<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                             -----------------------

                                    FORM 10-K
(Mark One)
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

         X        For the fiscal year ended  December 31, 2001
         -                                   -----------------

                                       OR

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

                  For the transition period from               to
                                                 -------------    --------------

Commission file number 0330-080104
                       -----------

                       GRANITE DEVELOPMENT PARTNERS, L.P.
                       ----------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                      34-1754061
-------------------------------------          ---------------------------------
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
or organization)

1050 Terminal Tower     50 Public Square      Cleveland, Ohio       44113
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code          216-621-6060
                                                   -----------------------------

Securities registered pursuant to Section 12(b) of the Act:
                                      None

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

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 Agreement to this
form 10-K. ( )

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>


                                TABLE OF CONTENTS




<TABLE>
<S>              <C>                                                                  <C>
PART I.                                                                                 PAGE
-------                                                                                 ----

Item     1.       Business                                                              3
         2.       Properties                                                            4
         3.       Legal Proceedings                                                     4
         4.       Submission of Matters to a Vote of Security Holders                   4


PART II.
--------

Item     5.       Market for Registrant's Common Equity
                           and Related Stockholder Matters                              4
         6.       Selected Financial Data                                               5
         7.       Management's Discussion and Analysis of Financial Condition
                           and Results of Operations                                    6
         7A.      Quantitative and Qualitative Disclosure About Market Risk             16
         8.       Financial Statements and Supplementary Data                           17
         9.       Changes in and Disagreements with Accountants on Accounting
                           And Financial Disclosure                                     46

PART III.
---------

Item     10.      Directors and Executive Officers of the
                           General Partner of the Registrant                            46
         11.      Executive Compensation                                                46
         12.      Security Ownership of Certain Beneficial Owners
                           and Management                                               46
         13.      Certain Relationships and Related Transactions                        46


PART IV.
--------

Item     14.      Exhibits, Financial Statement Schedules and Reports
                            on form 8-K                                                 47-48
</TABLE>


                                       2
<PAGE>


                                     PART I

Item 1.  Business

ORGANIZATION

         Granite Development Partners, L.P. ("Partnership"), a Delaware limited
partnership, was formed on November 15, 1993 for the purpose of investing in,
acquiring, owning, developing, selling and otherwise disposing of undeveloped
and developed land acquired by the Partnership ("Partnership Properties"). The
Partnership also may act as a joint venture partner with respect to the
acquisition, ownership, development, sale or disposition of certain properties
(also the "Partnership Properties"). The Partnership will terminate on December
31, 2013 or upon disposition of assets or certain other events. Effective
December 16, 1998, the Partnership changed its fiscal year end from January 31
to December 31.

         The Partnership expects sales of all its properties to be complete by
the year 2005, at which time the Partnership is expected to dissolve and
terminate.

         The Partnership is the owner of Granite Silver Development Partners,
L.P. the managing partner in Silver Canyon Partnership. Silver Canyon
Partnership ("SC Partnership"), a Nevada limited partnership, is owned 33 1/3 %
by Granite Silver Development Partners, L.P., 33 1/3% by Silver Canyon
Corporation ("SCC"), and 33 1/3% by American Nevada Seven Hills Limited
Partnership ("ANC"), a Nevada limited partnership and subsidiary of American
Nevada Corporation, a Nevada corporation. SC Partnership is the owner and
developer of Seven Hills, an approximately 1,300 acre master planned community
located outside Las Vegas, Nevada.

INVESTMENT OBJECTIVES AND POLICIES

         The principal investment objectives of the Partnership are the
preservation of capital and appreciation of such capital through sales of land
at increased values. There is no assurance that these investment objectives will
be achieved. The Partnership has invested in undeveloped land or in partnerships
or joint ventures that hold interests in such land on an all-cash basis and
intends to realize the appreciation of such land upon resale. The Partnership
Properties, the majority of which will be developed as residential tracts, have
been acquired and developed with the proceeds from the sale of the senior notes
and the warrants exercisable into partnership units and the proceeds from the
sale of Partnership Properties allocated to such future acquisition and
development. The Partnership Properties are in various stages of development
ranging from fully developed and ready for sale to third parties, to projects
with sales not expected to be completed for another three years. Seven Hills is
not expected to fully mature for another two years. The Partnership expects
sales of all Partnership Properties to be completed by the year 2005, at which
time the Partnership will dissolve and terminate.

         The Partnership will develop each of its properties at a rate which
will approximate the absorption rate in the relevant real estate market. Once
development is completed, the properties will be marketed and sold. Upon
completion of the sale of all of the Partnership Properties, remaining proceeds
will be used to repay the senior note holders and the Partnership will be
dissolved and terminated.


                                       3
<PAGE>


FORMATION OF THE PARTNERSHIP

         All of the Partnership Properties have been acquired and are in various
stages of development. These properties are owned, developed and sold by the
Partnership or a joint venture in which the Partnership, or a wholly-owned
subsidiary of the Partnership, is a joint venture partner. The formation of the
Partnership was designed to facilitate development of Partnership Properties
under the control of a single entity, the Partnership, with greater access to
the public and private capital markets and to enhance the potential for future
growth.

COMPETITION

         Competition in this segment is dominated by price, location and
availability of properties.

Item 2.  Properties

         The following properties remain in the Partnership property portfolio
as of December 31, 2001:

<TABLE>
<CAPTION>
NAME                              DESCRIPTION
----                              -----------

<S>                              <C>
Day Drive                         Located in Parma, Ohio. Approximately four (4) acres of commercially zoned property remain.


Solon Estates (Thornbury)         Located in Solon, Ohio. Consists of 250 acres zoned for 175 single family lots and cluster
                                  homes of which 51 lots have been sold. Sales are expected to be completed within three years.


Seven Hills (Silver Canyon)       Located in Henderson, Nevada. A 1,293 acre master planned residential community currently
                                  under development. Consists of 3,296 lots of which 3,212 lots are sold; 12.1 unsold
                                  commercial acres. Sales are expected to be completed within two years.


Music Street                      Located in Newbury Township, Ohio. Consists of thirty, 3 acre residential lots of which six
                                  lots remain.

Fairfax Meadows                   Located in Medina, Ohio. Consists of 73 acres zoned for 141 single family residential
                                  sublots of which 23 lots remain.  Sales are expected to be completed within two years.
</TABLE>


Item 3.  Legal Proceedings

         Other than routine litigation and administrative proceedings arising in
the ordinary course of business, the Partnership is not presently involved in
any litigation nor, to its knowledge, is any litigation threatened against the
Partnership or its properties, which is reasonably likely to have a material
adverse effect on the liquidity or results of operations of the Partnership.

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

         No matters were submitted to a vote of security holders during the year
ended December 31, 2001.

                                     PART II

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

         The securities offered of Granite Development Partners, L.P., were
36,000 warrants, each of which entitled the holder thereof to purchase one unit
of limited partnership interest of the Partnership, at an exercise price of
$111.11 per partnership unit and up to 36,000 partnership units issuable upon
exercise of the warrants. The warrants were exercisable at any time prior to
December 3, 1996. On December 3, 1996, all 36,000 warrants were exercised. The
securities are not traded on a public market.


                                       4
<PAGE>


Item 6.  Selected Financial Data


<TABLE>
<CAPTION>


                                   Fiscal               Fiscal              Fiscal              Fiscal             Fiscal
                                    2001*               2000**              1999***            1998****           1997*****
                             -------------------- -------------------  ------------------ ------------------- ------------------

<S>                            <C>                    <C>                 <C>                 <C>                <C>
OPERATING RESULTS
Sales of developed
  property                     $     1,629,800        $    7,617,600      $    4,709,680      $    8,417,447     $   5,709,083
Gross margin                   $       714,869        $    3,364,688      $    1,183,266      $    2,479,013     $   2,088,020
Net income (loss)              $     2,886,995        $  (1,933,299)      $ (17,731,283)      $  (1,215,059)     $   (357,213)
</TABLE>


<TABLE>
<CAPTION>
                                December 31,         December 31,        December 31,        December 31,        January 31,
                                    2001                 2000                1999                1998               1998
                             -------------------- -------------------  ------------------ ------------------- ------------------
<S>                            <C>                    <C>                 <C>                 <C>                <C>
FINANCIAL POSITION
Total assets                   $    19,850,256        $   18,416,386      $   28,689,141      $   49,641,324     $  48,015,304
Land and land
  improvements                 $     2,863,422        $    1,244,223      $    2,394,946      $    3,203,853     $   6,360,771
Investments in and
  advances to joint
    ventures                   $    14,586,951        $   14,676,838      $   21,983,937      $   32,221,489     $  29,748,165
Total debt, including
  mortgage debt                $    34,740,634        $   36,000,000      $   36,528,961      $   36,776,659     $  37,242,514
</TABLE>

         * Fiscal 2001 results are for the year ended December 31, 2001
        ** Fiscal 2000 results are for the year ended December 31, 2000
       *** Fiscal 1999 results are for the year ended December 31, 1999
      **** Fiscal 1998 results are for the eleven months ended December 31, 1998
     ***** Fiscal 1997 results are for the year ended January 31, 1998


                                       5
<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         The following discussion and analysis of Granite Development Partners,
L.P. ("Partnership"), should be read in conjunction with the audited financial
statements and notes thereto as of and for the year ended December 31, 2001
contained in this Annual Report on Form 10-K.

RESULTS OF OPERATIONS

Overview
         The Partnership's results of operations for the years ended December
31, 2001, 2000 and 1999 include the financial results, accounted for on the
equity basis, of Eaton Estate Partnership ("Eaton") and Silver Canyon
Partnership ("SC Partnership"), the Partnership's two joint ventures. The
Partnership has four remaining wholly owned projects in inventory at December
31, 2001. Eaton recorded its final sales during 2001. Eaton will be dissolved in
2002 and all remaining cash will be distributed to the partners pursuant to the
terms of the partnership agreement. The Partnership is the owner of Granite
Silver Development Partners, L.P., the managing partner in SC Partnership. The
only project owned by SC Partnership is Seven Hills, which is discussed in more
detail below.

         For the fiscal years ended December 31, 2001 and December 31, 2000, the
Partnership reported net income of $2,886,995 and a net loss of $1,933,299,
respectively. The increase in net income is primarily the result of net income
from joint ventures of $6,145,060 for the year ended December 31, 2001 versus a
net loss from joint ventures of $908,158 for the year ended December 31, 2000.
This increase was partially offset by a decrease in Partnership gross margins
from $3,364,688 for the year ended December 31, 2000 to $714,869 for the year
ended December 31, 2001.

         For the fiscal years ended December 31, 2000 and December 31, 1999, the
Partnership reported net losses of $1,933,299 and $17,731,283 respectively. The
decrease in net loss is primarily the result of the following: a loss from joint
ventures of $9,670,001 for the year ended December 31, 1999 versus $908,158 for
the year ended December 31, 2000; the forgiveness of $3,800,771 of previously
recognized interest income from SC Partnership during 1999; the forgiveness of
$1,455,981 of previously recognized commission income from SC Partnership during
1999; and the forgiveness of $220,000 of administrative fee income from SC
Partnership during 1999. The forgiveness of previously recognized interest and
fees is the result of an agreement ("Agreement") between American Nevada Seven
Hills Limited Partnership ("ANC") and the Partnership, the partners in SC
Partnership, which modified certain terms of the Silver Canyon Partnership
Agreement. This Agreement is described further in subsequent paragraphs.

Silver Canyon Partnership - Agreement (1999)
         As discussed above, the primary reason for the net loss reported by the
Partnership in 1999, was due to the loss from joint ventures of $9,670,001 of
which $9,899,688 related to SC Partnership. The SC Partnership loss recorded by
the Partnership related primarily to excess project costs for the Seven Hills
project identified in 1999. As a result of such excess costs, ANC, the partner
in SC Partnership responsible for the on-site improvements in the Seven Hills
project, and the Partnership entered into the Agreement which modified certain
terms of the Silver Canyon Partnership Agreement. The intent of the Agreement
was to result in a more equitable sharing of excess costs by ANC and the
Partnership to minimize the impact of the


                                       6
<PAGE>


identified costs in excess of budget to complete the Seven Hills project and to
preserve cash flow available to meet the Partnership's obligations.

         The Agreement's impact on the Silver Canyon Partnership Agreement
included the following provisions:

1.   ANC assigned all of its future and past commissions, fees, and
     distributions relating to loans, capital calls and interest thereon to the
     SC Partnership. Amounts previously paid were deemed return of capital.

2.   ANC funded one-half of the settlement amounts for the two lawsuits settled
     in 1999 and 2000.

3.   The Partnership funded the remaining settlement liability for the lawsuits
     but received a priority distribution to cover such capital contribution.

4.   After the priority distribution in #3, ANC and the Partnership received
     distributions pari passu until ANC recovered its entire cash investment
     except for $750,000, which occurred in the first quarter of 2001.

5.   Thereafter, the Partnership will receive all distributions until it has
     recovered its entire capital account. To the extent the Partnership does
     not recover its entire capital account, ANC will negotiate in good faith as
     to whether ANC should fund one-half of any additional lawsuits funded by
     the Partnership.

6.   After the Partnership has recovered its entire capital account, ANC and the
     Partnership will share all remaining distributions pari passu.

         The following table summarizes the favorable impact of the Agreement to
SC Partnership as of December 31, 1999:

<TABLE>
<S>                                                                    <C>
Land inventory adjustment                                              $ 5,054,279
Fees and commissions adjustment                                          6,110,701
                                                                       -----------
  Total adjustments                                                    $11,164,980
                                                                       ===========
</TABLE>

         The following table summarizes the impact of the Agreement to the SC
Partnership Agreement as it relates directly to the Partnership as of December
31, 1999:

<TABLE>
<S>                                                                 <C>
Land inventory adjustment at ownership                                $  4,263,313
Fees and commissions adjustment at ownership                             1,675,982
                                                                      ------------
  Subtotal                                                            $  5,939,295

Forgiveness of capitalized income recognized                           (3,800,771)
Forgiveness of commission income                                       (1,455,981)
Forgiveness of administration fee income                               (  220,000)
                                                                      ------------
  Subtotal                                                            $(5,476,752)
                                                                      ------------
  Total                                                               $    462,543
                                                                      ============
</TABLE>

         The general partner of the Partnership is FC-Granite, Inc., an Ohio
corporation ("FC-Granite"). FC-Granite is a wholly-owned subsidiary of Sunrise
Land Company ("Sunrise"). As a result of the Partnership excess costs and their
impact on the Partnership, FC-Granite and Sunrise forgave certain unpaid
expenses as of June 30, 1999 and will not charge


                                       7
<PAGE>


the Partnership in the future. The following table summarizes the forgiven
expenses which were recorded as a reduction to expense in the statement of
operations:

<TABLE>
<S>                                                                     <C>
Administrative fees to FC-Granite                                       $   77,123
Real estate commissions to FC-Granite                                       59,295
Development fees to Sunrise                                                 67,765
Interest to Sunrise                                                         84,476
                                                                        ----------
                                                                        $  288,659
                                                                        ==========
</TABLE>

Seven Hills - Gross Margins Through September 30, 2000
         The loss from joint ventures for the nine months ended September 30,
2000 resulted primarily from SC Partnership recording zero gross margins on its
Seven Hills project in Henderson, Nevada. The zero gross margins were the result
of an extensive review of project costs performed in 1999, which revealed an
increase in the scope of landscape and greenbelt improvements for the balance of
the project as well as increases in parcel development costs in excess of
budget. As a result, estimated costs to complete the project were revised.
During the third quarter of 2000, the Partnership identified potential
improvements in the estimated cost to complete the Seven Hills project. However,
the management of the Partnership believed that it was premature to recognize
gross margins for the project as of the third quarter of 2000 primarily because
of the speculative nature of future land sales. A significant portion of the
remaining land sales in Seven Hills consisted of estate lots, which are higher
priced lots sold to high net worth individuals as opposed to lower priced lots
sold in bulk to production home builders. Uncertainties in current and future
economic conditions and the large number of estate lots yet to be sold made it
very difficult to estimate accurate future sales prices and gross margins. As a
result, no gross margins were recorded on sales in the first three quarters of
2000.

         The zero margins reported by the Partnership specifically related to
speculation in high-end estate lot pricing and contingent project costs. A
lowest-probable pricing scenario through the third quarter of 2000, showed that
remaining sales would be sufficient only to recover remaining development costs,
resulting in zero gross margins. A lowest-probable pricing scenario was used
because of unknown future economic conditions, and how they could affect the
pricing of remaining lots. The 2000 business plan was also adjusted to include
certain contingent costs not included in the plan.

Seven Hills - Gross Margins Fourth Quarter 2000 and 2001
         The 2001 Seven Hills business plan was approved by the partners on
January 25, 2001. That plan showed remaining sales to be sufficient to recover
estimated costs to complete, resulting in an overall gross margin. However, the
2001 business plan continued to be based on speculation of sales prices,
particularly for high priced estate lots. In addition, the 2001 business plan
did not include estimates for certain contingent project costs. As a result,
Partnership management adjusted the 2001 business plan to remove some of the
speculation of higher priced estate lot pricing. The plan was also adjusted by
management to include certain of the contingent project cost items that were
reasonable to estimate and are reasonably probable to incur.

         The 2002 Seven Hills business plan was approved by the partners on
February 7, 2002. That plan continues to show remaining sales to be sufficient
to recover estimated costs to complete resulting in an overall gross margin and
was adjusted by management to include certain of the contingent project cost
items that are reasonable to estimate and are reasonably probable to incur.


                                       8
<PAGE>


         During the fourth quarter of 2000 through to December 31, 2001, a
significant amount of speculation was eliminated relating to the pricing of
estate lots. Strong sales of high-end estate lots at prices higher than those
used in the preliminary business plan reduced the need to use a lowest-probable
pricing scenario for estate lots. As a result, revised estimates were
incorporated by management for pricing and potential future cost. This resulted
in the Partnership reporting gross margin beginning with sales in the fourth
quarter of 2000. During the year ended December 31, 2001, $9,688,825 of gross
margin was reported.

         SC Partnership and the Partnership management will continue to monitor
all trends, results and uncertainties very closely. Gross margin reported will
continue to be adjusted based on continued review of the business plan, and the
effect that trends, actual results, and potential uncertainties have on the
business plan.

Comparisons - Results of Operations
         Sales of developed property totaled $1,629,800 for the year ended
December 31, 2001, $7,617,600 for the year ended December 31, 2000 and
$4,709,680 for the year ended December 31, 1999. The following significant sales
occurred in fiscal 2001: 1) 10 lots in the Solon Estates (Thornbury) development
for $1,335,800; 2) 5 lots in the Fairfax Meadows development for $224,000 and 1
lot in River Oaks for $ 70,000. The following significant sales occurred in
fiscal 2000: 1) 41 lots in the Solon Estates (Thornbury) development for
$4,671,100; 2) 45 lots in the Fairfax Meadows development for $1,973,000 and 4.8
acres in Day Drive for $690,000. The following significant sales occurred in
fiscal 1999: 1) 54 lots in the Ledges development for $3,235,680; 2) 20 lots in
the Fairfax Meadows development for $1,026,000; 3) 7 single family sublots in
Cambridge Park for $368,000; and 4) a 0.77 acre parcel of Drake Estates in
Strongsville for $80,000. Note that the Ledges, Cambridge Park and Drake Estates
were completed and sold out in 1999. River Oaks was completed and sold out
during 2001.

         As of March 4, 2002, one lot in the Solon Estates (Thornbury)
subdivision in Solon, Ohio has sold for $140,000, one lot in the Fairfax Meadows
subdivision in Medina, Ohio has sold for $44,000 and one lot in the Music Street
subdivision in Newbury Township has sold for $60,000. Also at this date, four
lots in the Solon Estates (Thornbury) subdivision in Solon, Ohio were under
contract for $523,450. These contracts are not guaranteed to close.

         Interest income totaled $126,993 for the year ended December 31, 2001
versus $86,631 for the year ended December 31, 2000. Interest income is
comprised of interest earned on notes receivable from the sales of developed
property and from the investment of proceeds from sales in short-term commercial
paper. The increase in interest income in fiscal 2001 is primarily due to the
increase in interest earned on notes receivable.

         Interest income totaled $86,631 for the year ended December 31, 2000
versus $954,398 for the year ended December 31, 1999. The decrease in interest
income in fiscal 2000 is mainly due to the decrease in the recognition of
deferred interest income. During the year ended December 31, 1999, $772,027 was
recognized related to SC Partnership sales, as previously discussed. No deferred
interest income was recognized during fiscal year 2000.

         Commission income of $189,448 was recorded for the year ended December
31, 1999. Commission income earned during 1999 and in prior years from the SC
Partnership, in the amount of $1,455,981, was forgiven in 1999 in connection
with the Agreement and reapplied as repayment of partner loans and capital.
There was no commission income recorded for the years ended December 31, 2001
and 2000.


                                       9
<PAGE>


         Other income totaled $14,743 for the year ended December 31, 2001
versus $2,205 for the year ended December 31, 2000. The increase in other income
in fiscal 2001 is primarily due to forfeited deposits.

         Other income totaled $2,205 for the year ended December 31, 2000 versus
$110,187 for the year ended December 31, 1999. Other income for the year ended
December 31, 1999 is mainly comprised of deferred administrative fees and
management fees related to the SC Partnership. Administrative fee income earned
during fiscal 1999 and in prior years in the amount of $220,000 was reapplied as
repayment of partners loans and capital. The decrease in other income in fiscal
2000 is mainly due to the decrease in the recognition of deferred administrative
and management fees related to the SC Partnership.

         Interest, commission, and administrative fee income in the amounts of
$3,800,771, $1,455,981, and $220,000, respectively, recorded through the
statement of operations in fiscal year 1999 and prior years, was forgiven during
the year ended December 31, 1999. The total amount of $5,476,752 was recorded as
a loss from joint venture agreement in the statement of operations.

         Interest expense totaled $3,788,423 for the year ended December 31,
2001 versus $4,090,708 for the year ended December 31, 2000. Interest expense is
mainly comprised of interest accrued for Senior Notes, operating loans and
mortgage notes payable. There was no interest expense incurred for operating
loans during the year ended December 31, 2001 versus $354,359 for the year ended
December 31, 2000.

         Interest expense totaled $4,090,708 for the year ended December 31,
2000 versus $4,470,896 for the year ended December 31, 1999. Interest expense
for operating loans was $354,359 for the year ended December 31, 2000 versus
$503,287 for the year ended December 31, 1999.

         Partner fees totaled $143,154 for the year ended December 31, 1999.
Partner fees are comprised of administrative fees, development fees and
commissions. There were no partner fees recorded for the years ended December
31, 2001 and 2000.

         As a result of the SC Partnership excess costs and their impact on the
Partnership, FC-Granite modified the administrative fee arrangement. The
administrative fee was not earned or accrued beyond June 30, 1999 and the unpaid
accrued amount of $77,123 as of June 30, 1999 was deemed paid by the
reapplication of a portion of the previously paid special units interest.
Originally, FC-Granite was to be paid a monthly administrative fee as
compensation for its services in administrating the business of the Partnership
equal to one-sixth of 1% of the book value of the partnership properties, as
defined. Total administrative fees accrued for the six months ended June 30,
1999 were $79,126. Administrative fees payable as of December 31, 1998 were
$196,494. The Partnership paid administrative fees of $198,497 during the year
ended December 31, 1999.

         As a result of the SC Partnership excess costs and their impact on the
Partnership, Sunrise modified the development fee arrangement. The development
fee was not earned or accrued beyond June 30, 1999 and the unpaid accrued amount
of $67,765 as of June 30, 1999 was deemed paid by the reapplication of a portion
of the paid special units interest. Originally, Sunrise was to be paid a
semi-annual development fee equal to 4% of gross revenues as compensation for
its services in managing the development of the Partnership's properties. Total
development fees accrued for the six months ended June 30, 1999 were $34,148.
Development


                                       10
<PAGE>


fees payable as of December 31, 1998 were $569,473. The Partnership paid
development fees of $535,856 during the year ended December 31, 1999.

         As a result of the SC Partnership excess costs and their impact on the
Partnership, FC-Granite modified the real estate commissions arrangement. The
real estate commissions were not earned or accrued beyond June 30, 1999 and the
unpaid accrued amount of $59,295 as of June 30, 1999 was deemed paid by the
reapplication of a portion of the paid special units interest. Total real estate
commissions accrued for the six months ended June 30, 1999 were $29,880.
Commissions payable as of December 31, 1998 were $498,289. The Partnership paid
commissions of $468,874 for the first six months of 1999 prior to the
modification of the real estate commission arrangement.

         Operating and other expenses totaled $236,331 for the year ended
December 31, 2001 versus $287,032 for the year ended December 31, 2000.
Operating and other expenses are mainly comprised of legal fees, title fees and
escrow fees. Title and escrow fees decreased from $63,431 for the year ended
December 31, 2000 to $12,541 for the year ended December 31, 2001.

         Operating and other expenses totaled $287,032 for the year ended
December 31, 2000 versus $344,635 for the year ended December 31, 1999. During
the year ended December 31, 1999, legal settlement costs of $100,000 were
recorded for the claims related to the 194th Street property in Miami Beach,
Florida. During the year ended December 31, 2000 an additional $12,500 in costs
were incurred. Title and escrow fees increased from $43,259 for the year ended
December 31, 1999 to $63,431 for the year ended December 31, 2000.

         Income from joint ventures was $6,145,060 for the year ended December
31, 2001 versus loss from joint ventures of $908,158 for the year ended December
31, 2000 and $9,670,001 for the year ended December 31, 1999. Income from joint
ventures consists of income from SC Partnership and Eaton, both being recorded
by the Partnership under the equity method. The increase in joint venture income
in fiscal 2001 as compared to 2000 and 1999, is mostly due to revised estimates
for pricing and potential future costs relating to the Seven Hills project as
previously discussed, resulting in increased gross margins recognized by SC
Partnership.

         Eaton had no lots remaining and reported final sales of $200,000 for
the year ended December 31, 2001, no sales for the year ended December 31, 2000
and $1,560,000 for the year ended December 31, 1999.

         The SC Partnership reported sales from the Seven Hills development in
Henderson, Nevada of $25,651,450 for the year ended December 31, 2001, versus
sales of $34,038,534 for the year ended December 31, 2000 and sales of
$29,431,179 for the year ended December 31, 1999. As of March 4, 2002, at the
Seven Hills development in Henderson, Nevada, three lots have sold for $875,000.
Also at this date, six lots for $1,449,500 were under contract. These lots are
not guaranteed to close.

FINANCIAL CONDITION AND LIQUIDITY

Outlook
         In November 2001, Forest City Enterprises, Inc., the corporate parent
of Sunrise, purchased 27.6% or $9,379,000 of the Partnership's total outstanding
senior notes payable ("Senior Notes") from an independent third party. Also, in
February 2002, Forest City Enterprises, Inc. purchased an additional $453,000 of
the Partnership's total outstanding Senior


                                       11
<PAGE>


Notes from an independent third party. Collectively, these two purchases are
referred to "Internally Owned Senior Notes". Management believes that the
Partnership has the wherewithal to service and retire all of the Senior Notes
owned by third parties ("Externally Owned Senior Notes") and mortgage debt.
Management also believes that a substantial portion of the Internally Owned
Senior Notes will also be serviced and retired. The primary sources of cash that
will be used to pay the Senior Notes interest and principal will be from land
sales at Seven Hills, Solon Estates (Thornbury) and Fairfax Meadows projects.
These projects represent substantially the remainder of the Partnership assets
as of December 31, 2001. There is no certainty that the results of any of these
business plans will be achieved. (See Information Related to Forward Looking
Statements.)

         The following inventory remained at Seven Hills as of December 31,
2001:

                -    12.1 commercial acres
                -    84 residential "estate" or custom lots

         The Partnership has not sold commercial property at Seven Hills to
date. Commercial property in the area has sold in the $100,000 to $150,000 per
acre range.

         The historical average sales price for estate lots through December 31,
2000 was approximately $259,000. In January 2001, Seven Hills released for sale
the most desirable lots. As a result, the average sales price for all estate
lots through December 31, 2001, increased to $289,000 based upon actual
closings. The updated average sales price through December 31, 2001 for the most
desirable estate lot parcels is $574,000. Based on this recent sales activity,
management believes a reasonable average sales price for future estate lots is
$366,000. There is no assurance that these average prices can be maintained.

         Management estimates that approximately $15,513,500 in costs remains to
be spent to complete the Seven Hills project.

         The remaining inventory at Solon Estates (Thornbury) is 103 lots. The
average price of lots sold through December 31, 2001 in this project was
$118,000. There are also 21 cluster units available. Through December 31, 2001,
17 cluster units have sold for an average price of $92,000. Approximately
$3,838,000 in costs remain to be incurred to complete the Thornbury project.

         The remaining inventory at Fairfax Meadows is 23 lots. The average
price of lots sold through December 31, 2001 in this project is $42,000. Project
construction is substantially complete.

         The Partnership maintains updated business plans for all of its
properties. The Seven Hills business plan has been adjusted to reduce sales to a
lowest probable pricing scenario, and to include potential costs that have not
been included in the business plan ("Management Adjustments"). Currently
available cash, along with projected available cash flow, based on these
business plans, taking into consideration the Management Adjustments of the
Seven Hills plan, appears sufficient to repay the Externally Owned Senior Notes,
including interest. There would not be sufficient cash flow to fully retire the
Internally Owned Senior Notes, retire the partner's special units of $9,000,000,
provide any return on the special units or make any payments to the
Partnership's limited partners. Based on current estimates, the shortfall to the
Internally Owned Senior Notes would be approximately $3,500,000 considering
Management Adjustments of the Seven Hills plan, and approximately $650,000 if
the Management Adjustments are not realized.


                                       12
<PAGE>


Cash Flows
         The net cash used in operating activities was $5,227,232 for the year
ended December 31, 2001 versus $980,994 for the year ended December 31, 2000.
The increase in net cash used in operating activities is primarily the result of
an increase in net operating loss (defined as net income (loss), income
forgiveness, amortization and income (loss) from joint ventures) of $3,223,648
for the year ended December 31, 2001 versus $1,019,324 for the year ended
December 31, 2000 and an increase in land and land improvements of $1,712,319
for the year ended December 31, 2001 versus a decrease of $1,061,919 for the
year ended December 31, 2000. These increases in net cash used in operating
activities were partially offset by a decrease in accrued interest of $26,165
for the year ended December 31, 2001 versus a decrease of $654,243 for the year
ended December 31, 2000 and an increase in mortgage notes receivables of
$178,278 for the year ended December 31, 2001 versus an increase of $377,695 for
the year ended December 31, 2000.

         The net cash used in operating activities was $980,994 for the year
ended December 31, 2000 versus $1,991,837 for the year ended December 31, 1999.
The decrease in net cash used in operating activities is primarily the result of
a decrease in net operating loss of $1,019,324 for the year ended December 31,
2000 versus $2,584,530 for the year ended December 31, 1999, and an increase in
interest receivable of $29,984 for the year ended December 31, 2000 versus a
decrease in interest receivable of $1,812,791 for the year ended December 31,
1999. These decreases in net cash used in operating activities were partially
offset by an increase in mortgage notes receivable of $377,695 for the year
ended December 31, 2000 versus a decrease of $1,987,574 for the year ended
December 31, 1999.

         Net cash provided by investing activities was $6,234,947 for the year
ended December 31, 2001 versus $6,398,941 for the year ended December 31, 2000.
The decrease in funds provided was the result of a decrease in distributions
from affiliates from $1,518,132 for the year ended December 31, 2000 to $650,830
for the year ended December 31, 2001. Partially offsetting the decrease was an
increase in investments in and advances to affiliates of $5,584,117 for the year
ended December 31, 2001 versus an increase in investment in and advances to
affiliate of $4,880,809 for the year ended December 31, 2000.

         Net cash provided by investing activities was $6,398,941 for the year
ended December 31, 2000 versus net cash used in investing activities of $888,430
for the year ended December 31, 1999. The increase in funds provided was mainly
the result of a decrease in investments in and advances to joint ventures from
$4,880,809 for the year ended December 31, 2000 versus an increase in investment
in and advances to joint ventures of $1,424,144 for the year ended December 31,
1999. The decrease in investments in and advances to joint ventures for the year
ended December 31, 2000 consisted primarily of loan repayments and excess cash
distributions from SC Partnership sales of $5,658,370 partially offset by
capital call payments to the SC Partnership of $580,000.

         Net cash used in financing activities was $1,294,717 and $7,629,009 for
the years ended December 31, 2001 and 2000, respectively. Net cash provided by
financing activities was $4,668,805 for the year ended December 31, 1999. During
the year ended December 31, 2001, the Partnership redeemed $2,000,000 in Senior
Notes and borrowed mortgage notes of $940,638 for expenditures at the Solon
Estates (Thornbury) development of which $200,004 was repaid. During the year
ended December 31, 2000, the Partnership repaid Sunrise $3,549,400 of funds
loaned for expenditures at the Seven Hills project as of December 31, 1999 and
subsequently borrowed additional funds totaling $1,949,400 which were repaid
during the year ended December 31, 2000. During the same period, the Partnership
repaid Eaton $3,514,286 of funds


                                       13
<PAGE>


loaned for additional development expenditures as of December 31, 1999. The
Partnership also repaid mortgage notes payable of $528,961 relating to
expenditures at the Solon Estates (Thornbury) development as of December 31,
1999 and subsequently borrowed additional funds totaling $1,993,081 which were
repaid during the year ended December 31, 2000. During January 2002, the
Partnership redeemed $5,000,000 in Senior Notes.

Litigation
         Other than routine litigation and administrative proceedings arising in
the ordinary course of business, the Partnership is not presently involved in
any litigation nor, to its knowledge, is any litigation threatened against the
Partnership or its properties, which is reasonably likely to have a material
adverse effect on the liquidity or results of operations of the Partnership.

CRITICAL ACCOUNTING POLICIES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to makes
estimates and assumptions in certain circumstances that affect amounts reported
in the accompanying financial statements and related notes. In preparing these
financial statements, management has utilized information available including
its past history, industry standards, and the current economic environment among
other factors, in forming its estimates and judgments of certain amounts
included in the financial statements, giving due consideration to materiality.
It is possible that the ultimate outcome as anticipated by management in
formulating its estimates inherent in these financial statements may not
materialize. However, application of the accounting policies below involves the
exercise of judgment and use of assumptions as to future uncertainties and, as a
result, actual results could differ from these estimates. In addition, other
companies may utilize different estimates, which may impact comparability of the
Partnership's results of operations to those of companies in similar businesses.

Land and Land Improvements
         Land and land improvements are recorded at cost. On a periodic basis,
management reviews land and land improvements for impairment when there is an
event or change in circumstances that indicates an impairment in value. The
Partnership records impairment losses and reduces the carrying amounts of land
held for sale when the carrying amounts exceed the estimated selling proceeds
less the costs to sell.

         The Partnership is required to make subjective assessments as to
whether there are impairments in the value of its properties. These assessments
have a direct impact on the Partnership's net income, because recording an
impairment charge results in an immediate negative adjustment to net income.

Land Sales
         The Partnership follows the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 66, Accounting for Sales of Real Estate, for
reporting sales of land and land improvements on the full accrual method, as
appropriate.

         For each land sale, the Partnership determines the amount of land and
land improvement costs to be reported in cost of sales using the relative sales
value method for the common site costs and the specific identification method
for all other costs. The Partnership makes estimates in utilizing the relative
sales value method relating to the budgeted improvement costs. These estimates
have a direct impact on the Partnership's net income, because a higher or lower
cost of sales allocation has a corresponding impact on the net income.


                                       14
<PAGE>


         For the Seven Hills project, the SC Partnership determines the amount
of land and land improvement costs to be reported in cost of sales based upon
the overall budgeted project gross margin. The budgeted project gross margin is
assessed quarterly and revised to reflect historical results and changes in
estimates. These revisions are considered a change in estimate and are accounted
for prospectively against future sales. Management makes estimates regarding
projected future land sales and improvement costs in determining the overall
project gross margin. Considerations made in developing estimates of budgeted
land sales include the economic conditions, competition, market supply and
historical sales figures. Considerations made in developing estimates of
budgeted improvement costs include market demand, cost trends and site
conditions. These estimates have a direct impact on the Partnership's net
income, because a higher or lower cost of sales allocation has a corresponding
impact on the proportionate share of income or loss recorded by the Partnership
relating to its interest in SC Partnership.

NEW ACCOUNTING STANDARDS

         In June 2001, the FASB issued SFAS No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets. The provisions of SFAS 141
require the use of purchase accounting for all business combinations and the
separate allocation of purchase price to intangible assets if specific criteria
are met. The provisions of SFAS 142 state that goodwill and intangible assets
with indefinite useful lives should not be amortized but rather tested at least
annually for impairment. Intangible assets that have finite useful lives should
continue to be amortized over their estimated useful lives. SFAS 142 also
provides specific guidance for testing goodwill and intangible assets for
impairment. The provisions of SFAS No. 141 apply to all business combinations
initiated after June 30, 2001. The Partnership will adopt SFAS 142 effective
January 1, 2002. The Partnership does not anticipate that these standards will
have a material impact on the Partnership's financial position, results of
operations, or cash flows.

In October 2001, the FASB Issued SFAS No. 144, Accounting for the Impairment of
Disposal of Long-Lived Assets, which addresses the financial accounting and
reporting for the impairment or disposal of long-lived assets. This standard
harmonizes the accounting for impaired assets and resolves some of the
implementation issues as originally described in SFAS 121. It retains the
fundamental provisions of SFAS 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale. It also retains the basic
provisions for presenting discontinued operations in the statement of operations
but broadens the scope to include a component of an entity rather than a segment
of a business. The Partnership will adopt this standard effective January 1,
2002. The Partnership does not believe this pronouncement will have a material
impact on the Partnership's financial position, results of operations or cash
flows.


INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

         This Annual Report, together with other statements and information
publicly disseminated by the Partnership, contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
reflect management's current views with respect to financial results related to
future events and are based on assumptions and expectations which may not be
realized and are inherently subject to risks and uncertainties, many of which


                                       15
<PAGE>


cannot be predicted with accuracy and some of which might not even be
anticipated. Future events and actual results, financial or otherwise, may
differ from the results discussed in the forward-looking statements. Risks and
other factors that might cause differences, some of which could be material,
include, but are not limited to, the effect of economic and market conditions on
a nation-wide basis as well as regionally in areas where the Partnership has a
geographic concentration of land; failure to consummate financing arrangements;
development risks, including lack of satisfactory financing, construction and
cost overruns; the level and volatility of interest rates; the rate of revenue
increases versus expenses increases; as well as other risks listed from time to
time in the Partnership's reports filed with the Securities and Exchange
Commission. The Partnership has no obligation to revise or update any
forward-looking statements as a result of future events or new information.
Readers are cautioned not to place undue reliance on such forward-looking
statements.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         Management has and will continue to manage interest rate risk by
maintaining a conservative ratio of fixed rate, long-term debt to total debt to
ensure that variable rate exposure is maintained at an acceptable level. The
Partnership had $740,634 in variable rate debt outstanding at December 31, 2001
and no variable rate debt outstanding at December 31, 2000.

         The tables below provide information about the Partnership's financial
instruments that are sensitive to changes in interest rates. For debt
obligations, the tables present principal cash flows and related weighted
average interest rates by expected maturity dates.


<TABLE>
<CAPTION>
                                                                Expected Maturity
AT DECEMBER 31, 2001                                                  Date
                                              ----------------------------------------------------------------------
                                                                                                      Fair Market
                                                     2002              2003             Total            Value
                                              ----------------------------------------------------------------------
<S>                                              <C>                 <C>              <C>               <C>
FIXED:
------
       Senior notes                              $  5,000,000        $29,000,000      $34,000,000       $37,142,758

       Stated interest rate                            10.83%             10.83%           10.83%                 -

VARIABLE:
---------
       Variable rate mortgage debt               $    740,634        $         -      $   740,634         $ 740,634
       Stated interest rate (prime)                     4.75%                  -            4.75%             4.75%
                                                 --------------   ---------------   --------------   ---------------
       Total debt                                $  5,740,634        $29,000,000      $34,740,634       $37,883,392
                                                ===============   ===============   ==============   ===============
</TABLE>


<TABLE>
<CAPTION>
                                                                 Expected Maturity
AT DECEMBER 31, 2000                                                  Date
                                          ---------------------------------------------------------------------------
                                                                                                       Fair Market
                                             2001         2002           2003            Total            Value
                                          ---------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>             <C>               <C>
FIXED:
------
       Senior notes                          $     -      $     -      $36,000,000     $36,000,000       $36,299,101
       Stated interest rate                   10.83%       10.83%           10.83%          10.83%                 -
                                          -----------   ----------   --------------  --------------   ---------------
       Total debt                            $     -      $     -      $36,000,000     $36,000,000       $36,299,101
                                          ===========   ==========   ==============  ==============   ===============
</TABLE>


                                       16
<PAGE>


Item 8.  Financial Statements and Supplementary Data

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Granite Development Partners, L.P.

In our opinion, the financial statements listed in the index appearing under
Item 14(a) (1) on page 47 present fairly, in all material respects, the
financial position of Granite Development Partners, L.P. (A Delaware Limited
Partnership) ("Partnership") at December 31, 2001 and 2000, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the index appearing under Item 14(a)(3)
on page 47 presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related financial statements. These
financial statements and financial statement schedule are the responsibility of
the Partnership's management; our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our
audits. We conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.




/S/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP

Cleveland, Ohio
March 4, 2002


                                       17
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    December 31,         December 31,
                                                                        2001                 2000
                                                                  ------------------   ------------------


ASSETS
------

<S>                                                               <C>                  <C>
LAND                                                              $         616,730    $         575,032
LAND IMPROVEMENTS                                                         2,246,692              669,191
                                                                  ------------------   ------------------
                                                                          2,863,422            1,244,223

MORTGAGE NOTES RECEIVABLE                                                 1,523,743            1,345,465

INVESTMENTS IN AND ADVANCES TO
   JOINT VENTURES                                                        14,586,951           14,676,838

OTHER ASSETS

  Mortgage procurement costs, net of accumulated
    amortization of $40,234 and $5,817 in 2001 and
    2000, respectively                                                       31,478               30,545

  Cash                                                                      721,081            1,008,083

  Interest receivable                                                        79,504               67,155

  Other                                                                      44,077               44,077

                                                                  ------------------   ------------------
                                                                            876,140            1,149,860
                                                                  ------------------   ------------------

                                                                  $      19,850,256    $      18,416,386
                                                                  ==================   ==================
</TABLE>


See notes to financial statements.


                                       18
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                           BALANCE SHEETS (continued)


<TABLE>
<CAPTION>


                                                               December 31,          December 31,
                                                                   2001                  2000
                                                             ------------------    ------------------


LIABILITIES
& PARTNERS' DEFICIT
-------------------

<S>                                                          <C>                   <C>
SENIOR NOTES PAYABLE                                         $     34,000,000      $     36,000,000

MORTGAGE NOTES PAYABLE                                                740,634                     -

OTHER LIABILITIES

  Accounts payable                                                     56,926               242,978

  Accrued interest                                                    472,015               498,180

  Accrued real estate taxes and other                                  70,515                52,057
                                                             ------------------    ------------------

                                                                      599,456               793,215
PARTNERS'  DEFICIT


Partner's special units                                             9,000,000             9,000,000
Partners' deficit                                                (24,489,834)          (27,376,829)
                                                             ------------------    ------------------
                                                                 (15,489,834)          (18,376,829)
                                                             ------------------    ------------------

                                                             $     19,850,256      $     18,416,386
                                                             ==================    ==================
</TABLE>


See notes to financial statements.


                                       19
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                  For the year          For the year         For the year
                                                     ended                 ended                 ended
                                                  December 31,          December 31,         December 31,
                                                      2001                  2000                 1999
                                                -----------------    -------------------   ------------------


REVENUES
<S>                                                  <C>             <C>                    <C>
Sales of developed property                          $ 1,629,800     $        7,617,600     $      4,709,680
Cost of sales                                          (914,931)            (4,252,912)          (3,526,414)
                                                -----------------    -------------------   ------------------
                                                         714,869              3,364,688            1,183,266

Interest                                                 126,993                 86,631              954,398
Commissions                                                    -                      -              189,448
Other                                                     14,743                  2,205              110,187
                                                -----------------    -------------------   ------------------
                                                         856,605              3,453,524            2,437,299
                                                -----------------    -------------------   ------------------

EXPENSES
Interest                                               3,788,423              4,090,708            4,470,896
Fees, partners                                                 -                      -              143,154
Real estate taxes                                         55,499                 95,108               63,144
Operating and other                                      236,331                287,032              344,635
Amortization                                              34,417                  5,817                    -
                                                -----------------    -------------------   ------------------
                                                       4,114,670              4,478,665            5,021,829
                                                -----------------    -------------------   ------------------
                                                     (3,258,065)            (1,025,141)          (2,584,530)


Loss from joint venture agreement                              -                      -          (5,476,752)
Income (loss) from joint ventures                      6,145,060             ( 908,158)          (9,670,001)
                                                -----------------    -------------------   ------------------

NET INCOME (LOSS)                                    $ 2,886,995     $      (1,933,299)     $   (17,731,283)
                                                =================    ===================   ==================
</TABLE>


See notes to financial statements.


                                       20
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' DEFICIT


<TABLE>
<CAPTION>
                                                       FC-Granite             Limited
                                                          Inc.               Partners               Total
                                                   -------------------    ----------------    ------------------

<S>                                                 <C>                    <C>                 <C>
Balance at December 31, 1998                        $  (11,864,418)        $   2,820,757       $    (9,043,661)


Cancellation of interest on special units                 1,331,414                    -              1,331,414

Net loss                                               (14,910,526)          (2,820,757)           (17,731,283)
                                                   -------------------    ----------------    ------------------


Balance at December 31, 1999                           (25,443,530)                    -           (25,443,530)

Net loss                                                (1,933,299)                    -            (1,933,299)
                                                   -------------------    ----------------    ------------------


Balance at December 31, 2000                           (27,376,829)                    -           (27,376,829)

Net income                                                2,886,995                    -              2,886,995
                                                   -------------------    ----------------    ------------------



Balance at December 31, 2001                        $  (24,489,834)        $           -       $   (24,489,834)
                                                   ===================    ================    ==================
</TABLE>


See notes to financial statements.


                                       21
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                       For the year          For the year          For the year
                                                                           ended                 ended                 ended
                                                                       December 31,          December 31,          December 31,
                                                                           2001                  2000                  1999
                                                                    --------------------  --------------------  --------------------

<S>                                                                     <C>                   <C>                    <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income (loss)                                                     $     2,886,995       $   (1,933,299)        $ (17,731,283)
  Adjustments to reconcile net income (loss) to net cash used in
       operating activities:
    Forgiveness of capitalized income recognized-
       Silver Canyon Partnership                                                      -                     -             3,800,771
    Forgiveness of commission income-
       Silver Canyon Partnership                                                      -                     -             1,455,981
    Forgiveness of administration fee income-
       Silver Canyon Partnership                                                      -                     -               220,000
    Amortization                                                                 34,417                 5,817                     -
    (Income) loss from joint ventures                                       (6,145,060)               908,158             9,670,001
Changes in operating assets and liabilities:
  (Increase) decrease in land and land improvements                         (1,712,319)             1,061,919               165,384
  (Increase) decrease in mortgage notes receivable                            (178,278)             (377,695)             1,987,574
  (Increase) decrease in interest receivable                                   (12,349)                29,984           (1,812,791)
  Increase in other assets                                                            -              (17,873)                     -
  Increase in administrative fee receivable                                           -                     -              (45,000)
  (Decrease) increase  in accounts payable                                     (92,932)                12,500                     -
  Decrease in accrued fees, partners                                                  -                     -           (1,060,073)
  (Decrease) increase in accrued interest                                      (26,165)             (654,243)               228,366
  Increase (decrease) in accrued real estate taxes and other                     18,459              (16,262)              (35,917)
  Increase in deferred income                                                         -                     -             1,165,150
                                                                    --------------------  --------------------  --------------------

  Net cash used in operating activities                                     (5,227,232)             (980,994)           (1,991,837)
                                                                    --------------------  --------------------  --------------------

CASH FLOW FROM INVESTING ACTIVITIES
  Distribution from joint ventures                                              650,830             1,518,132               535,714
  Investments in and advances to joint ventures                               5,584,117             4,880,809           (1,424,144)
                                                                    --------------------  --------------------  --------------------

  Net cash provided by (used in) investing activities                         6,234,947             6,398,941             (888,430)
                                                                    --------------------  --------------------  --------------------

CASH FLOW FROM FINANCING ACTIVITIES
  Repayment of Senior Notes                                                 (2,000,000)                     -                     -
  Proceeds from loan payable - Sunrise Land Company                                   -             1,949,400             5,748,800
  Repayment of loan payable - Sunrise Land Company                                    -           (5,498,800)           (2,395,951)
  Proceeds from loan payable - Eaton Estate Partnership                               -                     -             5,281,792
  Repayment of loan payable - Eaton Estate Partnership                                -           (3,514,286)           (2,646,004)
  Proceeds from loans payable - National City Bank                              940,638             1,993,081                     -
  Repayment of loans payable - National City Bank                             (200,004)           (2,522,042)             (247,662)
  Distribution of interest on special units                                           -                     -           (1,072,170)
  Payment of mortgage procurement costs                                        (35,351)              (36,362)                     -
                                                                    --------------------  --------------------  --------------------

  Net cash (used in) provided by financing activities                       (1,294,717)           (7,629,009)             4,668,805
                                                                    --------------------  --------------------  --------------------
(DECREASE) INCREASE  IN CASH                                                  (287,002)           (2,211,062)             1,788,538
CASH AT BEGINNING OF THE PERIOD                                               1,008,083             3,219,145             1,430,607
                                                                    --------------------  --------------------  --------------------
CASH AT END OF THE PERIOD                                               $       721,081       $     1,008,083        $    3,219,145
                                                                    ====================  ====================  ====================
</TABLE>


See notes to financial statements.


                                       22
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                      STATEMENTS OF CASH FLOWS (continued)


<TABLE>
<CAPTION>
                                                              For the year           For the year          For the year
                                                                  ended                  ended                ended
                                                              December 31,           December 31,          December 31,
                                                                  2001                   2000                  1999
                                                           --------------------   -------------------- ---------------------

<S>                                                             <C>                     <C>                <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH
  ACTIVITIES:
  Operating Expenses
    Land improvement costs included in accounts payable         $   (93,120)            $  (88,804)        $   (643,523)
    Write off of deferred income                                $          -            $         -        $ (7,544,412)
    Write off of interest receivable                            $          -            $         -        $  11,345,183

  Financing Activities
     Cancellation of interest on special units
        applied to loan payable-Sunrise Land Company            $          -            $         -        $ (2,199,400)
     Cancellation of interest on special units
       applied to Accrued Partners Fees                         $          -            $         -        $   (204,184)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
    Cash paid during the period for interest                    $  3,814,588            $ 4,744,951        $   4,242,530
</TABLE>


See notes to financial statements.


                                       23
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE A - NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

Organization
Granite Development Partners, L.P., a Delaware Limited Partnership (the
"Partnership"), was formed on November 15, 1993 to acquire, develop, market and
sell partnership properties, located principally in Ohio and Nevada, including
acting as a joint venture partner with respect to certain properties. The
Partnership is the owner of Granite Silver Development Partners, L.P., the
managing partner in Silver Canyon Partnership ("SC Partnership"). The
Partnership will terminate on December 31, 2013 or earlier upon disposition of
assets.

The sole general partner of the Partnership is FC-Granite, Inc., an Ohio
corporation ("FC-Granite"). FC-Granite made an initial capital contribution to
the Partnership of $300. FC-Granite is a wholly-owned subsidiary of Sunrise Land
Company ("Sunrise"). Sunrise made an initial capital contribution of $100 and
acted as the original limited partner until the outstanding warrants to acquire
limited partnership interests were exercised on December 3, 1996. When the first
warrant was exercised, Sunrise withdrew as the original limited partner. As a
result, FC-Granite owned a 25% general partner interest and the limited partners
owned a 75% interest in the Partnership.

On December 3, 1996, FC-Granite exercised 9,000 warrants to purchase limited
partnership units, representing a 25% ownership of the limited partnership
units. On December 29, 2000, FC-Granite purchased 11,250 additional limited
partnership units representing a 31.25% ownership of the limited partnership
units. As of December 31, 2001, FC-Granite owns 56.25% of the limited
partnership units. Combined with its general partnership units, FC-Granite owns
67.19% of the Partnership.

At Partnership formation, FC-Granite contributed properties with assigned values
of $7,234,482 and $2,765,518 of cash related to properties originally intended
to be contributed by FC-Granite but were sold prior to the formation of the
Partnership in exchange for $10,000,000 in special units valued at $1,111.11 per
special unit. The historical cost basis of the contributed properties was
$4,097,400. Until the senior notes payable are paid in full, $9,000,000 of the
special units bear interest at 10.83% and will be paid pari-passu with interest
on the senior notes payable and have accordingly been treated as partners'
special units and the remaining $1,000,000 was reflected as a capital
contribution. The difference of $3,137,082 between the partners' special units
of $10,000,000 and the historical cost basis of the contributed properties of
$4,097,400 and contributed cash of $2,765,518 was reflected as a reduction of
partners' equity for FC-Granite. The properties are presented at their
historical cost basis because of the affiliated ownership and common management
of Sunrise, FC-Granite, and the Partnership.

Pursuant to the terms of the Partnership Agreement, all income is allocated to
FC-Granite, the general partner, until all prior year losses allocated to
FC-Granite are recovered. As of December 31, 2001, $845,511 in losses allocated
to FC-Granite have not been recovered. Once FC-Granite recoups the full
allocation of losses from prior years as noted above, income and losses of the
Partnership will be allocated in accordance with the Partnership agreement.


                                       24
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE A - NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION (continued)

Once the senior notes payable and partner's special units have been paid in full
and the capital accounts of the general and limited partners have been repaid,
FC-Granite will receive distributions of 25% of available cash, as defined. No
amounts are currently due under the terms of this participation.

Silver Canyon Partnership - Agreement
During the second quarter of 1999, American Nevada Seven Hills Limited
Partnership ("ANC"), the partner in SC Partnership responsible for the onsite
improvements in the Seven Hills project, identified costs in excess of budget to
complete the project. Certain of these costs became known to ANC operating
personnel during the fourth quarter of 1998. Further information became known
during the second quarter of 1999.

To minimize the impact of these excess costs, ANC and the Partnership entered
into an agreement ("Agreement") which modified certain terms of the Silver
Canyon Partnership Agreement. The changes resulting from the Agreement are
reflected in these financial statements.

The Agreement's impact on the Silver Canyon Partnership Agreement included the
following provisions:

1.   ANC assigned all of its future and past commissions, fees, and
     distributions relating to loans, capital calls and interest thereon to the
     SC Partnership. Amounts previously paid were deemed a return of capital.

2.   ANC funded one-half of the settlement amounts for the two lawsuits settled
     in 1999 and 2000.

3.   The Partnership funded the remaining settlement liability for the lawsuits
     but received a priority distribution to cover such capital contribution.

4.   After the priority distribution in #3, ANC and the Partnership received
     distributions pari passu until ANC recovered its entire cash investment
     except for $750,000, which occurred in the first quarter of 2001.

5.   Thereafter, the Partnership will receive all distributions until it has
     recovered its entire capital account. To the extent the Partnership does
     not recover its entire capital account, ANC will negotiate in good faith as
     to whether ANC should fund one-half of any additional lawsuits funded by
     the Partnership.

6.   After the Partnership has recovered its entire capital account, ANC and the
     Partnership will share all remaining distributions pari passu.


                                       25
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE A - NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION (continued)

The following table summarizes the favorable impact of the Agreement to SC
Partnership as of December 31, 1999:

<TABLE>
<S>                                                                 <C>
Land inventory adjustment                                           $    5,054,279
Fees and commissions adjustment                                          6,110,701
                                                                  -----------------
  Total adjustments                                                 $   11,164,980
                                                                  =================
</TABLE>

The following table summarizes the impact of the Agreement to the Silver Canyon
Partnership Agreement as it relates directly to the Partnership as of December
31, 1999:

<TABLE>
<S>                                                                  <C>
Land inventory adjustment at ownership                               $      4,263,313
Fee and commissions adjustment at ownership                                 1,675,982
                                                                   -------------------
  Subtotal                                                           $      5,939,295

Forgiveness of capitalized income recognized                              (3,800,771)
Forgiveness of commission income                                          (1,455,981)
Forgiveness of administration fee income                                    (220,000)
                                                                   -------------------
  Subtotal                                                           $    (5,476,752)
                                                                   -------------------
  Total                                                              $        462,543
                                                                   ===================
</TABLE>

Also, as a result of the SC Partnership excess costs and their impact on the
Partnership, FC-Granite and Sunrise forgave certain unpaid expenses as of June
30, 1999 and will not charge the Partnership in the future. The following table
summarizes the forgiven expenses:

<TABLE>
<S>                                                                   <C>
Administrative fees to FC-Granite                                     $      77,123
Real estate commissions to FC-Granite                                        59,295
Development fees to Sunrise                                                  67,765
Interest to Sunrise                                                          84,476
                                                                  ------------------
                                                                      $     288,659
                                                                  ==================
</TABLE>

The forgiven expense was recorded as a reduction to expense in the statement of
operations.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported amounts of revenues and
expenses during the period. Management is required to make significant estimates
in connection with its development of budgeted sales and cost estimates in
determining the allocation of land and land improvements to cost of sales in
connection with the recording of land sales. Actual results could differ from
those estimates.


                                       26
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Land and Land Improvements
Land and land improvements are recorded at cost. Management reviews its land and
land improvements for impairment when there is an event or change in
circumstances that indicates an impairment in value. The Partnership records
impairment losses and reduces the carrying amounts of land held for sale when
the carrying amounts exceed the estimated selling proceeds less the costs to
sell.

Land Sales
The Partnership follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 66, Accounting for Sales of Real Estate, for reporting
sales of land and land improvements on the full accrual method, as appropriate.
For land sales, the Partnership determines the amount of land and land
improvement costs to be reported in cost of sales using the relative sales value
method for the common site costs and the specific identification method for all
other costs.

Investments In Joint Ventures
The Partnership has two joint venture investments, which are accounted for under
the equity method, as the Partnership has the ability to exercise significant
influence over but does not have financial or operating control. These
investments were recorded initially at cost and subsequently adjusted for net
equity in income (loss), other capital transactions, and cash contributions and
distributions.

Mortgage Procurement Costs
Mortgage procurement costs are amortized over the life of the debt to which the
costs relate.

Fair Value of Financial Instruments
The Partnership's financial instruments consists principally of cash, mortgage
notes receivable, interest receivable, accounts payable and accrued expenses in
which the fair value of these financial instruments approximates the carrying
value. The Partnership determined the estimated fair value of its debt by
discounting future cash payments at interest rates that the Partnership believes
approximates the current market.

Business Segment Information
The sole business of the Partnership is to acquire, develop, market and sell
Partnership properties. The Partnership evaluates operating results and
allocates resources on a property-by-property basis. The Partnership does not
distinguish or group its operations on a geographic basis. Accordingly, the
Partnership believes it has a single reportable segment for financial reporting
purposes. Further, all operations are within the United States. Therefore, no
additional disclosure relating to the presentation of business segment
information is considered necessary.

Income Taxes
No provision or benefit for income taxes is included in the financial
statements. Income taxes, if any, are the responsibility of the individual
partners.


                                       27
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Standards
In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. The provisions of SFAS 141 require the use
of purchase accounting for all business combinations and the separate allocation
of purchase price to intangible assets if specific criteria are met. The
provisions of SFAS 142 state that goodwill and intangible assets with indefinite
useful lives should not be amortized but rather tested at least annually for
impairment. Intangible assets that have finite useful lives should continue to
be amortized over their estimated useful lives. SFAS 142 also provides specific
guidance for testing goodwill and intangible assets for impairment. The
provisions of SFAS No. 141 apply to all business combinations initiated after
June 30, 2001. The Partnership will adopt SFAS 142 effective January 1, 2002.
The Partnership does not anticipate that these standards will have a material
impact on the Partnership's financial position, results of operations, or cash
flows.

In October 2001, the FASB Issued SFAS No. 144, Accounting for the Impairment of
Disposal of Long-Lived Assets, which addresses the financial accounting and
reporting for the impairment or disposal of long-lived assets. This standard
harmonizes the accounting for impaired assets and resolves some of the
implementation issues as originally described in SFAS 121. It retains the
fundamental provisions of SFAS 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale. It also retains the basic
provisions for presenting discontinued operations in the statement of operations
but broadens the scope to include a component of an entity rather than a segment
of a business. The Partnership will adopt this standard effective January 1,
2002. The Partnership does not believe this pronouncement will have a material
impact on the Partnership's financial position, results of operations or cash
flows.

NOTE C - SENIOR NOTES PAYABLE

The Partnership has unsecured senior notes payable ("Senior Notes") in the
aggregate principal amount of $34,000,000 and $36,000,000 at December 31, 2001
and December 31, 2000, respectively. The Senior Notes bear interest at a fixed
annual rate of 10.83%, payable semi-annually, and include a negative pledge
covenant relating to the assets and operations of the Partnership, allowing only
a collateralized working capital line not to exceed $5,000,000 and subordinated
indebtedness of $5,000,000. Until such time as the principal of the Senior Notes
and interest thereon is repaid in full, 100% of the cash flow of the
Partnership, as defined, shall be applied to repay the Senior Notes. The Senior
Notes will mature on November 15, 2003, but are subject to earlier redemption.
On June 29, 2001, the Partnership repaid $2,000,000 in Senior Notes plus accrued
interest to that date. On January 15, 2002, the Partnership repaid an additional
$5,000,000 in Senior Notes plus accrued interest to that date.


                                       28
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE C - SENIOR NOTES PAYABLE (continued)


Additionally, the Partnership may defer two interest payments if minimum working
capital, as defined, falls below $5,000,000. During the period interest payments
are deferred, interest shall accrue at 12.83% and shall remain at that level
until all deferred interest and interest thereon has been paid. The Partnership
has not deferred interest payments on the Senior Notes payable.

In November 2001, Forest City Enterprises Inc., the corporate parent of Sunrise,
purchased 27.6% or $9,379,000, of the Partnership's total outstanding Senior
Notes from an independent third party. In February 2002, Forest City Enterprises
Inc. purchased an additional $453,000 of the Partnership's total outstanding
Senior Notes from an independent third party.

NOTE D - MORTGAGE NOTES PAYABLE

In August 2000, the Partnership obtained a construction loan agreement for the
Solon Estates (Thornbury) development. The loan amount is not to exceed
$3,500,000 and has a maturity date of August 1, 2004. The principal outstanding
bears interest at the prime rate (4.75% at December 31, 2001). There was an
outstanding balance of $740,634 under this loan agreement at December 31, 2001.

NOTE E - PARTNER'S SPECIAL UNITS

Per the original Partnership Agreement, until the Senior Notes are paid in full,
the $9,000,000 of partner's special units bear interest at 10.83% and the
interest will be paid pari passu with the interest on the Senior Notes. As a
result of the SC Partnership excess costs and their impact on the Partnership as
discussed in Note A, FC-Granite, the holder of the special units, modified the
interest arrangement during 1999. As a result, $2,841,317 in interest has not
been accrued from February 1, 1999 through December 31, 2001.

NOTE F - TRANSACTIONS WITH AFFILIATES

FC-Granite and Sunrise are reimbursed for all direct costs of operations of the
Partnership's affairs and development activities.

Originally, FC-Granite was to be paid a monthly administrative fee as
compensation for its services in administrating the business of the Partnership.
As a result of the SC Partnership excess costs and their impact on the
Partnership, FC-Granite modified the administrative fee arrangement to eliminate
administrative fees beyond June 30, 1999. Therefore, no administrative fees were
accrued for the years ended December 31, 2001 and 2000. Total administrative
fees accrued for the six months ended June 30, 1999 were $79,126.

Originally, Sunrise was to be paid a semi-annual development fee equal to 4% of
gross revenues as compensation for its services in managing the development of
the Partnership's properties. As a result of the SC Partnership excess costs and
their impact on the Partnership, Sunrise modified the development fee
arrangement to eliminate development fees beyond June 30, 1999. Therefore, no
development fees were earned or accrued for the years ended December 31, 2001
and 2000. Total development fees accrued for the six months ended June 30, 1999
were $34,148.


                                       29
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE F - TRANSACTIONS WITH AFFILIATES  (continued)

Originally, Sunrise was to be paid a semi-annual development fee equal to 4% of
gross revenues as compensation for its services in managing the development of
the Partnership's properties. As a result of the SC Partnership excess costs and
their impact on the Partnership, Sunrise modified the development fee
arrangement to eliminate development fees beyond June 30, 1999. Therefore, no
development fees were earned or accrued for the years ended December 31, 2001
and 2000. Total development fees accrued for the six months ended June 30, 1999
were $34,148.

Originally, FC-Granite was to be paid a monthly real estate commission equal to
3.5% of gross sales as compensation for its conducting marketing and sales
duties and authorization of sales contracts. As a result of the SC Partnership
excess costs and their impact on the Partnership, FC-Granite modified the real
estate commissions arrangement to eliminate real estate commissions beyond June
30, 1999. Therefore, no real estate commissions were earned or accrued for the
years ended December 31, 2001 and 2000. Total real estate commissions accrued
for the six months ended June 30, 1999 were $29,880.

Based on the terms of the Agreement, the Partnership's commission equal to 1.67%
of SC Partnership's gross sales representing compensation for the Partnership's
services in conducting marketing and sales duties and authorization of sales
contracts was reapplied as payments on the amounts the Partnership loaned SC
Partnership (See Note A). There were no commissions earned or accrued for the
years ended December 31, 2001 and 2000. The Partnership earned commissions of
$189,448 during the year ended December 31, 1999. The total amount of
commissions earned from inception through December 31, 1999 totaling $1,455,981
was reversed through the statement of operations as a loss from joint venture
agreement and applied to reduce advances to joint ventures.

Based on the terms of the Agreement, the Partnership's monthly administrative
fee in the amount of $5,000 per month was waived. There were no administrative
fees earned or accrued for the years ended December 31, 2001 and 2000. At
December 31, 1999, accrued administrative fees totaling $220,000 were reversed
through the statement of operations as part of loss from joint venture
agreement.

During the year ended December 31, 2000, the Partnership repaid Sunrise
$3,549,400 of funds loaned for expenditures at the Seven Hills project as of
December 31, 1999 and subsequently borrowed additional funds totaling $1,949,400
which were repaid during the year ended December 31, 2000. During the same
period, the Partnership repaid Eaton Estate Partnership ("Eaton") $3,514,286 of
funds loaned for additional development expenditures as of December 31, 1999.

Silver Canyon Partnership
The Partnership has a 33 1/3 % interest in SC Partnership. The Partnership's
investment in SC Partnership at December 31, 2001 and December 31, 2000 was
$(1,486,866) and $(7,645,818), respectively.


                                       30
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE G - INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

The Partnership has advances outstanding to SC Partnership of $15,971,337 and
$21,555,454 at December 31, 2001 and 2000, respectively. The decrease in
advances outstanding is the result of loan repayments of $5,584,117 funded by
proceeds from SC Partnership land sales.

For the year ended December 31, 2001, SC Partnership generated income of
$8,244,138, of which $6,158,952 was recorded by the Partnership pursuant to the
terms of the Agreement. For the year ended December 31, 2000, SC Partnership
generated a loss of $1,044,857, 100% of which was recorded by the Partnership
pursuant to the terms of the Agreement. For the year ended December 31, 1999, SC
Partnership generated a loss of $27,201,519 and other capital transactions of
$10,551,111 of which $9,899,688 was recorded by the Partnership.

Summarized below is the condensed financial information of SC Partnership. The
results for the year ended December 31, 1999 were affected by three events.

-    During the second quarter of 1999, ANC, the partner in charge of on-site
     improvements of the Seven Hills project, identified cost overruns that
     required adjustment of the remaining inventory to its realizable value.

-    The Partnership settled certain lawsuits.

-    To minimize the impact of these cost overruns, the Agreement forfeited
     certain previously earned commissions, fees and interest on advances. The
     effect of the Agreement is documented separately below as other capital
     transactions.

<TABLE>
<CAPTION>
                                                                                       For the year ended
                                                                                       December 31, 1999
                                                                                     -----------------------
<S>                                                                                          <C>
REVENUES
    Operating loss                                                                           $ (17,457,081)
EXPENSES
    Fees, partners                                                                                   50,000
    Commissions                                                                                   1,953,057
    Legal, professional and litigation costs                                                      6,632,876
    Travel and entertainment                                                                         49,422
    Operating and other                                                                             989,674
    Depreciation and amortization                                                                    69,409
                                                                                     -----------------------
                  Subtotal                                                                        9,744,438
                                                                                     -----------------------
NET LOSS                                                                                     $ (27,201,519)
OTHER CAPITAL TRANSACTIONS  RESULTING FROM AGREEMENT
    Land inventory adjustment                                                                     5,054,279
    Fees and commissions adjustment                                                               6,110,701
                                                                                     -----------------------
                                                                                                 11,164,980
    Recharacterization of development fees                                                        (613,869)
                                                                                     -----------------------
                  Subtotal                                                                       10,551,111
                                                                                     -----------------------
    Net change in SC Partnership capital                                                     $ (16,650,408)
                                                                                     =======================
</TABLE>


                                       31
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE G - INVESTMENTS IN AND ADVANCES TO JOINT VENTURES (continued)

The Partnership recorded its proportionate share of the net change in the SC
Partnership capital after giving effect to the special allocations agreed to in
the Agreement for the year ended December 31, 1999 (See Note A).

The 1999 operating loss prior to the Agreement in the amount of $(17,457,081)
results from an adjustment of the land inventory to its estimated realizable
value. The adjustment in the amount of $17,758,816 was recorded in the second
quarter 1999.

As a result of the Agreement, $5,054,279 of the land inventory adjustment
recorded in 1999 resulted from the partners of SC Partnership agreeing to
reverse interest that the partners had earned and the SC Partnership had
capitalized to inventory.

Also as a result of the Agreement, certain fees and commissions previously
earned by the partners of SC Partnership and expensed by the SC Partnership were
reapplied from partnership expenses to repay certain partner loans and capital.
These previously paid items were as follows:

<TABLE>
<CAPTION>
                                                          Fees                   Commissions
                                                     --------------              ------------
<S>                                                  <C>                         <C>
American Nevada Seven Hills Limited Partnership      $       30,000              $  4,224,719
Granite Silver Development Partners, L.P.                   220,000                 1,455,982
Silver Canyon Corporation                                   180,000                         -
                                                     --------------              ------------
                                                     $      430,000              $  5,680,701
                                                     ==============              ============
</TABLE>

As a result of the 1999 identified excess costs, which reflected an overall
estimated project gross margin of zero, SC Partnership recorded zero gross
margins on all sales from the second quarter of 1999 through the third quarter
of 2000. During the fourth quarter of 2000 revised estimates of sales and costs
to complete resulted in an overall gross margin for the project. As a result, a
gross margin was reported relating to sales activity for that period. Sales and
costs to complete have been further revised during fiscal year 2001 based upon
current activity, maintaining an overall gross margin for the project. Based on
these current revised estimates, a gross margin of $9,688,825 was reported by SC
Partnership for the year ended December 31, 2001.

Eaton Estate Partnership
The Partnership has a 30% interest in Eaton. The Partnership's investment in
Eaton at December 31, 2001 and 2000 was $102,480 and $767,202, respectively. For
the years ended December 31, 2001 and 2000, Eaton generated losses of $46,307
and income of $455,663, respectively, of which losses of $13,892 and income of
$136,699, respectively, have been recorded by the Partnership under the equity
method. Eaton distributed $650,830 and $1,518,132 to the Partnership in fiscal
years 2001 and 2000, respectively.


                                       32
<PAGE>


                       GRANITE DEVELOPMENT PARTNERS, L.P.
                        (A Delaware Limited Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)


NOTE G - INVESTMENTS IN AND ADVANCES TO JOINT VENTURES (continued)

Combined Joint Venture Financial Information
Summarized below is the combined condensed financial information for the
Partnership's joint venture investments in SC Partnership and Eaton:


<TABLE>
<CAPTION>
                                                                            As of December 31,
                                                         -----------------------------------------------------
                                                                2001                             2000
                                                         --------------------            ---------------------
<S>                                                           <C>                              <C>
Balance Sheet
-------------
Assets                                                        $   17,030,609                   $   18,932,939

Liabilities, primarily affiliate loans                            23,582,894                       28,908,955
                                                         --------------------            ---------------------
Partners' deficit
                                                                 (6,552,285)                      (9,976,016)

Less:  Outside partners' deficit                                 (5,167,899)                      (3,097,400)
                                                         --------------------            ---------------------
Investment in joint ventures                                 $   (1,384,386)                  $   (6,878,616)
                                                         ====================            =====================
</TABLE>

<TABLE>
<CAPTION>
                                                                For the year ended December 31,
                                                 -------------------------------------------------------------
                                                      2001                 2000                   1999
                                                 ----------------    -----------------     -------------------
<S>                                               <C>                <C>                    <C>
Operating Results
-----------------
Sales from developed property                     $  25,851,450      $     34,038,534       $     30,991,179
                                                 ================    =================     ===================

Gross margins                                     $   9,690,688       $     2,234,505       $   (17,471,214)

Other income                                            884,115               994,863                986,403

Expenses                                              2,376,972             3,818,562              9,951,084
                                                 ----------------    -----------------     -------------------
Net income (loss)                                 $   8,197,831       $     (589,194)       $   (26,435,895)
                                                 ================    =================     ===================
</TABLE>

NOTE H - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table sets forth the quarterly results of operations for the years
ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                         For the quarter     For the quarter     For the quarter     For the quarter
                                              ended               ended               ended               ended
                                            December 31,        September 30,         June 30,           March 31,
                                               2001                2001                2001                2001
                                        ------------------  ------------------  ------------------  ------------------
<S>                                       <C>                 <C>                 <C>                 <C>
Sales of developed property               $    1,093,550      $       341,000     $       195,250     $             -
Gross margins                             $      400,449      $       231,832     $        82,588     $             -
Net income (loss)                         $    1,279,272      $       873,641     $     (196,182)     $       930,264
</TABLE>


<TABLE>
<CAPTION>
                                         For the quarter     For the quarter     For the quarter     For the quarter
                                              ended               ended               ended               ended
                                            December 31,        September 30,         June 30,           March 31,
                                               2000                2000                2000                2000
                                        ------------------  ------------------  ------------------  ------------------
<S>                                       <C>                 <C>                 <C>                 <C>
Sales of developed property               $    5,771,300      $    1,674,300      $             -     $       172,000
Gross margins                             $    2,797,695      $       487,761     $             -     $        79,232
Net income (loss)                         $    3,976,696      $   (1,233,282)     $   (2,027,295)     $   (2,649,418)
</TABLE>


                                       33
<PAGE>


Item 8.  Financial Statements and Supplementary Data (continued)

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Silver Canyon Partnership

In our opinion, the financial statements listed in the index appearing under
Item 14(a)(2) on page 47 present fairly, in all material respects, the financial
position of Silver Canyon Partnership (A Nevada General Partnership)
("Partnership") at December 31, 2001 and 2000, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2001 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement schedule
listed in the index appearing under Item 14(a)(3) on page 47 presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and financial statement schedule are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.




/S/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Cleveland, Ohio
March 4, 2002


                                       34
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         December 31,         December 31,
                                                                             2001                 2000
                                                                      -------------------   ------------------


<S>                                                                       <C>                     <C>
ASSETS
------

LAND                                                                      $    3,427,371          $ 6,081,321

RESTRICTED CASH                                                                3,536,864            3,396,696

MORTGAGE NOTES RECEIVABLE                                                      2,856,600                    -

OTHER ASSETS
  Mortgage procurement costs, net of accumulated
    amortization of  $417,647 and $219,145 in 2001 and
    in 2000, respectively                                                              -              196,478
  Fixed assets, net of accumulated depreciation
    of $1,607 and $1,071 in 2001 and in 2000,
    respectively                                                                       -                  536
  Cash                                                                         6,691,354            7,196,115
  Accounts receivable - affiliate                                                      -                8,675
  Accounts receivable                                                             15,521               15,000
  Interest receivable                                                              5,203                    -
  Funds in escrow                                                                150,000               40,914
                                                                      -------------------   ------------------
                                                                               6,862,078            7,457,718
                                                                      -------------------   ------------------

                                                                          $   16,682,913         $ 16,935,735
                                                                      ===================   ==================
</TABLE>


See notes to financial statements.


                                       35
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                           BALANCE SHEETS (continued)


<TABLE>
<CAPTION>

                                                                        December 31,           December 31,
                                                                            2001                   2000
                                                                     --------------------   -------------------


<S>                                                                         <C>                    <C>
LIABILITIES AND
PARTNERS' DEFICIT
-----------------

LOANS PAYABLE
  Granite Silver Development Partners, L.P.                                 $ 15,971,338           $21,555,454
  Silver Canyon Corporation                                                      141,326               141,326
                                                                     --------------------   -------------------
                                                                              16,112,664            21,696,780
OTHER LIABILITIES
  Accounts payable                                                             1,510,949             1,636,516
  Deposits                                                                             -               595,114
  Costs to complete                                                            5,953,181             4,971,244
                                                                     --------------------   -------------------
                                                                               7,464,130             7,202,874

PARTNERS' DEFICIT                                                            (6,893,881)          (11,963,919)
                                                                     --------------------   -------------------
                                                                            $ 16,682,913           $16,935,735
                                                                     ====================   ===================
</TABLE>


See notes to financial statements.


                                       36
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                        For the year         For the year          For the year
                                                           ended                ended                 ended
                                                        December 31,         December 31,          December 31,
                                                            2001                 2000                  1999
                                                     -------------------  -------------------   -------------------

<S>                                                     <C>                  <C>                   <C>
REVENUES
  Sales of developed property                           $    25,651,450      $    34,038,534       $    29,431,179
  Cost of sales                                            (15,962,625)         (31,804,029)          (47,189,995)
                                                     -------------------  -------------------   -------------------
                                                              9,688,825            2,234,505          (17,758,816)

  Other                                                         876,699              496,415               301,735
                                                     -------------------  -------------------   -------------------
                                                             10,565,524            2,730,920          (17,457,081)
                                                     -------------------  -------------------   -------------------
EXPENSES

  Fees, partners                                                      -                    -                50,000
  Commissions                                                   986,481            1,084,758             1,953,057
  Legal and professional                                        168,874            1,419,895             6,632,876
  Travel and entertainment                                       23,555               80,596                49,422
  Operating and other                                           943,438              970,312               989,674
  Depreciation and amortization                                 199,038              220,216                69,409
                                                     -------------------  -------------------   -------------------
                                                              2,321,386            3,775,777
                                                                                                         9,744,438
                                                     -------------------  -------------------   -------------------

NET INCOME (LOSS)                                       $     8,244,138      $   (1,044,857)       $  (27,201,519)

OTHER CAPITAL TRANSACTIONS
  Land inventory adjustment                                           -                    -             5,054,279
  Fees and commissions adjustment                                     -                    -             6,110,701
                                                     -------------------  -------------------   -------------------
                                                                      -                    -            11,164,980
  Recharaterization of development fees                               -                    -             (613,869)
                                                     -------------------  -------------------   -------------------
                     Subtotal                                         -                    -            10,551,111

                                                     -------------------  -------------------   -------------------
  Net change in partnership capital                     $     8,244,138      $   (1,044,857)       $  (16,650,408)
                                                     ===================  ===================   ===================
</TABLE>


See notes to financial statements.


                                       37
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' DEFICIT


<TABLE>
<CAPTION>
                                                                    Granite             American
                                                                     Silver              Nevada
                                                 Silver           Development         Seven Hills
                                                 Canyon            Partners,            Limited
                                               Corporation            L.P.            Partnership            Total
                                             ----------------  ------------------- -------------------  -----------------

<S>                                            <C>                <C>                   <C>               <C>
Balance at December 31, 1998                   $   1,803,242      $     3,298,726       $     764,674     $    5,866,642

Net loss                                         (1,985,727)         (15,838,982)         (9,376,810)       (27,201,519)

Land inventory adjustment                              2,485            4,263,313             788,481          5,054,279

Fees and commissions adjustment                      180,000            1,675,982           4,254,719          6,110,701

Recharacterization of development
  fees                                                     -                    -           (613,869)          (613,869)
                                             ----------------  ------------------- -------------------  -----------------

Balance at December 31, 1999                               -          (6,600,961)         (4,182,805)       (10,783,766)

Distributions                                              -                    -           (135,296)          (135,296)

Net loss                                                   -          (1,044,857)                   -        (1,044,857)
                                             ----------------  ------------------- -------------------  -----------------


Balance at December 31, 2000                               -          (7,645,818)         (4,318,101)       (11,963,919)

Distributions                                              -                    -         (3,174,100)        (3,174,100)

Net income                                                 -            6,158,952           2,085,186          8,244,138
                                             ----------------  ------------------- -------------------  -----------------



Balance of December 31, 2001                   $           -     $    (1,486,866)       $ (5,407,015)     $  (6,893,881)
                                             ================  =================== ===================  =================
</TABLE>


See notes to financial statements.


                                       38
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                         For the year         For the year         For the year
                                                                             ended                ended                ended
                                                                         December 31,         December 31,         December 31,
                                                                             2001                 2000                 1999
                                                                      -------------------- -------------------- --------------------
<S>                                                                      <C>                  <C>                  <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income (loss)                                                      $      8,244,138     $    (1,044,857)     $   (27,201,519)
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities
      Depreciation and amortization                                               199,038              220,216               69,409
 Changes in operating assets and liabilities:
      Decrease in land and land improvements                                    2,862,496           10,704,255           24,558,193
      (Increase) decrease  in mortgage notes receivable                       (2,856,600)              525,000              438,032
      (Increase) decrease in restricted cash                                    (140,168)          (3,396,696)              157,111
      (Increase) decrease in accounts receivable                                    (521)               27,875            3,165,517
      Decrease (increase) in accounts receivable - affiliate                        8,675              991,325          (1,000,000)
      (Increase) decrease  in funds in escrow                                   (109,086)               51,545              490,759
      Increase in interest receivable                                             (5,203)                    -                    -
      (Decrease) increase in accounts payable - trade                           (334,113)            ( 12,972)              132,946
      Increase in accounts payable - management fee                                     -                    -               15,000
      (Decrease)  increase in accrued interest                                          -             (48,012)            2,430,343
      Decrease in accrued developments fees, partners                                   -                    -          (1,533,220)
      (Decrease) increase in accrued expenses                                           -          (3,059,000)            3,059,000
      Decrease in deposits                                                      (595,114)            (980,157)          (2,605,595)
      Increase in deferred income                                                 981,937            4,571,244                    -
                                                                      -------------------- -------------------- --------------------
      Net cash provided by operating activities                                 8,255,479            8,549,766            2,175,976
                                                                      -------------------- -------------------- --------------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from loan payable-Ohio Savings Bank                               9,927,467           21,356,364           28,821,964
     Repayment of loan payable-Ohio Savings Bank                              (9,927,467)         (23,343,544)         (26,834,784)
     Repayment of loan payable-General Motors Acceptance
       Corporation                                                                      -                    -            (350,972)
     Proceeds from loan payable-American Nevada Seven Hills Limited
       Partnership                                                                      -              580,000            1,600,000
     Repayment of loan payable-American Nevada Seven Hills Limited
       Partnership                                                                      -          (1,864,704)            (385,960)
     Proceeds from loan payable-Granite Silver Development Partners,
       L.P.                                                                             -              580,000            1,600,000
     Repayment of loan payable-Granite Silver Development Partners,
       L.P.                                                                   (5,584,116)          (5,658,369)            (175,855)
     Proceeds from loan payable-Silver Canyon Corporation                               -                    -              141,326
     Partner distribution-American Nevada Seven Hills Limited
       Partnership                                                            (3,174,100)            (135,296)                    -
     Payment of mortgage procurement costs                                        (2,024)            (373,588)             (60,531)
                                                                      -------------------- -------------------- --------------------
     Net cash (used in) provided by financing activities                      (8,760,240)          (8,859,137)            4,355,188
                                                                      -------------------- -------------------- --------------------

(DECREASE) INCREASE  IN CASH                                                    (504,761)            (309,371)            6,531,164
CASH AT BEGINNING OF THE PERIOD                                                 7,196,115            7,505,486              974,322
                                                                      -------------------- -------------------- --------------------
CASH AT END OF THE PERIOD                                                $      6,691,354     $      7,196,115     $      7,505,486
                                                                      ==================== ==================== ====================
</TABLE>


See notes to financial statements.


                                       39
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                      STATEMENTS OF CASH FLOWS (continued)


<TABLE>
<CAPTION>
                                                                           For the year         For the year        For the year
                                                                               ended                ended              ended
                                                                           December 31,         December 31,        December 31,
                                                                               2001                 2000                1999
                                                                        --------------------  ------------------  -----------------


<S>                                                                        <C>                  <C>              <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
  Operating expenses
     Land improvement cost included in accounts payable                    $    (208,546)       $  (639,115)     $  (3,313,401)
     Write off interest payable                                            $           -        $          -     $ (12,637,173)
     Write off development fee payable                                     $           -        $          -     $  (1,243,835)

  Financing activities
     Cancellation of Commissions applied to loan payable-
       American Nevada Seven Hills Limited Partnership                     $           -        $          -     $    4,224,719
     Cancellation of Development fee applied to loan payable-
       American Nevada Seven Hills Limited Partnership                     $           -        $          -     $    1,181,131
     Cancellation of Development fee applied to partners' equity-
       American Nevada Seven Hills Limited Partnership                     $           -        $          -     $      613,869
    Cancellation of Commissions applied to loan payable-
       Granite Silver Development Partners, L.P.                           $           -        $          -     $    1,455,982

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for interest                                 $       2,538        $    162,197     $      925,530
</TABLE>


See notes to financial statements.


                                       40
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE A - NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

Organization
Silver Canyon Partnership ("Partnership"), was formed on January 7, 1994 to
acquire, own, plan, develop, operate, improve, lease, manage, sell, finance and
refinance and otherwise deal with the Partnership property located in Henderson,
Nevada. The Partnership will terminate on December 31, 2013 or earlier upon
disposition of assets.

The original partners were Silver Canyon Corporation, a Nevada Corporation
("SCC") and Granite Silver Development Partners, L.P., a Delaware Limited
Partnership ("Granite") owned by Granite Development Partners, L.P. SCC made an
initial capital contribution of land with an assigned value agreed upon by the
partners of $4,500,000. As of January 31, 1995, Granite made a total initial
cash capital contribution of $2,250,000. The cash from Granite's contribution
was distributed to SCC. Through January 30, 1996, Granite owned a 55% interest
and SCC owned a 45% interest in the Partnership. On January 30, 1996, Granite
sold to American Nevada Seven Hills Limited Partnership ("ANC") a 21 2/3%
partnership interest in the Partnership. SCC sold to ANC a 11 2/3% partnership
interest in the Partnership. Upon the execution of the Amended and Restated
Partnership Agreement, ANC had acquired interests in the Partnership
representing in the aggregate a 33 1/3% interest.

Partnership Amendment
During the second quarter of 1999, ANC, the partner responsible for the onsite
improvements in the Seven Hills project, identified costs in excess of budget to
complete the project. Certain of these costs became known to operating personnel
during the fourth quarter of 1998. Further information became known during the
second quarter of 1999.

To minimize the impact of these excess costs, an agreement ("Agreement") between
ANC and Granite was entered into which modified certain terms of the Silver
Canyon Partnership Agreement. The changes resulting from the Agreement are
reflected in these statements.

The Agreement's impact on the Silver Canyon Partnership Agreement includes the
following provisions:

1.   ANC assigned all of its future and past commissions, fees, and
     distributions relating to loans, capital calls and interest thereon to
     Granite. Amounts previously paid were deemed a return of capital.

2.   ANC funded one-half of the settlement amounts for the two lawsuits settled
     in 1999 and 2000.

3.   Granite funded the remaining settlement liability for the lawsuits but
     received a priority distribution to cover such capital contribution.

4.   After the priority distribution in #3, ANC and Granite received
     distributions pari passu until ANC recovered its entire cash investment
     except for $750,000, which occurred in the first quarter of 2001.


                                       41
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE A - NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION (continued)

5.   Thereafter, Granite will receive all distributions until it has recovered
     its entire capital account.

6.   After Granite has recovered its entire capital account, ANC and Granite
     will share all remaining distributions pari passu.

The following table summarizes the impact of the Agreement to Silver Canyon
Partnership as of December 31, 1999:

<TABLE>
<S>                                                            <C>
Land inventory adjustment                                      $  5,054,279
Fees and commissions adjustment                                   6,110,701
                                                               ------------
Total adjustments                                              $ 11,164,980
                                                               ============
</TABLE>

The Partnership reduced its remaining land inventory by the amount of
$21,006,068 during the second quarter of 1999 as a result of the excess costs,
which reflected an estimated gross margin of zero. The Partnership continued to
record zero gross margins on all sales closed since the second quarter of 1999.

Profits, losses and distributions are allocated to the partners as provided in
the Amended and Restated Partnership Agreement.

As a result of the 1999 identified excess costs, which reflected an overall
estimated project gross margin of zero, the Partnership recorded zero gross
margins on all sales from the second quarter of 1999 through the third quarter
of 2000. During the fourth quarter of 2000, revised estimates of sales and costs
to complete resulted in an overall gross margin for the project. As a result, a
gross margin was reported relating to sales activity for that period. Sales and
costs to complete have been further revised during fiscal year 2001 based upon
current activity, maintaining an overall gross margin for the project. Based on
these current revised estimates, a gross margin of $9,688,825 was reported for
the year ended December 31, 2001.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported amounts of revenues and
expenses during the period. Management is required to make significant estimates
in connection with its development of budgeted sales and cost estimates in
determining the allocation of land and land improvements to cost of sales in
connection with the recording of land sales. Actual results could differ from
those estimates.


                                       42
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Land and Land Improvements
Land and land improvements are recorded at cost. Management reviews its land and
land improvements for impairment when there is an event or change in
circumstances that indicates an impairment in value. The Partnership records
impairment losses and reduces the carrying amounts of land held for sale when
the carrying amounts exceed the estimated selling proceeds less the costs to
sell.

Land Sales
The Partnership follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 66, Accounting for Sales of Real Estate, for reporting
sales of and land improvements on the full accrual method, as appropriate. For
land sales, the Partnership determines the amount of land and land improvement
costs to be reported in cost of sales based upon the overall project gross
margin.

Costs to Complete
Total estimated project costs are reported in cost of sales based upon the
overall project gross margin, which is reviewed quarterly. As a result,
estimated project costs not yet incurred are included in costs of sales in
certain circumstance due to timing. Such costs have been reclassified from land
improvements to costs to complete in the balance sheet. As these costs are
incurred they will be recorded as a reduction to costs to complete.

Capitalized Interest and Real Estate Taxes
Interest expense and real estate tax expense allocated to land held for
development is capitalized. For the years ended December 31, 2001, 2000 and
1999, total interest charges were $2,538, $114,185 and $3,355,873, respectively,
all of which were capitalized. For the years ended December 31, 2001, 2000 and
1999, total real estate taxes were $508,549, $400,869, and $500,912,
respectively, all of which were capitalized.

Restricted Cash
Pursuant to the loan agreement with Ohio Savings Bank, a restricted cash account
was established to hold scheduled loan paydowns in excess of expenditures.

Mortgage Procurement Costs
Mortgage procurement costs are amortized over the life of the debt to which the
costs relate.

Fixed Assets
Fixed assets are recorded at cost. Depreciation is provided on a straight-line
basis over the estimated useful lives of owned assets.

Fair Value of Financial Instruments
The Partnership's financial instruments consists principally of cash, restricted
cash, mortgage notes receivable, accounts receivable, accounts receivable
affiliate, funds in escrow, accounts payable, accrued expenses and deposits in
which the fair value of these financial instruments approximate the carrying
value.


                                       43
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes
No provision or benefit for income taxes is included in the financial
statements. Income taxes, if any, are the responsibility of the individual
partners.

New Accounting Standards
In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. The provisions of SFAS 141 require the use
of purchase accounting for all business combinations and the separate allocation
of purchase price to intangible assets if specific criteria are met. The
provisions of SFAS 142 state that goodwill and intangible assets with indefinite
useful lives should not be amortized but rather tested at least annually for
impairment. Intangible assets that have finite useful lives should continue to
be amortized over their estimated useful lives. SFAS 142 also provides specific
guidance for testing goodwill and intangible assets for impairment. The
provisions of SFAS No. 141 apply to all business combinations initiated after
June 30, 2001. The Partnership will adopt SFAS 142 effective January 1, 2002.
The Partnership does not anticipate that these standards will have a material
impact on the Partnership's financial position, results of operations, or cash
flows.

In October 2001, the FASB Issued SFAS No. 144, Accounting for the Impairment of
Disposal of Long-Lived Assets, which addresses the financial accounting and
reporting for the impairment or disposal of long-lived assets. This standard
harmonizes the accounting for impaired assets and resolves some of the
implementation issues as originally described in SFAS 121. It retains the
fundamental provisions of SFAS 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale. It also retains the basic
provisions for presenting discontinued operations in the statement of operations
but broadens the scope to include a component of an entity rather than a segment
of a business. The Partnership will adopt this standard effective January 1,
2002. The Partnership does not believe this pronouncement will have a material
impact on the Partnership's financial position, results of operations or cash
flows.

NOTE C - LOAN PAYABLE

In January 1999, the Partnership obtained financing from Ohio Savings Bank to
fund development expenditures for the Seven Hills project. Ohio Savings Bank has
agreed, in accordance with the loan agreement, to make loans to the Partnership
in an aggregate amount not to exceed $12,000,000. The loan bears interest at
prime (4.75% at December 31, 2001) plus 1%. The loan had a scheduled maturity of
January 28, 2002. In the second quarter of fiscal year 2000, the loan agreement
was amended to reduce the maximum outstanding balance to $10,000,000. In the
third quarter of fiscal year 2000, a restricted cash account was established to
hold scheduled loan paydowns in excess of expenditures.


                                       44
<PAGE>


                            SILVER CANYON PARTNERSHIP
                         (A Nevada General Partnership)
                  NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTE C - LOAN PAYABLE (continued)

Pursuant to an amended loan agreement signed by Ohio Savings Bank and the
Partnership in January 2001, excess cash of $3,289,868 was returned to the
Partnership. The amended loan agreement also reduced Ohio Savings' Bank funding
of development costs from 100% to 50% and reduced the maximum outstanding
balance to $3,000,000. There was no outstanding balance under this loan
agreement at December 31, 2001.

In February 2002, the third amendment to the development loan agreement extended
the due date of any borrowed funds to December 31, 2002. It allows for
borrowings of 100% of development costs up to a total of $3,000,000. Remaining
estate lots and commercial property secure the loan. Ninety percent of gross
proceeds from sales will be used to repay the loan.

NOTE D - TRANSACTIONS WITH AFFILIATES

Granite, SCC, and ANC are reimbursed for all direct costs of operations of the
Partnership's affairs and development activities.

Based on the Agreement, the monthly administrative fees in the amount of $5,000
per month payable to Granite were waived. No fees were earned or accrued for the
years ended December 31, 2001 and 2000. At December 31, 1999 accrued
administrative fees totaling $220,000 were reversed and presented as other
capital transactions on the statement of operations.

Based on the Agreement, the monthly golf course operation fees in the amount of
$5,000 per month payable to SCC were waived. No fees were earned or accrued for
the years ended December 31, 2001 and 2000. At December 31, 1999 accrued
operation fees totaling $180,000 were reversed and presented as other capital
transactions on the statement of operations.

Based on the Agreement, the development fees payable to ANC were waived. No fees
were earned or accrued for the years ended December 31, 2001 and 2000. At
December 31, 1999, accrued development fees totaling $613,869 were reversed and
presented as other capital transactions on the statements of operations.

Granite had advances outstanding of $15,971,338 and $21,555,454 at December 31,
2001 and 2000, respectively, to the Partnership. Based on the Agreement, the
above advances to the Partnership do not bear interest. All previously accrued
and unpaid interest was waived.

On November 22, 1999, the Partnership issued a capital call to its three
partners in the amount of $1,066,667 each. One of the partners, SCC, failed to
pay its capital call of $1,066,667 and was therefore in default. Pursuant to the
terms of the Amended and Restated Partnership Agreement, each of the other two
partners, Granite and ANC elected to make "Shortfall Loans", each in the amount
of $533,334 to the Partnership. Such loans bear interest at the rate of 25% per
annum and are payable from all distributions, fees or compensation which may
otherwise be due to the defaulting partner. According to the terms of the
Agreement, Granite has agreed to fund ANC's portion of future capital calls
without charging interest. In addition, Granite will continue to make "Shortfall
Loans" to SCC as necessary.


                                       45
<PAGE>


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         None

                                    PART III

Item 10. Directors and Executive Officers of the General Partner of the
         Registrant

         The following table sets forth the names of the officers and directors
of the General Partner:

<TABLE>
<CAPTION>
                           NAME                               OFFICE
                           ----                               ------
<S>                                                         <C>
                           Robert F. Monchein                 President
                           Samuel H. Miller                   Vice President, Director
                           Thomas G. Smith                    Secretary
                           Albert B. Ratner                   Director
                           Charles A. Ratner                  Director
</TABLE>

         Robert F. Monchein, age 57, is the President of the General Partner and
Sunrise. Mr. Monchein joined Forest City in 1979 and assumed the office of
President of Sunrise in 1983.

         Samuel H. Miller, age 80, is the Vice President of the General Partner
and Sunrise. Mr. Miller is also a director of the General Partner and Sunrise.
Mr. Miller joined Forest City in 1945 and is currently Co-Chairman of the Board
of Directors and Treasurer of Forest City.

         Thomas G. Smith, age 61, is the Secretary of the General Partner. Mr.
Smith joined Forest City in 1985 and is Executive Vice President, Chief
Financial Officer, and Secretary.

         Albert B. Ratner, age 74, is a Director of the General Partner and
Sunrise. Mr. Ratner joined Forest City in 1951 and is currently Co-Chairman of
the Board of Directors of Forest City.

         Charles A. Ratner, age 60, is a Director of the General Partner. Mr.
Ratner joined Forest City in 1966 and is serving as its President and Chief
Executive Officer. Mr. Ratner is also a director of American Greetings
Corporation.

Item 11. Executive Compensation

         The officers and directors of the General Partner are neither employed
by nor compensated by the Partnership. All compensation paid to affiliates of
the General Partner are defined in a management agreement between the
Partnership and Sunrise Land Company, an affiliate of the General Partner.

Item 12. Security Ownership of Certain Beneficial Owners and Management

         None

Item 13. Certain Relationship and Related Transactions

         There are certain family relationships among the executive officers of
Forest City, Sunrise and the General Partner. Charles A. Ratner is the brother
of James A. Ratner and Ronald A. Ratner, and the cousin of Albert B. Ratner.


                                       46
<PAGE>


                                     PART IV


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

(a)     (1)       The following financial statements of Granite Development
                  Partners, L.P. and the report of the independent accountants
                  are included in Part II, Item 8:

                  Report of Independent Accountants

                  Financial Statements:
                        -    Balance Sheets as of December 31, 2001 and 2000
                        -    Statements of Operations for the years ended
                             December 31, 2001, 2000 and 1999
                        -    Statements of Changes in Partners' Deficit for the
                             years ended December 31, 2001, 2000 and 1999
                        -    Statements of Cash Flows for the years ended
                             December 31, 2001, 2000 and 1999
                        -    Notes to the Financial Statements

(a)     (2)       The following financial statements of Silver Canyon
                  Partnership and the report of the independent accountants
                  are included:

                  Report of Independent Accountants

                  Financial Statements:
                        -    Balance Sheets as of December 31, 2001 and 2000
                        -    Statements of Operations for the years ended
                             December 31, 2001, 2000 and 1999
                        -    Statements of Changes in Partners' Deficit for the
                             years ended December 31, 2001, 2000 and 1999
                        -    Statements of Cash Flows for the years ended
                             December 31, 2001, 2000 and 1999
                        -    Notes to the Financial Statements

(a)     (3)       The following financial statement schedule is included in
                  Part IV, Item 14(d):

                  Schedule III - Real Estate and Accumulated Depreciation

                  Schedules other than those listed above are omitted for the
                  reason that they are not required or are not applicable, or
                  the required information is shown in the financial statements
                  or notes thereto.

(a)     (4)       Exhibits:

                  No.  3.1    Summary of the Partnership Agreement of Limited
                              Partnership adopted November 15, 1993 was filed
                              with the Registration Statement on Form S-11 filed
                              with the Commission on November 4, 1994 and is
                              hereby incorporated by reference.


                  No.  4.1    The Prospectus for the S-11 offering of 36,000
                              warrants and partnership units and the Prospectus
                              for the S-4 Offer to Exchange


                                       47
<PAGE>


                              Senior Notes was filed with the Commission on
                              November 4, 1994 and is hereby incorporated by
                              reference.

                  No.  5.1    The Prospectus for the Post-Effective Agreement
                              No. 1 to the Registration Statement on Form S-11
                              was filed with the Commission on September 6, 1996
                              and is hereby incorporated by reference.

(b)               Reports on Form 8-K

                              None



                                       48
<PAGE>


                                   SIGNATURES

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

                                    GRANITE DEVELOPMENT PARTNERS, L.P.
                                    ----------------------------------
                                                (Registrant)

DATE: March 29, 2002                /s/ Robert F. Monchein
     ---------------                --------------------------------------------
                                    Robert F. Monchein
                                    President
                                    FC-Granite, Inc., the general partner
                                    of  Granite Development Partners, L.P.


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


<TABLE>
<S>                                 <C>                               <C>
Principal Executive Officer         President, FC-Granite, Inc.       Date: March 29, 2002
/s/ Robert F. Monchein              the general partner of Granite          --------------
----------------------              Development Partners, L.P.
Robert F. Monchein

Principal Financial and             Controller, FC-Granite, Inc.,     Date: March 29, 2002
Accounting Officer                  the general partner of Granite          --------------
/s/ Mark A. Ternes                  Development Partners, L.P.
------------------
Mark A. Ternes

/s/ Samuel H. Miller                Vice President, Director          Date: March 29, 2002
--------------------                                                        --------------
Samuel H. Miller

/s/ Thomas G. Smith                  Secretary                        Date: March 29, 2002
-------------------                                                         --------------
Thomas G. Smith

/s/ Albert B. Ratner                 Director                         Date: March 29, 2002
--------------------                                                        --------------
Albert B. Ratner

/s/ Charles A. Ratner                Director                         Date: March 29, 2002
----------------------                                                      --------------
Charles A. Ratner
</TABLE>



                                       49

<PAGE>
            Granite Development Partners, L.P.

            Schedule I I I - Real Estate Owned





<TABLE>
<CAPTION>
                                                                                                                          Cost
                                                                                                                      capitalized
                                                                                              Initial cost           subsequent to
                                                                 Amount of                     to Company             acquisition
                                                                encumbrance        ------------------------------- -----------------
                                                              at December 31,
Description of property                                             2001                 Land        Improvements     Improvements
                                                            ---------------------  ---------------  -------------- -----------------

<S>                                                             <C>                 <C>              <C>              <C>
Undeveloped land, North Miami Beach, Florida                    $              -    $   9,712,620                     $           -
Developed and undeveloped land, Kirtland and
  Kirtland Hills, Ohio                                                                  1,660,876                                 -
Undeveloped commercial land, Strongsville, Ohio                                           617,957                                 -
Undeveloped commercial land, Parma, Ohio                                                  554,664                            56,977
Undeveloped land, Middleburg Heights, Ohio                                                718,683                                 -
Undeveloped land, North Royalton, Ohio                                                    232,049                                 -
Undeveloped land, Solon, Ohio                                                             464,825                         1,819,589
Undeveloped commercial land, North Olmsted, Ohio                                          305,923                                 -
Developed land, North Royalton, Ohio                                                      160,397                                 -
Undeveloped land, Twinsburg, Ohio                                                       1,179,875                                 -
Undeveloped land, Olmsted Falls, Ohio                                                   1,102,526                                 -
Undeveloped land, Newbury Township, Ohio                                                  460,842                            94,914
Undeveloped land, Medina, Ohio                                                             42,545                           275,212
Undeveloped land, Medina, Ohio                                                            131,382                                 -
Senior Notes Payable                                                  34,000,000                -


                                                            ---------------------  ---------------  -------------- -----------------
                                                                $     34,000,000    $  17,345,164    $         -      $   2,246,692
                                                            =====================  ===============  ============== =================
</TABLE>


<TABLE>
<CAPTION>
                                                                 Cost
                                                              capitalized                  Gross amount at which
                                                             subsequent to                  carried at close of
                                                              acquisition                    December 31, 2001
                                                            --------------  -------------------------------------------------------
                                                               Carrying
Description of property                                          Costs             Land           Improvements        Total (A)
                                                            --------------  -----------------  -----------------  -----------------

<S>                                                         <C>               <C>                  <C>             <C>
Undeveloped land, North Miami Beach, Florida                                  $            -       $          -       $          -
Developed and undeveloped land, Kirtland and
  Kirtland Hills, Ohio                                                                     -                  -                  -
Undeveloped commercial land, Strongsville, Ohio                                            -                  -                  -
Undeveloped commercial land, Parma, Ohio                                              26,067             56,977             83,044
Undeveloped land, Middleburg Heights, Ohio                                                 -                  -                  -
Undeveloped land, North Royalton, Ohio                                                     -                  -                  -
Undeveloped land, Solon, Ohio                                                        365,193          1,819,589          2,184,782
Undeveloped commercial land, North Olmsted, Ohio                                           -                  -                  -
Developed land, North Royalton, Ohio                                                       -                  -                  -
Undeveloped land, Twinsburg, Ohio                                                          -                  -                  -
Undeveloped land, Olmsted Falls, Ohio                                                      -                  -                  -
Undeveloped land, Newbury Township, Ohio                                             128,189             94,914            223,103
Undeveloped land, Medina, Ohio                                                        97,281            275,212            372,493
Undeveloped land, Medina, Ohio                                                             -                  -                  -
Senior Notes Payable                                                                                                             -


                                                            --------------  -----------------  -----------------  -----------------
                                                              $        -      $      616,730       $  2,246,692       $  2,863,422
                                                            ==============  =================  =================  =================
</TABLE>



(A) Land held by the unconsolidated joint ventures, included in Note G to the
financial statements, also encumbered by the senior notes payable totals
$3,427,371.

(B)  Reconciliations of total real estate carrying value are as follows:


<TABLE>
<CAPTION>
                                                                December 31,            December 31,
                                                                    2001                    2000
                                                            ---------------------     -----------------
<S>                                                            <C>                      <C>
Balance at beginning of period                                 $       1,244,223        $    2,394,946

  Additions during period -
    Improvements                                                       2,534,130             3,102,189
    Other acquisition                                                          -                     -
                                                            ---------------------     -----------------
                                                                       3,778,353             5,497,135
                                                            ---------------------     -----------------

  Deductions during period -
    Cost of real estate sold                                            (914,931)           (4,252,912)
                                                            ---------------------     -----------------


Balance at end of period                                       $       2,863,422        $    1,244,223
                                                            =====================     =================
</TABLE>


<PAGE>


                            Silver Canyon Partnership

                       Schedule I I I - Real Estate Owned


<TABLE>
<CAPTION>

                                                                                                                          Cost
                                                                                                                      capitalized
                                                                                          Initial cost               subsequent to
                                                             Amount of                     to Company                 acquisition
                                                            encumbrance      ------------------------------------ ------------------
                                                          at December 31,
Description of property                                        2001                Land           Improvements      Improvements
-----------------------                                 -------------------- ------------------ ----------------- ------------------
<S>                                                       <C>                   <C>              <C>                 <C>
Developed land, Henderson, Nevada                         $               -     $   23,323,784                       $            -


                                                        -------------------- ------------------ ----------------- ------------------
                                                          $               -     $   23,323,784     $           -     $            -
                                                        ==================== ================== ================= ==================
</TABLE>


<TABLE>
<CAPTION>
                                                            Cost
                                                         capitalized                 Gross amount at which
                                                        subsequent to                 carried at close of
                                                         acquisition                   December 31, 2001
                                                        ------------- ------------------------------------------------------
                                                          Carrying
Description of property                                    Costs            Land          Improvements        Total (A)
-----------------------                                 ------------- ----------------- ------------------ -----------------
<S>                                                      <C>             <C>                <C>              <C>
Developed land, Henderson, Nevada                                        $   3,427,371      $           -    $    3,427,371


                                                        ------------- ----------------- ------------------ -----------------
                                                           $       -     $   3,427,371      $           -    $    3,427,371
                                                        ============= ================= ================== =================
</TABLE>




(A)  Reconciliations of total real estate carrying value are as follows:

<TABLE>
<CAPTION>
                                                           December 31,         December 31,
                                                               2001                 2000
                                                        --------------------  ------------------
<S>                                                         <C>                 <C>
Balance at beginning of period                              $     6,081,321      $   17,424,691

  Additions during period -
    Improvements                                                 13,308,675          20,460,659
    Other acquisition                                                     -                   -
                                                        --------------------  ------------------
                                                                 19,389,996          37,885,350
                                                        --------------------  ------------------

  Deductions during period -
    Cost of real estate sold                                    (15,962,625)        (31,804,029)
                                                        --------------------  ------------------


Balance at end of period                                    $     3,427,371      $    6,081,321
                                                        ====================  ==================
</TABLE>