SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                                   (MARK ONE)

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

                For The fiscal year ended November 30, 1999
                                    or

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

                           Commission file no. 1-8846

                                  CALTON, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                  <C>
                NEW JERSEY                                           22-2433361
      (State or other jurisdiction of                 (I.R.S. Employer Identification Number)
       incorporation or organization

            125 HALF MILE ROAD                                       07701-6749
           RED BANK, NEW JERSEY                                      (Zip Code)
(Addresses of principal executive offices)
</TABLE>

                         Registrant's telephone number,
                       including area code: (732) 212-1280

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

<TABLE>
<CAPTION>
                                                                Name of each exchange
           Title of Class                                        on which registered
           --------------                                       ---------------------
<S>                                                             <C>
            Common Stock                                       American Stock Exchange
      $.01 par value per share

              Rights                                           American Stock Exchange
</TABLE>

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

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

The aggregate market value (based upon the last sales price reported by the
American Stock Exchange) of voting shares held by non-affiliates of the
registrant as of February 24, 2000 was $82,226,000.

As of February 24, 2000, 21,617,000 shares of Common Stock were outstanding.

The Company's Proxy Statement for the annual meeting of shareholders is
incorporated by reference into Part III hereof.

<PAGE>


--------------------------------------------------------------------------------
Disclosure Concerning Forward-Looking Statements
--------------------------------------------------------------------------------

All statements, other than statements of historical fact, included in this Form
10-K, including in Part II, Item 7: "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the statements under
"Business" are, or may be deemed to be, "Forward-Looking Statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," and variations of such words and
similar phrases are intended to identify such forward-looking statements. Such
forward-looking statements involve assumptions, known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements contained in this Form 10-K. Such potential risks and
uncertainties, include without limitation, matters related to national and local
economic conditions, the effect of governmental regulation on the Company, the
competitive environment in which the Company operates, potential adverse affects
of acquisitions, the ability of the Company to identify suitable acquisition
candidates, changes in interest rates, and other risk factors detailed herein
and in other of the Company's Securities and Exchange Commission filings. The
forward-looking statements are made of the date of this Form 10-K and the
Company assumes no obligation to update the forward-looking statements or to
update the reasons actual results could differ from those projected in such
forward-looking statements.
--------------------------------------------------------------------------------

                                     PART I

ITEM 1. BUSINESS

        (A)  GENERAL DEVELOPMENT OF BUSINESS

             GENERAL

                  Calton, Inc. (the "Company" or "Calton") sold its principal
             operating subsidiary, Calton Homes, Inc. ("Calton Homes"), on
             December 31, 1998. See "Sale of Calton Homes." Since the completion
             of the sale, the Company has been primarily engaged in providing
             consulting services to the purchaser of Calton Homes and analyzing
             potential business and acquisition opportunities. In addition, in
             July 1999, the Company acquired substantially all of the assets of
             iAW, Inc., an Internet business solutions provider in its early
             stages of development. In January 2000, the Company acquired a
             controlling interest in PrivilegeONE Networks, Inc.
             ("PrivilegeONE"), a newly formed company engaged in the development
             of a co-branded loyalty credit card program.

                  Calton was incorporated in 1981 for the purpose of acquiring
             all of the issued and outstanding capital stock of Kaufman and
             Broad of New Jersey, Inc., a New Jersey corporation, from Kaufman
             and Broad, Inc., a Maryland corporation. After the acquisition, the
             name Kaufman and Broad of New Jersey, Inc. was changed to Calton
             Homes. Calton maintains it corporate offices at 125 Half Mile Road,
             Suite 206, Red Bank, New Jersey 07701 and its telephone number is
             (732) 212-1280. As used herein, the term "Company" refers to
             Calton, Inc. and its subsidiaries, unless the context indicates
             otherwise.


             SALE OF CALTON HOMES

                  On December 31, 1998 (the "Closing Date"), Calton completed
             the sale of Calton Homes, its wholly owned homebuilding subsidiary,
             to Centex Real Estate Corporation ("CREC" or the "purchaser"), the
             homebuilding subsidiary of Centex Corporation (NYSE:CTX), one of
             the nation's largest homebuilders (the "Sale Transaction"). The
             purchase price for the stock of Calton Homes, which was paid in
             cash at closing, was $48.1 million, subject to a $5.2 million
             holdback, and certain post closing adjustments. The Company
             recorded a pre-tax gain of approximately $7.6 million and a net
             gain of approximately $4.4 million after recording a non-cash
             provision in lieu of taxes of $3.2 million as a result of the Sale
             Transaction in the first quarter of fiscal 1999. Calton has entered
             into an agreement to provide consulting services to CREC which will
             entitle the Company to payments of $1.3 million per year over the
             three year period ending December 31, 2001.

                                       2

<PAGE>

             STRATEGIC PLAN

                  At the time of the Sale Transaction, the Company announced
             that the Sale Transaction was part of a strategic plan designed to
             enhance shareholder value. Pursuant to its strategic plan, the
             Company commenced a stock repurchase program and announced its
             intention to (i) shift the Company's primary business focus from
             homebuilding to providing various services to participants both
             within and outside the homebuilding industry, including consulting
             services, equity and debt financing and financial advisory services
             and (ii) seek to invest in, acquire or combine with one or more
             operating businesses within or outside the homebuilding industry.

                  Pursuant to its stock repurchase program, the Company has,
             since October 31, 1998, acquired approximately 6,900,000 shares of
             Common Stock at an average price of $1.26 per share. The timing and
             number of additional shares purchased pursuant to the stock
             repurchase program will depend on a variety of factors, including
             the market price of the Common Stock. Management has currently
             suspended the acquisition of additional shares of Common Stock
             pursuant to the stock repurchase program because recent market
             prices of the Common Stock have exceeded book value.

                  In 1999, the Company acquired the assets of iAW, Inc. and in
             January 2000, acquired a 50.4% interest in PrivilegeONE pursuant to
             its strategic plan. The Company continues to analyze potential
             acquisitions and other business opportunities. Pending further
             implementation of the Company's strategic plan, the Company's cash
             will be temporarily invested as management of the Company deems
             prudent, which may include, but will not be limited to, mutual
             funds, money market accounts, stocks, bonds or United States
             government or municipal securities; provided, however, that the
             Company will attempt to invest the net proceeds and conduct its
             activities in a manner which will not result in the Company being
             deemed to be an investment company under the Investment Company Act
             of 1940, as amended, or a personal holding company for federal
             income tax purposes. See "Certain Risks."

                  If by June 30, 2000, the Company has not redeployed a
             substantial portion of the proceeds of the Sale Transaction, or
             developed a plan to redeploy a substantial portion of such proceeds
             within in a reasonable time frame, the Company, subject to
             shareholder approval, will be liquidated and dissolved. Management
             currently expects to deploy or have a plan to deploy a substantial
             portion of the proceeds by June 30, 2000.

             CERTAIN RISKS

             Risks Associated with Potential Business Combinations.
                  The Company is seeking to enhance shareholder value by
             investing in, acquiring or combining with one or more operating
             businesses either within or outside of the homebuilding industry.
             Management of the Company will endeavor to evaluate the risks
             inherent in any particular target business; however, there can be
             no assurance that the Company will properly ascertain all such
             risks. In many cases, shareholder approval will not be required to
             effect such a business combination. The fair market value of the
             target business will be determined by the Board of Directors of the
             Company. Therefore, the Board of Directors has significant
             discretion in determining whether a target business is suitable for
             a proposed business combination. The success of the Company will
             depend on the Company's ability to attract and retain qualified
             personnel as well as the abilities of key management of the
             acquired companies. As a result, no assurance can be given that the
             Company will be successful in implementing its strategic plan or
             that the Company will be able to generate profits from such
             activities.

             Continued Listing on AMEX.
                  The Company's Common Stock is currently listed for trading on
             the American Stock Exchange ("AMEX"). Under AMEX's suspension and
             delisting policies, AMEX will normally consider suspending

                                       3

<PAGE>

             dealings in, or removing from listing securities of a company, if
             the company has sold or otherwise disposed of its principal
             operating assets, has ceased to be an operating company or has
             discontinued a substantial portion of its operations or business
             for any reason. AMEX has indicated that the Common Stock may become
             subject to delisting if the Company is not engaged in active
             business operations within a reasonable period of time after the
             closing of the Sale Transaction. Although the Company is engaged in
             active business as a result of its consulting agreement with CREC
             and its acquisitions of iAW and PrivilegeONE, no assurance can be
             given that AMEX will not commence proceedings to delist the Common
             Stock. If the Common Stock is delisted, it would trade on the OTC
             Bulletin Board or in the "pink sheets" maintained by the National
             Quotation Bureau, Inc., which are generally considered to be less
             efficient markets.

             Investment Company Act Considerations.
                  The Investment Company Act of 1940, as amended ("1940 Act"),
             requires the registration of, and imposes various substantive
             restrictions on, certain companies that engage primarily, or
             propose to engage primarily in the business of investing,
             reinvesting, or trading in securities, or that fail certain
             statistical tests regarding the composition of assets and source of
             income, and are not primarily engaged in a business other than
             investing, holding, owning or trading securities. The Company
             intends to conduct its activities in a manner which will not
             subject the Company to regulation under the 1940 Act; however,
             there can be no assurance that the Company will not be deemed to be
             an investment company under the 1940 Act. If the Company were
             required to register as an investment company under the 1940 Act,
             it would become subject to substantial regulation with respect to
             its capital structure, management, operations, transactions with
             affiliates, the nature of its investments and other matters. In
             addition, the 1940 Act imposes certain requirements on companies
             deemed to be within is regulatory scope, including compliance with
             burdensome registry, recordkeeping, voting, proxy, disclosure and
             other rules and regulations. In the event of the characterization
             of the Company as an investment company, the failure of the Company
             to satisfy regulatory requirements, whether on a timely basis or at
             all, could have a material adverse effect on the Company.

             Certain Tax Matters.
                  Section 541 of the Internal Revenue Code of 1986, as amended
             (the "IRC"), subjects a corporation which is a "personal holding
             company," as defined in the IRC, to a 39.6% penalty tax on
             undistributed personal holding company income in addition to the
             corporation's normal income tax. The Company could become subject
             to the penalty tax if (i) 60% or more of its adjusted ordinary
             gross income is personal holding company income and (ii) 50% or
             more of its outstanding Common Stock is owned, directly or
             indirectly, by five or fewer individuals. Personal holding company
             income is comprised primarily of passive investment income plus,
             under certain circumstances, personal service income.

             Indemnity Obligations
                  The stock purchase agreement pursuant to which the Company
             sold Calton Homes requires the Company to indemnify the purchaser
             for, among other things, breaches of the agreement and certain
             liabilities that arise out of events occurring prior to the closing
             of the sale including the cost of warranty work on homes delivered
             if such costs exceed $600,000. On the Closing Date of the Sale
             Transaction, the Company deposited an aggregate of approximately
             $5.2 million in escrow, $3 million of which provides security for
             the Company's indemnity obligations (the "General Indemnification
             Funds") and approximately $2.2 million of which were deposited to
             fund costs associated with certain specified litigation (the
             "Specific Indemnification Funds"), involving Calton Homes. During
             1999, the Company refunded to the purchaser $700,000, paid out of
             the General Indemnification Funds as a part of a settlement
             agreement and related post closing adjustments; also the Company
             collected $592,000 from the Specific Indemnification Funds as a
             result of a certain litigation settlements and legal fee
             reimbursements. In January, 2000 the Company collected
             approximately $1.0 million from the General Indemnification Funds.
             As of February 1, 2000 there was approximately $1.5 million in the
             General Indemnification Funds and $1.5 million in the Specific

                                       4

<PAGE>

             Indemnification Funds. In January, 2000 the purchaser asserted an
             indemnification claim against the General Indemnification Funds in
             the amount of $253,000. However the Company believes it has
             meritorious defenses against this claim. It is uncertain as to
             whether this claim will enter into arbitration proceedings. Under
             certain circumstances, the Company may be required to deposit
             additional funds into escrow. In addition, the Company's indemnity
             obligations are not limited to the amount deposited in escrow. No
             assurance can be given that the purchaser of Calton Homes will not
             make additional claims for indemnity or that a significant portion
             of the escrowed funds will not be utilized to resolve litigation.
             See "Legal Proceedings."


         (B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

                  The information required by this item is presented in Note 3
             of the 1999 Financial Statements located on page F-9 of this
             report.

         (C) DESCRIPTION OF BUSINESS

             GENERAL

                  With the sale of Calton Homes, the Company discontinued its
             homebuilding operations. Since the completion of the Sale
             Transaction, the Company has been primarily engaged in providing
             consulting services to the purchaser of Calton Homes and analyzing
             potential acquisitions and other business opportunities. In July
             1999, the Company acquired substantially all of the assets of iAW,
             Inc., an Internet business solutions provider. In January 2000, the
             Company acquired a 50.4% interest in PrivilegeONE.

             ECALTON.COM

                  In July 1999, the Company acquired iAW, Inc. an Internet
             business solutions provider. The Company conducts the acquired
             business though a wholly owned subsidiary that has changed its name
             to eCalton.com, Inc. ("eCalton"). The purchase price for the
             acquisition, which was structured as an asset purchase, was
             $250,000. eCalton provides Internet strategy consulting and
             comprehensive Internet-based solutions. By combining extensive
             business and Internet knowledge with creativity, eCalton provides
             its customers with the resources and tools to optimize, monitor,
             and measure the effectiveness of each component of their
             e-business. eCalton provides Internet-based solutions to small,
             medium, and large companies.

             Sales and Marketing.
                  eCalton's national marketing office is headquartered in Vero
             Beach, Florida. The company markets its products and services
             through telemarketing, face to face interviews with client
             executives, and through the eCalton web site.

                  In order to completely understand the needs of its clients,
             eCalton uses a three-step process that allows eCalton to evaluate
             the client's Internet practices, and transform the client's
             Internet business presence into one that provides a competitive
             business advantage, referred to as an Internet Best Practices
             Audit:

                  Step one is a visit to the client facility for a series of
             interviews with senior executives responsible for setting corporate
             strategy. This interview allows eCalton to gain a basic
             understanding of the clients overall e-business strategy,
             competitive situation, immediate and long-term goals.

                                       5

<PAGE>

                  Step two is to conduct a complete assessment of the client's
             current Internet presence and to formulate an e-business strategic
             plan to satisfy all of the client's needs. eCalton evaluates the
             effectiveness of the web site, and compares and contrasts the site
             to industry best practices, including measuring the "visibility" of
             the Website with the most effective Internet search tools
             available.

                  The third step is for eCalton to present the results to its
             client and direct the implementation of the solution. The Internet
             Best Practices Audit includes a written report with assessments and
             recommendations.

                  In most cases, once the solution has been implemented, eCalton
             continues to partner with its clients to ensure that the solution
             continues to meet the clients' changing e-business requirements and
             to allow for potential future revenue opportunities for eCalton.

                  In addition to marketing its services to its client, eCalton's
             marketing efforts are also dedicated to creating brand name
             awareness and enhancing its reputation as a complete Internet-based
             solutions provider.

             Competition.
                  The market for Internet professional services is relatively
             new, intensely competitive, rapidly evolving and subject to rapid
             technological change. While relatively new, the market is already
             highly competitive and characterized by an increasing number of
             entrants that have introduced or developed products and services
             similar to those offered by eCalton. The Company expects
             competition not only to persist, but to increase. Increased
             competition may result in price reductions, reduced margins and
             loss of market share. eCalton's competitors and potential
             competitors have longer operating histories, larger installed
             customer bases, greater name recognition, longer relationships with
             their clients, and significantly greater financial, technical,
             marketing and public relations resources than eCalton. As a result,
             eCalton's competitors may be better positioned to react in the
             ever-changing market place. eCalton expects competition to persist
             and intensify in the future.

             PRIVILEGEONE

             General.
                  In January 2000, the Company acquired a 50.4% collective
             direct and indirect (through ownership in a parent company)
             interest in PrivilegeONE Networks, Inc. PrivilegeONE was formed in
             1999 to develop customer loyalty programs through the use of a
             co-branded credit card related to the automotive industry.

                  In order to execute the PrivilegeONE business plan,
             PrivilegeONE management is currently pursuing arrangements with
             financial institutions to issue and process credit cards marketed
             by PrivilegeONE. Until such an arrangement is secured, PrivilegeONE
             will be unable to execute its business plan.

                  The purchase price for the Company's interest in PrivilegeONE
             was comprised of $105,000 of cash and a five-year warrant to
             acquire 1,200,000 shares of the Company's Common Stock at an
             exercise price of $2.50 per share. The warrant becomes exercisable
             only if PrivilegeONE surpasses certain specified earnings targets.
             In addition to its equity interest, the Company has agreed to loan
             up to $1,500,000 to PrivilegeONE pursuant to a note which bears
             interest at the rate of 10% per annum and becomes due in January
             2004. The Company has the right to designate a majority of the
             Board of Directors of PrivilegeONE until the later of the time that
             the note is repaid or January 2004. The Company has entered into
             shareholder agreements with the other shareholders of PrivilegeONE
             and its parent company which obliges each of the shareholders to
             offer his or its shares in PrivilegeONE or its parent to the other
             shareholders in the event that the shareholder wishes to transfer
             his or its shares. The shareholder agreements also grant the
             Company the preemptive right to acquire a proportionate share of
             any additional

                                       6

<PAGE>

             securities issued by PrivilegeONE or its parent and provide that
             certain corporate actions may not be taken without the
             Company's approval.

             Sales and Marketing.
                  PrivilegeONE intends to market its program directly through a
             national sales force. PrivilegeONE is seeking to develop a number
             of customer acquisition and loyalty strategies centered around the
             acceptance and use of its cards, including reward and other
             programs designed to promote card use. PrivilegeONE also intends to
             develop an Internet site through which it will seek to develop
             strong relationships with and provide services to customers.

             Competition.
                  The credit card industry is characterized by intense
             competition. PrivilegeONE will compete with numerous co-branded
             credit card programs, including reward based programs. Many of
             these programs are sponsored by entities with greater resources and
             name recognition than PrivilegeONE. As a result PrivilegeONE's
             competitors may be better positioned to react in a changing market
             place.

             CONSULTING SERVICES

                  The Consulting Agreement requires the Company to provide
             certain consulting services to CREC, including information, advice
             and recommendations with respect to the homebuilding market in New
             Jersey and Pennsylvania. The Company has agreed that it will not
             provide similar services to others in New Jersey or Pennsylvania
             during the term of the Consulting Agreement and for a four year
             period after the expiration of the three year term of the
             Consulting Agreement.

                  The Consulting Agreement requires Anthony J. Caldarone, the
             Company's Chairman, President and Chief Executive Officer to
             participate in the performance of the consulting services to CREC
             and for so long as he remains employed by or associated with the
             Company.

                  In consideration for the services provided by the Company
             under the Consulting Agreement, CREC is required to pay the Company
             a consulting fee of $1.3 million per year, payable in equal
             quarterly installments during the three year term of the agreement.
             Other than the Consulting Agreement, the Company has not entered
             into any arrangements to provide consulting, investment or advisory
             services to any third parties.

             EMPLOYEES

                  As of February 25, 2000, the Company employed eight full time
             personnel, and one part time employee; the Company's subsidiary,
             eCalton.com, Inc., employed 24 full time personnel and two part
             time employees; PrivilegeONE employed 9 full time personnel.

                  The Company believes that its employee relations are
             satisfactory.

ITEM 2. COMPANY FACILITIES

                  The Company currently leases approximately 2,100 square feet
             of office space located in Red Bank, New Jersey, for approximately
             $4,700.00 per month. The term of this lease is on a month-to-month
             basis. The Company also leases approximately 1,790 square feet of
             temporary office space on a month-to-month basis in Vero Beach,
             Florida, for approximate $2,200.00 per month, until its permanent
             space is available at the end of May 2000. The permanent space at
             the same location will consist of approximately 3,815 square feet,
             at a monthly rate of approximately $5,722.00, for a term of 5
             years.

                                       7

<PAGE>

                  The Company's subsidiary, eCalton, currently leases
             approximately 4,000 square feet of office space, for approximately
             $4,700 per month. The term of this lease is on a month-to-month
             basis. PrivilegeONE currently leases 2,000 square feet of office
             space in Rhode Island at a cost of $900.00 per month on a month to
             month basis.

                  Management believes that these arrangements currently provide
             adequate space for all of the Company's business operations.

ITEM 3. LEGAL PROCEEDINGS

                  The stock purchase agreement pursuant to which the Company
             sold Calton Homes on December 31, 1998 requires the Company to
             indemnify the purchaser for, among other things, breaches of the
             agreement and certain liabilities that arise out of events
             occurring prior to the closing of the sale. On December 31, 1998,
             as a condition to the sale of Calton Homes, the Company entered
             into a holdback escrow agreement with the purchaser pursuant to
             which approximately $5.2 million of the closing proceeds were
             deposited into escrow. Of this amount, $3 million (the "General
             Indemnification Funds") were deposited to provide security for the
             Company's indemnity obligations and approximately $2.2 million (the
             "Specific Indemnification Funds") were deposited to fund costs
             associated with certain specified litigation involving Calton
             Homes. During 1999, the Company refunded $700,000 to the purchaser,
             out of the General Indemnification Funds as a part of a settlement
             agreement and related post closing adjustments. The Company
             collected $592,000 from the Specific Indemnification Funds in 1999
             as a result of a certain litigation settlements and legal fee
             reimbursements. In January 2000, approximately $1.0 million was
             released to the Company from the General Indemnification Funds
             pursuant to the terms of its agreement with the purchaser. As of
             February 1, 2000 there was approximately $1.5 million in the
             General Indemnification Funds and $1.5 million in the Specific
             Indemnification Funds. In January 2000, the purchaser asserted a
             $253,000 claim for indemnification related to certain alleged
             misrepresentations and liabilities allegedly arising out of the
             events occurring prior to the sale of Calton Homes. The Company and
             the purchaser are attempting to resolve this claim and it is
             uncertain as to whether this claim will enter into arbitration
             proceedings. However, the Company believes it has meritorious
             defenses against this claim. The remaining General Indemnification
             Funds will be disbursed to the Company, subject to claims for
             indemnification, on December 31, 2000. The Specific Indemnification
             Funds will be disbursed, to the extent not otherwise utilized in
             the resolution of litigation, on a case by case basis as the
             litigation is resolved. If all of the specified litigation is not
             resolved by December 31, 2000, a portion of the General
             Indemnification Funds will not be disbursed to the Company until
             the resolution of the litigation. The Company may, under certain
             circumstances, be required to deposit additional funds in the
             holdback if all of the specified litigation is not resolved by
             December 31, 2000. In addition, the Company's indemnity obligations
             are not limited to the amounts deposited in escrow. In the event
             that the Company elects to liquidate and dissolve prior to December
             31, 2003, it will be required to organize a liquidating trust to
             secure its obligations to the purchaser. The liquidating trust will
             be funded with the Specific Indemnification Funds plus, $3 million
             if created between December 31, 1999 and December 31, 2000 and $2
             million if created after December 31, 2000. If the liquidation
             occurs prior to December 31, 2000, the Company may be required to
             deposit additional amounts in the Liquidating Trust if the
             specified litigation is not resolved by such date. Any General
             Indemnification Funds remaining in the holdback escrow fund will be
             applied as a credit against amounts required to be deposited in the
             liquidating trust.

                  Although the Company believes it has adequately reserved for
             the resolution of all of the litigation associated with the
             indemnity obligations, there is no assurance that the ultimate
             resolution of the pending litigation will not result in additional
             charges to discontinued operations or the Company will collect all
             of the remaining holdback escrow.

                                       8

<PAGE>

                  Calton's by-laws contain provisions which provide
             indemnification rights to officers, directors and employees under
             certain circumstances with respect to liabilities and damages
             incurred in connection with any proceedings brought against such
             persons by reason of their being officers, directors or employees
             of Calton.


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

                  During the fourth quarter of 1999, no matter was submitted to
             a vote of security holders through the solicitation of proxies or
             otherwise.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

                  The executive officers of the Company as of February 24, 2000
             are listed below and brief summaries of their business experience
             and certain other information with respect to them is set forth in
             the following table and in the information which follows the table:

<TABLE>
<CAPTION>
               Name                                      Age         Position
               ----                                      ---         --------
              <S>                                        <C>         <C>
               Anthony J. Caldarone                       62         Chairman, President and Chief Executive Officer

               Maria F. Caldarone                         36         Vice President of Corporate Development

               David J. Coppola                           40         Vice President and Treasurer

               Kelly S. McMakin                           38         Senior Vice President of Accounting
</TABLE>

                  Mr. Caldarone was reappointed as Chairman, President and Chief
             Executive Officer of Calton in November 1995, having previously
             serviced in such capacities from the inception of the Company in
             1981 through May 1993. From June 1993 through October 1995, Mr.
             Caldarone served as a Director of the Company.

                  Maria Caldarone served as the Director of Business Development
             from January 1999 until she was appointed as a Vice President of
             the company in February 2000. From 1995 through January 1999 Ms.
             Caldarone was a non-practicing attorney. Prior to 1995 Ms.
             Caldarone was employed by Trafalgar Homes, from December 1993 to
             November 1994 where she served as Director of Land Acquisition. Ms.
             Caldarone is a licensed attorney in the state of Florida. Ms.
             Caldarone is the daughter of Mr. Caldarone.

                  Mr. Coppola was appointed Treasurer of the Company in January
             1999. He served as the Company's Controller from 1992 until 1999
             and was appointed as a Vice President of the Company in 1993. Mr.
             Coppola is a Certified Public Accountant.

                  Mr. McMakin was appointed Senior Vice President of the company
             in January 2000. From 1993 through January 2000, Mr. McMakin served
             as Controller and Treasurer of Florafax International, Inc., a
             publicly traded floral wire service and credit card processor
             headquartered in Vero Beach, Florida. Mr. McMakin is a Certified
             Public Accountant.

                                       9

<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

                  Calton, Inc. common stock is traded on the American Stock
             Exchange ("AMEX") under the symbol CN. The following reflects the
             high and low sales prices of the common stock during fiscal 1999
             and 1998.


                        FISCAL 1999                    High          Low
                                                     -------       -------
                        1st  Quarter..............   $ 1-1/2       $   1
                        2nd Quarter...............     1-3/8           1
                        3rd  Quarter..............    1-9/16        1-5/16
                        4th  Quarter..............     1-7/8        1-3/16


                        FISCAL 1998                     High        Low
                                                     --------     -------
                        1st  Quarter..............   $  5/8       $  7/16
                        2nd Quarter...............      7/8           5/8
                        3rd  Quarter..............      3/4          9/16
                        4th  Quarter..............     1-1/8          3/4


                  At February 15, 2000, there were approximately 577 record
             holders of the Company's common stock. On that date, the last sale
             price for the common stock as reported by AMEX was $4.94. The
             Company did not pay any dividends on its Common Stock during fiscal
             1999.

                  In July 1999, the Company issued options to acquire 600,000
             shares of Common Stock at an exercise price of $1.63 per share to
             Kenneth D. Hill, Matthew Smith and Robert Hill pursuant to
             employment agreements between such individuals and eCalton that
             were executed in connection with the acquisition of the assets of
             iAW, Inc. Each of such options has a 10 year term and is
             exercisable in three equal annual installments commencing on the
             anniversary date of the date of grant. The grant of the options was
             made in reliance upon the exemption provided by Section 4(2) of the
             Securities Act of 1933 as a transaction not involving any public
             offering.

                  In January 2000, the Company issued a warrant to acquire
             1,200,000 shares of the Company's Common Stock at an exercise price
             of $2.50 per share to Taytrowe Van Fecthmann World Companies, Inc.,
             the parent company of PrivilegeONE, in connection with the
             acquisition of the Company's interest in PrivilegeONE. The warrant,
             which has a term of five years, is not exercisable unless
             PrivilegeONE surpasses certain specified earnings targets. The
             warrant was issued in reliance upon the exemption provided by
             Section 4(2) of the Securities Act of 1933 as a transaction not
             involving any public offering.

                                       10
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

                  The following table sets forth historical selected financial
             information of the Company as of the dates and for the periods
             indicated. The data set forth below should be read in conjunction
             with "Management's Discussion and Analysis of Financial Condition
             and Results of Operations" and the Company's Consolidated Financial
             Statements and Notes thereto include elsewhere in this report.

<TABLE>
<CAPTION>

(in thousands, except per share amounts)                                                Years Ended November 30,
                                                             --------------------------------------------------------------------

                                                                 1999          1998          1997          1996           1995
                                                             -----------   -----------   -----------   -----------    -----------
<S>                                                          <C>           <C>           <C>           <C>            <C>
SELECTED OPERATING DATA
Revenues................................................     $     3,196   $         -   $         -   $     1,292    $     9,090
Net income (loss) from continuing operations............             661        (1,960)       (1,901)       (1,736)        (1,660)
Net income (loss) from discontinued operations(1).......            (240)        6,315         1,646         2,189         (1,478)
Net income from sale of operating businesses............           4,418             -           369             -              -
Extraordinary gain, net of income taxes.................               -             -         1,263             -              -
Net income (loss).......................................           4,839         4,355         1,377           453         (3,138)

Basic earnings (loss) per share:
Net income (loss) from continuing operations............             .03          (.07)         (.07)         (.06)          (.06)
Net income (loss) from discontinued operations(1).......            (.01)          .23           .06           .08           (.06)
Net income from sale of operating businesses............             .19             -           .01             -              -
Extraordinary gain, net of income taxes.................               -             -           .05             -              -
Net income (loss).......................................             .21           .16           .05           .02           (.12)

Diluted earnings (loss) per share:
Net income (loss) from continuing operations............             .03          (.07)         (.07)         (.06)          (.06)
Net income (loss) from discontinued operations(1).......            (.01)          .23           .06           .08           (.06)
Net income from sale of operating businesses............             .18             -           .01             -              -
Extraordinary gain, net of income taxes.................               -             -           .05             -              -
Net income (loss).......................................             .20           .16           .05           .02           (.12)


<CAPTION>
                                                                                                At November 30,
                                                             --------------------------------------------------------------------
                                                                 1999          1998          1997          1996           1995
                                                             -----------   -----------   -----------   -----------    -----------
<S>                                                          <C>           <C>           <C>           <C>            <C>
SELECTED BALANCE SHEET DATA
Total assets............................................     $    40,441   $    40,082   $    35,142   $    70,895    $    77,183
Total debt(2)...........................................               -             -             -        39,500         45,000
Shareholders' equity....................................          38,654        38,221        32,850        28,086         27,013
</TABLE>

     (1) As a result of the sale of Calton Homes, Inc. that occurred on December
         31, 1998, the financial statements presentation treats the Company's
         homebuilding business and results as discontinued operations in
         accordance with APB Opinion No. 30, "Reporting the Results of
         Operations-Reporting the Effects of Disposal of a Segment of a
         Business." The Company recognized a gain of $4,418,000 which is net of
         a provision in lieu of taxes of $3,173,000 on the sale.

     (2) Debt is included as part of discontinued operations subsequent to June
         1997 since Calton Homes, Inc. became the primary obligor and borrower
         of a revolving credit agreement entered into at that time.

                                       11
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

RESULTS OF   SALE OF CALTON HOMES, INC.
OPERATIONS
                  On December 31, 1998, the Company completed the sale of Calton
             Homes, Inc., its primary operating homebuilding subsidiary to
             Centex Real Estate Corporation ("Centex" or the "purchaser"). The
             shareholders of Calton, Inc. approved the sale of the stock of
             Calton Homes on December 30, 1998. The purchase price for the stock
             of Calton Homes was $48.1 million, which resulted in a pretax gain
             of approximately $7.6 million and was subject to a $5.2 million
             holdback (see Commitments and Contingencies). Cash proceeds from
             the sale through November 30, 1999 were approximately $43.4
             million, net of the remaining holdback of $4.0 million and
             including other closing adjustments. No tax liability is expected
             to result from the sale. However, a provision in lieu of taxes was
             recorded for financial reporting purposes in the amount of $3.2
             million related to the sale. Calton has entered into an agreement
             to provide consulting services to Centex that requires payments to
             the Company of $1.3 million per year over a three-year period.

                  The sale of Calton Homes was completed as part of the
             Company's overall strategy to enhance shareholder value. Since the
             completion of the sale, the Company has been primarily engaged in
             providing consulting services to the purchaser of Calton Homes and
             analyzing potential business and acquisition opportunities. In July
             1999, the Company acquired substantially all of the assets of iAW,
             Inc., an Internet business solutions provider in its early stages
             of development that assists companies in defining an effective
             Internet business strategy and implementing the components of that
             strategy. The Company conducts this business through its wholly
             owned subsidiary, eCalton. In January 2000, the Company acquired a
             collective direct and indirect (through ownership in a parent
             company) 50.4% interest in PrivilegeONE, a newly formed company
             engaged in the development of a co-branded loyalty credit card
             program. The Company continues to actively analyze other
             opportunities to deploy the funds generated by the sale of Calton
             Homes.

                  As part of the Company's strategic plan to enhance shareholder
             value, the Company implemented a significant stock repurchase
             program, pursuant to which it announced its intention to repurchase
             up to 10 million shares of common stock in open market repurchases
             and privately-negotiated transactions. Approximately 6.9 million
             shares of Common Stock have been repurchased by the Company since
             October 31, 1998 at an average price of $1.26 per share.

                  The following discussion included in the Results of Operations
             are based on the continuing operations of Calton, Inc. The
             financial statements present the Company's homebuilding business as
             discontinued operations in accordance with APB Opinion No. 30,
             "Reporting the Effects of Disposal of a Segment of a Business."

             RESULTS OF OPERATIONS FOR THE YEARS ENDED NOVEMBER 30, 1999
             AND 1998

                  Income from continuing operations before taxes was $1.1
             million for the year ended November 30, 1999 compared to a loss of
             $2.0 million for the year ended November 30, 1998. Revenues of $3.2
             million during fiscal 1999 were primarily derived from the
             consulting agreement with the purchaser of Calton Homes and
             interest earned on cash derived from the sale. Also included in
             revenues for 1999 was $157,000 for eCalton. There were no
             comparable revenues for fiscal 1998.

                  Selling, general and administrative expenses included in
             continuing operations were $2.0 million during both fiscal 1999 and
             1998. General and administrative expenses have decreased
             approximately $500,000 at the corporate level. The decrease is
             attributable to a significant reduction in corporate fixed costs
             related to the sale of Calton Homes, including personnel
             reductions, leasing costs and other overhead items. However, the
             reductions were offset with the expenditures of eCalton as part of
             the strategy to ramp up its operations during 1999 and 2000.

                                       12

<PAGE>
                  As a result of the circumstances described above, the Company
             recognized Income from continuing operations, net of taxes of
             $661,000 for fiscal 1999 as compared to a loss of $2.0 for fiscal
             1998. Included in the 1999 results is a pretax loss of $427,000
             from eCalton, $256,000 net of taxes.

                  Loss from discontinued operations was $613,000, $240,000 net
             of a $373,000 tax benefit for the year ended November 30, 1999. The
             loss includes approximately $1.0 million related to legal costs and
             the resolution of certain litigation matters in excess of amounts
             previously reserved by management related to the Company's former
             homebuilding business. As a condition to the sale of Calton Homes,
             the Company is required to indemnify the purchaser for certain
             specified litigation pending against Calton Homes. There is no
             assurance that the ultimate resolution of the pending litigation
             will not result in additional charges. Partially offsetting the
             loss is pre-tax income of $429,000 from one month of operations of
             Calton Homes and a commercial land sale. In addition, included in
             the tax provision for discontinued operations is a tax benefit
             related to the reduction of a state tax reserve in the amount of
             $550,000 due to the resolution of certain state tax issues.

                  Income from discontinued operations for the year ended
             November 30, 1998 was $6.3 million, net of a tax provision of $2.4
             million. The results primarily include the operations of Calton
             Homes.

                  Taxes for the year ended November 30, 1999 reflect a provision
             for income taxes of $3.2 million resulting in an effective rate of
             thirty-nine and one- half percent (39.5%). The increase in the
             effective tax rate from thirty-four percent (34%) for the year
             ended November 30, 1998 was primarily due to the future tax
             benefits recognized in 1998 which were significantly higher than
             those recognized in 1999, coupled with a significantly larger
             amount of 1999 expenses for which the Company will not receive any
             tax benefit. In 1998 a provision for income taxes of $2.2 million
             was recorded. The net operating loss carryforwards and certain
             other deferred tax assets are subject to utilization limitations as
             a result of the changes in the control of the Company that occurred
             in 1993 and 1995. The Company's ability to use the net operating
             loss ("NOL") to offset future income is $1.1 million per year for
             14 years. This amount has been reduced from 1998 by $500,000 per
             year as a result of the sale of Calton Homes (see note 5).

                  The effective rate from continuing operations for the years
             ended November 30, 1999 and 1998 is based upon a provision of
             $453,000 and a benefit of $125,000, respectively. The effective
             rate for 1998 is influenced by the tax expense associated with
             intercompany charges from continuing operations to discontinued
             operations.

                  As of November 30, 1999 the Company recorded a $518,000
             unrealized loss on marketable equity securities in comprehensive
             income.

            RESULTS OF OPERATIONS FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997

                  For the year ended November 30, 1998 the Company reported a
             net loss of $2.0 million from continuing operations as compared to
             $1.9 million for the year ended November 30, 1997. As previously
             stated, the Company's primary business was homebuilding and with
             the sale of Calton Homes, Inc., those financial results are treated
             as discontinued operations. Without revenues in both 1998 and 1997,
             the loss was primarily attributable to general and administrative
             costs of $2.0 million and $2.4 million for the years ended November
             30, 1998 and 1997, respectively. General and administrative costs
             were substantially comprised of salaries, benefits, insurance ,
             rent, and professional services.

                  Other income for 1997 is comprised of $571,000 of interest
             income received related to a tax refund which was recorded as an
             increase to paid in capital since the refund related to events
             occurring prior to the Company's 1993 restructuring and $525,000
             representing the final payments received on a note previously
             reserved.

                  The effective tax rate for continuing operations for the years
             ended November 30, 1998 and 1997 is based upon a benefit of
             $125,000 and a provision of $560,000, respectively. The effective
             rate for both years is influenced by the tax expense associated
             with intercompany charges from continuing operations to
             discontinued operations. The effective rate from continuing
             operations for 1997 was influenced by the tax expense associated
             with other income.

                  Taxes for the year ended November 30, 1998 reflect a provision
             for income taxes of $2.2 million resulting in an effective rate of
             thirty-four percent (34%). The reduction in the effective tax rate
             from sixty-five
                                       13

<PAGE>
             percent (65%) for the year ended November 30, 1997 was primarily
             due to realization of future tax benefits of approximately
             $603,000, which increased the total tax benefit to $705,000, of
             which $649,000 relates to the sale of Calton Homes. In 1997 a
             provision for income taxes of $209,000 was recorded.

                  Income from discontinued operations was $6.3 million for the
             year ended November 30, 1998 as compared to $1.6 million for the
             prior year. The Company's former homebuilding operations benefited
             from improved economic conditions in New Jersey. Revenues and gross
             profit for fiscal 1998 were $105.3 million and $19.4 million as
             compared to $126.6 million and $16.2 million, respectively for
             fiscal 1997.

                  The Company's objectives during 1998 and 1997 were to reduce
             debt and related interest costs, and to increase shareholders'
             equity. The Company's weighted average debt outstanding under its
             revolving credit facility amounted to $25.0 million for the year
             ended November 30, 1998 compared to $40.2 million for the year
             ended November 30, 1997. The decrease is attributable to the
             improved operating and financial performance of Calton Homes, and
             the sale of the Florida division's assets of approximately $16.7
             million in November 1997, a substantial portion of which was
             utilized to reduce the amount outstanding under the Company's
             credit facility.

                  In June 1997, the Company entered into a new, secured
             revolving credit facility with BankBoston, N.A. Proceeds from the
             new facility were used to retire the prior revolving credit
             facility of $42.0 million which was paid off for $39.4 million.
             Based on the accounting principals in effect at the time of the
             extinguishment of debt, the Company recorded an extraordinary gain
             of approximately $1.3 million, after deducting an $842,000
             provision in lieu of income taxes. Included in the gain was the
             write off of deferred costs and out-of-pocket costs of
             approximately $550,000.

LIQUIDITY         On December 31, 1998 the sale of Calton Homes liquidated a
AND          substantial part of the Company and resulted in the payoff, by the
CAPITAL      purchaser, of the Company's revolving credit facility with
RESOURCES    BankBoston which had an outstanding balance of $19.5 million. The
             sale generated approximately $43.4 million of cash including the
             receipt of an additional $1.8 million related to the post closing
             adjustments that were finalized in September 1999. In addition, a
             $5.2 million holdback was established at closing as part of the
             sale as a condition to indemnify the purchaser against existing
             litigation and other warranties. As part of a post-closing
             settlement agreement, $700,000 was refunded to the purchaser in the
             fourth quarter of 1999, which was paid out of the General
             Indemnification Funds. The Company collected $592,000 out of the
             Specific Indemnification Funds during 1999 as a result of certain
             litigation settlements, and legal fee reimbursements (see Note 6).

                  At November 30, 1999 there was $2.4 million in the General
             Indemnification Funds and $1.6 million in the Specific
             Indemnification Funds. During the first quarter of 2000, $1.0
             million was collected out of the General Indemnification Funds
             and indemnity claims totaling approximately $253,000 have been
             made by the purchaser. The Company and the purchaser are
             attempting to resolve these claims and it is uncertain as to
             whether these claims will proceed to arbitration in accordance
             with the terms of the indemnification agreement. However, the
             Company believes it has meritorious defenses against this claim.
             The remaining General Indemnification Funds will be disbursed to
             the Company, subject to claims for indemnification, on December
             31, 2000. The Specific Indemnification Funds will be disbursed,
             to the extent not otherwise utilized in the resolution of
             litigation, on a case by case basis as the litigation is
             resolved. If all of the specified litigation is not resolved by
             December 31, 2000, a portion of the General Indemnification Funds
             will not be disbursed to the Company until the resolution of the
             litigation. The Company may, under certain circumstances, be
             required to deposit additional funds in the holdback if all of
             the specified litigation is not resolved by December 31, 2000.
             Future decreases to the escrows held for indemnifications, if any
             will be recorded as an adjustment to the Income from sale of
             Calton Homes.

                  As of November 30, 1999 the Company had $33.8 million of
             highly liquid money market funds with its underlying investments
             comprised of investment-grade, short-term corporate issues and
             commercial paper yielding approximately 5.0%. Also at November 30,
             1999 the Company had invested approximately $1.9 million in
             marketable equity securities with an unrealized loss of $518,000.

                  In July 1999, the Company acquired substantially all of the
             assets of iAW, Inc., an Internet business solutions provider. The
             purchase price for the acquisition was $250,000. The Company
             conducts the acquired business through its wholly owned subsidiary,
             eCalton.

                                       14

<PAGE>

                  In January 2000, the Company acquired a collective direct and
             indirect (through ownership in a parent company) 50.4% equity
             interest in PrivilegeONE Networks, a newly formed company engaged
             in the development of a co-branded loyalty credit card program. The
             purchase price for the Company's interest was comprised of $105,000
             of cash and a warrant to acquire 1,200,000 shares of Common Stock
             at an exercise price of $2.50 per share. The warrant becomes
             exercisable only if PrivilegeONE surpasses certain specified
             earning targets. In addition to its equity interest, the Company
             has agreed to loan up to $1,500,000 to PrivilegeONE pursuant to a
             note which bears interest at the rate of 10% per annum and becomes
             due in January 2004.

                  The Company believes that current cash on hand, additional
             funds generated by the sale of Calton Homes as a result of the
             collection of the holdback receivable, income tax payment
             reductions derived from NOL utilization, and funds provided under
             the three-year consulting agreement with the purchaser of Calton
             Homes which provides for payments of $1.3 million per year, will
             provide sufficient capital to support the Company's operations. As
             of November 30, 1999 the Company had repurchased an aggregate of
             6.9 million shares for $8.7 million, an average price of $1.26 per
             share. Management has suspended the acquisition of additional
             shares subsequent to year end since the market value of the
             Company's common stock has been trading in excess of book value.
             Although the Company is currently analyzing potential business
             opportunities consistent with its strategic plan; it has not
             determined the specific application for the remaining proceeds of
             the sale of Calton Homes. If over the period that commenced on
             December 30, 1998 and continues for 18 months thereafter, the
             Company has not redeployed a substantial portion of the sale
             proceeds of Calton Homes, or developed a plan to redeploy a
             substantial portion of the proceeds within a reasonable timeframe,
             the Company, subject to shareholder approval, will be liquidated
             and proceeds distributed to its shareholders. However, the Company
             continues to actively analyze other opportunities to redeploy the
             funds.

             CASH FLOWS FROM OPERATING ACTIVITIES

                  Cash flow from operating activities generated approximately
             $1.0 million during 1999 that includes $1.7 million of interest
             earned on highly liquid money market funds, and approximately $1.0
             million from the consulting agreement with the purchaser of Calton
             Homes. Partially offsetting the increases are cash utilized for
             general and administrative costs and the funding of eCalton's
             operations as it proceeds in the initial stages of business.

                  Cash flow from discontinued operations during fiscal 1999
             primarily consisted of the payment of legal settlements and
             litigation costs related to the indemnification obligations arising
             from the sale of Calton Homes in the amount of $1.5 million.
             Offsetting the uses of cash are the collection of a mortgage
             payable in the amount of $442,000 and the sale of a commercial land
             parcel of $240,000, among other items.

             CASH FLOWS FROM INVESTING ACTIVITIES

                  The Company generated approximately $43.4 million of cash in
             fiscal 1999 from the sale of Calton Homes including the receipt of
             an additional $1.8 million as part of the post-closing settlement.
             As a part of the post-closing agreement, the Company refunded to
             the purchaser $700,000 in September 1999, paid out of the General
             Indemnification Funds that were deposited in escrow and classified
             as Holdback receivable. In addition, the Company collected $592,000
             of the holdback established to secure the Company's indemnity
             obligations to the purchaser.

                  In July 1999, the Company acquired the assets of iAW, Inc., an
             Internet business solutions provider. The purchase price for the
             acquisition was $250,000.

                  The Company purchased marketable equity securities for an
             aggregate amount of $4.0 million in fiscal 1999, of which $1.9
             million was outstanding as of November 30, 1999. These securities
             were subsequently sold during the first quarter of 2000 resulting
             in the receipt of $1.3 million.

                                       15

<PAGE>

                  The Company loaned $250,000 to an entity in exchange for a
             convertible note with a warrant attached. The note has been
             subsequently converted to 142,851 common shares of CorVu
             Corporation (symbol-"CRVU") under the terms of the loan when the
             borrower became a publicly held company through a reverse merger.
             As consideration for making the loan, the Company obtained a
             warrant that permits the purchase of 253,125 shares at a per share
             price of $.01 per share. The fair value of the warrant is $16,000
             based upon the allocation of the relative fair values of the
             convertible note and warrant at the time of issuance. The market
             price for CorVu common stock was $6.25 per share as of February 9,
             2000; however, both the stock and the stock under the warrants are
             unregistered securities and therefore are not freely tradable. In
             addition, the Company loaned $103,000 to PrivilegeONE pursuant to
             the acquisition that occurred in January 2000 (see Note 9,
             Subsequent Events).

             CASH FLOWS FROM FINANCING ACTIVITIES

                  For the year ended November 30, 1999 the Company repurchased
             6.9 million shares of its Common Stock on the open market and in
             privately negotiated transactions for an aggregate price of $8.6
             million, an average of $1.26 per share. These repurchases were
             consistent with the Company's repurchase program to repurchase up
             to 10.0 million shares of its Common Stock. The stock repurchase
             program has been temporarily suspended as a result of increases in
             the trading price during the first quarter of 2000 as compared to
             the book value per share. In June 1999, the holder of a warrant
             (the "Warrant") to purchase 1,000,000 shares of Calton Common Stock
             exercised its right under the Warrant using the cashless exercise
             method. As a result, the holder was issued 681,000 shares which the
             Company repurchased for $750,000 that is included in the aggregate
             numbers above. As a result, the Warrant was cancelled.

             YEAR 2000

                  The Company implemented a plan to address the Company's
             exposure to the Year 2000 issues and has not experienced any
             material adverse consequences as a result of the impact of Year
             2000 issues on its computer based systems and applications, or the
             computer based systems of its vendors. The Year 2000 issue is the
             result of computer programs written using two digits rather than
             four to define the applicable year. Computer systems that have time
             sensitive software may recognize the date "00" as the year 1900
             rather than 2000. This could result in a major system failure or
             miscalculations. Pursuant to its plan, the Company has completed
             the process of upgrading its personal computers and the conversion
             of its information technology system to a new system that is Year
             2000 compliant. The Company does not believe that it faces any
             significant risk relating to non-information technology systems.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                  The Company currently has no outstanding indebtedness other
             than accounts payable. As a result, the Company's exposure to
             market rate risk relating to interest rate is not material. The
             Company's funds are primarily invested in highly liquid money
             market funds with its underlying investments comprised of
             investment-grade, short-term corporate issues and commercial paper
             currently yielding approximately 5.0%. The Company does not believe
             that it is currently exposed to market risk relating to foreign
             currency exchange risk or commodity price risk. However, a
             substantial part of the Company's cash equivalents are not FDIC
             insured or bank guaranteed. As of November 30, 1999 the Company had
             approximately $1,857,000 in marketable equity securities. As a
             result, the Company had exposure to market risks associated with
             declines in trading prices of these securities. As of November 30,
             1999, the Company recorded a $518,000 unrealized loss on the
             securities in comprehensive income. These securities were
             subsequently sold at a $508,000 loss in the first quarter of fiscal
             2000 that will impact earnings for the quarter ending February 29,
             2000.

                                       16
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  The Financial Statements and Supplementary Data are set forth
             herein commencing on page F-1 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

             None
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                  The information required by item 10 is incorporated herein by
             reference to the Company's proxy statement to be filed with the
             Securities and Exchange Commission pursuant to Regulation 14A, not
             later than 120 days after the end of the fiscal year covered by
             this report.

ITEM 11. EXECUTIVE COMPENSATION

                  The information required by Item 11 is incorporated herein by
             reference to the Company's proxy statement to be filed with the
             Securities and Exchange Commission pursuant to Regulation 14A, not
             later than 120 days after the end of the fiscal year covered by
             this report.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  The information required by Item 12 is incorporated herein by
             reference to the Company's proxy statement to be filed with the
             Securities and Exchange Commission pursuant to Regulation 14A, not
             later than 120 days after the end of the fiscal year covered by
             this report.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  The information required by Item 13 is incorporated herein by
             reference to the Company's proxy statement to be filed with the
             Securities and Exchange Commission pursuant to Regulation 14A, not
             later than 120 days after the end of the fiscal year covered by
             this report.

                                       17
<PAGE>

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>            <C>              <C>
       (a)     1. and 2.        Financial statements and financial statement schedules                  F-1
                                Reference is made to the Index of Financial Statements and
                                Financial Statements Schedules hereinafter contained

               3.               Exhibits                                                                E-1
                                Reference is made to the Index of Exhibits hereinafter
                                contained


       (b)                      Reports on Form 8-K
                                No reports on Form 8-K were filed during the quarter ended
                                November 30, 1999.
</TABLE>

                                       18
<PAGE>


                                   SIGNATURES


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

                                                CALTON, INC.
                                                --------------------------------
                                                (Registrant)

Dated:  February 29, 2000                   By: /s/ David J. Coppola
                                                --------------------------------
                                                David J. Coppola, Vice President


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

<TABLE>
<CAPTION>
           Signature                                 Title                            Date
           ---------                                 -----                            ----
<S>                                     <C>                                     <C>
/s/ Anthony J. Caldarone                 Chairman, Chief Executive              February 29, 2000
---------------------------              Officer and President
Anthony J. Caldarone                     (Principal Executive Officer)

/s/ David J. Coppola                     Vice President                         February 29, 2000
---------------------------              (Principal Financial &
David J. Coppola                         Accounting Officer)


/s/ Anthony J. Caldarone                 Director                               February 29, 2000
---------------------------
Anthony J. Caldarone

/s/ J. Ernest Brophy                     Director                               February 29, 2000
---------------------------
J. Ernest Brophy

/s/ Mark N. Fessel                       Director                               February 29, 2000
---------------------------
Mark N. Fessel

/s/ Kenneth D. Hill                      Director                               February 29, 2000
---------------------------
Kenneth D. Hill

/s/ Robert E. Naughton                   Director                               February 29, 2000
---------------------------
Robert E. Naughton

/s/ Frank Cavell Smith, Jr.              Director                               February 29, 2000
---------------------------
Frank Cavell Smith, Jr.
</TABLE>
                                       19
<PAGE>

                          CALTON, INC. AND SUBSIDIARIES
                        INDEX OF FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>

                                                                                                          Page
                                                                                                          ----
<S>                                                                                                      <C>
Report of Independent Accountants                                                                         F-2

Consolidated Balance Sheets as of November 30, 1999 and 1998                                              F-3

Consolidated Statements of Operations for the Years Ended November 30, 1999, 1998 and 1997                F-4

Consolidated Statements of Cash Flows for the Years Ended November 30, 1999, 1998 and 1997                F-5

Consolidated Statements of Shareholders' Equity for the Years Ended November 30, 1999, 1998 and           F-6
1997

Notes to Consolidated Financial Statements                                                                F-7

Consent of Independent Accountants                                                                        F-18

Schedules

II-Valuation and Qualifying Accounts                                                                      F-19
</TABLE>

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

** Schedules other than the schedule listed above have been omitted because of
the absence of the condition under which they are required or because the
required information is presented in the financial statements or the note
thereto.

                                      F-1

<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders of Calton, Inc.


     In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page F-1 present fairly, in all material
respects, the financial position of Calton, Inc. and its subsidiaries at
November 30, 1999 and November 30, 1998, and the results of their operations and
their cash flows for each of the three years in the period ended November 30,
1999 in conformity with accounting principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 14(a)(2) on page F-1 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.



PricewaterhouseCoopers, LLP

Florham Park, New Jersey
January 12, 2000, except for the information presenting in Note 9, which is as
of February 18, 2000

                                      F-2

<PAGE>


CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                              1999           1998
                                                                                          ------------   ------------
<S>                                                                                       <C>               <C>
 ASSETS
    Current Assets
       Cash and cash equivalents......................................................    $ 33,786,000   $     85,000
       Securities available for sale..................................................       1,339,000              -
       Holdback receivable............................................................       1,205,000              -
       Receivables....................................................................         337,000         61,000
       Prepaid expenses and other assets .............................................         202,000        939,000
                                                                                          ------------   ------------
           Total current assets.......................................................      36,869,000      1,085,000

       Holdback receivable............................................................       2,842,000              -
       Notes receivable..............................................................          338,000              -
       Goodwill, net..................................................................         233,000              -
       Fixed assets, net..............................................................         143,000         31,000
       Warrant........................................................................          16,000              -
       Net assets of discontinued operations..........................................               -     38,851,000
                                                                                          ------------   ------------

           Total assets ..............................................................    $ 40,441,000   $ 39,967,000
                                                                                          ============   ============


 LIABILITIES AND SHAREHOLDERS' EQUITY
    Accounts payable, accrued expenses and other liabilities..........................    $  1,350,000   $  1,746,000
    Net liabilities of discontinued operations .......................................         437,000              -
                                                                                          ------------   ------------

           Total liabilities .........................................................       1,787,000      1,746,000
                                                                                          ------------   ------------

 Commitments and contingent liabilities


 SHAREHOLDERS' EQUITY
      Common stock, $.01 par value, 53,700,000 shares authorized; issued and
          outstanding 21,473,000 in 1999 and 26,635,000 in 1998 ......................         283,000        267,000
      Paid in capital ................................................................      32,636,000     27,957,000
      Retained earnings...............................................................      14,951,000     10,112,000
      Less cost of shares held in treasury............................................      (8,698,000)      (115,000)
      Accumulated other comprehensive loss:
           Unrealized loss in securities available for sale...........................        (518,000)             -
                                                                                          ------------   ------------

           Total shareholders' equity ................................................      38,654,000     38,221,000
                                                                                          ------------   ------------

           Total liabilities and shareholders' equity ................................    $ 40,441,000   $ 39,967,000
                                                                                          ============   ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                  Years Ended November 30,
                                                                          -----------------------------------------
                                                                              1999          1998           1997
                                                                          ------------  ------------   ------------
<S>                                                                       <C>           <C>            <C>
Revenues ............................................................     $  3,196,000  $          -   $          -
                                                                          ------------  ------------   ------------

Costs and expenses
         Cost of revenues............................................          116,000             -              -
         Selling, general and administrative.........................        1,966,000     2,029,000      2,396,000
                                                                          ------------  ------------   ------------
                                                                             2,082,000     2,029,000      2,396,000
                                                                          ------------  ------------   ------------
Income (loss) from operations........................................        1,114,000    (2,029,000)    (2,396,000)

Other charges (credits)
        Interest expense, net........................................                -        56,000         41,000
        Other income.................................................                -             -     (1,096,000)
                                                                          ------------  ------------   ------------
Income (loss) from continuing operations before income taxes,
          discontinued operations and extraordinary gain.............        1,114,000    (2,085,000)    (1,341,000)
Provision (benefit) for income taxes.................................          453,000      (125,000)       560,000
                                                                          ------------  ------------   ------------
Income (loss) from continuing operations.............................          661,000    (1,960,000)    (1,901,000)
Income (loss) from discontinued operations, net of a provision
        (benefit) for incomes taxes of ($373,000), $2,363,000
        and ($597,000) respectively..................................        (240,000)     6,315,000      1,646,000
Income from sale of Calton Homes, Inc. in 1999 and Florida
        sale transaction in 1997, net of a provision in lieu of
        income taxes of $3,173,000 and $246,000, respectively........        4,418,000             -        369,000
Extraordinary gain from extinguishment of debt, net of an
        $842,000 provision in lieu of income taxes...................                -             -      1,263,000
                                                                          ------------  ------------   ------------
Net income...........................................................     $  4,839,000  $  4,355,000   $  1,377,000
                                                                          ============  ============   ============

Earnings per share
    Basic:
        Income (loss) from continuing operations.....................     $        .03  $       (.07)  $       (.07)
        Income (loss) from discontinued operations, net..............            (.01)           .23            .06
        Income from sale of operating businesses, net................              .19             -            .01
        Extraordinary gain, net......................................                -             -            .05
                                                                          ------------  ------------   ------------
        Net income...................................................     $        .21  $        .16   $        .05
                                                                          ============  ============   ============

    Diluted:
        Income (loss) from continuing operations.....................     $        .03  $       (.07)  $       (.07)
        Income (loss) from discontinued operations, net..............            (.01)           .23            .06
        Income from sale of operating businesses, net................              .18             -            .01
        Extraordinary gain, net......................................                -             -            .05
                                                                          ------------  ------------   ------------
        Net income...................................................     $        .20  $        .16   $        .05
                                                                          ============  ============   ============

Weighted average number of shares outstanding
        Basic........................................................       22,769,000    26,685,000     26,567,000
                                                                          ============  ============   ============
        Diluted......................................................       23,992,000    26,685,000     26,567,000
                                                                          ============  ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>

                                                                                 Years Ended November 30,
                                                                        --------------------------------------------
                                                                            1999            1998           1997
                                                                        ------------    ------------   -------------
<S>                                                                     <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................................      $  4,839,000    $  4,355,000   $   1,377,000
   Adjustments to reconcile net income to net cash
       used by operating activities
             Income from the sale of Calton Homes, Inc............        (4,418,000)              -               -
             Income (loss) from discontinued operations...........           240,000      (6,315,000)     (2,015,000)
             Extraordinary gain from extinguishment of debt, net..                 -               -      (1,263,000)
             Provision for income taxes...........................           422,000               -               -
             Depreciation and amortization........................            17,000         164,000         173,000
             Amortization of debt financing fees..................                 -               -         103,000
             Change in net assets/liabilities of discontinued
                  operations......................................          (657,000)      3,232,000      32,694,000
             Increase in receivables..............................          (276,000)              -               -
             Tax refund...........................................                 -               -       1,871,000
             Decrease (increase) in prepaid expenses
                  and other assets................................           737,000        (895,000)        697,000
             Increase (decrease) in accounts payable, accrued
                  expenses and other liabilities..................            77,000        (431,000)     (1,042,000)
             Issuance of stock under 401(k) Plan and other........                 -          91,000          41,000
                                                                        ------------    ------------   -------------
                                                                             981,000         201,000      32,636,000
                                                                        ------------    ------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net proceeds from sale of Calton Homes, Inc....................        43,440,000               -               -
   Purchase of securities available for sale......................        (3,984,000)              -               -
   Sale of securities available for sale..........................         2,127,000               -               -
   Increase in notes receivable...................................          (338,000)              -               -
   Acquisition of business........................................          (250,000)              -               -
   Increase in property and equipment.............................           (58,000)        (18,000)        (16,000)
   Purchase of warrant............................................           (16,000)               -               -
                                                                        ------------    -------------  --------------
                                                                          40,921,000         (18,000)        (16,000)
                                                                        ------------    ------------   -------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Stock repurchase...............................................        (8,583,000)       (115,000)              -
   Stock options exercised........................................           382,000               -               -
   Retirement of revolving credit agreement.......................                 -               -     (39,350,000)
   Proceeds under revolving credit agreement......................                 -               -       2,500,000
                                                                        ------------    ------------   -------------
                                                                          (8,201,000)       (115,000)    (36,850,000)
                                                                        ------------    ------------   -------------

Net increase (decrease) in cash and cash equivalents..............        33,701,000          68,000      (4,230,000)
Cash and cash equivalents at beginning of year....................            85,000          17,000       4,247,000
                                                                        ------------    ------------   -------------
Cash and cash equivalents at end of year..........................      $ 33,786,000    $     85,000   $      17,000
                                                                        ============    ============   =============

Noncash transactions:
   Holdback receivable............................................      $  4,047,000    $           -  $           -
   Acquisition of assets..........................................      $     54,000    $           -  $           -
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>


<TABLE>
<CAPTION>

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(amounts in thousands)

                                      Total                                                            Accumulated
                                   Shareholders'                                                           Other        Compre-
                                      Equity          Common     Paid In      Retained     Treasury       Compre-       hensive
                                     Capital          Stock      Capital     Earnings       Stock     hensive Loss     Earnings
                                 --------------    -----------  -----------  -----------   ----------   -------------   -----------
Balance,
<S>                              <C>              <C>          <C>          <C>           <C>          <C>             <C>
November  30, 1996............   $       28,086   $       265  $    23,441  $     4,380   $        -   $           -   $         -
Net income....................            1,377             -            -        1,377            -               -             -
Issuance of stock under
     401(k) Plan..............               31             1           30            -            -               -             -
Provision in lieu of
      income taxes............            1,265             -        1,265            -            -               -             -
Tax refund....................            1,871             -        1,871            -            -               -             -
Issuance of stock
     warrants.................              210             -          210            -            -               -             -
Shares issued under
     stock option plan
     and other................               10             -           10            -            -               -             -
                                 --------------   -----------  -----------  -----------   ----------   -------------   -----------
Balance,
November 30, 1997.............           32,850           266       26,827        5,757            -               -             -
Net income....................            4,355             -            -        4,355            -               -             -
Issuance of stock under
     401(k) Plan .............               71             1           70            -            -               -             -
Provision in lieu of
     income taxes.............            1,040             -        1,040            -            -               -             -
Shares issued under
     stock options plan
     and other................               20             -           20            -            -               -             -
                                 --------------   -----------  -----------  -----------   ----------   -------------   -----------
     Subtotal.................           38,336           267       27,957       10,112            -               -             -
Less: Purchase of
     treasury stock...........             (115)            -            -            -         (115)              -             -
                                 --------------   -----------  -----------  -----------   ----------   -------------   -----------
Balance,
November 30, 1998.............           38,221           267       27,957       10,112         (115)              -             -
Net income....................            4,839             -            -        4,839            -               -         4,839
Issuance of stock under
      stock option plans......              382             9          373            -            -               -             -
Issuance of stock under
      warrant exercise........                -             7          (7)            -            -               -             -
Modification of stock                                                                                              -             -
     option terms.............              525             -          525            -            -               -             -
Provision in lieu of
     income taxes.............            3,788             -        3,788            -            -               -             -
Less: purchase of
     treasury stock...........           (8,583)            -            -            -       (8,583)              -             -
Comprehensive Loss:
     unrealized loss in
     securities available
     for sale.................             (518)            -            -            -            -            (518)         (518)
                                                                                                                       -----------
Comprehensive
     earnings.................                -             -            -            -            -               -   $     4,321
                                 --------------   -----------  -----------  -----------   ----------    ------------   ===========
Balance,
November 30, 1999.............   $       38,654   $       283  $    32,636  $    14,951   $   (8,698)   $       (518)
                                 ==============   ===========  ===========  ===========   ==========    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF     PRINCIPLES OF CONSOLIDATION
   SIGNIFICANT
   ACCOUNTING       The consolidated financial statements include the accounts
   POLICIES    of Calton, Inc. and all of its wholly-owned and majority owned
               subsidiaries (the "Company"). On December 31, 1998, the Company
               completed the sale of Calton Homes to Centex Real Estate
               Corporation ("Centex" or the "purchaser"), and on November 30,
               1997, the Company sold the Orlando, Florida homebuilding assets
               (see Note 7).

                    As a result of the sale of Calton Homes and the Florida
               homebuilding assets, the financial statements treat the Company's
               former homebuilding business and results as discontinued
               operations in accordance with APB Opinion No. 30, "Reporting the
               Results of Operations-Reporting the Effects of Disposal of a
               Segment of a Business."

                    Certain reclassifications have been made to prior years'
               financial statements in order to conform with the 1999
               presentation. All significant intercompany accounts and
               transactions have been eliminated.

               ACQUISITION AND NEW BUSINESS SEGMENT

                    In July 1999 the Company acquired the assets of iAW, Inc.,
               an Internet business solutions provider. The acquired business is
               operated through a wholly owned subsidiary named eCalton.com,
               Inc. ("eCalton"). As a result of this acquisition, the Company
               has recorded Goodwill in the amount of $237,000 that will be
               amortized over a ten-year period.

               REVENUE RECOGNITION

                    Revenues of eCalton are derived from fixed fee arrangements
               and are recognized under the percentage of completion method of
               accounting based on the ratio of costs incurred compared to
               estimated costs. Provision for estimated losses on uncompleted
               contracts are made in circumstances in which such losses are
               probable.

               CASH AND CASH EQUIVALENTS

                    Cash equivalents consist of short-term, highly liquid
               investments, with original maturities of three months or less,
               that are readily convertible into cash.

               FIXED ASSETS

                    Fixed assets primarily comprise of computer equipment and
               office furniture. Computer equipment is being depreciated over a
               useful life of three to four years and office furniture is being
               depreciated over five years. Accumulated depreciation as of
               November 30, 1999 is $12,000.

               INCOME TAXES

                    Income taxes are determined in accordance with Statement of
               Financial Accounting Standards No. 109 (see Note 5).

               PREPAID EXPENSES AND OTHER ASSETS

                    Prepaid expenses consist primarily of prepaid insurance that
               will be amortized over the contract period.

               RISKS AND UNCERTAINTIES

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

               PER SHARE COMPUTATIONS

                    Statements of Financial Accounting Standards No. 128,
               "Earnings per Share" requires the presentation of basic and
               diluted per share amounts, effective for financial statements
               issued for periods ending after December 15, 1997. The weighted
               average number of common stock outstanding for 1999, 1998 and
               1997 used for the basic calculation is 22,769,000, 26,685,000 and
               26,567,000 respectively. The diluted weighted average number of
               shares of common stock for the same periods is 23,992,000,
               26,685,000 and 26,567,000 respectively.

                    As of November 30, 1999, there were 21,473,000 shares
               outstanding and a total of 3,661,000 stock options granted and
               outstanding under the Company's incentive stock option plans.
               There were 1,800,000 stock options that were not included in the
               calculation of diluted earnings per share in 1999 as these
               options were antidilutive. In addition, a warrant to purchase
               1,000,000 shares of common stock was outstanding until June 1999
               (see Note 4). The effect of stock options and the warrant were
               not included in the calculation of diluted earning per share in
               1998

                                      F-7

<PAGE>

               and 1997 as these options and warrants were antidilutive due to
               the loss from continuing operations during these periods.

               STOCK-BASED COMPENSATION

                    Statement of Financial Accounting Standards No. 123,
               "Accounting for Stock-Based Compensation" ("FAS 123"),
               establishes a fair value based method of accounting for
               stock-based compensation plans, including stock options. FAS 123
               allows the Company to continue accounting for stock options plans
               under Accounting Principles Board Opinion No. 25, "Accounting for
               Stock Issued to Employees" ("APB 25"), but requires it to provide
               pro forma net income and earnings per share information "as if"
               the new fair value approach had been adopted. Because the Company
               continued to account for its stock option plans under APB 25,
               there was no impact on the Company's consolidated financial
               statements resulting from implementation of FAS 123 (see Note 4).


2. NOTES
   RECEIVABLE  NOTES RECEIVABLE CONSIST OF THE FOLLOWING:

<TABLE>
<CAPTION>
                                                                      November 30,
                                                                ------------------------
                                                                   1999          1998
                                                                ---------    -----------
<S>                                                             <C>          <C>
               CorVu note receivable (a)................        $ 234,000    $         -
               PrivilegeONE note receivable (b).........          104,000              -
                                                                ---------    -----------
                                                                $ 338,000    $         -
                                                                =========    -----------
</TABLE>

                    (a) In November 1999, the Company made a $250,000 unsecured
               bridge loan to CorVu Corporation ("CorVu") pursuant to a note
               which provided that all principal and accrued interest would
               become due upon the earlier of (i) 120 days or (ii) the closing
               of a reverse merger transaction with Minnesota American, Inc.
               Upon the occurrence of the reverse merger in January 2000, the
               bridge loan was converted to 143,000 common shares in the
               surviving corporation.

                    As consideration for making the bridge loan, the Company was
               issued a five year warrant to purchase 253,000 shares of common
               stock in CorVu at a per share price of $.01 per share. The fair
               value of the notes and warrant were determined and allocated to
               each instrument based on their relative fair value.

                    At the time of the reverse merger, Minnesota American
               changed its name to CorVu and is traded under the symbol
               ("CRVU".) The trading price for CorVu common stock was $6.25 per
               share as of February 9, 2000; however, both the common shares and
               the shares under the warrant are unregistered securities and
               therefore are not freely tradable (see Note 9).

                    (b) November 1999, the Company loaned an aggregate of
               $104,000 to PrivilegeONE to fund its initial operations pursuant
               to a note providing for interest at a rate of ten percent per
               annum and a maturity date of February 19, 2000. During the first
               quarter of fiscal 2000, the Company acquired a 50.4% direct and
               indirect ownership interest in PrivilegeONE. Concurrently, the
               note was converted to a new note bearing interest at 10% per
               annum, with a maturity date of January, 2004 (see Note 9).

                                      F-8

<PAGE>



3. SEGMENT          Through the acquisition of substantially all the assets of
   REPORTING   iAW, Inc., an Internet business solutions provider, in July 1999,
               the Company has entered into a new business and related industry.
               The acquired business is operated through a wholly owned
               subsidiary, eCalton. Revenues of eCalton will be recognized under
               the percentage of completion method of accounting. The Company
               does not have any foreign operations. The following schedule
               illustrates eCalton relative to the consolidated Company for the
               year ended November 30, 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                           CORPORATE
                                                                        INTERNET              AND
                                                                        BUSINESS          CONSULTING         TOTAL
                                                                        SOLUTIONS          SERVICES         COMPANY
                                                                       -----------       -----------      ----------
<S>                                                                    <C>               <C>              <C>
                       Total revenues (a) .........................    $       157       $     3,039      $    3,196
                       Total cost of revenue (b) ..................            116                 -             116
                       Total selling, general and administrative
                             expenses .............................            468             1,498          1,966
                       Income (loss) from operations ..............           (427)            1,541          1,114
                       Provision (benefit) for income taxes........           (171)              624             453
                       Income (loss) from continuing
                             operations............................           (256)              917             661
                       Total assets ...............................    $       464       $    39,977      $   40,441
</TABLE>


                       (a) Total revenues for Internet Business Solutions
                           represents five months of revenues since acquisition
                           on July 1, 1999.

                       (b) Total cost of revenues represents production costs
                          (including allocated salaries, computer hardware,
                          computer software and video conferencing costs).


4. SHAREHOLDERS'    The Company's Certificate of Incorporation provides for
   EQUITY      53,700,000 authorized shares of Common Stock (par value $.01 per
               share), 2,600,000 shares of Redeemable Convertible Preferred
               Stock (par value $.10 per share) and 10,000,000 shares of Class A
               Preferred Stock (par value $.10 per share), one million shares of
               which have been designated as Class A Series One Preferred Stock.
               None of the Preferred Stock is issued or outstanding.

                    The Company commenced a significant stock repurchase program
               pursuant to which it announced its intention to repurchase up to
               10,000,000 shares of Common Stock in open market repurchases and
               privately-negotiated transactions during fiscal 1999 and 1998. As
               of November 30, 1999, there were 6,900,000 shares held in
               Treasury in the amount of $8,698,000. The Company has suspended
               the acquisition of additional shares subsequent to year end since
               the market value of the Company's Common Stock has been in excess
               of book value.

                    In May 1993, the Company adopted the Calton, Inc. 1993
               Non-Qualified Stock Option Plan (the "1993 Plan") under which a
               total of 1,493,000 shares of Common Stock were reserved for
               issuance. Under the terms of the 1993 Plan, options may be
               granted at an exercise price designated by the Board of
               Directors. In January 1999, the Company's Board of Directors
               approved the grant to the Company's Chairman and President of
               options to acquire an aggregate of 600,000 shares of Common Stock
               under the 1993 Plan. The options granted under the 1993 Plan vest
               in equal installments over a three-year period. The exercise
               price of options granted range from $.31 to $1.22 per share.
               Options granted under the 1993 Plan have a maximum term of ten
               years, with a weighted average contractual life of 6.5 years in
               1999 and 2.3 years in 1998. In the fourth quarter of 1998,
               685,000 options were repurchased from a former employee for
               $171,000 or $.25 per option.

                                      F-9
<PAGE>

                    In April 1996, the Company's shareholders approved the
               Company's 1996 Equity Incentive Plan (the "1996 Plan") under
               which a total of 2,000,000 shares of Common Stock were reserved
               for issuance. Under the terms of the 1996 Plan, options may be
               granted at an exercise price equal to the fair market value of
               the Common Stock on the date of grant (110% of such fair market
               value in the case of an incentive stock option granted to a 10%
               shareholder). In January 1999, the Board approved the grant to
               other employees of options to acquire an aggregate of 35,000
               shares of Common Stock under the 1996 Plan. The options granted
               under the 1996 Plan vest in equal installments over a five-year
               period. The exercise prices of outstanding options range from
               $.34 to $1.22 per share with vesting ranging from one to five
               years. The exercise period in up to ten years, with a weighted
               average contractual life of 4.7 years in 1999 and 4.1 years in
               1998.

                    In connection with the sale of Calton Homes, Inc. the
               Company made certain adjustments to the terms of options to
               acquire Calton Common Stock previously granted and outstanding as
               of December 31, 1998 under the 1993 Plan and the 1996 Plan.
               Effective January 1, 1999, all options that were previously
               granted and outstanding became exercisable, regardless of whether
               the right to exercise the option had previously vested; employees
               of Calton Homes, Inc. have until December 31, 2000 to exercise
               any options; and options of employees of Calton, Inc. will expire
               in accordance with their original terms. The effect of the
               amendments to the stock option plans of approximately $525,000 is
               considered to be severance costs and was therefore recorded as an
               expense and included in the gain on the sale transaction in the
               first quarter of 1999.

               STOCK OPTION TRANSACTIONS UNDER THE 1996 PLAN AND 1993 PLAN ARE
               SUMMARIZED AS FOLLOWS
               (SHARES IN THOUSANDS):
<TABLE>
<CAPTION>
                                                                                                   1996      1993
                                                                                                   Plan      Plan
                                                                                                   -----     -----
<S>                                                                                                <C>       <C>
                      Options outstanding, November 30, 1997...................................    1,095     1,360
                      Granted..................................................................      327         -
                      Forfeited or repurchased.................................................      (36)     (685)
                      Exercised................................................................       (4)        -
                                                                                                   -----     -----
                      Options outstanding, November 30, 1998...................................    1,382       675
                      Granted..................................................................       85       600
                      Exercised................................................................     (521)     (360)
                                                                                                   -----     -----
                      Options outstanding, November 30, 1999...................................      946       915
                                                                                                   -----     -----
</TABLE>

                    In July 1999, the Company entered into employment agreements
               with three officers of eCalton pursuant to which each have been
               granted options to acquire 600,000 shares of Calton Common Stock,
               or an aggregate of 1.8 million shares. The non-qualified stock
               options granted have terms similar to the 1996 Equity Incentive
               Plan, vest in three equal annual installments beginning July 19,
               2000, and have a term of ten years. The exercise price is $1.63
               per share.

                    The Company accounts for stock option plans under APB 25.
               Accordingly, no compensation expense has been recognized for its
               stock-based compensation plans except as discussed above and in
               Note 7. Had compensation cost for the Company's stock option
               plans been determined based upon the fair value at the grant date
               for awards under these plans consistent with the methods
               prescribed under FAS 123, the Company's net income would have
               been reduced by approximately $551,000 and $141,000 for years
               ended November 30, 1999 and 1998, respectively. On a pro forma
               basis, earnings per share would have been reduced by $.02 and
               $.00 per share for 1999 and 1998, respectively. The estimated
               weighted average fair value of the options granted in each of the
               two fiscal years ended November 30, 1999 and 1998 is $1.21 and
               $.31, using the Black-Scholes option-pricing model, with the
               following assumptions: dividend yield - none, volatility of .8
               and .7, risk-free interest rate of 4.56% and 5.49%, assumed
               forfeiture rate as they occur and an expected life of 3 years and
               4.7 years at November 30, 1999 and 1998, respectively.

                                      F-10

<PAGE>

                    In June 1999, the holder of a warrant (the "Warrant") to
               purchase 1,000,000 shares of Calton Common Stock, exercised the
               Warrant using the cashless exercise method. As a result, the
               holder was issued 681,461 shares which the Company repurchased
               for $750,000 and the Warrant was canceled. The 681,461 shares are
               held as Treasury stock.

                    In January 2000, the Company's Board of Directors approved a
               grant to the Company's Chairman and President of options to
               acquire 200,000 shares of Common Stock under the 1996 Plan. These
               options have an exercise price of $2.78 per share, a term of five
               years and vest in five equal annual installments. In addition, in
               January 2000, the Board approved the grant to other employees of
               options to acquire an aggregate of 215,000 shares under the 1993
               Plan and 136,000 shares under the 1996 Plan. Each of these
               options has an exercise price of $2.53 per share. Options granted
               under the 1993 Plan vest in equal annual installments over a
               three year period. The options granted under the 1996 Plan vest
               in equal installments over a five year period.

                    In February 1999, the Company's Board of Directors adopted a
               shareholder rights plan (the "Rights Plan") and declared a
               dividend of one preferred stock purchase right (a "Right") for
               each outstanding share of Common Stock. Under the Rights Plan,
               each Right represents the right to purchase from the Company one
               one-hundredth (1/100th) of a share of Class A Preferred Stock
               Series One (the "Preferred Stock") at a price of $5.50 per one
               one-hundredth (1/100th) of a share. Each one one-hundredth
               (1/100th) of a share of Preferred Stock has economic and voting
               terms equivalent to those of one share of the Company's Common
               Stock. The Rights will not become exercisable unless and until,
               among other things, a person or group acquires or commences a
               tender offer for 15% or more of the Company's outstanding Common
               Stock. In the event that a person or group, without Board
               approval acquires 15% or more of the outstanding Common Stock,
               each Right would entitle its holder (other than the person or
               group) to purchase shares of Preferred Stock having a value equal
               to twice the exercise price. Also, if the Company is involved in
               a merger or sells more than 50% of its assets or earning power,
               each Right will entitle its holder (other than the acquiring
               person or group) to purchase shares of common stock of the
               acquiring company having a market value equal to twice the
               exercise price. If any person or group acquires at least 15%, but
               less than 50%, of the Company's Common Stock, the Board may, at
               its option, exchange one share of Common Stock for each Right
               (other than Rights held by such person or group). The Right Plan
               may cause substantial dilution to a person or group that, without
               prior Board approval, acquires 15% or more of the Company's
               Common Stock, unless the Rights are first redeemed by the Board.
               The Rights expire on February 1, 2009 and may be redeemed by the
               Company at a price of $.01 per Right.


5. INCOME      THE COMPONENTS OF THE PROVISION/(BENEFIT) FOR INCOME TAXES ARE AS
               FOLLOWS:
              (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                          Years Ended November 30,
                                                                                      -------------------------------
                                                                                        1999        1998        1997
                                                                                      --------    --------     ------
<S>                                                                                   <C>         <C>          <C>
                           Federal
                                Current...........................................    $     15    $  1,785     $  455
                                Deferred..........................................         (28)       (603)      (102)
                                Provision in lieu of income taxes.................       2,928         527        257
                           State
                                Current...........................................          28          16         57
                                Provision/(benefit) in lieu of income taxes.......         310         513       (458)
                                                                                      --------    --------     ------
                                                                                         3,253       2,238        209
                           Less: Discontinued operations (provision)/benefit......         373      (2,363)       351
                                      Provision in lieu of taxes on the sale of
                                           Calton Homes...........................      (3,173)           -         -
                                                                                      --------    --------     ------
                                      Continuing operations.......................    $    453    $   (125)    $  560
                                                                                      ========    ========     ======
</TABLE>

                                      F-11
<PAGE>


              THE FOLLOWING SCHEDULE RECONCILES THE FEDERAL PROVISION (BENEFIT)
              FOR INCOME TAXES COMPUTED AT THE STATUTORY RATE TO THE ACTUAL
              PROVISION FOR INCOME TAXES
              (AMOUNTS IN THOUSANDS):
<TABLE>
<CAPTION>

                                                                                          Years Ended November 30,
                                                                                      -------------------------------
                                                                                        1999        1998        1997
                                                                                      --------    --------     ------
<S>                                                                                   <C>         <C>          <C>
                         Computed provision for income taxes at 34%..........         $  2,758    $  2,242     $  110
                         Expenses for which deferred tax benefit
                              cannot be currently recognized.................                -           -        501
                         Expenses for which deferred tax benefit is
                              currently recognized...........................              (37)       (399)         -
                         State and local tax provision.......................              594         529        222
                         State tax reserves..................................             (550)          -       (624)
                         Expenses for which no tax benefit is available......              488           -          -
                         Other...............................................                -        (134)         -
                                                                                      --------    --------     ------
                         Total provision for income taxes....................            3,253       2,238        209
                         Less: Discontinued operations
                                        (provision)/benefit..................              373      (2,363)       351
                                   Provision in lieu of taxes on the sale of
                                         Calton Homes........................           (3,173)          -          -
                                                                                      --------    --------     ------
                                   Continuing operations.....................         $    453    $   (125)    $  560
                                                                                      ========    ========     ======
</TABLE>

                    In 1999 and 1997, the resolution of certain state tax issues
               resulted in $550,000 and $624,000 of state tax reserves being
               reduced as a reduction to the 1999 and 1997 provision for income
               taxes. In addition, included in the Company's 1997 extraordinary
               gain is a provision in lieu of income taxes of $842,000.

               TEMPORARY  DIFFERENCES AND CARRYFORWARDS WHICH GIVE RISE TO A
               SIGNIFICANT PORTION OF DEFERRED TAX ASSETS AND LIABILITIES AT
               NOVEMBER 30, 1999, AND 1998 ARE AS FOLLOWS:
               (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                  Deferred Tax Assets/(Liabilities)
                                                        -----------------------------------------------------
                                                          Continuing Operations             Combined*
                                                        --------------------------    -----------------------
                                                            1999           1998         1999         1998
                                                        -----------     ----------    ---------   -----------
<S>                                                     <C>             <C>           <C>         <C>
                    Fresh-start inventory
                         reserves..................     $         -     $       31    $       -   $       322
                    Income from joint ventures.....               -            129           33           129
                    Inventory and other reserves...               -            594            -         1,173
                    Capitalized inventory costs....               -           (263)           -          (479)
                    Federal net operating losses...           5,594          5,406        5,594         8,126
                    State net operating losses.....           2,248          2,227        2,662         4,265
                    Depreciation...................              (6)            83           (6)           78
                    Deferred state taxes...........               5            328          131           615
                    Litigation reserve.............               -              -          187             -
                    Stock compensation.............               -              -          179             -
                    Other..........................              23             40          109            17
                                                         ----------     ----------    ---------   -----------
                                                              7,864          8,575        8,889        14,246
                    Valuation allowances...........           7,864         (8,519)      (8,805)      (13,541)
                                                         ----------     ----------    ---------   -----------
                    Total deferred taxes...........     $         -     $       56    $      84   $       705
                                                        -----------     ----------    ---------   -----------
</TABLE>

                    *Includes both continuing and discontinued operations

                                      F-12

<PAGE>

               Deferred income taxes arise from temporary differences between
               the tax basis of assets and liabilities and their reported
               amounts in the financial statements. For federal and state tax
               purposes, a valuation allowance was provided on a significant
               portion of the net deferred tax assets due to uncertainty of
               realization. On December 31, 1998, Calton, Inc. sold the stock of
               Calton Homes to an unrelated party and incurred a capital tax
               loss. This loss will have a full valuation allowance due to
               uncertainty of realization. The sale of Calton Homes resulted in
               the termination of a significant portion of the net deferred tax
               asset.

                    The federal net operating loss carryforward for tax purposes
               is approximately $16,400,000 at November 30, 1999 and $23,900,000
               at November 30, 1998. The sale of Calton Homes resulted in a
               reduction of approximately $8,000,000 in Calton, Inc.'s federal
               net operating loss carryforward. The Company's ability to use its
               deferred tax assets including federal net operating loss
               carryforwards, created prior to November 21, 1995, to offset
               future income is limited to approximately $1,127,000 per year
               under Section 382 of the Internal Revenue Code as a result of the
               change in control of the Company in November 1995. The limitation
               has been reduced by approximately $500,000 per year as a result
               of the terms of the sale of Calton Homes. These federal
               carryforwards will expire between 2007 and 2014. In 1997, the
               Company received a tax refund related to prior periods of
               $2,442,000. The Company paid income taxes of approximately
               $1,640,000, $680,000 and $30,000, respectively, in 1999, 1998 and
               1997.

6. COMMITMENTS      (a) As part of the sale of Calton Homes on December 31,
   AND         1998, the Company entered into a consulting agreement with the
   CONTINGENT  purchaser that requires the purchaser to make payments of
   LIABILITIES $1,300,000 million per year over a three-year period to the
               Company.

                    (b) If by June 30, 2000, the Company has not redeployed a
               substantial portion of the proceeds of the Sale Transaction, or
               developed a plan to redeploy a substantial portion of such
               proceeds within in a reasonable time frame, the Company, subject
               to shareholder approval, will be liquidated and dissolved.
               Management currently expects to deploy or have a plan to deploy a
               substantial portion of the proceeds by June 30, 2000.

                    (c) The stock purchase agreement pursuant to which the
               Company sold Calton Homes on December 31, 1998 requires the
               Company to indemnify the purchaser for, among other things,
               breaches of the agreement and certain liabilities that arise out
               of events occurring prior to the closing of the sale, including
               the cost of warranty work on homes delivered if such costs exceed
               $600,000. On December 31, 1998, as a condition to the sale of
               Calton Homes, the Company entered into a holdback escrow
               agreement with the purchaser pursuant to which $5,159,000 of the
               closing proceeds were deposited into escrow. Of this amount,
               $3,000,000 (the "General Indemnification Funds") was deposited to
               provide security for the Company's indemnity obligations and
               $2,159,000 (the "Specific Indemnification Funds") was deposited
               to fund costs associated with certain specified litigation
               involving Calton Homes. As of November 30, 1999 there was
               $1,610,000 in the Specific Indemnification Funds, and $2,410,000
               in the General Indemnification Funds, of which $962,000 was paid
               to the Company in January 2000. In January 2000, the purchaser
               asserted a $253,000 claim for indemnification related to certain
               alleged misrepresentations and liabilities allegedly arising out
               of the events occurring prior to the sale of Calton Homes. The
               Company and the purchaser are attempting to resolve these claims
               and is uncertain as to whether these claims will proceed to
               arbitration pursuant to the indemnity agreement. The remaining
               General Indemnification Funds will be disbursed to the Company,
               subject to claims for indemnification, on December 31, 2000. The
               Specific Indemnification Funds will be disbursed, to the extent
               not otherwise utilized in the resolution of litigation, on a case
               by case basis as the litigation is resolved. If all of the
               specified litigation is not resolved by December 31, 2000, a
               portion on the General Indemnification Funds will not be
               disbursed to the Company until the resolution of the litigation.
               The Company may, under certain circumstances, be required to
               deposit additional funds in the holdback if all of the specified
               litigation is not resolved by December 31, 2000. In addition, the
               Company's indemnity obligations are not limited to the amounts
               deposited in escrow. In the event that the Company elects to
               liquidate and

                                      F-13

<PAGE>

               dissolve prior to December 31, 2003, it will be required to
               organize a liquidating trust to secure its obligations to the
               purchaser. The liquidating trust will be funded with the Specific
               Indemnification Funds plus $3,000,000 if created between December
               31, 1999 and December 31, 2000 and $2,000,000 if created after
               December 31, 2000. If the liquidation occurs prior to December
               31, 2000, the Company may be required to deposit additional
               amounts in the liquidating trust if the specified litigation is
               not resolved by such date. Any General Indemnification Funds
               remaining in the holdback escrow fund will be applied as a credit
               against amounts required to be deposited in the liquidating
               trust.

                    (d) The Company assigned its operating lease in New Jersey
               for office space expiring November 30, 2002 to Calton Homes.
               Rental expense for the years ended November 30, 1999, 1998 and
               1997 amounted to $45,000, $392,000 and $730,000 respectively.

                    The Company currently leases approximately 2,100 square feet
               of office space located in Red Bank, New Jersey, for
               approximately $4,700.00 per month. The term of this lease is on a
               month-to-month basis. The Company also leases approximately 1,790
               square feet of temporary office space on a month-to-month basis
               in Vero Beach, Florida, for approximate $2,200.00 per month,
               until its permanent space is available at the end of May 2000.
               The permanent space at the same location will consist of
               approximately 3,815 square feet, at a monthly rate of
               approximately $5,722.00, for a term of 5 years.

                    The Company's subsidiary, eCalton, currently leases
               approximately 4,000 square feet of office space, for
               approximately $4,700 per month. The term of this lease is on a
               month-to-month basis.

                    (e) The Company had a qualified contributory retirement plan
               (401(k) Plan) which covered all eligible full-time employees with
               a minimum of one year of service. The Company terminated the
               401(k) Plan effective December 31, 1998. The Company's
               contribution to the plan was $71,000 in 1998, and $30,000 in
               1997. The Company's matching contribution, in the form of
               registered Common Stock of the Company, for 1998 was 50% of
               participant contributions, subject to a maximum of 3% of total
               compensation and $2,000 per employee.

7. DISCONTINUED     On December 31, 1998, the Company completed the sale of
   OPERATIONS  Calton Homes. The shareholders of Calton, Inc. approved the sale
               of the stock of Calton Homes on December 30, 1998. The purchase
               price for the stock of Calton Homes was $48,100,000 plus certain
               post closing adjustments. The Company recorded a pretax gain of
               $7,591,000 on the sale including the post closing adjustments.
               Cash proceeds from the sale were approximately $43,440,000, net
               of the $4,040,000 remaining holdback and $1,800,000 million cash
               received from closing adjustments. No tax liability is expected
               to result from the sale since the transaction resulted in a
               capital loss for tax purposes. However, a provision in lieu of
               taxes was recorded for financial reporting purposes in fiscal
               1999 in the amount of $3,173,000 related to the sale transaction.
               The gain was subject to the $5,200,000 holdback (see note 6) of
               which $700,000 was refunded to the purchaser, out of the General
               Indemnification Funds and included as part of the gain and
               $592,000 was received by Calton pursuant to the terms of the
               indemnification agreement. Future decreases to the escrows held
               for indemnifications, if any, will be recorded as an adjustment
               to the Income from the sale of Calton Homes. Calton has entered
               into an agreement to provide consulting services to Centex that
               requires payments to the Company of $1,300,000 per year over a
               three-year period.

                    As a result of the sale of Calton Homes and the sale of the
               Florida homebuilding assets that occurred at the end of fiscal
               1997, the financial statements for the current and prior periods
               have been restated to reflect the Company's homebuilding and real
               estate development business as discontinued operations including
               the operations of other subsidiaries located in Orlando, Florida;
               Chicago, Illinois; Pennsylvania and California, where the Company
               had similar operations and commercial land held for sale.

                                      F-14

<PAGE>

               RESULTS OF OPERATIONS FROM DISCONTINUED OPERATIONS ARE AS FOLLOWS
               (AMOUNTS IN THOUSANDS):
<TABLE>
<CAPTION>
                                                                                     Years Ended November 30,
                                                                                 --------------------------------
                                                                                   1999        1998       1997
                                                                                 -------    ---------   ---------
<S>                                                                              <C>        <C>         <C>
                    Revenues.................................................    $ 6,763    $ 105,292   $ 126,588
                                                                                 -------    ---------   ---------

                    Cost of revenues.........................................      5,858       85,897     110,419
                    Selling, general and administrative......................      1,518       10,172      12,532
                    Impairment of assets.....................................          -            -         750
                                                                                 -------    ---------   ---------
                                                                                   7,376       96,069     123,701
                                                                                 -------    ---------   ---------
                    Income (loss) from operations............................       (613)       9,223       2,887
                    Interest expense, net....................................          -          545       1,223
                                                                                 -------    ---------   ---------
                    Income (loss) before income taxes........................       (613)       8,678       1,664
                    Provision (benefit) for income taxes.....................       (373)       2,363        (351)
                                                                                 -------    ---------   ---------
                    Net income (loss) from discontinued operations...........    $  (240)   $   6,315   $   2,015
                                                                                 =======    =========   =========
</TABLE>

                    Selling, general and administrative costs include
               approximately $984,000 of litigation costs related to the
               resolution of indemnification obligations as a part of the sale
               of Calton Homes.

                    Included in revenues for the year ended November 30, 1997,
               is the Orlando, Florida division that generated $56,281,000 of
               revenues, that included $16,660,000 of revenues from the 1997
               Florida asset sale and resulted in a pretax gain of $615,000.

                    Interest paid for the years ended November 30, 1999, 1998
               and 1997 was $209,000, $3,970,000 and $5,508,000, respectively.

               NET ASSETS OF DISCONTINUED OPERATIONS ARE AS FOLLOWS
               (AMOUNTS IN THOUSANDS):
<TABLE>
<CAPTION>
                                                                                                          November 30,
                                                                                                     ---------------------
                                                                                                       1999        1998
                                                                                                     --------   ----------
<S>                                                                                                  <C>        <C>
                    Assets
                         Cash....................................................................    $      -   $   11,910
                         Receivables and other assets............................................         104        9,385
                         Inventories.............................................................           -       61,449
                         Commercial land.........................................................         109          252
                    Liabilities
                         Revolving credit agreement..............................................           -      (21,000)
                         Mortgages payable.......................................................           -       (1,262)
                         Accounts payable and accrued expenses...................................        (650)     (21,883)
                                                                                                     --------   ----------
                    Net assets (liabilities).....................................................    $   (437)  $   38,851
                                                                                                     ========   ==========
</TABLE>

                                      F-15
<PAGE>

8. QUARTERLY       QUARTERLY FINANCIAL RESULTS FOR THE YEARS ENDED
   FINANCIAL       NOVEMBER 30, 1999 AND 1998 ARE   AS FOLLOWS
   RESULTS         (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS):
   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                              -------------------------------------------------------
                                                               February 28,    May 31,    August 31,    November 30,
                                                                   1999         1999         1999           1999
                                                              -------------   ---------  ------------  --------------
<S>                                                           <C>             <C>        <C>           <C>
                    Net loss from continuing
                         operations........................   $         159   $     285  $        178  $           39
                    Net (loss) income from
                         discontinued operations...........              92        (379)         (100)            147
                    Net income from the sale of
                         Calton Homes......................           3,886         668             -            (136)
                                                              =============   =========  ============  ==============
                    Net (loss) income......................   $       4,137   $     574  $         78  $           50
                                                              -------------   ---------  ------------  --------------

                    Net income per share
                         Basic(b)..........................   $         .16   $     .03  $          -  $            -
                                                              =============   =========  ============  ==============
                         Diluted(b)........................   $         .15   $     .02  $          -  $            -
                                                              =============   =========  ============  ==============
<CAPTION>

                                                                                Three Months Ended
                                                              -------------------------------------------------------
                                                               February 28,    May 31,    August 31,    November 30,
                                                                   1998         1998         1998           1998
                                                              -------------   ---------  ------------  --------------
<S>                                                           <C>             <C>        <C>           <C>
                    Net income from continuing
                         operations(a).....................   $      (301)    $    (251) $       (352) $       (1,056)
                    Net income (loss) from
                         discontinued operations...........          (236)          657         1,052           4,842
                                                              -----------     ---------  ------------  --------------
                    Net (loss) income......................   $      (537)    $     406  $        700  $        3,786
                                                              -----------     ---------  ------------  --------------

                    Net (loss) income per share,
                         basic and diluted.................   $      (.02)    $     .02  $        .03  $          .13
                                                              -----------     ---------  ------------  --------------
</TABLE>
                    (a) The increase in the net loss from continuing operations
                    for the three months ended November 30, 1998 is primarily a
                    result of intercompany charges from continuing operations to
                    discontinued operations.

                    (b) Net income per share does not agree to the per share
                    amounts presented on the face of the income statement as a
                    result of the impact of the stock repurchase program.

9. SUBSEQUENT       On January 24, 2000 the Company purchased an additional
   EVENTS      375,000 shares of common stock and a five-year warrant which
               entitles the Company to purchase an aggregate of 225,000 shares
               of CorVu Corporation common stock. The Warrant entitles the
               Company to acquire certain specified quantities of shares at
               specified exercise prices ranging from $2.00 per share to $8.00
               per share. The aggregate exercise price is $900,000. The
               aggregate acquisition amount for the stock and warrant was
               $750,000. CorVu Corporation is traded under the symbol "CRVU" on
               the OTC Bulletin Board. As of February 9, 2000 the common stock
               was traded at $6.25 per share. Both the warrants and stock are
               not registered and have current restrictions on trading.

                    In January 2000, the Company acquired a collective direct
               and indirect (through ownership in a parent company) 50.4% equity
               interest in PrivilegeONE Networks, Inc., a newly formed company
               engaged in the development of a co-branded loyalty credit card
               program. The purchase


                                      F-16

<PAGE>


               price for the Company's interest was comprised of $105,000 of
               cash and a warrant to acquire 1,200,000 shares of Common Stock at
               an exercise price of $2.50 per share. The warrant becomes
               exercisable only if PrivilegeONE surpasses certain specified
               earnings targets. In addition to its equity interest, the Company
               has agreed to loan up to $1,500,000 to PrivilegeONE pursuant to a
               note which bears interest at the rate of 10% per annum and
               becomes due in January 2004.

                                      F-17

<PAGE>


                       CONSENT OF INDEPENDENT ACCOUNTANTS


     We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 33-70628, 33-75184 and 333-28135) of Calton, Inc. of
our report dated January 12, 2000, except as to the information described in
Note 9, which is as of February 18, 2000 relating to the financial statements
and financial statement schedule, which appears in this Form 10-K.



PricewaterhouseCoopers, LLP

Florham Park, New Jersey
February 28, 2000


                                      F-18

<PAGE>

                                   SCHEDULE II
                          CALTON, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                             Additions
                                                                    ----------------------------
                                                      Balance at     Charged to      Charged to                       Balance
                                                      Beginning      Costs and         Other                          At End
                 Description                           of Year        Expenses        Accounts     Deductions         of Year
                 -----------                        -------------   -------------  -------------   ----------      -------------
<S>                                                 <C>             <C>            <C>             <C>             <C>
Year ended November 30, 1997:

Net realizable value reserves for inventory         $       1,113   $         750  $           -   $      882(A)   $         981
                                                    =============   =============  =============   ==========      =============

Valuation allowance for net deferred tax asset      $      19,628   $           -  $           -   $    3,538(B)   $      16,090
                                                    =============   =============  =============   ==========      =============


Year ended November 30, 1998:

Net realizable value reserves for inventory         $         981   $           -  $           -   $        726    $         726
                                                    =============   =============  =============   ============    =============

Valuation allowance for net deferred tax asset      $      16,090   $           -  $           -   $      2,549    $      13,541
                                                    =============   =============  =============   ============    =============


Year ended November 30, 1999:

Net realizable value reserves for inventory         $         255   $           -  $           -   $        100    $         155
                                                    =============   =============  =============   ============    =============

Valuation allowance for net deferred tax asset      $      13,541   $           -  $           -   $    4,736(c)   $       8,805
                                                    =============   =============  =============   ==========      =============
</TABLE>

(A)  Represents the utilization of reserves recorded when affected homes are
     delivered and land is sold.

(B)  Represents the change in the valuation allowance due to the changes in the
     deferred tax assets and the impact of the IRS Code Section 382 limitation
     on those assets.

(C)  The majority of the change in valuation allowance is due to the sale of
     Calton Homes, Inc., and did not have an income statement impact.


                                      F-19


<PAGE>

                                INDEX TO EXHIBITS

     2.1       Agreement for Sale and Purchase of Assets dated as of November
               26, 1997 between Beazer Homes Corp., Beazer Homes USA, Inc.,
               Calton Homes of Florida, Inc. and Calton Homes, Inc.,
               incorporated by reference to Exhibit 2 to Form 8-K of Registrant
               dated December 1, 1997.

     2.2       Amended and Restated Stock Purchase Agreement effective September
               2, 1998 among Calton, Inc., Calton Homes, Inc. and Centex Real
               Estate Corp., incorporated by reference to Exhibit 2 to Form 8-K
               of Registrant dated December 31, 1998.

     2.3       Amendment No. 1 to Amended and Restated Stock Purchase Agreement
               dated as of December 28, 1998 among Calton, Inc., Calton Homes,
               Inc. and Braewood Development Corp. (assignee of Centex Real
               Estate Corp.), incorporated by reference to Exhibit 2.1 to Form
               8-K of Registrant dated December 31, 1998.

     3.1       Amended and Restated Certificate of Incorporation of the
               Registrant filed with the Secretary of State, State of New Jersey
               on May 28, 1993, incorporated by reference to Exhibit 3.2 to
               Amendment No. 1 to Form S-1 Registration Statement under the
               Securities Act of 1933, Registration No. 33-60022, Certificate of
               Amendment to Amended and Restated Certificate of Incorporation of
               Registrant filed with the Secretary of State, State of New Jersey
               on April 27, 1994, incorporated by reference to Exhibit 3(b) to
               Form S-1 Registration Statement under the Securities Act of 1933,
               Registration No. 33-76312, and Certificate of Amendment to
               Amended and Restated Certificate of Incorporation of Registrant
               filed with the Secretary of State, State of New Jersey on May 29,
               1997, incorporated by reference to Exhibit 3.1 to Form 10-K of
               Registrant for the fiscal year ended November 30, 1997, and
               Certificate of Amendment to Amended and Restated Certificate of
               Incorporation of Registrant filed with the Secretary of State,
               State of New Jersey on February 2, 1999, incorporated by
               reference to Exhibit 3.1 to Form 10-K of Registrant for the
               fiscal year ended November 30, 1998.

     3.2       By Laws of Registrant, as amended, incorporated by reference to
               Exhibit 3.2 to Form 10-K of Registrant for the fiscal year ended
               November 30, 1998.

     4.1       Warrant to Purchase Common Stock of Calton, Inc. dated June 12,
               1997 issued to BankBoston, N.A., incorporated by reference to
               Exhibit 10.2 to Form 8-K of Registrant dated June 12, 1997.

     4.2       Warrant to Purchase Common Stock of Calton, Inc. dated January
               2000 issued to Taytrowe Van Fechtmann World Companies, Inc.

     4.3       Rights Agreement dated February 1, 1999 by and between the
               Registrant and First City Transfer Company as Rights Agent,
               including forms of Rights Certificate and Election to Purchase
               included as Exhibit B thereto, incorporated by reference to
               Exhibit 1 to Form 8-A Registration Statement of Registrant filed
               with the Securities and Exchange Commission on February 2, 1999.

(*) 10.1       1996 Equity Incentive Plan, incorporated by reference to Exhibit
               10.1 to Form 10-K of Registrant for the fiscal year ended
               November 30, 1996.

(*) 10.3       Registrant's Amended and Restated 1993 Non-Qualified Stock Option
               Plan, incorporated by reference to Exhibit 10.3 to Form 10-K of
               Registrant for the fiscal year ended November 30, 1995.

(*) 10.4       Incentive Compensation Plan of Registrant.


                                      E-1

<PAGE>

 (*) 10.6      Severance Policy for Senior Executives of Registrant,
               incorporated by reference to Exhibit 10.6 of Form 10-K of
               Registrant for the fiscal year ended November 30, 1994.

(**) 10.7      Executive Employment Agreement dated as of November 21, 1995
               between Registrant and Anthony J. Caldarone, incorporated by
               reference to Exhibit 10.7 to Form 10-K of Registrant for the
               fiscal year ended November 30, 1995 and Amendment to Executive
               Employment Agreement dated as of April 14, 1999.

     10.8      Senior Secured Credit Agreement dated as of June 12, 1997, among
               Calton Homes, Inc., Calton Homes of Florida, Inc. and BankBoston,
               N.A., incorporated by reference to Exhibit 10.1 to Form 8-K of
               Registrant dated June 12, 1997.

     10.9      Consulting Agreement between Registrant and Braewood Development
               Corp. dated December 31, 1998, incorporated by reference to
               Exhibit 10.9 to Form 10-K of Registrant for the fiscal year ended
               November 30, 1998.

 (*) 10.10     2000 Equity Incentive Plan.

 (*) 10.11     Option Agreement dated July 19, 1999 between the Company and
               Kenneth D. Hill. Agreements identical in term and content between
               the Registrant and each of Matthew R. Smith and Robert K. Hill
               have been executed. These documents have not been reproduced
               herein.

(**) 10.12     Employment Agreement dated as of July 19, 1999 between
               eCalton.com, Inc. and Kenneth D. Hill.

     21.       Subsidiaries of the Registrant.

     27.       Financial Data Schedule.


(*) Constitutes a compensatory plan required to be filed by an exhibit pursuant
to Item 14(c) of Form 10-K.

(**) Constitutes a management contract required to be filed pursuant to Item
14(c) of Form 10-K.