<PAGE>   1
                       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, 2000

                                       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)

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


        2013 INDIAN RIVER BOULEVARD                                   32960
            VERO BEACH, FLORIDA                                     (Zip Code)
(Addresses of principal executive offices)


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

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

                                                      NAME OF EACH EXCHANGE
     TITLE OF CLASS                                   ON WHICH REGISTERED
     --------------                                  ----------------------
      Common Stock                                    American Stock Exchange
$.05 par value per share

         Rights                                       American Stock Exchange

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.  [ ]

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 20, 2001 was $10,789,152.

As of February 20, 2001 4,132,356 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.


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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.

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                                     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 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. In January 2000, the Company acquired a controlling
              interest in PrivilegeONE Networks, LLC ("PrivilegeONE"), a
              newly-formed company engaged in the development of a co-branded
              loyalty credit card program. In June 2000, the Company acquired a
              controlling interest in Innovation Technology Partners ("ITP"), a
              newly-formed entity established to provide management and
              consulting services to entrepreneurial and development stage
              companies. In August 2000, through its interest in ITP, the
              Company acquired a controlling interest in MindSearch, Inc.
              ("MindSearch") a company which is developing technology to provide
              consumer research to businesses on a faster and broader basis than
              existing research approaches.

              Effective at the close of business on May 31, 2000, the Company
              effected a one-for-twenty-five share combination or "reverse
              split" of the Company's Common Stock. Contemporaneous with, but
              after giving effect to the share combination, the Company effected
              a five-for-one forward split of the Common Stock. As a result of
              this Recapitalization (the "Recapitalization"), each twenty-five
              shares of Common Stock outstanding was combined into one share of
              Common Stock and the resulting share was split into five shares.
              All Common Stock, stock option, warrant and per share information
              has been adjusted to give effect to the Recapitalization.

              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 its corporate offices at 2013 Indian River
              Boulevard, Vero Beach, Florida 32960 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.



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              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 ("Centex" 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 $6.9 million and a net
              gain of approximately $3.7 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, and adjusted for
              a provision of approximately $650,000 recorded during fiscal 2000.
              Calton has entered into an agreement to provide consulting
              services to purchaser which entitles the Company to payments of
              $1.3 million per year over the three year period ending December
              31, 2001.

              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. In April 2000, the Company announced that its strategic
              plan would focus on acquiring controlling interests in information
              technology companies.

              Pursuant to its stock repurchase program, the Company has, since
              October 31, 1998, acquired approximately 1,615,000 shares of
              Common Stock at an average price of $6.03 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.

              In July 1999, the Company acquired substantially all of the assets
              of iAW, Inc., in January 2000, acquired a 50.4% interest in
              PrivilegeONE, in June 2000 acquired a 51% interest in ITP, and in
              August 2000 ITP acquired a 51% interest in MindSearch. 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, demand
              deposits, money market accounts, or United States government
              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."

              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.
              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




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              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
              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 businesses as a result of its consulting
              agreement with purchaser and its acquisitions of iAW,
              PrivilegeONE, ITP and MindSearch, 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 companies that fail
              certain statistical tests regarding the composition of assets and
              sources 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 its 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

              On the closing date of the Sale Transaction, the Company deposited
              approximately $5,200,000 in escrow, $3,000,000 of which provides
              security for the Company's indemnity obligations and approximately
              $2,200,000 of which was deposited to fund costs associated with
              certain specified litigation. The purchaser has asserted indemnity
              claims of approximately $2,300,000 against of the Company and an
              arbitration proceeding is scheduled for March 2001 to resolve
              these claims. See the section of this report captioned "Legal
              Proceedings" for a more detailed description of this matter.


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      (b)     FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

              The information required by this item is presented in Note 9 of
              the 2000 Financial Statements located on page F-20 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 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, a newly formed company
              which is developing a co-branded credit card program for the
              automobile dealer industry. In February 2001, the Company acquired
              an additional 25% of PrivilegeONE. In June 2000, the Company
              acquired a 51% interest in ITP, a newly-formed entity established
              to provide management and consulting services to entrepreneurial
              and development stage companies. In August 2000, through its
              interest in ITP, the Company acquired a controlling interest in
              MindSearch, a company which is developing technology to provide
              consumer research to businesses on a faster and broader basis than
              existing research approaches.

              ECALTON.COM

              GENERAL

              In July 1999, the Company acquired substantially all of the assets
              of iAW, Inc. an Internet business developer. The Company conducts
              the acquired business though a wholly-owned subsidiary that has
              changed its name to eCalton.com, Inc. ("eCalton"). eCalton
              provides Internet strategy consulting and comprehensive
              Internet-based solutions. By combining business and Internet
              knowledge with creativity, eCalton provides its customers with the
              resources and tools to optimize, monitor, and measure the
              effectiveness of their e-business. eCalton provides Internet-based
              solutions to small and medium size companies in various
              industries, as well as to two prime vertical markets - the Florida
              Agricultural industry and the Homebuilding and Construction
              industries.

              In July 2000, eCalton entered into a second line of business, a
              technology based consulting and staffing service specializing in
              network design and management. Through its technical staffing
              business, eCalton assists clients in managing and improving their
              IT systems and networks. This division employs approximately 20
              employees and consultants, and operates in the Houston, Texas
              market.

              SALES AND MARKETING

              The eCalton sales force is comprised of professionals that market
              and sell its services on a nationwide basis. eCalton's national
              marketing office is headquartered in Vero Beach, Florida. It
              markets eCalton's services through print advertising, face to face
              interviews with client executives, trade show attendance and
              through its website, www.eCalton.com.

              THE FLORIDA AGRICULTURAL INDUSTRY

              The Florida Farm Foundation has engaged eCalton to develop an
              Internet Hub, AGMARKETING.ORG, to provide farmers, ranchers, and
              allied organizations access to the Internet in a cost-effective,
              user-friendly way. The Web site will enable the user to buy and
              sell products and services, to connect with vendors and suppliers,
              and access technical information. In addition, eCalton is offering
              sponsorships and advertising opportunities to the agriculture
              business community through this Internet site.




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              THE HOMEBUILDING AND CONSTRUCTION GROUP

              eCalton has designed a Web site package for Homebuilders and
              Developers offering a customized "look and feel" that reflects
              their company, logo, corporate colors and image, using predefined
              templates. The site is intended to help homebuilders reduce
              operating costs, improve customer service levels, and improve
              communications with clients, vendors, employees, and investors.
              These sites will be designed so that employees with only basic Web
              browser/user skills can add, edit and update content through the
              use of eCalton's EasyRemoteAdmin Tools(TM).

              COMPETITION

              The market for Internet professional services is relatively
              saturated, intensely competitive, rapidly evolving and subject to
              rapid technological change. 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 also 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.

              Competition in the technical staffing industry is intense, with
              little barrier to entry. The industry is highly evolved with
              competitors who have much greater access to capital and
              significantly greater name recognition. In addition, competitors
              may be better positioned to offer a superior benefits package than
              can be offered by the Company, and provide a much larger client
              base allowing for better continuity of work flow for the employee
              or consultant.

              PRIVILEGEONE

              GENERAL

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

              The purchase price for the Company's interest in PrivilegeONE was
              comprised of $105,000 in cash and a five-year warrant to acquire
              240,000 shares of the Company's Common Stock at an exercise price
              of $12.50 per share. The warrant becomes exercisable only if
              PrivilegeONE surpasses certain specified earnings targets. In
              addition to its equity interest, the Company 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. As
              of November 30, 2000, $1,486,000 has been advanced to
              PrivilegeONE. The Company has entered into agreements with the
              other owners of PrivilegeONE and its parent company which obliges
              each of the owners to offer its equity interest in PrivilegeONE or
              its parent to the other owners in the event that the owner wishes
              to transfer its equity interest.

              In February 2001, the Company made an additional $50,000 equity
              investment in PrivilegeOne which increased its direct and indirect
              ownership interest to 75.4%. The Company has also agreed to lend
              PrivilegeOne up to an additional $1,450,000 if PrivilegeOne
              achieves certain milestones related to the development of its
              proposed credit card program. The Company has granted the other
              owners of PrivilegeOne an option to purchase the interest in
              PrivilegeOne acquired by the Company in February 2001 at a price
              of $10,000,000. This option, which expires in February 2004, may
              only be exercised if all of the loans made by the Company to
              PrivilegeOne are repaid in full. The Company has the right to
              designate a majority of the Board of Directors of PrivilegeOne




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              until all loans made to PrivilegeOne by the Company are repaid in
              full or December 31, 2004, whichever is later. After that time,
              directors will be elected by the majority vote of the owners of
              PrivilegeOne based upon their percentage ownership interests.

              In order to execute the PrivilegeONE business plan, PrivilegeONE
              management is currently negotiating an arrangement with a
              financial institution to issue and process credit cards marketed
              by PrivilegeONE. If such an arrangement is not secured,
              PrivilegeONE will be unable to execute its business plan.

              SALES AND MARKETING

              PrivilegeONE intends to market its program directly through a
              national sales force. PrivilegeONE is seeking to develop customer
              acquisition and loyalty strategies centered on the acceptance and
              use of its cards, including reward programs from automobile
              dealers 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 of
              the automobile dealership.

              COMPETITION

              The credit card industry is characterized by intense competition.
              PrivilegeONE will compete with numerous co-branded credit card
              programs, including reward-based programs. Most 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.

              INNOVATION TECHNOLOGY PARTNERS

              GENERAL

              In June 2000, the Company acquired a 51% interest in ITP, a
              newly-formed entity established to develop businesses and provide
              management and consulting services to entrepreneurial and
              development stage companies. In the original business plan, ITP
              was to focus on providing technology hosting and infrastructure
              services such as human resources management, finance and
              accounting functions, and Internet/application service provider
              services. For its efforts, ITP charges cash fees, accepts equity
              positions in its clients, or a combination of both. ITP will
              continue to perform services as described in the original business
              plan, but due to changes in the technology and internet related
              environment, ITP will place increased emphasis on developing and
              acquiring controlling interests in businesses which have a
              possibility of providing the Company with a greater return on its
              investment.

              In exchange for its controlling interest in ITP, the Company
              contributed $1,500,000 in cash and agreed to loan up to $3,500,000
              to the new venture. The loan, which bears interest at a rate equal
              to prime plus one percent per annum, is due in June 2004.
              Executive management of ITP contributed $500,000 in cash and
              certain assets, including existing client contracts, in exchange
              for their collective 49% interest. Certain owners of ITP have been
              issued warrants to acquire an aggregate 11.1% interest in ITP at a
              value to be determined by appraisal if certain events occur,
              including the completion of a public offering, a merger or other
              business combination, a change of control of the Company, or if
              Anthony J. Caldarone ceases to be Chairman of the Company. ITP
              management has been granted options to acquire up to 150,000
              shares of Common Stock of the Company at an exercise price of
              $5.56 per share if ITP surpasses certain specified earnings
              targets. As a result, the Company could be subject to expense
              recognition in the event it becomes probable that ITP will achieve
              its target earnings.

              In addition to its management and consulting services, ITP also
              intends to acquire controlling interests in certain entities that
              it manages and consults with. The first initiative for this line
              of ITP business was the acquisition of a 51%-owned subsidiary,
              MindSearch, Inc. ("MindSearch"), a company which has developed
              technology to provide consumer research to businesses on a faster
              and broader basis than existing research approaches. ITP borrowed
              $500,000 under its $3,500,000 credit facility with the Company to
              finance the acquisition of the controlling interest in MindSearch.




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              SALES AND MARKETING

              At this time, the sales and marketing efforts of ITP are focused
              primarily on the operations of MindSearch and general business
              consulting services. MindSearch marketing efforts revolve around
              customer survey and data gathering. The general consulting
              services are marketed primarily by referrals and personal business
              contacts of the executive management of ITP.

              COMPETITION

              Competition in the financial and business consulting industry is
              intense, with businesses such as national accounting firms and
              investment banking firms better positioned and better capitalized
              to attract and retain significant clients. The limited number of
              professionals employed by ITP, and its limited financial
              resources, will likely require ITP to focus its attention on
              smaller clients and projects.

              CONSULTING SERVICES

              The Consulting Agreement executed in conjunction with the Sale
              Transaction requires the Company to provide certain consulting
              services to purchaser, 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
              purchaser 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, purchaser is required to pay the Company
              a consulting fee of $1,300,000 per year, payable in equal
              quarterly installments during the three-year term of the
              agreement, which expires on December 30, 2001.

              EMPLOYEES

              As of February 20, 2001, the Company and its subsidiaries employed
              61 full time personnel, and 1 part-time employee. None of the
              Company's employees are subject to collective bargaining
              agreements. The Company believes that its employee relations are
              satisfactory.

ITEM 2.       COMPANY FACILITIES

              The Company currently leases approximately 1,000 square feet of
              office space located in Red Bank, New Jersey, for approximately
              $3,100 per month. The term of this lease is on a month-to-month
              basis. The Company also leases approximately 3,800 square feet of
              office space in Vero Beach, Florida at a monthly rate of
              approximately $6,800 for a term of 5 years ending August 31, 2005.

              The Company's subsidiary, eCalton, currently leases approximately
              12,000 square feet of office space in Vero Beach, Florida, for
              approximately $10,700 per month. This lease expires on July 31,
              2001, but eCalton has an option to renew this lease for three
              one-year terms. eCalton also rents approximately 2,400 square feet
              of office space in Houston, Texas for approximately $2,700 per
              month. The term of the 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 per month on a month-to-month
              basis. ITP currently leases 3,500 square feet of office space in
              Houston, Texas at a cost of approximately $6,200 per month through
              January 31, 2003.



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

ITEM 3.       LEGAL PROCEEDINGS

              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 $5,200,000 of the
              closing proceeds were deposited into escrow. Of this amount,
              $3,000,000 (the "General Indemnification Funds") were deposited to
              provide security for the Company's indemnity obligations and
              approximately $2,200,000 (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 Amended and Restated Stock Purchase Agreement ("Agreement"),
              pursuant to which the Company sold Calton Homes on December 31,
              1998 requires the Company to indemnify the purchaser for, among
              other things, 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.

              In January 2000, the purchaser asserted a $253,000 claim for
              indemnification related to certain alleged liabilities arising out
              of the events occurring prior to the sale of Calton Homes. The
              purchaser has agreed to reduce the claim to $205,000. On December
              28, 2000, rather than permit the release of the remaining General
              Indemnification Funds, which were to be disbursed to the Company
              at year-end, the purchaser asserted that it had sustained losses
              of $770,000 as a result of matters allegedly arising from events
              prior to the sale of Calton Homes, including the cost of warranty
              work in excess of the $600,000 reserve established upon the
              closing of the transaction. In addition, the purchaser requested
              the escrow agent to set aside $1,139,000 for damages which it
              believes it will sustain in the future, including the cost of
              anticipated warranty work and other matters. An arbitration
              proceeding to resolve these issues is currently scheduled for
              March 2001. The Company believes that many of the claims made by
              the purchaser are without merit and intends to vigorously contest
              these claims in the arbitration. In certain instances, the
              purchaser has not provided sufficient documentation to enable the
              Company to assess the merits of the claim. With regard to claims
              for warranty work performed, the Company believes that the
              purchaser has failed to comply with the provisions of its
              agreement with the Company related to the performance of the work
              and did not demonstrate reasonably prudent business judgment in
              administering warranty claims. At this time it is not possible to
              accurately predict what the Company's liability will be related to
              the claims asserted by the purchaser. However, at this time the
              potential additional claims asserted by the purchaser against the
              General Indemnification Fund total approximately $2,300,000. As of
              November 30, 2000, the balance in the General Indemnification Fund
              amounted to only $1,434,000. No amounts will be released from the
              General Indemnification Funds until the indemnity claims are
              resolved. The Company's indemnity obligations are not limited to
              the amounts deposited in escrow.

              The Specific Indemnification Funds are to be disbursed, to the
              extent not otherwise utilized in the resolution of litigation, on
              a case-by-case basis, as the litigation is resolved. As of
              November 30, 2000, there were $1,055,000 of Specific
              Indemnification Funds remaining in escrow. With the exception of
              two matters, each of the matters for which the Specific
              Indemnification Funds were deposited have been resolved, subject,
              in certain cases, to the finalization of settlement agreements.
              Under the terms of its agreement with the purchaser, the Company
              is required to deposit additional Specific Indemnification Funds
              for any matters that remain unresolved at December 31, 2000. As a
              result, the Company may be required to deposit an additional
              $189,000 in escrow until the resolution of the remaining two
              matters.

              The Company has filed a counter claim against the purchaser
              alleging that purchaser has breached the Agreement and holdback
              escrow agreement. The Company contends that purchaser did not
              comply with its express obligations under the contract and its



                                       9
<PAGE>   10


              obligations of "good faith and fair dealing" implied in all New
              Jersey contracts. Among other things, the Company alleges that
              purchaser failed to handle third party indemnification claims in
              good faith and in a reasonable manner using prudent business
              standards, and failed to provide the Company with requested
              information on certain claims to allow the Company to make an
              intelligent assessment of the claim. At this time, there can be no
              assurance that the Company will prevail in this counter claim.

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

              During the fourth quarter of 2000, 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 22, 2001 are
              listed below and brief summaries of their business experience and
              certain other information with respect to them are 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   63   Chairman, President and Chief Executive Officer
               Kelly S. McMakin       39   Senior Vice President of Accounting
               Christopher J. Burk    37   Vice President of Acquisitions
               Maria F. Caldarone     37   Vice President of Corporate Development
               Laura A. Camisa        38   Vice President of Strategic Planning
</TABLE>

              Mr. Caldarone was reappointed as Chairman, President and Chief
              Executive Officer of Calton in November 1995, having previously
              served 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.

              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.

              Mr. Burk was hired as Vice President of Acquisitions by the
              Company in March 2000. From 1990 until March 2000, he was the
              principal at a privately held investment management firm which
              invested in both large and small emerging growth companies. In
              addition, Mr. Burk has served as Chairman of a closely held
              telecommunications firm he founded in 1993.

              Ms. 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.

              Ms. Camisa was hired as a Financial Analyst by the Company in
              February 2000. In April 2000, she was appointed Vice President of
              Strategic Planning. She held the position of Director of Investor
              Relations and Financial Analyst at Hovnanian Enterprises, Inc.
              from June 1998 through February 2000. Following her completion of
              the Analyst Training Program at Kidder, Peabody & Co., Ms. Camisa




                                       10
<PAGE>   11


               also held the position of Financial Analyst - International
               Mergers and Acquisitions at Marsh & McLennan Companies from
               January 1995 through May 1998.


                                     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 2000
               and 1999.

              FISCAL 2000            High              Low
                                  ------------     -------------

               1st Quarter            $28.75            $ 7.50
               2nd Quarter             33.75              5.31
               3rd Quarter              6.88              4.00
               4th Quarter              4.69              3.25


              FISCAL 1999            High              Low
                                  ------------     -------------

               1st Quarter            $ 1.50            $ 1.00
               2nd Quarter              1.38              1.00
               3rd Quarter              1.56              1.31
               4th Quarter              1.88              1.19


              At February 20, 2001, there were approximately 3,000 record and
              "street name" shareholders of the Company's common stock, based on
              information obtained from the Company's transfer agent and number
              of requests from brokers and dealers for the Company's proxies and
              annual reports. On that date, the last sale price for the common
              stock as reported by AMEX was $3.86. The Company did not pay any
              dividends on its Common Stock during fiscal 2000 or 1999.


                                       11
<PAGE>   12

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.

              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                                   Years Ended November 30,
                                                                   ----------------------------------------------------------------
                                                                      2000          1999          1998          1997        1996
                                                                   ----------    ----------    ----------    ----------    --------

<S>                                                                <C>           <C>           <C>           <C>           <C>
               SELECTED OPERATING DATA
               Revenues                                            $    3,534    $    1,351    $       --    $       --    $  1,292
               Net income (loss) from continuing operations            (5,158)          661        (1,960)       (1,901)     (1,736)
               Net income (loss) from discontinued operations(1)          (84)         (240)        6,315         1,646       2,189
               Gain (loss) from sale of operating businesses             (654)        4,418            --           369          --
               Extraordinary gain, net of income taxes                     --            --            --         1,263          --
               Net income (loss)                                   $   (5,896)   $    4,839    $    4,355    $    1,377    $    453

               Basic earnings (loss) per share:

               Net income (loss) from continuing operations        $    (1.21)   $     0.15    $    (0.37)   $    (0.35)   $  (0.30)
               Net income (loss) from discontinued operations(1)         (.02)         (.05)         1.18           .30         .40
               Gain (loss) from sale of operating businesses             (.15)          .97            --           .05          --
               Extraordinary gain, net of income taxes                     --            --            --           .25          --
                                                                   ----------    ----------    ----------    ----------    --------
               Net income (loss)                                   $    (1.38)   $     1.07    $     0.81    $     0.25    $   0.10
                                                                   ==========    ==========    ==========    ==========    ========

               Diluted earnings (loss) per share:

               Net income (loss) from continuing operations        $    (1.21)   $     0.14    $    (0.37)   $    (0.35)   $  (0.30)
               Net income (loss) from discontinued operations(1)         (.02)         (.05)         1.18           .30         .40
               Gain (loss) from sale of operating businesses             (.15)          .92            --           .05          --
               Extraordinary gain, net of income taxes                     --            --            --           .25          --
                                                                   ----------    ----------    ----------    ----------    --------
               Net income (loss)                                   $    (1.38)   $     1.01    $     0.81    $     0.25    $   0.10
                                                                   ==========    ==========    ==========    ==========    ========


                                                                                           At November 30,
                                                                   ----------------------------------------------------------------
                                                                      2000          1999          1998          1997        1996
                                                                   ----------    ----------    ----------    ----------    --------

               SELECTED BALANCE SHEET DATA
               Total assets                                        $   35,100    $   40,441    $   40,082    $   35,142    $ 70,895
               Total debt (2)                                              --            --            --            --      39,500
               Shareholders' equity                                    32,887        38,654        38,221        32,850      28,086

</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 that 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.



                                       12
<PAGE>   13


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

              OVERVIEW - SALE OF CALTON HOMES

              On December 31, 1998, the Company completed the sale of Calton
              Homes, Inc., its primary operating homebuilding subsidiary to
              Centex Real Estate Corporation. The purchase price for the stock
              of Calton Homes was approximately $48,100,000, which resulted in a
              pretax gain of approximately $6,900,000, inclusive of a provision
              of approximately $650,000 recorded in fiscal 2000, and was subject
              to a $5,200,000 holdback. The Company 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, ending December 30, 2001.

              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 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 January 2000, the
              Company acquired a 50.4% interest in PrivilegeONE, a newly formed
              company which is developing a co-branded credit card program for
              the automobile dealer industry. In February 2001, the Company
              acquired an additional 25% of PrivilegeOne. In June 2000, the
              Company acquired a 51% interest in ITP, a newly-formed entity
              established to provide management and consulting services to
              entrepreneurial and development stage companies. In August 2000,
              through its interest in ITP, the Company acquired a 51% interest
              in MindSearch, a company which is developing technology to provide
              consumer research to businesses on a faster and broader basis than
              existing research approaches. The Company's consolidated financial
              statements included the accounts of the Company and its
              majority-owned subsidiaries, including eCalton, PrivilegeOne, ITP
              and MindSearch.

              The Company continues to actively analyze other opportunities to
              deploy the funds generated by the sale of Calton Homes.

              The following discussions 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, 2000 AND
               1999

              Revenues for fiscal 2000 increased to $3,534,000 compared to
              revenues of $1,351,000 for fiscal 1999. The primary reasons for
              the increase were a full year of operations for eCalton in 2000,
              compared to four months of operations in 1999, as well as the
              addition of the technical staffing division at eCalton, which
              commenced operations in July 2000. Revenues for the Web
              development division at eCalton were $1,109,000 compared to
              $157,000 in 1999, and revenues for the staffing operation at
              eCalton were $936,000 in 2000, with no similar revenues in 1999.
              Also included in 2000 revenues was $189,000 from ITP, which was
              acquired in June 2000.

              Project personnel expenses for eCalton were $1,514,000 in 2000
              compared to $116,000 in 1999. The increase is attributable to a
              full year of operations for the eCalton Web division in 2000,
              compared to four months of operations in 1999, as well as the
              addition of the technical staffing division which began operations
              in July 2000.

              Selling, general and administrative expenses experienced an
              increase from $1,966,000 in 1999 to $8,015,000 in 2000. During
              1999 the Company sold its homebuilding business and had minimal
              operating expenses, and a greatly reduced corporate office. In
              addition, eCalton was a much smaller operating unit and was not



                                       13
<PAGE>   14


              acquired until late in 1999. During fiscal 2000, the Company
              expanded its operations at eCalton, including commencing
              operations of a technical staffing division. In addition, the
              Company acquired controlling interests in PrivilegeONE and ITP,
              and through ITP, acquired a controlling interest in MindSearch.
              The Company also relocated and increased staffing at its corporate
              office. As a result, selling, general and administrative expenses
              experienced a significant increase during fiscal 2000 attributable
              primarily to payroll and payroll related expenses, professional
              fees, and abandoned acquisition costs.

              Research and development costs associated with MindSearch's
              efforts to develop technology to provide consumer research
              amounted to $315,000 in 2000, with no similar costs in 1999.

              The acquisitions of eCalton and PrivilegeONE resulted in goodwill
              in the amount of $237,000 and $138,000, respectively. However,
              during 2000 management concluded that the goodwill for both
              eCalton and PrivilegeONE had been permanently impaired, and
              charged the entire unamortized balance to operations. This
              conclusion was reached because of sustained losses since inception
              for both entities, and the lack of certainty at November 30, 2000
              as to whether these businesses would ever become profitable. The
              amount charged to operations for eCalton and PrivilegONE amounted
              to $205,000 and $119,000, respectively.

              Interest income increased from $1,845,000 in 1999 to $2,144,000 in
              2000, primarily due to higher interest rates in effect during
              2000.

              The Company recognized a loss on securities in the amount of
              $1,708,000 for fiscal 2000. During fiscal 2000 and the prior year,
              the Company acquired 518,000 shares of CorVu Corporation (OTCBB:
              CRVU) common stock. The Company had previously valued and reported
              these securities based on the closing price of CorVu common stock,
              as reported on the "Over-the-Counter" Bulletin Board. In
              accordance with Statement of Financial Accounting Standards No.
              115, "Accounting for Certain Investments in Debt and Equity
              Securities", the Company has assessed the carrying value of these
              shares and concluded that the decline in the value of these
              securities is not temporary. This conclusion was based on, among
              other things, CorVu's financial condition and sustained losses
              from operations, the low per share value at which CorVu common
              stock is trading, the Company's inability to liquidate its shares
              in CorVu, and other factors that management considered relevant
              under the circumstances. The loss associated with this other than
              temporary impairment amounted to $990,000 for the current year. In
              addition, the current year loss on securities includes a capital
              loss on the sale of common stock of two publicly traded New York
              Stock Exchange companies in the amount of $508,000, and a charge
              for non-readily marketable securities in the amount of $210,000.

              The credit to income for minority interest represents 49% of the
              net loss of ITP, which had a capital contribution of $552,000 from
              minority shareholders upon its formation in 2000. The Company may
              record only up to a cumulative $552,000 of minority interest
              credit against losses of ITP. If the cumulative loss incurred by
              ITP causes the ITP associated minority interest to decline to
              zero, the Company will be required to absorb all additional losses
              until such time, if ever, that ITP begins to generate a profit.

              The current year income tax benefit consists of a $579,000 benefit
              related to a loss carryback to prior years and a current state tax
              expense of $26,000. The 1999 income tax expense from continuing
              operations of $453,000 is a result of income from continuing
              operations in 1999 of $1,114,000.

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

              Income from continuing operations before taxes was $1,114,000 for
              the year ended November 30, 1999 compared to a loss of $2,085,000
              for the year ended November 30, 1998. Revenues of $1,351,000
              during fiscal 1999 were primarily derived from the consulting
              agreement with the purchaser of Calton Homes, and also included
              revenues of $157,000 from eCalton. There were no comparable
              revenues for fiscal 1998.




                                       14
<PAGE>   15


              Selling, general and administrative expenses included in
              continuing operations were approximately $2,000,000 during both
              fiscal 1999 and 1998. General and administrative expenses
              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.

              As a result of the circumstances described above, the Company
              recognized income from continuing operations, net of taxes of
              $661,000 for fiscal 1999 compared to a loss of $1,960,000 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 for 1999 was $240,000, net of a
              $373,000 tax benefit for the year ended November 30, 1999. The
              loss includes approximately $1,000,000 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 $6,315,000, net of a tax provision of $2,363,000. The
              results primarily include the operations of Calton Homes.

              Taxes for the year ended November 30, 1999 reflect a provision for
              income taxes of $3,253,000 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 approximately
              $2,200,000 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
              $1,100,000 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 4).

              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 was reporting a $518,000
              unrealized loss on marketable equity securities in comprehensive
              income.

              LIQUIDITY AND CAPITAL RESOURCES

              On December 31, 1998 the sale of Calton Homes liquidated a
              substantial part of the Company and resulted in the payoff, by the
              purchaser, of the Company's revolving credit facility with
              BankBoston which had an outstanding balance of $19,500,000. The
              sale generated approximately $43,400,000 of cash including the
              receipt of an additional $1,800,000 related to the post closing
              adjustments that were finalized in September 1999. In addition, a
              $5,200,000 holdback was established at closing as part of the sale
              as a condition to indemnify the purchaser against existing
              litigation and other warranties.




                                       15
<PAGE>   16


              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 Fund during
              1999 as a result of certain litigation settlements, and legal fee
              reimbursements.

              As of November 30, 2000 there was $1,055,000 in the Specific
              Indemnification Fund and $1,434,000 in the General Indemnification
              Fund. Receipt of the remaining holdback money will be determined
              in an arbitration proceeding to resolve pending issues with the
              purchaser in March 2001. If the Company does not prevail in
              arbitration the Company may receive no further disbursements from
              the General Indemnity Escrow Account. The Company's indemnity
              obligations are not limited to the amounts deposited in escrow.

              As of November 30, 2000 the Company had approximately $32,190,000
              of cash and cash equivalents compared to $33,786,000 at November
              30, 1999. The majority of this cash was invested in money market
              funds, which were earning approximately 6.3% at November 30, 2000
              compared to 5.0% at November 30, 1999.

              The Company believes that cash on hand, interest income, and funds
              provided under the remaining year of the consulting agreement with
              the purchaser of Calton Homes, which provides for another payment
              of $1,300,000, will provide sufficient capital to support the
              Company's operations for the upcoming year.

              As of November 30, 2000 the Company had repurchased an aggregate
              of 1,615,000 shares of treasury stock for a total of $9,739,000,
              at an average price of $6.03 per share. Management continues to
              buy back shares of the Company's common stock, as the stock
              continues to trade at a price that is below both cash and book
              value per share. If the Company's stock experiences an increase in
              its trading price, management may suspend purchasing shares of the
              Company.

              CASH FLOWS FROM OPERATING ACTIVITIES

              For the year ended November 30, 2000 the Company incurred a net
              loss of approximately $5,900,000. However, cash used by operating
              activities amounted to only $2,937,000. There were a number of
              operating activities that did not use cash, such as a loss on
              securities in the amount of $1,708,000, a loss on the sale of
              Calton Homes of $654,000, tax related items of $647,000, increases
              in accounts payable and accrued expenses of $710,000, as well as
              other less significant items. Conversely, other operating
              activities that did not provide cash were minority interest of
              $464,000 and an increase in receivables of $545,000.

              Cash flow from operating activities generated approximately
              $1,000,000 during 1999, which includes $1,700,000 of interest
              earned on money market funds, and approximately $1,000,000 from
              the consulting agreement with the purchaser of Calton Homes.
              Partially offsetting the increases was cash utilized for general
              and administrative costs and the funding of eCalton's operations
              as it proceeded 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 $1,500,000.
              Offsetting the uses of cash were 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.




                                       16
<PAGE>   17


              CASH FLOWS FROM INVESTING ACTIVITIES

              For the year ended November 30, 2000 the Company received proceeds
              from investing activities from the sale of marketable securities
              in the amount of $1,366,000 and from the collection of the
              holdback receivable in the amount of $2,104,000. Significant items
              of cash used by investing activities included the purchase of
              securities in the amount of $967,000 and the purchase of property
              and equipment in the amount of $622,000.

              In addition to items disclosed on the face of the consolidated
              statements of cash flows, the Company also made certain
              acquisitions, which are described in the following paragraphs. The
              acquisitions discussed below have been consolidated in the
              Company's financial statements and, consequently, they are not
              reflected in the statement of cash flows.

              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 price for the Company's interest was
              comprised of $105,000 of cash and a warrant to acquire 240,000
              shares of Common Stock. 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. As of November 30, 2000 the
              outstanding principal balance on this loan was $1,486,000.

              In February 2001, the Company made an additional $50,000 equity
              investment in PrivilegeOne which increased its direct and indirect
              ownership interest to 75.4%. The Company has also agreed to lend
              PrivilegeOne up to an additional $1,450,000 if PrivilegeOne
              achieves certain milestones related to the development of its
              proposed credit card program.

              In June 2000, the Company acquired a 51% interest in ITP. In
              exchange for its controlling interest, the Company contributed
              $1,500,000 in cash and agreed to loan up to $3,500,000 to the new
              venture. Executive management of ITP contributed $500,000 in cash
              and certain assets, including existing client contracts, in
              exchange for their collective 49% interest. In addition to its
              management and consulting services, ITP also intends to acquire
              controlling interests in certain entities that it manages and
              consults with. The first initiative for this line of ITP business
              was the acquisition of a 51%-owned subsidiary, MindSearch. In
              August 2000, ITP borrowed $500,000 of its $3,500,000 credit
              facility with the Company to finance the acquisition of a
              controlling interest in MindSearch.

              The Company generated approximately $43,400,000 of cash in fiscal
              1999 from the sale of Calton Homes including the receipt of an
              additional $1,800,000 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 substantially all of the assets
              of iAW, Inc., an Internet business solutions provider. The
              purchase price for the acquisition was $250,000. In addition to
              the purchase price, at the time of acquisition the Company
              contributed $750,000 of capital to fund operations.

              The Company purchased marketable equity securities for an
              aggregate amount of $4,000,000 in fiscal 1999, of which
              approximately $1,400,000 was outstanding as of November 30, 1999.

              In November 1999, the Company loaned $250,000 to CorVu Corporation
              in exchange for a convertible note with a warrant attached. The
              note has been subsequently converted to 143,000 common shares of
              CorVu Corporation 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



                                       17
<PAGE>   18


              that permits the purchase of 253,000 shares at a per share price
              of $.01 per share. The fair value of the warrant was $16,000 based
              upon the allocation of the relative fair values of the convertible
              note and warrant at the time of issuance.

              CASH FLOWS FROM FINANCING ACTIVITIES

              Cash provided by financing activities in 2000 include cash
              contributed by the minority owners of ITP in the amount of
              $500,000 and proceeds from the exercise of stock options in the
              amount of $149,000.

              Cash used by financing activities in 2000 include the repurchase
              of 235,000 shares of the Company's common stock in the amount of
              $1,051,000. These repurchases were consistent with the Company's
              repurchase program to repurchase up to two million shares of its
              Common Stock.

              For the year ended November 30, 1999 the Company repurchased
              approximately 1,400,000 shares of its Common Stock on the open
              market and in privately negotiated transactions for an aggregate
              price of $8,600,000, an average of $6.14 per share. In June 1999,
              the holder of a warrant (the "Warrant") to purchase 200,000 shares
              of Calton Common Stock exercised its right under the Warrant using
              the cashless exercise method. As a result, the holder was issued
              136,000 shares which the Company repurchased for $750,000 that is
              included in the aggregate numbers above. As a result, the Warrant
              was cancelled.

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 rates 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 currently yielding
              approximately 6.3%. 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, 2000 the Company is reporting no
              marketable securities.

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.



                                       18
<PAGE>   19


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.

                                     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, 2000.

</TABLE>


                                       19
<PAGE>   20

 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 22, 2001                    By: /s/ KELLY S. MCMAKIN
                                                 ------------------------------
                                                 Kelly S. McMakin, Senior Vice
                                                 President and Treasurer

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 22, 2001
-------------------------------------    Officer and President
Anthony J. Caldarone                     (Principal Executive Officer)


/s/ Kelly S. McMakin                     Senior Vice President of Accounting           February 22, 2001
-------------------------------------    (Principal Financial &
Kelly S. McMakin                         Accounting Officer)


/s/ Anthony J. Caldarone                 Director                                      February 22, 2001
-------------------------------------
Anthony J. Caldarone


/s/ J. Ernest Brophy                     Director                                      February 22, 2001
-------------------------------------
J. Ernest Brophy


/s/ Mark N. Fessel                       Director                                      February 22, 2001
-------------------------------------
Mark N. Fessel


/s/ Kenneth D. Hill                      Director                                      February 22, 2001
-------------------------------------
Kenneth D. Hill


/s/ Robert E. Naughton                   Director                                      February 22, 2001
-------------------------------------
Robert E. Naughton


/s/ Frank Cavell Smith, Jr.              Director                                      February 22, 2001
-------------------------------------
Frank Cavell Smith, Jr.


/s/ Gerald W. Stanley                    Director                                      February 22, 2001
-------------------------------------
Gerald W. Stanley

</TABLE>


                                       20
<PAGE>   21


                          CALTON, INC. AND SUBSIDIARIES

                        INDEX OF FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----

<S>                                                                                                      <C>
Report of Independent Certified Public Accountants .................................................   F-2

Consolidated Balance Sheets as of November 30, 2000 and 1999 .......................................   F-3

Consolidated Statements of Operations for the Years Ended November 30, 2000, 1999 and 1998 .........   F-4

Consolidated Statements of Cash Flows for the Years Ended November 30, 2000, 1999 and 1998 .........   F-5

Consolidated Statements of Shareholders' Equity for the Years Ended November 30, 2000, 1999 and 1998   F-6

Notes to Consolidated Financial Statements .........................................................   F-7

Consent of Independent Certified Public Accountants ................................................   F-23

Schedules:
          II - Valuation and Qualifying Accounts ...................................................   F-24

</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 notes thereto.



                                      F-1
<PAGE>   22

    REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

    To the 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, 2000 and November 30, 1999, and the results of their operations
    and their cash flows for each of the three years in the period ended
    November 30, 2000 in conformity with accounting principles generally
    accepted in the United States of America. In addition, in our opinion, the
    financial statement schedule listed in the index appearing under item
    14(a)(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 of America, which require that we plan and perform the
    audit to obtain reasonable assurance about whether the financial statements
    are free of material misstatement. An audit includes examining, on a test
    basis, evidence supporting the amounts and disclosures in the financial
    statements, assessing the accounting principles used and significant
    estimates made by management, and evaluating the overall financial statement
    presentation. We believe that our audits provide a reasonable basis for our
    opinion.

    PricewaterhouseCoopers LLP
    Tampa, Florida
    January 19, 2001





                                      F-2
<PAGE>   23

CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2000 AND 1999



<TABLE>
<CAPTION>

                                                                                    2000               1999
                                                                               ------------       ------------
<S>                                                                            <C>                <C>
ASSETS
     Current Assets
         Cash and cash equivalents                                             $ 32,190,000       $ 33,786,000
         Available for sale securities                                                   --          1,355,000
         Current portion of holdback receivable                                   1,289,000          1,205,000
         Accounts receivable, net of allowance for doubtful accounts of
            $122,000 and $0 at November 30, 2000 and 1999, respectively             760,000            337,000
         Prepaid expenses and other assets                                          218,000            202,000
                                                                               ------------       ------------
            Total current assets                                                 34,457,000         36,885,000

         Non-current portion of holdback receivable                                      --          2,842,000
         Notes receivable                                                                --            338,000
         Goodwill, net                                                                   --            233,000
         Property and equipment, net                                                638,000            143,000
         Other assets                                                                 5,000                 --
                                                                               ------------       ------------
            Total assets                                                       $ 35,100,000       $ 40,441,000
                                                                               ============       ============

LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
         Accounts payable, accrued expenses and other liabilities              $  1,384,000       $    778,000
         Deferred taxes                                                             741,000            572,000
         Net liabilities of discontinued operations                                      --            437,000
                                                                               ------------       ------------
            Total current liabilities                                             2,125,000          1,787,000
                                                                               ------------       ------------

         Commitments and contingencies (Note 7)

         Minority interest                                                           88,000                 --
                                                                               ------------       ------------

SHAREHOLDERS' EQUITY
         Preferred Stock                                                                 --                 --
         Common stock, $.05 par value, 10,740,000 shares authorized;
            4,132,000 and 4,295,000 shares outstanding at November 30,
            2000 and 1999, respectively                                             207,000            215,000
         Additional paid in capital                                              33,364,000         32,704,000
         Retained earnings                                                        9,055,000         14,951,000
         Less cost of shares held in treasury, 1,615,000 and 1,380,000
            shares as of November 30, 2000 and 1999, respectively                (9,739,000)        (8,698,000)
         Accumulated other comprehensive loss:
            Unrealized loss in available for sale securities                             --           (518,000)
                                                                               ------------       ------------
            Total shareholders' equity                                           32,887,000         38,654,000
                                                                               ------------       ------------
            Total liabilities, minority interest and shareholders' equity      $ 35,100,000       $ 40,441,000
                                                                               ============       ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-3
<PAGE>   24

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                 FISCAL YEARS ENDED NOVEMBER 30,
                                                                       --------------------------------------------------
                                                                            2000               1999               1998
                                                                       ------------       ------------       ------------
<S>                                                                    <C>                <C>                <C>
Revenue
     Homebuilding consulting fees                                      $  1,300,000       $  1,194,000       $         --
     Web design and implementation                                        1,109,000            157,000                 --
     Technical staffing                                                     936,000                 --                 --
     Other                                                                  189,000                 --                 --
                                                                       ------------       ------------       ------------
                                                                          3,534,000          1,351,000                 --
                                                                       ------------       ------------       ------------
Costs and expenses
     Project personnel and expenses                                       1,514,000            116,000                 --
     Selling, general and administrative                                  8,015,000          1,966,000          2,029,000
     Research and development                                               315,000                 --                 --
     Impairment of goodwill                                                 324,000                 --                 --
                                                                       ------------       ------------       ------------
                                                                         10,168,000          2,082,000          2,029,000
                                                                       ------------       ------------       ------------
Loss from operations                                                     (6,634,000)          (731,000)        (2,029,000)

Other expense (income)
     Interest income                                                     (2,144,000)        (1,845,000)                --
     Interest expense                                                         3,000                 --             56,000
     Loss on securities                                                   1,708,000                 --                 --
                                                                       ------------       ------------       ------------
Income (loss) from continuing operations before
     income taxes, minority interest
     and discontinued operations                                         (6,201,000)         1,114,000         (2,085,000)

Minority interest                                                          (464,000)                --                 --
Income tax expense (benefit)                                               (579,000)           453,000           (125,000)
                                                                       ------------       ------------       ------------
Income (loss) from continuing operations                                 (5,158,000)           661,000         (1,960,000)

Income (loss) from discontinued operations,
     net of a provision (benefit) for
     income taxes of ($373,000) in 1999 and $2,363,000
     in 1998                                                                (84,000)          (240,000)         6,315,000

Gain (loss) from sale of Calton Homes, Inc. net of a provision
     in lieu of taxes of $0 in 2000 and  $3,173,000 in 1999                (654,000)         4,418,000                 --
                                                                       ------------       ------------       ------------
Net income (loss)                                                      $ (5,896,000)      $  4,839,000       $  4,355,000
                                                                       ============       ============       ============
Earnings (loss) per share
     Basic:
        Income (loss) from continuing operations                       $      (1.21)      $       0.15       $      (0.37)
        Income (loss) from discontinued operations, net                       (0.02)             (0.05)              1.18
        Gain (loss) from sale of Calton Homes, Inc., net                      (0.15)              0.97                 --
                                                                       ------------       ------------       ------------
        Net income (loss)                                              $      (1.38)      $       1.07       $       0.81
                                                                       ============       ============       ============
     Diluted:
        Income (loss) from continuing operations                       $      (1.21)      $       0.14       $      (0.37)
        Income (loss) from discontinued operations, net                       (0.02)             (0.05)              1.18
        Gain (loss) from sale of Calton Homes, Inc., net                      (0.15)              0.92                 --
                                                                       ------------       ------------       ------------
        Net income (loss)                                              $      (1.38)      $       1.01       $       0.81
                                                                       ============       ============       ============
Weighted average number of shares outstanding
        Basic                                                             4,276,000          4,554,000          5,337,000
                                                                       ------------       ------------       ------------
        Diluted                                                           4,276,000          4,799,000          5,337,000
                                                                       ------------       ------------       ------------
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-4
<PAGE>   25

CONSOLIDATED STATEMENTS OF CASH FLOWS







<TABLE>
<CAPTION>

                                                                                           Years Ended November 30,
                                                                               -----------------------------------------------
                                                                                     2000             1999             1998
                                                                               ------------     ------------     ------------
<S>                                                                            <C>              <C>              <C>
OPERATING ACTIVITIES
Net income (loss)                                                              $ (5,896,000)    $  4,839,000     $  4,355,000
     Adjustments to reconcile net income (loss) to net cash provided by
         (used in) operating activities, net of effects of business
         acquisitions

     Subsidiary options issued for services                                          35,000               --               --
     Minority interest                                                             (464,000)              --               --
     Loss on securities                                                           1,708,000               --               --
     Impairment of goodwill                                                         324,000               --               --
     (Gain) loss from the sale of Calton Homes, Inc.                                654,000       (4,418,000)              --
     Income (loss) from discontinued operations                                          --          240,000       (6,315,000)
     Provision for uncollectible receivables                                        122,000               --               --
     Provision for income taxes                                                     647,000          422,000               --
     Depreciation and amortization                                                  226,000           17,000          164,000
     Change in net assets/liabilities of discontinued operations                   (437,000)        (657,000)       3,232,000
     Increase in accounts receivable                                               (545,000)        (276,000)              --
     (Increase) decrease in prepaid expenses and other assets                       (21,000)         737,000         (895,000)
     Increase (decrease) in accounts payable, accrued
         expenses and other liabilities                                             710,000           77,000         (431,000)
     Issuance of stock under 401(k) Plan and other                                       --               --           91,000
                                                                               ------------     ------------     ------------
Net cash provided by (used in) operating activities                              (2,937,000)         981,000          201,000

INVESTING ACTIVITIES
     Net proceeds from sale of Calton Homes, Inc.                                        --       43,440,000               --
     Sale of available for sale securities                                        1,366,000        2,127,000               --
     Decrease in holdback receivable                                              2,104,000               --               --
     Purchase of available for sale securities                                     (967,000)      (4,000,000)              --
     Acquisition of business, net of cash acquired                                 (138,000)        (250,000)              --
     Increase in notes receivable                                                        --         (338,000)              --
     Purchase of property and equipment                                            (622,000)         (58,000)         (18,000)
                                                                               ------------     ------------     ------------
Net cash provided by (used in) investing activities                               1,743,000       40,921,000          (18,000)

FINANCING ACTIVITIES
     Stock repurchase                                                            (1,051,000)      (8,583,000)        (115,000)
     Capital contributed by minority owners of
         Innovation Technology Partners                                             500,000               --               --
     Stock options exercised                                                        149,000          382,000               --
                                                                               ------------     ------------     ------------
Net cash used in financing activities                                              (402,000)      (8,201,000)        (115,000)

Net (decrease) increase in cash and cash equivalents                             (1,596,000)      33,701,000           68,000
Cash and cash equivalents at beginning of period                                 33,786,000           85,000           17,000
                                                                               ------------     ------------     ------------
Cash and cash equivalents at end of period                                     $ 32,190,000     $ 33,786,000     $     85,000
                                                                               ============     ============     ============

SUPPLEMENTAL CASH FLOW INFORMATION
     Cash paid for interest                                                    $      2,000     $    209,000     $  3,970,000
     Cash paid for income taxes                                                $     35,000     $  1,640,000     $    680,000

NON-CASH INVESTING AND FINANCING ACTIVITIES
     Holdback receivable                                                       $         --     $  4,047,000     $         --
     Acquisition of assets                                                     $         --     $     54,000     $         --
     Conversion of CorVu and PrivilegeONE notes receivable into investments    $    338,000     $         --     $         --
     Property and equipment contributed by minority owners of
         Innovation Technology Partners                                        $     52,000     $         --     $         --
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-5
<PAGE>   26

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                        Accumulated
                                  Common Stock      Additional                             Other        Total
                              --------------------   Paid-in      Retained    Treasury  Comprehensive Shareholders' Comprehensive
                               Shares      Amount     Capital     Earnings      Stock        Loss        Equity      Income(Loss)
                              --------    --------    --------    --------    ----------  ----------  ------------   -----------
<S>                              <C>           <C>      <C>         <C>           <C>      <C>          <C>          <C>
 Balance,
     November 30, 1997           5,323    $    266    $ 26,827    $  5,757    $     --    $     --    $ 32,850      $     --

     Net Income                     --          --          --       4,355          --          --       4,355            --
Issuance of Stock under
     401 (k) Plan                   32           1          70          --          --          --          71            --
Issuance of Stock under
     stock option plans             --          --          20          --          --          --          20            --
Income tax refund                   --          --       1,040          --          --          --       1,040            --
Less:  Purchase of
     treasury stock                (28)         --          --          --        (115)         --        (115)           --
                              --------    --------    --------    --------    --------    --------    --------      --------
Balance
     November 30, 1998           5,327         267      27,957      10,112        (115)         --      38,221            --
     Net Income                     --          --          --       4,839          --                   4,839         4,839
Issuance of Stock under
     stock option plans            176           9         373          --          --          --         382            --
Issuance of Stock under
     warrant exercise              143           7          (7)         --          --          --          --            --
Modification of stock
     option terms                   --          --         525          --          --          --         525            --
Income tax refund                   --          --       3,788          --          --          --       3,788            --
Less:  Purchase of
     treasury stock             (1,351)         --          --          --      (8,583)         --      (8,583)           --
Adjustment to reflect
     par value                      --         (68)         68          --          --          --          --            --
Comprehensive Loss:
     unrealized loss in
     available for sale
     securities                     --          --          --          --          --        (518)       (518)         (518)
                                                                                                                    --------
Comprehensive income                                                                                                   4,321
                              --------    --------    --------    --------    --------    --------    --------
Balance,
     November 30, 1999           4,295         215      32,704      14,951      (8,698)       (518)     38,654

     Net Loss                                                       (5,896)                             (5,896)       (5,896)
Issuance of Stock under
     stock option plans             73           4         145          --          --          --         149            --
Issuance of Stock and options
     by consolidated
     subsidiary                     --          --          35          --          --          --          35            --
Shares retired upon
     recapitalization
     of the Company                 (1)         --         (10)         --          --          --         (10)           --
Income tax refund                   --          --         478          --          --          --         478            --
Less:  Purchase of
     treasury stock               (235)         --          --          --      (1,041)         --      (1,041)           --
Adjustment to reflect
     par value                      --         (12)         12          --          --          --          --            --
Change in unrealized loss in
     available for sale
     securities                     --          --          --          --          --         518         518           518
                                                                                                                    --------
Comprehensive Loss                                                                                                  $ (5,378)
                                                                                                                    ========
                              --------    --------    --------    --------    --------    --------    --------
Balance,
     November 30, 2000           4,132    $    207    $ 33,364    $  9,055    $ (9,739)   $     --    $ 32,887
                              ========    ========    ========    ========    ========    ========    ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-6
<PAGE>   27

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESSES

         PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of Calton,
         Inc. and all of its wholly owned and majority owned subsidiaries (the
         "Company"). The Company consolidates a subsidiary when it owns directly
         or indirectly more than 50% of the outstanding voting securities. Under
         this method, a subsidiary's results of operations, cash flows and
         balance sheets are reflected in the consolidated financial statements
         of the Company. All significant intercompany accounts and transactions
         have been eliminated. Participation of other security holders in the
         earnings and losses of consolidated majority owned subsidiaries are
         reflected in the caption "Minority Interest" in the Company's
         consolidated financial statements. Minority interest adjusts the
         Company's consolidated results of operations to reflect only the
         Company's shares of the earnings or losses of majority owned
         subsidiaries. In certain circumstances where majority owned
         subsidiaries incur losses, and the Company is unable to pass these
         losses through to minority security holders, the Company records the
         entire loss of the subsidiary.

         DESCRIPTION OF BUSINESSES

         On December 31, 1998, the Company completed the sale of the primary
         homebuilding subsidiary, Calton Homes, Inc. ("Calton Homes") to Centex
         Real Estate Corporation ("Centex" or the "purchaser"). As a result of
         the sale of Calton Homes, 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."

         In July 1999 the Company acquired substantially all of the assets of
         iAW, Inc, and subsequently changed the name to eCalton.com, Inc.
         ("eCalton"). eCalton is engaged in designing Web pages and providing
         Internet strategy consulting and comprehensive Internet-based
         solutions. In addition, eCalton is in the business of providing
         technical staffing to assist and augment their clients' information
         technology departments.

         In January 2000, the Company acquired a collective direct and indirect
         (through ownership in a parent company) equity interest in PrivilegeONE
         Networks, LLC ("PrivilegeONE"), a newly formed limited liability
         corporation engaged in the development of a co-branded loyalty credit
         card program. PrivilegeONE has developed a co-branded credit card with
         the name of individual automobile dealers, along with that of
         PrivilegeONE, and will provide dealership-sponsored incentives for
         consumers to use the card both at the dealerships, and at other
         businesses that accept the cards.

         In June 2000, the Company acquired a 51% interest in Innovation
         Technology Partners, LLC ("ITP"), a newly-formed entity established to
         provide management and consulting services to entrepreneurial and
         development stage companies. In addition to its management and
         consulting services, ITP also intends to acquire controlling interests
         in certain entities that it manages and consults with.

         In August 2000, through its interest in ITP, the Company acquired a
         controlling interest in MindSearch, a company which is developing
         technology to provide consumer research to businesses on a faster and
         broader basis than existing research approaches.

         Through December 30, 2001, the Company is to provide corporate
         consulting services related to the sale of the homebuilding assets
         under a consulting agreement with the purchaser. The eCalton Web
         strategy division develops Web sites for customers throughout the
         United States, while the eCalton staffing operation places staff mainly
         in the Houston, Texas market. To date, ITP has consulted on projects
         mainly in the south Texas area. PrivilegeONE has yet to generate any
         revenues, but expects to operate in most regions of the United States
         once operational.



                                      F-7
<PAGE>   28


         RECAPITALIZATION

         Effective at the close of business on May 31, 2000, the Company
         effected a one-for-twenty-five share combination or "reverse split" of
         the Company's Common Stock. Contemporaneous with, but after giving
         effect to the share combination, the Company effected a five-for-one
         forward split of the Common Stock. As a result of this recapitalization
         (the "Recapitalization"), each twenty-five shares of Common Stock
         outstanding was combined into one share of Common Stock and the
         resulting share was split into five shares. All Common Stock, stock
         option, warrant and per share information has been adjusted to reflect
         the Recapitalization as if such Recapitalization had taken place at the
         beginning of the periods presented. In connection with this
         Recapitalization, the Company changed the par value of its common stock
         from $.01 to $.05 per share.

         REVENUE RECOGNITION

         Revenues of Calton, Inc. are comprised of the consulting agreement
         payments from the purchaser of Calton Homes. Revenue is recognized once
         the consulting report has been delivered and the amounts due under the
         contract become payable to the Company.

         eCalton recognizes revenues for services as work is performed on a
         project-by-project basis adjusted for any anticipated losses in the
         period in which any such losses are identified. For projects charged on
         a time and materials basis, revenue is recognized based on the number
         of hours worked by consultants at an agreed-upon rate per hour. eCalton
         also undertakes projects on a fixed-fee or capped-fee basis for which
         revenues are recognized on the percentage of completion method of
         accounting based on the evaluation of actual costs incurred to date
         compared to total estimated costs.

         Revenues of ITP are recorded once ITP consulting services have been
         rendered.

         CASH AND CASH EQUIVALENTS

         Cash equivalents consist of demand deposits, United States Government
         Treasury Bills, and highly liquid money market funds with original
         maturities of three months or less. The Company places its temporary
         cash investments with high credit quality financial institutions. At
         times, such investments may be in excess of the FDIC insurance limits.
         The Company has not experienced any loss to date on these investments.

         AVAILABLE-FOR-SALE SECURITIES

         The Company classifies all of its short-term investments as
         available-for-sale securities. Such investments are carried at fair
         value based on quoted market prices, with the unrealized gains and
         losses, net of tax, reported as a separate component of comprehensive
         income (loss) in shareholders' equity. Realized gains and losses, and
         declines in value judged to be other than temporary, are included in
         the caption "Loss on Securities" (see Note 2).

         PROPERTY AND EQUIPMENT

         Property and equipment are primarily comprised of computer equipment,
         office furniture and leasehold improvements. Computer equipment is
         being depreciated over a useful life of three to four years, office
         furniture is being depreciated over five years, and leasehold
         improvements are being depreciated over the terms of the respective
         leases, which range from one to five years. Maintenance and repairs are
         expensed as incurred, while renewals and betterments are capitalized.
         The Company periodically performs an assessment of fixed assets to
         determine if the assets have been impaired. Impairments are recognized
         in operating results to the extent that carrying value exceeds fair
         value.


                                      F-8
<PAGE>   29

         INTANGIBLE ASSETS

         Goodwill consists of the excess of purchase price over the fair value
         of assets and liabilities acquired in acquisitions accounted for under
         the purchase method of accounting. Goodwill is amortized on a
         straight-line basis over five to ten years. The Company periodically
         analyzes the carrying value of its goodwill and other intangible assets
         to assess the recoverability from future operations. Impairments are
         recognized in operating results to the extent that carrying value
         exceeds fair value. During 2000 the Company concluded that the goodwill
         associated with the acquisitions of both eCalton and PrivilegeONE had
         been impaired, and charged these amounts to operations. This conclusion
         was reached because of sustained losses since inception for both
         entities, and the lack of certainty at November 30, 2000 as to whether
         these businesses would ever become profitable.

         INCOME TAXES

         The Company records income taxes using the liability method based on
         enacted tax laws and statutory tax rates applicable to the period in
         which differences are expected to affect taxable income. Under this
         method, the Company records deferred taxes based on temporary taxable
         and deductible differences between the tax bases of the Company's
         assets and liabilities and their financial reporting bases. A valuation
         allowance is established when it is more likely than not that some or
         all of the deferred tax assets will not be realized. Income tax expense
         is the tax payable for the period and the change during the period in
         deferred tax assets and liabilities.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The Company's financial instruments consist of cash and cash
         equivalents, accounts receivable and unbilled revenue, other
         receivables, accounts payable, accrued expenses and other liabilities.
         At November 30, 2000 and 1999, the fair value of these instruments
         approximated their carrying value.

         USE OF ESTIMATES

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

         PER SHARE COMPUTATIONS

         Basic net income (loss) per common share is computed by dividing net
         income (loss) by the weighted average number of common shares
         outstanding during the period.

         Income (loss) per share assuming dilution is computed by dividing the
         net income (loss) by the weighted average number of common shares
         outstanding, increased by the assumed conversion of other potentially
         dilutive securities during the period.

         The effect of 979,000 stock options and warrants were not included in
         the calculation of earnings per share for 2000, as they would be
         antidilutive. There were 360,000 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 200,000
         shares of common stock was outstanding until June 1999 (see Note 5).
         The effect of stock options and the warrant were not included in the
         calculation of diluted earnings per share in 1998 as these options and
         warrants were antidilutive due to the loss from continuing operations
         during this period.

         STOCK-BASED COMPENSATION

         The Company measures compensation expense related to the grant of stock
         options and stock-based awards to employees in accordance with the
         provisions of Accounting Principles Board Opinion No. 25, "Accounting
         for Stock Issued to Employees," ("APB 25") and related interpretations.
         Stock-based compensation arrangements involving non-employees are
         accounted for under Statement of Financial Accounting Standards No.
         123, "Accounting for Stock-Based Compensation," ("SFAS 123") and



                                      F-9
<PAGE>   30


         related interpretations. The Company provides the disclosure
         requirements of SFAS 123 for employee arrangements.

         ADVERTISING EXPENSE

         The costs of advertising are expensed as incurred. Included in selling,
         general and administrative expenses are advertising costs of
         approximately $86,000 and $16,000 for the years ended November 30, 2000
         and 1999, respectively.

         RECENT ACCOUNTING PRONOUNCEMENTS

         On December 3, 1999, the staff of the SEC published Staff Accounting
         Bulletin 101, "Revenue Recognition," ("SAB 101") to provide guidance on
         the recognition, presentation and disclosure of revenue in financial
         statements. The Company's policy of revenue recognition is consistent
         with this bulletin.

         In June 2000, the FASB issued Statement No. 138, "Accounting for
         Certain Hedging Activities", which amended Statement No. 133,
         "Accounting for Derivative Instruments and Hedging Activities".
         Statement 138 must be adopted concurrently with the adoption of
         Statement 133. The Company expects to adopt these new Statements
         effective December 1, 2000. These Statements will require the Company
         to recognize all derivatives on the balance sheet at fair value. The
         Company does not anticipate that the adoption of these Statements will
         have a significant effect on its results of operations or financial
         position.

         RECLASSIFICATIONS

         Certain reclassifications have been made to prior years' financial
         statements in order to conform to the 2000 presentation.

         2.    AVAILABLE-FOR-SALE SECURITIES

         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. Also
         in January 2000, the Company purchased an additional 375,000 shares of
         common stock and a five-year warrant for 225,000 shares of CorVu for
         $750,000. The warrant entitles the Company to acquire certain
         quantities of CorVu common stock at prices ranging from $2.00 per share
         to $8.00 per share.

         At November 30, 2000, the Company is reporting no Available-for-Sale
         Securities, although the Company holds 518,000 shares of CorVu
         Corporation (OTCBB: CRVU) as of the balance sheet date. The Company had
         previously valued and reported these securities based on the closing
         price of CorVu common stock, as reported on the "Over-the-Counter"
         Bulletin Board. In accordance with Statement of Financial Accounting
         Standards No. 115, "Accounting for Certain Investments in Debt and
         Equity Securities" the Company has assessed the carrying value of these
         shares and concluded that the decline in value was not temporary. This
         conclusion was based on, among other things, CorVu's financial
         condition and sustained losses from operations, the low per share value
         at which CorVu common stock is trading, the Company's inability to
         liquidate its shares in CorVu, and other factors that management
         considered relevant under the circumstances. The loss associated with
         this other-than-temporary impairment amounted to $990,000 for the
         current year, and is included on the income statement as loss on
         securities. In addition, the current year loss on securities includes a
         capital loss on the sale of common stock of two publicly traded New



                                      F-10
<PAGE>   31


         York Stock Exchange companies in the amount of $508,000, for which the
         Company received proceeds in the amount of approximately $1,350,000.
         The remaining $210,000 of loss on securities resulted from the write
         off of non-readily marketable securities.

         3.    ACQUISITIONS AND INVESTMENTS

         In July 1999 the Company acquired substantially all of the assets of
         iAW, Inc., an Internet business solutions provider for a cash price of
         $250,000. The acquired business is operated through a wholly-owned
         subsidiary named eCalton.com, Inc. As a result of the acquisition, the
         Company recorded goodwill in the amount of $237,000, which was
         originally to be amortized over ten years. However, during the current
         year management concluded that this goodwill had been permanently
         impaired, and charged the entire unamortized balance of goodwill to
         operations. In conjunction with the acquisition, the Company entered
         into employment contracts with the three principal officers of eCalton,
         and granted each officer options to acquire 120,000 shares of the
         Company's common stock at a price of $8.15. During the fourth quarter
         of 2000 one of these officers resigned, and 80,000 of these options
         were cancelled.

         In January 2000, the Company acquired a collective direct and indirect
         (through ownership in a parent company) 50.4% equity interest in
         PrivilegeONE Networks, LLC, a newly formed limited liability
         corporation 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 five-year warrant to acquire
         240,000 shares of common stock at an exercise price of $12.50 per
         share. As of the acquisition date, the warrant was determined to have
         nominal value. As a result of the acquisition, the Company recorded
         goodwill in the amount of $138,000, which was originally to be
         amortized over five years. However, during the current year management
         concluded that this goodwill had been permanently impaired, and charged
         the entire unamortized balance of goodwill to operations.

         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. As of November 30, 2000 the outstanding principal
         balance on this loan was $1,486,000. 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 agreements with the other owners of
         PrivilegeONE and its parent company, which obliges each of the owners
         to offer its equity interest in PrivilegeONE or its parent to the other
         owners in the event that the owner wishes to transfer its equity
         interest.

         In June 2000, the Company acquired a 51% interest in ITP, a
         newly-formed entity established to provide management and consulting
         services to entrepreneurial and development stage companies. In
         exchange for its controlling interest, the Company contributed
         $1,500,000 in cash and agreed to loan up to $3,500,000 to the new
         venture. The loan, which bears interest at a rate equal to prime plus
         one percent per annum, is due in June 2004. Executive management of ITP
         contributed $500,000 in cash and certain assets, including exiting
         client contracts, in exchange for their collective 49% interest. The
         accounts of ITP have been consolidated along with those of the Company
         with the executive management's interest shown as minority interest.
         Certain owners of ITP have been issued warrants to acquire an aggregate
         11.1% interest in ITP at a value to be determined by appraisal if
         certain events occur, including the completion of a public offering, a
         merger or other business combination, a change of control, or if
         Anthony J. Caldarone ceases to be Chairman of the Company. ITP
         management has been granted options to acquire up to 150,000 shares of
         common stock of the Company at an exercise price of $5.56 per share if
         ITP surpasses certain specified earnings targets. As a result, the
         Company could be subject to expense recognition in the event it becomes
         probable that ITP will achieve its target earnings.



                                      F-11
<PAGE>   32


         In addition to its management and consulting services, ITP also intends
         to acquire controlling interests in certain entities that it manages
         and consults with. The first initiative for this line of ITP business
         was the acquisition of a 51%-owned subsidiary, MindSearch, Inc., a
         company which has developed technology to provide consumer research to
         businesses on a faster and broader basis than existing research
         approaches. In August 2000, ITP borrowed $500,000 under its $3,500,000
         credit facility with the Company to finance the acquisition of a
         controlling interest in MindSearch. The accounts of MindSearch have
         been consolidated along with those of the Company.

         During 2000 the Company also acquired certain interests in businesses
         accounted for using the cost method in amounts totaling less than
         $250,000 in the aggregate.

         4.    INCOME TAXES

         The components of the provision/(benefit) for income taxes are as
         follows: (amounts in thousands)
<TABLE>
<CAPTION>

                                                                           Years Ended November 30,
                                                                        -----------------------------
                                                                          2000       1999       1998
                                                                        -------    -------    -------
<S>                                                                     <C>        <C>        <C>
         Federal
               Current                                                  $  (605)   $    15    $ 1,785
               Deferred                                                      84        (28)      (603)
               Provision in lieu of income taxes                             --      2,928        527
         State
               Current                                                       26         28         16
               Provision in lieu of income taxes                             --        310        513
                                                                        -------    -------    -------
                                                                           (495)     3,253      2,238
         Less:  Discontinued operations (provision) benefit                 (84)       373     (2,363)
               Provision in lieu of taxes on the sale of Calton Homes        --     (3,173)        --
                                                                        -------    -------    -------
               Continuing operations                                    $  (579)   $   453    $  (125)
                                                                        =======    =======    =======
</TABLE>




                                      F-12
<PAGE>   33

         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,
                                                                        -----------------------------
                                                                          2000       1999       1998
                                                                        -------    -------    -------
<S>                                                                     <C>        <C>        <C>
         Computed provision (benefit) for income taxes at 34%           $(2,266)   $ 2,758    $ 2,242
         Expenses for which deferred tax benefit
               cannot be currently recognized                             1,851         --         --
         Expenses for which deferred tax benefit
               is currently recognized                                       --        (37)      (399)
         State and local tax benefit                                         26        594        529
         State tax reserves                                                  --       (550)        --
         Expenses for which no tax benefit is available                      15        488         --
         Other                                                             (121)        --       (134)
                                                                        -------    -------    -------
         Total provision (benefit) for income taxes                        (495)     3,253      2,238
         Less:  Discontinued operation (provision) benefit                  (84)       373     (2,363)
               Provision in lieu of taxes on the sale of Calton Homes        --     (3,173)        --
                                                                        -------    -------    -------
               Continuing operations                                    $  (579)   $   453    $  (125)
                                                                        =======    =======    =======
</TABLE>



         During fiscal 2000, the Company received a federal income tax refund in
         the amount of $1,298,000 resulting from the carryback of certain losses
         to years in which the Company incurred income taxes.

         In 1999, the resolution of certain state tax issues resulted in a
         $550,000 reduction to the 1999 provision for income taxes.



                                      F-13
<PAGE>   34



         Temporary differences and carryforwards which give rise to a
         significant portion of deferred tax assets and liabilities at November
         30, 2000, and 1999 are as follows:

         (amounts in thousands)

<TABLE>
<CAPTION>

                                            Deferred Tax Assets (Liabilities)
                                        -------------------------------------------
                                        Continuing Operations      Combined*
                                        ---------------------   -------------------
                                           2000        1999        2000       1999
                                        --------    ---------   --------    -------
<S>                                     <C>         <C>         <C>         <C>
         Income from joint ventures     $     --    $     --    $     93    $    33
         Federal net operating losses      7,214       5,594       7,214      5,594
         State net operating losses        2,023       2,248       2,444      2,662
         Depreciation                          9          (6)          9         (6)
         Deferred state taxes                177           5         368        131
         Litigation reserve                   --          --         188        187
         Stock compensation                   --          --         179        179
         Intangibles, net                    603          --         603         --
         Other                                85          23         333        109
                                        --------    --------    --------    -------
                                          10,111       7,864      11,431      8,889
         Valuation allowances            (10,111)     (7,864)    (11,431)    (8,805)
                                        --------    --------    --------    -------
         Total deferred taxes           $     --    $     --    $     --    $    84
                                        ========    ========    ========    =======

</TABLE>



         * Includes both continuing and discontinued operations

         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.

         The federal net operating loss carryforward for tax purposes is
         approximately $21,200,000 at November 30, 2000 and $16,400,000 at
         November 30, 1999. 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 2019.



                                      F-14
<PAGE>   35


         5.    SHAREHOLDERS' EQUITY

         The Company's Certificate of Incorporation, as amended, provides for
         10,740,000 authorized shares of Common Stock (par value $.05 per
         share), 520,000 shares of Redeemable Convertible Preferred Stock (par
         value $.10 per share) and 2,000,000 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.

         During 1998 the Company commenced a stock repurchase program with the
         intention to repurchase up to 2,000,000 shares of Common Stock in open
         market repurchases and privately negotiated transactions. As of
         November 30, 2000, there were 1,615,000 shares held in Treasury
         totaling $9,739,000.

         In May 1993, the Company adopted the Calton, Inc. 1993 Non-Qualified
         Stock Option Plan (the "1993 Plan") under which a total of 299,000
         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. The options granted under the 1993 Plan vest
         in equal installments over a three-year period. The exercise price of
         outstanding options at November 30, 2000 under the 1993 Plan range from
         $1.55 to $6.10 per share. Options granted under the 1993 Plan have a
         maximum term of ten years, with a weighted average remaining
         contractual life of 7.5 years at November 30, 2000.

         In April 1996, the Company's shareholders approved the Company's 1996
         Equity Incentive Plan (the "1996 Plan") under which a total of 400,000
         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). The exercise prices of outstanding options at
         November 30, 2000 range from $1.70 to $13.90 per share with vesting
         ranging from one to five years. The exercise period is up to ten years,
         with a weighted average remaining contractual life of 6.1 years at
         November 30, 2000.

         In April 2000, the Company's shareholders approved the Company's 2000
         Equity Incentive Plan (the "2000 Plan") under which a total of 800,000
         shares of Common Stock were reserved for issuance. Under the terms of
         the 2000 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). Generally, the options granted under the 2000
         Plan vest in equal installments over a five-year period. The exercise
         prices of outstanding options at November 30, 2000 range from $3.65 to
         $4.50 per share. The exercise period is up to ten years, with a
         weighted average remaining contractual life of 9.6 years at November
         30, 2000.

         At November 30, 2000 there were 346,000 options exercisable under all
         plans in the aggregate, with a weighted average exercise price of
         $4.79.

         In connection with the sale of Calton Homes, Inc. the Company made
         certain adjustments to the terms of options to acquire the Company's
         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. had 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.


                                      F-15
<PAGE>   36

         Stock option activity under each of these Plans are summarized as
follows (shares in thousands):
<TABLE>
<CAPTION>

                                                   2000        1996        1993            Weighted Average
                                                   Plan        Plan        Plan     Total   Exercise Price
                                                   ----        ----        ----     -----   --------------

<S>                                                 <C>        <C>        <C>        <C>       <C>
         Options outstanding November 30, 1998       --        276        135        411        $  1.99
         Granted                                     --         17        120        137        $  6.05
         Exercised                                   --       (104)       (72)      (176)       $  2.07
                                                   ----       ----        ---       ----
         Options outstanding November 30, 1999       --        189        183        372        $  3.44
         Granted                                     49         75         43        167        $ 10.29
         Forfeited                                   (2)        (6)        --         (8)       $ 10.85
         Exercised                                   --        (29)       (43)       (72)       $  2.00
                                                   ----       ----        ---       ----
         Options outstanding November 30, 2000       47        229        183        459        $  6.04
                                                   ====       ====        ===       ====
</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 120,000 shares of the Company's Common Stock, or an aggregate
         of 360,000 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 $8.15 per share. During 2000 one of these officers
         resigned and, as a result, forfeited 80,000 of the options which had
         not yet vested.

         The Company accounts for stock option plans under APB 25. Accordingly,
         no compensation expense has been recognized for its stock-based
         compensation plans. 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 (loss) would have
         been reduced by (increased by) approximately ($269,000), $551,000 and
         $141,000 for years ended November 30, 2000, 1999 and 1998,
         respectively. On a pro forma basis, earnings (loss) per share would
         have been reduced by (increased by) ($.06), $.02 and $.00 per share for
         2000, 1999 and 1998, respectively. The estimated weighted average fair
         value of the options granted in the years ended November 30, 2000, 1999
         and 1998 is $7.34, $6.05 and $1.55, respectively, using the
         Black-Scholes option-pricing model, with the following assumptions:
         dividend yield - none, volatility of .8, .8 and .7, risk-free interest
         rate of 6.54%, 4.56% and 5.49%, assumed forfeiture rate as they occur,
         and an expected life of 5.8 years, 3 years and 4.7 years at November
         30, 2000, 1999 and 1998, respectively. Compensation expense recognized
         in providing pro forma disclosures may not be representative of the
         effects on net income or loss for future years.

         In June 1999, the holder of a warrant (the "Warrant") to purchase
         200,000 shares of Calton Common Stock exercised the Warrant using the
         cashless exercise method. As a result, the holder was issued 136,000
         shares which the Company repurchased for $750,000 and the Warrant was
         canceled. The 136,000 shares are held as treasury stock.

         In July 2000 the Company's Board of Directors repriced 92,000 options
         held by current employees of the Company. The options were repriced to
         $4.50 per share, and had exercise prices ranging from $6.10 to $12.65
         prior to the repricing. The effect of repricing options can trigger
         compensation expense to the extent that the fair value of the Company's
         common stock exceeds the new price of the options through until the
         date they are exercised or expire. In 2000 no compensation expense was
         recognized as a result of the repricing, as the price of the Company's
         stock did not close above $4.50 at the end of any reporting period.



                                      F-16
<PAGE>   37


         Effective November 30, 2000 the Board of Directors of the Company
         adopted an Employee Stock Purchase Plan (the "Plan"), subject to
         shareholder approval at the Company's 2001 Annual Meeting of
         Shareholders. The stock subject to options under the Plan will
         initially be 175,000 shares of the Company's common stock. This initial
         number shall be automatically increased on January 1 of each year by
         the lesser of (i) 2% of the total number of shares of common stock
         outstanding on December 31 of the prior year or (ii) 75,000 shares.
         Offering periods will be determined by the Compensation Committee, with
         a maximum offering period not to exceed twenty-four months. Under the
         terms of the Plan, the option price per share will be the lesser of (i)
         85% of the average market price of the common stock on the first
         business day of the offering period, or (ii) 85% of the average market
         price of the common stock on the last business day of the payment
         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.

6.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following:
         (in thousands)


                                                         As of November 30,
                                                        -------------------
                                                         2000          1999
                                                        -----         -----
         Computer, furniture and other equipment        $ 670         $ 155
         Leasehold improvements                           159            --
                                                        -----         -----
                                                          829           155
         Less:  Accumulated depreciation                 (191)          (12)
                                                        -----         -----
                                                        $ 638         $ 143
                                                        =====         =====




         Total depreciation expense for the years ended November 30, 2000, 1999
         and 1998 was $179,000, $20,000 and $164,000, respectively.



                                      F-17
<PAGE>   38



         7.    COMMITMENTS AND CONTINGENT LIABILITIES

         DISCONTINUED OPERATIONS

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

         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 $5,200,000 of the closing proceeds were
         deposited into escrow. Of this amount, approximately $3,000,000 (the
         "General Indemnification Funds") were deposited to provide security for
         the Company's indemnity obligations and approximately $2,200,000 (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 Amended and Restated Stock Purchase Agreement ("Agreement"),
         pursuant to which the Company sold Calton Homes on December 31, 1998,
         requires the Company to indemnify the purchaser for, among other
         things, 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.

         In January 2000, the purchaser asserted a $253,000 claim for
         indemnification related to certain alleged liabilities arising out of
         the events occurring prior to the sale of Calton Homes. The purchaser
         has agreed to reduce claim to $205,000. On December 28, 2000, rather
         than permit the release of the remaining General Indemnification Funds,
         which were to be disbursed to the Company at year-end, the purchaser
         asserted that it had sustained losses of $770,000 as a result of
         matters allegedly arising from events prior to the sale of Calton
         Homes, including the cost of warranty work in excess of the $600,000
         reserve established upon the closing of the transaction. In addition,
         the purchaser requested the escrow agent to set aside $1,139,000 for
         damages which it believes it will sustain in the future, including the
         cost of anticipated warranty work and other matters. An arbitration
         proceeding to resolve these issues is currently scheduled for March
         2001. The Company believes that many of the claims made by the
         purchaser are without merit and intends to vigorously contest these
         claims in the arbitration. In certain instances, the purchaser has not
         provided sufficient documentation to enable the Company to assess the
         merits of the claim. With regard to claims for warranty work performed,
         the Company believes that the purchaser has failed to comply with the
         provisions of its agreement with the Company related to the performance
         of the work and did not demonstrate reasonably prudent business
         judgment in administering warranty claims. At this time it is not
         possible to accurately predict what the Company's liability will be
         related to the claims asserted by the purchaser. However, at this time
         the potential additional claims asserted by the purchaser against the
         General Indemnification Fund total approximately $2,300,000. As of
         November 30, 2000, the balance in the General Indemnification Fund
         amounted to only $1,434,000. No amounts will be released from the
         General Indemnification Funds until the indemnity claims are resolved.
         The Company's indemnity obligations are not limited to the amounts
         deposited in escrow.

         The Specific Indemnification Funds are to be disbursed, to the extent
         not otherwise utilized in the resolution of litigation, on a
         case-by-case basis, as the litigation is resolved. As of November 30,
         2000, there were $1,055,000 of Specific Indemnification Funds remaining
         in escrow. With the exception of two matters, each of the matters for
         which the Specific Indemnification Funds were deposited have been
         resolved, subject, in certain cases, to the finalization of settlement
         agreements. Under the terms of its agreement with the purchaser, the
         Company is required to deposit additional Specific Indemnification
         Funds for any matters that remain unresolved at December 31, 2000. As a
         result, the Company may be required to deposit an additional $189,000
         in escrow until the resolution of the remaining two matters.




                                      F-18
<PAGE>   39



         The Company has filed a counter claim against the purchaser alleging
         that purchaser has breached the purchase agreement and holdback escrow
         agreement. The Company contends that purchaser did not comply with its
         express obligations under the contract and its obligations of "good
         faith and fair dealing" implied in all New Jersey contracts. Among
         other things, the Company alleges that purchaser failed to handle third
         party indemnification claims in good faith and in a reasonable manner
         using prudent business standards, and failed to provide the Company
         with requested information on certain claims to allow the Company to
         make an intelligent assessment of the claim. At this time, there can be
         no assurance that the Company will prevail in this counter claim.

         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 $2,000,000. 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.

         LEASES

         The Company and its consolidated subsidiaries lease their facilities
         and equipment under operating lease agreements with various expiration
         dates through 2005. Future minimum lease payments as of November 30,
         2000 under the leases are as follows:

         2001                               $246,000
         2002                                167,000
         2003                                 97,000
         2004                                 82,000
         2005                                 68,000
        Thereafter:                               --
                                            --------
            Total:                          $660,000
                                            ========

         Rental expense for the Company and its subsidiaries for the years ended
         November 30, 2000, 1999, and 1998 was $247,000, $45,000, and $392,000,
         respectively.

         8.    DISCONTINUED OPERATIONS

         On December 31, 1998, the Company completed the sale of Calton Homes.
         The purchase price for the stock of Calton Homes was $48,100,000 plus
         certain post-closing adjustments. In fiscal 1999, the Company recorded
         a pretax gain of $7,591,000 on the sale. 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 resulted 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 7) 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 the Company
         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 gain from the sale of Calton Homes. In
         fiscal 2000, the Company recorded a provision of approximately $650,000
         against the previously recognized gain on sale of $7,591,000. 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.


                                      F-19
<PAGE>   40

         Results of operations from discontinued operations are as follows
(amounts in thousands):

<TABLE>
<CAPTION>

                                                                Years ended November 30,
                                                               -------------------------
                                                                 1999             1998
                                                               --------         --------
<S>                                                            <C>              <C>
         Revenues                                              $  6,763         $105,292
                                                               ========         ========

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




         Net assets of discontinued operations are as follows (amounts in
thousands):

                                                                  Nov. 30,
                                                                   1999
                                                              --------------
Assets

       Receivables and other assets                                 $   104
       Commercial land                                                  109

Liabilities
       Accounts payable and accrued expenses                           (650)
                                                              -------------
Net liabilities                                                     $  (437)
                                                              =============





         9.    SEGMENT REPORTING

         The Company accounts for reportable segments using the "management
         approach". The management approach focuses on disclosing financial
         information that the Company's management uses to make decisions about
         the Company's operating matters. As of November 30, 2000 the Company
         operates in three business segments, as follows.

         In July 1999, the Company acquired substantially all of the assets of
         iAW, Inc., an Internet business solutions provider. The acquired
         business is operated through a wholly owned subsidiary, eCalton.
         Revenues of eCalton are derived from designing Web pages and providing
         internet strategy consulting services. In addition, eCalton also earns
         revenues from employee staffing.

         In January 2000, the Company acquired a 50.4% equity interest in
         PrivilegeONE. PrivilegeONE was formed in 1999 to develop customer
         loyalty programs through the use of a co-branded credit card related to
         the automotive industry. At this time PrivilegeONE operations consist
         solely of start up activities, and its entire loss has been included in
         the Company's consolidated results of operations.



                                      F-20
<PAGE>   41


         The Company also provides corporate consulting services related to the
         sale of the homebuilding assets in December 1998. In addition, in June
         2000 the Company acquired a 51% interest in ITP, a newly formed entity
         established to provide management and consulting services to
         entrepreneurial and development stage companies, as well as acquiring
         controlling interest in certain entities that ITP consults with.
         Because ITP's operations are similar to that of the Company's corporate
         consulting for Centex, the results of operations for ITP are included
         in the results of operations for the corporate and consulting services
         segment.

         The Company recognized revenues in the Corporate and Consulting
         Services division from Centex Corporation in the amount of $1,300,000
         and $1,194,000 for the years ended November 30, 2000 and 1999,
         respectively. These amounts represented 37% and 88% of consolidated net
         revenues in 2000 and 1999.

         The Company has no foreign operations.

         Operating results, by segment, for the years ended November 30, 2000
         and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                      Year ended November 30, 2000
                                                  --------------------------------------------------------------------

                                                     Internet       Credit Card       Corporate and
                                                     Business         Loyalty          Consulting          Total
                                                    Solutions         Business          Services          Company
                                                  --------------------------------------------------------------------
<S>                                                  <C>             <C>             <C>              <C>
         Total revenues                              $ 2,045         $    --         $  1,489         $  3,534
         Total cost of revenues                        1,514              --               --            1,514
         Depreciation and amortization                   109              26               91              226
         Interest income                                  --              --            2,144            2,144
         Loss from operations                         (2,910)         (1,709)          (1,582)          (6,201)
         Benefit for income taxes                         --              --             (579)            (579)
         Net loss                                     (2,911)         (1,859)          (1,126)          (5,896)
         Total assets                                $ 1,172         $    39         $ 33,889         $ 35,100

</TABLE>


<TABLE>
<CAPTION>

                                                                         Year ended November 30, 1999
                                                  --------------------------------------------------------------------

                                                     Internet       Credit Card       Corporate and
                                                     Business         Loyalty          Consulting          Total
                                                    Solutions         Business          Services          Company
                                                  --------------------------------------------------------------------
<S>                                                  <C>             <C>             <C>              <C>
         Total revenues                              $   157         $    --         $  1,194         $  1,351
         Total cost of revenues                          116              --               --              116
         Depreciation and amortization                    14              --                3               17
         Interest income                                  --              --            1,845            1,845
         Income (loss) from operations                  (427)             --            1,541            1,114
         Provision (benefit) for income taxes           (171)             --              624              453
         Net income (loss)                              (256)             --            5,095            4,839
         Total assets                                $   464         $    --         $ 39,977         $ 40,441
</TABLE>


                                      F-21
<PAGE>   42




         10.      QUARTERLY FINANCIAL RESULTS (UNAUDITED)

         Quarterly financial results for the years ended November 30, 2000 and
         1999 are as follows (amounts in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                                               Three Months Ended
                                                          --------------------------------------------------------------
                                                            Feb. 29,         May 31,        Aug. 31,        Nov. 30,
                                                              2000            2000            2000            2000
                                                          --------------  --------------  -------------  ---------------
<S>                                                             <C>             <C>           <C>             <C>
         Net loss from continuing operations                    $(1,063)        $(678)        $(1,349)        $(2,068)
         Net loss from discontinued operations                       --            --              --             (84)
         Net loss from the sale of Calton Homes                      --            --              --            (654)
                                                                -------         -----         -------         -------
         Net loss                                               $(1,063)        $(678)        $(1,349)        $(2,806)
                                                                =======         =====         =======         =======

         Net loss per share
              Basic                                             $ (0.25)        $(0.16)       $ (0.32)        $ (0.65)
              Diluted                                           $ (0.25)        $(0.16)       $ (0.32)        $ (0.65)
</TABLE>


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

         Net income per share (a)
              Basic                                             $  0.80         $0.15         $    --         $    --
              Diluted                                           $  0.75         $0.10         $    --         $    --
</TABLE>



         (a) 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.


                                      F-22
<PAGE>   43

               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

         We hereby consent to the incorporation by reference in the Registration
         Statements on Form S-8 (Nos. 33-70628, 33-75184, 333-28135, and
         333-42424) of Calton, Inc. of our report dated January 19, 2001
         relating to the financial statements and financial statement schedule,
         which appears in this Form 10-K.

         PricewaterhouseCoopers LLP

         Tampa, Florida
         February 22, 2001


                                      F-23
<PAGE>   44

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


<TABLE>
<CAPTION>

                                                                                    Additions
                                                                           -------------------------
                                                           Balance at       Charged to     Charged to                   Balance at
                                                          Beginning        Costs and         Other                        End
Description                                                of Year          Expenses       Accounts        Deductions    of Year
----------------------------------------------            -----------      -----------     ----------     ------------  ----------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Year ended November 30, 1998:

     Inventory valuation reserves                         $        981    $         --    $         --    $        726    $   255
                                                          ============    ============    ============    ============    =======

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

Year ended November 30, 1999:

     Inventory valuation reserves                         $        255    $         --    $         --    $        100    $   155
                                                          ============    ============    ============    ============    =======

     Valuation allowance for net deferred
          tax asset                                       $     13,541    $         --    $         --     $     4,736(a) $ 8,805
                                                          ============    ============    ============    ============    =======

Year ended November 30, 2000:

     Allowance for doubtful accounts                      $         --    $        122    $         --    $         --    $   122
                                                          ============    ============    ============    ============    =======

     Inventory valuation reserves                         $        155    $        108    $         --    $         --    $   263
                                                          ============    ============    ============    ============    =======

     Valuation allowance for net deferred
          tax asset                                       $      8,805    $      1,864    $         --    $         --    $10,669
                                                          ============    ============    ============    ============    =======
</TABLE>

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

(a)  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-24
<PAGE>   45


                          CALTON, INC. AND SUBSIDIARIES

                                INDEX TO EXHIBITS

2.1 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.

2.2 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, 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, and Certificate of Amendment to Amended and Restated Certificate of
Incorporation filed with the Secretary of State, State of New Jersey on May 30,
2001.

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 January 2000 issued
to Taytrowe Van Fechtmann World Companies, Inc., incorporated by reference to
Exhibit 4.2 to Form 10-K of Registrant for the fiscal year ended November 30,
1999.

4.2 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.

(**) 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,
incorporated by reference to Exhibit 10.7 to Form 10-K of Registrant for the
fiscal year ended November 30, 1999.



                                      E-1

<PAGE>   46

10.8 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.

(*) 10.9 2000 Equity Incentive Plan incorporated by reference to Exhibit 10.10
to Form 10-K of Registrant for the fiscal year ended November 30, 1999.

(*) 10.10 Option Agreement dated July 19, 1999 between the Company and Kenneth
D. Hill, incorporated by reference to Exhibit 10.11 to Form 10-K of Registrant
for the fiscal year ended November 30, 1999. 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 filed.

(**) 10.11 Employment Agreement dated as of July 19, 1999 between eCalton.com,
Inc. and Kenneth D. Hill, incorporated by reference to Exhibit 10.2 to Form 10-K
of Registrant for the fiscal year ended November 30, 1999.

10.12 Employee Stock Purchase Plan.

10.13 Operating Agreement of PrivilegeOne Networks, LLC

10.14 Amendment No. 1 to Operating Agreement of PrivilegeOne Networks, LLC

10.15 Promissory Note issued by PrivilegeOne Networks, Inc. dated January 27,
2000

10.16 Amendment No. 1 to Promissory Note issued by PrivilegeOne Networks, Inc.

10.17 Assignment and Assumption Agreement dated January 27, 2000 between
PrivilegeOne Networks, LLC and PrivilegeOne Networks, Inc.

10.18 Second Promissory Note dated February 9, 2001 issued by PrivilegeOne
Networks, LLC

10.19 Operating Agreement of Innovation Technology Partners, LLC

10.20 Revolving Promissory Note dated June 19, 2000 issued by Innovation
Technology Partners, LLC

10.21 Consulting Agreement dated July 17, 2000 between the Registrant and Robert
E. Naughton

21. Subsidiaries of the Registrant.



(*)     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.


                                      E-2