ANNUAL REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
                     TO THE 1934 ACT REPORTING REQUIREMENTS

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
    [X]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
                     For the fiscal year ended December 31, 1999

    [ ]           TRANSMISSION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

                          Commission File No. 33-87024C

                          TAYLOR INVESTMENT CORPORATION
                 (Name of small business issuer in its charter)

            Minnesota                                   41-1373372
------------------------------------      --------------------------------------
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
   incorporation or organization)

              43 Main Street S.E., Suite 506, Minneapolis, MN 55414
              -----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (612) 331-6929

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

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

Check whether the issuer (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 ___

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year. $24,973,604

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.

                       $1,224,637 as of December 31, 1999
                       ----------------------------------

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practical date.

      Common Stock, $.01 Par Value - 484,129 shares as of December 31, 1999
      ---------------------------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of certain exhibits hereto are incorporated by reference to the
Company's Registration Statement on Form SB-2 (No. 33-87024C), effective January
12, 1995.

    Transitional Small Business Disclosure Format (check one): Yes ___ No _X_

<PAGE>


                                TABLE OF CONTENTS

                                     PART I

ITEM 1.  BUSINESS..............................................................1

         General...............................................................1

         Principal Business....................................................1

         Competition...........................................................3

         Regulation............................................................3

         Employees.............................................................3

ITEM 2.  PROPERTIES............................................................3

ITEM 3.  LEGAL PROCEEDINGS.....................................................4

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

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............4

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.................................................4

ITEM 7.  FINANCIAL STATEMENTS.................................................11

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE.............................................25

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT....................25

ITEM 10. EXECUTIVE COMPENSATION...............................................26

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT...........................................................27

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................28

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................................28

SIGNATURES....................................................................29


                                        i
<PAGE>


                                     PART I
ITEM 1.   BUSINESS

          GENERAL

          Taylor Investment Corporation (the Company) was incorporated in 1979
          by its president, Philip C. Taylor, who then had 11 years of
          experience in the development and sale of rural recreational
          properties. The Company's principal business is the purchase,
          development and sale of previously undeveloped tracts of land within a
          reasonable driving distance of major metropolitan areas, primarily in
          Minnesota, Wisconsin, Georgia, and Texas. The Company subdivides these
          tracts into lots and markets them through its Four Seasons sales
          offices for use as primary residences, vacation retreats, retirement
          residences, and investment. The size of lots sold by the Company
          typically ranges from 1.5 to 2 acres each, but on occasion may be as
          large as 40 acres. Historically, the Company has not participated on a
          regular basis in the construction of homes on the lots, which it
          sells, but has contracted for the construction of homes on an isolated
          basis. The Company believes it is the largest developer of waterfront
          properties for the construction of primary and second homes in
          Minnesota and Wisconsin and is not aware of any other major developer
          in those states.

          To simplify and facilitate the purchasing process for its customers,
          the Company offers qualified customers loans collateralized by
          mortgages on the lots. Customers desiring financing must submit credit
          applications to the Sales and Marketing Department, which then has a
          credit analysis completed on such customers to determine their
          creditworthiness. Depending on the results of this analysis, the Sales
          and Marketing Department approves or disapproves the loan or submits
          the information to the Finance and Accounting Department for further
          analysis. The number of lot purchases financed with Company-originated
          mortgage loans depends on the availability and terms of alternative
          sources of credit to the customer.

          The Company believes it must position itself to take advantage of the
          current and expected future demand for rural properties for building
          primary and secondary homes. The Company's strategy is to expand the
          organization by exploring new markets outside its current locations.

          PRINCIPAL BUSINESS

          Taylor's operations are organized into four primary departments:
          Acquisitions, Development, Sales and Marketing, and Finance and
          Accounting.

          ACQUISITIONS - To locate potential quality properties for purchase,
          development, and sale, Taylor's Acquisition Department reviews plat
          maps for the areas served by its sales offices and identifies
          undeveloped tracts of land. The Acquisitions Department then obtains
          additional information regarding the property and any nearby amenities
          from such sources as topographical maps and reports from the
          Department of Natural Resources. Other due diligence activities
          conducted to determine the suitability of the property for purchase by
          the Company may include studies of local maps and development
          ordinances, reviews of zoning regulations, soil testing, water
          testing, trees and foliage typing, a study of local road access, and a
          consideration of potential lot layout. The Acquisitions Department
          also estimates the costs of development. If the results of these
          studies and estimates are favorable, an offer is made for the property
          in accordance with established pricing guidelines developed by the
          Company based on its past experience. Negotiations then typically
          commence and, if possible, a purchase agreement is entered into. The
          Company's obligations under a purchase agreement are generally
          conditioned upon Taylor obtaining the necessary subdivision approval
          from the local governmental authority. Negotiations may take as long
          as a year before a purchase can be concluded.

          DEVELOPMENT - After purchase negotiations are completed, the Company's
          Development Department is responsible for obtaining regulatory
          approval for the planned development. This process typically involves
          determining the layout of lots, or platting the property, attending
          public hearings, and


                                       1
<PAGE>


          conducting on-site inspections with governmental and regulatory
          personnel. To date, the Development Department has typically been
          successful in obtaining the necessary regulatory and governmental
          approvals; however, there can be no assurance that any particular
          transaction will be approved and ultimately consummated. The
          Development Department also works with a title insurance company in
          obtaining title abstracts, ordering title insurance, and preparing
          other facets of the acquisition for closing. After closing, the
          property is physically developed using road contractors, surveyors,
          and Company work crews. Lots are platted to maximize their
          attractiveness, privacy, and road and water access, taking into
          account view corridors and the layout of trees on the lot. Roads are
          installed, the property is prepared to receive telephone and
          electrical service, trails are cut, underbrush is removed, shorelines
          are cleared, and the property is otherwise prepared for marketing and
          sales to the buying public. The Company then assigns prices to each
          lot based on market prices for similar properties in the area. These
          sales prices generally range from $20,000 - $60,000 per lot.

          SALES AND MARKETING - Taylor's strategy is to purchase and develop
          high quality properties and then market the lots to residents of
          metropolitan areas. Most properties developed by the Company are
          within reasonable driving distances of major metropolitan areas, such
          as Minneapolis and St. Paul, Minnesota; Chicago, Illinois; Atlanta,
          Georgia; and Austin, Texas. The Company's lots are targeted toward
          buyers who desire property with many attractive features on which to
          build primary and secondary homes for use as primary residences,
          vacation retreats, retirement residences, or investments. The primary
          purchasers of the Company's vacation properties are individuals
          ranging from 30 to 60 years old. The Company's strategy for remaining
          competitive in this market involves building on its reputation of
          offering quality properties; using its own regional sales offices and
          personnel, which offer more control over the sales and marketing
          process and better access to the buyers than using independent sales
          offices and agents; offering "on-the-spot" financing for qualified
          purchasers; and offering properties with many appealing features, such
          as trails, water access, creeks, attractive views and shorelines.

          The Company's sales and marketing activities are conducted principally
          through its Four Seasons subsidiaries in Minnesota, Wisconsin, Georgia
          and Texas. A principal element of the Company's strategy and success
          to date has been the establishment and use of regional sales offices
          in general location to the developed properties. The Company's six
          existing Four Seasons regional sales offices are located near
          Brainerd, Minnesota; Spooner, Minocqua, and Stevens Point, Wisconsin;
          Jasper, Georgia; and Austin, Texas. The Company typically acquires
          land near these offices, and the agents in these offices sell only
          properties owned by Taylor. The Company advertises in major
          metropolitan newspapers and other publications, television, radio and
          participates in home and garden, outdoors, and sports shows to attract
          potential customers. Sales personnel are compensated based on sales
          performance but are not permitted to use "hard" sales techniques or
          enticements to prospective purchasers (such as free products) to visit
          property sites. To consummate sales, the Company relies heavily upon
          the quality of its properties combined with the availability of
          "on-the-spot" financing for qualified buyers.

          FINANCE AND ACCOUNTING - The Finance and Accounting Department is
          responsible for maintaining records of account for each project
          developed by the Company and managing the Company's trade receivables
          and payables and mortgages receivable. This department prepares
          management information reports, prepares and services mortgage loans
          extended to lot purchasers, projects cash flow and capital needs for
          acquisition and lending activities, and performs collection
          activities.

          The Company regularly offers financing for the purchase of its
          properties. Upon execution of a purchase agreement, a customer may
          submit an application for credit, which, combined with a credit report
          from a credit rating agency, is given to the Sales Manager for
          approval. Applications from customers who have experienced credit
          problems in the past are submitted to the Controller for ultimate
          approval or rejection. Approved customers execute notes secured by
          first mortgages on the lots purchased.


                                       2
<PAGE>


          COMPETITION

          The Company operates in a highly competitive environment. It competes
          with other real estate development companies and real estate brokers
          in developing and selling its properties. In addition, and to a lesser
          extent, it competes with banks and other financial institutions and
          with several private companies and individual lenders in making
          mortgage loans. The Company's competitive factors in the market for
          developed lots include the ability to acquire quality inventory and
          the size and quality of the sales force, and the principal competitive
          factor in the mortgage loan market is the ability to offer favorable
          terms, including interest rates. The Company believes that it competes
          successfully in its market because of the quality of its product,
          access to capital (which enables it to purchase large tracts at more
          favorable prices than smaller industry participants), its dedicated
          sales staff, its reputation, and its financial strength. Management
          believes that the Company's ability to facilitate and simplify
          purchases by offering competitive financing to qualified lot
          purchasers offers another competitive advantage.

          REGULATION

          The Company's sales personnel, consisting primarily of those based in
          its Four Seasons sales offices, must be registered as real estate
          brokers and maintain such registration with the Minnesota Department
          of Commerce and the Wisconsin Department of Registration and
          Licensing. Minnesota requires registration of subdivisions containing
          more than ten lots. The Minnesota Department of Commerce granted a
          waiver of the registration and in its stead requires notification of
          the sale of any subdivision containing more than ten lots, which will
          be offered to Minnesota residents. No registration is required in
          Wisconsin, Georgia or Texas. In addition, the development of
          properties requires compliance with state and local zoning laws and
          regulations and local laws and ordinances regarding such matters as
          the size of lots, the construction of roads, and the amount of setback
          required from roads and bodies of water.

          The Company is subject to the Interstate Land Sales Full Disclosure
          Act, which requires registration with the Department of Housing and
          Urban Development of any project that consists of 100 or more lots.
          The Company has received a Multiple Site Subdivision Exemption from
          the Department of Housing and Urban Development allowing it to sell
          projects consisting of no more than 99 lots in any given noncontiguous
          site without registration.

          The Company is also subject to consumer protection laws, such as the
          Truth in Lending Act, in connection with its mortgage lending
          activities.

          EMPLOYEES

          As of December 31, 1999, the Company has 68 full-time and 7 part-time
          employees. None of the Company's employees are represented by a labor
          union or are covered by a collective bargaining agreement. The Company
          has not experienced any work stoppages and believes employee relations
          are good.


ITEM 2.   PROPERTIES

          The Company leases its administrative office located at 43 Main Street
          SE, Suite 506, in Minneapolis, Minnesota, consisting of 3,276 square
          feet in an office/residential complex. The lease expires March 31,
          2002.

          The Company leases regional sales, acquisition and development offices
          at various locations in Minnesota, Wisconsin, Georgia, and Texas.
          These offices typically range from 1,000 to 2,500 square feet and are
          leased on terms ranging from month-to-month to three years.


                                       3
<PAGE>


          Management believes that these facilities provide sufficient space to
          support its current activities, and that additional space will be
          available in the future as needed.

ITEM 3.   LEGAL PROCEEDINGS

          NONE

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

          There were no matters submitted to a vote of security holders during
          the year ended December 31, 1999.

                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          The Company's authorized capital stock consists of 10,000,000 shares
          of common stock, $.01 par value, of which 484,129 shares were
          outstanding and held of record by 17 stockholders as of December 31,
          1999. There is currently no public trading market for the Company's
          capital stock, and the Company does not expect such a market to
          develop in the foreseeable future. Holders of common stock have no
          preemptive or other rights to acquire stock or other securities of
          Taylor. Cumulative voting for directors is not permitted. Holders of
          common stock are entitled to one vote per share on matters submitted
          to a vote of stockholders. All shares of common stock presently
          outstanding are fully paid and non-assessable. The Company's Credit
          Agreement contains a covenant requiring the Company to obtain written
          approval for the declaration and payment of cash distributions.
          Distributions declared and paid in the future, if any, are subject to
          the discretion of the Board of Directors and will depend on the
          Company's earnings, financial condition, capital requirements, debt
          covenant limitations and other relevant factors. In addition, the
          Board of Directors is authorized to issue additional shares of common
          stock and to issue options and warrants for the purchase of such
          shares, the aggregate of which may not exceed the number of shares
          authorized by the Company's Articles of Incorporation.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

          The following analysis of the consolidated results of operations and
          financial condition of the Company should be read in conjunction with
          the Company's consolidated financial statements and notes thereto
          included elsewhere in this document.

          OVERVIEW

          LAND AND STRUCTURE SALES - The Company's principal business is the
          purchase, development and sale of previously undeveloped tracts of
          land.The Company identifies, acquires and develops raw land inventory
          through its Acquisition and Development departments. Financing for the
          acquisition and development of real estate is provided primarily by a
          network of financial institutions located in proximity to the
          Company's properties as well as by an asset-based credit facility (the
          "Credit Agreement"). On average, 75% of the purchase price of the
          acquired property is financed with loans from financial institutions,
          which are secured by mortgages on the acquired property. In addition,
          property sellers may also agree to provide financing for up to 70% of
          the purchase price.

          The Company records its inventory, which consists primarily of land
          held for sale, at the purchase price plus amounts expended for the
          acquisition, development and improvement of the land. The Company
          currently attempts to maintain its inventory at a level that, at any
          time, will meet its sales goals for the next twelve months. Inventory
          balances were $9.9 million and $11.5 million as of December 31, 1999
          and 1998, respectively.


                                       4
<PAGE>


          The Company occasionally contracts for the construction of shell homes
          on its Four Seasons lots. The Company may have between one and three
          structures in inventory, at any time, for each Four Seasons office.
          Structure inventory consists of structures that existed on a property
          at the time of acquisition and structures that the Company contracted
          to build. Structure sales also include the proceeds from the sale of
          townhomes in the Company's Alexandria, Minnesota project. The
          construction of condominiums and townhomes is subcontracted through
          independent builders.

          Revenues from the sale of developed lots, shell homes, townhomes and
          condominiums are recognized upon closing of the sale of the property
          and receipt of at least 10% of the purchase price.

          An environment of increased interest rates may adversely affect the
          Company's ability to successfully market and sell its properties.

          OTHER REVENUES - Other revenues consist primarily of interest income
          from the Company's financing operation. The Company records the
          finance receivables as contracts and mortgages receivable. Generally,
          mortgage loans on lots are originated for terms of up to ten years
          while loans on structures are offered for a maximum term of five
          years. The Company's underwriting parameters require a minimum down
          payment of 10%. Interest rates currently range from 10.25% to 12.25%
          depending principally on the amount of the down payment.
          Company-financed sales were 26.4% and 35.3% of sales for the years
          ended December 31, 1999 and 1998, respectively. The decrease in
          customer purchases financed by the Company is due to low interest
          rates throughout the year, resulting in more competitive financing
          programs available through banks and other lending institutions. The
          weighted average interest rate on outstanding contracts and mortgages
          receivable was approximately 11.1% and 11.6% as of December 31, 1999
          and 1998, respectively.

          Other revenues also include closing fee income the Company collects
          for each sale.

          COMPARISON OF THE YEARS ENDED DECEMBER 31, 1999 AND 1998

          The Company reported an 18.0% increase in sales for the year ended
          December 31, 1999 to $23.5 million, including sales of shell homes,
          condominiums, townhomes and timeshare sales of $1.4 million, or 6.0%
          of sales. For the same period in 1998, sales were $19.9 million,
          including $1.6 million in sales of shell homes, condominiums and
          townhomes, or 8.2% of sales. The overall sales increase is
          attributable to superior quality inventory, a strong real estate
          market and a dedicated sales staff.

          The following table sets forth the sales, cost of sales and gross
          profit information for the years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                1999           Land                   Structures                  Total
<S>                        <C>             <C>       <C>             <C>       <C>             <C>
          Sales            $22,104,045     100.0%    $ 1,414,393     100.0%    $23,518,438     100.0%
          Cost of sales     11,344,516      51.3%      1,403,366      99.2%     12,747,882      54.2%
                           -----------    ------     -----------    ------     -----------    ------
          Gross profit     $10,759,529      48.7%    $    11,027       0.8%    $10,770,556      45.8%

<CAPTION>
                1998           Land                   Structures                  Total

          Sales            $18,295,165     100.0%    $ 1,639,264     100.0%    $19,934,429     100.0%
          Cost of sales     10,269,115      56.1%      1,540,493      94.0%     11,809,608      59.2%
                           -----------    ------     -----------    ------     -----------    ------
          Gross profit     $ 8,026,050      43.9%    $    98,771       6.0%    $ 8,124,821      40.8%
</TABLE>

          For 1999, gross profit was $10.8 million or 45.8% of sales, compared
          to $8.1 million or 40.8% of sales for the same period in 1998. Gross
          profit margin from the sale of lots was 48.7% for 1999 and 43.9% in
          1998. In 1999, gross profit margin from the sale of structures (shell
          homes, condominiums, and townhomes) was 0.8%, while for the same
          period in 1998 gross profit margin from the sale of structures was
          6.0%. The increase in gross profit on land sales is principally due to
          the sale of superior


                                       5
<PAGE>


          quality inventory in 1999 and managements focus on controlling project
          related costs, compared to 1998. Offsetting this increase, the Company
          wrote down inventory by $294,480 and $137,781 in 1999 and 1998,
          respectively, to reflect its net realizable value.

          Other revenues increased to $1,455,166 in 1999, from $1,439,706 for
          the same period in 1998, which is the net result of closing fees
          increasing and interest income decreasing. Closing fees increased
          28.6% from the prior year, due to approximately $244,000 of
          commissions collected on sales of property owned by an unaffiliated
          company. Interest income decreased to $988,145 in 1999 from $1,086,340
          in 1998 as a result of a lower average balance of contracts and
          mortgages receivable.

          Selling, general and administrative expenses for 1999 were $8.0
          million or 33.8% of sales, compared to $6.0 million or 29.9% of sales
          for the same period in 1998. The increase in selling, general and
          administrative expense, as a percent of sales, is attributable to
          increased advertising costs to promote new or slow markets, a higher
          rate paid for sales commissions in 1999 and an new management
          incentive program.

          Interest expense of $1.2 million in 1999 decreased by 18.2% from $1.5
          million in 1998. The decrease in interest expense is due to a decrease
          in contracts and mortgages payable in 1999 from 1998.

          No income tax expense was recorded in 1999 due to the Company's
          conversion to an S-corporation, as of January 1, 1999. The effect of
          recognizing deferred tax assets and liabilities as a result of the
          conversion was not material to the financial statements. Income tax
          expense for the year ended December 31, 1998 was 40.0% of income
          before income taxes and was based on the Company's estimated annual
          income tax rate.

          LIQUIDITY AND CAPITAL RESOURCES

          OVERVIEW - The Company requires consistent access to capital to
          finance growth of its operations. Although the Company has generally
          operated profitably, its cash flow from operating activities alone has
          been, and is expected to continue to be, insufficient to fund the
          Company's capital needs for continued growth.

          The Company generates cash flow from operations as land inventory is
          sold unless the Company finances the sale and collections are made on
          its contracts and mortgages receivable. The Company's primary use of
          cash flow is for funding its ongoing acquisition of land and the
          subsequent customer mortgage financing. Secondarily, the Company uses
          cash to reduce the aggregate amount outstanding under its Credit
          Agreement and notes and mortgages payable. The following table sets
          forth the Company's net cash flows for operating, investing and
          financing activities for the years ended December 31, 1999 and 1998:

                                                       1999            1998
          Net cash provided by (used in):
             Operating activities                 $ 12,151,270     $ 7,094,849
             Investing activities                      (41,473)        (93,342)
             Financing activities                  (11,574,205)     (7,216,550)
                                                  ------------     -----------
             Net increase (decrease) in cash      $    535,592     $  (215,043)
                                                  ============     ===========

          Cash provided by operating activities totaled $12,151,270 in 1999 and
          $7,094,849 in 1998. Cash used for investing and financing activities
          in 1999 consisted primarily of principal payments on notes, contracts,
          mortgages payable and subordinated debt of $10.0 million and dividend
          payments to shareholders of $1,549,212. Cash used for investing and
          financing activities in 1998 consisted primarily of principal payments
          on notes, contracts, and mortgages payable of $6.9 million and a
          dividend payment to shareholders of $300,160.


                                       6
<PAGE>


          FINANCING SOURCES - The Company's financing sources consist of
          short-term financing under its Credit Agreement, seller financing,
          financing from a network of commercial banks, and sales of contracts
          and mortgages receivable. Permanent financing has been obtained
          through the issuance of $4.0 million of Senior Subordinated Debt. The
          source of repayment for the Company's working capital financing is the
          sale of lots and the receipt of payment on contracts and mortgages
          receivables. As a lot is sold, a portion of the proceeds is used to
          pay down the respective financing. On average, the Company finances
          75% of the cost of land acquisitions and development. As a result, the
          loan is usually paid in full when approximately 70% of the lots in a
          development are sold. Payments received by the Company on customer
          contracts or mortgages receivable are applied to the outstanding
          balance under its Credit Agreement. The following table sets forth the
          Company's sources of financing and the amount of such financing at
          December 31, 1999 and 1998.

          SOURCES OF FINANCING

<TABLE>
<CAPTION>
                                                 1999       Percentage         1998       Percentage
<S>                                          <C>              <C>          <C>                 <C>
          Lines of credit                    $  3,797,508        31.0%     $  5,820,433        37.0%
          Notes payable (1)                     4,725,779        38.6         5,888,508        37.4
          Contracts and mortgages payable          46,041         0.4           207,433         1.3
          Senior subordinated debt              3,680,000        30.0         3,832,000        24.3
                                             ------------     -------      ------------     -------
            Total debt                       $ 12,249,328       100.0%     $ 15,748,374       100.0%
                                             ============     =======      ============     =======
</TABLE>

          --------------------------
          (1)  Notes payable includes the real estate line of credit in the
               amounts of $1,606,429 and $2,440,408 as of December 31, 1999 and
               1998, respectively.

          "CREDIT AGREEMENT" - The Company began its borrowing relationship in
          1986 and may currently borrow a total aggregate of up to $10.0 million
          under the Credit Agreement which includes the following four lines of
          credit:


          DESCRIPTION OF LINES OF CREDIT

<TABLE>
<CAPTION>
                                                                                    Balance
                                                                 Amount of     Outstanding as of
                                                                  Line(1)      December 31, 1999
<S>                                                             <C>               <C>
          Mortgages and Contracts Receivable                    $10,000,000       $  3,772,143
          Real Estate Mortgage                                    3,500,000          1,606,429
          Project                                                 1,000,000             25,365
          Interim Financing                                       2,250,000                  0
                                                                                  ------------
                                                                                  $  5,403,937
                                                                                  ============
</TABLE>

          --------------------------
          (1)  These totals are the maximum principal amounts that may be
               outstanding under each of the lines of credit; however, the
               maximum aggregate principal amount outstanding under all of the
               lines of credit cannot exceed $10.0 million.

          The amounts borrowed by the Company under the Mortgages and Contracts
          Receivable line of credit are at the discretion of the lender, are
          based on 90% of eligible contracts receivable, and are to be used to
          finance the development of properties. Borrowings under this credit
          line bear interest at the greater of 8.0% or the lender's base rate
          plus 1.0% (9.50% as of December 31, 1999). The lender's base rate is
          equal to the interest rate publicly announced by National City Bank of
          Minneapolis from time to time as its "Base" rate.


                                       7
<PAGE>


          The Company also may borrow up to $3,500,000 under the Real Estate
          Mortgage line of credit based on 90% of the purchase price of the real
          estate plus 80% of eligible development costs. Funds obtained by the
          Company under the Real Estate Mortgage credit line are to be used to
          purchase real estate pending development or sale. The Project line of
          credit of $1,000,000 is to be used to finance project development
          costs and the purchase of real estate in connection with a project in
          northern Minnesota. The assets of the project secure this line of
          credit. Borrowings of up to $2,250,000 under the Interim Financing
          line are available to the Company at the discretion of the lender to
          cover demand overages on the other lines of credit. Borrowings under
          the Real Estate Mortgage, Project and Interim Financing lines of
          credit bear interest at a rate equal to 1.5% over the lender's base
          rate.

          All amounts borrowed by the Company under the Credit Agreement are due
          April 30, 2001 under an amendment to the Credit Agreement that changed
          the structure of the Agreement to a Committed Line. All funds advanced
          by the lender under the Credit Agreement are collateralized by an
          assignment by the Company of first mortgages, contracts for deed,
          security interests, or other rights or property interests acquired by
          the Company in connection with specific property development projects
          and a security interest in virtually all of the Company's assets. In
          addition, the Credit Agreement also contains a number of restrictive
          covenants and is personally guaranteed by the Company's president,
          Philip C. Taylor.

          NETWORK BANKS - Another recurring source of capital is a network of
          community banks, the majority of which Taylor has been utilizing as
          financing sources since the mid-1980s. These financial institutions,
          which are typically in proximity to the land being purchased, provide
          loans that are secured by a first mortgage on the land. Interest
          payments are made monthly and generally payments are made as the
          individual lots are sold. The Company's borrowings through the network
          of banks are shown as "Notes payable" in the table entitled "Sources
          of Financing."

          SELLER FINANCING - Seller financing or mortgages payable are
          equivalent to accounts payable that are due on resale and result from
          the Company's ordinary course of business. When the Company decides to
          acquire a parcel of land, the first source of financing it attempts to
          secure is financing from the seller. Seller financing typically
          consists of a purchase agreement evidencing the sale and outlining the
          terms of payment. The Company makes interest and principal payments on
          a scheduled amortization which varies by transaction, but which in no
          event extends beyond the sale of the property. The Company's use of
          seller financing is shown as "Mortgages payable" in the table entitled
          "Sources of Financing."

          SENIOR SUBORDINATED DEBT - In April 1994, the Company issued $1.0
          million of Senior Subordinated Notes, Series 1994 pursuant to Rule 504
          of Regulation D under the Securities Act of 1933, as amended. The
          proceeds were initially used to pay down existing debt. Ultimately the
          funds were used to acquire additional inventory. The Company issued an
          additional $3.0 million of Senior Subordinated Debt pursuant to a
          Registration Statement on Form SB-2, which became effective January
          12, 1995. The proceeds of this offering were used to reduce existing
          debt, finance inventory, fund customer mortgage financing and open new
          offices during 1995.

          SALES OF CONTRACTS AND MORTGAGES RECEIVABLE - The general level of
          stability in its contracts and mortgages receivable portfolio has
          provided the Company with the opportunity to sell portfolios of
          receivables to raise cash when needed and to take advantage of
          positive interest rate spreads. Depending on the current interest
          rates, the sale can be at a discount or premium to par. The typical
          structure involves the Company selling the rights to payment on the
          contracts and mortgages with recourse, and also requires a small
          percentage of the sales price, approximately 5%, to be "held-back" and
          subsequently paid to the Company as the portfolio is paid down. In
          order to obtain more favorable pricing, the Company may retain
          servicing rights or grant put options to the purchasers in connection
          with the receivables sold. The put options typically require the
          Company to repurchase, at the option of the purchaser, the balance of
          the receivables within 60 days of the five-year anniversary of the
          sale. The sale of receivables with put options is accounted for as a
          financing transaction in the Company's


                                       8
<PAGE>


          consolidated financial statements. Future sales of contracts and
          mortgages receivable will depend on the Company's cash needs and
          prevailing interest rates.

          Put options were granted to three purchasers in 1991 on an initial
          aggregate amount of $1.4 million in contracts and mortgages receivable
          and in the amount of $5,613,167 in 1996. As of December 31, 1999,
          $956,947 in contracts and mortgages receivable were outstanding with
          recourse, all of which had put options. Based on the scheduled
          amortization of these balances, the Company's potential liability, if
          the put features are exercised, is approximately zero in 2000 and
          2001, and $488,129 in 2002. Should all of the put options be
          exercised, the Company would use amounts available under its Credit
          Agreement to repurchase the contracts and mortgages receivable.

          The following table lists as of December 31, 1999, and 1998 the
          balance of the Company's contracts and mortgages receivable
          outstanding, the amount of the portfolio 90 days past due, average
          portfolio term and weighted average interest rate. The table also sets
          forth the amounts foreclosed and the contracts and mortgages sold
          during the years ended December 31, 1999 and 1998.

                                                            1999          1998
          Contracts and mortgages receivable:
             Balance outstanding                        $8,694,934    $9,365,257
                Amount 90 days past due                    269,871       294,827
                Percentage of Balance                        3.10%         3.15%
             Amount foreclosed during period               302,164       111,960
                Percentage of balance                        3.48%         1.20%
          Average portfolio term                           4 years       6 years
          Weighted average interest rate                     11.1%         11.6%

          At December 31, 1999, contracts and mortgages receivable outstanding
          were approximately $8.7 million, had an average remaining term of
          approximately four years, and carried a weighted average interest rate
          of 11.1%. Approximately 3% of the balance was over 90 days past due.
          The Company works aggressively and closely with its customers as soon
          as an account becomes overdue to attempt to avoid default and
          foreclosure. After the Company begins collection proceedings, most
          accounts are eventually made current and the Company receives full
          payment. On occasion, the Company must cancel the contract and begin
          foreclosure proceedings. During 1999, there were approximately
          $302,164 in contract and mortgage receivable balances where the
          foreclosure process was complete, and an additional $54,453 were in
          the process of foreclosure. Subsequent to a completed foreclosure, the
          Company returns the underlying property to inventory and begins
          re-marketing the lot. Properties that are foreclosed upon and returned
          to inventory are generally resold at a profit.

          Based on expected cash generated from operations in 2000 and the above
          available financing resources, management believes it has adequate
          sources of funds to finance its 2000 cash requirements.

          NEW ACCOUNTING STANDARDS - In June 1998 the Financial Accounting
          Stantards Board (FASB) issued Statement of Financial Accounting
          Standards (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
          HEDGING ACTIVITIES, which will be effective for the Company beginning
          January1, 2001. SFAS No. 133 requires companies to record derivative
          instruments on the balance sheet at fair market value and recognize
          fluctuations in fair value either in earnings or as a component of
          other comprehensive income, depending on the nature of the derivative
          instrument. Although the Company expects that this standard will not
          materially affect its financial position and results of operations, it
          has not yet determined the impact of this standard on its financial
          statements.

          EFFECT OF INTEREST RATE ENVIRONMENT - The Company believes it can
          protect itself from sustained high interest rates by selling its
          contracts and mortgages receivable portfolio and increasing the rates
          it charges to customers who utilize Company financing, or by incurring
          fixed rate debt. Such increases in


                                       9
<PAGE>


          rates would, however, have an adverse impact on the Company's cost of
          carrying inventory. The Company believes the best defense against
          rising interest rates is to buy only the best property, which should
          remain in high demand. However, sustained increases in interest rates
          could impact future sales levels. If demand for product was to decline
          for an extended period of time, the Company believes it could minimize
          the impact by reducing the sales price of the product to stimulate
          sales and would discontinue purchasing properties until the level of
          inventory more closely matched customer demand.

          YEAR-2000 ISSUE - As with other organizations, some of the Company's
          computer programs were originally designed to recognize calendar years
          by their last two digits. Calculations performed using these truncated
          fields may not work properly with dates from the year 2000 and beyond.

          The Company implemented new computer systems in all areas of
          operations that corrected this situation. The new software and
          hardware systems have been purchased since the year-2000 issue has
          been exposed, and all sellers assured the Company, in writing, that
          their product was year-2000 compliant. The costs associated with the
          year-2000 issue totaled approximately $360,000. This cost is composed,
          primarily, of new computer hardware and new financial accounting
          software, which have been capitalized in the Company's financial
          statements.

          Overall, the Company was well prepared for the year-2000 issue and
          took actions that minimized the risk of system failure or corruption.
          There were no failures with any software or hardware. Also, there were
          no reports of failures or problems with third-party creditors or any
          other service providers.

          SAFE HARBOR DISCLOSURE - Various forms filed by the Company with the
          Securities and Exchange Commission, including the Company's Form
          10-KSB and Form 10-QSB, and other written documents and oral
          statements released by the Company, may contain forward-looking
          statements. Forward-looking statements generally use words such as
          "expect," "anticipate," "believe," "project," "should," "estimate,"
          and similar expressions, and reflect the Company's expectations
          concerning the future. Such statements are based upon currently
          available information, but various risks and uncertainties may cause
          the Company's actual results to differ materially from those expressed
          in these statements. Among the factors which management believes could
          affect the Company's operating results are the following:

          *    Changing economic conditions, including economic downturns or
               recessions;
          *    The ability of the Company to maintain and enhance its market
               position relative to its competitors, realize productivity, and
               continue to control expenses;
          *    The availability of suitable tracts of undeveloped land in
               proximity to the marketplace;
          *    Changes in zoning and subdivision regulations;
          *    The availability and cost of financing; and
          *    Continuity of management.


                                       10
<PAGE>


ITEM 7.   FINANCIAL STATEMENTS

          Independent Auditors' Report........................................12

          Consolidated Balance Sheets.........................................13

          Consolidated Statements of Income...................................14

          Consolidated Statements of Stockholders' Equity.....................15

          Consolidated Statements of Cash Flows...............................16

          Notes to Consolidated Financial Statements..........................17


                                       11
<PAGE>


INDEPENDENT AUDITORS' REPORT


Board of Directors
Taylor Investment Corporation
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Taylor
Investment Corporation and Subsidiaries (the Company) as of December 31, 1999
and 1998 and the related consolidated statements of income, stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Taylor Investment Corporation and
Subsidiaries at December 31, 1999 and 1998 and the results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles.


DELOITTE & TOUCHE LLP

March 1, 2000
Minneapolis, Minnesota


                                       12
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       1999            1998
<S>                                                               <C>             <C>
ASSETS

INVENTORY - Principally land held for sale                        $  9,938,693    $ 11,469,212

CONTRACTS AND MORTGAGES RECEIVABLE                                   8,694,934       9,365,257

INVESTMENT IN JOINT VENTURE                                              6,713          11,060

OTHER ASSETS:
   Cash                                                                969,309         433,717
   Note receivable from officer                                              0         225,000
   Tax increment financing receivable                                  568,977         631,373
   Other receivables                                                   252,511         102,220
   Prepaid expenses and earnest money deposits                         342,602         161,987
   Funds held by trustee                                                40,500          37,500
   Land, buildings, and equipment, less accumulated
      depreciation of $869,594 and 659,310, respectively               399,474         504,930
   Loan acquisition and debt issuance costs, less accumulated
      amortization of $332,480 and $284,472, respectively              291,470         351,819
                                                                  ------------    ------------
            Total other assets                                       2,864,843       2,448,546
                                                                  ------------    ------------
                                                                  $ 21,505,183    $ 23,294,075
                                                                  ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LINES OF CREDIT                                                   $  3,797,508    $  5,820,433

NOTES PAYABLE                                                        4,725,779       5,888,508

CONTRACTS AND MORTGAGES PAYABLE                                         46,041         207,433

SENIOR SUBORDINATED DEBT                                             3,680,000       3,832,000

OTHER LIABILITIES:
   Accounts payable                                                    365,619         147,077
   Accrued liabilities                                                 925,259         481,197
   Income taxes payable                                                      0         241,664
   Deposits on land sales and purchase agreements                       47,615          34,358
                                                                  ------------    ------------
            Total other liabilities                                  1,338,493         904,296

DEFERRED INCOME TAXES                                                  374,032         608,023

COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)

STOCKHOLDERS' EQUITY:
   Common stock, $.01 par value; 10,000,000 shares authorized;
      484,129 shares issued and outstanding                              4,841           4,841
   Additional paid-in capital                                          740,136         740,136
   Retained earnings                                                 6,798,353       5,288,405
                                                                  ------------    ------------
            Total stockholders' equity                               7,543,330       6,033,382
                                                                  ------------    ------------
                                                                  $ 21,505,183    $ 23,294,075
                                                                  ============    ============
</TABLE>


See notes to consolidated financial statements.


                                       13
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   1999           1998
<S>                                                           <C>             <C>
REVENUES:
   Sales                                                      $ 23,518,438    $ 19,934,429
   Interest income on contracts receivable                         988,145       1,086,340
   Equity in earnings of 50% owned subsidiary and
      joint venture                                                 57,653          34,415
   Other revenue                                                   409,368         318,321
                                                              ------------    ------------
            Total revenue                                       24,973,604      21,373,505

COSTS AND EXPENSES:
   Cost of sales                                                12,453,402      11,671,827
   Reduction of inventory to net realizable value (Note 1)         294,480         137,781
   Selling, general, and administrative                          7,953,939       5,959,479
   Interest                                                      1,212,623       1,481,843
                                                              ------------    ------------
            Total costs and expenses                            21,914,444      19,250,930
                                                              ------------    ------------

INCOME BEFORE INCOME TAXES                                       3,059,160       2,122,575

INCOME TAX EXPENSE                                                       0         849,230
                                                              ------------    ------------

NET INCOME                                                    $  3,059,160    $  1,273,345
                                                              ============    ============

NET INCOME PER COMMON SHARE OUTSTANDING                       $       6.32    $       2.63
                                                              ============    ============

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                        484,129         484,129
                                                              ============    ============
</TABLE>


See notes to consolidated financial statements.


                                       14
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                           Common Stock             Additional
                                 -----------------------------        Paid-in        Retained
                                    Shares           Amount           Capital        Earnings          Total
<S>                              <C>              <C>              <C>             <C>             <C>
BALANCES AT DECEMBER 31, 1997         484,129     $      4,841     $    740,136    $  4,315,220    $  5,060,197

   Dividends paid                                                                      (300,160)       (300,160)
   Net income                                                                         1,273,345       1,273,345
                                 ------------     ------------     ------------    ------------    ------------

BALANCES AT DECEMBER 31, 1998         484,129            4,841          740,136       5,288,405       6,033,382

   Dividends paid                                                                    (1,549,212)     (1,549,212)
   Net income                                                                         3,059,160       3,059,160
                                 ------------     ------------     ------------    ------------    ------------

BALANCES AT DECEMBER 31, 1999         484,129     $      4,841     $    740,136    $  6,798,353    $  7,543,330
                                 ============     ============     ============    ============    ============
</TABLE>


See notes to consolidated financial statements.


                                       15
<PAGE>


TAYLOR INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          1999             1998
<S>                                                                   <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                         $  3,059,160     $  1,273,345
   Adjustments to reconcile net income to net cash provided by
         operating activities:
      Depreciation and amortization                                        326,267          329,951
      (Gain) Loss on sale of assets                                         (4,613)         120,842
      Deferred income taxes                                               (233,991)        (936,685)
      Equity in earnings of 50% owned subsidiary and joint venture         (57,653)         (34,415)
      Contracts and mortgages receivable funded                         (5,293,516)      (5,743,480)
      Payments on contracts and mortgages receivable                     5,963,839        5,473,222
      Decrease in inventory - land held for sale                         8,001,090        6,069,886
      Decrease in other receivables                                        137,105           76,209
      Decrease in income taxes receivable                                        0          314,296
      (Decrease) Increase in income taxes payable                         (241,664)         241,664
      Increase in prepaid expenses                                        (180,615)         (25,504)
      Increase (decrease) in accounts payable                              218,542         (204,830)
      Increase in accrued liabilities                                      444,062          131,562
      Increase in deposits on land sales and purchase agreements            13,257            8,786
                                                                      ------------     ------------
         Total adjustments to net income                                 9,092,110        5,821,504
                                                                      ------------     ------------
            Net cash provided by operating activities                   12,151,270        7,094,849

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of land, buildings, and equipment                             (110,473)        (148,742)
   Proceeds from sale of land, buildings, and equipment                     10,000            8,900
   Proceeds from distribution of joint venture                              62,000           84,000
   Increase in funds held by trustee                                        (3,000)         (37,500)
                                                                      ------------     ------------
            Net cash used in investing activities                          (41,473)         (93,342)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net payments on lines of credit                                      (2,022,925)        (111,792)
   Repayment of notes, contracts, and mortgage payables                 (7,819,844)      (6,646,598)
   Loan acquisition costs                                                  (30,224)               0
   Repayment of senior subordinated debt                                  (152,000)        (158,000)
   Dividends paid                                                       (1,549,212)        (300,160)
                                                                      ------------     ------------
            Net cash used in financing activities                      (11,574,205)      (7,216,550)
                                                                      ------------     ------------

INCREASE (DECREASE) IN CASH                                                535,592         (215,043)

CASH AT BEGINNING OF YEAR                                                  433,717          648,760
                                                                      ------------     ------------

CASH AT END OF YEAR                                                   $    969,309     $    433,717
                                                                      ============     ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for:
      Interest                                                        $  1,420,261     $  1,524,263
                                                                      ============     ============
      Income taxes                                                    $    507,619     $  1,392,293
                                                                      ============     ============
   Non-cash financing activity - inventory and equipment
      purchased with notes and contracts payable                      $  6,495,723     $  5,307,214
                                                                      ============     ============
</TABLE>


See notes to consolidated financial statements.


                                       16
<PAGE>


TAYLOR INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION AND PRINCIPLES OF CONSOLIDATION - Taylor Investment
     Corporation (the Company) is a Minnesota corporation organized in 1979
     which is engaged in land development activities. The Company owns 100% of
     Four Seasons Realty of Minnesota, Inc. (FSM), Four Seasons Realty of
     Wisconsin, Inc. (FSW), and Laurentian Development Corporation. FSM and FSW
     are engaged in the sale of recreational property while Laurentian
     Development Corporation is engaged in both the development and sale of
     recreational property. The Company also owns 100% of Four Seasons Realty of
     Michigan, Inc., which was inactive in 1999 and 1998.

     The consolidated financial statements include the accounts of the Company
     and its subsidiaries. All significant intercompany accounts and
     transactions have been eliminated.

     INVENTORY - PRINCIPALLY LAND HELD FOR SALE - Land held for sale is recorded
     at the purchase price plus amounts expended for development and improvement
     of the land but not at a price more than its net realizable value. Property
     sold and subsequently repossessed under the terms of a defaulted sales
     contract is recorded at the lower of the remaining unpaid contract balance
     or the net realizable value of the property.

     Total costs of a development are allocated to individual lots on the basis
     of the estimated selling price of each lot, as a percentage of the total
     estimated gross selling price of the entire development. In addition,
     development costs are allocated to individual lots for the purpose of
     recording cost of sales.

     Interest is capitalized on all projects during the development stage.
     Interest capitalized into inventory was $179,229 and $36,897 in 1999 and
     1998, respectively.

     During each period, the Company provides for identified, unsalable, and
     slow-moving inventory. As a result of a review of the carrying amount of
     this inventory, the Company determined that reductions in the carrying
     value of land inventories of $294,480 and $137,781 in 1999 and 1998,
     respectively, were necessary to reduce this inventory to net realizable
     value.

     LAND, BUILDING, AND EQUIPMENT - Depreciation of buildings and equipment is
     computed principally using the straight-line method on the cost of the
     assets, less allowance for salvage value where appropriate, based on their
     estimated useful lives, which range from three to thirty years.

     Land, buildings, and equipment consist of the following at December 31:

                                                       1999             1998
     Land                                          $     11,022     $     11,022
     Buildings and improvements                          70,104           63,904
     Equipment                                        1,187,942        1,089,314
                                                   ------------     ------------
                                                      1,269,068        1,164,240
     Less accumulated depreciation                      869,594          659,310
                                                   ------------     ------------
     Land, buildings, and equipment, net           $    399,474     $    504,930
                                                   ============     ============


                                       17
<PAGE>

     Included in land, buildings, and equipment at December 31, 1999 are assets
     under capital lease of $32,202 and associated accumulated depreciation of
     $12,711.

     LOAN ACQUISITION AND DEBT ISSUANCE COSTS - Such costs are amortized over
     the term of the related loan using the straight-line method.

     REVENUE RECOGNITION - The Company recognizes revenue when a sale has closed
     and the buyer's cumulative down payment, principal, and interest paid total
     at least 10% of the sale price. Until 10% of the sale price is received, no
     revenue is recognized and all payments received are recorded as a current
     liability in the consolidated balance sheets under the caption "deposits on
     land sales and purchase agreements." During 1999 and 1998, down payments on
     sales financed by the Company averaged 15% and 18% of the sale price,
     respectively.

     EARNINGS PER COMMON SHARE (EPS) - As the Company has no dilutive items that
     would require disclosure of diluted EPS, the Company calculates basic EPS
     as net income or loss divided by the weighted average number of common
     shares outstanding during the year.

     INVESTMENT IN JOINT VENTURE - The Company owns 50% of a limited liability
     corporation, which was formed to acquire and develop specific plots of
     land. The Company accounts for its investment using the equity method of
     accounting.

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

     EFFECT OF INTEREST RATE ENVIRONMENT - The Company protects itself from
     sustained high interest rates by selling its contracts and mortgages
     receivable portfolio and increasing the rates it charges to customers who
     utilize Company financing, or by incurring fixed rate debt. Such increases
     in rates would, however, have an adverse impact on the Company's cost of
     carrying inventory. The Company believes the best defense against rising
     interest rates is to buy only the best property, which should remain in
     high demand. Sustained increases in interest rates could, however, impact
     future sales levels if demand for product was to decline for an extended
     period of time. The Company believes it could minimize the impact by
     reducing the sales price of the product to stimulate sales and would
     discontinue purchasing properties until the level of inventory more closely
     matched customer demand.

     FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of contracts and
     mortgages receivable, note receivable from officer, lines of credit, notes
     payable, and contracts and mortgages payable are reasonable estimates of
     the fair value of these financial instruments based on the short-term
     nature of these instruments and, if applicable, the interest rates of these
     financial instruments. The fair value of the senior subordinated debt is
     estimated to be $3,620,000 and $3,742,000 at December 31, 1999 and 1998,
     respectively.

     IMPAIRMENT OF LONG-LIVED ASSETS - The Company periodically reviews the
     carrying amounts of all its long-lived assets and identifiable intangibles
     based on expected future cash flows from the use of those assets.


                                       18
<PAGE>


     NEW ACCOUNTING STANDARDS -In June 1998 the Financial Accounting Standards
     Board (FASB) issued Statement of Financial Account Standards (SFAS) No.
     133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES which
     will be effective for the Company beginning January 1, 2001. SFAS No. 133
     requires companies to record derivative instruments on the balance sheet at
     fair market value and recognize fluctuations in fair value either in
     earnings or as a component of other comprehensive income, depending on the
     nature of the derivative instrument. Although the Company expects that this
     standard will not materially affect its financial position and results of
     operations, it has not yet determined the impact of this standard on its
     financial statements.

2.   CONTRACTS AND MORTGAGES RECEIVABLE

     Contracts and mortgages receivable result from the sale of land or land and
     cabins. Generally, the receivables are collected in monthly installments,
     including interest, over ten years for land sales and over five years for
     land and property structure sales. The Company also has certain mortgage
     receivables which are amortized over eight years for land sales and ten
     years for property structure sales, with a balloon payment for the
     remaining unpaid principal at the end of four years. At December 31, 1999,
     the weighted average maturity of contracts and mortgages receivable was
     approximately four years, and the weighted average interest rate on
     outstanding contracts and mortgages receivable was approximately 11.1% and
     11.6% as of December 31, 1999 and 1998, respectively.

     Maturities of contracts and mortgages receivable at December 31, 1999 are
     as follows:

<TABLE>
<S>                                                                        <C>
     Year ending December 31:
     2000                                                                  $  1,993,167
     2001                                                                       885,180
     2002                                                                     1,007,944
     2003                                                                       965,770
     2004                                                                       961,338
     Thereafter                                                               2,978,244
                                                                           ------------
                                                                              8,791,643
     Less allowance for uncollectable contracts and mortgages receivable         96,709
                                                                           ------------
                                                                           $  8,694,934
                                                                           ============
</TABLE>

3.   TAX INCREMENT FINANCING RECEIVABLES

     Several taxing authorities have established tax increment financing
     districts whereby the Company will be reimbursed for costs incurred in the
     development of community infrastructure to the extent the community
     improvements and related development increase property taxes collected by
     the taxing authority. The Company recognizes these receivables, which are
     generally non-interest bearing, upon the sale of the developed property or
     upon the completion of the structure by the owner. Estimated amounts
     receivable under these agreements were $568,977 and $631,373 at December
     31, 1999 and 1998, respectively. Estimated maturity of these receivables at
     December 31, 1999 is as follows:


                                       19
<PAGE>


     Year ending December 31:
     2000                                                            $    97,057
     2001                                                                 97,612
     2002                                                                 98,173
     2003                                                                 98,738
     2004                                                                 88,363
     Thereafter                                                          718,940
                                                                     -----------
                                                                       1,198,883
     Less imputed interest at 10%                                        629,906
                                                                     -----------
             Net receivable                                          $   568,977
                                                                     ===========

4.   LINES OF CREDIT

     The Company has a credit agreement that provides for total borrowings of up
     to $10,000,000 at the discretion of the lender and is due April 30, 2001.
     The credit agreement provides for various lines of credit. Total borrowings
     outstanding under the credit agreement are secured by virtually all of the
     Company's assets and are guaranteed by the president of the Company. The
     credit agreement contains certain restrictive covenants, including such
     items as maintenance of minimum net worth (as defined), and limitation of
     capital expenditures. The Company was in compliance with these financial
     covenants in the credit agreement at December 31, 1999 and 1998.

     At December 31, 1999 and 1998, the Company had borrowings outstanding of
     $3,772,143 and $5,777,068, respectively, under the line of credit based on
     90% of eligible contracts receivable. In addition, the Company may borrow
     up to $3,500,000 for real estate purchases. The real estate borrowings are
     at the discretion of the lender based on 90% of the purchase price of the
     real estate plus 80% of eligible development costs. At December 31, 1999
     and 1998, the Company had borrowings of $1,606,429 and $2,440,408,
     respectively, which are included in real estate notes payable (see Note 5).
     Borrowings under the line of credit bear interest at the greater of 8% or
     the lender's "base" rate plus 1.0% (9.50% and 8.75% at December 31, 1999
     and 1998, respectively). Borrowings under the real estate loan facility
     bear interest at the greater of 8% or the lender's "base" rate plus 1.5%
     (10.00% and 9.25% at December 31, 1999 and 1998, respectively). The "base"
     rate is equal to the interest rate publicly announced by National City Bank
     of Minneapolis from time to time as its "base" rate. At December 31, 1999
     the Company has unused availability of $1,738,952 under the credit
     agreements and real estate loan facility.

     Also, under the credit agreement, the Company has a $1,000,000 line to
     support financing of a major project. Borrowings under the project line
     bear interest at the lender's "base" rate plus 1.5% (10.00% and 9.25% at
     December 31, 1999 and 1998, respectively). Borrowings under the project
     line outstanding at December 31, 1999 and 1998 were $25,365 and $43,365,
     respectively, and are secured by a mortgage on the major project.

     The credit agreement also provides the Company an over-line up to
     $2,250,000 at the discretion of the lender. Borrowings under the over-line
     facility at December 31, 1999 and 1998 were zero. Borrowings bear interest
     at the lender's "base" rate plus 1.5% (10.00% and 9.25% at December 31,
     1999 and 1998, respectively).


                                       20
<PAGE>


5.   NOTES PAYABLE

     Notes payable consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                        1999            1998
<S>                                                                 <C>             <C>
     Fixed rate notes payable, due through 2005 at
         various rates of interest ranging from 2.77% to 13.50%     $ 2,368,672     $ 2,526,229
     Real estate notes payable, due through 2001
         at various rates of interest ranging from prime to
         prime plus 1.5%                                               2,357,107      3,362,279
                                                                    ------------    -----------
                                                                    $  4,725,779    $ 5,888,508
                                                                    ============    ===========
</TABLE>

     At December 31, 1999, notes payable was secured by certain land held for
     sale, contracts and mortgages receivable, and equipment. The president of
     the Company personally guarantees the notes payable.

     Maturity requirements on notes payable at December 31, 1999 are as follows:

     Years ending December 31:
     2000                                                            $ 3,177,755
     2001                                                              1,036,366
     2002                                                                181,380
     2003                                                                134,226
     2004                                                                111,731
     Thereafter                                                           84,321
                                                                     -----------
                                                                     $ 4,725,779
                                                                     ===========

6.   CONTRACTS AND MORTGAGES PAYABLE

     The Company has entered into contracts for deed and mortgages for the
     purchase of land. At December 31, 1999, the agreements provide for interest
     rates from 3.0% to 7.5% and maturity dates through 2005. The contracts and
     mortgages payable are secured by land held for sale and land which has been
     sold and the related contracts receivable.

     Maturity requirements on the contracts and mortgages payable at December
     31, 1999 are as follows:

     Years ending December 31:
     2000                                                            $    11,348
     2001                                                                 12,047
     2002                                                                 12,793
     2003                                                                  3,705
     2004                                                                  3,816
     Thereafter                                                            2,332
                                                                     -----------
                                                                     $    46,041
                                                                     ===========


                                       21
<PAGE>


7.   SENIOR SUBORDINATED DEBT

     The Company has $680,000 in senior subordinated notes outstanding which
     bear interest at 8% to 10% and are unsecured. In addition, the Company has
     $3,000,000 of senior subordinated debt that bears interest at 11% to 12%
     and is unsecured. These notes contain certain restrictive covenants (as
     defined), including such items as maintenance of minimum net worth,
     limitation of dividend payments, maximum debt to equity ratio, and other
     financial ratios. At December 31, 1999, principal maturities of senior
     subordinated debt are as follows:

     Years ending December 31:
     2000                                                            $   166,000
     2001                                                                780,000
     2002                                                                774,000
     2003                                                                760,000
     2004                                                                600,000
     Thereafter                                                          600,000
                                                                     -----------
                                                                     $ 3,680,000
                                                                     ===========

8.   COMMITMENTS AND CONTINGENCIES

     The Company has sold certain contracts receivable to financial institutions
     under recourse sales agreements. In the event of default under these
     contracts receivable, the Company is required to pay the outstanding
     balance of the contract, whereupon the Company will reacquire title to the
     underlying land. Put options that typically require the Company to
     repurchase, at the option of the purchaser, the balance of the receivables
     within 60 days of the five-year anniversary of the sale, were also granted
     for these contracts receivable. At December 31, 1999 and 1998, the balance
     on contracts and mortgages receivable under such recourse sales agreements
     was approximately $956,947 and $1,571,638, respectively. Based on the
     scheduled amortization of these balances, the Company's potential
     liability, if the put features are exercised, is approximately zero in 2000
     and 2001 and $488,129 in 2002. Should all of the put options be exercised,
     the Company would use amounts available under its Credit Agreement to
     repurchase the contracts and mortgages receivable.

9.   OPERATING LEASES

     The Company has entered into non-cancelable leases for office space.
     Estimated payments under these lease agreements at December 31, 1999 are
     approximately as follows:

     Years ending December 31:
     2000                                                            $   187,455
     2001                                                                139,800
     2002                                                                 25,300
                                                                     -----------
                                                                     $   352,555
                                                                     ===========

     Total rental expense for all operating leases was approximately $230,000
     and $180,000 for the years ended December 31, 1999 and 1998, respectively.


                                       22
<PAGE>


10.  INCOME TAXES

     In January 1999, the Company filed with the Internal Revenue Service and
     obtained status as a Subchapter S-Corporation. Accordingly, taxable income
     from operations is allocated to the individual shareholders with no income
     tax expense recorded in the financial statements. The Company will continue
     to pay "built-in-gain" taxes related to deferred tax liabilities existing
     at December 31, 1998 for installment sales, until all installments of such
     sales have been received. The recognition of all other deferred tax assets
     and liabilities had no effect on income in 1999.

     The following summarizes the provision for income taxes for the year ended
     December 31, 1998:

     Current:
         Federal                                                    $   863,997
         State                                                          216,602
                                                                    -----------
             Total current                                            1,080,599

     Deferred:
         Federal                                                       (216,303)
         State                                                          (15,066)
                                                                    ------------
             Total deferred                                            (231,369)
                                                                    -----------
                                                                    $   849,230
                                                                    ===========

     Deferred income taxes are recognized for the tax consequences in future
     years of differences between the tax bases of assets and liabilities and
     their financial reporting amounts at each year-end based on enacted tax
     law and statutory tax rates applicable to the periods in which the
     differences are expected to affect taxable income. The Company's deferred
     tax liability at December 31, 1999 of $374,032 consists entirely of
     "built-in-gains" on installment sales.

     The tax effect of significant items comprising the Company's net deferred
     tax liability as of December 31, 1998 is as follows:

                                           Deferred Tax
                                   ----------------------------
                                       Asset        Liability         Total

     Inventory capitalization      $     17,035                    $     17,035
     Allowance reserves                  42,409                          42,409
     Installment sales                             $   (618,251)       (618,251)
     Accelerated depreciation                           (33,789)        (33,789)
     Other                                              (15,427)        (15,427)
                                   ------------    ------------    ------------
                                   $     59,444    $   (667,467)   $   (608,023)
                                   ============    ============    ============


                                       23
<PAGE>


     The provision for income taxes differs from the amounts computed by
     applying the federal statutory rate to income before income taxes for the
     year ended December 31, 1998 as follows:

     Computed income tax expense at
         federal statutory rate                                    $    743,076
     State income taxes, net of federal income tax
         benefit                                                        133,014
     Other                                                              (26,860)
                                                                   ------------
                                                                   $    849,230
                                                                   ============

11.  EMPLOYEE 401(k) PLAN

     The Company's 401(k) plan covers substantially all employees meeting
     minimum eligibility requirements. The plan provides for employee
     contributions of up to a maximum of 15% of each employee's compensation,
     with the Company matching 50% of the first 6% of each employee's
     contribution. The Company's contributions to the plan totaled approximately
     $80,000 for the years ended December 31, 1999 and 1998.

12.  TRANSACTIONS WITH OFFICER AND EMPLOYEES

     At December 31, 1998, the Company had a note receivable of $225,000 from an
     officer of the Company. The note was paid in full in November, 1999.
     Included in contracts and mortgages receivable at December 31, 1999 and
     1998 are contracts receivable from employees of the Company in the amount
     of $71,700 and $89,696, respectively. During the years ended December 31,
     1999 and 1998, the Company had sales to officers and employees of
     approximately $272,263 and $50,402, respectively.


                                       24
<PAGE>


ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

          No changes in or disagreements with accountants have occurred during
          the two-year period ended December 31, 1999.

                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

          EXECUTIVE OFFICERS AND DIRECTORS

          The Company's executive officers and directors and their ages and
          positions with the Company are as follows:

                 Name           Age            Positions with Company

          Philip C. Taylor      48    President, Chairman of the Board,
                                         Secretary and Treasurer
          Joel D. Kaul          40    Vice President and Chief Operating Officer
          W. John Driscoll      71    Director
          John H. Hooley        48    Director
          Charles J. McElroy    45    Director
          William R. Sieben     47    Director

          PHILIP C. TAYLOR is the founder, President, Chairman of the Board and
          majority shareholder of the Company. Mr. Taylor has been actively
          involved in real estate investment and development for over 20 years.
          Since 1979, management of the Company has been his full-time
          occupation. Mr. Taylor graduated in 1973 from the College of St.
          Thomas, St. Paul, Minnesota, with a Bachelor of Arts degree in
          Economics. In 1978, Mr. Taylor received his Juris Doctorate degree
          from William Mitchell College of Law, St. Paul, Minnesota. Mr. Taylor
          has been Chairman, President, Secretary, and Treasurer since the
          Company's formation.

          JOEL D. KAUL is Vice President and Chief Operating Officer. Mr. Kaul
          joined the Company in June 1995 and has over 10 years of experience in
          the real estate finance industry. From 1989-1995, Mr. Kaul served as
          senior asset manager for Dain Corporation. In this capacity, Mr. Kaul
          directed a staff of fifteen people in the management of a $300 million
          national real estate portfolio. Prior to joining Dain Corporation, Mr.
          Kaul spent four years employed as a CPA with Ernst and Young and
          Coopers and Lybrand. Mr. Kaul also served as the Chief Financial
          Officer for a Minnesota-based developer for four years. Mr. Kaul
          graduated cum laude in 1981 from the University of Wisconsin-LaCrosse,
          with a double major in finance and accounting.

          W. JOHN DRISCOLL has been a director of the Company since 1986. Mr.
          Driscoll is a director of Rock Island Company, a private investment
          firm where he served as Chairman of the Board from May 1993 to June
          1994 and as President prior to May 1993. Mr. Driscoll also serves as a
          member of the board of directors of Comshare, Inc.; John Nuveen & Co.;
          Northern States Power Company; The St. Paul Companies, Inc. and
          Weyerhaeuser Company.

          JOHN H. HOOLEY has been a director of the Company since 1986. Mr.
          Hooley is President of Cub Foods, a division of Super Valu, Inc. He
          received a Bachelor of Arts degree in economics in 1974 from St.
          John's University, Collegeville, Minnesota. In 1980, he received his
          Juris Doctorate degree from William Mitchell College of Law, St. Paul,
          Minnesota.


                                       25
<PAGE>


          CHARLES J. McELROY has been a director of the Company since 1986. Mr.
          McElroy is a partner with the firm of Larson, Allen, Weishair &
          Company, a regional certified public accounting firm. He received his
          Bachelor of Arts degree in accounting from the College of St. Thomas,
          St. Paul, Minnesota, in 1976. Mr. McElroy is Mr. Philip C. Taylor's
          brother-in-law.

          WILLIAM R. SIEBEN has been a director of the Company since 1986. Mr.
          Sieben is a partner in the law firm of Schwebel, Goetz & Sieben, P.A.,
          of Minneapolis, Minnesota. He received his Bachelor of Arts in 1972
          from St. Cloud State University and a Juris Doctorate degree from
          William Mitchell College of Law in 1977. He is past President of the
          Minnesota Trial Lawyers Association and has written several legal
          publications.

          All members of the Board of Directors hold office until the next
          annual meeting of stockholders or until their successors are elected
          and qualified. The Company pays each director an annual fee of $4,500,
          plus reimbursement of out-of-pocket expenses.

          The Company does not have a class of equity securities registered
          pursuant to Section 12 of the Securities Exchange Act of 1934 (the
          "Exchange Act") and therefore is not subject to Section 16 of the
          Exchange Act.

ITEM 10.  EXECUTIVE COMPENSATION

          The following table sets forth the compensation paid or accrued by the
          Company for services rendered during the years ended December 31, 1999
          and 1998 with respect to the President (Chief Executive Officer) and
          all officers of the Company whose total annual salary and bonus for
          1999 exceeded $100,000:

          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                       Annual Compensation
                                         -----------------------------------------------
                   Name and                                                 Other Annual
              Principal Position         Year      Salary       Bonus(1)    Compensation
<S>                                      <C>      <C>          <C>             <C>
          Philip C. Taylor, President    1999     $150,000     $220,853        $4,500(2)
                                         1998      150,000      150,230         4,500
          Joel D. Kaul, Vice President   1999      100,000      274,506            --
                                         1998      100,000       77,142            --
</TABLE>

          -------------------------
          (1)  The amount of Mr. Taylor's bonus is approved by the Board of
               Directors and is related to the Company's profitability.

          (2)  Annual fee paid to Mr. Taylor for serving as a member of the
               Company's Board of Directors.


                                       26
<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The following table sets forth as of December 31, 1999, the number of
          shares of the Company's common stock beneficially owned by (i) each
          director of the Company, (ii) each executive officer of the Company
          named in the Summary Compensation Table, (iii) each person known by
          the Company to beneficially own more than five percent of the
          outstanding shares of the Company's common stock, and (iv) all
          executive officers and directors as a group. Unless otherwise
          indicated, each person has sole voting and dispositive power over such
          shares.

                                                                       Shares
                   Name and Address of              Outstanding     Beneficially
                    Beneficial Owner                 Shares(2)        Owned(1)

          Philip C. Taylor
             43 Main Street SE, Suite 506
             Minneapolis, Minnesota 55414             387,804(3)        80.1%
          Charles J. McElroy
             Pillsbury Center
             220 South Sixth Street
             Suite 1000
             Minneapolis, Minnesota 55402             120,000(4)        24.8
          Joel D. Kaul
             2821 Overlook Lane North
             Stillwater, Minnesota 55082                7,541            1.6
          John H. Hooley
             9770 Old Deer Trail
             Stillwater, Minnesota 55082                5,740            1.2
          William R. Sieben
             1201 Southview Drive
             Hastings, Minnesota 55033                  5,740            1.2
          W. John Driscoll
             2090 First National Bank Building
             St. Paul, Minnesota 55101                      0(5)         *
          All executive officers and directors
             as a group (6 persons)                   406,825           84.0

          --------------------------
          (1)  Unless otherwise indicated, each person has sole voting and
               dispositive power with respect to all outstanding shares reported
               in the foregoing table.
          (2)  Based on 484,129 shares of common stock outstanding at December
               31, 1999.
          (3)  Includes 132,573 shares owned by Mr. Taylor's wife, 120,000
               shares held in trust for his children. The 120,000 shares held in
               trust for Mr. Taylor's children have also been included in the
               number of shares shown for Mr. Charles J. McElroy, the trustee.
          (4)  Includes 120,000 shares held by Mr. McElroy as trustee under
               trusts for the benefit of Philip C. Taylor's children that have
               also been included in the number of shares shown for Mr. Taylor.
          (5)  Does not include 35,700 shares held in a trust for which Mr.
               Driscoll was the trustee or 7,140 shares held by Mr. Driscoll as
               trustee as to which Mr. Driscoll disclaims beneficial ownership.


                                       27
<PAGE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Employees of the Company have from time to time purchased from the
          Company vacation property for their personal use. In connection with
          such purchases, the Company has provided, to such employees, mortgage
          financing on the same or similar terms it makes available to
          unaffiliated customers in the ordinary course of its business. In the
          opinion of management, the terms of such sales and financing are no
          more favorable to the employee(s) than those generally made available
          to its customers.

          Under the terms of the Subordinated Debt, the Company may not, and may
          not permit any subsidiary to, conduct any business or enter into any
          transaction or series of transactions with or for the benefit of any
          affiliate or any subsidiary of the Company, or any holder of 5% or
          more of any class of capital stock of the Company, except in good
          faith and on terms that are, in the aggregate, no less favorable to
          the Company or any subsidiary, as the case may be, than those that
          could have been obtained in a comparable transaction on an arm's
          length basis from a person not an affiliate of the Company or such
          subsidiary.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

            (a)   Exhibits.

                  No.                     Description

                  3.1   Articles of Incorporation of the Company, as amended *
                  3.2   Bylaws of the Company, as amended *
                  4.1   Form of Debenture (included as Article Two of Indenture
                        filed as Exhibit 4.2) *
                  4.2   Forms of Indenture by and between the Company and
                        American Bank National Association, as Trustee *
                  10.3  Redevelopment Agreement between the City of Hillsboro,
                        Illinois and the Company dated April 26, 1994 *
                  10.5  Contract for Private Development between The Joint East
                        Range Economic Development Authority and Laurentian
                        Development Authority *
                  10.6  Second Contract for Private Development between The
                        Joint East Range Economic Development Authority and
                        Laurentian Corporation Authority *
                  10.8  Credit Agreement between Diversified Business Credit,
                        Inc. and the Company dated November 18, 1986, as amended
                        by Amendment to Credit Agreement dated June 2, 1993 *
                  10.9  Security Agreement between Diversified Business Credit,
                        Inc. and the Company dated November 18, 1986 *
                  10.10 Agreement between the City of Coleraine, Minnesota and
                        the Company dated September 26, 1994 *
                  22.1  Subsidiaries of the Company
                  27    Financial Data Schedule**

            ------------------------------
            *     Incorporated by reference to the Company's registration
                  statement on Form SB-2 (No. 33-87024C), effective January 12,
                  1995.

            **    Exhibit 27 has been excluded from the printed version.



            (a)   REPORTS ON FORM 8-K. No reports on Form 8-K were filed during
                  the last quarter of the period covered by this report.


                                       28
<PAGE>


                                   SIGNATURES

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

                                       TAYLOR INVESTMENT CORPORATION
                                       (Registrant)

Dated:   March 1, 2000                 By /S/ Philip C. Taylor
      -------------------                 --------------------
                                          Philip C. Taylor
                                          President and Chief Executive Officer

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

SIGNATURE                      TITLE                               DATE
---------                      -----                               ----


/S/ Philip C. Taylor           Chairman of the Board, President    March 1, 2000
----------------------------   Secretary and Treasurer (Chief      -------------
Philip C. Taylor               Executive Officer)


/S/ W. John Driscoll           Director                            March 1, 2000
----------------------------                                       -------------
W. John Driscoll



/S/ John H. Hooley             Director                            March 1, 2000
----------------------------                                       -------------
John H. Hooley



/S/ Charles J. McElroy         Director                            March 1, 2000
----------------------------                                       -------------
Charles J. McElroy



/S/ William R. Sieben          Director                            March 1, 2000
----------------------------                                       -------------
William R. Sieben



/S/ Joel D. Kaul               Vice President and Chief            March 1, 2000
----------------------------   Operating Officer                   -------------
Joel D. Kaul


                                       29
<PAGE>


INDEX TO EXHIBITS

EXHIBIT
   NO.    DESCRIPTION                                                       PAGE

   3.1    Articles of Incorporation of the Company, as amended ................*
   3.2    Bylaws of the Company, as amended ...................................*
   4.1    Form of Debenture (included as Article Two of Indenture filed as
          Exhibit 4.2).........................................................*
   4.2    Form of Indenture by and between the Company and American Bank
          National Association, as Trustee.....................................*
  10.3    Redevelopment Agreement between the City of Hillsboro, Illinois
          and the Company dated April 26, 1994.................................*
  10.5    Contract for Private Development between The Joint East Range
          Economic Development Authority and Laurentian Development
          Authority............................................................*
  10.6    Second Contract for Private Development between The Joint East Range
          Economic Development Authority and Laurentian Corporation
          Authority............................................................*
  10.8    Credit Agreement between Diversified Business Credit, Inc. and the
          Company dated November 18, 1986, as amended by Amendment to Credit
          Agreement dated June 2, 1993.........................................*
  10.9    Security Agreement between Diversified Business Credit, Inc. and
          the Company dated November 18, 1986..................................*
  10.10   Agreement between the City of Coleraine, Minnesota and the Company
          dated September 26,
          1994.................................................................*
  22.1    Subsidiaries of the Company.........................................31
  27      Financial Data Schedule ............................................**

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

* Incorporated by reference to the Company's registration statement on Form
  SB-2 (No. 33-87024C), effective January 12, 1995.
**Exhibit 27 has been excluded from the printed version.


                                       30