<PAGE>

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

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

                   For the fiscal year ended November 30, 2004

                                       or

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

                           Commission file no. 1-8846

                                  CALTON, INC.
           (Name of small business issuer as specified in its charter)

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

              2050 40TH AVENUE - SUITE ONE
                   VERO BEACH, FLORIDA                                 32960
       (Addresses of principal executive offices)                    (Zip Code)

         Issuer's telephone number, including area code: (772) 794-1414

                           2013 Indian River Boulevard
                            Vero Beach, Florida 32960
              (Former name, former address and former fiscal year,
                         if changed since last report)

Securities registered under Section 12 (b) of the Exchange Act:        None

Securities registered under Section 12 (g) of the Exchange Act:   Common Stock,
                                                                $0.05 par value

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this Form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.        |X|

Revenues for the fiscal year ended November 30, 2004:   $12,202,000.

The aggregate market value (based upon the last sales price of the Issuer's
Common Stock reported by the OTC Bulletin Board) of voting shares and non-voting
equity held by non-affiliates of the registrant as of February 18, 2005 was
$978,636.

As of February 18, 2005, 9,372,361 shares of Common Stock were outstanding.

Certain portions of the Company's Proxy Statement for the annual meeting of
shareholders are incorporated by reference into Part III hereof.

Transitional Small Business Disclosure Format (check one):  Yes  |_|  No |X|


<PAGE>


-------------------------------------------------------------------------------
DISCLOSURE CONCERNING FORWARD-LOOKING STATEMENTS
-------------------------------------------------

All statements, other than statements of historical fact, included in this Form
10-KSB, including in Part II, Item 6: "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-KSB. Such potential risks
and uncertainties, include without limitation, the Company's ability to raise
capital, matters related to national and local economic conditions, including
conditions in the residential homebuilding industry, the effect of governmental
regulation on the Company, commercial acceptance of the Company's co-branded
customer loyalty credit card program, the competitive environment in which the
Company operates, the Company's ability to acquire property for development, the
impact of severe weather on the Company's homebuilding operations, 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-KSB and the Company assumes no
obligation to update the forward-looking statements or to update the reasons
actual results could differ from those projected in such forward-looking
statements.

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

                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

    (A)   BUSINESS DEVELOPMENT

          Calton, Inc. (the "Company" or "Calton") was incorporated in 1981 and
          is a New Jersey corporation.

          The Company's primary business activities are (i) homebuilding, (ii)
          providing Internet business solutions, and (iii) developing a loyalty
          and co-branded credit card program.

          In August 2003, the Company decided to capitalize on existing
          management's experience in the residential homebuilding industry and
          acquired 35 residential lots in a 121-home residential community being
          developed in Vero Beach, Florida. The Company has expanded its
          homebuilding operations since such time and continues to pursue other
          homebuilding opportunities in Florida.

          From June 2000 until April 2002, the Company provided management and
          consulting services to entrepreneurial and development-stage companies
          through Innovation Growth Partners, LLC ("IGP"), a 51% owned
          subsidiary. The Company sold its interest in IGP in April 2002.

          From July 2000 to October 2003, the Company provided technical
          staffing services in the Houston, Texas area. The technical staffing
          business was wound down in the fourth quarter of fiscal 2003 as a
          result of a severe downturn in economic conditions in its regional
          market.

          Calton maintains its corporate offices at 2050 40th Avenue, Suite One,
          Vero Beach, Florida 32960 and its telephone number is (772) 794-1414.

(B)       BUSINESS OF ISSUER

          GENERAL
          The Company's business activities are primarily focused on (i)
          homebuilding through Homes by Calton, LLC ("Homes by Calton"), (ii)
          providing Internet business solutions through eCalton.com, Inc.
          ("eCalton"), and (iii) developing a loyalty and co-branded credit card
          program through PrivilegeONE Networks, LLC ("PrivilegeONE").

          HOMES BY CALTON, LLC
          Homes by Calton was formed for the express purpose of capitalizing on
          existing management's experience in the residential homebuilding
          marketplace. The Company's focus is on homebuilding developments
          primarily located in Indian River County, Florida.


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          Homes by Calton's initial homebuilding endeavor involved the August
          29, 2003 acquisition of 35 residential lots in the Riverside at The
          Island Club, a 121-home residential community being developed in Vero
          Beach, Florida.

          During fiscal 2004, Homes by Calton expanded its homebuilding
          operations throughout the Indian River County market area. Currently,
          the Company is constructing homes in three different communities. In
          addition, management continues to assess land acquisition
          opportunities and negotiate with various landowners, brokers and
          agents to expand its operations and to create a more diversified
          product offering. However, there can be no assurances that
          transactions can be entered into on terms reasonably satisfactory to
          management.

          PRODUCT OFFERING
          Homes by Calton offers single-family detached homes at prices,
          including customized options and lot premiums, which have ranged from
          $475,000 up to $850,000 during the year ended November 30, 2004. Homes
          by Calton offers four different house floor plans in each of its
          communities, with the size of homes ranging from 2,700 to 3,600 square
          feet. A wide selection of options is available to purchasers for
          additional charges. Major options include built-in entertainment
          centers, bonus rooms and pools. On average, Homes by Calton's
          homebuyers added approximately 22% or $89,000 per home, in options and
          lot premiums to the base price of homes delivered in fiscal 2004. At
          November 30, 2004, seven homes were under contract, representing
          $3,800,000 of sales backlog.

          PRODUCT DEVELOPMENT
          The Company increased its land bank in fiscal 2004 by entering into
          two land purchase agreements covering an additional 49 developed lots
          in Vero Beach, Florida in two different subdivisions. Each, by virtue
          of the lot size and zoning requirements, required eight new model
          types to be developed and introduced into the marketplace in the
          spring of 2005. In addition, the Company plans to use the new and
          existing model types to refine its "On Your Lot" program.

          SALES AND MARKETING
          Homes by Calton markets its homes primarily to upper-income buyers,
          emphasizing high-quality construction and customer satisfaction. The
          Company maintains sales offices at its communities under development
          which are staffed by Homes by Calton sales personnel. Local realtors
          also introduce customers to Homes by Calton. Homes by Calton also
          advertises in newspapers and other local and regional publications and
          potential homebuyers can obtain detailed information regarding the
          communities where the Company builds by visiting Homes by Calton's
          website, www.homesbycalton.com. Homes by Calton's homes are sold under
          a limited warranty as to workmanship and materials.

          CONSTRUCTION
          Homes by Calton acts as the general contractor in the construction of
          homes that it builds. Homes by Calton employees provide purchasing and
          quality assurance for, and construction management of, the homes it
          builds, while the material and labor components of its homes are
          provided by subcontractors. Homes by Calton generally contracts for
          most of its materials and labor at fixed prices during the
          construction period of the home. This process allows Homes by Calton
          to mitigate the risks associated with increases in building materials
          and labor costs between the time construction begins and the time the
          home closes. Homes by Calton complies with local and state building
          codes, including Florida's stringent hurricane and energy efficiency
          regulations. Depending upon the size and complexity of a home's
          design, Homes by Calton construction time generally ranges from about
          120 to 150 calendar days.

          COMPETITION
          The homebuilding business is highly competitive and fragmented. Homes
          by Calton competes with numerous homebuilders of varying sizes,
          ranging from local to national in scope, some of which have greater
          sales and financial resources than Homes by Calton. Sales of existing
          homes are also a competitive factor. Homes by Calton competes
          primarily on the basis of price, location, design, quality and
          service.


                                       2
<PAGE>

          REGULATORY AND ENVIRONMENTAL MATTERS
          Homes by Calton's operations are subject to Federal, state and local
          laws and regulations. In particular, development of property in
          Florida is subject to comprehensive Federal and state environmental
          legislation. This regulatory framework, in general, encompasses areas
          like traffic considerations, availability of municipal services, use
          of natural resources, impact of growth, utility services, conformity
          with local and regional plans, together with a number of other safety
          and health regulations. Permits and approvals mandated by regulation
          for development of any magnitude are often numerous, significantly
          time-consuming and onerous to obtain, and not guaranteed. Such
          permits, once expired, may or may not be renewed and development for
          which the permit is required may not be completed if such renewal is
          not granted. These requirements have a direct bearing on Homes by
          Calton's ability to further develop communities in Florida. Although
          the Company believes that Homes by Calton's operations are in full
          compliance in all material respects with applicable Federal, state and
          local requirements, Homes by Calton's growth and development
          opportunities in Florida may be limited and more costly as a result of
          legislative, regulatory or municipal requirements.

          Homes by Calton's operating costs may also be affected by the cost of
          complying with existing or future environmental laws, ordinances and
          regulations, which require a current or previous owner or operator of
          real property to bear the costs of removal or remediation of hazardous
          or toxic substances on, under or in the property.

          ECALTON.COM
          eCalton provides Internet business solutions that empower large and
          medium-sized businesses to rapidly create, deliver and manage
          e-commerce solutions and web initiatives. eCalton provides its clients
          with proven, cost-effective software solutions supported by consulting
          personnel to assist with implementation and ongoing project support.
          eCalton's service offerings include application development, commerce
          portals, eBusiness integration, wireless computing and outsourcing
          infrastructure. Through its specialized subdivision, the Internet Home
          Construction Group ("iHCG"), the Company has identified and focuses on
          one prime vertical market segment, the homebuilding industry. iHCG
          assists homebuilders in using the Internet to communicate effectively
          with customers, suppliers, trades and employees by developing and
          implementing cost-effective web-based solutions and strategies.

          SALES AND MARKETING
          eCalton markets its services through existing client referrals, its
          website, WWW.ECALTON.COM, and co-operative advertising. In addition,
          eCalton establishes strategic partnerships with complementary
          organizations such as advertising agencies and homebuilding technology
          suppliers to facilitate cooperative advertising and lead generation.

          COMPETITION
          The market for Internet professional services is highly competitive
          and characterized by numerous companies that have introduced or
          developed products and services similar to those offered by eCalton.
          The Company expects competition to persist. Continuous competition may
          result in price reductions, reduced margins and loss of market share.
          Many of 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, marketing and public relations
          resources than eCalton. As a result, many of eCalton's competitors may
          be better positioned to react in the ever-changing market place.
          eCalton expects competition to persist and intensify in the future.

          PRIVILEGEONE NETWORKS, LLC
          PrivilegeONE was formed to develop and implement the PrivilegeONE
          Loyalty program. The patent pending program is designed to aggregate
          disparate entities under the PrivilegeONE umbrella to create customer
          loyalty and retention through the issuance of co-branded credit card
          and membership cards. PrivilegeONE initially focused on the retail
          automobile industry. Under the terms of this program, customers of
          participating automobile dealers are offered the opportunity to apply
          for the PrivilegeONE VISA credit card. Through PrivilegeONE's unique
          credit card acquisition system technology, qualifying customers are
          granted instant credit



                                       3
<PAGE>

          approval. By using the PrivilegeONE card, customers earn rebate
          dollars, which can be redeemed when the customer purchases or leases a
          new or used vehicle. In addition, participating dealers provide up to
          a ten percent discount on parts and service when the PrivilegeONE card
          is used at the dealership. The Company believes that if the program is
          proven successful in the automotive industry, it will have
          applicability to many other industries that may be the focus of the
          next generation of products.

          AGREEMENT WITH FLEET
          In May 2001, the Company and PrivilegeONE entered into a credit card
          processing agreement with Fleet Credit Card Services, L.P. ("Fleet"),
          pursuant to which Fleet agreed to issue the PrivilegeONE credit cards.
          Under the agreement, Fleet was required to pay PrivilegeONE a fee for
          each account established through the PrivilegeONE program and a
          percentage of the revenue realized from finance charges. However, in
          March 2003 Fleet informed PrivilegeONE of its desire to exit the
          credit card program, but advised PrivilegeONE that it would assist it
          in finding a new issuer. PrivilegeONE is currently seeking a new
          issuer for the program. On May 15, 2004, the Fleet/PrivilegeONE
          agreement was formally terminated, although credit card customers will
          be allowed to redeem their earned rebate dollars through June 30,
          2005. As a result, PrivilegeONE is currently seeking a new issuer for
          the program or a strategic alliance with an automotive manufacturer.

          AGREEMENT WITH LARGE THIRD PARTY DISTRIBUTOR
          In October 2002, PrivilegeONE, as part of its shift in strategy toward
          third party distribution channels, entered into its first agreement
          with a large third party distributor, which is an exclusive
          distributor of Toyota vehicles to 163 Toyota dealerships. Under the
          terms of the agreement with this third party, the distributor had
          agreed to market and promote the PrivilegeONE program at these 163
          dealerships. For each credit card account established at one of these
          dealerships, PrivilegeONE would be required to pay the distributor a
          new account fee. The implementation of the PrivilegeONE program
          through this distribution channel has been delayed as a result of the
          termination of the Fleet agreement.

          INSTALLED DEALERSHIPS
          The PrivilegeONE co-branded loyalty and credit card program was
          initially launched at 29 retail automotive dealerships in New York,
          New Jersey and New Hampshire. Approximately 2,200 cards were initially
          issued. No cards have been issued since March 2003 when Fleet informed
          PrivilegeONE of its desire to exit the program; however, existing
          cardholders may redeem their rebate dollars with a participating
          dealership until June 2005.

          SALES AND MARKETING
          PrivilegeONE has shifted its strategy from an internal sales force to
          large third party distribution networks, such as the Toyota
          distributor arrangement described above. PrivilegeONE, through
          eCalton's technical and marketing development teams, has developed
          various Internet sites and support services which will enable
          PrivilegeONE to link certain large third party distributor consumer
          websites to PrivilegeONE's patent pending online credit card
          application system ("CCAS").

          COMPETITION
          Although the Company believes that PrivilegeONE's distribution channel
          is unique, 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 marketplace.

          PATENTS & TRADEMARKS
          PrivilegeONE has applied to the United States Patent and Trademark
          Office for a patent for CCAS, its online credit card acquisition
          system. No assurance can be given that the patent will be issued.
          However, on September 25, 2003, the U.S. Patent Office issued
          PrivilegeONE a Patent Application Publication Number, US 2003/0182247
          A1. Failure to obtain patent protection for CCAS, which the Company
          believes gives PrivilegeONE an advantage over potential competitors,
          could result in other parties duplicating the system.

                                       4
<PAGE>

          PrivilegeONE has received trademark registrations for "PrivilegeONE"
          and the PrivilegeONE stylized logo.

          SEGMENT DATA
          See Note 8 to the Company's Financial Statements for financial data
          about its segments.

          EMPLOYEES
          As of February 18, 2005, the Company and its wholly owned subsidiaries
          employed 20 full time personnel, and one 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.   DESCRIPTION OF PROPERTY

          The Company currently leases: (a) approximately 650 square feet of
          office space located in Red Bank, New Jersey, for approximately $1,000
          per month, for a renewable term of one year, (b) approximately 2,000
          square feet of office space in Vero Beach, Florida at a monthly rate
          of approximately $2,450 for a term of five years ending September
          2009, and (c) approximately 1,400 square feet of office space in
          Melbourne, Florida at a monthly rate of approximately $1,500 on a
          month-to-month basis.

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

ITEM 3.   LEGAL PROCEEDINGS

          The Company is involved from time to time in litigation arising in the
          ordinary course of business, none of which is expected to have a
          material adverse effect on the Company.

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

          During the fourth quarter of fiscal 2004, no matter was submitted to a
          vote of security holders through the solicitation of proxies or
          otherwise.


                                       5
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                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          On April 6, 2004, the Company's common stock was delisted from the
          American Stock Exchange ("AMEX"). The Company's common stock was
          delisted as a result of the Company not being in compliance with the
          continued listing standards of the AMEX. Specifically, the Company's
          stockholders' equity was less than $4 million and the Company had
          sustained losses from continuing operations and/or net losses in three
          of its four most recent fiscal years.

          The Company's common stock is currently being traded on the OTC
          Bulletin Board under the symbol CTON.OB. Once the Company meets the
          listing qualifications of the AMEX, it intends to reapply for trading
          on the AMEX. The following chart reflects the high and low sales
          prices of the common stock during fiscal 2004 and 2003:

                     FISCAL 2004                 High              Low
                                             --------------   ---------------

                     1st Quarter                $0.81             $0.50
                     2nd Quarter                 1.09              0.35
                     3rd Quarter                 0.47              0.30
                     4th Quarter                 0.45              0.33


                     FISCAL 2003                 High              Low
                                             --------------   ---------------

                     1st Quarter                $0.17             $0.11
                     2nd Quarter                 0.24              0.09
                     3rd Quarter                 0.90              0.19
                     4th Quarter                 1.20              0.32

          At February 18, 2005, there were approximately 377 shareholders of
          record of the Company's common stock, based on information obtained
          from the Company's transfer agent. On that date, the last sales price
          the Company's common stock as reported by the OTC Bulletin Board was
          $0.35.

          In fiscal 2004 and 2003, the Company did not pay dividends. The
          Company intends to retain future earnings to finance the expansion of
          operations and for general corporate purposes.


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

          RESULTS OF OPERATIONS FOR THE YEARS ENDED NOVEMBER 30, 2004 AND 2003

          REVENUES: Consolidated revenues increased from $3,133,000 for 2003 to
          $12,202,000 for 2004. A substantial portion of this increase occurred
          in the homebuilding segment that began operations in the fourth
          quarter of 2003. This segment generated $2,180,000 in revenue for the
          three months ended November 30, 2003 and generated $11,587,000 in
          revenue for the year ended November 30, 2004. Revenues associated with
          the Company's homebuilding operations are anticipated to continue to
          outpace revenues from other business operations and are ultimately
          expected to constitute the most significant component of consolidated
          revenues.

          Revenues from the internet development division of eCalton increased
          from $499,000 in 2003 to $614,000 in 2004. The technical staffing
          division of eCalton generated $440,000 in revenue in 2003. The Company
          exited this line of business in fiscal 2003 and no further revenues
          from this operation are projected.

          Revenues from the Credit Card Loyalty segment decreased from $14,000
          in 2003 to $1,000 in 2004. This segment has undergone a shift in
          strategy and is now exploring different opportunities for revenue
          generation including, but not limited to, licensing its patent-pending
          software and joint venture prospects.

          COST OF REVENUES: Cost of revenues consists of cost of goods sold for
          the homebuilding segment, project personnel and expenses associated
          with the technical staffing services and internet development segment,
          and credit card loyalty program direct expenses. Homebuilding cost of
          goods sold were $1,796,000 for the quarter ended November 30, 2003,
          the first quarter of homebuilding operations, and $9,176,000 for the
          year ended November 30, 2004. Project personnel and expenses for
          eCalton decreased from $572,000 in 2003 to $289,000 in 2004. The
          decrease is predominantly a result of the Company's strategic decision
          to exit the technical staffing line of business. Gross profits on
          revenues for the homebuilding business increased to 21% in 2004 from
          18% in 2003 due to higher sales prices of homes. Gross profits on
          revenues for the technical staffing/internet development segment
          increased from 39% in 2003 to 53% in 2004, principally as a result of
          the Company's continued cost containment efforts, the wind-down of the
          technical staffing division and the operation's focusing on more
          profitable contracts.

          SELLING, GENERAL AND ADMINISTRATIVE: Selling, general and
          administrative expenses decreased from $3,155,000 in 2003 to
          $2,390,000 in 2004. The amount in 2003 includes certain non-cash
          stock-based compensation expense of $720,000 related to the sale of
          common stock to certain of the Company's officers; there was no
          similar charge during 2004. The reduction in expenses, other than as
          attributable to the stock-based compensation, is primarily
          attributable to the wind-down of the technical staffing division,
          reduced occupancy costs and the continued cost containment efforts
          focused on by management in all of the Company's business segments. In
          addition, the Internet development segment of eCalton continues to
          perform a significant amount of inter-company work for Homes by Calton
          and PrivilegeONE, thereby reducing consolidated selling, general and
          administrative expenses.

          INTEREST INCOME: Interest income is derived principally from interest
          on depository accounts and money-market type accounts. Interest income
          decreased from $21,000 during 2003 to $8,000 in 2004. The decrease was
          a result of lower average deposited balances. Currently, cash is being
          used in operating activities and accordingly, interest income is
          expected to decline during 2005.

          INTEREST EXPENSE: Interest expense amounted to $29,000 for the year
          ended November 30, 2004 compared to $49,000 for the year ended
          November 30, 2003. Interest is incurred on the Company's demand
          revolving line of credit and, to the extent required under generally
          accepted accounting principles, capitalized in real estate inventory.
          During the years ended November 30, 2004 and 2003, the Company
          capitalized $84,000 and $45,000, respectively


                                       7
<PAGE>

          GAINS ON INVESTMENTS: During the year ended November 30, 2004, the
          Company realized a gain of $228,000 from the sale of 237,500 shares of
          CorVu Corporation's common stock. During the year ended November 30,
          2003, the Company realized a gain of $190,000 from the sale of 182,550
          shares of CorVu Corporation's common stock. As of November 30, 2004,
          the Company carried CorVu common stock with a fair value of $103,000.

          LITIGATION SETTLEMENTS: The Company paid $20,000 in litigation
          settlements and received $5,000 from certain matters in the year ended
          November 30, 2004. The amount paid by the Company in 2003 to settle
          the Calton Homes and Tetreault/Van Fechtmann matters was approximately
          $60,000 less than the amounts previously reserved for these matters
          for financial statement purposes. As a result, the settlements did not
          have an adverse effect on the financial condition or operating results
          of the Company. See Note 9 - Commitments and Contingent Liabilities.

          INCOME TAXES:
          The Company recognized a deferred income tax benefit during the year
          ended November 30, 2003. The benefit arose from the release of certain
          reserves for income tax matters resolved during the period.

          SALES ACTIVITY AND BACKLOG

                                                   Contract         Number
                                                   Backlog         of Homes
                                                 ------------    ------------

     Backlog as of November 30, 2003             $  6,700,000              13

     Less: Homes delivered during the
           year ended November 30, 2004          ($11,600,000)            (23)

     Plus: New contracts signed during the
           year ended November 30, 2004          $  8,700,000              17

                                                 ------------    ------------
     Backlog as of November 30, 2004             $  3,800,000               7
                                                 ============    ============

          LIQUIDITY AND CAPITAL RESOURCES

          GENERAL:

          In the third quarter of fiscal 2003, the Company underwent a shift in
          its operational strategy and returned to residential homebuilding in
          the state of Florida. In addition, the Company exited the technical
          staffing business in the fourth quarter of fiscal 2003 and streamlined
          its operations. The Company was profitable in fiscal 2004 as a result
          of these strategic decisions.

          Management believes that cash on hand as of November 30, 2004, plus
          amounts to be generated from operations and borrowing availability
          under the Company's revolving credit facility, will be sufficient to
          support consolidated operations during fiscal 2005. Total working
          capital at November 30, 2004 was $3,042,000 compared to $3,281,000 at
          November 30, 2003.



                                       8
<PAGE>

          The Company increased its land bank in fiscal 2004 by entering into
          two land purchase agreements covering an additional 49 developed lots
          in Vero Beach, Florida. The majority of the lots are under a rolling
          option land purchase agreement. The lot purchases are financed through
          bank financing (Note 4) and working capital. The Company plans to
          complete the development of these lots, develop its "On Your Lot"
          program and pursue other opportunities in the homebuilding industry in
          Florida.

          Management has continued its cost containment efforts and as a result,
          administrative expenses have been reduced from $3,155,000 for the year
          ended November 30, 2003 to $2,390,000 for the year ended November 30,
          2004. In addition, the Company made the strategic decision to curtail
          operations in the technical staffing business due to the division's
          diminished performance during the first nine months of fiscal 2003.

          CASH FLOWS FROM OPERATING ACTIVITIES:

          The Company generated $2,101,000 in cash through its operating
          activities in the year ending November 30, 2004 compared to using
          $2,045,000 in cash in its operating activities in the year ending
          November 30, 2003. The primary generator of cash in 2004 was the sale
          of 23 single-family homes.

          CASH FLOWS FROM INVESTING ACTIVITIES:

          The Company generated cash of $250,000 from investing activities
          during the year ended November 30, 2004. This represented cash
          received from the sale of available-for-sale equity securities and the
          net of purchases and disposals of property and equipment.

          CASH FLOWS FROM FINANCING ACTIVITIES:

          The Company used $1,544,000 in cash from financing activities for the
          year ended November 30, 2004. This represented payments on the
          Company's construction line of credit.

          As a result of the above cash flow activities, cash increased from
          $1,821,000 at November 30, 2003 to $2,628,000 at November 30, 2004.
          Total working capital decreased from $3,281,000 at November 30, 2003
          to $3,042,000 at November 30, 2004.

          COMMITMENTS, GUARANTEES AND CONTINGENCIES

          LAND PURCHASE AGREEMENTS:

          In April 2004, the Company entered in to a rolling option contract to
          purchase forty-one (41) developed, golf course lots in the Pointe West
          development located in Vero Beach, Florida. If the Company does not
          perform under the contract, its liability is limited to the deposit
          money held by the seller. The total deposit of $300,000 had been made
          and two lots have been purchased under this agreement as of November
          30, 2004.

          In December 2003, the Company entered in to a contract to purchase
          eight (8) developed lots in the Amelia Plantation development located
          in Vero Beach, Florida. If the Company does not perform under the
          contract, its liability is limited to the deposit money held by the
          seller. The net deposit remaining is $12,000 as of November 30, 2004.
          Four lots have been purchased under this agreement as of November 30,
          2004.

          The Company anticipates purchasing all of the lots it has under its
          existing land contracts. The estimated cost to the Company to perform
          all of its obligations under the existing land contracts is
          approximately $4.4 million.


                                       9
<PAGE>


          PROFIT SHARING ARRANGEMENT:

          The Company has entered into an arrangement with John G. Yates and
          Thomas C. Corley, who are the President and Chief Financial Officer of
          PrivilegeONE, respectively, pursuant to which Mr. Yates and Mr. Corley
          have agreed to serve as unpaid officers PrivilegeONE and pursue
          business opportunities on behalf of PrivilegeONE in consideration of
          the Company's agreement to pay them 25% of the net profit attributable
          to business arrangements with parties introduced by either of them to
          PrivilegeONE.

          LOAN AGREEMENT

          The Company entered into a loan agreement with Harbor Federal Savings
          Bank in August of 2003. The loan agreement provides for $1.2 million
          of acquisition and construction financing and a $5 million revolving
          line of credit that is due on demand. Interest on advances, which are
          secured by a mortgage on the Company's homebuilding properties,
          accrues at a rate equal to the prime rate plus one percent (1%) per
          annum.

          The Company has paid in full the $1.2 million acquisition and
          construction financing loan. In June 2004, Harbor Federal Savings Bank
          increased the Company's demand revolving line of credit to $6.5
          million. As of November 30, 2004, $1,397,000 of advances under the
          line of credit were outstanding.

          OPERATING LEASE COMMITMENTS:

          The Company and its consolidated subsidiaries lease their facilities
          with various expiration dates through 2009. Future non-cancelable
          minimum lease payments for each of the following years ending November
          30 are as follows:

                     2005             $ 48,000
                     2006               31,000
                     2007               31,000
                     2008               31,000
                     2009               31,000
                                      --------
                    Total             $173,000
                                      ========

          GUARANTEES AND OFF BALANCE SHEET ARRANGEMENTS:

          The Company has no guarantees outside of the consolidated organization
          and no off balance sheet arrangements of any nature.

          PARTICULARLY SENSITIVE ACCOUNTING ESTIMATES

          RESERVE FOR BAD DEBTS: The Company provides reserves against
          uncollectible accounts receivable. This process requires significant
          subjective estimates that take into account the credit worthiness of
          the customer, historical collection experience, and the general
          economic environment. The Company continues to perform formal reviews
          on all open accounts receivable, write off balances known to be
          uncollectible against existing reserves, and estimate the appropriate
          levels of reserves on existing balances. As a result of this on-going
          process, reserves were increased slightly from $22,000 as of November
          30, 2003 to $23,000 as of November 30, 2004.

          RESERVE FOR WARRANTY: The Company provides a basic limited warranty on
          workmanship and materials for all homes for a period of one year. The
          Company estimates the costs that may be incurred under its basic
          limited warranty and records a liability in the amount of such costs
          at the time the product revenue is recognized.



                                       10
<PAGE>

          Factors that affect the Company's warranty liability include the
          number of homes sold, historical and anticipated rates of warranty
          claims and average cost per claim. Estimated future warranty costs are
          charged to cost of sales in the period when the revenues from home
          closings are recognized. Such estimated costs are 0.5% of the total
          sales price of the home. The Company periodically assesses the
          adequacy of its recorded warranty liabilities and adjusts the amount
          as necessary. The Company's warranty liability is included in accrued
          expenses on its balance sheet.

          OTHER RESERVES: The Company resolved the litigation matters in the
          year ended November 30, 2003 for which it had previously reserved
          $710,000 as of November 30, 2002. The accrual required significant
          subjective estimates about then existing and potential future claims.
          Management made its estimates based upon the best available evidence,
          which included historical experience in the homebuilding industry and
          the counsel of outside lawyers engaged in litigating certain other
          matters. Management applied the provisions of SFAS 5 "Accounting for
          Contingencies" in making its estimates, which provides that amounts
          that are probable and estimable are recorded. As a result of the
          Company's estimation process, reserves for the various litigation
          claims of $710,000 were established as of November 30, 2002. The
          aggregate $650,000 paid by the Company to settle the litigation
          matters in the year ended November 30, 2003 was approximately $60,000
          less than the amounts previously reserved for these matters for
          financial statement purposes.

          RECENT ACCOUNTING PRINCIPLES

          FASB STATEMENT NO. 153, EXCHANGES OF NONMONETARY ASSETS (STATEMENT
          153) On December 16, 2004 the FASB issued Statement No. 153,
          "Exchanges of Nonmonetary Assets." Statement 153 amends the guidance
          in APB Opinion No. 29, "Accounting for Nonmonetary Transactions",
          based on the principle that exchanges of nonmonetary assets should be
          measured based on the fair value of the assets exchanged. Further, the
          amendments eliminate the narrow exception for nonmonetary exchanges of
          similar productive assets and replace it with a broader exception for
          exchanges of nonmonetary assets that do not have commercial substance.
          Previously, Opinion 29 required that the accounting for an exchange of
          a productive asset for a similar productive asset or an equivalent
          interest in the same or similar productive asset should be based on
          the recorded amount of the asset relinquished. The Statement is
          effective for nonmonetary asset exchanges occurring in fiscal periods
          beginning after June 15, 2005 and the provisions of this Statement
          shall be applied prospectively. The Company has not assessed the
          impact of this statement on its consolidated financial position,
          results of operations or cash flows.

          FASB STATEMENT NO. 123 (REVISED 2004) (STATEMENT 123(R))
          On December 16, 2004 the FASB issued Statement No. 123 (revised 2004),
          "Share-Based Payments." Statement 123(R) replaces FASB Statement No.
          123, "Accounting for Stock-Based Compensation," supersedes APB Opinion
          No. 25, "Accounting for Stock Issued to Employees" and amends FASB
          Statement No. 95, "Statement of Cash Flows." Generally, the approach
          in Statement 123(R) is similar to the approach described in Statement
          123. However, Statement 123(R) requires all share-based payments to
          employees, including grants of employee stock options, to be
          recognized in the financial statements based on their fair values
          (i.e., pro forma disclosure is no longer an alternative to financial
          statement recognition). Statement 123(R) is effective for small
          business issuers at the beginning of the first interim or annual
          period beginning after December 15, 2005. The Company has not assessed
          the impact of this statement on its consolidated financial position,
          results of operations or cash flows.

          FASB STATEMENT NO. 152, "ACCOUNTING FOR REAL ESTATE TIME-SHARING
          TRANSACTIONS" (STATEMENT 152)
          On December 16, 2004 the FASB issued Statement No. 152, "Accounting
          for Real Estate Time-Sharing Transactions." This Statement amends FASB
          Statement No. 66, "Accounting for Sales of Real Estate," to reference
          the financial accounting and reporting guidance for real estate
          time-sharing transactions that is provided in AICPA Statement of
          Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
          Transactions." This Statement also amends FASB Statement No. 67,
          "Accounting for Costs and Initial Rental Operations of Real Estate
          Projects," to state that the guidance for (a) incidental operations
          and (b) costs incurred to sell real estate projects does not apply to
          real estate time-sharing transactions. The accounting for those




                                       11
<PAGE>

          operations and costs is subject to the guidance in SOP 04-2. This
          Statement is effective for financial statements for fiscal years
          beginning after June 15, 2005. The Company has not assessed the impact
          of this statement on its consolidated financial position, results of
          operations or cash flows.

          FASB STATEMENT NO. 151, INVENTORY COSTS (STATEMENT 151)
          On November 24, 2004 the FASB issued Statement No. 151, "Inventory
          Costs." Statement 151 amends the guidance in ARB No. 43, Chapter 4,
          "Inventory Pricing," to clarify the accounting for abnormal amounts of
          idle facility expense, freight, handling costs, and wasted material
          (spoilage). The amendments made by Statement 151 clarify that abnormal
          amounts of idle facility expense, freight, handling costs, and wasted
          materials (spoilage) should be recognized as current-period charges
          and require the allocation of fixed production overheads to inventory
          based on the normal capacity of the production facilities. The
          guidance is effective for inventory costs incurred during fiscal years
          beginning after June 15, 2005. Earlier application is permitted for
          inventory costs incurred during fiscal years beginning after November
          23, 2004. The Company has not assessed the impact of this statement on
          its consolidated financial position, results of operations or cash
          flows.

ITEM 7.   FINANCIAL STATEMENTS

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

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

          None.

ITEM 8A.  CONTROLS AND PROCEDURES

          As of the end of the period covered by this report, the Company
          carried out an evaluation of the effectiveness of the design and
          operation of the Company's disclosure controls and procedures. This
          evaluation was carried out under the supervision and with the
          participation of the Company's management, including the Company's
          Chairman and Chief Executive Officer, along with the Company's Chief
          Financial Officer, who concluded that the Company's disclosure
          controls and procedures were effective as of the date of the
          evaluation. There were no significant changes in the Company's
          internal controls during the quarter ended November 30, 2004 that have
          materially affected, or are reasonably likely to have materially
          affected, the Company's internal controls subsequent to the date the
          Company carried out its evaluation.

          Disclosure controls and procedures are controls and other procedures
          that are designed to provide reasonable assurance that information
          required to be disclosed in Company reports filed or submitted under
          the Securities and Exchange Act of 1934 ("Exchange Act") is recorded,
          processed, summarized and reported, within the time periods specified
          in the Securities and Exchange Commission's rules and forms.
          Disclosure controls and procedures include, without limitation,
          controls and procedures designed to provide reasonable assurance that
          information required to be disclosed in Company reports filed under
          the Exchange Act is accumulated and communicated to management,
          including the Company's Chief Executive Officer and Chief Financial
          Officer as appropriate, to allow timely decisions regarding required
          disclosure.


                                       12
<PAGE>


                                    PART III

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

          EXECUTIVE OFFICERS
          The executive officers of the Company, as of February 24, 2005, 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>
Anthony J. Caldarone          67       Chairman, President and Chief Executive Officer
                                       Chairman and Chief Executive Officer - Homes by Calton, LLC
                                       President - eCalton.com, Inc.
Maria F. Caldarone            41       Executive Vice President of Corporate Development and Asst. Secretary
                                       President - Homes by Calton, LLC
                                       Executive Vice President of Operations - PrivilegeONE
Laura A. Camisa               42       Senior Vice President, Chief Financial Officer and Treasurer
                                       Senior Vice President - Homes by Calton, LLC
                                       Executive Vice President and Secretary - eCalton.com, Inc.
                                       Senior Vice President of Strategic Planning - PrivilegeONE
</TABLE>

          Mr. Caldarone has served as Chairman, President and Chief Executive
          Officer of the Company since January 27, 2005 and served in the same
          capacity from the inception of the Company in 1981 through June 1993
          and from November 1995 through September 2002. From September 2002
          until January 2005, he served as Chairman and Chief Executive Officer
          of the Company. He served as director of the Company from June 1993
          through October 1995.

          Ms. Caldarone has served as Executive Vice President of the Company
          since September 2002, President of Homes by Calton since January 2004
          and Executive Vice President of PrivilegeONE since May 2001. She
          served as Vice President of the Company from February 2000 until
          September 2002. 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 has served as Chief Financial Officer and Treasurer of the
          Company since April 2004 and Senior Vice President of the Company
          since September 2002. From April 2000 until her appointment as Senior
          Vice President, she served as the Company's Vice President of
          Strategic Planning, having been hired in February 2000 as a Financial
          Analyst. Ms. Camisa was appointed Senior Vice President of Homes by
          Calton in January 2004 and Executive Vice President of eCalton in June
          2001. Prior to joining Calton, she held the position of Director of
          Investor Relations and Financial Analyst at Hovnanian Enterprises,
          Inc. from June 1998 through February 2000. Ms. Camisa held the
          position of Financial Analyst - International Mergers and Acquisitions
          at Marsh & McLennan Companies from January 1995 through May 1998. Ms.
          Camisa spent five years with Kidder, Peabody & Co. as a Financial
          Analyst specializing in Mergers & Acquisitions and High Yield Debt
          Financing as well as successfully completing the company's Investment
          Banking Analyst Training Program.


                                       13
<PAGE>


          DIRECTORS
          Information regarding Directors of the Company 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.

          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
          Information regarding compliance with Section 16(a) of the Securities
          Exchange Act of 1934 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.

          CODE OF CONDUCT
          The Company has adopted a Code of Conduct that applies to all of its
          directors, officers and employees, including its Chief Executive
          Officer, Chief Financial Officer and other senior financial officers.
          The Company's Code of Conduct is posted on its website,
          www.caltoninc.com, under Investor Relations. The Company intends to
          disclose on its website any amendment to, or waiver of, a provision of
          the Code of Conduct that applies to its Chief Executive Officer, Chief
          Financial Officer or other senior financial officers.

ITEM 10.  EXECUTIVE COMPENSATION

          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.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          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.  EXHIBITS

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

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

          The information required by Item 14 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.


                                       14
<PAGE>



SIGNATURES

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

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

Dated:  February 24, 2005          By:   /s/ Laura A. Camisa
                                         --------------------------------------
                                         Laura A. Camisa, Senior Vice President,
                                         Chief Financial Officer and Treasurer


                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Anthony J. Caldarone and Laura A. Camisa and each
of them, as his true lawful attorney-in-fact and agent, with full power of
substitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Form 10-KSB, and to file the
same, together with all the exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and being requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, of his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
<S>                                               <C>
             Signature                                         Title                                            Date
             ---------                                         -----                                            ----

/s/ Anthony J. Caldarone                     Chairman, President, Chief Executive                           February 24, 2005
---------------------------------
Anthony J. Caldarone                         Officer & Director (Principal Executive
                                             Officer)

/s/ Laura A. Camisa                          Senior Vice President, Chief Financial                         February 24, 2005
---------------------------------
Laura A. Camisa                              Officer & Treasurer (Principal Financial
                                             & Accounting Officer)

/s/ J. Ernest Brophy                         Director                                                       February 24, 2005
---------------------------------
J. Ernest Brophy

/s/ Mark N. Fessel                           Director                                                       February 24, 2005
---------------------------------
Mark N. Fessel

/s/ Kenneth D. Hill                          Director                                                       February 24, 2005
---------------------------------
Kenneth D. Hill

/s/ Frank Cavell Smith, Jr.                  Director                                                       February 24, 2005
---------------------------------
Frank Cavell Smith, Jr.

/s/ John G. Yates                            Director                                                       February 24, 2005
---------------------------------
John G. Yates
</TABLE>


                                       15
<PAGE>

                                       CALTON, INC. AND SUBSIDIARIES

                                       INDEX OF FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                   <C>
     Report of Independent Registered Public Accounting Firm                                          F-2

     Consolidated Balance Sheet as of November 30, 2004                                               F-3

     Consolidated Statements of Operations for the Years Ended November 30, 2004 and 2003             F-4

     Consolidated Statements of Cash Flows for the Years Ended November 30, 2004 and 2003             F-5

     Consolidated Statements of Shareholders' Equity for the Years Ended November 30, 2004 and 2003   F-6

     Notes to Consolidated Financial Statements                                                       F-7
</TABLE>




                                      F-1
<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------



To the Board of Directors and Shareholders
Calton, Inc.

We have audited the accompanying consolidated balance sheet of Calton, Inc. and
Subsidiaries ("Calton") as of November 30, 2004, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
two years in the period ended November 30, 2004. These financial statements are
the responsibility of Calton's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Calton,
Inc. and Subsidiaries at November 30, 2004, and the consolidated results of
their operations and their cash flows for each of the two years in the period
ended November 30, 2004, in conformity with accounting principles generally
accepted in the United States of America.

                                      /s/ AIDMAN, PISER & COMPANY, P.A.

Tampa, Florida
February 4, 2005


                                      F-2
<PAGE>


CALTON, INC.  AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 2004


<TABLE>
<CAPTION>
                                                                                        November 30,
                                                                                            2004
                                                                                        ------------
<S>                                                                                     <C>
     ASSETS
           Current Assets
               Cash and cash equivalents                                                $  2,628,000
               Accounts receivable, net of allowance for doubtful accounts of $23,000        119,000
               Inventory                                                                   2,501,000
               Deposits on land                                                              312,000
               Prepaid expenses and other current assets                                     270,000
                                                                                        ------------
                   Total current assets                                                    5,830,000
                                                                                        ------------

               Deferred charges                                                               97,000
               Property and equipment, net                                                    48,000
                                                                                        ------------
                   Total assets                                                         $  5,975,000
                                                                                        ============

     LIABILITIES AND SHAREHOLDERS' EQUITY
           Current Liabilities
               Accounts payable, accrued expenses and other liabilities                 $  1,391,000
               Notes payable                                                               1,397,000
                                                                                        ------------
                   Total current liabilities                                               2,788,000
                                                                                        ------------

           Commitments and contingent liabilities (Note 9)                                      --
           Shareholders' Equity
               Common stock, $.05 par value, 25,000,000 shares authorized;
                   9,372,000 shares outstanding                                              469,000
               Additional paid-in capital                                                 12,033,000
               Retained earnings (deficit)                                                (2,072,000)
               Less cost of shares held in treasury 1,325,000 shares                      (7,346,000)
               Accumulated other comprehensive income                                        103,000
                                                                                        ------------
                   Total shareholders' equity                                              3,187,000
                                                                                        ------------
                   Total liabilities and shareholders' equity                           $  5,975,000
                                                                                        ============
</TABLE>


                See notes to consolidated financial statements.


                                      F-3
<PAGE>


CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>

                                                                    2004             2003
                                                                ------------    ------------
<S>                                                             <C>             <C>
     REVENUE
         Homebuilding and consulting                            $ 11,587,000    $  2,180,000
         Technical staffing services                                    --           440,000
         Internet development                                        614,000         499,000
         Credit card loyalty program                                   1,000          14,000
                                                                ------------    ------------
                                                                  12,202,000       3,133,000
                                                                ------------    ------------
     COSTS AND EXPENSES
         Cost of sales
            Homebuilding                                           9,176,000       1,796,000
            Internet development/technical staffing                  289,000         572,000
            Credit card loyalty program                                1,000           4,000
         Selling, general and administrative                       2,390,000       3,155,000
                                                                ------------    ------------
                                                                  11,856,000       5,527,000
                                                                ------------    ------------
            Income/(loss) from operations                            346,000      (2,394,000)

     OTHER (EXPENSE) INCOME
         Interest income                                               8,000          21,000
         Interest expense                                            (29,000)        (49,000)
         Realized gain on sale of marketable securities              228,000         190,000
         Litigation settlements                                      (15,000)         23,000
         Other income                                                 19,000          57,000
                                                                ------------    ------------
            Income/(loss) from operations before income taxes        557,000      (2,152,000)

     INCOME TAX BENEFIT                                                4,000         487,000
                                                                ------------    ------------

     NET INCOME/(LOSS)                                          $    561,000    $ (1,665,000)
                                                                ============    ============

     INCOME/(LOSS) PER SHARE:
         Basic and Diluted:                                     $       0.06    $      (0.29)
                                                                ============    ============

     WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
            Basic                                                  9,285,000       5,840,000
                                                                ============    ============
            Diluted                                                9,414,000       5,840,000
                                                                ============    ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-4
<PAGE>



CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                  2004             2003
                                                                               -----------    -----------
<S>                                                                            <C>            <C>
     CASH FLOWS FROM OPERATING ACTIVITIES
     Net income/(loss)                                                         $   561,000    $(1,665,000)
           Adjustments to reconcile net income/(loss) to net cash
               used in operating activities:
           Deferred income taxes                                                      --         (487,000)
           Realized gain on sale of marketable securities                         (228,000)          --
           (Gain)/loss on disposal of long lived assets                            (49,000)        13,000
           Depreciation and amortization                                            32,000         43,000
           Amortization of deferred charges                                        136,000           --
           Stock-based compensation for directors                                   54,000         33,000
           Stock-based compensation for officers                                      --          720,000
           Changes in operating assets and liabilities:
               Accounts receivable                                                 (18,000)       180,000
               Inventory                                                         1,834,000       (806,000)
               Deposits on land                                                   (312,000)          --
               Prepaid expenses and other assets                                   (72,000)      (185,000)
               Accounts payable, accrued expenses and other liabilities            163,000        109,000
                                                                               -----------    -----------
     Net cash flows from operating activities                                    2,101,000     (2,045,000)
                                                                               -----------    -----------

     CASH FLOWS FROM INVESTING ACTIVITIES
           Proceeds from the sale of securities held as available for sale         228,000           --
           Purchases of property and equipment                                     (45,000)          --
           Proceeds from disposal of property and equipment                         67,000           --
           Receipts from holdback escrow account                                      --           88,000
                                                                               -----------    -----------
     Net cash flows from investing activities                                      250,000         88,000
                                                                               -----------    -----------

     CASH FLOWS FROM FINANCING ACTIVITIES
           Payments on notes payable                                            (1,544,000)      (588,000)
           Proceeds from sale of common stock and treasury stock to officers          --        1,080,000
                                                                               -----------    -----------
     Net cash flows from financing activities                                   (1,544,000)       492,000
                                                                               -----------    -----------

     Net increase/(decrease)  in cash and cash equivalents                         807,000     (1,465,000)
     Cash and cash equivalents at beginning of period                            1,821,000      3,286,000
                                                                               -----------    -----------
     Cash and cash equivalents at end of period                                $ 2,628,000    $ 1,821,000
                                                                               ===========    ===========

     SUPPLEMENTAL CASH FLOW INFORMATION
           Non-cash investing and financing activities
               Acquisition of inventory assets through financing                      --        3,529,000
</TABLE>


                   See notes to consolidated financial statements.


                                      F-5
<PAGE>



CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 2004 AND 2003
(AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                     Common Stock      Additional   Retained                 Assum.      Total
                                                  ------------------    Paid In     Earnings   Treasury      Other    Shareholders'
                                                  Shares     Amount     Capital    (Deficit)    Stock      Comp. Inc.    Equity
                                                 --------   --------   --------    --------    --------    --------   --------
<S>                                                 <C>     <C>        <C>         <C>         <C>         <C>        <C>
     Balances November 30, 2002                     4,644   $    232   $ 12,138    $   (968)   $ (9,102)   $   --     $  2,300

        Net Loss                                     --         --         --        (1,665)       --          --       (1,665)
        Stock issued to Directors                      96          5         28        --          --          --           33
        Common stock and treasury
            stock sold to officers                  4,500        225        739        --           836        --        1,800
                                                 --------   --------   --------    --------    --------    --------   --------
     Balances November 30, 2003                     9,240   $    462   $ 12,905    $ (2,633)   $ (8,266)   $   --     $  2,468
                                                 --------   --------   --------    --------    --------    --------   --------

        Net Income                                   --         --         --           561        --          --          561
        Stock issued to Directors                     132          7       (872)       --           920        --           55
        Accum Other Comp. Income                     --         --         --          --          --           103        103
                                                 --------   --------   --------    --------    --------    --------   --------
     Balances November 30, 2004                     9,372   $    469   $ 12,033    $ (2,072)   $ (7,346)   $    103   $  3,187
                                                 ========   ========   ========    ========    ========    ========   ========
</TABLE>



           See notes to consolidated financial statements.

                                      F-6
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



1.      NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        NATURE OF BUSINESSES

        Calton, Inc. ("Calton" or the "Company") was incorporated in the State
        of New Jersey in 1981. The Company is engaged in (i) constructing single
        family homes through Homes by Calton, LLC ("Homes by Calton"), (ii)
        providing Internet business solutions and consulting services through
        eCalton.com, Inc. ("eCalton") and (iii) developing a loyalty and
        co-branded credit card program through PrivilegeONE Networks, LLC
        ("PrivilegeONE").

        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        USE OF ESTIMATES

        The preparation of financial statements in conformity with accounting
        principles generally accepted in the United States of America 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.

        PRINCIPLES OF CONSOLIDATION

        The consolidated financial statements include the accounts of the
        Company and its wholly owned subsidiaries. All significant inter-company
        accounts and transactions have been eliminated in the accompanying
        consolidated financial statements.

        REVENUE RECOGNITION

        Revenues and related profits from the homebuilding segment are
        recognized using the full accrual method, as defined in Statements on
        Financial Accounting (SFAS) No. 66. Revenue is recognized under the full
        accrual method when the earning process of constructing the home has
        been completed as follows:

        o       The Company recognizes revenue at the time of closing and title
                transfer. Prior to closing, the customer performs walkthroughs
                of the home and any other procedures that they consider
                necessary to accept the home. The Company attempts to remedy any
                issues with its customers prior to closing.

        o       In all instances, the buyer's commitment to repay financing
                obtained to purchase the property is between the buyer and the
                buyer's lender. The Company does not provide customer financing
                and there is no recourse against the Company for non-payment by
                the buyers.

        o       The risks and rewards of ownership of the home pass to the
                customer at closing and the Company has no substantial
                continuing involvement with the property.

        Revenues from the Internet development division are derived under
        short-term time-and-material and, to a lesser extent, fixed price
        contracts with principally commercial business customers. Internet
        development revenues under time-and-material contracts are recognized
        upon acceptance by the customer of the website. Internet development
        revenues under fixed-price contracts are recognized as the contract
        progresses, using the cost-to-cost method to determine percentage of
        completion. There were no material incomplete fixed price website design
        and implementation contracts as of November 30, 2004.


                                      F-7
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        CASH AND CASH EQUIVALENTS

        Cash equivalents consist of demand deposits and highly liquid money
        market funds. 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.

        ACCOUNTS RECEIVABLE AND CREDIT RISK

        The Company provides reserves against uncollectible accounts receivable.
        This process requires significant subjective estimates that take into
        account the credit worthiness of the customer, historical collection
        experience, and the general economic environment. The Company continues
        to perform formal reviews on all open accounts receivable, write off
        balances known to be uncollectible against existing reserves, and
        estimate the appropriate levels of reserves on existing balances.

        INVESTMENTS

        The Company holds certain equity securities which are classified as
        available-for-sale as defined in SFAS No. 115. As a result, at November
        30, 2004 the securities are valued at fair market value of $103,000 and
        are included in prepaid expenses and other current assets in the
        accompanying consolidated balance sheet. The corresponding unrealized
        gain on securities held as available-for-sale is recorded as a component
        of other comprehensive income.

        During the year ended November 30, 2004, the Company sold certain of
        these securities and recorded a $228,000 gain.

        INVENTORY

        Homebuilding work in process, speculative and model homes and developed
        land are stated at the lower of cost (including direct construction
        costs, capitalized interest, and real estate taxes) or net realizable
        value. The capitalized costs are included in cost of homebuilding
        revenues as homes are sold and customers take title to the home and real
        estate.

        In accordance with SFAS 34, CAPITALIZATION OF INTEREST COSTS, the
        Company capitalizes interest incurred on lots under development and
        homes under construction. During the year ended November 30, 2004,
        approximately $84,000 of interest was capitalized. Capitalization begins
        when the construction of a home commences, whether it is under contract
        or being built on a speculative basis. Capitalized interest costs are
        charged to cost of sales in the period when the revenues from home
        closings are recognized. Interest costs are expensed on developed,
        vacant lots and completed speculative homes.

        PROPERTY AND EQUIPMENT

        Property and equipment are carried at cost. Computer equipment is being
        depreciated using the straight-line method over a useful life of three
        to four years, office furniture is being depreciated using the
        straight-line method over five years, and leasehold improvements are
        being depreciated using the straight-line method 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.


                                      F-8
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003


        IMPAIRMENTS OF LONG-LIVED ASSETS

        The Company performs an assessment of the carrying values of fixed
        assets and other long-lived assets to be held and used when indications
        that the carrying value of such assets may not be recoverable are
        present. This review consists of a comparison of the carrying value of
        the assets with expected undiscounted cash flows. If the respective
        carrying values exceed undiscounted cash flows, the impairment is
        measured using fair value measures to the extent available, or
        discounted cash flows.

        DEFERRED FINANCE CHARGES

        Deferred finance charges included in other current assets are associated
        with the Company's current revolving credit agreement (Note 4). Deferred
        finance charges are amortized over the term of the line of credit.
        Amortization is reflected as a component of depreciation and
        amortization.

        INCOME TAXES

        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, investments, accounts payable, accrued
        expenses and other liabilities and notes payable. At November 30, 2004,
        the fair value of these instruments approximated their carrying value.

        ADVERTISING EXPENSE

        The costs of advertising are expensed as incurred. Included in selling,
        general and administrative expenses are advertising costs of
        approximately $100,000 and $54,000 for the years ended November 30, 2004
        and 2003, respectively.

        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. Diluted income/(loss) per share 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.


                                      F-9
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003


<TABLE>
<CAPTION>
                                                                 2004            2003
                                                              -----------    -----------

<S>                                                           <C>            <C>
     Net income/(loss) - [numerator]                          $   561,000    $(1,665,000)
                                                              ===========    ===========

     Basic:

          Weighted average shares outstanding [denominator]     9,285,000      5,840,000
                                                              ===========    ===========
          Net income/(loss) per common share                  $      0.06    $     (0.29)
                                                              ===========    ===========
     Diluted:

          Weighted average shares outstanding                   9,285,000      5,840,000
          Effect of dilutive securities                           129,000           --
          Adjusted weighted average shares - [denominator]      9,414,000      5,840,000
                                                              ===========    ===========

     Net income/(loss) per common share - diluted             $      0.06    $     (0.29)
                                                              ===========    ===========
</TABLE>


        The effect of 705,400 and 735,400 stock options outstanding at November
        30, 2004 and 2003, respectively, were not included in the calculation of
        diluted income/(loss) per share for each of those years, as they were
        anti-dilutive pursuant to the treasury stock method.

        STOCK-BASED COMPENSATION

        The Company accounts for employee stock-based compensation using the
        intrinsic method in accordance with Accounting Principles Board Opinion
        No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
        interpretations. Accordingly, in cases where exercise prices for stock
        option grants equal or exceed the trading market value of the stock at
        the date of grant, the Company recognizes no compensation expense. In
        cases where exercise prices are less than the fair value of the stock at
        the date of grant, compensation is recognized over the period of
        performance or the vesting period. The Company accounts for non-employee
        stock-based compensation using the fair market value approach for stock
        options and warrants, in accordance with SFAS 123, ACCOUNTING FOR
        STOCK-BASED COMPENSATION ARRANGEMENTS.


                                      F-10
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        The following table reflects supplemental financial information related
        to stock-based employee compensation, as required by SFAS 148:

<TABLE>
<CAPTION>
                                                                       2004         2003
                                                                    ---------   -----------
<S>                                                                 <C>         <C>
     Year ended November 30:

     Net income/(loss), as reported                                 $ 561,000   $(1,665,000)
                                                                    =========   ===========
     Income/(loss) per share, as reported                           $    0.06   $     (0.29)
                                                                    =========   ===========

     Stock-based employee compensation costs used in the
     determination of net income/(loss), as reported                $    --     $  (720,000)
                                                                    =========   ===========

     Stock-based employee compensation costs that would
     have been included in the determination of net income/(loss)
     if the fair value method (Statement 123) had been
     applied to all awards                                          $ (50,000)  $  (727,200)
                                                                    =========   ===========

     Unaudited pro forma net income/(loss), as if the
     fair value method had been applied to all awards               $ 511,000   $(1,672,200)
                                                                    =========   ===========

     Unaudited pro forma income/(loss) per share, as if the
     fair value method had been applied to all awards               $    0.06   $     (0.29)
                                                                    =========   ===========
</TABLE>


        Stock based compensation costs that would have been included in the
        determination of net income/(loss) if the fair value method had been
        applied is calculated using the Black-Scholes option-pricing model, with
        the following assumptions: dividend yield - none, volatility of 196%,
        risk-free interest rate of 4.36% in 2004 and 4.34% in 2003, assumed
        forfeiture rate as they occur, and an expected life of 4.3 and 4.5 years
        at November 30, 2004 and 2003, respectively.

        RECENT ACCOUNTING PRONOUNCEMENTS

        FASB STATEMENT NO. 153, EXCHANGES OF NONMONETARY ASSETS (STATEMENT 153)
        On December 16, 2004 the FASB issued Statement No. 153, "Exchanges of
        Nonmonetary Assets." Statement 153 amends the guidance in APB Opinion
        No. 29, ACCOUNTING FOR NONMONETARY TRANSACTIONS, based on the principle
        that exchanges of nonmonetary assets should be measured based on the
        fair value of the assets exchanged. Further, the amendments eliminate
        the narrow exception for nonmonetary exchanges of similar productive
        assets and replace it with a broader exception for exchanges of
        nonmonetary assets that do not have commercial substance. Previously,
        Opinion 29 required that the accounting for an exchange of a productive
        asset for a similar productive asset or an equivalent interest in the
        same or similar productive asset should be based on the recorded amount
        of the asset relinquished. The Statement is effective for nonmonetary
        asset exchanges occurring in fiscal periods beginning after June 15,
        2005 and the provisions of this Statement shall be applied
        prospectively. The Company has not assessed the impact of this statement
        on its consolidated financial position, results of operations or cash
        flows.


                                      F-11
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        FASB STATEMENT NO. 123 (REVISED 2004) (STATEMENT 123(R))
        On December 16, 2004 the FASB issued Statement No. 123 (revised 2004),
        "Share-Based Payments." Statement 123(R) replaces FASB Statement No.
        123, "Accounting for Stock-Based Compensation," supersedes APB Opinion
        No. 25, "Accounting for Stock Issued to Employees" and amends FASB
        Statement No. 95, "Statement of Cash Flows." Generally, the approach in
        Statement 123(R) is similar to the approach described in Statement 123.
        However, Statement 123(R) requires all share-based payments to
        employees, including grants of employee stock options, to be recognized
        in the financial statements based on their fair values (i.e., pro forma
        disclosure is no longer an alternative to financial statement
        recognition). Statement 123(R) is effective for small business issuers
        at the beginning of the first interim or annual period beginning after
        December 15, 2005. The Company has not assessed the impact of this
        statement on its consolidated financial position, results of operations
        or cash flows.

        FASB STATEMENT NO. 152, "ACCOUNTING FOR REAL ESTATE TIME-SHARING
        TRANSACTIONS" (STATEMENT 152)
        On December 16, 2004 the FASB issued Statement No. 152, "Accounting for
        Real Estate Time-Sharing Transactions." This Statement amends FASB
        Statement No. 66, "Accounting for Sales of Real Estate," to reference
        the financial accounting and reporting guidance for real estate
        time-sharing transactions that is provided in AICPA Statement of
        Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
        Transactions." This Statement also amends FASB Statement No. 67,
        "Accounting for Costs and Initial Rental Operations of Real Estate
        Projects," to state that the guidance for (a) incidental operations and
        (b) costs incurred to sell real estate projects does not apply to real
        estate time-sharing transactions. The accounting for those operations
        and costs is subject to the guidance in SOP 04-2. This Statement is
        effective for financial statements for fiscal years beginning after June
        15, 2005. The Company has not assessed the impact of this statement on
        its consolidated financial position, results of operations or cash
        flows.

        FASB STATEMENT NO. 151, INVENTORY COSTS (STATEMENT 151)
        On November 24, 2004 the FASB issued Statement No. 151, "Inventory
        Costs." Statement 151 amends the guidance in ARB No. 43, Chapter 4,
        "Inventory Pricing," to clarify the accounting for abnormal amounts of
        idle facility expense, freight, handling costs, and wasted material
        (spoilage). The amendments made by Statement 151 clarify that abnormal
        amounts of idle facility expense, freight, handling costs, and wasted
        materials (spoilage) should be recognized as current-period charges and
        require the allocation of fixed production overheads to inventory based
        on the normal capacity of the production facilities. The guidance is
        effective for inventory costs incurred during fiscal years beginning
        after June 15, 2005. Earlier application is permitted for inventory
        costs incurred during fiscal years beginning after November 23, 2004.
        The Company has not assessed the impact of this statement on its
        consolidated financial position, results of operations or cash flows.

2.      INVENTORY

        Inventory consists of the following as of November 30, 2004:

          Developed land                $  351,000
          Work in process                1,792,000
          Speculative and model homes      358,000
                                        ----------
                                        $2,501,000
                                        ==========


        The Company capitalizes interest on loans directly associated with the
        real estate development projects. During the year ended November 30,
        2004, the Company capitalized $84,000.

                                      F-12
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



3.      PROPERTY AND EQUIPMENT

        Property and equipment consists of the following as of November 30,
        2004:

                                                  November 30,
                                                      2004
                                                  -------------

          Computer equipment and furniture         $ 129,000
          Leasehold improvements                       4,000
          Other                                        5,000
                                                   ---------
                                                     138,000

                  Less: Accumulated Depreciation     (90,000)
                                                   ---------
                                                   $  48,000
                                                   =========

        As a result of the destruction caused by hurricanes Jeanne and Frances,
        the Company disposed of long-lived assets with a net carrying value of
        $18,000. The Company received insurance proceeds in the amount of
        $67,000 to which it recorded a gain of $49,000 for the fiscal year ended
        November 30, 2004.

4.      NOTES PAYABLE

        Notes payable consists of borrowings under a $6.5 million demand
        revolving line of credit with Harbor Federal Savings Bank. The credit
        facility is secured by inventories and related homebuilding assets and
        expires in June 2005. The annual interest rate is the bank's prime rate
        plus 1% (5.75% at November 30, 2004).

5.      ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABIILITIES

        Accounts payable, accrued expenses and other liabilities consist of the
        following as of November 30, 2004:

                                    November 30,
                                        2004
                                    ----------
          Accounts payable, trade   $  264,000
          Accrued expenses             303,000
          Customer deposits            798,000
          Deferred revenue              26,000
                                    ----------
                                    $1,391,000
                                    ==========

6.      SHAREHOLDERS' EQUITY ACTIVITY

        The Company's Certificate of Incorporation, as amended, provides for
        25,000,000 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), 1,000,000 shares of which have been designated as Class
        A Series One Preferred Stock. None of the Preferred Stock is issued or
        outstanding.



                                      F-13
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        PRIVATE PLACEMENT

        On August 29, 2003, the Company sold 4,500,000 shares of its common
        stock to four of its officers for an aggregate purchase price of
        $1,080,000, or $0.24 per share, which exceeded both the book value and
        the closing price of the Common Stock on the date that the agreement to
        sell the shares was reached. A portion of the stock issued to the
        officers was issued out of Treasury shares. The 150,000 shares issued
        from Treasury were recorded using the first-in first-out method of
        accounting with the difference being recorded in paid-in-capital. While
        the sale of the shares was intended to serve as a financing activity,
        necessary to engage in the homebuilding operations, the measurement date
        for compensation purposes occurred at a date subsequent to execution of
        the agreement, at a time when the stock price was higher than the sale
        price. As a result, the Company recorded compensation expense of
        $720,000 during the year ended November 30, 2003 related to this
        placement of securities.

        STOCK REPURCHASE PROGRAM

        During 1998, the Company commenced a stock repurchase program covering
        up to 2,000,000 shares of Common Stock in open market repurchases and
        privately negotiated transactions. Treasury stock is recorded at cost as
        a reduction of shareholders' equity. During the fiscal years ended
        November 30, 2004 and 2003, there were no treasury stock purchases.

        STOCK COMPENSATION PROGRAMS AND TRANSACTIONS

        As of November 30, 2004 there were 392,696 options exercisable under all
        plans in the aggregate with a weighted average exercise price of $2.15.
        Stock option activity is summarized as follows:

<TABLE>
<CAPTION>

                                             2004                       2003
                                     ---------------------     ---------------------
                                                  Weighted                   Weighted
                                                   Average                   Average
                                                  Exercise                  Exercise
                                       Options      Price       Options       Price
                                     ---------------------     ----------------------
<S>                                    <C>        <C>           <C>        <C>
     Outstanding
            Beginning of year          735,400    $   2.48      731,200    $   3.24
            Granted at market price     94,000        0.56       40,000        0.21
            Exercised                     --           --          --          --
            Expired or cancelled      (124,000)       6.08      (35,800)       0.69
                                       -------    --------      -------    --------
     Outstanding end of year           705,400    $   1.58      735,400    $   2.48
                                       =======    ========      =======    ========

     Exercisable as of November 30     392,696    $   2.15      353,347    $   3.75
                                       =======    ========      =======    ========
</TABLE>


                                      F-14
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003


        The weighted average exercise price of the options granted during fiscal
        years ended 2004 and 2003 is $0.56 and $0.21, respectively. The range of
        exercise prices for exercisable options and the weighted average
        remaining lives are reflected in the following table.

<TABLE>
<CAPTION>

         Options Outstanding                                                                    Exercisable
----------------------------------------------------------------------------------   -----------------------------------
     Range of                                Weighted Avg.         Weighted Avg.                       Weighted Avg.
      Prices               Number           Remaining Life        Exercise Price         Number        Exercise Price
--------------------------------------   -------------------   -------------------   -------------  --------------------
<C>         <C>            <C>                 <C>                <C>                   <C>            <C>
$    0.01 - 1.00           607,400             6.33 yrs.          $        0.47         302,696        $        0.41
     1.01 - 7.00            50,000             1.42 yrs.                   4.12          50,000                 4.12
     7.01 - 9.00             8,000             0.42 yrs.                   8.75           8,000                 8.75
    9.01 - 14.00            40,000             0.17 yrs.                  13.90          32,000                13.90
                       ---------------   -------------------   -------------------   -------------  --------------------

    $ 0.01 - 14.00         705,400             5.57 yrs.         $         1.58         392,696        $         2.15
                       ===============   ===================   ===================   =============  ====================
</TABLE>

        During 2004, 132,000 shares of treasury stock were issued to directors
        of the Company in lieu of receiving cash fees. The Company records
        stock-based compensation associated with the issuance of common stock to
        directors based upon the fair market value of the shares on the date
        issued. Compensation expense for the year ended November 30, 2004
        amounted to $55,000 under this method. Treasury stock was relieved using
        the first-in first-out method of accounting with the difference being
        recorded as a reduction of paid-in capital.

        As of November 30, 2004, there were 426,228 shares of Common Stock
        reserved for possible future issuances under the Company's stock option
        plans.

        PREFERRED STOCK RIGHTS AGREEMENTS

        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 Rights 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 $0.01 per Right.


                                      F-15
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003


        OTHER COMPREHENSIVE INCOME:

        Under Statements of Financial Accounting Standards No. 130 (SFAS 130),
        Reporting Comprehensive Income, the Company is required to display
        comprehensive income and its components as part of its full set of
        financial statements. Comprehensive income comprises net income and
        other comprehensive income items. Other comprehensive income during the
        year ended November 30, 2004 represents the changes in unrealized gains
        and losses on available-for-sale equity securities and is recorded net
        of taxes of $0. The following table reflects comprehensive income for
        the year ended November 30, 2004:

          Net income                  $561,000
          Other comprehensive items    103,000
                                      --------
          Comprehensive income        $664,000
                                      ========

7.      INCOME TAXES

        The income tax benefit for the year ended November 30, 2003 arose from
        the release of certain reserves for income tax matters resolved during
        the period.

        The federal net operating loss carryforward for tax purposes is
        approximately $31,442,000 at November 30, 2003 and $31,968,000 at
        November 30, 2004. The Company's ability to utilize its deferred tax
        assets, including the federal net operating loss carryforwards created
        prior to November 21, 1995 to offset future income, is limited to
        approximately $1,000,000 per year under Section 382 of the Internal
        Revenue Code as a result of the change in control of the Company in
        November 1995. These federal carryforwards will expire between 2007 and
        2024.

        The following schedule reconciles the income tax benefit at the federal
        statutory rate (35%) to the effective rate:

                                                            2004       2003
                                                        ----------   ---------

          Benefit using statutory rate                  $(195,000)   $ 753,000
          Change in valuation allowance                   195,000     (753,000)
          Reduction in Federal deferred tax liability        --        487,000
                                                        ----------   ---------
                                                        $    --      $ 487,000
                                                        ==========   =========


                                      F-16
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        Temporary differences and carryforwards that give rise to deferred tax
        assets as of November 30, 2004 are as follows:

          Net operating losses            $ 12,983,000
          Asset impairment charges             321,000
          Capital loss carryforwards           403,000
          Investment impairment charges        263,000
          Unamortized start up costs           603,000
          Bad debt and other allowances          8,000
          Other                                 58,000
                                          ------------
              Deferred tax assets           14,639,000
          Less: Valuation allowances       (14,639,000)
                                          ------------
          Net deferred taxes              $       --
                                          ============

8.      INDUSTRY SEGMENTS AND MAJOR CUSTOMERS

        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. During the operating periods presented
        in the accompanying financial statements, the Company operated in four
        business segments, as follows:

        HOMEBUILDING AND CONSTRUCTION SERVICES

        Homes by Calton constructs single-family residential homes in the state
        of Florida. Revenues and related profits from the homebuilding segment
        are recognized using the full accrual method, as the term is defined in
        Statements on Financial Accounting (SFAS) No. 66. Revenue is recognized
        under the full accrual method when the earning process of constructing
        the home has been completed as follows:

        o       The Company recognizes revenue at the time of closing and title
                transfer. Prior to closing, the customer performs walkthroughs
                of the home and any other procedures that they consider
                necessary to accept the home. The Company attempts to remedy any
                issues with its customers prior to closing.

        o       In all instances, the buyer's commitment to repay financing
                obtained to purchase the property is between the buyer and the
                buyer's lender. The Company does not provide customer financing
                and there is no recourse against the Company for non-payment by
                the buyers.

        o       The risks and rewards of ownership of the home pass to the
                customer at closing and the Company has no substantial
                continuing involvement with the property.

        INTERNET DEVELOPMENT

        The Internet development division of eCalton.com, Inc. provides Internet
        consulting services and develops comprehensive Internet-based solutions
        for its clients. Its mission is to help businesses and organizations
        optimize their competitive business advantages through strategic use of
        the Internet and related technologies. This division of eCalton provides
        its services to medium and large size companies in various industries,
        as well as one prime vertical market - the homebuilding industry.
        Revenues from the Internet development division are derived under
        short-term time-and-material and, to a lesser extent, fixed-price
        contracts with principally commercial business customers. Internet
        development revenues under time-and-material contracts are recognized
        upon acceptance by the customer of the website. Internet development
        revenues under fixed-price contracts are recognized as the contract
        progresses, using the cost-to-cost method to determine percentage of
        completion.


                                      F-17
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        In the fourth quarter of fiscal 2003, the Company wound down the
        technical staffing division of eCalton due to the severe downturn in
        economic conditions in its regional market of Houston, Texas. Revenues
        for this division were generated under contracts with its customers to
        provide staffing services. The Company charged hourly rates for the
        services of its employees. The Company recorded revenues as the services
        were performed, based upon service delivery evidence provided by its
        employees that were directly engaged in the service. The Company did not
        report the wind down of the technical staffing division as a
        discontinued operation as, in accordance with FAS 141 - paragraph 41,
        the division's operations and cash flows could not be clearly
        distinguished operationally and for financial reporting purposes from
        the rest of the entity. In addition, the Company previously concluded
        that the staffing activities did not rise to the level of an operating
        segment, as that term is defined in paragraph 10 of FAS 131, since
        discrete financial information was not fully available. The Company does
        not anticipate incurring any restructuring or impairment charges,
        including severance or similar employment separation charges, as a
        result of the wind down of the division's operations.

        CORPORATE

        The corporate division provides senior management, accounting, human
        resources and investor relations services to all wholly owned
        subsidiaries of Calton, Inc.

        CREDIT CARD LOYALTY BUSINESS

        PrivilegeONE Networks, LLC was formed to develop and implement the
        PrivilegeONE Loyalty Program. The patent pending program was developed
        to aggregate disparate entities under the PrivilegeONE umbrella to
        create customer loyalty and retention to the individual entity through
        the issuance of co-branded credit cards and membership cards. To
        introduce the program, PrivilegeONE elected the initial target customer
        base of automobile dealers throughout the United States. This segment
        recognizes revenue upon receipt of its proportionate share of finance
        charges incurred on existing PrivilegeONE credit card accounts and upon
        receipt of fees associated with new card issuances.


                                      F-18
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        Operating results, by segment, for the years ended November 30, 2004 and
        2003 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              Fiscal year ended November 30, 2004
                                    --------------------------------------------------------------------------------------------
                                      eCalton             P-ONE
                                      Internet         Credit Card
                                    Development          Loyalty         Homebuilding                               Total
                                    and Staffing        Business         & Consulting         Corporate            Company
                                    --------------------------------------------------------------------------------------------
<S>                                <C>                 <C>                  <C>                 <C>                <C>
   Segment revenues                $   614             $     1              $11,587             $  --              $12,202
   Cost of revenues                    289                   1                9,176                --                9,466
   Depreciation and amortization         5                  --                  138                  25                168
   Interest income                      --                  --                   --                   8                  8
   Profit/(loss) from operations        38                  (5)               1,481                (957)               557
   Net profit/(loss)                    38                  (5)               1,481                (953)               561
   Total assets                    $   192             $   -                $ 5,269             $   514            $ 5,975
</TABLE>

<TABLE>
<CAPTION>
                                                              Fiscal year ended November 30, 2003
                                    --------------------------------------------------------------------------------------------
                                      eCalton             P-ONE
                                      Internet         Credit Card
                                    Development          Loyalty         Homebuilding                               Total
                                    and Staffing        Business         & Consulting         Corporate            Company
                                    --------------------------------------------------------------------------------------------
<S>                                <C>                  <C>                  <C>                 <C>               <C>
   Segment revenues                $   939              $    14              $ 2,180             $  --             $ 3,133
   Cost of revenues                    572                    4                1,796                --               2,372
   Depreciation and amortization      --                     --                   --                 43                 43
   Interest income                    --                     --                   --                 21                 21
   Profit/(loss) from operations      (165)                (489)                 185             (1,196)            (1,665)
   Net profit/(loss)                  (165)                (489)                 185             (1,196)            (1,665)
   Total assets                    $   136              $     3              $ 5,309            $ 1,189              $ 6,637
</TABLE>


9.      COMMITMENTS AND CONTINGENT LIABILITIES

        WARRANTY COMMITMENTS ON HOMES BY CALTON
        The Company provides a basic limited warranty on workmanship and
        materials for all homes for a period of one year. The Company estimates
        the costs that may be incurred under its basic limited warranty and
        records a liability in the amount of such costs at the time the product
        revenue is recognized. Factors that affect the Company's warranty
        liability include the number of homes sold, historical and anticipated
        rates of warranty claims and average cost per claim. Estimated future
        warranty costs are charged to cost of sales in the period when the
        revenues from home closings are recognized. Such estimated warranty
        costs are 0.5% of the total sales price of the home. The Company
        periodically assesses the adequacy of its recorded warranty liabilities
        and adjusts the amount as necessary.


                                      F-19
<PAGE>


CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 2004 AND 2003



        Following is the Company's warranty reserve activity for the years ended
        November 30, 2004 and 2003:

                                             2004        2003
                                           --------    --------

          Balance at beginning of period   $ 11,000    $   --
          Reserves                           57,000      11,000
          Payments and other adjustments   $(11,000)       --
                                           --------    --------
          Balance at end of period         $ 57,000    $ 11,000
                                           ========    ========

        LAND PURCHASE AGREEMENTS
        In April 2004, the Company entered into a rolling option contract to
        purchase forty-one (41) developed, golf course lots in the Pointe West
        development located in Vero Beach, Florida. If the Company does not
        perform under the contract, its liability is limited to the deposit
        money held by the seller. The full deposit of $300,000 was made during
        the year ended November 30, 2004. Two lots have been purchased under
        this Land Purchase Agreement as of November 30, 2004.

        In December 2003, the Company entered into a contract to purchase eight
        (8) developed lots in the Amelia Plantation development located in Vero
        Beach, Florida. If the Company does not perform under the contract, its
        liability is limited to the deposit money held by the seller. A net
        deposit of $12,000 remains as of November 30, 2004. Four lots have been
        purchased under this Land Purchase Agreement as of November 30, 2004.

        The Company anticipates purchasing all of the lots it has under its
        existing land contracts. The estimated cost to the Company to perform
        all of its obligations under the existing land contracts is
        approximately $4.4 million.

        OPERATING LEASE COMMITMENTS
        The Company and its consolidated subsidiaries lease their facilities
        under operating lease agreements with various expiration dates through
        2009. In November 2004, the Company relocated its corporate office and
        entered into a new 5-year lease for its office space. The Company was
        relieved of its obligations under the lease for its prior office space
        due to the effect of hurricanes Frances and Jeanne. Future
        non-cancelable minimum lease payments for each of the following years
        ending November 30 are as follows:

                 2005        $ 48,000
                 2006          31,000
                 2007          31,000
                 2008          31,000
                 2009          31,000
                             --------
               Total         $173,000
                             ========

        Rent expense for the years ended November 30, 2004 and 2003 amounted to
        $112,000 and $131,000, respectively.

        LITIGATION SETTLEMENTS
        During the fiscal year ended November 30, 2004, the Company paid $20,000
        in final and complete settlement of one litigation matter, which closed
        the matter in its entirety and received $5,000 in a litigation
        settlement.


                                      F-20
<PAGE>


                          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.

2.3     Assignment of Interest in Innovative Growth Partners, LLC and Agreement
        as to Other Matters dated as of April 18, 2002 among Calton, Inc.,
        Innovation Growth Partners, LLC and, Richard Dole, Frederick Huttner and
        James West, incorporated by reference to Exhibit 2 to Form 8-K of
        Registrant dated May 8, 2002.

2.4     Amended and Restated Agreement for Sale and Purchase of Assets effective
        June 13, 2003 between Homes by Calton, LLC, the Registrant and Beazer
        Homes Corp., incorporated by reference to Exhibit 2.1 to Form 10-QSB of
        Registrant for the fiscal quarter ended May 31, 2003.

2.5     First Amendment to Amended and Restated Agreement for Sale and Purchase
        of Assets effective June 13, 2003 between Homes by Calton, LLC, the
        Registrant and Beazer Homes Corp., incorporated by reference to Exhibit
        2.2 to Form 10-QSB for the fiscal quarter ended May 31, 2003.

2.6     LLC Purchase Agreement dated as of July 10, 2003 among the Registrant,
        Anthony J. Caldarone, John G. Yates, Maria F. Caldarone and Laura A.
        Camisa, incorporated by reference to Exhibit 2.3 to Form 10-QSB of
        Registrant for the fiscal quarter ended May 31, 2003.

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, Certificate of Amendment to
        Amended and Restated Certificate of Incorporation filed with the
        Secretary of State, State of New Jersey on May 30, 2000, incorporated by
        reference to Exhibit 3.1 to Form 10-K of Registrant for the fiscal year
        ended November 30, 2000 and Certificate of Amendment to Amended and
        Restated Certificate of Incorporation filed with the Division of
        Revenue, State of New Jersey, on June 20, 2004, incorporated by
        reference to Exhibit 3.1 to Form 10-QSB of the Registrant for fiscal
        quarter ended May 31, 2004.

3.2     By Laws of Registrant, incorporated by reference to Exhibit 3.2 to Form
        10-KSB of Registrant for the fiscal year ended November 30, 2003.

4.1     Option to Purchase Common Stock dated May 10, 2002 issued to Steven R.
        Tetreault, incorporated by reference to similarly numbered exhibit filed
        with Registrant's Report on Form 10-Q for the fiscal quarter ended May
        31, 2001.



                                      E-1
<PAGE>




4.2     Option to Purchase Common Stock dated May 10, 2002 issued to Thomas E.
        Van Fechtmann, incorporated by reference to similarly numbered exhibit
        filed with Registrant's Report on Form 10-Q for the fiscal quarter ended
        May 31, 2001.

4.3     Option to Purchase Common Stock dated May 10, 2002 issued to Thomas
        Corley, incorporated by reference to similarly numbered exhibit filed
        with Registrant's Report on Form 10-Q for the fiscal quarter ended May
        31, 2001.

4.4     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, incorporated by reference to
        Exhibit 10.4 of Form 10-KSB of Registrant for the fiscal year ended
        November 30, 2002.(*)

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, 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 and
        Second Amendment to Executive Employment Agreement dated as of October
        17, 2002, incorporated by reference to Exhibit 10.7 to Form 10-K of
        Registrant for fiscal year ended November 30, 2001, Third Amendment to
        Executive Employment Agreement dated as of October 30, 2002 incorporated
        by reference to Exhibit 10.7 to Form 10-K of Registrant for fiscal year
        ended November 2002 and Fourth Amendment to Executive Employment
        Agreement dated as of November 10, 2003.(**)

10.9    2000 Equity Incentive Plan, as amended, incorporated by reference to
        Exhibit 10.9 of Form 10-KSB of Registrant for the fiscal year ended
        November 30, 2003. (*)

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.

10.12   Employee Stock Purchase Plan, incorporated by reference to Exhibit 10.12
        to Form 10-K of Registrant for the fiscal year ended November 30, 2000,
        incorporated by reference to Exhibit 10.12 of Form 10-KSB for the fiscal
        year ended November 30, 2003.

10.21   Profit Sharing Arrangement among the Registrant, John G. Yates and
        Thomas C Corley, incorporated by reference to Exhibit 10.21 to Form
        10-KSB of Registrant for the fiscal year ended November 30, 2003. (**)

10.23   Mandatory Redeemable, Convertible, Subordinated Note issued by Automated
        Information Management, Inc., incorporated by reference to similarly
        numbered exhibit to Form 10-K of Registrant for fiscal year ended
        November 30, 2001.

10.26   Services Agreement dated as of October 2002 between PrivilegeONE
        Networks, LLC and World Omni Financial Corp., incorporated by reference
        to similarly numbered exhibit to Form 10-K of Registrant for the fiscal
        year ended November 30, 2002. Information has been omitted from this
        exhibit and is subject to an order granting confidential treatment.



                                      E-2
<PAGE>

10.27   Stock Purchase Agreement dated as of June 26, 2003 among the Registrant,
        Anthony J. Caldarone, John G. Yates, Maria F. Caldarone and Laura A.
        Camisa, incorporated by reference to Exhibit 10 to Form 10-QSB of
        Registrant for the fiscal quarter ended May 31, 2003.

10.28   Amendment to Stock Purchase Agreement dated as of June 26, 2003 among
        the Registrant, Anthony J. Caldarone, John G. Yates, Maria F. Caldarone
        and Laura A. Camisa, incorporated by reference to Exhibit 10.28 to Form
        10-KSB for fiscal year ended November 30, 2003.

10.29   Registration Rights Agreement dated as of April 29, 2003 among the
        Registrant, Anthony J. Caldarone, John G. Yates, Maria F. Caldarone and
        Laura A. Camisa, incorporated by reference to Exhibit 10.1 to Form
        10-QSB of Registrant for the fiscal quarter ended August 31, 2003.

10.30   Commitment Letter dated as of August 13, 2003 and Promissory Notes dated
        as of August 27, 2003, between Harbor Federal Savings Bank and Homes by
        Calton, LLC, incorporated by reference to Exhibit 10.30 to Form 10-KSB
        for fiscal year ended November 30, 2003.

10.31   Real Estate Purchase and Sale Agreement dated April 6, 2004 between
        Homes by Calton, LLC and Pointe West of Vero Beach, Ltd., incorporated
        by reference to Exhibit 10.31 to Form 10-QSB of Registrant for fiscal
        quarter ended May 31, 2004. Information has been omitted from the
        exhibit and is subject to a request for confidential treatment.

21.     Subsidiaries of the Registrant, incorporated by reference to Exhibit 21
        to Form 10-KSB for fiscal year ended November 30, 2003.

23.     Consent of Aidman, Piser & Company, P.A.

24.     Power of Attorney (located on signature page of this Report).

31.1    Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of
        2002

31.2    Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of
        2002

32.1    Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of
        2002

32.2    Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of
        2002

(*)     Constitutes a compensatory plan required to be filed pursuant to Item
        13(a) of Form 10-KSB.

(**)    Constitutes a management contract required to be filed pursuant to Item
        13(a) of Form 10-KSB.




                                      E-3