 8. Financial Statements and Supplementary Data

         The financial  statements and the  supplementary  data are listed under
Item 14 herein.


Item 9. Disagreements with Accountants on Accounting and Financial Disclosure

                                      None


<PAGE>
                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The following information is provided with respect to the directors and officers
of each general partner of the Registrant.(l)
<TABLE>
<CAPTION>

                                            Present Position
                                            With  the  Registrant
Name                            Age         and other positions
----                            ---         -------------------
<S>                             <C>         <C>
Irving Cowan                    64          Chairman and President of Steinco (1)(*)
                                            Private Investor

Randy Rieger (**)               47          Vice President  and  Chief
                                            Operating Officer of Steinco,
                                            September 1995 through February 1996;
                                            President of RTL Realty, Inc.
                                            and Royal T Land, Inc.,
                                            privately held real estate
                                            consultants and brokers
                                            for over five years

David  B.  Simpson              58          Director and Vice President(*)of Steinco; 
                                            attorney currently  in
                                            private practice and counsel
                                            to the Partnership; partner,
                                            Holtzmann, Wise & Shepard,
                                            Counsel to Partnership,
                                            September 1991 to August 1993


Dr. Ernest Sayfie                66         Director  of  Steinco; Physician in 
                                            private practice

Herbert Tobin                   56          Director, and Secretary and Treasurer(*)
                                            of  Steinco; President, The Ben Tobin
                                            Companies, LTD, a real estate development company.

Jack Friedland                  71          Member, Friedco, L.C.(l); Private Investor
                           

Leonard Friedland               74          Member, Friedco, L.C.(l); Private Investor
                           

Harold Friedland                66          Member, Friedco, L.C.(l); Private Investor
                          

Marjorie Cowan                  56          Member, Friedco, L.C.(l); Private Investor
                            
</TABLE>
(1) The general  partners are Stein  Management  Company,  Inc.  ("Steinco") and
Hasam  Realty  L.P.  The  general  partner  of  Hasam  L.P.  is  Friedco,  L.C.,
("Friedco") a Florida limited liability company.  Friedco is managed by its four
members, Jack, Harold and Leonard Friedland and Marjorie Cowan, who are brothers
and sister. Irving Cowan is the husband of Marjorie Cowan.
<PAGE>
(*) Elected to this position on February 14, 1996. 
(**) Mr.  Rieger,  who was elected on an interim  basis  following  the death in
September,  1995,  of Martin Katz,  President of the managing  general  partner,
resigned  following the election of the officers referred to in the above table.
See Item 13.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
officers and directors of the general partners of the  Partnership,  and persons
who own more than ten percent of the  Partnership's  Units,  to file  reports of
ownership and changes in ownership with the  Securities and Exchange  Commission
and the American  Stock  Exchange.  Such  officers,  directors  and greater than
ten-percent   Unitholders  are  required  by  SEC  regulations  to  furnish  the
Partnership with copies of all Section 16(a) forms they file.

         No such forms were  furnished to the  Partnership  during  fiscal 1996.
Based solely on the foregoing the Partnership  believes that during fiscal 1996,
no purchases or sales of units were made requiring  compliance  with  applicable
Section 16(a) filing requirements.

Item 11.  Executive Compensation

         During fiscal 1996 no executive officer of the Managing General Partner
received  compensation  exceeding  $60,000  except  Randy  Rieger,  who received
$60,000 through  February,  1996 (the date of Mr.  Rieger's  resignation as Vice
President)  and  $42,000  through  end of the  fiscal  year  in  management  and
consulting and brokerage fees.

         All officers and Directors,  as a group (5 persons)  earned $127,400 in
cash  compensation  (including  the  compensation  paid to Mr. Rieger  described
above) and $4,300 in other benefits.

         The Partnership  Agreement  provides that the Partnership  will provide
and pay for all payroll and other costs of Steinco (to the extent such costs are
not paid  directly by the  Partnership)  in  connection  with the  employment of
personnel,  and the costs of office  space,  outside  clerical and  professional
assistance,  equipment, and other facilities which are ordinary and necessary to
the  conduct  and  management  of the  Partnership's  affairs.  The  Partnership
reimbursed Steinco  approximately $45,000 in the fiscal year ended September 30,
1994 for such  expenses.  Steinco's  sole  function is to serve as the  Managing
General Partner and it does not conduct any other operations.

         Other than the foregoing,  the Managing General Partner is not entitled
to any  compensation  in respect of the discharge of its  obligations  under the
Partnership Agreement. Hasam L.P., the other General Partner, is not entitled to
compensation  of any nature under the  Partnership  Agreement but is entitled to
reimbursement  for such expenses as it may reasonably  incur in the discharge of
its ordinary and necessary  obligations as a General  Partner.  No such expenses
were reimbursed in the fiscal year ended September 30, 1996.
<PAGE>
Item 12.  Security Ownership of Certain Beneficial Owners and Management

The following  table sets forth as of December 15, 1996  information  concerning
(i) all persons who are known to the  Registrant to be the  beneficial  owner of
more  than 5% of the  Units  and  (ii)  the  beneficial  ownership  of  Units of
directors and officers of each General Partner of the Registrant.
<TABLE>
<CAPTION>
                                              Amount Beneficially                    Percent of
Name  and  Address                                  Owned (a)                           Class
------------------                                  ---------                           -----
<S>                                              <C>                                  <C>        
Harold Friedland                                   712,417 (1)                           15.8%
636 Old York Road #210
Jenkintown, PA 19046

Jack Friedland                                   1,155,834  (1)(2)                       25.8%
111  Regatta  Drive
Jupiter,  FL  33477

Leonard Friedland                                1,170,196  (1)(3)                       26.1%
6530  Allison  Road
Miami Beach, FL 33131

Marjorie Cowan                                   1,057,929  (1)(4)                       23.6%
3725 S. Ocean  Dr.
Hollywood,  FL  33019

Samuel Friedland
Family Foundation                                  637,417                               14.2%
2501 S.  Ocean  Dr.
Hollywood,  FL  33019

Hasam Realty Limited
Partnership                                         75,000                                1.7%
2501 S. Ocean  Dr.
Hollywood,  FL  33019

Stein Management Company                            20,093                            Less  than  1%
2501 S. Ocean  Drive
Hollywood,  FL  33019

David  B. Simpson                                    1,460 (5)                        Less  than  1%
2 University Plaza  #109
Hackensack, N. J. 07601

Dr.  Ernest Sayfie                                     150                            Less  than  1%
3001 S. Ocean  Dr.
Hollywood,  FL  33019

All officers and directors                       2,361,972                               52.7%
 as a group (See footnotes)
</TABLE>
<PAGE>
(a)  Includes  all  units as to which  owner  holds  sole or  shared  voting  or
investment power.

(1) Includes 637,417 units owned by the Samuel  Friedland Family  Foundation and
75,000 units owned by Hasam Realty Limited Partnership, of which this individual
may be deemed a controlling  person.  In the case of Harold  Friedland  does not
include  316,144  Units owned by an adult child and 65,000 Units owned by trusts
for other adult  children of which Jack Friedland is one of three  trustees.  In
the case of Leonard Friedland,  includes Units held for benefit of Mr. Friedland
and adult children of Mr. Friedland.

(2) Does not include 2,500 units owned Jack Friedland's wife.

(3) Does not include 2,500 units owned by Leonard Friedland's ex-wife.

(4) Does not include 96,900 units owned by Mrs. Cowan's  husband,  Irving Cowan.
Includes  16,993  units owned by a trust for a minor child of which Mr. and Mrs.
Cowan are trustees; Includes 21,708 Units owned jointly with Mr. Cowan.

(5) Does not include 20,000 Units owned by Stein  Management  Company,  of which
Mr. Simpson's wife owns 50% of the common stock.


Item 13.  Certain Relationships and Related Transactions

Borrowing from Related Parties

         In June,  1995, the Company borrowed  $500,000 from Hasam Realty,  L.P.
for  general  working  capital  purposes,  secured  by a first  mortgage  on the
Crestwood  commercial  property referred to in Item 2. In February,  1996, Hasam
agreed to add to principal  $27,249 of interest accrued through January 31, 1996
and unpaid.  The loan  (including said amount added to principal) was payable in
full on June 29, 1996 but was extended  through  February 28, 1997. The loan and
bears  interest at a rate equal to two percent  over the Prime Rate,  defined as
the highest  fluctuating  rate of interest  per annum as  published  by the Wall
Street  Journal.  Management  believes that the terms of this borrowing are fair
and  reasonable,  and at least as  favorable  as the terms which could have been
obtained from an unaffiliated institutional lender.

         On June 13, 1996, the Partnership  borrowed  $300,000 from an affiliate
of Jack Friedland and $25,000 directly from Mr.  Friedland,  who is an affiliate
of Hasam Realty Limited Partnership, a general partner of the Partnership. These
loans,  originally due on October 1, 1996, have been extended  through  February
28, 1997. See Item 7.

Indian Trail Water Control District

         The Indian Trail Water  Control  District,  a public entity whose seven
supervisors  included  Martin J. Katz until his death in September,  1995 and to
which Jack  Friedland  has recently  been  elected,  has prepared a drainage and
reclamation plan covering a portion of the Company's  acreage in the vicinity of
the Village of Royal Palm Beach.  In addition,  the  Partnership  is negotiating
with the  District  for the  issuance  of  bonds to  finance  a  portion  of the
Partnership's  acreage in the Village.  Reference is made to Item 2 - Properties
-- Palm Beach  County  -"The  Village of Royal Palm  Beach" and  "Acreage in the
Vicinity of the Village."
<PAGE>
         Herbert  Tobin,  a Director  of  Steinco,  is Chairman of the Board and
Director,  of Union Bank of Florida,  which made a land  development loan to the
Partnership in 1994. See Item 2.

         Randy Rieger was elected on an interim  basis as a Vice  President  and
Chief Operating  Officer of Stein Management  Company,  Inc., the  Partnership's
managing general partner, in September 1995, shortly following Mr. Katz's death.
Mr.  Rieger  had been  active as a real  estate  broker,  directly  and  through
affiliated  companies,  in the south  Florida real estate market for many years.
Prior to his election in 1995,  Mr.  Rieger had been serving as a consultant  to
the  Partnership  under an arrangement  pursuant to which he was paid consulting
fees, and additional  amounts  applicable to future  brokerage  commissions were
being paid to RTL Realty Corp.  (50% owned by Mr. Rieger) which had been engaged
as the Partnership's exclusive broker in respect of a substantial portion of its
real estate  assets.  Under such prior  arrangement,  RTL Realty  Corp.  will be
entitled to  substantial  brokerage  commissions  in the event that certain real
estate sales  currently  under contract  relating to a shopping  center site are
consummated.  See Item 2 -- Properties -- "The Villaqe of Royal Palm Beach." Mr.
Rieger  resigned  following  the  election of new officers on February 14, 1996;
however, Mr. Rieger has continued to serve the Partnership as a consultant under
a consulting and brokerage  agreement with Mr. Rieger and RTL Realty Corp, dated
May 23, 1996, which was originally scheduled to expire on December 31, 1996 (the
"RTL  Agreement").  Under the RTL  Agreement,  RTL received  $6,000 per month in
consideration  of Mr.  Rieger's  services  to the  Partnership,  in  addition to
brokerage  on sales of the  Partnership's  properties  at a varying  schedule of
rates and reimbursement of approved expenses. In November, 1996, the Partnership
approved an extention of the RTL  Agreement  until  December 31, 1997,  and also
agreed to reimburse RTL for certain expenses at the rate of $2,500 per month for
office  expenses.  In the fiscal year ended  September 30, 1996,  Mr. Rieger was
paid $113,060  under the original and revised  agreements,  of which $60,000 was
paid to him as officer's compensation. See Item 10.

General Partners

The general  partners do not receive any  compensation  for serving as such. See
Item 11 -- "Executive Compensation."
<PAGE>
                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a)      The following documents are filed as a part of this report:

                  1. Financial Statements:

                  Independent Auditor's Report

                  Royal  Palm  Beach  Colony,   Limited  Partnership   Financial
                  Statements:

                  Balance sheets as of September 30, 1996 and 1995.

                  Statements  of  operations  for the years ended  September 30,
                  1996, 1995 and 1994.

                  Statements of partners'  equity for the years ended  September
                  30, 1996, 1995 and 1994.

                  Statements  of cash flows for the years  ended  September  30,
                  1996, 1995 and 1994.


         2.       Financial Statement Schedules:

Schedule IX       Valuation and qualifying accounts

Schedule X        Supplementary Income Statement Information


Schedules  other than those listed above have been omitted  because they are not
applicable or the required  information is shown in the financial  statements or
notes thereto.


         (b)      Reports on Form 8-K

                  None.

         (c)      Exhibits

NOTE:  All  references  in this table of  exhibits to  "Registration  Statement"
relate to the Registration Statement of the Registrant on Form S-14 (file Number
2-96374) as  originally  filed with the  Securities  and Exchange  Commission on
March 12, 1985,  as  supplemented  by Amendment  No. 1 filed May 23, 1985 and as
effective on June 10, 1985.

3(a)  Certificate  and  Agreement  of  Limited  Partnership  of Royal Palm Beach
Colony,   L.P.  filed  as  Exhibit  3(d)  to  the  Registration   Statement  and
incorporated herein by reference.

3(b) Restated  Certificate  and Agreement of Limited  Partnership  of Royal Palm
Beach  Colony,  L.P.  included as Appendix B to the  Registration  Statement and
incorporated herein by reference.
<PAGE>
3(c) Amended  Certificate  and  Agreement of Limited  Partnership  of Royal Palm
Beach Colony,  L.P. (filed May 21, 1985 with the Secretary of State of Delaware)
changing name to Royal Palm Beach Colony, Limited Partnership.  Filed as Exhibit
3(g) to Amendment  Number One to the  Registration  Statement  and  incorporated
herein by reference.

3(d)  Restated  Certificate  and  Agreement  of  Limited  Partnership  (revised)
included as Appendix B to  Amendment  No. 1 to the  Registration  Statement  and
filed July 11, 1985 with the  Secretary  of State of Delaware  and  incorporated
herein by reference.

3(e) Restated  Certificate of Limited Partnership dated December 16, 1986. Filed
as Exhibit 3(e) to Report on Form 10-K for the fiscal year ended  September  30,
1986 and incorporated herein by reference.

3(f) Amended and Restated  Agreement of Limited  Partnership  dated December 16,
1986.  Filed as Exhibit  3(f) to Report on Form 10-K for the  fiscal  year ended
September 30, 1986 and incorporated herein by reference.

3(g)  Amendment No. 1 to Amended and Restated  Agreement of Limited  Partnership
dated  December 30,  1986.  Filed as Exhibit 3(g) to Report on Form 10-K for the
fiscal year ended September 30, 1986 and incorporated herein by reference.

3(h) Second  Amended  and  Restated  Certificate  of Limited  Partnership  dated
December 30, 1986.  Filed as Exhibit 3 (h) to Report on Form 10-K for the fiscal
year ended September 30, 1986 and incorporated herein by reference.

4(a) Form of Unit  Certificate  issued to Limited  Partners and Assignees of the
Partnership.   Filed  as  Exhibit  4  (a)  to  the  Registration  Statement  and
incorporated herein by reference.

4(b) Loan Agreement  between Royal Palm Beach Colony,  Limited  Partnership  and
Union Bank of Florida dated October 6, 1994, pertaining to loan in the amount of
$975,000. Filed as Exhibit 4(b) to the Report of the Registrant on Form 10-K for
the fiscal year ended September 30, 1995 and incorporated herein by reference.

4(c)  Correction to  description of Exhibit 4(c) filed with Report of Registrant
on Form 10-K for fiscal year ended  September 30, 1995.  Said Exhibit relates to
is a promissory note for $27,247.83 of accrued  interest on Prommissory  Note in
the amount of $500,000 filed as Exhibit 4(d) to said report on Form 10-K.

4(d)  Correction to  description of Exhibit 4(d) filed with Report of Registrant
on Form 10-K for  fiscal  year  ended  September  30,  1995.  Said  Exhibit is a
Prommissory  note from  Registrant to Hasam Realty  Limited  Partnership  in the
amount of $500,000.

4(e)  Agreement  between  Registrant and Gerald M. Higier dated December 1, 1995
relating to purchase of 10.8 acre commercial tract. Filed as Exhibit 4(e) to the
Report of the  Registrant  on Form 10-K for the fiscal year ended  September 30,
1995 and incorporated herein by reference.

4(f) Agreement between Registrant and Gerald M. Higier dated in 1995 relating to
purchase of 24 acres.  Filed as Exhibit 4(f) to the Report of the  Registrant on
Form 10-K for the fiscal year ended September 30, 1995 and  incorporated  herein
by reference.

4(g) Agreement executed August 12, 1996 between the Registrant and Lennar Homes,
Inc.  relating  to sale of 86 single  family  lots in  Crrestwood  Unit 3 - Plat
Three.
<PAGE>
4(h) First Amendment to Loan Agreement and First Mortgage Modification Amendment
dated June 26, 1995 to Loan Agreement referred to in Exhibit 4(b).

4(i)  Second  Mortgage  Modification  Amendment  dated  October 21, 1996 to Loan
Agreement referred to in Exhibit 4(b).

4 (j) Mortgage dated June 13, 1996 between Crossroads  Associates,  Ltd. and the
Registrant pertaining to secured loan of $300,000 to the Registrant.

4 (k)  Promissory  Note  dated  June 13,  1996 in the  amount of  $300,000  from
Registrant to Crossroads  Associates,  Ltd.  relating to Mortgage referred to in
Exhibit 4(j).

4(l) Letter Agreement dated May 23, 1996 between Randy Rieger and the Registrant
relating to brokerage and consulting services.
<PAGE>

                                   SIGNATURES



Pursuant  to the  requirements  of  Section 13 and 15(d) of the  Securities  and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         ROYAL PALM BEACH COLONY,
                                         LIMITED PARTNERSHIP

                                    By:  Stein Management Company, Inc.
                                         Managing General Partner


Date: January 31, 1997              By:  /s/ David B. Simpson
                                         --------------------
                                         David B. Simpson, Vice President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name                                   Title                            Date
----                                   -----                            ----
<S>                            <C>                                   <C>
/s/Irving Cohen                Chairman, President and Director,     January 31, 1997
---------------                Stein Management Company, Inc.    
Irving Cowan                            


/s/David B. Simpson            Vice President and Director,          January 31, 1997
-------------------            Stein Management Company, Inc.
David B. Simpson               


/s/Ernest Sayfie               Director,                             January 31, 1997
----------------               Stein Management Company, Inc.          
Ernest Sayfie                          


/s/Herbert Tobin
----------------               Director,                             January 31, 1997
Herbert Tobin                  Stein Management Company, Inc.
</TABLE>
<PAGE>
























                            ROYAL PALM BEACH COLONY,

                               LIMITED PARTNERSHIP

                              FINANCIAL STATEMENTS

                   YEARS ENDED SEPTEMBER 30, 1996, 1995, 1994





<PAGE>
                          INDEPENDENT AUDITORS' REPORT 

Partners
Royal Palm Beach Colony, Limited Partnership
Hollywood, Florida

We have  audited the  accompanying  balance  sheets of Royal Palm Beach  Colony,
Limited  Partnership  as of  September  30,  1996  and  1995,  and  the  related
statements of operations,  partners' equity and cash flows for each of the three
years in the period ended September 30, 1996. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Royal Palm Beach  Colony,
Limited  Partnership  as of September 30, 1996 and 1995,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
September 30, 1996 in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Partnership  will  continue as a going  concern.  As discussed in Note 14 to the
financial statements,  in anticipation of a proposed merger which was ultimately
terminated,  the Partnership  suspended land sales during fiscal year 1995 which
resulted in  insufficient  cash resources to meet its obligations as they become
due.  Management's  plans in regard to these matters are also  described in Note
14. These matters raise  substantial  doubt about the  Partnership's  ability to
continue as a going  concern.  The  financial  statements  and  schedules do not
include any adjustments that might result from the outcome of this uncertainty.

As described in Note 1, the primary  business  purpose of the Partnership is the
operation, management and orderly disposition of its assets and the distribution
of the proceeds therefrom to unitholders.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole. The schedules listed in item 14(a)2 are
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules and are not part of the basic  financial  statements.  These
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly state in all material
respects the financial  data required to be set forth therein in relation to the
basic financial statements taken as a whole.

                             /s/ LEFCOURT, BILLIG, SARBEY, TIKTIN & YESNER, P.A.

Coral Gables, Florida

December 11, 1996
<PAGE>
<TABLE>
<CAPTION>
                     ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                                    BALANCE SHEETS

                              SEPTEMBER 30, 1996 AND 1995



                ASSETS

                                                                1996           1995
                                                            ----------     ---------- 
<S>                                                         <C>            <C>
Cash                                                        $   41,451     $   83,902
Mortgage notes and other receivables (Note 2):
    Mortgage notes receivable                                                 236,153
    Other                                                      133,318        435,883
Property held for sale (Note 3)                              5,249,988      4,607,661
Other assets (Note 4)                                           61,376         61,891
                                                            ----------     ----------
                                                            $5,486,133     $5,425,490
                                                            ==========     ==========



                LIABILITIES AND PARTNERS' EQUITY

Liabilities:
    Mortgage notes payable, bank (Note 5)                   $1,212,412     $1,010,513
    Mortgage notes payable, general partner (Note 5)           527,249        500,000
    Mortgage and note payable, related parties (Note 5)        325,000
    Accounts payable and other liabilities (Note 6)          1,037,439        840,402
    Estimated costs of development of land sold                 14,142         14,441

Subsequent events (Notes 5 and 6)

Partners' equity:
     4,485,504 units authorized and outstanding              2,369,891      3,060,134
                                                            ----------     ----------
                                                            $5,486,133     $5,425,490
                                                            ==========     ==========







                          See notes to financial statements.
                                                                                                                         
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                     ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                               STATEMENTS OF OPERATIONS





                                                   Years ended September 30,
                                        ---------------------------------------------
                                            1996             1995             1994
                                        -----------      -----------      -----------
<S>                                     <C>              <C>              <C>
Revenues (Notes 13 and 14)              $   396,924      $   497,651      $   831,773
                                        -----------      -----------      -----------

Costs and expenses:
   Cost of sales                            135,533                           439,195
   Selling, general and
     administrative expenses                752,935          807,505          804,930
   Terminated merger costs (Note 7)          70,720          405,261
   Provision for doubtful
     accounts                                                (48,500)          48,500
   Depreciation and
     property taxes                         127,979          120,734           92,941
                                        -----------      -----------      -----------
                                          1,087,167        1,285,000        1,385,566
                                        -----------      -----------      -----------

Net loss                                ($  690,243)     ($  787,349)     ($  553,793)
                                        ===========      ===========      ===========

Net loss per unit                       ($     0.15)     ($     0.18)     ($     0.12)
                                        ===========      ===========      ===========

Weighted average number of
   units outstanding                      4,485,504        4,485,504        4,485,504
                                        ===========      ===========      ===========






                          See notes to financial statements. 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                         ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                                STATEMENTS OF PARTNERS' EQUITY



                                Partnership        General          Limited           Total
                                   Units           Partner          Partners         Equity
                                -----------      -----------      -----------      -----------
<S>                             <C>              <C>              <C>              <C>
Balance, September 30, 1993       4,485,504      $   161,415      $ 4,239,861      $ 4,401,276

Net loss                                             (11,740)        (542,053)        (553,793)
                                -----------      -----------      -----------      -----------

Balance, September 30, 1994       4,485,504          149,675        3,697,808        3,847,483

Net loss                                             (16,691)        (770,658)        (787,349)
                                -----------      -----------      -----------      -----------

Balance, September 30, 1995       4,485,504          132,984        2,927,150        3,060,134

Net loss                                             (14,633)        (675,610)        (690,243)
                                -----------      -----------      -----------      -----------

Balance, September 30, 1996       4,485,504      $   118,351      $ 2,251,540      $ 2,369,891
                                ===========      ===========      ===========      ===========










                              See notes to financial statements. 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                         ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                                   STATEMENTS OF CASH FLOWS


                                                          Years ended September 30,
                                              ----------------------------------------------
                                                 1996             1995             1994
                                              -----------      -----------      -----------
<S>                                           <C>              <C>              <C>
Cash flows from operating activities:
   Cash received:
     Collections on land sales
        and receivables                       $   434,830      $   161,428      $   469,393
     Interest income                                7,622           77,207           56,051
     Sale of utility system                       432,800           85,800          215,050
     Other cash received                            6,398           14,985          106,021
                                              -----------      -----------      -----------
                                                  881,650          339,420          846,515
                                              -----------      -----------      -----------
Cash expended:
   Selling, general and
     administrative, property
     taxes and other expenses                     528,353          845,097          991,682
   Interest paid
     (net of amounts capitalized)                  72,696            4,750
   Acquisition of property held for sale                            18,766          123,552
   Improvements to property held for sale         848,616        1,439,903          597,404
                                              -----------      -----------      -----------
                                                1,449,665        2,308,516        1,712,638
                                              -----------      -----------      -----------
Net cash used in
   operating activities                          (568,015)      (1,969,096)        (866,123)
                                              -----------      -----------      -----------

Cash flows from investing activities:
   Purchase of property and equipment              (1,335)            (758)         (11,387)
                                              -----------      -----------      -----------

Net cash used in investing activities              (1,335)            (758)         (11,387)
                                              -----------      -----------      -----------



                                         (continued)
<PAGE>
<CAPTION>
                         ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
                             STATEMENTS OF CASH FLOWS (CONTINUED)

                                                          Years ended September 30,
                                              ----------------------------------------------
                                                 1996             1995             1994
                                              -----------      -----------      -----------
<S>                                           <C>              <C>              <C>
Cash flows from financing activities:
Proceeds from mortgage notes payable:
     Bank                                         301,899        1,010,513
     General partner                                               500,000
     Others                                       325,000
   Payments on mortgage payable:
     Bank                                        (100,000)
                                              -----------      -----------      -----------
   Net cash provided by
     financing activities                         526,899        1,510,513
                                              -----------      -----------      -----------

Net decrease in cash                              (42,451)        (459,341)        (877,510)

Cash at beginning of year                          83,902          543,243        1,420,753
                                              -----------      -----------      -----------

Cash at end of year                           $    41,451      $    83,902      $   543,243
                                              ===========      ===========      ===========




                                         (continued)
<PAGE>
<CAPTION>
                         ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP
                             STATEMENTS OF CASH FLOWS (CONTINUED)

                                                          Years ended September 30,
                                              ----------------------------------------------
                                                 1996             1995             1994
                                              -----------      -----------      -----------
<S>                                           <C>              <C>              <C>
Reconciliation of net loss to
   net cash used in 
     operating activities:

Net loss                                      ($  690,243)     ($  787,349)     ($  553,793)
                                              -----------      -----------      -----------
Adjustments to reconcile net income
   to net cash provided by (used in)
     operating activities:

   Depreciation and amortization                    3,428            4,334            3,599
   Provision for doubtful accounts                                 (48,500)          48,500
   Sundry                                                            4,227

Change in assets and liabilities:
   Increase in:
     Mortgage notes and
        other receivables                                         (158,232)
     Property held for sale                      (642,327)      (1,097,773)        (485,947)
     Other assets                                  (1,578)                          (28,696)
     Accounts payable and
        accrued liabilities                       197,037          297,436          191,670
     Estimated costs of development
        of land sold
   Decrease in:
     Mortgage notes and
        other receivables                         538,718                            36,356
     Other assets                                                   61,740
     Estimated cost of development
        of land sold                                 (299)        (244,979)         (77,812)
                                              -----------      -----------      -----------

Total adjustments                                  94,979       (1,181,747)        (312,330)
                                              -----------      -----------      -----------

Net cash flow used in
   operating activities                       ($  595,264)     ($1,969,096)     ($  866,123)
                                              ===========      ===========      ===========
</TABLE>

Supplemental information concerning investing and financing activities:

As discussed in Note 5, in fiscal 1996 the Partnership  issued a note payable to
the general partner for unpaid interest in the amount of $27,249.  In connection
with the 1995 recording of an in substance foreclosure of the property described
in Note 3, the Partnership  recorded the property and  concurrently  reduced its
mortgage notes receivable by the carrying value of the receivable,  $65,064,  in
fiscal year 1995.

                       See notes to financial statements.
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994



1.     Organization and summary of significant accounting policies:

       The  primary  business  purpose  of the  Partnership  is  the  operation,
       management and orderly  disposition of its assets and the distribution of
       the  proceeds  therefrom  to  unitholders.  The  general  partners of the
       Partnership  are Hasam Realty Limited  Partnership  and Stein  Management
       Company, Inc. ("Steinco").  Steinco is the Managing General Partner which
       employs the management and clerical employees  necessary to carry out the
       operation of the  Partnership.  Steinco is reimbursed by the  Partnership
       for related expenses.

       A summary of the Partnership's accounting principles is as follows:

       Land sales:
         Land  sales  are  accounted  for  under  the  accrual  method  when the
         purchaser has made an adequate  down  payment,  generally 20% to 25% of
         the  purchase  price,  the  Partnership  has no  substantial  remaining
         obligations  with respect to the property,  and  collectibility  of the
         related  receivable is reasonably  predictable.  Otherwise,  either the
         installment or the cost recovery method is used.  Under the installment
         method, portions of profit are recognized as cash payments are received
         from the buyer.  Under the cost recovery method no profit is recognized
         until cash  payments  received from the buyer,  including  interest and
         principal, exceed the seller's cost of the property sold.

       Sale of Utility System:
         The Partnership  recognizes profit on the 1983 sale of a Utility System
         in the years in which increases in consumption  generate amounts due to
         the Partnership. (See note 11).

       Cash:
         The  Partnership  considers  all highly  liquid debt  investments  with
         maturities of three months or less to be cash equivalents.

       Mortgage notes receivable:
         Mortgage  notes  receivable  represent  amounts  due  from  the sale of
         properties  and in  certain  cases have been  reduced  by the  deferred
         profit  which is being  recognized  under  the  installment  method  of
         accounting. The Partnership evaluates the carrying amount of delinquent
         mortgage  notes  receivable  to  determine  that such  amount is not in
         excess of the estimated fair market value of the underlying land.

       Property held for sale:
         Property  held for sale is stated at the lower of cost or estimated net
         realizable  value.  The cost of  property  held for sale  includes  the
         original  purchase  price,  cost of land  development,  and development
         period real estate taxes and interest.

                                  (continued)
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994


1.     Organization and summary of significant accounting policies (continued):


       Property and equipment:
         Property and  equipment  are stated at cost.  Depreciation  is computed
         over the  estimated  useful  lives of the  assets on the  straight-line
         method for financial reporting purposes and accelerated methods for tax
         reporting purposes.

       Net (loss) per unit:
         Net (loss) per unit is calculated  based on the weighted average number
         of units outstanding during the year.

       Concentrations of credit risk:
         Assets which subject the Partnership to  concentrations  of credit risk
         consist  primarily of cash and property held for sale. The  Partnership
         places  its  temporary  cash   investments  with  high  credit  quality
         institutions.  At times, such investments may exceed the FDIC insurance
         limit. The Partnership's  property held for sale is located in Florida.
         The  Partnership's  ability  to  sell  its  property  is  substantially
         dependent upon the Florida real estate economic sector.

       Use of estimates:
         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that affect the  reported  amounts  and  disclosures.
         Actual results could differ from those estimates.

2.     Mortgage notes and other receivables:

       Mortgage  notes  receivable  consist of the following as of September 30,
       1995:
<TABLE>
<CAPTION>

           <S>                                      <C>
           Mortgage notes receivable                $ 285,801
                                                  
           Less:
              Deferred profit                         (49,648)
                                                    ---------
                                                    $ 236,153
                                                    =========
</TABLE>
       In December 1995, the Partnership received $168,962 as full settlement of
       a mortgage  note which had a carrying  value at the date of settlement of
       $173,513  (mortgage  note  receivable  $222,471 less  deferred  profit of
       $48,958). The loss on this transaction, $4,551, has been included in 1996
       selling, general and administrative expenses.

                                  (continued)
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
 
2.     Mortgage notes and other receivables (continued):

       Other receivables consist of the following:
<TABLE>
<CAPTION>

                                                 September 30,
                                            ------------------------
                                              1996            1995
                                            ---------       ---------
           <S>                              <C>             <C>
           Utility receivable (Note 11)     $129,000        $432,800
           Accrued interest receivable                         2,833
           Other                               4,318             250
                                            --------        --------

                                            $133,318        $435,883
                                            ========        ======== 
</TABLE>

3.     Property held for sale:

       Included  in  property  held for sale at  September  30,  1995 is the net
       carrying  value of a  mortgage  note  receivable  in  default  which  was
       considered to be an in substance  foreclosure.  The Partnership  filed an
       action to foreclose on the  mortgage.  The in substance  foreclosure  was
       recorded by  reclassifying  the net carrying  value of the  receivable of
       $65,064,  consisting  of a mortgage  note  receivable  of  $137,614  less
       related  deferred  profit of  $72,550,  to  property  held for  sale.  In
       September 1996, the Partnership  received  $155,000 from the purchaser of
       the  property  as part of a joint  stipulation  settlement  to settle and
       compromise  the  litigation.  Proceeds  received  in  excess  of the  net
       carrying  value of the in substance  foreclosure  and related  settlement
       expenses  amount to $74,047 and have been  included in revenues (See Note
       13).

4.     Other assets:

       Other assets consist of the following:
<TABLE>
<CAPTION>
                                                        September 30,
                                               -----------------------------
                                                  1996                1995
                                               ---------           ---------
           <S>                                 <C>                 <C>
           Furniture and equipment, net of     
              accumulated depreciation         $   6,090           $   8,184
           Prepaid expenses                       55,286              53,707
                                               ---------           ---------

                                               $  61,376           $  61,891
                                               =========           ========= 

</TABLE>
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994






5.     Mortgages and note payable:

       Mortgages and note payable consist of the following:
<TABLE>
<CAPTION>
                                                                                                 September 30,
                                                                                         --------------------------- 
                                                                                             1996            1995
                                                                                         -----------      ---------- 
<S>                                                                                      <C>              <C>
Mortgage notes payable - bank:
       On    October    6,    1994    the    Partnership    entered    into    a
       construction/development  loan agreement whereby the Partnership borrowed
       $975,000  at 2% over the prime  rate  (10.25%  at  September  30,  1996).
       Interest  only is payable  monthly and, as modified on June 26, 1995 (see
       below),  the loan matures on July 1, 1997.  Property held for sale with a
       cost of  approximately  $2,978,000  is  collateral  for this loan and the
       additional  borrowings  described  below.  The mortgage  requires certain
       release principal payments as land is sold.                                       $   875,000      $  975,000

       On June 26, 1995,  the  Partnership  entered into a  modification  of the
       above loan agreement  whereby the Partnership may borrow,  under the same
       terms as  above,  up to an  additional  $1,200,000  based on the  minimum
       proceeds of a  $1,000,000  municipal  bond  issuance of the Indian  Trail
       Water Control District during November, 1996.                                         337,412          35,513
                                                                                         -----------      ----------
       On October 21, 1996 the Partnership  combined these  obligations  under a
       Consolidation  Promissory Note,  whereby the Partnership may borrow up to
       $2,625,000 at 2% over the prime rate, maturing on January 31, 1998.               $ 1,212,412      $1,010,513
                                                                                         ===========      ==========

Mortgage notes  payable,  general  partner:  
       On June 29,  1995 the  Partnership  borrowed  $500,000  from its  general
       partner for working  capital.  The terms of the mortgage call for monthly
       interest  payments at a rate of 2% over prime  (10.25% at  September  30,
       1996) with the outstanding  principal balance due at maturity on June 29,
       1996.  Property  held for sale with a cost of  approximately  $787,000 is
       collateral  for this loan. On February 9, 1996 the  Partnership  issued a
       note payable to the general  partner for unpaid interest in the amount of
       $27,249 and on September  30, 1996 the general  partner  extended the due
       date of both notes to February 28, 1997.                                         $   527,249      $  500,000
                                                                                        ===========      ==========
                                                                                


                                                     (continued)
</TABLE>
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994



5.       Mortgage notes payable (continued):
<TABLE>
<CAPTION>
                                                                                                 September 30,
                                                                                         --------------------------- 
                                                                                             1996            1995
                                                                                         -----------      ---------- 
<S>                                                                                      <C>              <C>
Mortgage note payable, related party:
       On June 13,  1996,  the  Partnership  borrowed  $300,000  from a  related
       company for working  capital.  The terms of the mortgage call for monthly
       interest  payments at a rate of 2% over prime  (10.25% at  September  30,
       1996) with the outstanding  principal  balance at maturity on October 31,
       1996.  Property  held for sale with a cost of  approximately  $287,000 is
       collateral  for this loan.  No payments of interest have been made and on
       September  30,  1996 the lender  waived the  default  for  nonpayment  of
       interest and extended the due date of the mortgage to February 28, 1997.          $   300,000

Note payable, related party:
       On September 4, 1996, the Partnership borrowed $25,000 from a unit holder
       for  working  capital.  The terms of the note call for  monthly  interest
       payments at a rate of 2% over prime  (10.25% at September  30, 1996) with
       the  outstanding  balance due upon  maturity  which has been  extended to
       February 28, 1997.                                                                     25,000
                                                                                         -----------
                                                                                         $   325,000
                                                                                         ===========
</TABLE>

    Interest is capitalized for property being developed.  All other interest is
    charged to  operations  as incurred as follows for the years ended September
    30:
<TABLE>
<CAPTION>
                                          1996                1995
                                          ----                ----
       <S>                             <C>                <C>
           Capitalized                 $ 119,870          $   89,605

           Charged to operations          72,696              16,630
                                       ---------          ----------

       Total interest incurred         $ 192,566          $  106,235
                                       =========          ==========

</TABLE>

    There was no interest incurred during 1994.
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994


6.     Accounts payable and other liabilities:

       Accounts payable and other liabilities consist of the following:
<TABLE>
<CAPTION>
                                                  September 30,
                                          ---------------------------
                                             1996              1995
                                          ----------        --------- 
       <S>                                <C>               <C>
       Accounts payable                   $  750,934        $ 555,547
       Accrued liabilities:
         Property taxes                      130,772          107,352
         Other                                80,733           83,703
       Due to landowner                       75,000           93,800
                                          ----------        ---------
                                          $1,037,439        $ 840,402
                                          ==========        =========
</TABLE>
       Property  taxes related to calendar  year 1994,  which were due March 31,
       1995,  and property  taxes related to calendar year 1995,  which were due
       March 31, 1996,  in the  approximate  amounts of $144,431  and  $147,735,
       respectively,  are  delinquent  and are  included in accounts  payable at
       September 30, 1996.

       Due to landowner  represents  reimbursement  due for development costs in
       connection  with  common  areas.  Payment of $75,000  was due on June 30,
       1996,  with  interest at 8% per annum.  Due date was extended to December
       31, 1996 and payment was made November 6, 1996.

7.     Terminated merger costs:

       During fiscal year 1995, a potential  affiliation with a  privately-owned
       South   Florida  home  builder  was   identified   and  a  memorandum  of
       understanding  was  executed  for the purpose of merger.  However,  after
       protracted negotiations,  the attempt to merge was terminated in December
       1995.  Costs incurred  during the years ended September 30, 1996 and 1995
       in  connection  with the  terminated  merger  amounted  to  approximately
       $71,000  and  $405,000,  respectively,  and  have  been  expensed  in the
       statement of operations.  Such costs include fees for financial,  capital
       and real estate consultants, and attorneys' fees.

8.     Income taxes:

       The Partnership is not subject to income taxes. Instead, the partners are
       required  to  include  in their  income tax  returns  their  share of the
       Partnership's  income or loss,  as  adjusted  to reflect  the  effects of
       certain  transactions which are accorded different  accounting  treatment
       for federal income tax purposes.  Pursuant to the Tax Reform Act of 1986,
       the Company changed its fiscal year end, September 30, to a calendar year
       end for income tax purposes.
                                  (continued)
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994

8.     Income taxes (continued):

       The  following  analysis  summarizes  the major  differences  between the
       financial  reporting and income tax basis of the partners' equity account
       at September 30, 1996.
<TABLE>
<CAPTION>
       <S>                                                      <C>             <C>
       Partners' equity, financial reporting basis                              $ 2,369,891
         Add items recorded for tax purposes only:
         Step-up in basis of property                           $ 17,000,000
         Less:  Cost of sales - step-up as adjusted
           for unamortized additional capitalized
           inventory costs                                        11,139,231
                                                                ------------
                                                                   5,860,769
         Add items not deducted for tax purposes                      40,270
                                                                ------------     
                                                                                  5,901,039
                                                                                -----------
       Partners' equity, income tax basis                                       $ 8,270,930
                                                                                ===========
</TABLE>

       The Partnership,  pursuant to the transitional  grandfather  rules of the
       Internal Revenue Code dealing with publicly traded partnerships,  reports
       its income as a partnership. Under current provisions, the application of
       the  grandfather  rules is scheduled  to  terminate  for the taxable year
       commencing after December 31, 1997. At that point in time the Partnership
       will be  required  to  determine  its income tax status  pursuant  to the
       operative  Internal  Revenue  Code  provisions,   regulations  and  rules
       thereunder   governing   publicly  traded   partnerships.   The  ultimate
       determination,  which is dependent  upon future results of operations and
       other factors, will result in the Partnership either retaining its status
       as a partnership or, alternatively,  being taxed as a corporation.  These
       provisions will become  operative for the taxable year beginning  January
       1, 1998.

9.     Related party transactions:

       The Partnership  reimbursed Steinco approximately $45,000 for payroll and
       related expenses for fiscal year 1994.

10.    Lease information:

       The  Partnership  occupies its office  facility in a building owned by an
       entity related by common ownership. The Partnership does not pay any rent
       at this office  facility.  Other long-term  operating  leases on real and
       personal properties are not considered material.
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 


11.    Other transactions:

       A  subsidiary  of  the  Company,   Royal  Palm  Beach  Utilities  Company
       ("Utilities"),  previously  sold  to the  Village  of  Royal  Palm  Beach
       ("Village")  all of its  assets,  consisting  of a  water  treatment  and
       distribution  system  and a  sanitary  sewer  collection,  treatment  and
       disposal system located in the Village.  The sale requires payments to be
       received by Utilities as future  connections (as measured by increases in
       consumption) are added to the system,  over a period which is expected to
       be extended  from  August,  2001 through  2003.  Should  consumption  not
       increase  sufficiently,  the Partnership  would not receive the full sale
       amount. The maximum proceeds to Utilities was approximately  $13,410,000,
       of which, under the terms of the sale,  approximately  $5,365,000 had not
       yet been received as of September 30, 1996. In addition,  the Partnership
       had the right to receive up to  $500,000,  of which  $262,000 has already
       been  received,   as  the  Village  collects   guaranteed  revenues  from
       developers.   Since  future  increases  in  consumption  and  payment  of
       guaranteed  revenues  cannot be  assured  and,  therefore,  the extent of
       future payments to the Partnership is uncertain, the Partnership accounts
       for this  transaction  utilizing the cost recovery  method of accounting.
       The  Partnership  has previously  fully recovered its cost and recognizes
       profit on the sale as increases in  consumption  generate  amounts due to
       the  Partnership.  Revenues  related  to the sale of  utility  system  of
       $129,000,  $432,800  and $85,800 were  recognized  for fiscal years 1996,
       1995 and 1994, respectively.
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994


12.    Comparative quarterly financial information (unaudited):
<TABLE>
<CAPTION>
                                   First           Second           Third             Fourth
                                  quarter          quarter          quarter          quarter        Full year
                               -----------      -----------      -----------      -----------      -----------
<S>                            <C>              <C>              <C>              <C>              <C>
1996:
Revenues                       $   144,044      $     7,197      $    12,476      $   260,207      $   396,924
Costs and expenses                 375,444          283,059          185,668          242,996        1,087,167
                               -----------      -----------      -----------      -----------      -----------

Net income (loss)              ($  231,400)     ($  275,862)     ($  173,192)     $    17,211      ($  690,243)
                               ===========      ===========      ===========      ===========      ===========

Net income (loss) per unit     ($     0.05)     ($     0.06)     ($     0.04)     $      0.00      ($     0.15)
                               ===========      ===========      ===========      ===========      ===========

1995:
Revenues                       $    19,758      $    36,840      $    10,666      $   430,387      $   497,651
Costs and expenses                 215,640          282,400          338,582          448,378        1,285,000
                               -----------      -----------      -----------      -----------      -----------
Net loss                       ($  195,882)     ($  245,560)     ($  327,916)     ($   17,991)     ($  787,349)
                               ===========      ===========      ===========      ===========      ===========

Net loss per unit              ($      .04)     ($      .06)     ($      .07)     ($      .01)     ($      .18)
                               ===========      ===========      ===========      ===========      ===========

1994:
Revenues                       $   145,468      $    70,504      $   390,362      $   225,439      $   831,773
Costs and expenses                 202,220          329,583          499,026          354,737        1,385,566
                               -----------      -----------      -----------      -----------      -----------

Net loss                       ($   56,752)     ($  259,079)     ($  108,664)     ($  129,298)     ($  553,793)
                               ===========      ===========      ===========      ===========      ===========

Net loss
  per unit                     ($      .01)     ($      .06)     ($      .02)     ($      .03)     ($      .12)
                               ===========      ===========      ===========      ===========      ===========
</TABLE>
      Year end  adjustments  at  September  30,  1995  principally  include  the
      write-off of terminated merger costs of approximately $220,000,  which had
      previously been capitalized.

      Year end  adjustments  at  September  30,  1994  principally  include  the
      reporting of a third  quarter land sale on the  installment  basis whereas
      the  accrual  method had  previously  been used.  At year end,  management
      determined that the installment method of accounting was more appropriate.
      The  effect  of this  adjustment  was to  increase  the  1994  net loss by
      approximately $61,000.
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994


13.    Revenues:

       Revenues consist of the following:
<TABLE>
<CAPTION>
                                                       Years ended September 30,
                                                 --------------------------------------
                                                   1996           1995           1994
                                                 --------       --------       -------- 
<S>                                              <C>            <C>            <C>
       Land revenues:     
          Gross sales of land                    $182,000                      $581,575
          Less profit deferred
             until principal
               collections are
                 received                                                        61,395
                                                 --------                      --------
          Net sales of land                       182,000                       520,180

          Recognized profit on
             installment and cost
               recovery sales                         690       $ 30,929         18,316
       Interest income                              4,789         31,916         66,814
       Sale of utility system
          (Note 11)                               129,000        432,800         85,800
       Foreclosure
          settlement, net (Note 3)                 74,047
       Other                                        6,398          2,006        140,663
                                                 --------       --------       --------
                                                 $396,924       $497,651       $831,773
                                                 ========       ========       ========
</TABLE>
       In fiscal  year 1994,  other  revenue  principally  consists  of $119,000
       received as a litigation  settlement against an unrelated third party for
       breach of contract.  The third party failed to reimburse the  Partnership
       for the costs incurred in building a road. The  Partnership  received the
       full amount due of $119,000 prior to final judicial determination.

14.    Liquidity:

       During  the year ended  September  30,  1995,  the  Partnership  incurred
       substantial  expenses in the development of its properties in addition to
       normal ongoing administrative costs and costs incurred in connection with
       the terminated merger described in Note 7. In anticipation of adding home
       building  operations  through  the  proposed  merger,  management  made a
       decision  to  suspend  land sales  activity  pending  the  outcome of the
       merger.  This  suspension  of land sales  resulted in  insufficient  cash
       resources  available for the  Partnership to meet its obligations as they
       become due.

                                  (continued)
<PAGE>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994

14.    Liquidity: (continued):

       Since the termination of the merger in December 1995, the Partnership has
       resumed land sales efforts and has entered into sales contracts for which
       closings are pending.  However,  there is no assurance that such closings
       will occur,  or that their timing will  coincide  with the  Partnership's
       cash requirements.  Management  believes that shortfalls in cash flow are
       temporary  and that the  Partnership  will be able to arrange  short term
       financing sufficient to fund ongoing operations. The success of the sales
       efforts or  obtaining  additional  borrowings  is necessary to enable the
       Partnership  to meet its  current  obligations  and  continue  as a going
       concern.
<PAGE>
<TABLE>
<CAPTION>
                                            ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

                                           SCHEDULE IX - VALUATION AND QUALIFYING ACCOUNTS

                                            YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994


                                                                     Column C-
                                                             -----------------------------
                                                                (1)                 (2)
                                          Column B-           Charged             Charged                             Column E-
                                          Balance at            to                   to                              Balance at
         Column A                          beginning         costs and             other              Column D-        end of
        Description                        of period          expenses            accounts           deductions        period
        -----------                        ---------          --------            --------           ----------        ------
<S>                                        <C>                 <C>             <C>                <C>                <C>
      Deferred profit:

          1994                             $110,049            $                                  (A) $ 61,395        $
                                                                                                  (B)  (18,316)
                                                                                                  (E)       (1)        153,127
              
          1995                              153,127                                               (B)  (30,929)
                                                                                                  (C)  (72,550)         49,648
              
          1996                               49,648                                               (B)     (690)              0
                                                                                                  (F)  (48,958)

      Allowance for
      doubtful accounts:

          1994                                    0             48,500                                                  48,500
              
              
          1995                               48,500                                               (D)  (48,500)              0
              
              
          1996                             $      0                                                                   $      0
          

(A) Deferred  profit on current year sales 
(B) Recognized  profit on installment and cost recovery sales
(C) Deferred  profit on receivable - the underlying  property was recorded as an
    in substance foreclosure (See Note 3 to Financial Statements)
(D) Recovery of reserved receivable
(E) Rounding
(F) Part of settlement transaction (See Note 3 to Financial Statements)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                  ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP

             SCHEDULE X - SUPPLEMENTAL INCOME STATEMENT INFORMATION

                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994




                                             September 30,
                                  ----------------------------------
                                    1996         1995          1994
                                  --------     --------      ------- 
<S>                               <C>          <C>          <C>
1.  Maintenance and repairs       $      0     $      0     $    580
                                  ========     ========     ========

2.  Taxes, other than payroll
      and income taxes            $128,589     $119,201     $ 92,267
                                  ========     ========     ========

3.  Advertising                   $      0     $    600     $  2,500
                                  ========     ========     ========

</TABLE>