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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
   (X)            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                  For the fiscal year ending December 31, 1999

                                       OR

   (  )           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                  For the transition period from     to

                             -----------------------

                          Commission file number 1-4719

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

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

                  8014 SW 135th Street Road
                         Ocala, FL                       34473
            (Address of principal executive offices)  (Zip Code)

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

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

                           COMMON STOCK, $1 PAR VALUE
                                (Title of Class)

         Indicate by check mark whether the Registrant (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___

            Indicate by check mark if disclosure of delinquent  filers  pursuant
to  Item  405 of  Regulation  S-K is  not  contained  herein,  and  will  not be
contained,  to the  best of  Registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K. [ ]

            State  the  aggregate  market  value  of the  voting  stock  held by
non-affiliates  of the Registrant:  $1,085,000  (based upon the average price of
such stock as traded  over-the-counter ($.31) at December 31, 1999 multiplied by
the 3,498,836  shares of stock owned by  non-affiliates,  excluding voting stock
held by directors,  executive officers and beneficial owners of more than 10% of
the Registrant's  voting stock ; however,  this does not constitute an admission
that any such holder is an "affiliate" for any purpose.)

            Indicate  the  number  of  shares  outstanding  of the  Registrant's
classes of common stock, as of the latest practicable date: 13,544,277 shares of
common stock, $1 par value, as of March 24, 2000,  excluding  12,228 shares held
in treasury.

                       DOCUMENTS INCORPORATED BY REFERENCE

Document                                                    Incorporated Part(s)
      *    Registrant's 2000 Annual Meeting Proxy Statement
           to be filed with the Securities and Exchange
           Commission pursuant to Regulation 14A                 Part III

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<PAGE>



                             THE DELTONA CORPORATION

                                      INDEX

 Form 10-K                                                                Page
 Item No.                 Section Heading in Attached Material          Number
 --------                 ------------------------------------          ------

PART I

 Items 1 and 2 .........  Business.....................................    1
                               General.................................    1
                               Recent Developments.....................    1
                               Real Estate.............................    2
                               Other Businesses........................    7
                               Employees...............................    7
                               Competition.............................    7
                               Regulation..............................    7
     Item 3 ............  Legal Proceedings............................   10
     Item 4 ............  Not Applicable

PART II

     Item 5 ............  Price Range of Common Stock and Dividends....   11
     Item 6 ............  Selected Consolidated Financial Information .   12
     Item 7 ............  Management's Discussion and Analysis of
                            Financial Condition and Results of
                            Operations.................................   12
     Item 8 ............  Index to Consolidated Financial Statements and
                            Supplemental Data .........................   21
     Item 9 ............  Not Applicable

PART IV

     Item 14 ...........  Exhibits, Financial Statement Schedules and
                            Reports on Form 8-K .......................   41



<PAGE>



ITEMS 1 AND 2

                                    BUSINESS

General

     The  Company  was  founded  in  1962  and  is  principally  engaged  in the
development and sale of Florida real estate,  through the development of planned
communities on land acquired for that purpose.  The Company offers single-family
lots and multi-family and commercial tracts for sale, in communities designed by
the Company.  The Company is the  developer  of eleven  planned  communities  in
Florida, including TimberWalk, which is located in the western portion of Marion
Oaks.  Seven  communities  are  completed  and four  are in  various  stages  of
development.   The  Company  plans,  designs  and  develops  roads,   waterways,
recreational  amenities,  grading and drainage systems within these communities.
Since  1962,  the  Company  has  sold  over  157,000   single-family   lots  and
multi-family  and  commercial  tracts in its  communities,  in  addition to over
13,000 single-family homes and over 4,300 multi-family housing units.

     The   Company's   land   holdings  in  Florida   include  an  inventory  of
approximately  17,000 unsold platted  single-family  and  multi-family  lots and
commercial tracts.  (Platting is the process of recording, in the public records
of the county where the land is located,  a map or survey  delineating the legal
boundaries of the lots and tracts.) See "Real Estate: Land".

     The  Company  also  operates  other  businesses  related to its real estate
activities,  such as a  title  insurance  company  and a real  estate  brokerage
company.  In addition,  the Company has designed and constructed  country clubs,
golf courses and other recreational  amenities at its communities,  and operated
such amenities until their conveyance or sale.

     Historically,  the Company had designed,  constructed and operated  utility
systems  for the  distribution  of water and LP gas and for the  collection  and
treatment of sewage, primarily at the Company's communities. However, on June 6,
1989, Topeka Group  Incorporated  ("Topeka"),  a subsidiary of Minnesota Power &
Light Company ("MPL"), exchanged the Company's Preferred Stock which it acquired
in November,  1985 for the Company's utility  subsidiaries.  The Company entered
into a Developer  Agreement  for each of its  communities,  which  provides  the
policies  for  water  and  sewer  utility  services  to  the  Company  and  it's
purchasers.

     The Company is  incorporated  in Delaware and has its  principal  office at
8014 SW 135th  Street  Road,  Ocala,  Florida  34473.  Its  telephone  number is
(352)307-8100.  The Company,  as used herein,  refers to The Deltona Corporation
and, unless the context otherwise indicates, its wholly-owned subsidiaries.

Recent Developments

     In the third  quarter of 1999,  the Company  introduced a new line of homes
available at Marion Oaks and Citrus  Springs.  Homes are to be constructed by an
independent  builder.  These new models were designed to fit the needs and wants
of a variety of housing customers:  models range from 1,692 square feet to 2,895
square feet.  From the smallest  home to the largest,  these homes feature 2 car
garages,  cathedral  ceilings over the main living  areas,  ceramic tile foyers,
plant shelves,  large fully equipped kitchens (most with breakfast nooks or good
morning rooms),  fully enclosed laundry centers,  impressive  master suites with
walk-in closets and large  bedrooms.  A new model center opened in February 2000
at Marion Oaks.

     During 1999, Swan Development  Corporation ( "Swan")  continued to loan the
Company  funds  to  meet  its  working  capital   requirements.   The  Company's
outstanding  debt to Swan,  which is secured by a second  lien on the  Company's
receivables,  was  $5,114,000  as of December  31,  1999.  The Company  signed a
promissory note to Swan in March 1999 which provides that funds advanced by Swan
will be paid back by the Company monthly in contracts receivables at 90% of face
value,  with recourse.  There will be no interest for the first six months after
an  advance  of money is  received  from  Swan by the  Company;  thereafter  the
interest shall be 6% per annum on the outstanding  balance of the advance.  Each
time an  advance is made,  a  supplemental  note is  signed.  The amount of each
monthly  payment  will vary and will be  dependent  upon the amount of contracts
receivable in the Company's  portfolio,  excluding contracts  receivable held as
collateral for

                                        1


<PAGE>



prior  receivable  sales.  Pursuant  to the terms of the  promissory  note,  the
Company is required to transfer to Swan  monthly as debt  repayment  all current
contracts  receivable in the Company's  portfolio in excess of the aggregate sum
of $500,000.  Funds advanced by Swan were used by the Company to pay outstanding
real estate taxes for unsold  properties  with the balance to meet the Company's
working capital requirements.

Real Estate

            The Company is primarily involved with the development and marketing
of planned  communities  in Florida since 1962.  The following  table sets forth
certain information about these communities and other land assets of the Company
as of December 31, 1999. For a detailed  description of these  communities,  see
"Existing Communities" and "Other Properties".
<TABLE>
<CAPTION>
                              Existing Communities

                                                                    Platted                 Unsold Platted
                           Acreage    Initial            Estimated  Lots & Tracts            Lots & Tracts
                           In         Acquisition Year   Current    in Masterplan  Unimproved           Improved
                           Masterplan Year        Opened Population     (a)         (a) (b)             (a) (b)
                           ---------- ----        ------ ---------- -------------  ----------           ---------
<S>                        <C>        <C>         <C>    <C>        <C>            <C>                  <C>

* Deltona Lakes ..........  17,203    1962         1962    73,150     34,964           --                   6
* Marco Island(c) ........   7,844    1964         1965    43,490      8,657           --                   --
* Spring Hill(d) .........  17,240    1966         1967    76,110     32,909           --                   7
* Citrus Springs(e)  .....  15,954    1969         1970     6,940     33,783           --                   7(h)
  St. Augustine Shores....   1,985    1969         1970     7,700      3,130           --                   -(h)
  Sunny Hills ............  17,743    1968         1971     1,410     26,251         12,469               681
* Pine Ridge .............   9,994    1969         1972     3,780      4,833           --                   3
  Marion Oaks(e)(f)  .....  14,644    1969         1973     8,530     27,537          3,136(f)            699(f)(h)
* Seminole Woods .........   1,554    1969         1979       515        262           --                  --

  There is no unplatted acreage in any community

Joint Venture Community:

* Tierra Verde ...........     666    1976         1977     5,200      1,036           --                  --
                               ---    ----         ----     -----      -----         ------             -----

        Total ............ 104,827                        221,625    173,362         15,605             1,394
                           =======                        =======    =======         ======             =====


                                Other Properties

                                      Initial
                                      Acquisition
                                      Year                 Acres
Other Land Assets:
Other land adjacent to
 existing communities(h)..            Various              92
                                                           --

             Total.....                                    92
                                                           ==
 <FN>

 *        Development completed.
 (a)        Excluded from these lots and tracts are  approximately  121 improved
            and 92 unimproved lots and tracts that are required for drainage and
            cannot be sold,  and  approximately  128 improved and 333 unimproved
            lots and tracts that have been removed from sale for encumbrances or
            additional  site  development,  which  can only be sold  when  these
            issues are resolved.  Also  excluded are  amenities  consisting of 2
            administration  facility sites, 2 recreational  facility sites and 1
            unimproved  golf course sites, as well as  approximately  292 tracts
            reserved for community usage such as for  greenbelts,  buffer areas,
            church and school sites.

 (b)        "Unimproved  Unsold  Platted  Lots & Tracts"  and  "Improved  Unsold
            Platted  Lots &  Tracts",  when added to lots and  tracts  sold,  as
            described in "Existing  Communities",  may not equal "Platted Lots &
            Tracts in Masterplan" for various  reasons,  such as the subdivision
            of tracts into two or more parcels for sale to different purchasers.

(C)         Excludes permit denial areas; reflects seasonal population.

                                        2


<PAGE>



(d)         Includes the South Hernando U.S. # 19 Commerce Center.

(e)         Excludes 83 Citrus  Springs and 63 Marion Oaks  improved lots deeded
            to a purchaser of the  Company's  contracts  receivable  as exchange
            inventory to be available for customers who pre-pay their  contracts
            prior to the  installation of water service lines within one mile of
            their  homesite  and who wish to  commence  immediate  construction.
            Unused  exchanged  inventory  will be reconveyed to the Company when
            all purchased receivables have matured and are paid in full.

(f)         Includes TimberWalk

(g)         Excludes  3,637 acres of unplatted  natural  preserve in  Washington
            County  restricted for  recreational,  open space/park use which can
            only be sold subject to the underlying land use restrictions.

(h)         Not included are 583 improved lots deeded to a collateral trustee on
            behalf of a purchaser of the Company's contract  receivables so they
            may be sold by the Company to create additional  receivables for the
            Company's  replacement  obligation.  These lots are comprised of 481
            lots in Citrus  Springs,  101 lots in  Marion  Oaks and 1 lot in St.
            Augustine Shores.
</FN>
</TABLE>

  Land

            In selecting sites for its communities, the Company examined various
demographic and economic factors,  the regulatory  climate,  the availability of
governmental services and medical,  educational and commercial  facilities,  and
estimated  development  costs.  Its communities are accessible to major highways
and Florida's major  metropolitan  areas and are near at least one large body of
water that can be used for  recreational  purposes.  Other  criteria used by the
Company  in site  selection  are the  suitability  of the  land for  natural  or
engineered drainage and the availability of a sufficient supply of potable water
to support the community's anticipated population.

            The master plans of the Company's  communities have been designed to
provide  for  amenities  such  as  golf  courses,  greenbelt  areas,  parks  and
recreational areas, as well as for the basic  infrastructure,  such as roads and
water, and in selected  development  areas, sewer lines. Sites are set aside for
shopping  centers,  schools,  houses of  worship,  medical  centers  and  public
facilities such as libraries and fire stations.

            In its major planned  communities,  the Company  offers for sale lot
and  house  "packages"  situated  on  paved  streets.  In  other  areas of these
communities,   the  Company   historically  has  sold   single-family  lots  and
multi-family and commercial tracts on an installment  basis.  Prior to 1991, the
Company sold such land,  subject to a future development  obligation,  accepting
down  payments as low as 5% of the sales  price,  with the balance  payable over
periods ranging from 2 to 15 years, depending on the payment plan selected. When
the applicable  rescission  period expired and the Company received at least 10%
of the contracted sales price, a substantial  portion of the revenue and related
profit  on the sale  was  recognized,  with the  remaining  revenue  and  profit
deferred and recognized as land improvements such as street paving occurred.

            Due to various factors,  since 1986, the Company had utilized a deed
and mortgage format for effecting  certain sales in its  communities.  Beginning
September 29, 1990, the Company changed its method of recognizing  land sales by
recording the sale of lots,  subject to a future development  obligation,  under
the deposit method; since January 1, 1991, no sale has been recognized until the
Company  receives at least 20% of the contracted  sales price;  and beginning in
the fourth quarter of 1991, the Company  limited the sale of lots to those which
front on a paved  street  and are ready for  immediate  building.  See Note 1 to
Consolidated Financial Statements.

            A portion of the contract  purchase  price is discounted and treated
as  interest  income to be  amortized  over the life of the  contract.  Interest
income  is also  earned  in  accordance  with the  interest  rate  stated in the
installment land sales contract or promissory note. The Company further provides
an allowance for contract  cancellations  based on the historical  experience of
the Company for such cancellations.

            Substantially   all  of  the   Company's   single-family   lot   and
multi-family and commercial tract sales have been made on an installment  basis.
Of the  over  157,000  lots and  tracts  sold  since  the  Company's  inception,
contracts  receivable presently exist with respect to approximately 340 lots and
tracts with an outstanding  balance of approximately  $2,448,000 at December 31,
1999,  excluding contracts  receivable of which the Company is a guarantor.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and Note 2 to Consolidated Financial Statements.

                                        3


<PAGE>



Housing

            Historically,   the  Company  has  been   involved  in  the  design,
construction  and marketing of  single-family  homes and  multi-family  housing,
including  both  condominium   apartment  complexes  and  a  vacation  ownership
(timesharing) project. Since commencing operations,  the Company has constructed
and sold over 13,000  single-family  homes and over 4,300  multi-family  housing
units in its  communities,  with much of the actual  construction  performed  by
subcontractors.   Revenues,  as  well  as  related  costs  and  expenses,   from
single-family  home and  vacation  ownership  sales are  recorded at the time of
closing.

            Single-Family Housing

            In the third quarter of 1999,  the Company  introduced a new line of
homes available at Marion Oaks and Citrus  Springs.  Homes are to be constructed
by an independent  builder.  These new models were designed to fit the needs and
wants of a variety of housing customers:  models range from 1,692 square feet to
2,895 square feet. From the smallest home to the largest,  these homes feature 2
car garages, cathedral ceilings over the main living areas, ceramic tile foyers,
plant shelves,  large fully equipped kitchens (most with breakfast nooks or good
morning rooms),  fully enclosed laundry centers,  impressive  master suites with
walk-in closets and large  bedrooms.  A new model center opened in February 2000
at Marion  Oaks.  Houses  are sold  with the lot  included  in the sales  price;
however,  the Company  also  offers a "build on your own lot"  program for those
purchasers who have previously  acquired a lot. The FeatherNest  Housing Village
in Marion Oaks,  where the lot is included in the price of the home, is owned by
Conquistador  Development  Corporation and marketed by the Company.  All housing
sales are made within the local  market and through  the  Company's  independent
dealer network. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

            The Company is directing a greater portion of its marketing  efforts
to the sale of lots with homes or lots with compulsory  building  obligations to
offset the negative cash effects of installment  land sales,  where the purchase
price of the lot is paid over several years and there is no commitment to build.

            Multi-Family Housing

            The  Company  has  designed,  constructed  and sold more than  4,300
condominium  apartment  units  at its  communities  in  buildings  ranging  from
garden-style  apartment complexes to luxury high-rise towers.  Every condominium
complex  constructed  by the Company  includes at least one pool and patio area;
many feature tennis courts and other recreational amenities.

            The Company's  limited  inventory of multi-family  housing is at its
vacation  ownership  complex,  The Surf  Club,  located on the Gulf of Mexico at
Marco Island. The bulk of its inventory at The Surf Club was sold prior to 1990.

  Marketing

            The Company has historically sold land and housing on a national and
international basis through independent dealers in the United States, Canada and
overseas, as well as through Company-affiliated  salespeople. For the year ended
December 31, 1999,  sales by independent  dealers in the United States accounted
for  approximately  100% (in dollar volume) of new land sales  contracts;  while
overseas dealers accounted for a fraction of a percent.

            Existing Communities

            Deltona Lakes

            Deltona  Lakes is located 26 miles  northeast  of Orlando,  with its
popular  tourist  attractions of Disney World and Sea World,  and is bordered on
the  northwest  by  Interstate  4.  Opened  in  1962,  Deltona  Lakes  now has a
population of approximately  73,150.  Over 30,000 lots and tracts and over 4,500
single and multi-family housing units have been sold at this community.

                                        4


<PAGE>



            Recreational  amenities  constructed  by the Company  include tennis
courts,  a golf  course  and  country  club  (which  were sold in  1983),  and a
recreational  complex  on the  shores  of Lake  Monroe.  A  133-room  motel,  an
industrial park, a medical complex, several shopping centers, numerous houses of
worship,  a fire  station,  a public  library  and  schools  are  located in the
community. The Company has completed development of this community.

            Marco Island

            The Company's  resort community of Marco Island is located 104 miles
west of Miami and  approximately 17 miles south of Naples,  Florida.  Over 8,500
lots and tracts and over 4,200 single and  multi-family  housing units have been
sold in this community.

            More  than  43,490  persons  reside  at Marco  Island,  including  a
population  which more than triples during the winter season.  It is the largest
of Florida's Ten Thousand  Islands and is known for its  recreational  amenities
which,  in addition to its 3 1/2 mile white sand beach,  sport fishing,  sailing
and shelling,  include golf, tennis, swimming and other recreational activities.
The island  community has several major  shopping  centers,  banks and savings &
loan associations, and medical and professional centers.

            Since the  community's  opening in  January,  1965,  the Company has
built and operated a yacht club and marina,  the Marco Beach Hotel & Villas, and
a golf course and  country  club,  all of which have been sold.  The Company has
also  constructed  and sold over 3,300  condominium  units on the island and The
Surf Club, a 44 unit vacation ownership complex.  In 1990, the Company completed
the sale of substantially all of its remaining  vacation  ownership weeks at The
Surf Club.

            Spring Hill

            Spring Hill, with an estimated population of over 76,110, is located
45 miles  north of  Tampa-St.  Petersburg.  Over 32,000 lots and tracts and over
4,000  single-family  homes have been sold in this  community.  The  Company has
constructed a recreation  complex,  a country club, and two golf courses,  which
have been sold. Several shopping centers and medical centers,  schools, numerous
houses of worship and fire  stations are located in the  community.  The Company
has completed the development of this community.

            Citrus Springs

            Citrus  Springs,  with an  estimated  population  of over 6,940,  is
located 28 miles  southwest of Ocala and 25 miles from the Gulf of Mexico.  Over
30,000 lots and tracts and over 700  single-family  homes have been sold at this
community.  A golf course and a clubhouse (sold in 1990) and a community  center
have been completed by the Company. Several churches,  schools and a convenience
shopping  area are  located in the  community.  In 1992,  most of the  Company's
remaining inventory at this community was sold to Citony Development Corporation
("Citony") for  approximately  $6,500,000.  The Company  provides  miscellaneous
administrative assistance and loan servicing to Citony for a fee.

            In February 1997, the Company  finalized the sale of the undeveloped
second  Citrus  Springs Golf Course to a third party,  which  completed the golf
course ("El  Diablo") in 1998.  See  "Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations" .

            St. Augustine Shores

            St. Augustine Shores, with a population  estimated to be over 7,700,
is located seven miles south of St. Augustine, between the Intracoastal Waterway
and U.S.  Highway 1. Over 2,000 single and  multi-family  housing units and lots
and  tracts  have been sold.  In  December  1997,  the  Company  sold all of its
remaining  inventory at St.  Augustine  Shores to Swan  Development  Corporation
("Swan").  As part of the purchase,  Swan assumed the  liability for  completing
improvements within St. Augustine Shores.



                                        5


<PAGE>



            Certain  common  areas of the  community,  such as parks  and  swale
areas,  are  maintained  by the St.  Augustine  Shores  Service  Corporation,  a
non-profit corporation, of which all property owners are members. Several houses
of worship,  shopping facilities, a recreational building and a golf and country
club are also located in the community.

            Sunny Hills

            Sunny Hills,  with a population of over 1,410 residents,  is located
in the  Florida  Panhandle,  45 miles  north of the Gulf of Mexico  and 35 miles
north of Panama City.  Over 12,000 lots and tracts and 300  single-family  homes
have been sold at this  community.  The  community  includes  a golf  course and
country  club,  which was sold by the  Company,  several  houses of worship  and
convenience shopping.

            Pine Ridge

            Pine Ridge, with a population of approximately  3,780, is located 34
miles southwest of Ocala. The community's  facilities include an equestrian club
and tennis courts.  The Company sold over 3,500 lots and tracts and more than 53
single-family  homes in Pine Ridge prior to the sale of its remaining  inventory
in 1987.

            Marion Oaks

            Marion Oaks, with a population of over 8,530  residents,  is located
18 miles  south of Ocala.  Over  23,000  lots and  tracts  have been sold in the
community.  The community includes playgrounds,  two golf courses (both of which
are owned by third parties),  several recreation  buildings,  community shopping
centers and several  houses of worship.  In addition,  this community is home to
the Company's corporate headquarters.

            In the third quarter of 1999,  the Company  introduced a new line of
homes available at Marion Oaks and Citrus  Springs.  Homes are to be constructed
by an independent  builder.  These new models were designed to fit the needs and
wants of a variety of housing customers:  models range from 1,692 square feet to
2,895 square feet. From the smallest home to the largest,  these homes feature 2
car garages, cathedral ceilings over the main living areas, ceramic tile foyers,
plant shelves,  large fully equipped kitchens (most with breakfast nooks or good
morning rooms),  fully enclosed laundry centers,  impressive  master suites with
walk-in closets and large  bedrooms.  A new model center opened in February 2000
at Marion  Oaks.  Houses  are sold  with the lot  included  in the sales  price;
however,  the Company  also  offers a "build on your own lot"  program for those
purchasers who have previously  acquired a lot. The FeatherNest  Housing Village
in Marion Oaks,  where the lot is included in the price of the home, is owned by
Conquistador  Development  Corporation and marketed by the Company.  All housing
sales are made within the local  market and through  the  Company's  independent
dealer network.

            Revenues in 2000 will be generated from the sale of land  inventory,
from housing sales, from the recognition of deferred revenue as land development
proceeds,  from  collections  on  existing  contracts  receivable  and  from the
Company's real estate brokerage and title company subsidiary operations.

            Seminole Woods

            Seminole Woods, with a population of over 515, is comprised of 1,554
acres of  property  located  20 miles  north of  Orlando.  The  community's  262
single-family  lots,  each  with a  minimum  of five  acres,  have been sold and
development completed.

            Tierra Verde

            Tierra  Verde,  with a  population  of  over  5,220,  is a  666-acre
waterfront  subdivision  located  eight  miles south of St.  Petersburg.  It was
developed and marketed pursuant to a 50% joint venture,  which no longer exists,
between  a   wholly-owned   subsidiary  of  the  Company  and  an   unaffiliated
corporation. The community has been sold out and development completed.

                                        6


<PAGE>



            Other Land Assets

            The  Company  also owns 92 acres of land in Florida  adjacent to its
existing communities.

  Other Businesses

            The Company's title insurance  subsidiary was established in 1978 in
order to  reduce  title  insurance,  legal and  certain  related  closing  costs
incurred  by the  Company in  transferring  title of its land and housing to its
purchasers. The subsidiary serves as an agent for TICOR Title Insurance Company,
Chicago Title Insurance  Company and other title insurers.  The Company's realty
subsidiary  performs real estate  brokerage and rental services at the Company's
Marion Oaks and Sunny Hills communities.

  Employees

            At December 31, 1999, the Company had 37 employees,  of whom 35 were
involved  in  executive,   administrative,   sales  and  community  development/
maintenance  capacities and 2 were involved with the title insurance subsidiary.
Certain  of  the   Company's   development   activities   are   carried  out  by
subcontractors  who separately employ additional  personnel.  For the most part,
the Company's  marketing  activities are carried out by independent  dealers and
marketing personnel employed by the Company and its subsidiaries.

  Competition

            The Company faces competition in the sale of its lots primarily from
property owners in the Company's  communities  seeking to resell their land. The
Company is also facing competition, on a regional level, from other builders and
developers in the sale of single-family  housing.  Such competition is generally
based upon location, price, reputation,  quality of product and the existence of
commercial and recreational facilities and amenities.

  Regulation

            The  Company's  real  estate  business is subject to  regulation  by
various local,  state and federal  agencies.  The communities  are  increasingly
subject to substantial regulation as they are planned, designed and constructed,
the nature of such  regulation  extending  to  improvements,  zoning,  building,
environmental, health and related matters. Although the Company has been able to
operate within the regulatory environment in the past, there can be no assurance
that such regulations  could not be made more restrictive and thereby  adversely
affect the Company's operations.

            Community Development

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

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

                                        7


<PAGE>



            Environmental

            To varying degrees,  certain permits and approvals will be necessary
to complete the  development  of Marion Oaks and Sunny  Hills.  Despite the fact
that  the  Company   has   obtained   substantially   all  of  the  permits  and
authorizations  necessary to proceed with its  development  work on  communities
presently  being  marketed,  additional  approvals  may be  required  to develop
certain  platted  properties to be marketed in the future.  Although the Company
cannot predict the impact of such requirements,  they could result in delays and
increased expenditures.  In addition, the continued effectiveness of permits and
authorizations  already  granted  is  subject  to many  factors,  some of which,
including  changes in policies,  rules and regulations and their  interpretation
and application, are beyond the Company's control.

            The Company is aware of studies  indicating that prolonged  exposure
to radon gas may be hazardous to one's  health.  Such studies  further  indicate
that radon gas is apparently associated with mining and earth moving activities,
particularly in phosphate-bearing  geological formations. Since phosphate mining
has,  over the years,  constituted a  significant  industry in Florida,  various
state and local  governmental  agencies  are in the  process  of  attempting  to
determine  the nature and extent of indoor radon gas  intrusion  throughout  the
state. Similar studies undertaken by the Company at its Citrus Springs community
indicate that less than 1% of its property in that  community may be affected by
radon gas; studies conducted at the Company's Marion Oaks community  revealed no
indications of potential indoor radon gas problems. None of the other properties
owned by the Company are situated over geological formations which are suspected
of causing  radon gas  problems.  Consequently,  the  existence  of radon gas in
Florida is not expected to materially affect the business or financial condition
of the Company.

            The Company  owns and operates one above ground fuel storage tank at
Marion Oaks.  The Florida  Department  of  Environmental  Regulation  ("DER") is
responsible   not  only  for  regulating  this  tank,  but  for  developing  and
implementing  plans and programs to prevent the  discharge of  pollutants by the
facility. The Company has registered this storage tank with the DER, constructed
a containment  device around the above ground storage tank and conducts periodic
inspections  and  monitoring  of the facility.  The Company  surveyed this site,
which exhibited evidence of potential soil contamination to the DER prior to the
deadline for acceptance into the Early Detection Incentive ("EDI") Program.  The
EDI Program  provides for the State to assume the financial  responsibility  for
any  necessary  clean-up  operations  when  suspected   contamination  has  been
voluntarily  reported by the facility owner and accepted into the program by the
DER. The site has been  inspected  and reviewed  under the EDI program and is in
compliance with current DER regulations.

            Marketing

            The  Company  is also  subject  to a  number  of  statutes  imposing
registration,  filing and disclosure  requirements with respect to homesites and
homes  sold or  proposed  to be sold to the  public.  On the  state  level,  the
Company's land sales  activities are subject to the jurisdiction of the Division
of Florida  Land Sales,  Condominiums  and Mobile Homes (the  "Division")  which
requires registration of subdividers and subdivided land; regulates the contents
of advertising and other promotional  material;  inspects the Company's land and
development work; exercises jurisdiction over sales practices; and requires full
disclosure to prospective  purchasers of pertinent  information  relating to the
property offered for sale.

            Other Obligations

            As a result of the delays in  completing  the land  improvements  to
certain  property sold in certain of its Central and North Florida  communities,
the Company fell behind in meeting its contractual obligations to its customers.
In  connection  with these  delays,  in 1980 the Company  entered into a Consent
Order  with the  Division  which  provided  a  program  for  notifying  affected
customers. Since 1980, the Consent Order was restated and amended several times,
culminating in the 1992 Deltona Consent Order.

            On December 30, 1997,  the Division  approved the formation of a Lot
Exchange Trust into which the Company conveyed  sufficient exchange inventory to
provide exchanges to customers with undeveloped lots. Concurrently, the Division
released its lien on the Company's contracts receivable,  satisfied its mortgage
on the Company's property and

                                        8


<PAGE>



approved a settlement  of all  remaining  issues under the 1992 Deltona  Consent
Order. The 1992 Deltona Consent Order was formally terminated on April 13, 1998.

            As of December  31,  1999,  the Company  had  estimated  development
obligations of approximately $25,000 on sold property, an estimated liability to
provide title  insurance and deeding costs of $273,700 and an estimated  cost of
street   maintenance,   prior  to  assumption  of  such   obligations  by  local
governments,  of $622,000,  all of which are included in deferred revenue. As of
December 31, 1999 and December 31, 1998 the Company had in escrow  approximately
$7,000  specifically  for land  improvements at certain of its Central and North
Florida  communities.  The Company's  development  obligation was  substantially
reduced  in  1997  by  the  consummation  of  the  Agreement   approved  by  the
stockholders  on November 4, 1997.  Approximately  $7,400,000 of the development
obligation  at St.  Augustine  Shores was  assumed  by Swan.  In  addition,  the
creation of a Lot Exchange  Trust reduced the  development  obligation at Marion
Oaks and Sunny Hills by approximately $5,800,000.

            On the federal level, the Company's  homesite  installment sales are
subject to the Federal Consumer Credit Protection  ("Truth-in-Lending")  Act. In
addition,  the Company's  activities are subject to regulation by the Interstate
Land Sales  Registration  Division  ("ILSRD"),  which administers the Interstate
Land Sales Full  Disclosure  Act.  That Act requires  that the Company file with
ILSRD  copies  of  applicable  materials  on file  with the  Division  as to all
properties  registered;  certain  properties  must be  registered  directly with
ILSRD, in addition to being registered with the Division.

            The  Company  has  either   complied   with   applicable   statutory
requirements  relative to the properties it is offering or has relied on various
statutory  exemptions  which have  relieved the Company from such  registration,
filing and  disclosure  requirements.  If these  exemptions  do not  continue to
remain  available to the Company,  compliance  with such  statutes may result in
delays in the offering of the Company's properties and products to the public.

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

            Real  estate  salespersons  must,  absent  exemptions  which  may be
available to employees of the property owner, be licensed in the jurisdiction in
which they perform their activities. Real estate brokerage companies in Florida,
as well as their brokers and salespersons,  must be licensed by the Florida Real
Estate Commission.

            Miscellaneous

            Various  subsidiaries  and  divisions  of the Company are subject to
regulation by local, state and federal agencies.  Such regulation extends to the
licensing of operations,  operating areas and personnel;  the  establishment  of
safety and service standards; and various other matters.

                                        9


<PAGE>



ITEM 3

                                LEGAL PROCEEDINGS

            During  1999,  the Company was subject to a lawsuit  entitled  Marco
Island Civic Association, Inc. et al v. The Deltona Corporation, et al, Case No.
98-3758-CA,  which was filed in the Circuit Court of Collier  County  Florida on
October  29,  1998.  The  complaint  alleged  that the Company  amended  certain
Declaration  of  Restrictions  for property in Marco Island  without  having the
authority  to do so. The  plaintiff  was  seeking to have the  Amendment  to the
Declaration declared null and void and to obtain unspecified  additional relief.
The  complaint was amended by the plaintiff to add claims for breach of warranty
and indemnity and included a claim for reimbursement of attorneys' fees incurred
in connection with prior  litigation.  In the amended  Complaint,  the plaintiff
also sought certification of the case as a class action based upon an allegation
that Deltona received  compensation  for granting  Declaration  amendments.  The
Company has settled all claims against it.

            The   Company   is  also  a  party  to  certain   other   legal  and
administrative  proceedings  arising in the  ordinary  course of  business.  The
outcome will not, in the opinion of the Company,  have a material adverse effect
on the business or financial condition of the Company.

                                       10


<PAGE>



ITEM 5

                    PRICE RANGE OF COMMON STOCK AND DIVIDENDS

            The  Company's  Common  Stock was traded on the New York and Pacific
Stock Exchanges under the ticker symbol DLT. On April 6, 1994, both the New York
and Pacific Stock  Exchanges  suspended the Company's  Common Stock from trading
and  instituted  procedures  to delist the Company's  Common Stock.  On June 16,
1994,  the  Company's  Common  Stock  was  formally  removed  from  listing  and
registration  on the New York Stock  Exchange.  As of  December  31,  1999,  the
Company's  Common  Stock was traded on a limited  basis in the  over-the-counter
markets (on the  bulletin  board) under the symbol  DLTA.  The weighted  average
price at which the stock was traded at the end of the first,  second,  third and
fourth quarters of 1999 is as follows:

                        March 31, 1999      $ .324
                        June 30, 1999       $ .449
                        September 30, 1999  $ .316
                        December 31, 1999   $ .229

            The Company has never paid cash  dividends on its Common Stock.  The
Company's loan agreements contain certain  restrictions which currently prohibit
the Company from paying dividends on its Common Stock.

                                       11


<PAGE>



ITEM 6

                   SELECTED CONSOLIDATED FINANCIAL INFORMATION

            The  following  table  summarizes  selected  consolidated  financial
information and should be read in conjunction  with the  Consolidated  Financial
Statements. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations".

<TABLE>
<CAPTION>
                       Consolidated Income Statement Data
                     (in thousands except per share amounts)

                                                       Year Ending

                                     December 31,  December 31,  December 31,  December 31,  December 31,
                                         1999          1998         1997           1996          1995
                                     ------------  ------------  ------------  ------------  ------------
<S>                                  <C>           <C>           <C>           <C>           <C>

Revenues ........................    $     8,837   $    6,487    $    9,425    $     8,650   $    6,688
Costs and expenses...............          9,204        9,078        10,751          9,877        9,593
                                     -----------   ----------    ----------    -----------   ----------
Loss from continuing operations
 before taxes and extraordinary
 items...........................           (367)      (2,591)       (1,326)        (1,227)      (2,905)
Provision for income taxes.......            -0-          -0-           -0-            -0-          -0-
                                     -----------   ----------    ----------    -----------   ----------
Loss from operations

 before extraordinary items......          (367)       (2,591)       (1,326)        (1,227)      (2,905)
Extraordinary items:
Gain on settlement related to
  the Marco refund obligation....           -0-           -0-           -0-            331          702
                                     ----------    ----------    ----------    -----------   ----------
Net income (loss) applicable
  to common stock................    $     (367)   $   (2,591)   $  (1,326)    $      (896)  $   (2,203)
                                     ==========    ==========    ==========    ===========   ==========
Basic earnings per share amounts:
    Continuing operations........    $     (.03)   $     (.19)   $    (.20)    $      (.18)  $     (.43)
    Extraordinary items..........           -0-           .00          .00             .05          .10
                                     ----------    ----------    ----------    -----------   ----------
Net income (loss)................    $     (.03)   $     (.19)   $     (.20)   $      (.13)  $     (.33)
                                     ==========    ==========    ==========    ===========   ==========
Weighted average common shares
 outstanding.....................    13,544,277    13,544,277    6,753,587     6,729,648     6,699,923
                                     ==========    ==========    ==========    ===========   ==========


                         Consolidated Balance Sheet Data
                                 (in thousands)


                                     December 31,  December 31,  December 31,  December 31,  December 31,
                                         1999          1998          1997         1996          1995
                                     ------------  ------------  ------------  ------------  ------------

Total assets.....................    $    11,913   $   11,915    $   13,560    $    19,422   $   19,180
                                     ===========   ==========    ==========    ===========   ==========

Liabilities......................    $    20,117   $   20,175    $   19,174    $    37,301   $   36,193
Stockholders' equity(deficiency).         (8,204)      (8,260)       (5,614)       (17,879)     (17,013)
                                     -----------   ----------    ----------    -----------   ----------
Total liabilities and stockholders'
 equity (deficiency).............    $    11,913   $   11,915    $   13,560    $    19,422   $   19,180
                                     ===========   ==========    ==========    ===========   ==========

                                       12

</TABLE>

<PAGE>



ITEM 7

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

From June 19,  1992  through  March 1999,  the  Company  had  entered  into loan
agreements with Selex International B.V., a Netherlands  corporation  ("Selex"),
Yasawa  Holdings,  N.V., a Netherlands  Antilles  Corporation  ("Yasawa"),  Swan
Development Corporation ("Swan") and related parties. Since December,  1992, the
Company has been  dependent  on loans and advances  from Selex,  Yasawa Swan and
their  affiliates  in order to  implement  its  marketing  program and assist in
meeting its working capital requirements.

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

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

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

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

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

Through  Yasawa's  acquisition  of the  6,809,338  shares of Common Stock of the
Company referenced above, Mr. Antony Gram's beneficial  ownership increased from
3,109,703 shares to 9,919,041 shares (73.23% of the outstanding shares of Common
Stock of the Company as of December 31, 1999).

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

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

                                       13


<PAGE>


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

            As of December 31, 1999,  the Company had  satisfied  its  principal
debt obligation to  Scafholding;  the Company's  outstanding  debt to Yasawa was
$6,600,000  secured by a first lien on the Company's  receivables and a mortgage
on all of the Company's property.  The terms of repayment of this debt have been
restructured  to provide for  monthly  payments  of  principal  in the amount of
$100,000  payable  monthly in cash or with contracts  receivable at 100% of face
value,  plus interest  payable  monthly on the declining  balance at the rate of
9.6%  per  annum  in cash or with  contracts  receivable  at 65% of face  value.
Effective  January 1, 1999,  Yasawa and Scafholding  agreed to reduce the annual
percentage  rate for their  existing  loans to the  Company  from 9.6% to 6% per
annum.  Yasawa and  Scafholding  did not require  the  Company to make  interest
payments for the period  September 1, 1998 to December 31, 1999.  As of December
31, 1999, the total amount of interest accrued is approximately $692,600.

            The  Company  recorded  interest  expense  on all  outstanding  debt
balances  for  1999  to  Yasawa,  Scafholding  and  Swan  at 8%,  the  Company's
incremental borrowing rate. The difference between interest calculated at 8% and
the amount  accrued  under the terms of the  respective  notes was recorded as a
capital contribution  increase to capital surplus. The Company recorded interest
expense and a capital  contribution in the amount of approximately  $423,000 for
1999.

            From October 9, 1998 through the present, Swan continued to loan the
Company  funds  to  meet  its  working  capital   requirements.   The  Company's
outstanding  debt to Swan,  which is secured by a second  lien on the  Company's
receivables,  was  $5,114,000  as of December  31,  1999.  The Company  signed a
promissory note to Swan in March 1999 which provides that funds advanced by Swan
will be paid back by the Company monthly in contracts receivables at 90% of face
value,  with recourse.  There will be no interest for the first six months after
an  advance  of money is  received  from  Swan by the  Company;  thereafter  the
interest shall be 6% per annum on the outstanding  balance of the advance.  Each
time an  advance is made,  a  supplemental  note is  signed.  The amount of each
monthly  payment  will vary and will be  dependent  upon the amount of contracts
receivable in the Company's  portfolio,  excluding contracts  receivable held as
collateral for prior receivable  sales.  Pursuant to the terms of the promissory
note,  the Company is required to transfer to Swan monthly as debt repayment all
current  contracts  receivable  in the  Company's  portfolio  in  excess  of the
aggregate  sum of $500,000.  Funds  advanced by Swan were used by the Company to
pay outstanding real estate taxes for unsold properties with the balance to meet
the Company's working capital requirements.

            During 1998, the Company transferred 14 lots and 4 tracts of land to
Swan. In return, Swan built an office complex on part of the land for use by the
Company for a period of 54 months, renewable thereafter.  The Company valued the
land transferred at approximately $440,000 and recorded the net present value of
the use of the office  complex of  approximately  $375,000 as prepaid rent.  The
difference between the net present value of the rent and the cost of the land of
approximately  $290,000 is recorded as deferred  profit at December 31, 1999 and
1998.

Results of Operations

  Years ended December 31, 1999 and December 31, 1998

            Revenues

            Total  revenues were  $8,837,000 for 1999 compared to $6,488,000 for
1998.

                                       14


<PAGE>



            Gross land sales were  $4,959,000  for 1999  versus  $4,155,000  for
1998. Net land sales (gross land sales less estimated uncollectible  installment
sales and contract valuation discount) increased to $4,465,000 for 1999 compared
to  $3,078,000  for 1998.  The increase  reflects  higher sales by the Company's
independent dealers and a lower estimate of uncollectible installment sales .

            New retail land sales  contracts  entered  into,  including  deposit
sales on which the Company has received less than 20% of the sales price, net of
cancellations,  for the years ended December 31, 1999 and December 31, 1998 were
$6,491,000 and $4,679,000, respectively. The Company had a backlog of $2,139,000
and  $630,000  in  unrecognized   sales  as  of  December  31,  1999  and  1998,
respectively.  Such  contracts  are not  included in retail land sales until the
applicable  rescission  period has expired and the Company has received payments
totaling  20%  of the  contract  sales  price.  See  Note 1 to the  Consolidated
Financial Statements.

            Advertising  and  marketing  costs are  charges to  operations  when
incurred.  Sales  commissions  are  recognized  as a liability  when the related
contract  is  accepted  and charged to expense  when the sale is  recognized  as
revenue.

            Housing  revenues are not  recognized  from housing  sales until the
completion  of  construction  and the passage of title.  Housing  revenues  were
$3,045,000  for 1999  compared to $1,622,000  for 1998.  The increase in housing
revenues  is  directly  related to the  increase  in the  Company's  promotional
programs for housing.

            Improvement  revenues result from  recognition of revenues  deferred
from prior period sales.  Recognition occurs as development work proceeds on the
previously  sold  property  or  customers  are  exchanged  to a  developed  lot.
Improvement  revenues totaled $381,000 in 1999 as compared to $956,000 for 1998.
The decrease is a result of lower expenditures.

            Interest income was $498,000 for 1999 compared to $548,000 for 1998.
This decrease is the result of lower contracts  receivable  balances due to debt
repayments to Swan, Scafholding and Yasawa.

            Other revenues were $448,000 for 1999 compared to $284,000 for 1998.
Other revenues are generated  principally by the Company's  title  insurance and
real estate brokerage subsidiaries.

            Costs and Expenses

            Costs and expenses were  $9,204,000  for 1999 compared to $9,079,000
for 1998.  Cost of sales totaled  $3,693,000 for 1999 compared to $2,562,000 for
1998. The increase reflects higher sales by the Company's independent dealers.

            Commissions,   advertising  and  other  selling   expenses   totaled
$3,040,000 for 1999 compared to $2,533,000 for 1998. Advertising was $359,000 in
1999 compared to $46,000 in 1998. Other selling expenses were $1,075,000 in 1999
compared to $1,124,000 in 1998.

            General and  administrative  expenses were $1,129,000 in 1999 versus
$2,144,000 in 1998. General and administrative  expenses decreased primarily due
to there being  reduced  payments due in 1999  pursuant to the 1998  termination
agreements to officers who resigned effective October 1998.

            Real estate tax expense was $491,000 in 1999  compared to $1,028,000
in 1998.  Included in real estate tax expense in 1998 is delinquent interest and
administrative  fees on  delinquent  taxes,  which  accrued  interest at 18% per
annum.

            Interest  expense was  $851,000 in 1999 as compared to $812,000  for
1998. The increase in interest expense is the result of increased debt. Interest
in the amount of $62,000 was capitalized in 1999. No interest was capitalized in
1998.

            Net Income

            The Company  reported a net loss of $367,000 for 1999  compared to a
net loss of $2,591,000 for 1998.

                                       15


<PAGE>






  Years ended December 31, 1998 and December 31, 1997

            Revenues

            Total  revenues were  $6,488,000 for 1998 compared to $9,425,000 for
1997.

            Gross land sales were  $4,155,000  for 1998  versus  $6,093,000  for
1997. Net land sales (gross land sales less estimated uncollectible  installment
sales and contract  valuation  discount)  decreased to $3,078,000  for 1998 from
$4,045,000  for 1997.  The  decrease  in sales  reflects  lower  sales  from the
Company's independent dealers.

            New retail land sales  contracts  entered  into,  including  deposit
sales on which the Company has received less than 20% of the sales price, net of
cancellations,  for the years ended December 31, 1998 and December 31, 1997 were
$4,679,000 and $5,359,000,  respectively.  The Company had a backlog of $630,000
and  $1,094,000 in  unrecognized  sales as of December 31, 1998 and December 31,
1997,  respectively.  Such contracts are not included in retail land sales until
the  applicable  rescission  period has expired  and the  Company  has  received
payments  totaling  20%  of  the  contract  sales  price.  See  Note  1  to  the
Consolidated Financial Statements.

            Housing  revenues are not  recognized  from housing  sales until the
completion  of  construction  and  passage  of  title.   Housing  revenues  were
$1,622,000  for 1998  compared to  $1,214,000  in 1997.  The increase in housing
revenues  is  directly  related  to  the  increase  in  the  Company's   housing
advertising and promotional programs for housing.

            Improvement  revenues result from  recognition of revenues  deferred
from prior period sales.  Recognition occurs as development work proceeds on the
previously  sold  property  or  customers  are  exchanged  to a  developed  lot.
Improvement  revenues  totaled  $956,000 in 1998 as compared to  $2,366,000  for
1997.  The decrease is a result of the Lot Exchange  Trust entered into in 1997,
which  provided  sufficient  developed  inventory for exchanges to customer with
undeveloped lots.

            Interest  income was $548,000 for 1998  compared to  $1,367,000  for
1997. This decrease is the result of lower contracts receivable balances.

            Other  revenues were $284,000 for 1998 compared to $433,000 in 1997.
Other revenues are generated  principally by the Company's  title  insurance and
real estate brokerage subsidiaries.

            Costs and Expenses

            Costs and expenses were  $9,079,000 for 1998 compared to $10,751,000
in 1997. Cost of sales totaled  $2,562,000 for 1998 versus  $2,831,000 for 1997.
This decrease reflects lower sales by the Company's independent dealers.

            Commissions,   advertising  and  other  selling   expenses   totaled
$2,533,000 for 1998 versus $2,517,000 for 1997. Advertising decreased to $46,000
in 1998 from $104,000 in 1997. Other selling expenses increased to $1,124,000 in
1998 from  $623,000 in 1997 as a result of increased  promotion of the Company's
housing line.

            General and  administrative  expenses were $2,144,000 in 1998 versus
$1,680,000  for  1997.  General  and  administrative   expenses  have  increased
primarily  due to  termination  agreements  to officers who  resigned  effective
October 1998.

            The Company recorded a $840,000  provision for recourse  obligations
in 1997.

            Real  estate  tax  expense  was   $1,028,000  in  1998  compared  to
$1,338,000 in 1997.  Included in real estate tax expense is delinquent  interest
and  administrative  fees on delinquent taxes,  which accrue interest at 18% per
annum.

                                       16


<PAGE>



            Interest  expense was $812,000 for 1998,  as compared to  $1,545,000
for 1997.  The  decrease  in interest  expense is the result of the  decrease in
debt. No interest was capitalized in 1998 and 1997.

            Net Income

            The Company reported a net loss of $2,591,000 for 1998,  compared to
a net loss of $1,326,000 for 1997.

Regulatory Developments which may affect Future Operations

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

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

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

Liquidity and Capital Resources

            Mortgages and Similar Debt

            Effective December 30, 1997, the Company and its lenders consummated
several  transactions that resulted in a reduction in the Company's  outstanding
debt  obligation  through the  conveyance  of all remaining  land  inventory and
obligations in the Company's St. Augustine  Shores  Subdivision and the issuance
of  approximately  6.8  million  shares of Common  Stock at $1.00 per share (par
value).  Additionally,  the lenders purchased $7,500,000 in contracts receivable
from the  Company  to  generate  working  capital  and  further  reduce the debt
obligation.  Selex sold its remaining  debt  ($2,664,736),  including the Empire
note,  to Yasawa and the Company  owes no further duty or  obligation  to Selex,
which  provided  the Company  with a release.  The debt  purchased by Yasawa was
satisfied  through Yasawa's  purchase of 2,664,736 shares of Common Stock issued
by the Company at a per share conversion  price of One Dollar ($1.00),  which is
equal to par value.  Swan had  previously  acquired  $5,529,501 of the Company's
debt from Selex. This $5,529,501 was satisfied through the Company's  conveyance
of all of the Company's remaining land inventory and obligations in its St.

                                       17


<PAGE>



Augustine  Shores  Subdivision to Swan . The price,  based upon appraised value,
was  adjusted to take into  account  the  development  obligations  on sold lots
assumed by Swan.  Scafholding  purchased  approximately  $7,500,000 in contracts
receivable  from the Company at  seventy-five  percent  (75%) of face value with
recourse for non-performing  contracts.  This sale generated  approximately $5.6
million,  $1,982,457 of which was used to reduce outstanding debt to Yasawa. The
balance was used by the Company to pay a portion of the  delinquent  real estate
taxes,  to  implement  its  marketing  programs,   to  initiate  development  of
TimberWalk and to meet the Company's working capital requirements.  A $4,144,602
portion of the Company's debt to Yasawa was satisfied  through Yasawa's purchase
of  4,144,602  shares  of Common  Stock  issued  by the  Company  at a per share
conversion price of One Dollar ($1.00), which is equal to par value.

            As of December 31, 1999,  the Company had  satisfied  its  principal
debt obligation to  Scafholding;  the Company's  outstanding  debt to Yasawa was
$6,600,000  secured by a first lien on the Company's  receivables and a mortgage
on all of the Company's property.  The terms of repayment of this debt have been
restructured  to provide for  monthly  payments  of  principal  in the amount of
$100,000  payable  monthly in cash or with contracts  receivable at 100% of face
value,  plus interest  payable  monthly on the declining  balance at the rate of
9.6%  per  annum  in cash or with  contracts  receivable  at 65% of face  value.
Effective  January 1, 1999,  Yasawa and Scafholding  agreed to reduce the annual
percentage  rate for their  existing  loans to the  Company  from 9.6% to 6% per
annum.  Yasawa and  Scafholding  did not require  the  Company to make  interest
payments for the period  September 1, 1998 to December 31, 1999.  As of December
31, 1999, the total amount of interest accrued is approximately $692,600.

            From October 9, 1998 through the present, Swan continued to loan the
Company  funds  to  meet  its  working  capital   requirements.   The  Company's
outstanding  debt to Swan,  which is secured by a second  lien on the  Company's
receivables,  was  $5,114,000  as of December  31,  1999.  The Company  signed a
promissory note to Swan in March 1999 which provides that funds advanced by Swan
will be paid back by the Company monthly in contracts receivables at 90% of face
value,  with recourse.  There will be no interest for the first six months after
an  advance  of money is  received  from  Swan by the  Company;  thereafter  the
interest shall be 6% per annum on the outstanding  balance of the advance.  Each
time an  advance is made,  a  supplemental  note is  signed.  The amount of each
monthly  payment  will vary and will be  dependent  upon the amount of contracts
receivable in the Company's  portfolio,  excluding contracts  receivable held as
collateral for prior receivable  sales.  Pursuant to the terms of the promissory
note,  the Company is required to transfer to Swan monthly as debt repayment all
current  contracts  receivable  in the  Company's  portfolio  in  excess  of the
aggregate  sum of $500,000.  Funds  advanced by Swan were used by the Company to
pay outstanding real estate taxes for unsold properties with the balance to meet
the Company's working capital requirements.

            The  Company  recorded  interest  expense  on all  outstanding  debt
balances  for  1999  to  Yasawa,  Scafholding  and  Swan  at 8%,  the  Company's
incremental borrowing rate. The difference between interest calculated at 8% and
the amount  accrued  under the terms of the  respective  notes was recorded as a
capital contribution  increase to capital surplus. The Company recorded interest
expense and a capital  contribution in the amount of approximately  $423,000 for
1999.

            The following table presents  information  with respect to mortgages
and similar debt (in thousands):

                                                    Years Ended
                                                    -----------
                                             December 31,   December 31,
                                                1999           1998
                                             ------------   ------------
            Mortgage Notes Payable........   $ 6,600        $ 6,670
            Other Loans...................     5,114          1,895
                                             -------        -------
               Total Mortgages and
                 similar debt.............   $11,714        $ 8,565
                                             -------        -------

            *           Included  in Mortgage  Notes  Payable is the Yasawa loan
                        ($6,600,000  at December  31,  1999);  included in Other
                        Loans is the Swan loan  ($5,114,000  as of December  31,
                        1999) and, for 1998,  the  Scafholding  loan,  which was
                        paid in full as of December 31, 1999.

            Indebtedness   under  various  purchase  money  mortgages  and  loan
agreements is  collateralized  by  substantially  all of the  Company's  assets,
including stock of certain wholly-owned subsidiaries.  The Company's outstanding
debt to Yasawa

                                       18


<PAGE>



is secured by a first lien on the Company's receivables and a mortgage on all of
the Company's property; and the Company's outstanding debt to Swan is secured by
a second lien on the Company's receivables.

            Contracts and Mortgages Receivable Sales

            In June,  1992 and February,  1990, the Company  completed  sales of
contracts  and  mortgages   receivable  totaling  $13,500,000  and  $17,000,000,
respectively,   which   generated   approximately   $8,000,000  and  $13,900,000
respectively, in net proceeds to the Company. The anticipated costs of the June,
1992 transaction were included in the extraordinary loss from debt restructuring
for 1991 since the restructuring was dependent on the sale. The Company recorded
a loss of $600,000 on the February,  1990 sale. In conjunction  with these sales
the Company  granted the  purchaser  a security  interest in certain  additional
contracts receivable of approximately $2,700,000 and conveyed all of its rights,
title and interest in the  property  underlying  such  contracts to a collateral
trustee. In addition,  these  transactions,  among other things require that the
Company  replace or repurchase  any receivable  that becomes 90 days  delinquent
upon the  request of the  purchaser.  Such  requirement  can be  satisfied  from
contracts  in which  the  purchaser  holds a  security  interest  (approximately
$1,855,000  as of  December  31,  1999).  The  purchaser  of  these  receivables
experienced  financial difficulty and filed in 1994 for protection under Chapter
11 of the Federal  Bankruptcy  Code.  In November  1995,  the purchaser of these
receivables  sold the portfolio to Finova Capital  Corporation.  The Company has
fully  reserved for the estimated  future  cancellations  based on the Company's
historical  experience for receivables  the Company  services and believes these
reserves to be  adequate.  In 1999,  the Company did not replace any  delinquent
receivables.  As of December 31, 1999 and 1998,  $1,244,000  and  $1,019,000  in
receivables were delinquent, respectively.

            In March, 1993, the Company transferred  $1,600,000 in contracts and
mortgages  receivable  generating  approximately  $1,059,000  in proceeds to the
Company,  which was used for  working  capital  and the  creation  of a holdback
account in the amount of  $150,000.  In 1998,  the  balance of the monies in the
holdback account were withdrawn by the contracts  receivable  purchaser pursuant
to the purchase agreement and the holdback account was terminated.

            During  1998,  Scafholding  purchased  approximately  $1,400,000  in
contracts and mortgages  receivable from the Company at sixty-five percent (65%)
of face value with recourse for non-performing contracts.  These sales generated
approximately $900,000 used to meet the Company's working capital requirements.

            The  Company  was the  guarantor  of  approximately  $13,038,000  of
contracts  receivable  sold or  transferred  as of December  31,  1999,  for the
transactions  described above.  There are no funds on deposit with purchasers of
the  receivables  as  security  to  assure  collectibility  as of such  date.  A
provision has been  established for the Company's  obligation under the recourse
provisions  of which  $3,809,000  remains at December 31, 1999.  The Company has
been in compliance with all receivables  transactions  since the consummation of
receivable sales.

            The Company has an agreement with Scafholding and Citony Development
Corporation  for the  servicing  of their  receivable  portfolios.  The  Company
received approximately $86,700 and $82,000, in 1999 and 1998,  respectively,  in
revenue pursuant to these agreements.

            In  the  future,  if  the  Company  elects  to  do  so,  Yasawa  and
Scafholding have agreed to purchase  contracts  receivable at 65% of face value,
with recourse. The Company has an agreement with Swan whereby Swan will loan the
Company funds to be repaid with contracts  receivable at 90% of face value, with
recourse.

  Other Obligations

            As of December  31,  1999,  the Company  had  estimated  development
obligations of approximately $25,000 on sold property, an estimated liability to
provide title  insurance and deeding costs of $273,700 and an estimated  cost of
street maintenance, prior to assumption of such obligations by local governments
of $622,000,  all of which are included in deferred revenue.  As of December 31,
1999 and  December  31,  1998 the  Company  had in escrow  approximately  $7,000
specifically  for land  improvements at certain of its Central and North Florida
communities.  The Company's development  obligation was substantially reduced in
1997 by the consummation of the Agreement approved by the stockholders on

                                       19


<PAGE>



November 4, 1997.  Approximately $7,400,000 of the development obligation at St.
Augustine  Shores was  assumed  by Swan.  In  addition,  the  creation  of a Lot
Exchange Trust reduced the development obligation at Marion Oaks and Sunny Hills
by approximately $5,800,000.

  Liquidity

            Retail land sales have  traditionally  produced  negative  cash flow
through the point of sale as a result of a regulatory  requirement to sell fully
developed  lots and the  additional  requirement  to pay  marketing  and selling
expenses prior to or shortly after the point of sale. In an effort to offset the
negative cash flow effects of installment land sales, the Company is directing a
greater  portion of its marketing  efforts to the sale of lots with homes and is
now offering  lots for sale in compulsory  building  areas where a lot purchaser
must complete  payments for the lot and construct a home within a limited period
of time.

            The Company has been  dependent  on its ability to sell or otherwise
finance its contracts  receivable and/or secure other financing to meet its cash
requirements.  Since 1992,  the Company has been  largely  dependent  on Yasawa,
Scafholding  and Swan and related  parties for the financing of its  operations.
Although  Scafholding has purchased contracts  receivables at the rate of 65% of
face value, with recourse,  and Swan has loaned the Company  additional funds to
be paid back with  contracts  receivable at the rate of 90% of face value,  with
recourse,  there can be no  guarantee  that the Company will be able to generate
sufficient  receivables  to obtain  sufficient  financing  in the future or that
Yasawa, Scafholding,  Swan and other related parties will continue to make loans
to the Company.

                                       20


<PAGE>



ITEM 8

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                              AND SUPPLEMENTAL DATA

                                                                           Page
                                                                           ----

Independent Auditors' Report...................................              22

Consolidated Balance Sheets as of December 31, 1999
   and December 31, 1998.......................................              24

Statements of Consolidated Operations for the years ended
   December 31, 1999, December 31, 1998 and
   December 31, 1997...........................................              26

Statements of Consolidated Stockholders' Equity(Deficiency)
   for the years ended December 31, 1999, December 31, 1998
   and December 31, 1997.......................................              27

Statements of Consolidated Cash Flows for the years ended
   December 31, 1999, December 31, 1998 and
   December 31, 1997...........................................              28

Notes to Consolidated Financial Statements.....................              30

Supplemental Unaudited Quarterly Financial Data................              41



                                       21


<PAGE>



                          INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE DELTONA CORPORATION:


            We have  audited  the  consolidated  balance  sheets of The  Deltona
Corporation  and  subsidiaries  (the "Company") as of December 31, 1999 and 1998
and  the   related   statements   of   consolidated   operations,   consolidated
stockholders' equity (deficiency) and consolidated cash flows for the years then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated 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,  such consolidated  financial statements referred to
above present fairly, in all material  respects,  the financial  position of the
Company at December 31, 1999 and 1998 and the results of its  operations and its
cash flows for the years ended  December  31, 1999 and 1998 in  conformity  with
generally accepted accounting principles.

            The  accompanying   consolidated   financial  statements  have  been
prepared assuming the Company will continue as a going concern.  As discussed in
Note  1  to  the  consolidated   financial  statements,   the  Company  incurred
substantial  operating  losses and has  continued to  experience  problems  with
liquidity,  causing  the  Company  to be  unable  to  meet  certain  contractual
obligations  and has a  stockholders'  deficiency  at December 31,  1999.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern. Management's plans concerning these matters are described in Note
1. The  consolidated  financial  statements do not include any adjustments  that
might result from the outcome of this uncertainty.

JAMES MOORE & CO.  P.L.
Certified Public Accountants
Gainesville, Florida

February 18, 2000


                                       22


<PAGE>



                          INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE DELTONA CORPORATION:

            We  have  audited  the   consolidated   statements  of   operations,
shareholders'  equity (deficiency) and cash flows of The Deltona Corporation and
subsidiaries  (the  "Company")  for the year  ended  December  31,  1997.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

            We  conducted  our  audit  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
from  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 audit provides a reasonable  basis
for our opinion.

            In our opinion,  such consolidated  financial  statement referred to
above present  fairly,  in all material  respects,  the results of the Company's
operations  and its  cash  flows  for the  year  ended  December  31,  1997,  in
conformity with generally accepted accounting principles.

            The  accompanying   consolidated   financial  statements  have  been
prepared assuming the Company will continue as a going concern.  As discussed in
Note  1  to  the  consolidated   financial  statements,   the  Company  incurred
substantial  operating losses and has continued to experience  liquidity crises,
causing the Company to be unable to meet certain contractual obligations and has
a stockholders' deficiency at December 31, 1997. These matters raise substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans  concerning  these  matters  are  described  in Note 1.  The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

DELOITTE & TOUCH LLP
Certified Public Accountants
Miami, Florida

March 25, 1998


                                       23


<PAGE>
<TABLE>
<CAPTION>



                           CONSOLIDATED BALANCE SHEETS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

                                     ASSETS
                                 (in thousands)


                                                     December 31,   December 31,
                                                        1999           1998
                                                     ------------   ------------
<S>                                                  <C>            <C>

Cash and cash equivalents, including escrow
 deposits and restricted cash of $396 in 1999
 and $667 in 1998 (Note 7)........................   $    548       $    721
                                                     --------       --------

Contracts receivable for land sales
 (Notes 2, 5 and 8)...............................      2,448          3,519

Less: Allowance for uncollectible contracts.......       (606)          (945)

      Unamortized valuation discount..............       (293)          (401)
                                                     --------       --------

Contracts receivable - net........................      1,549          2,173
                                                    ---------       --------

Mortgages and other receivables - net (Notes 2,
 5 and 8).........................................        109            194
                                                    ---------       --------
Inventories, at lower of cost or net realizable
 value (Notes 3 and 5):

Land and land improvements........................      8,237          7,579

Other.............................................         70             76
                                                     --------       --------

            Total inventories.....................      8,307          7,655
                                                     --------       --------

Property, plant and equipment - net (Notes
 4 and 5).........................................        489            467
                                                     --------       --------
Prepaid expenses and other........................        911            705
                                                     --------       --------
            Total.................................   $ 11,913       $ 11,915
                                                     ========       ========
</TABLE>




                   The accompanying notes are an integral part
                    of the consolidated financial statements.

                                       24


 <PAGE>
 <TABLE>
 <CAPTION>



                           CONSOLIDATED BALANCE SHEETS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                        (in thousands except share data)


                                                    December 31,    December 31,
                                                       1999            1998
                                                   ------------    ------------
<S>                                                <C>             <C>
Mortgages and similar debt (Note 5):

            Mortgage notes payable ..............   $  6,600         $  6,670

            Other loans .........................      5,114            1,895
                                                    --------         --------

              Total mortgages and similar debt...     11,714            8,565

Accounts payable-trade ..........................          7              193

Accrued interest payable (Note 5) ...............        744              258

Accrued taxes, principally real estate taxes ....         30            2,880

Accrued expenses and other (Notes 2 and 8) ......      4,513            4,459

Customers' deposits .............................        730              996

Deferred revenue (Notes 7 and 8) ................      2,379            2,824
                                                    --------         --------
Total liabilities ...............................     20,117           20,175
                                                    --------         --------

Commitments and contingencies (Notes 1, 2, 5,
 7 and 8)

Stockholders' equity (deficiency) (Notes 1, 5,
 and 9):

     Common stock, $1 par value-authorized
     15,000,000 shares; issued and outstanding:
     13,544,277 shares in 1999 and 1998
     (excluding 12,228 shares held in treasury)..     13,544           13,544

     Capital surplus ............................     51,863           51,440

     Accumulated deficit ........................    (73,611)         (73,244)
                                                    --------         --------
Total stockholders' equity (deficiency) .........     (8,204)         ( 8,260)
                                                    --------         --------
                                    Total........   $ 11,913         $ 11,915
                                                    ========         ========
</TABLE>


                   The accompanying notes are an integral part
                   of the consolidated financial statements.

                                       25


<PAGE>
<TABLE>
<CAPTION>



                      STATEMENTS OF CONSOLIDATED OPERATIONS
                    THE DELTONA CORPORATION AND SUBSIDIARIES

                        (in thousands except share data)

                                                                   Years Ended
                                                      December 31,  December 31,  December 31,
                                                         1999          1998          1997
                                                      -----------   ------------  ------------

<S>                                                   <C>           <C>           <C>
Revenues

 Gross land sales (Notes 2 and 7)..............       $ 4,959       $  4,155      $  6,093
 Less: Estimated uncollectible sales...........          (322)          (840)       (1,528)
       Contract valuation discount.............          (172)          (237)         (520)
                                                      -------       --------      --------
 Net land sales................................         4,465          3,078         4,045
 Sales-housing.................................         3,045          1,622         1,214
 Recognized improvement revenue-prior period
  sales........................................           381            956         2,366
 Interest income...............................           498            548         1,367
 Other ........................................           448            284           433
                                                      -------       --------      --------
                                    Total......         8,837          6,488         9,425
                                                      -------       --------      --------

Costs and expenses

 Cost of sales-land............................           986            741         1,121
 Cost of sales-housing.........................         2,402          1,269           917
 Cost of improvements-prior period sales.......           126            302           545
 Cost of sales-other...........................           179            250           248
 Provision for uncollectible contracts and
   recourse obligations (Note 2)...............           -0-            -0-           840
 Commissions, advertising, and other selling
  expenses.....................................         3,040          2,533         2,517
 General and administrative expenses...........         1,129          2,144         1,680
 Real estate tax...............................           491          1,028         1,338
 Interest expense..............................           851            812         1,545
                                                      -------       --------      --------
                                    Total......         9,204          9,079        10,751
                                                      -------       --------      --------

Loss from operations before income

 taxes.........................................          (367)        (2,591)       (1,326)

Provision for income taxes (Note 6)............           -0-            -0-           -0-
                                                      -------       --------      --------
Net income (loss)..............................       $  (367)      $ (2,591)     $ (1,326)
                                                      =======       ========      ========

Net income (loss) per common share.............       $  (.03)      $  ( .19)     $   (.20)
                                                      =======       ========      ========
</TABLE>


                   The accompanying notes are an integral part
                   of the consolidated financial statements.

                                       26


<PAGE>

<TABLE>
<CAPTION>


          STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIENCY)

                    THE DELTONA CORPORATION AND SUBSIDIARIES
                                 (in thousands)

For the years ended  December 31, 1999, December 31, 1998 and December 31, 1997

                                             Common Stock      Capital       Accumulated
                                            ($1 par value)     Surplus         Deficit        Total
                                            --------------     -------       -----------     -------
<S>                                         <C>                <C>           <C>             <C>
Balances, December 31, 1996.......          $ 6,734            $44,714       $(69,327)       $(17,879)
       Issuance of Common Stock to
         Related Party............            6,810                -0-            -0-           6,810
       Gain from Exchange of Land
         and Contracts Receivable
         with Related Party.......              -0-              6,781            -0-           6,781
       Net (loss) for the year....              -0-                -0-         (1,326)         (1,326)
                                            -------            -------       --------        --------
Balances, December 31, 1997.......          $13,544            $51,495       $(70,653)       $ (5,614)
       Gain (loss)from Exchange
         of Land and Contracts
         Receivable with Related
         Party....................              -0-               (55)            -0-             (55)
       Net (loss) for the year....              -0-               -0-          (2,591)         (2,591)
                                            -------           -------        --------        --------
Balances, December 31, 1998.......          $13,544           $51,440        $(73,244)       $ (8,260)
       Imputed Interest expense on
         debt with Related Party
         (See Note 5).............              -0-               423             -0-             423
       Net (loss) for the year....              -0-               -0-            (367)           (367)
                                            -------           -------        --------        --------
Balances, December 31, 1999.......          $13,544           $51,863        $(73,611)       $ (8,204)
                                            =======           =======        ========        ========

</TABLE>


                     The accompanying notes are an integral
                 part of the consolidated financial statements.

                                       27


<PAGE>
<TABLE>
<CAPTION>



                      STATEMENTS OF CONSOLIDATED CASH FLOWS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

                                 (in thousands)


                                                                               Years Ended
                                                                               -----------
                                                       December 31,            December 31,            December 31,
                                                          1999                    1998                     1997
                                                       ------------            ------------            ------------


<S>                                                    <C>                     <C>                     <C>
Cash flows from operating activities:
  Cash received from operations:

  Proceeds from sale of residential units........      $  2,846                $   1,768               $  1,272
  Collections on contracts and mortgages
   receivable....................................         1,051                    1,993                  3,245
    Down payments on and proceeds from sales
      of homesites and tracts....................           891                    1,072                  1,476
     Proceeds from sale of Contracts Receivables.             0                      868                  4,625
     Proceeds (uses) from other sources..........           (80)                     240                     (8)
                                                       --------                ---------               --------
            Total cash received from operations..         4,708                    5,941                 10,610
                                                       --------                ---------               --------
Cash expended by operations:
     Cash paid for residential units.............         2,402                    1,269                    917
     Cash paid for land and land improvements....         1,648                    1,047                    621
     Customer refunds............................           -0-                       35                     28
     Commissions, advertising and other
      selling expenses...........................         3,274                    2,620                  2,414
     General and administrative expenses.........         1,452                    1,715                  1,803
     Interest paid...............................           -0-                      299                    -0-
     Real estate taxes paid......................         3,336                      260                  2,504
                                                       --------                ---------               --------
            Total cash expended by operations....        12,112                    7,245                  8,287
                                                       --------                ---------               --------
            Net cash provided by (used in)
             operating activities................        (7,404)                  (1,304)                 2,323
                                                       --------                ---------              ---------

Cash flows from investing activities:
 Proceeds from sale of property, plant
  and equipment.................................              3                        0                     18
 Payment for acquisition and construction of
   property, plant and equipment................            (72)                    (137)                    (6)
                                                       --------                ---------               --------
            Net cash provided by (used in) investing
              activities........................            (69)                    (137)                    12
                                                       --------                ---------               --------
Cash flows from financing activities:

 New borrowings.................................          7,300                      765                    137
 Repayment of borrowings........................            -0-                      -0-                 (1,982)
                                                       --------                ---------               --------
            Net cash provided by (used in) financing
              activities........................          7,300                      765                 (1,845)
                                                       --------                ---------               --------
Net increase (decrease) in cash and cash
 equivalents....................................           (173)                    (676)                   490
Cash and cash equivalents, beginning of year....            721                    1,397                    907
                                                       --------                ---------               --------
Cash and cash equivalents, end of year..........       $    548                $     721               $  1,397
                                                       ========                =========               ========


                          The accompanying notes are an
            integral part of the consolidated financial statements.

                                       28


<PAGE>



               STATEMENTS OF CONSOLIDATED CASH FLOWS - (Continued)

                    THE DELTONA CORPORATION AND SUBSIDIARIES

                                 (in thousands)

                                                                                                              Years Ended


                                                                               Years Ended
                                                                               -----------
                                                       December 31,            December 31,            December 31,
                                                          1999                    1998                     1997
                                                       ------------            ------------            ------------
Reconciliation of net income (loss) to net cash
provided by (used in) operating activities:

Net income (loss)...............................       $     (367)             $   (2,591)             $   (1,326)
                                                       ----------              ----------              ----------
Adjustments to reconcile net income (loss) to
 net cash provided by (used in) operating activities:
            Depreciation and amortization.......               50                      45                      46
            Provision for estimated uncollectible
              sales and recourse obligations....              322                     840                   1,528
            Contract valuation discount, net of
              amortization......................               (5)                    140                     238
            Net (gain) loss on sale of property,
              plant and equipment...............               (3)                    -0-                     (18)
            Imputed Interest on debt with related
              party (See Note 5)................              423                     -0-                     -0-
            Provision for recourse obligation...              -0-                     -0-                     840
(Increase) decrease in assets and increase
 (decrease) in liabilities:
            Gross contracts receivable plus
             deductions from reserves...........           (3,844)                 (1,689)                  2,501
            Mortgages and other receivables.....               85                     890                    (907)
            Land and land improvements..........             (658)                   (211)                    673
            Housing completed or under
             construction and other.............                6                      23                     -0-
            Prepaid expenses and other..........             (205)                    (87)                    115
            Accounts payable, accrued expenses
             and other..........................           (2,497)                  2,049                   1,086
            Customers' deposits.................             (266)                    243                    (103)
            Deferred revenue....................             (445)                   (956)                 (2,350)
                                                       ----------               ---------              ----------
                Total adjustments and changes...           (7,037)                  1,287                   3,649
                                                       ----------               ---------              ----------
Net cash provided by (used in) operating
  activities....................................       $   (7,404)              $  (1,304)             $    2,323
                                                       ==========               =========              ==========

Supplemental disclosure of non-cash investing
 and financing activities:

Reduction of accrued interest as a result of the
  capitalization of interest to principal.......       $      -0-               $     -0-              $    1,130
                                                       ==========               =========              ==========
Reduction of accrued interest as a result of
  forgiveness of interest.......................       $      -0-               $     -0-              $    2,050
                                                       ==========               =========              ==========
Reduction of accrued interest and mortgage notes
  payable as a result of an exchange of land,
  property and common stock.....................       $      -0-               $     -0-              $   11,689
                                                       ==========               =========              ==========
Reduction of land as a result of an exchange of
  debt..........................................       $      -0-               $     -0-              $    1,953
                                                       ==========               =========              ==========
Reduction of deferred revenue as a result of
  assumption of the development obligation by
  a related party...............................       $      -0-               $     -0-              $    1,901
                                                       ==========               =========              ==========
Common Stock issued for reduction of long-term
  debt..........................................       $      -0-               $     -0-              $    6,810
                                                       ==========               =========              ==========
Reduction of notes receivable as a result of payment
  of accrued interest...........................       $      -0-               $     254              $      -0-
                                                       ==========               =========              ==========
Reduction of accrued interest and mortgage
  notes payable through transfer of contracts
  receivable....................................       $    4,151               $   1,233              $      -0-
                                                       ==========               =========              ==========
Sale of land to related party in return for
  future rent credits (see Note 8):
  Increase of prepaid expenses .................       $      -0-               $     398              $      -0-
                                                       ==========               =========              ==========
  Reduction of land inventory...................       $      -0-               $      81              $      -0-
                                                       ==========               =========              ==========
  Increase in deferred revenue..................       $      -0-               $     291              $      -0-
                                                       ==========               =========              ==========
</TABLE>

                          The accompanying notes are an
            integral part of the consolidated financial statements.

                                       29


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

1.          Basis of Presentation and Significant Accounting Policies

            Basis of Presentation - Going Concern

            The accompanying financial statements of The Deltona Corporation and
subsidiaries (the "Company") have been prepared on a going concern basis,  which
contemplates  the  realization of assets and  satisfaction of liabilities in the
normal course of business.

            The  Company  has  incurred  a loss  from  operations  for  1997  of
$1,326,000,  for 1998 of  $2,591,000,  and for 1999 of $367,000  resulting  in a
stockholders' deficiency of $8,204,000 as of December 31, 1999.

            Following  the  restructuring  of its debt in 1997 (see Note 5), the
Company  commenced the  implementation  of its business plan by redirecting  its
focus to  single-family  housing with the  development  of TimberWalk  and other
housing  in  Marion  Oaks.  The  transactions  described  in  Note 5 with  Selex
International,  B.V. ("Selex"),  Yasawa Holdings,  N.V. ("Yasawa"),  Scafholding
B.V.  ("Scafholding") and Swan Development  Corporation  ("Swan"),  provided the
Company  with a portion of its  financing  requirements  enabling the Company to
commence  implementation  of the marketing program and attempt to accomplish the
objectives of its business plan. Selex, Yasawa, Scafholding and Swan are related
parties to the Company  either because they are  shareholders  or as a result of
common control.

            The Company has been  dependent  on its ability to sell or otherwise
finance  contracts  receivable and/or secure other financing sources to meet its
cash  requirements.  Additional  financing  was  required in 1999 and was funded
through additional loans from Swan. Additional financing will be required in the
future.  Although Scafholding has purchased contracts receivables at the rate of
65% of face value, with recourse, in 1998 and Swan loaned the Company additional
funds  to be paid  back  with  contracts  receivable  at the rate of 90% of face
value,  with  recourse  in 1998 and  1999,  there can be no  guarantee  that the
Company will be able to generate  sufficient  receivables  to obtain  sufficient
financing  in the future or that  Yasawa,  Scafholding,  Swan and other  related
parties will continue to make loans to the Company. (See Notes 5 and 11.)

            The consolidated financial statements do not include any adjustments
relating to the  recoverability  of asset amounts or the amounts of  liabilities
should the Company be unable to continue as a going concern.

            Significant Accounting Policies

            The Company is principally  engaged in the  development  and sale of
Florida  real estate  through the  development  of planned  communities  on land
acquired for that purpose.

            The  Company's  consolidated  financial  statements  are prepared in
accordance with generally accepted accounting principles.  Material intercompany
accounts and transactions are eliminated.

            The  Company  sells  homesites  under  installment  contracts  which
provide for payments over periods  ranging from 2 to 10 years.  Since 1991,  the
Company  has  offered  only  developed  lots for sale.  Sales of  homesites  are
recorded under the percentage-of-completion  method in accordance with Statement
of Financial  Accounting Standards No. 66, "Accounting for Sales of Real Estate"
("FAST No. 66").  Since 1991, the Company has not recognized a sale until it has
received  20%  of  the  contract  sales  price.  During  1999,  1998  and  1997,
approximately 73%, 82% and 87% of sales were through a single independent dealer
in New York.

                                       30


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

1.          Basis of Presentation and Significant Accounting Policies(continued)

            At the time of recording a sale the Company records an allowance for
the estimated cost to cancel the related contracts  receivable  through a charge
to the provision for  uncollectible  sales. The amount of this provision and the
adequacy of the allowance is determined by the Company's  continuing  evaluation
of the portfolio and past  cancellation  experience.  While the Company uses the
best  information  available to make such  evaluations it is at least reasonably
possible,  future adjustments to the allowance may be necessary in the near term
as a result of future national and  international  economic and other conditions
that may be beyond the Company's  control.  Changes in the Company's estimate of
the allowance for  previously  recognized  sales are reported in earnings in the
period in which they  become  estimable  and are  charged to the  provision  for
uncollectible contracts.

            Land improvement  costs are allocated to individual  homesites based
upon the  relationship  that the homesite's sales price bears to the total sales
price of all  homesites  in the  community.  The  estimated  costs of  improving
homesites are based upon  independent  engineering  estimates made in accordance
with sound cost estimation and provide for anticipated  cost-inflation  factors.
The estimates are systematically  reviewed. When cost estimates are revised, the
percentage  relationship  they bear to deferred  revenues is  recalculated  on a
cumulative  basis to determine  future income  recognition as performance  takes
place.

            Sales of houses and vacation ownership units, as well as all related
costs and expenses, are recorded at the time of closing.

            Interest costs directly related to, and incurred during, a project's
construction  period are  capitalized.  No interest was  capitalized in 1997 and
1998. In 1999, approximately $62,000 of interest was capitalized.

            Property,  plant and  equipment is stated at cost.  Depreciation  is
provided by the  straight-line  method over the  estimated  useful  lives of the
respective assets, which range from 5 to 33 years. Additions and betterments are
capitalized,  and  maintenance  and repairs  are charged to income as  incurred.
Generally,  upon the sale or retirement of assets,  the accounts are relieved of
the costs and related accumulated depreciation and any gain or loss is reflected
in income.

            When property exchanges and refund transactions are consummated (see
Note 8), any resulting loss is charged against the allowance included in accrued
expenses and other.  The Company accrues  interest on its refund  obligations in
accordance with the customer refund programs.

            Advertising  and  marketing  costs are  charges to  operations  when
incurred.  Sales  commissions  are  recognized  as a liability  when the related
contract  is  accepted  and charged to expense  when the sale is  recognized  as
revenue.

            For the  purposes  of the  statements  of cash  flows,  the  Company
considers  its  investments,  which are  comprised of short term,  highly liquid
investments  purchased  with a  maturity  of three  months  or less,  to be cash
equivalents.

            In accordance with Statement of Financial  Accounting  Standards No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets  to Be  Disposed  Of"  (  SFAS  No.  121),  long-lived  assets,  such  as
inventories  and  property,  plant and  equipment  to be held and used are to be
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that the carrying amounts of an asset may not be recoverable. As of December 31,
1999,  there were no assets  considered  impaired  under the  provisions  of the
Statement.

                                       31


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

1.          Basis of Presentation and Significant Accounting Policies(continued)

            The  estimated  fair  values  of  financial  instruments  have  been
determined by the Company using  available  market  information  and appropriate
valuation methods. Considerable judgment is required in interpreting market data
to develop the estimates of fair value.  Accordingly,  the  estimates  presented
herein are not  necessarily  indicative of the amounts the Company could realize
or incur in a current market exchange.  The use of different market  assumptions
and/or estimation methods may have a material effect on the estimated fair value
amounts.   The  Company's  financial   instruments  consist  of  cash  and  cash
equivalents,  contracts and mortgages receivable, and similar debt. The carrying
amount of cash and cash equivalents are reasonable  estimates of fair value. The
fair value of  contracts  and  mortgages  receivable  and similar  debt has been
estimated  using  interest  rates  currently  available for similar  terms.  The
carrying  value of the  contracts  and  mortgages  receivable  and similar  debt
approximates fair value.

            The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

2.          Contracts and Mortgages Receivable

            At  December  31,  1999,  interest  rates  on  contracts  receivable
outstanding  ranged  from 5% to 12% per annum  (weighted  average  approximately
8.62%). The approximate principal maturities of contracts receivable were:

                                                  December 31,
                                                     1999
                                                   --------
                                                (in thousands)

            2000.....................                 358
            2001.....................                 359
            2002.....................                 317
            2003.....................                 293
            2004 ....................                 293
            2005 and thereafter......                 828
                                                   ------
                        Total........              $2,448
                                                   ======

            If a regularly  scheduled  payment on a contract  remains  unpaid 30
days  after its due date,  the  contract  is  considered  delinquent.  Aggregate
delinquent  contracts  receivable  at  December  31,  1999 and 1998  approximate
$856,000 and $1,058,000, respectively.

            Information  with  respect to interest  rates and  average  contract
lives used in valuing new contracts receivable generated from sales follows:

                                         Average     Average Stated   Discounted
            Years ended                   Term       Interest Rate     to Yield
            -----------                   ----       -------------     --------
            December 31, 1999.........   88 months       7.5%           13.5%
            December 31, 1998.........   94 months       8.3%           13.5%
            December 31, 1997.........   91 months       8.8%           13.5%

            In June,  1992 and February,  1990, the Company  completed  sales of
contracts  and  mortgages   receivable  totaling  $13,500,000  and  $17,000,000,
respectively, which generated approximately $8,000,000 and $13,900,000,

                                       32


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

2.          Contracts and Mortgages Receivable (continued)

respectively,  in net proceeds to the Company.  In conjunction with these sales,
the Company  granted the  purchaser  a security  interest in certain  additional
contracts receivable of approximately $2,700,000 and conveyed all of its rights,
title and interest in the  property  underlying  such  contracts to a collateral
trustee. In addition,  these  transactions,  among other things require that the
Company  replace or repurchase  any receivable  that becomes 90 days  delinquent
upon the  request of the  purchaser.  Such  requirement  can be  satisfied  from
contracts  in which  the  purchaser  holds a  security  interest  (approximately
$1,855,000  as of  December  31,  1999).  The  purchaser  of  these  receivables
experienced  financial difficulty and filed in 1994 for protection under Chapter
11 of the Federal  Bankruptcy  Code.  In November  1995,  the purchaser of these
receivables  sold the portfolio to Finova Capital  Corporation.  The Company has
fully  reserved for the estimated  future  cancellations  based on the Company's
historical  experience for receivables  the Company  services and believes these
reserves to be adequate. The Company was not requested to replace any delinquent
receivables in 1997, 1998 or 1999. As of December 31, 1999 and 1998,  $1,083,000
and $1,019,000 in receivables owned by Finova were delinquent, respectively.

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

            During  1998,  Scafholding  purchased  approximately  $1,400,000  in
contracts and mortgages  receivable from the Company at sixty-five percent (65%)
of face value with recourse for non-performing contracts.  These sales generated
approximately $900,000 used for the Company's working capital requirements.

            The Company is required to make monthly principal payments to Yasawa
and Scafholding with contracts  receivable at 100% of face value, with recourse.
The Company is also  required to make  monthly  principal  payments to Swan with
contracts receivable at 90% of face value, with recourse.  The Company transfers
all current contracts  receivable in excess of the net aggregate sum of $500,000
to Swan on a monthly basis (See Note 5).

            The  Company  is  the  guarantor  of  approximately  $13,038,000  of
contracts  receivable sold or transferred as of December 31, 1999.  There are no
funds on deposit  with  purchasers  of the  receivables  as  security  to assure
collectibility  as of such  date.  A  provision  has  been  established  for the
Company's  obligation under the recourse  provisions of which $3,809,000 remains
at December 31, 1999.  The Company has been in compliance  with all  receivables
transactions  since the  consummation of receivable  sales.  Because of inherent
uncertainties  in estimating the recourse  provision,  it is at least reasonably
possible that the Company's estimate will change in the near term.

            The Company has an agreement with Scafholding and Citony Development
Corporation  for the  servicing  of their  receivable  portfolios.  The  Company
received approximately $86,700 and $82,000, in 1999 and 1998,  respectively,  in
revenue  pursuant  to these  agreements.  The  Company  also  services  the Swan
receivable portfolio,  which consisted of 231 contracts as of December 31, 1999;
however,  the Swan  portfolio  is  serviced  at no charge to Swan under the debt
agreement.

                                       33


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

3.          Inventories

            Information with respect to the  classification of inventory of land
and improvements including land held for sale or transfer is as follows:

                                                     December 31,   December 31,
                                                        1999            1998
                                                     ------------   ------------
                                                           (in thousands)

            Unimproved land........................  $    420       $    420
            Land in various stages of development..     2,633          2,287
            Fully improved land....................     5,184          4,872
                                                     --------       --------
                        Total......................  $  8,237       $  7,579
                                                     ========       ========
4.          Property, Plant and Equipment

            Property,  plant and equipment and accumulated  depreciation consist
of the following:
<TABLE>
<CAPTION>

                                             December 31, 1999         December 31, 1998
                                          ------------------------    -----------------------
                                                      Accumulated                  Accumulated
                                            Cost      Depreciation      Cost       Depreciation
                                          --------    ------------    --------     ------------
                                                          (in thousands)

            <S>                           <C>         <C>             <C>          <C>
            Land and land improvements..  $     74    $   -0-         $    74       $  -0-
            Other buildings, improvements
              and furnishings...........     1,116       789            1,073          771
            Construction and other
              equipment.................       758       670              752          661
                                          --------   -------          -------       ------
                        Total...........  $  1,948   $ 1,459           $1,899       $1,432
                                          ========   =======          =======       ======
</TABLE>

            Depreciation  charged to operations for the years ended December 31,
1999,   1998  and  1997  was   approximately   $50,000,   $45,000  and  $46,000,
respectively.

5.          Mortgages and Similar Debt

            Effective December 30, 1997, the Company and its lenders consummated
several  transactions that resulted in a reduction in the Company's  outstanding
debt  obligation  through the  conveyance  of all remaining  land  inventory and
obligations in the Company's St. Augustine  Shores  Subdivision and the issuance
of  approximately  6.8  million  shares of Common  Stock at $1.00 per share (par
value).  Additionally,  the lenders purchased $7,500,000 in contracts receivable
from the  Company  to  generate  working  capital  and  further  reduce the debt
obligation.  Selex sold its remaining  debt  ($2,664,736),  including the Empire
note,  to Yasawa and the Company  owes no further duty or  obligation  to Selex,
which provided the Company a release. The debt purchased by Yasawa was satisfied
through  Yasawa's  purchase of  2,664,736  shares of Common  Stock issued by the
Company at a per share conversion price of One Dollar ($1.00), which is equal to
par value.  Swan had previously  acquired  $5,529,501 of the Company's debt from
Selex. This $5,529,501 was satisfied through the Company's  conveyance of all of
the Company's  remaining  land inventory and  obligations  in its St.  Augustine
Shores Subdivision to Swan . The price, based upon appraised value, was adjusted
to take into account the  development  obligations on sold lots assumed by Swan.
Scafholding purchased approximately  $7,500,000 in contracts receivable from the
Company  at  seventy-five   percent  (75%)  of  face  value  with  recourse  for
non-performing  contracts.  This  sale  generated  approximately  $5.6  million,
$1,982,457 of which was used to reduce  outstanding debt to Yasawa. A $4,144,602
portion of the Company's debt to Yasawa was satisfied  through Yasawa's purchase
of  4,144,602  shares  of Common  Stock  issued  by the  Company  at a per share
conversion price of One Dollar ($1.00), which is equal to par value.

                                       34


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

 5.         Mortgages and Similar Debt (continued)

            The terms of  repayment  of the  Yasawa  and  Scafholding  debt were
restructured  to provide  for  payments of  principal  in the amount of $100,000
payable monthly in cash or with contracts receivable at 100% of face value, plus
interest payable monthly on the declining  balance at the rate of 9.6% per annum
in cash or with  contracts  receivable at 65% of face value.  As of December 31,
1999, the Company had satisfied its debt  obligation to  Scafholding.  Effective
January 1, 1999,  Yasawa and Scafholding  agreed to reduce the annual percentage
rate for their existing  loans to the Company from 9.6% to 6% per annum.  Yasawa
and Scafholding have not required the Company to make monthly interest  payments
for the period  September 1, 1998 to December 31, 1999. As of December 31, 1999,
the total amount of interest accrued is approximately $693,000.

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

            From October 9, 1998 through the present, Swan continued to loan the
Company  funds to meet its  working  capital  requirements  (see Note  11).  The
Company's  outstanding  debt to Swan,  which is secured by a second  lien on the
Company's  receivables,  was  $5,114,000  as of December 31,  1999.  The Company
signed a  promissory  note to Swan in  March  1999  which  provides  that  funds
advanced  by  Swan  will  be  paid  back by the  Company  monthly  in  contracts
receivables at 90% of face value,  with recourse.  There will be no interest for
the first six  months  after an advance  of money is  received  from Swan by the
Company;  thereafter  the  interest  shall be 6% per  annum  on the  outstanding
balance of the  advance.  Each time an advance is made, a  supplemental  note is
signed.  The amount of each monthly payment will vary and will be dependent upon
the  amount  of  contracts  receivable  in the  Company's  portfolio,  excluding
contracts receivable held as collateral for prior receivable sales.  Pursuant to
the terms of the  promissory  note,  the Company is required to transfer to Swan
monthly as debt  repayment  all current  contracts  receivable  in the Company's
portfolio in excess of the  aggregate  sum of $500,000.  Funds  advanced by Swan
were used by the  Company  to pay  outstanding  real  estate  taxes  for  unsold
properties with the balance to meet the Company's working capital requirements.

           The  Company  recorded  interest  expense  on all  outstanding  debt
balances  for  1999  to  Yasawa,  Scafholding  and  Swan  at 8%,  the  Company's
incremental borrowing rate. The difference between interest calculated at 8% and
the amount  accrued  under the terms of the  respective  notes was recorded as a
capital contribution  increase to capital surplus. The Company recorded interest
expense and a capital  contribution in the amount of approximately  $423,000 for
1999.

            In  the  future,  if  the  Company  elects  to  do  so,  Yasawa  and
Scafholding have agreed to purchase  contracts  receivable at 65% of face value,
with recourse. The Company has an agreement with Swan whereby Swan will loan the
Company funds to be repaid with contracts  receivable at 90% of face value, with
recourse.

            The following table presents  information  with respect to mortgages
and similar debt (in thousands):

                                                         Years Ended
                                                December 31,        December 31,
                                                   1999                 1998
                                                ------------        ------------
   Mortgage Notes Payable...............        $ 6,600             $ 6,670
   Other Loans..........................          5,114               1,895
                                                -------             -------
     Total Mortgages and similar debt...        $11,714             $ 8,565
                                                -------             -------

* Included in Mortgage Notes Payable is the Yasawa loan  ($6,600,000 at December
31, 1999);  included in Other Loans is the Swan loan  ($5,114,000 as of December
31,  1999) and, for 1998,  the  Scafholding  loan,  which was paid in full as of
December 31, 1999.

                                       35


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

5.          Mortgages and Similar Debt (continued)

            The following table presents information with respect to the minimum
principal  maturities  of  mortgages  and  similar  debt for the next five years
(excluding amounts owed to Swan):

                                                      For the year ended
                                                          December 31
                                                        (in thousands)

             2000................................           1,200
             2001................................           1,200
             2002................................           1,200
             2003................................           1,200
             2004................................           1,200

            Indebtedness   under  various  purchase  money  mortgages  and  loan
agreements is  collateralized  by  substantially  all of the  Company's  assets,
including stock of certain  wholly-owned  subsidiaries.  The loan  modifications
consummated  December 31, 1997,  satisfied all Company obligations to Selex. The
Company's outstanding debt to Yasawa is secured by a first lien on the Company's
receivables and a mortgage on all of the Company's  property;  and the Company's
outstanding  debt  to  Swan  is  secured  by a  second  lien  on  the  Company's
receivables. The Company satisfied its debt obligation to Scafholding.

6.          Income Taxes

            Effective  December  26,  1992,  the Company  adopted  Statement  of
Accounting  Standard No. 109 "Accounting for Income Taxes."  Differences between
accounting  rules and tax laws cause  differences  between  the basis of certain
assets and liabilities for financial  reporting  purposes and tax purposes.  The
tax effect of these differences,  to the extent they are temporary, are recorded
as deferred tax assets and liabilities. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in deferred
assets and liabilities.

            For the years ended  December 31, 1999,  1998 and 1997,  the Company
had a net loss for tax  purposes  and  there  was no  material  amount  of taxes
payable or refundable. Accordingly, there was no tax provision for such years.

            As of December 31, 1999, the Company had a net deferred tax asset of
approximately $ 14,139,000  which primarily  resulted from the tax effect of the
Company's  net  operating  loss  carryforward  of  $  8,610,000  and  losses  on
subsidiaries  sold in prior  years  of  $3,960,000.  A  valuation  allowance  of
$14,139,000 has been established against the net deferred tax asset.

            As of December 31, 1998, the Company had a net deferred tax asset of
approximately  $19,374,000  which primarily  resulted from the tax effect of the
Company's  net  operating  loss   carryforward  of  $14,817,000  and  losses  on
subsidiaries  sold in prior  years  of  $3,960,000.  A  valuation  allowance  of
$19,374,000 has been established against the net deferred tax asset.

            The Company's regular net operating loss  carryover for tax purposes
is estimated to be $31,741,000 at  December  31,  1999,  $364,000  of which  was
available  through  2002,  $9,189,000  through  2005,  $9,780,000  through 2006,
$5,029,000 through 2008,  $5,401,000 through 2009, $1,977,000 through 2011 , and
the remainder  through 2019.  In addition to the net operating  loss  carryover,
investment tax credit  carryovers of  approximately  $64,000,  which expire from
2000 through 2001, and alternative minimum tax credits of $386,000 are available
to reduce  federal  income tax  liabilities  only after the net  operating  loss
carryovers have been utilized.

                                      36


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

6.          Income Taxes (continued)

            The utilization of the Company's net operating loss and  tax  credit
carryforwards could be impaired or reduced under certain circumstances, pursuant
to changes in the  federal  income  tax laws  effected  by the Tax Reform Act of
1986. Events which affect these carryforwards  include,  but are not limited to,
cumulative stock ownership  changes of 50% or more over a three-year  period, as
defined, and the timing of the utilization of the tax benefit carryforwards.

7.          Liability for Improvements

            The Company has an  obligation to complete  land  improvements  upon
deeding which, depending on contractual  provisions,  typically occurs within 90
to 120 days after the completion of payments by the customer. The estimated cost
to complete  improvements  to lots and tracts from which sales have been made at
December  31,  1999  and  1998  was   approximately   $921,000  and  $1,060,000,
respectively.  The foregoing estimates reflect the Company's current development
plans at its  communities  (see  Note 8).  These  estimates  include:  estimated
development  obligations  applicable to sold lots of  approximately  $25,000;  a
liability to provide title insurance and deeding costs of $273,700 and $423,000,
respectively;  and an estimated cost of street maintenance,  prior to assumption
of  such   obligations   by  local   governments,   of  $622,000  and  $612,000,
respectively; all of which are included in deferred revenue. Included in cash at
December  31,  1999 and  December  31,  1998,  are  escrow  deposits  of  $7,000
restricted  for  completion  of   improvements   in  certain  of  the  Company's
communities.  The Company's development  obligation was substantially reduced in
1997 by the  consummation  of the  Agreement  approved  by the  stockholders  on
November 4, 1997.  Approximately $7,400,000 of the development obligation at St.
Augustine  Shores was  assumed  by Swan.  In  addition,  the  creation  of a Lot
Exchange Trust reduced the development obligation at Marion Oaks and Sunny Hills
by approximately $5,800,000.

            The anticipated expenditures for land improvements,  title insurance
and deeding to complete  areas from which sales have been made through  December
31, 1999 are as follows:

                                                         December 31, 1999
                                                         -----------------
                                                           (in thousands)

             2000...........................                  $ 208
             2001...........................                    271
             2002...........................                    312
             2003 and thereafter............                    130
                                                              -----
                    Total....................                 $ 921
                                                              =====

8.          Commitments and Contingent Liabilities

            Total rental expense for the years ended December 31, 1999, December
31, 1998 and December 31, 1997 was approximately $77,000, $134,000 and $121,000,
respectively.

            The Company has a lease on its  headquarters  building in TimberWalk
and on its Miami office that extend through 2003. Estimated rental expense under
these leases is expected to be approximately  $76,000 annually.  The Company has
no material equipment leases.

            During 1998, the Company transferred 14 lots and 4 tracts of land to
Swan. In return, Swan built an office complex on part of the land for use by the
Company for a period of 54 months, renewable thereafter.  The Company valued the
land transferred at approximately $440,000 and recorded the net present value of
the use of the office  complex of  approximately  $375,000 as prepaid rent.  The
difference between the net present value of the rent and the cost of the land of
approximately  $290,000 is recorded as deferred  profit as of December  31, 1999
and 1998.


                                       37


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

8. Commitments and Contingent Liabilities (continued)

           Additionally during  1998, Scafholding advanced the Company $200,000
against future administrative fees due the  Company  for  selling  lots owned by
Scafholding.  The  Company  recorded  this advance as a deposit.   In the  years
ended  December 31, 1999  and  1998,  the  Company  earned  $74,240 and $27,780,
respectively, in fees for sold lots.

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

            As a result of the delays in  completing  the land  improvements  to
certain  property sold in certain of its Central and North Florida  communities,
the Company fell behind in meeting its contractual obligations to its customers.
In  connection  with these  delays,  in 1980 the Company  entered into a Consent
Order with the  Division of Florida  Land Sales,  Condominiums  and Mobile Homes
(the  "Division"),  which provided a program for notifying  affected  customers.
Since

 1980, the Consent Order was restated and amended several times,  culminating in
the 1992 Deltona Consent Order.

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

            As of  December  31,  1999  and  1998  the  Company  had  in  escrow
approximately  $7,000  specifically  for land  improvements  at  certain  of its
Central and North Florida communities.  The Company's development obligation was
substantially  reduced in 1997 by the consummation of the Agreement  approved by
the  stockholders  on  November  4,  1997.   Approximately   $7,400,000  of  the
development obligation at St. Augustine Shores was assumed by Swan. In addition,
the creation of a Lot  Exchange  Trust  reduced the  development  obligation  at
Marion Oaks and Sunny Hills by approximately $5,800,000.

            The Company's continuing liquidity problems had precluded the timely
payment of the full amount of certain real estate taxes. In 1999,  delinquent as
well as current real estate taxes for all  properties in the Company's  saleable
inventory were paid. On properties  where customers have  contractually  assumed
the  obligation to pay real estate  taxes,  monies  received from  customers for
payment of such taxes are deposited into a tax escrow  maintained by the Company
until paid.

            In addition to the matters  discussed  above, the Company is a party
to other litigation  relating to the conduct of its business which is routine in
nature and, in the opinion of  management,  should have no material  effect upon
the Company's operation.

9.          Common Stock and Earnings Per Share Information

            Effective  December 30, 1997,  the Company  entered into  agreements
with  its  lenders  to  substantially  reduce  the  Company's  outstanding  debt
obligations.  Yasawa  purchased  6,809,338  shares of Common Stock issued by the
Company at a per share price of One Dollar ($1.00), which is equal to par value,
in satisfaction of $6,809,338 of the Company's debt to Yasawa.  Through Yasawa's
acquisition  of the 6,809,338  shares of Common Stock of the Company  referenced
above, Mr. Antony Gram's beneficial ownership increased from 3,109,703 shares to
9,919,041  shares  (73.23%  of the  outstanding  shares of  Common  Stock of the
Company as of December 31, 1999).

                                       38


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    THE DELTONA CORPORATION AND SUBSIDIARIES

9.          Common Stock and Earnings Per Share Information (continued)

            Net income  (loss) per common share is computed in  accordance  with
the  requirements  of  Statement  of  Financial  Accounting  Standards  No.  128
"Earnings  Per Share" (SFAS 128).  SFAS 128 requires net income (loss) per share
information  to be computed  using a simple  weighted  average of common  shares
outstanding during the periods presented.

            The net loss and the  average  number of shares of common  stock and
common stock  equivalents  used to calculate earnings (loss) per share for 1999,
1998 and 1997  were  $(367,000),  $(2,591,000) and  $(1,326,000) and 13,544,277,
13,544,277 and 6,753,587, respectively.

10.         Subsequent Event

            Between  January 1, 2000 and  February  18,  2000,  Swan  loaned the
Company  $645,000  under  similar terms as described in Note 5. These funds were
used to meet the Company's current working capital requirements.

            In  January  2000,   the  Company   acquired   sixteen  homes  under
construction from Scafholding  valued at approximately  $763,000.  Swan financed
the acquisition under similar terms as described in Note 5.

            In January 2000, the Company  transferred a 185 acre parcel zoned as
a park site to Scafholding.  In consideration for the transfer,  Scafholding has
paid approximately  $100,000 in current and delinquent real estate taxes related
to the parcel.  The Company did not record a gain or loss on this transaction as
neither the park site or the related taxes have been  attributed  any amounts on
the books of the Company.

            In January and  February  2000,  the Company  transferred  contracts
receivable  with a face  value  of  $100,000  to  Scafholding  under  the  terms
described in Note 5.

                                       39


<PAGE>

                 SUPPLEMENTAL UNAUDITED QUARTERLY FINANCIAL DATA
                    (in thousands, except per share amounts)


<TABLE>
<CAPTION>

                                                  (Loss)
                                                   From
                                                Operations
                                                  Before                (Loss)                   Net
                                                  Income                 From                   Income
                        Revenues                  Taxes                 Operations              (Loss)
                        --------                  -----                 ----------              ------
<S>                     <C>                     <C>                     <C>                     <C>
1999

  First.....            $ 2,184                 $   (297)               $   (297)               $   (297)
  Second....              2,277                     (222)                   (222)                   (222)
  Third.....              2,046                     (280)                   (280)                   (280)
  Fourth....              2,330                      432                     432                     432
                        -------                 --------                --------                --------
Total.......            $ 8,837                 $   (367)               $   (367)               $   (367)
                        =======                 ========                ========                ========

1998

  First....             $  1,379                $   (621)               $   (621)               $  (621)
  Second...                1,946                    (304)                   (304)                  (304)
  Third....                1,338                  (1,269)                 (1,269)                (1,269)
  Fourth...                1,825                    (397)                   (397)                  (397)
                        --------                --------                --------                -------
Total......             $  6,488                $ (2,591)               $ (2,591)               $(2,591)
                        ========                ========                ========                -

1997

  First....             $  2,072                $   (429)               $   (429)               $   (429)
  Second...             $  2,291                $   (174)               $   (174)               $   (174)
  Third....             $  1,631                $   (627)               $   (627)               $   (627)
  Fourth...             $  3,431                $   ( 96)               $   ( 96)               $    (96)
                        --------                --------                --------                --------
Total......             $  9,425                $ (1,326)               $ (1,326)               $ (1,326)
                        ========                                        ========                --------


Earnings (Loss) Per Share(a)
                                                                        Net Income
                                                Operations                (Loss)
                                                ----------                ------
1999

            First.......                        $  (.02)                 $  (.02)
            Second......                           (.02)                    (.02)
            Third.......                           (.02)                    (.02)
            Fourth......                            .03                      .03
                                                -------                 --------
Total...................                        $  (.03)                $   (.03)
                                                =======                 ========

1998

            First.......                        $  (.05)                $   (.05)
            Second......                           (.02)                    (.02)
            Third.......                           (.09)                    (.09)
            Fourth......                           (.03)                    (.03)
                                                -------                 --------
Total...................                        $  (.19)                $   (.19)
                                                =======                 ========

1997

            First.......                        $  (.06)                $   (.06)
            Second......                           (.03)                    (.03)
            Third.......                           (.09)                    (.09)
            Fourth......                           (.01)                    (.01)
                                                -------                 --------
Total...................                        $  (.20)                $   (.20)
                                                =======                 ========
<FN>

            (a)         Total shown does not agree with  earnings  per share set
                        forth  in  the  Company's   Statement  of   Consolidated
                        Operations  for the year ended  December 31, 1997 due to
                        differences in the  calculation of the weighted  average
                        number of shares  outstanding at the end of each quarter
                        during the year.
</FN>
</TABLE>

                                       40


<PAGE>

ITEM 14

         EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


(a)         1.   Financial Statements

            See Item 8, Index to Consolidated Financial Statements
            and Supplemental Data.


(a)         2.   Financial Statement Schedules

                                                                        Page
                                                                        ----
                 Independent Auditors' Report.....................       42

                 Schedule VIII - Valuation and qualifying
                   accounts for the three years ended
                   December 31, 1999..............................       44

            All other  schedules are omitted  because they are not applicable or
            not required, or because the required information is included in the
            Consolidated  Financial  Statements  or  Notes  thereto  or the 2000
            Annual  Meeting Proxy  Statement to be filed with the Securities and
            Exchange Commission pursuant to Regulation 14A,  incorporated herein
            by reference.

(a)         3.   Exhibits

            See the Exhibit Index included herewith.

(b)         Reports on Form 8-K

            No report on Form 8-K was filed  during the year ended  December 31,
            1999.

                                       41


<PAGE>

                          INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF THE DELTONA CORPORATION:


            We have audited the consolidated financial statements of The Deltona
Corporation  and  subsidiaries  (the "Company") as of December 31, 1999 and 1998
and for the years then ended, and have issued our reports thereon dated February
18, 2000 (which  expresses an  unqualified  opinion and includes an  explanatory
paragraph  relating to the  Company's  ability to continue as a going  concern),
included  elsewhere in this Annual Report on Form 10-K.  Our audit also included
the financial statement schedules listed in Item 14(a)2 of this Annual Report on
Form 10-K. These financial  statement  schedules are the  responsibility  of the
Company's  management.  Our responsibility is to express an opinion based on our
audits. In our opinion,  such financial statement schedules,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
present fairly in all material respects the information set forth therein.

JAMES MOORE & COMPANY P.L.
Certified Public Accountants
Gainesville, Florida

February 18, 2000


                                       42


<PAGE>

                          INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF THE DELTONA CORPORATION:

            We have audited the consolidated financial statements of The Deltona
Corporation  and  subsidiaries  (the "Company") as of December 31, 1997, and for
the year then ended and have  issued our report  thereon  dated  March 25,  1998
(which  expresses an unqualified  opinion and includes an explanatory  paragraph
relating to the  Company's  ability to continue  as a going  concern),  included
elsewhere  in this  Annual  Report on Form 10-K.  Our audits also  included  the
financial  statement  schedules  listed in Item 14(a)2 of this Annual  Report on
Form 10-K. These financial  statement  schedules are the  responsibility  of the
Company's  management.  Our responsibility is to express an opinion based on our
audits. In our opinion,  such financial statement schedules,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
present fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE  LLP
Certified Public Accountants
Miami, Florida

March 25, 1998


                                       43

<PAGE>

                    THE DELTONA CORPORATION AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                                                          Additions
                                                                                                                          Charged to

Those Valuation and Qualifying Accounts             Balance at    Revenues,     Deductions     Balance at
Which are Deducted in the Balance Sheet             Beginning     Costs, and    from           End of
  from the Assets to Which They Apply               of Period     Expenses      Reserves       Period
---------------------------------------             ----------    ----------    ----------     --------

<S>                                                 <C>           <C>           <C>            <C>
Year ended December 31, 1999


  Allowance for uncollectible contracts(a)........  $     945     $      322    $      661     $      606
                                                    =========     ==========    ==========     ==========

  Unamortized contract valuation discount(b)......  $     401     $      172    $      280     $      293
                                                    =========     ==========    ==========     ==========



Year ended December 31, 1998

  Allowance for uncollectible contracts(a)........  $   1,150     $      840    $    1,045     $      945
                                                    =========     ==========    ==========     ==========

  Unamortized contract valuation discount(b)......  $     508     $      237    $      344     $      401
                                                    =========     ==========    ==========     ==========


Year ended December 31, 1997

  Allowance for uncollectible contracts(a)........  $   2,429     $    1,528    $    2,807     $    1,150
                                                    =========     ==========    ==========     ==========

  Unamortized contract valuation discount(b)......  $   1,094     $      520    $    1,106     $      508
                                                    =========     ==========    ==========     ==========


<FN>

------------

       (a)         Represents estimated uncollectible contracts receivable (see
                   Notes 1 and 2 to Consolidated Financial Statements).

       (b)         Represents  the  unamortized   discount  generated  from
                   initial valuations of contracts  receivable (see Notes 1
                   and 2 to Consolidated Financial Statements).

</FN>
</TABLE>
                                       44


<PAGE>


                                    SIGNATURES

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

THE DELTONA CORPORATION
  (Company)


By:            /s/ Donald O. McNelley                 DATE:       March 24, 2000
            ------------------------------------
               Donald O. McNelley, Treasurer

            Pursuant to the  requirements  of the Securities  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated on the date indicated.

  /s/  Antony Gram
  ----------------

Antony Gram, Chairman of the Board of Directors,
        Chief Executive Officer and President

  /s/ Christel DeWilde
  --------------------

        Christel DeWilde, Director

  /s/George W. Fischer
  --------------------

        George W. Fischer, Director

  /s/Rudy Gram
  ------------

        Rudy Gram, Director

  /s/Thomas B. McNeill
  --------------------

         Thomas B. McNeill, Director                  DATE:       March 24, 2000

                                       45


<PAGE>