<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1999

                                       or

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

                For the transition period from _______ to _______

                         Commission File Number: 0-22299

                               SAXTON INCORPORATED
             (Exact name of registrant as specified in its charter)

                    NEVADA                                    88-0223654
        (State or other jurisdiction of                    (I.R.S. Employer
        incorporation or organization)                   Identification No.)

                            5440 West Sahara Ave., Third Floor
                                  Las Vegas, Nevada 89146
                                    (702) 221-1111
            (Address and telephone number of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to the filing requirements for the past 90 days.

                                YES [X]            NO [ ]

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

The number of shares of common stock, par value $.001 per share, outstanding
as of August 4, 1999 was 7,732,922.

<PAGE>

                       SAXTON INCORPORATED AND SUBSIDIARIES
                                    FORM 10-Q
<TABLE>
<CAPTION>
                                                                                     PAGE NUMBER
                                                                                     -----------
<S>                                                                                  <C>
PART I.  FINANCIAL INFORMATION

           Item 1.  Condensed Financial Statements

                    Condensed Consolidated Balance Sheets  -
                    December 31, 1998 and June 30, 1999.............................      3

                    Condensed Consolidated Statements of Income -
                    Three and Six Months Ended June 30, 1998 and 1999...............      4

                    Condensed Consolidated Statement of  Stockholders'
                    Equity - Six Months Ended June 30, 1999.........................      5

                    Condensed Consolidated Statements of Cash Flows -
                    Six Months Ended June 30, 1998 and 1999.........................      6

                    Notes to Condensed Consolidated Financial Statements............      8

           Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations...................     15

           Item 3.  Quantitative and Qualitative Disclosures About Market Risk......     22

PART II.  OTHER INFORMATION

           Item 1.  Legal Proceedings...............................................     23

           Item 2.  Changes in Securities and Use of Proceeds.......................     23

           Item 3.  Defaults Upon Senior Securities.................................     23

           Item 4.  Submission of Matters to a Vote of Security Holders.............     23

           Item 5.  Other Information...............................................     23

           Item 6.  Exhibits and Reports on Form 8-K................................     23

SIGNATURES .........................................................................     24
</TABLE>
                                       2

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  CONDENSED FINANCIAL STATEMENTS

                     SAXTON INCORPORATED AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
              (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,        JUNE 30,
                                  ASSETS                                          1998              1999
                                                                             -------------------------------
                                                                                                 (unaudited)
<S>                                                                          <C>               <C>
Real estate properties:
   Operating properties, net of accumulated depreciation.................    $     23,117       $     31,571
   Properties under development..........................................          79,418             84,069
   Land held for future development or sale..............................           1,349              5,381
                                                                             ------------       ------------
     Total real estate properties........................................         103,884            121,021

Cash and cash equivalents................................................           1,331                390
Due from Tax Credit Partnerships.........................................          31,997             33,124
Construction contracts receivable, net of allowance for doubtful
   accounts of $403 at December 31, 1998 and June 30, 1999...............           8,773              8,739
Costs and estimated earnings in excess of billings on
   uncompleted contracts.................................................           2,618              1,578
Notes receivable.........................................................           1,000              1,402
Investments in joint ventures............................................           3,577              3,603
Due from related parties.................................................             154                166
Prepaid expenses and other assets........................................          17,661             18,902
                                                                             ------------       ------------
         Total assets....................................................    $    170,995       $    188,925
                                                                             ============       ============

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses....................................    $     24,892       $     21,463
Tenant deposits and other liabilities....................................           6,295              6,476
Billings in excess of costs and estimated earnings
   on uncompleted contracts..............................................             181                281
Notes payable............................................................          88,306            104,292
Notes payable to related parties.........................................          12,016             12,783
Long-term capital lease obligations......................................           1,118              1,120
                                                                             ------------       ------------
         Total liabilities...............................................         132,808            146,415

Commitments and contingencies (note 11)

Stockholders' equity:
Common stock, $.001 par value.  Authorized 50,000,000
   shares; issued and outstanding 7,732,922 at December 31, 1998
   and June 30, 1999.....................................................               8                  8
Preferred stock, $.001 par value. Authorized 5,000,000
   shares; no shares issued and outstanding..............................               -                  -
Additional paid-in capital...............................................          21,482             21,482
Retained earnings........................................................          16,697             21,020
                                                                             ------------       ------------
         Total stockholders' equity......................................          38,187             42,510
                                                                             ------------       ------------

         Total liabilities and stockholders' equity......................    $    170,995       $    188,925
                                                                             ============       ============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>
                     SAXTON INCORPORATED AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except share and per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                                   JUNE 30,                     JUNE 30,
                                                                           ------------------------    ------------------------
                                                                              1998          1999           1998          1999
                                                                           ----------    ----------    ----------    ----------
<S>                                                                        <C>           <C>           <C>           <C>
REVENUE:
   Construction revenue, including Tax Credit
     Partnership construction revenue of $9,905 and $6,949
     for the three months ended June 30, 1998 and 1999, respectively,
     and $14,135 and $10,862 for the six months ended June 30, 1998
     and 1999, respectively..............................................  $   13,395    $    7,417    $   19,132    $   12,167
   Sales of homes........................................................       6,175        25,430         8,960        47,101
   Sales of commercial properties........................................         984           137         3,819         1,687
   Rental revenue........................................................         843           844         1,767         1,854
   Other revenue.........................................................         471           588           899         1,159
                                                                           ----------    ----------    ----------    ----------
         Total revenue...................................................      21,868        34,416        34,577        63,968
                                                                           ----------    ----------    ----------    ----------

COST OF REVENUE:
   Cost of construction, including Tax Credit Partnership cost of
     construction of $7,038 and $4,992 for the three months ended
     June 30, 1998 and 1999, respectively, and $10,050 and $7,690
     for the six months ended June 30, 1998 and 1999, respectively.......      10,264         5,949        14,767         9,837
   Cost of homes sold....................................................       5,192        21,809         7,536        40,883
   Cost of commercial properties sold....................................         920            18         3,500         1,024
   Rental operating cost.................................................         248           236           422           523
                                                                           ----------    ----------    ----------    ----------
         Total cost of revenue...........................................      16,624        28,012        26,225        52,267
                                                                           ----------    ----------    ----------    ----------

   Gross profit..........................................................       5,244         6,404         8,352        11,701
                                                                           ----------    ----------    ----------    ----------
   General and administrative expense....................................       1,684         2,056         2,436         3,922
   Depreciation and amortization.........................................         375           577           766         1,108
                                                                           ----------    ----------    ----------    ----------
         Operating income................................................       3,185         3,771         5,150         6,671
                                                                           ----------    ----------    ----------    ----------

OTHER EXPENSE:
   Interest expense, net of interest income of $270 and $232 for
     the three months ended June 30, 1998 and 1999, respectively,
     and $563 and $478 for the six months ended June 30, 1998 and
     1999, respectively..................................................        (456)         (284)         (823)         (579)
   Joint venture loss....................................................          (4)          (18)           (7)          (24)
                                                                           ----------    ----------    ----------    ----------
         Total other expense.............................................        (460)         (302)         (830)         (603)
                                                                           ----------    ----------    ----------    ----------
Income before provision for income taxes.................................       2,725         3,469         4,320         6,068
Provision for income taxes...............................................         895           947         1,339         1,745
                                                                           ----------    ----------    ----------    ----------
         Net income......................................................  $    1,830    $    2,522    $    2,981    $    4,323
                                                                           ==========    ==========    ==========    ==========

EARNINGS PER COMMON SHARE:
BASIC:
Net income...............................................................  $     0.24    $     0.33    $     0.39    $     0.56
                                                                           ==========    ==========    ==========    ==========

Weighted-average number of common shares outstanding.....................   7,661,422     7,732,922     7,642,968     7,732,922
                                                                           ==========    ==========    ==========    ==========


DILUTED:
Net income...............................................................  $     0.24    $     0.33    $     0.39    $     0.56
                                                                           ==========    ==========    ==========    ==========
Weighted-average number of common shares outstanding assuming
   dilution..............................................................   7,671,509     7,734,185     7,677,388     7,734,688
                                                                           ==========    ==========    ==========    ==========
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>

                     SAXTON INCORPORATED AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 1999
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                 ADDITIONAL
                                                  SHARES           COMMON          PAID-IN        RETAINED
                                               OUTSTANDING         STOCK           CAPITAL        EARNINGS         TOTAL
                                               ----------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>             <C>             <C>
Balance at December 31, 1998...............          7,733      $         8     $    21,482     $    16,697     $    38,187
Net income for the six months
   ended June 30, 1999 (unaudited).........              -                -               -           4,323           4,323
                                               -----------      -----------     -----------     -----------     -----------

Balance at June 30, 1999 (unaudited).......          7,733      $         8     $    21,482     $    21,020     $    42,510
                                               ===========      ===========     ===========     ===========     ===========
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>




                       SAXTON INCORPORATED AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                          JUNE 30,
                                                                               ------------------------------
                                                                                   1998              1999
                                                                               ------------      ------------
  <S>                                                                          <C>               <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
  -------------------------------------
     Net income............................................................    $      2,981      $      4,323
     Adjustments to reconcile net income to net cash used in
       operating activities:
         Depreciation and amortization.....................................             766             1,108
         Gain on sales of commercial properties............................            (310)             (789)
         Joint venture loss................................................               7                24
         Increase in Investments in joint ventures.........................               -               (50)
         Changes in operating assets and liabilities:
           Increase in Due from Tax Credit Partnerships....................          (9,868)             (999)
           Decrease (increase) in Construction contracts receivable........          (1,767)               34
           Decrease in Costs and estimated earnings in excess of billings
             on uncompleted contracts......................................           1,803             1,040
           Increase in Properties under development........................          (8,965)          (16,205)
           Increase in Prepaid expenses and other assets...................            (154)           (1,634)
           Increase (decrease) in Accounts payable and accrued expenses ...           1,810            (3,429)
           Increase (decrease) in Billings in excess of costs and
             estimated earnings on uncompleted contracts...................            (958)              100
           Increase in Tenant deposits and other liabilities...............           1,922               181
                                                                               ------------      ------------
                    Net cash used in operating activities..................         (12,733)          (16,296)
                                                                               ------------      ------------

  CASH FLOWS FROM INVESTING ACTIVITIES:
  -------------------------------------
     Expenditures for property acquisitions and improvements...............          (9,937)           (2,175)
     Proceeds from Sales of commercial properties..........................             984             1,686
     Increase in Notes receivable from related parties ....................             (14)              (70)
     Payments from Notes receivable from related parties...................              16                58
     Increase in Notes receivable..........................................            (694)           (1,029)
     Payments from Notes receivable........................................           2,446               249
     Cash paid to acquire net assets of Maxim Homes, Inc...................            (793)                -
                                                                               -------------     ------------

                    Net cash used in investing activities..................          (7,992)           (1,281)
                                                                               -------------     ------------

  CASH FLOWS FROM FINANCING ACTIVITIES:
  -------------------------------------
     Proceeds from issuance of Notes payable...............................          37,193            54,621
     Payments on Notes payable and capital lease obligations...............         (14,263)          (38,752)
     Proceeds from issuance of Notes payable to related parties ...........             903             2,472
     Payments on Notes payable to related parties .........................            (903)           (1,705)
                                                                               -------------     ------------
                    Net cash provided by financing activities..............          22,930            16,636
                                                                               ------------      ------------

                    Net increase (decrease) in cash and cash equivalents...           2,205              (941)
     Cash and cash equivalents:
       Beginning of period.................................................           1,110             1,331
                                                                               ------------      ------------
       End of period.......................................................    $      3,315      $        390
                                                                               ============      ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements.

                                       6

<PAGE>



                     SAXTON INCORPORATED AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                                (in thousands)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                                    SIX MONTHS ENDED
                                                                                        JUNE 30,
                                                                             ------------------------------
                                                                                 1998              1999
                                                                             ------------      ------------
 <S>                                                                         <C>               <C>
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 -------------------------------------------------
     Cash paid during the period for interest, net of amounts capitalized    $      1,811      $      2,556
                                                                             ============      ============

     Cash paid during the period for income taxes........................    $      2,494      $        259
                                                                             ============      ============

 NON-CASH FINANCING AND INVESTING ACTIVITIES:
 --------------------------------------------
    Common stock issued to acquire net assets of
       Maxim Homes, Inc..................................................    $        338      $          -
                                                                             ============      ============

     Capital lease obligation recorded in connection with equipment
       acquisitions......................................................    $         41      $        119
                                                                             ============      ============

     Recognition of revenue for the prior sale of a commercial
       property which was subject to certain conditions..................    $      2,834      $          -
                                                                             ============      ============
</TABLE>


      See accompanying notes to condensed consolidated financial statements.

                                       7
<PAGE>

                      SAXTON INCORPORATED AND SUBSIDIARIES

               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

NOTE 1.   DESCRIPTION OF SAXTON INCORPORATED

    Saxton Incorporated ("Saxton" or the "Company") is a leader in the
affordable housing industry and a diversified real estate development company
operating in the fast growing Las Vegas, Phoenix, Salt Lake City, Reno and
Tucson markets. The Company's business is comprised of four components: (i)
the design, development, construction and sale of single-family homes; (ii)
the performance of design-build services for third-party clients, including
tax credit partnerships ("design-build services"); (iii) the design,
development and construction of income producing portfolio properties; and
(iv) property operations and management. The properties consist of office and
industrial buildings, retail centers, apartments, single-family homes and
land in various phases of development. The Company also has non-controlling
interests in joint ventures that are engaged in the acquisition, development,
ownership and operation of real property.

    On June 24, 1997, the Company completed its initial public offering (the
"Offering") of 2,275,000 shares of the Company's common stock ("Common
Stock") at $8.25 per share. The net proceeds of approximately $17.3 million
were used as follows: (i) $8.1 million to repay indebtedness, of which $3.4
million represented indebtedness to the Company's principal stockholders and
$1.7 million represented indebtedness to other related parties; (ii) $5.6
million to acquire land for future development; (iii) $2.8 million to acquire
the interests of various third-party partners in certain properties; and (iv)
approximately $800,000 for development activities and general corporate
purposes.

     The Company's development experience and expertise enable it to identify
and take advantage of market opportunities and to minimize the risk of real
estate cycles. In 1995, management recognized the need for affordable housing
in the Las Vegas market and began to develop value-priced single-family
detached homes. The Company opened its first single-family home development
in April 1996 and its second home development in early 1997.

NOTE 2.   ACQUISITIONS

     On March 20, 1998, the Company acquired all of the capital stock of
Maxim Homes, Inc. ("Maxim"), a Utah homebuilder. The acquisition was
accounted for using the purchase method of accounting. Maxim operates
principally as a single-family residential homebuilder, specializing in
building homes generally ranging in price from $145,000 to $185,000. The
consideration paid at closing for this acquisition consisted of: (i) $224,000
in cash; (ii) approximately $338,000 in the Company's Common Stock (42,280
shares valued at $8.00 per share); and (iii) $569,000 in cash to retire a
portion of Maxim's debt. In addition, the Company may make five annual
installments ("earn-out payments") on March 31 of each year beginning in 1999,
subject to certain levels of required income. These earn-out payments are
based on a specified percentage of estimated after-tax net income of the Salt
Lake City real estate operations of the Company and are to be made 50% in the
Company's Common Stock and 50% in cash. No earn-out payments were required to
be paid by the Company and no earn-out payments were paid during the first
half of 1999.

     On November 13, 1998, the Company acquired the outstanding capital stock
and ownership interests of Diamond Key Homes, Inc. ("Diamond Key") and
certain related entities. The purchase was accounted for using the purchase
method of accounting and the price was approximately $10.9 million paid in
cash at closing, approximately $250,000 expected to be paid in 1999 of which
$200,000 has been paid through June 30, 1999, with an additional $2.0 million
to be paid 50% in cash and 50% in the Company's Common Stock one year from
the date of closing. Of the $1.0 million to be paid in cash, $300,000 has
been paid through June 30, 1999.

     On December 22, 1998, the Company acquired the outstanding capital stock
of HomeBanc Mortgage Corporation ("HomeBanc"). The purchase was accounted for
using the purchase method of accounting and the price was $474,000 paid in
the form of 71,500 shares of the Company's Common Stock at closing.

     Goodwill related to the acquisitions of Maxim, Diamond Key and HomeBanc
is amortized over 15 years. The operations of these three acquisitions were
included in the Company's Consolidated Statements of Income since their
acquisition dates.

                                       8
<PAGE>

    The  percentage of total  revenue by geographic  area for the three and
six months ended June 30, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED              SIX MONTHS ENDED
                                                      JUNE 30,                       JUNE 30,
                                               -------------------------------------------------------
                                                 1998            1999           1998            1999
                                               --------        --------       --------        --------
                   <S>                         <C>             <C>            <C>             <C>
                   Arizona.................           -%           42.2%             -%           42.2%
                   Nevada..................        92.3            48.0           95.1            46.4
                   Utah....................         7.7             9.8            4.9            11.4
                                               --------        --------       --------        --------

                     Total.................       100.0%          100.0%         100.0%          100.0%
                                               ========        ========       ========        ========
</TABLE>

NOTE 3.   BASIS OF PRESENTATION

    The accompanying condensed consolidated unaudited interim financial
statements of the Company have been prepared in conformity with generally
accepted accounting principles ("GAAP") and reflect all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of the results of operations for
the three and six months ended June 30, 1998 and 1999. These condensed
consolidated unaudited interim financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
the notes thereto as of and for the year ended December 31, 1998, which are
included in the Company's Form 10-K/A filed with the Securities and Exchange
Commission for the year ended December 31, 1998. Certain reclassifications
have been made to conform prior periods with the current period presentation.

    The Company historically has experienced, and expects to continue to
experience, variability in quarterly sales and revenues. The combined results
of operations for the three and six months ended June 30, 1999 are not
necessarily indicative of the results to be expected for the full year. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Risks and Related Factors."

    The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that effect the reported amounts
of assets and liabilities and disclosure of contingent assets and contingent
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ materially from those estimates.

RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

    In 1998, the Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE RELATED INFORMATION ("SFAS 131"). SFAS 131 supersedes SFAS No.
14, FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS ENTERPRISE replacing the
"industry segment" approach with the "management" approach. The management
approach designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of the
Company's reportable segments, SFAS 131 also requires disclosures about
products and services, geographic areas and major customers. The adoption of
SFAS 131, in 1998, did not affect the consolidated financial statements of
the Company.

    In February 1998, the FASB issued SFAS No. 132, EMPLOYERS' DISCLOSURE
ABOUT PENSIONS AND OTHER POST-RETIREMENT BENEFITS--AN AMENDMENT OF SFAS NOS.
87, 88 AND 106 ("SFAS 132"). SFAS 132 standardized the disclosure
requirements for pensions and other post-retirement plans, requires
additional information on changes in the benefit obligations and fair value
of plan assets and eliminates certain disclosures previously required under
SFAS Nos. 87, 88 and 106. SFAS 132 is effective for fiscal years beginning
after December 31, 1997. The adoption of SFAS 132, in 1998, did not affect
the consolidated financial statements of the Company.

     In June 1998, the FASB issued, SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. SFAS 133 requires recognition of all derivative instruments in
the statement of financial position as either assets or liabilities and the
measurement of derivative instruments at fair value. SFAS 133 is effective
for fiscal years beginning after June 15, 1999. The adoption of SFAS 133 is
not expected to have an effect on the consolidated financial statements of
the Company.

                                       9
<PAGE>

    In October 1998, the FASB issued SFAS No. 134, ACCOUNTING FOR
MORTGAGE-BACKED SECURITIES RETAINED AFTER THE SECURITIZATION OF MORTGAGE
LOANS HELD FOR SALE BY A MORTGAGE BANKING ENTERPRISE, AND AMENDMENT OF SFAS
NO. 65 ("SFAS 134"). SFAS 134 requires mortgage banking enterprises to
classify loans held for sale that they have securitized, based on their
intent to sell or hold those investments. SFAS 134 is effective for the first
fiscal quarter beginning after December 15, 1998. The adoption of SFAS 134,
in the first quarter of 1999 did not affect the consolidated financial
statements of the Company.

NOTE 4.   REAL ESTATE OPERATING PROPERTIES

    Real estate operating properties are summarized as follows (in thousands):

<TABLE>
<CAPTION>

                                                               DECEMBER 31, 1998        JUNE 30, 1999
                                                               -----------------      -----------------
                                                                                         (unaudited)
                <S>                                            <C>                    <C>
                Cost:
                 Buildings.................................    $         19,530       $         34,250
                 Tenant improvements.......................                 761                    510
                 Land......................................               6,122                    131
                                                               -----------------      -----------------
                Real estate operating properties at cost...              26,413                 34,891

                   Less accumulated depreciation and
                     amortization..........................              (3,296)                (3,320)
                                                               -----------------      -----------------

                Real estate operating properties, net......    $         23,117       $         31,571
                                                               =================      =================
</TABLE>

    Depreciation expense relating to real estate operating properties for the
three months ended June 30, 1998 and 1999 was $173,000 and $191,000,
respectively. Depreciation expense relating to real estate operating
properties for the six months ended June 30, 1998 and 1999 was $350,000 and
$346,000, respectively.

NOTE 5.   CONSTRUCTION CONTRACTS

    Construction contracts receivable includes amounts retained pending
contract completion, aggregating approximately $155,000 at December 31, 1998
and June 30, 1999. Based on anticipated completion dates, these retentions
are expected to be collected within the next twelve months.

    Accounts payable and accrued expenses include amounts retained pending
subcontract completion, aggregating approximately $3.1 million at December
31, 1998 and $3.2 million at June 30, 1999.

    Costs and estimated earnings in excess of billings, net, on uncompleted
contracts, are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1998        JUNE 30, 1999
                                                               -----------------      -----------------
                                                                                         (unaudited)
                <S>                                            <C>                    <C>
                Costs incurred to date.....................    $         98,470       $        105,212
                Estimated earnings to date.................              30,694                 33,099
                                                               -----------------      -----------------
                                                                        129,164                138,311
                Less billings to date......................            (126,727)              (137,014)
                                                               -----------------      -----------------
                 Cost and estimated earnings in excess of
                   billings, net...........................    $          2,437       $          1,297
                                                               ================       =================
</TABLE>

                                      10

<PAGE>


    Costs and estimated earnings in excess of billings, net, are shown on the
accompanying Condensed Consolidated Balance Sheets as follows (in thousands):

<TABLE>
<CAPTION>

                                                               DECEMBER 31, 1998        JUNE 30, 1999
                                                               -----------------      -----------------
                                                                                         (unaudited)
                <S>                                            <C>                    <C>
                Costs and estimated earnings in excess of
                   billings on uncompleted contracts.......     $         2,618        $         1,578
                Billings in excess of costs and estimated
                   earnings on uncompleted contracts.......                (181)                  (281)
                                                               -----------------      -----------------
                Costs and estimated earnings in excess of
                   billings, net...........................     $         2,437        $         1,297
                                                                ================      =================
</TABLE>

    The asset "Costs and estimated earnings in excess of billings on
uncompleted contracts" represents construction revenue recognized in excess
of amounts billed in the respective construction contracts. The liability
"Billings in excess of costs estimated earnings on uncompleted contracts"
represents amounts billed in excess of revenue recognized on the respective
construction contracts.

NOTE 6.   PREPAID EXPENSES AND OTHER ASSETS

    Prepaid expenses and other assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 1998        JUNE 30, 1999
                                                                   -----------------      -----------------
                                                                                          (unaudited)
    <S>                                                            <C>                    <C>
    Rental and other accounts receivable.........................  $           575        $         1,337
    Goodwill.....................................................            7,877                  7,625
    Development costs............................................            2,598                  4,157
    Deferred tax assets, net.....................................               74                     95
    Furniture and equipment, net.................................            1,379                  1,516
    Option and escrow deposits and impounds......................            3,087                  2,282
    Inventories..................................................              101                    101
    Other assets, primarily prepaid expenses and loan fees.......            1,970                  1,789
                                                                   -----------------      -----------------
                                                                   $        17,661        $        18,902
                                                                   =================      =================
</TABLE>

NOTE 7.   NOTES PAYABLE

    Notes payable consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                                                    DECEMBER 31,         JUNE 30,
                                                                                       1998                1999
                                                                                   -------------      -------------
                                                                                                       (unaudited)
    <S>                                                                            <C>                <C>
    Notes payable to various financial institutions, maturing at dates ranging
      between August 1999 and November 2027. The notes bear interest
      monthly at various rates ranging from 7.9% to 13.0%. (1)(2)(3).............  $     72,328       $     84,462


    Notes payable to various individuals, maturing at dates ranging between
      August 1999 and  August 2000.  The notes bear interest at various rates
      ranging from 15.0% to 24.0%................................................        15,875             19,830

    Other........................................................................           103                  -
                                                                                   -------------      -------------
                                                                                   $     88,306       $    104,292
                                                                                    ============      =============
</TABLE>

    (1) On February 9, 1998, the Company entered into a $10.0 million
revolving loan agreement with a financial institution. The line of credit
provides for borrowings of up to $1.0 million for general working capital
requirements, $4.0 million for acquisition and development, including
strategic acquisitions, and $5.0 million for land acquisitions. Borrowing
under the line of credit is secured by the pledge of certain Company
receivables and any land acquired with borrowings under the line of credit
and bears interest at one percent over the lender's prime rate in effect from
time to time. The agreement is also subject to certain financial covenants
and matures November 30, 1999. As of December 31, 1998 and June 30, 1999, the
Company had outstanding indebtedness of $5.0 million and $9.8 million,
respectively, and available borrowings of $5.0 million and $190,000,
respectively, under this agreement.

                                      11
<PAGE>

    (2) On July 30, 1997, the Company entered into a $5.0 million revolving
line of credit with a financial institution. Loans under the agreement bear
monthly interest at 1.5% above the prime rate as defined in the agreement
(9.25% at December 31, 1998 and June 30, 1999), and require the Company to
pay a loan fee of 0.25% for each disbursement. Loans under the agreement are
available only for the acquisition of land and are secured by first trust
deeds on certain real property. As of December 31, 1998 and June 30, 1999,
the Company had outstanding indebtedness of $1.9 million and $2.2 million,
respectively, and available borrowings of $3.1 million and $2.8 million,
respectively, under the agreement. Under the terms of the agreement, the
Company is required to meet certain financial covenants.

    (3) Through July 31, 1999, $3.7 million of notes payable maturing in July
1999 have been extended with new maturity dates in late August 1999. For the
remaining notes payable with maturity dates in 1999, management is
negotiating refinancing alternatives with the applicable lenders.

    During 1998 and 1999, the Company entered into various notes payable
representing borrowings from an unaffiliated individual. These notes bear
interest and mature on the following dates: $1.0 million on August 16, 1999;
$1.0 million on September 3, 1999; $7.6 million on September 10, 1999; $1.0
million on November 20, 1999; $1.0 million on March 17, 2000; $1.5 million on
March 23, 2000; $985,000 on June 26, 2000; $430,000 on June 30, 2000; and
$5.3 million on August 1, 2000.

NOTE 8.   NOTES PAYABLE TO RELATED PARTIES AND OTHER RELATED PARTY
          TRANSACTIONS

    Notes payable to related parties are unsecured notes payable to certain
stockholders, officers and Directors of the Company for development purposes.
Interest only payments are due monthly at rates ranging from 12% to 18%, with
all amounts due at various dates in 1999. During the first quarter of 1999,
the Company borrowed $721,000 from the Company's President and principal
stockholder, James C. Saxton. The note matures on February 1, 2000 and bears
interest at 18% per annum. The Company used the proceeds for general
operating expenses.

    During the fourth quarter of 1998, Mr. James C. Saxton, pledged 3,471,590
shares of Common Stock, or approximately 44.9% of its outstanding shares, as
collateral for two personal loans to Mr. Saxton and three loans to the
Company. Mr. Saxton reloaned the proceeds from the two personal loans to the
Company for use in connection with the acquisition of Diamond Key. The two
notes payable to Mr. Saxton aggregating $7.6 million bear interest at 12% per
annum and mature on February 1, 2000. The Company intends to refinance the
loans from Mr. Saxton prior to their maturities. The Company understands that
Mr. Saxton intends to repay, in full, the loans from the two lenders upon
repayment of the loans he has made to the Company.

NOTE 9.   EARNINGS PER COMMON SHARE

    As required by SFAS No. 128, "Earnings per Share," ("EPS"), the following
unaudited tables reconcile net income applicable to common stockholders,
basic and diluted shares and EPS for the following periods (in thousands,
except share and per share amounts):

<TABLE>
<CAPTION>

                                   THREE MONTHS ENDED JUNE 30, 1998                THREE MONTHS ENDED JUNE 30, 1999
                              -----------------------------------------      --------------------------------------------
                                                              PER-SHARE                                        PER-SHARE
                                 INCOME          SHARES         AMOUNT          INCOME          SHARES           AMOUNT
                              -----------      ----------     ---------      ------------      ----------     -----------
<S>                           <C>              <C>            <C>            <C>               <C>            <C>
Net income.................   $     1,830                                    $     2,522

BASIC EPS
---------
Income applicable to
  common stockholders......         1,830       7,661,422     $     0.24            2,522       7,732,922      $     0.33
                              -----------      ----------     ==========      ------------      ----------     ===========

Effect of dilutive
securities:
  Stock options............             -          10,087                               -           1,263
                               ----------      ----------                    ------------      ----------

DILUTED EPS
Income applicable to
  common stockholders         $    1,830       $7,671,509     $    0.24      $     2,522         7,734,185     $     0.33
  and assumed conversions..   ==========       ==========     =========      ============      ===========    ===========
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>

                                    SIX MONTHS ENDED JUNE 30, 1998                   SIX MONTHS ENDED JUNE 30, 1999
                              -----------------------------------------      --------------------------------------------
                                                             PER-SHARE                                       PER-SHARE
                               INCOME          SHARES         AMOUNT          INCOME          SHARES          AMOUNT
                              -----------      ----------     ---------      ------------      ----------     -----------
<S>                           <C>              <C>            <C>            <C>               <C>            <C>

Net income.................   $     2,981                                    $     4,323

BASIC EPS
---------
Income applicable to
  common stockholders......         2,981       7,642,968     $    0.39             4,323       7,732,922     $     0.56
                              -----------      ----------     =========      ------------      ----------     ===========

Effect of dilutive
securities:
  Stock options............             -          34,420                               -           1,766
                              -----------      ----------                    ------------      ----------

DILUTED EPS
-----------
Income applicable to
  common stockholders
  and assumed conversions..  $    2,981         7,677,388     $    0.39      $      4,323        7,734,688    $      0.56
                             ============      ==========     =========      ============      ===========    ===========
</TABLE>

    The Company had options and warrants outstanding to purchase Common Stock
that were excluded from the computation of Diluted EPS since their exercise
price was greater than the average market price. The antidilutive options and
warrants outstanding at June 30, 1998 and 1999 were 472,050 and 736,198,
respectively.

NOTE 10.   MANAGEMENT STOCK OPTION PLAN

    On June 30, 1997, the Company adopted a Management Stock Option Incentive
Plan (the "Option Plan") which provides for the grant of options to employees
to purchase Common Stock up to a maximum of 500,000 shares. Stock options
which terminate without having been exercised, shares forfeited or shares
surrendered will again be available for distribution in connection with
future awards under the Option Plan. On December 7, 1998, the Company's Board
of Directors approved an increase from 500,000 to 750,000 in the number of
shares subject to stock options under the Option Plan. The increase was
approved by the stockholders at the annual meeting of stockholders in June
1999. As of June 30, 1999, the Company had outstanding 457,600 stock options
to certain officers and employees of the Company pursuant to the Option Plan.
These options will vest in equal annual installments over five years
commencing one year from the award date and will expire between June 30, 2007
and June 30, 2009. Stock options granted on June 30, 1997 were issued at an
exercise price equal to the initial public offering price of $8.25 per share.
Stock options granted after June 30, 1997 were granted at the closing stock
price on the grant date as reported on the Nasdaq Stock Market. On January 2,
1998, the Company gave employees the opportunity to reprice their stock
options. The repricing involved changing their stock price from $8.25 per
share to $6.875 per share (the closing stock price on January 2, 1998) and
changing their grant date from June 30, 1997 to January 2, 1998. Employees
holding 148,300 stock options elected to reprice on January 2, 1998. As of
June 30, 1999, stock options had been granted under the Option Plan with
exercise prices ranging from $5.125 per share to $8.375 per share.

NOTE 11.   COMMITMENTS AND CONTINGENCIES

    The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.

    The Company and its two principal stockholders are guarantors on
construction loans relating to Tax Credit Partnerships. Total construction
loans payable for these Tax Credit Partnerships were approximately $37.1
million and $33.7 million at December 31, 1998 and June 30, 1999,
respectively.

NOTE 12.   INFORMATION REGARDING BUSINESS SEGMENTS

    In 1998, the Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE RELATED INFORMATION ("SFAS 131"). SFAS 131 supersedes SFAS No.
14, FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS ENTERPRISE replacing the
"industry segment" approach with the "management" approach. The management
approach designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of the
Company's reportable segments, SFAS 131 also requires disclosures about
products and services, geographic areas and major customers. The adoption of
SFAS 131 did not affect the consolidated financial results of the Company.

                                      13
<PAGE>

    The Company has determined that its reportable segments are those that are
based on the Company's method of internal reporting, which disaggregates its
business by certain lines of business components. The Company's four reportable
operating segments are: Homebuilding, Design-Build Services, Sales of Commercial
Property and Property Operations and Management. Retail operations and corporate
activities are included in the "Other" column. The financial results of the
Company's operating segments are presented on an accrual basis. There are no
significant differences among the accounting policies of the segments as
compared to the Company's consolidated financial statements. The Company
evaluates the performance of its segments and allocates resources to them based
on revenues and gross profit. There are no material intersegment revenues. The
tables below present information about the Company's operating segments for the
three and six months ended June 30, 1998 and 1999, respectively (in thousands):

<TABLE>
<CAPTION>

                                                         THREE MONTHS ENDED JUNE 30, 1998
                           ----------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                           ----------------------------------------------------------------------------------------------
<S>                           <C>              <C>            <C>              <C>              <C>           <C>
Revenue...................    $    13,395      $     6,175    $        985     $        843     $     470     $  21,868
Costs.....................         10,264            5,192             920              248             -        16,624
                              -----------      -----------    ------------     ------------     ---------     ---------
   Gross profit...........    $     3,131      $       983    $         65     $        595     $     470     $   5,244
                              ===========      ===========    ============     ============     =========     =========

Depreciation and
   amortization expense...    $         -      $         3    $          -     $        180     $     192     $     375

Interest expense..........    $         -      $         -    $          -     $       (541)    $    (185)    $    (726)
Interest income...........    $         -      $         -    $          -     $        205     $      65     $     270

Total assets..............    $    34,541      $    25,210    $          -     $     47,589     $   9,164     $ 116,504

                                                         THREE MONTHS ENDED JUNE 30, 1999
                           ----------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                           ----------------------------------------------------------------------------------------------
Revenue...................    $     7,417      $    25,430    $        137     $        844     $     588     $  34,416
Costs.....................          5,949           21,809              18              236             -        28,012
                              -----------      -----------    ------------     ------------     ---------     ---------
   Gross profit...........    $     1,468      $     3,621    $        119     $        608     $     588     $   6,404
                              ===========      ===========    ============     ============     =========     =========

Depreciation and
   amortization expense...    $         -      $       124    $          -     $        191     $     262     $     577

Interest expense..........    $         -      $         -    $          -     $       (490)    $     (27)    $    (517)
Interest income...........    $         -      $         -    $          -     $        233     $       -     $     233

Total assets..............    $    43,441      $    87,134    $          -     $     49,442     $   8,908     $ 188,925

                                                          SIX MONTHS ENDED JUNE 30, 1998
                           ----------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                           ----------------------------------------------------------------------------------------------
Revenue...................    $    19,132      $     8,960    $      3,819     $      1,767     $     899     $  34,577
Costs.....................         14,767            7,536           3,500              422             -        26,225
                              -----------      -----------    ------------     ------------     ---------     ---------
   Gross profit...........    $     4,365      $     1,424    $        319     $      1,345     $     899     $   8,352
                              ===========      ===========    ============     ============     =========     =========

Depreciation and
   amortization expense...    $         -      $         3    $          -     $        348     $     415     $     766

Interest expense..........    $         -      $         -    $          -     $     (1,042)    $    (344)    $  (1,386)
Interest income...........    $         -      $         -    $          -     $        403     $     160     $     563

Total assets..............    $    34,541      $    25,210    $          -     $     47,589     $   9,164     $ 116,504
</TABLE>

                                      14

<PAGE>

<TABLE>
<CAPTION>

                                                          SIX MONTHS ENDED JUNE 30, 1999
                           ----------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                           ----------------------------------------------------------------------------------------------
<S>                           <C>              <C>            <C>              <C>              <C>           <C>
Revenue...................    $    12,167      $    47,101    $      1,687     $      1,854     $   1,159     $  63,968
Costs.....................          9,837           40,883           1,024              523             -        52,267
                              -----------      -----------    ------------     ------------     ---------     ---------
   Gross profit...........    $     2,330      $     6,218    $        663     $      1,331     $   1,159     $  11,701
                              ===========      ===========    ============     ============     =========     =========

Depreciation and
   amortization expense...    $         -      $       250    $          -     $        349     $     509     $   1,108

Interest expense..........    $         -      $         -    $          -     $     (1,030)    $     (27)    $  (1,057)
Interest income...........    $         -      $         -    $          -     $        478     $       -     $     478

Total assets..............    $    43,441      $    87,134    $          -     $     49,442     $   8,908     $ 188,925

</TABLE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

    The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto of Saxton
Incorporated (the "Company") appearing elsewhere in this Form 10-Q.

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

    REVENUE. Total revenue was $34.4 million for the three months ended June
30, 1999, representing a $12.5 million, or 57.4%, increase from $21.9 million
for the three months ended June 30, 1998. The increase was primarily due to
an increase of $19.3 million, or 311.8%, in sales of homes to $25.4 million
during the three months ended June 30, 1999 compared to $6.2 million during
the three months ended June 30, 1998. The 234 single-family home closings for
the three months ended June 30, 1999 represented an increase of 283.6%,
compared to the 61 closings for the three months ended June 30, 1998. Home
closings for the three months ended June 30, 1999 included 94 in Nevada, 5 in
Utah and 135 in Arizona. For the three months ended June 30, 1998, home
closings included 52 in Nevada and 9 in Utah. The increase in home sales was
primarily due to the Company's increased focus on homebuilding and its
acquisition of Diamond Key Homes, Inc. ("Diamond Key") in November 1998.
Construction revenue for the three months ended June 30, 1999 was $7.4
million, a decrease of $6.0 million, or 44.6%, from $13.4 million during the
three month ended June 30, 1998. The decrease was primarily due to more
construction activity on five active projects during the three months ended
June 30, 1998 compared to only four active projects during the three months
ended June 30, 1999. The 1998 projects included one preschool, one
residential development and three tax credit partnership apartment complexes.
The 1999 projects included three tax credit partnership apartment complexes
and one warehouse addition. One of the three tax credit partnership apartment
complexes in 1999 began construction late in the second quarter. Sale of
commercial properties was $137,000 for the three months ended June 30, 1999
compared to $984,000 for the three months ended June 30, 1998. The 1999
commercial sale was a parcel of land adjacent to a retail store owned by the
Company compared to the 1998 commercial sale, which was the sale of a
commercial center. Rental and other revenue increased to $1.4 million for the
three months ended June 30, 1999, a 9.0% increase over the $1.3 million in
the comparable period of the prior year. The increase was primarily due to
additional other revenue recognized by HomeBanc Mortgage Corporation
("HomeBanc") during the three months ended June 30, 1999, primarily for
origination fees and premiums. HomeBanc, an affiliate of Diamond Key, was
acquired by the Company in December 1998.

    COST OF REVENUE. Total cost of revenue was $28.0 million for the three
months ended June 30, 1999, representing a $11.4 million, or 68.5%, increase
from $16.6 million for the three months ended June 30, 1998. Cost of revenue
for the three months ended June 30, 1999 as a percentage of revenue was
81.4%, compared to 76.0% for the three months ended June 30, 1998. The
increase was primarily due to the Company's significant increase in the
proportion of revenues it generates from its homebuilding activities which
has lower margins and the increased overhead allocation to the Company's
homebuilding activities on a per unit basis during 1999.

    GROSS PROFIT. Gross profit as a percent of revenue decreased to 18.6% for
the three months ended June 30, 1999 from 24.0% for the comparable period in
1998. Gross margins on the sales of homes decreased to 14.2% during the three
months ended June 30, 1999 compared to 15.9% during the three months ended
June 30, 1998, due to an increased overhead allocation as explained above.
Gross margin on construction revenue decreased to 19.8% in the

                                      15

<PAGE>

three months ended June 30, 1999, compared to 23.4% in the same period of
1998, primarily due to the timing of the completion of such projects and
increased overhead allocation. Gross profit margins on commercial properties
sold in the three months ended June 30, 1999 increased to 86.9% from 6.5% in
the three months ended June 30, 1998 primarily due to the lower cost basis of
the property sold during the 1999 period compared to the property sold during
the 1998 period.

    GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $2.1 million for the three months ended June 30, 1999, representing a
$372,000, or 22.1%, increase from $1.7 million for the three months ended
June 30, 1998. The increase was primarily due to increased activities related
to the growth in the Company's revenues, including an increase in
homebuilding activities and the acquisitions of Diamond Key and Maxim Homes,
Inc. ("Maxim") in December 1998 and March 1998, respectively. Of this
increase, $446,000 of marketing and advertising costs reflect the increased
number of housing subdivisions in production during the three months ended
June 30, 1999 compared to the same period in 1998. The Company had 22 home
developments open for sale at June 30, 1999 compared to only 3 at June 30,
1998. In addition, accounting, legal and other professional fees increased
$127,000, vehicle and repairs and maintenance expenses increased $60,000 and
rent, utility, travel and other general office expenses increased $156,000 as
the number of employees increased to 761 at June 30, 1999 from 524 at June
30, 1998. General and administrative expenses as a percentage of total
revenue was 6.0% for the three months ended June 30, 1999 as compared to 7.7%
for the three months ended June 30, 1998.

    DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
$577,000 for the three months ended June 30, 1999, representing a $202,000,
or 53.9%, increase from $375,000 for the three months ended June 30, 1998.
The increase was primarily due to goodwill amortization expense of $152,000
for the three months ended June 30, 1999 for Diamond Key, Maxim and HomeBanc
which were acquired in 1998 utilizing the purchase method of accounting. The
remaining increase was due to depreciation expense related to furniture,
fixtures and equipment due to the Company's growth.

    INTEREST EXPENSE, NET. Interest expense, net, was $284,000 for the three
months ended June 30, 1999, representing a $172,000 or 37.7%, decrease from
$456,000 for the three months ended June 30, 1998. The decrease was primarily
the result of a $210,000 decrease in interest expense due to increased
interest capitalization on loans related to construction projects.

    INCOME BEFORE PROVISION FOR INCOME TAXES. As a result of the foregoing
factors, income before provision for income taxes was $3.5 million for the
three months ended June 30, 1999, representing a $744,000 million, or 27.3%,
increase from $2.7 million for the three months ended June 30, 1998. Income
before provision for income taxes as a percentage of total revenue was 10.1%
for the three months ended June 30, 1999 as compared to 12.5% for the three
months ended June 30, 1998.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

    REVENUE. Total revenue was $64.0 million for the six months ended June
30, 1999, representing a $29.4 million, or 85.0%, increase from $34.6 million
for the six months ended June 30, 1998. The increase was primarily due to an
increase of $38.1 million, or 425.7%, in sales of homes to $47.1 million
during the six months ended June 30, 1999 compared to $9.0 million during the
six months ended June 30, 1998. The 424 single-family home closings for the
six months ended June 30, 1999 represented a 351.1% increase over the 94
closings for the six months ended June 30, 1998. Home closings during the six
months ended June 30, 1999, included 154 in Nevada, 23 in Utah and 247 in
Arizona compared to 85 in Nevada and 9 in Utah for the comparable period in
1998. The increase in home sales was primarily due to the Company's increased
focus on homebuilding and its acquisition of Diamond Key in November 1998.
Construction revenue decreased $7.0 million, or 36.4% from $19.1 million
during the six months ended June 30, 1998 to $12.2 million during the six
months ended June 30, 1999. The decrease is primarily the result of more
active projects and construction activity during the six months ended June
30, 1998 compared to the six months ended June 30, 1999. Three large projects
under construction during the six months ended June 30, 1998 were completed
in early 1999, therefore lower revenues were recognized on these projects as
they neared completion during the first part of 1999. Sale of commercial
properties was $1.7 million for the six months ended June 30, 1999 compared
to $3.8 million for the six months ended June 30, 1998. The decrease was due
to smaller properties sold during 1999 compared to 1998. The 1999 sales were
a small retail center and a parcel of land compared to the 1998 sales, which
were a large warehouse and a commercial center. Rental revenue was $1.9
million for the six months ended June 30, 1999 compared to $1.8 million for
the comparable 1998 period. The increase was primarily due to higher
occupancy levels during 1999. Other revenue for the six months ended June 30,
1999 was $1.2 million compared to $899,000 for the six months ended June 30,
1998. The increase was due primarily to premiums and origination fees
collected by HomeBanc during the six months ended June 30, 1999.

                                      16
<PAGE>

    COST OF REVENUE. Total cost of revenue was $52.3 million for the six
months ended June 30, 1999, representing a $26.2 million, or 99.3%, increase
from $26.2 million for the six months ended June 30, 1998. Cost of revenue
for the six months ended June 30, 1999 as a percentage of revenue was 81.7%,
compared to 75.8% for the six months ended June 30, 1998. The increase was
primarily due to the Company's significant increase in the proportion of
revenues it generates from its homebuilding activities which has lower margins
and the increased overhead allocation to the Company's homebuilding activities
on a per unit basis during 1999.

    GROSS PROFIT. Gross profit as a percent of revenue decreased to 18.3% for
the six months ended June 30, 1999 from 24.2% for the comparable period in
1998. Gross margins on the sales of homes decreased to 13.2% during the six
months ended June 30, 1999 compared to 15.9% during the six months ended June
30, 1998, due to an increased overhead allocation to the Company's
homebuilding activities on a per unit basis. Gross margin on construction
revenue decreased to 19.2% in the six months ended June 30, 1999, compared to
22.8% in the same period of 1998, primarily due to the timing of the
completion of such projects and increased overhead allocation. Gross profit
margin on commercial properties sold in the six months ended June 30, 1999
increased to 39.3% from 8.4% in the six months ended June 30, 1998 primarily
due to the lower cost basis of the properties sold during the 1999 period
compared to the properties sold during the 1998 period.

    GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $3.9 million for the six months ended June 30, 1999, representing a $1.5
million, or 61.0%, increase from $2.4 million for the six months ended June
30, 1998. The increase was primarily due to increased activities related to
the growth in the Company's revenues, including an increase in homebuilding
activities and the acquisitions of Diamond Key and Maxim. Of this increase,
$685,000 of marketing and advertising costs reflect the increased number of
housing subdivisions in production during the six months ended June 30, 1999
compared to the same period in 1998. The Company had 22 home developments
open for sale at June 30, 1999 compared to only 3 at June 30, 1998. In
addition, accounting, legal and other professional fees increased $232,000,
vehicle and repairs and maintenance expense increased $179,000 and rent,
utility, travel and other general office expenses increased $499,000 as the
number of employees increased to 761 at June 30, 1999 from 524 at June 30,
1998. General and administrative expenses as a percentage of total revenue
was 6.1% for the six months ended June 30, 1999 as compared to 7.0% for the
six months ended June 30, 1998.

    DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
$1.1 million for the six months ended June 30, 1999, representing a $342,000,
or 44.6%, increase from $766,000 for the six months ended June 30, 1998. The
increase was primarily due to goodwill amortization expense of $276,000 for
the six months ended June 30, 1999 for Diamond Key, Maxim and HomeBanc which
were acquired in 1998 utilizing the purchase method of accounting.

    INTEREST EXPENSE, NET. Interest expense, net, was $579,000 for the six
months ended June 30, 1999, representing a $244,000 or 29.6%, decrease from
$823,000 for the six months ended June 30, 1998. The decrease was primarily
the result of a $331,000 decrease in interest expense due to increased
interest capitalization.

    INCOME BEFORE PROVISION FOR INCOME TAXES. As a result of the foregoing
factors, income before provision for income taxes was $6.1 million for the
six months ended June 30, 1999, representing a $1.7 million, or 40.5%,
increase from $4.3 million for the six months ended June 30, 1998. Income
before provision for income taxes as a percentage of total revenue was 9.5%
for the six months ended June 30, 1999 as compared to 12.5% for the six
months ended June 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has historically relied upon land and project financing, as
applicable, partner and joint venture contributions in the form of land or
cash, developer's equity (value in excess of cost), other forms of debt,
including loans from affiliates and cash flow from operations to provide
capital for land acquisitions and portfolio construction. The Company intends
to continue to provide for its capital requirements from some or all of these
sources. Management believes that cash generated from operations, funds
available from external sources of debt and equity financing, together with
cash on hand at June 30, 1999 will be sufficient to provide for its capital
requirements for at least the next 12 months. The Company is exploring the
refinancing of these and other indebtedness through the issuance of up to
$50.0 million of longer term notes during 1999. There can be no assurance
that the Company will be able to do so.

    During the fourth quarter of 1998, the Company's President and principal
stockholder, James C. Saxton, pledged 3,471,590 shares of Common Stock, or
approximately 44.9% of the Company's outstanding shares at June 30, 1999,

                                      17
<PAGE>

as collateral for two personal loans to Mr. Saxton and three loans to the
Company. Mr. Saxton reloaned the proceeds from the two personal loans to the
Company for use in connection with the acquisition of Diamond Key. The two
notes payable to Mr. Saxton aggregating $7.6 million bear interest at 12% per
annum and mature on February 1, 2000. The Company intends to refinance the
loans from Mr. Saxton prior to their maturities. The Company understands that
Mr. Saxton intends to repay, in full, the loans from the two lenders upon
repayment of the loans he has made to the Company.

      On February 9, 1998, the Company entered into a $10.0 million revolving
loan agreement with a financial institution. The line of credit provides for
borrowings of up to $1.0 million for general working capital requirements,
$4.0 million for acquisition and development, including strategic
acquisitions, and $5.0 million for land acquisitions. Borrowing under the
line of credit is secured by the pledge of certain Company receivables and
any land acquired with borrowings under the line of credit and bears interest
at one percent over the lender's prime rate in effect from time to time. The
agreement is also subject to certain financial covenants and matures November
30, 1999. As of December 31, 1998 and June 30, 1999, the Company had
outstanding indebtedness of $5.0 million and $9.8 million, respectively, and
available borrowings of $5.0 million and $190,000, respectively, under this
agreement.

    On July 30, 1997, the Company entered into a $5.0 million revolving line
of credit agreement with a financial institution. Loans under the agreement
bear monthly interest at 1.5% above the prime rate as defined in the
agreement (9.25% at December 31, 1998 and June 30, 1999), and require the
Company to pay a loan fee of 0.25% for each disbursement. Loans under the
agreement are available only for the acquisition of land and are secured by
first trust deeds on certain real property. As of December 31, 1998 and June
30, 1999, the Company had outstanding indebtedness of $1.9 million and $2.2
million, respectively, and available borrowings of $3.1 million and $2.8
million, respectively, under the agreement. Under the terms of the agreement,
the Company is required to meet certain financial covenants.

    OPERATING ACTIVITIES. Net cash used in operating activities was $16.3
million for the six months ended June 30, 1999 compared to $12.7 million for
the six months ended June 30, 1998. The increase in net cash used in
operating activities was primarily due to a $16.2 million increase in cash
used for properties under development related to single-family homes during
the six months ended June 30, 1999 compared to a $9.0 million increase during
the six months ended June 30, 1998. The number of home developments under
construction increased to 35 for $68.2 million at June 30, 1999 from 11 for
$23.3 million at June 30, 1998.

    INVESTING ACTIVITIES. Net cash used in investing activities was $1.3
million for the six months ended June 30, 1999 compared to $8.0 million for
the six months ended June 30, 1998. The decrease was primarily due to lower
expenditures for property acquisitions and improvements during the 1999
period compared to the 1998 period as the Company focused more on
homebuilding activities during 1999. The Company spent $9.9 million on
property acquisitions and improvements during the 1998 period compared to
$2.2 million during 1999. The decrease in net cash used in investing
activities was also attributable to lower payments received on notes
receivable during the six months ended June 30, 1999 compared to the six
months ended June 30, 1998.

    FINANCING ACTIVITIES. Net cash provided by financing activities was $16.6
million for the six months ended June 30, 1999 compared to $22.9 million for
the six months ended June 30, 1998. The decrease in cash provided by
financing activities was primarily due to lower net borrowings of $15.9
million during the six months ended June 30, 1999 compared to $22.9 million
during the six months ended June 30, 1998.

                                      18

<PAGE>

    Interest costs incurred, expensed and capitalized were as follows (in
thousands):

<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                JUNE 30,                      JUNE 30,
                                                     ---------------------------    ---------------------------
                                                         1998           1999            1998           1999
                                                     ------------   ------------    ------------   ------------
       <S>                                           <C>            <C>             <C>            <C>
       Interest incurred:
          Residential............................    $        804   $      2,281    $      1,319   $      4,450
          Commercial.............................             552            609           1,139          1,210
                                                     ------------   ------------    ------------   ------------
            Total incurred.......................    $      1,356   $      2,890    $      2,458   $      5,660
                                                     ============   ============    ============   ============

       Interest expensed:
          Residential............................    $        198   $          2    $        331   $         31
          Commercial.............................             528            515           1,055          1,026
                                                     ------------   ------------    ------------   ------------
            Total expensed.......................    $        726   $        517    $      1,386   $      1,057
                                                     ============   ============    ============   ============

       Interest capitalized at end of period:
          Residential............................    $        606   $      2,279    $        988   $      4,419
          Commercial.............................              24             94              84            184
                                                     ------------   ------------    ------------   ------------
            Total interest capitalized...........    $        630   $      2,373    $      1,072   $      4,603
                                                     ============   ============    ============   ============
</TABLE>

    Properties under development and land held for future development or sale
increased $8.8 million from $80.7 million at December 31, 1998 to $89.5
million at June 30, 1999.

     The Company anticipates that during the next twelve months portfolio
projects in development will cost approximately $313,000 in the aggregate,
substantially all of which the Company plans to finance through construction
loans. The Company also anticipates that it will spend approximately $1.2
million for planned portfolio projects during the next twelve months. The
real estate development business is capital intensive and requires
significant up-front expenditures to acquire and entitle land and commence
development. The Company typically finances, and will continue to finance,
its land acquisition and portfolio development activities utilizing the
proceeds of institutional loans secured by real property. In some cases, the
Company plans to utilize private financing, typically on a short-term or
interim basis. In cases where the Company holds a property after completion
of construction, the Company plans to obtain permanent financing secured by
the property.

    The Company is exposed to changes in interest rates primarily as a result
of its borrowing activities, which includes borrowings under lines of credit.
These lines, along with cash flow from operations, are used to maintain
liquidity and fund business operations. The Company typically replaces
borrowings under its lines of credit, as necessary, with long-term fixed rate
and shorter termed variable rate financing generally secured by real estate.
The nature and amount of the Company's debt may vary as a result of business
requirements, market conditions and other factors. The extent of the
Company's interest rate risk is not quantifiable or predictable because of
the variability of interest rates and business financing requirements, but
the Company does not believe such risk is material. The Company does not
currently use derivative instruments to adjust the Company's interest rate
risk profile.

    The Company has made its capital contributions to the six Tax Credit
Partnerships. The Company is obligated, however, to make operating expense
loans, not to exceed an aggregate of $3.0 million, to meet operating
deficits, if any, of such Tax Credit Partnerships.

    The Company does not utilize financial instruments for trading or other
speculative purposes, nor does it utilize leveraged financial instruments. On
the basis of the fair value of the Company's market sensitive instruments at
June 30, 1999, the Company does not consider the potential near-term losses
in future earnings, fair values and cash flows from reasonably possible
near-term changes in interest rates to be material.

BACKLOG

    The Company's homes are generally offered for sale in advance of their
construction. The majority of the Company's homes are sold pursuant to
standard sales contracts entered into prior to commencement of construction.
Such sales contracts are typically subject to certain contingencies such as
the buyer's ability to qualify for financing. Homes covered by such sales
contracts are considered by the Company as backlog. The Company does not
recognize revenue on homes covered by such contracts until the sales are
closed and the risk of ownership has been

                                      19
<PAGE>

legally transferred to the buyer. At June 30, 1999, the Company had 353 homes
in backlog, representing an aggregate sales value of approximately $39.3
million. At June 30, 1998, the Company's backlog was 50 homes representing an
aggregate sales value of $6.0 million.

    The Company is also involved in the design-build development of
commercial projects. Backlog for such commercial projects is defined as the
uncompleted work remaining under a signed fixed-price contract. The Company
uses the percentage-of-completion method to account for revenue from its
design-build contracts. At June 30, 1999, the Company had backlog under its
design-build contracts of approximately $22.3 million. At June 30, 1998, the
Company's design-build backlog was approximately $46.8 million.

YEAR 2000

     The Company's process for becoming Year 2000 ("Y2K") compliant has been
to perform an ongoing comprehensive study and review of computer hardware,
software and systems, both internal and external, and non-computer related
systems which may be affected by certain computerized functions. The Company
does not believe the non-computer related systems, whether Y2K compliant or
not, will have a material impact on the Company's operations. The Company has
contacted or will contact its significant service providers, vendors,
suppliers, subcontractors, financial institutions, consultants and various
government agencies, to obtain information regarding the assurance of Y2K
compliance. However, there can be no guarantee that the systems of others
upon which the Company's systems rely will be Y2K compliant in a timely
manner. Failure to convert by an external source or provider or the failure
to convert properly would have a material adverse effect on the Company, as
would the Company's failure to convert, or convert properly, an internal
system.

     The Company has also increased the awareness of the Y2K issue across the
Company, assessed the Company's Y2K issues, determined proposed resolutions,
validated those proposed resolutions and implemented most system solutions.
The Company has substantially completed its assessment of applications within
the Company that are not Y2K compliant and is in varying stages of
determining appropriate resolutions to the issues identified. The Company has
substantially completed all business critical internal hardware and software
modifications and testing.

     Given the information known at this time about the Company's systems and
such issues, coupled with the Company's ongoing, normal course-of-business
efforts to upgrade or replace business critical systems and software
applications as necessary, it is currently expected that Y2K costs, the
majority of which are expected to be incurred in fiscal 1999, could
approximate up to $100,000-$150,000. Current Y2K expenditures have been
negligible thus far due to much of the work performed by existing internal
staff. Any further costs will be incorporated into the Company's operating
plan for fiscal 1999. These costs include incremental personnel costs,
consulting costs and costs for the modification of or replacement of existing
hardware and software. These costs will be funded through cash flows from
operations and are expensed as incurred. Purchased hardware and software has
been and will be capitalized in accordance with the Company's normal
accounting policy. The costs of the project and the timing in which the
Company believes it will complete the necessary Y2K modifications are based
on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, third-party modification plans and other factors. However, there
can be no guarantee that these estimates will be achieved and actual results
could differ materially from those anticipated.

     Specific factors that might cause such material differences include, but
are not limited to, the success of the Company in identifying systems and
programs having Y2K issues, the nature and amount of programming required to
upgrade or replace the affected programs, the availability and cost of
personnel trained in this area and the extent to which the Company might be
adversely impacted by third-party (vendors, subcontractors, lenders, bond
trustees, etc.) failure to remediate their own Y2K issues. Failure by the
Company and/or its vendors and subcontractors and in particular, the local
governments, on which the Company is materially dependent to complete Y2K
compliance work in a timely manner could have a material adverse effect on
the Company's operations. The Company believes that its business operations
are not heavily dependent on Y2K compliance of its systems and that, should a
reasonably likely worst case Y2K situation occur, the Company, because of the
basic nature of its systems, many of which can be executed manually, would
not likely suffer material loss or disruption in remedying the situation.

The Company currently has not established a formal contingency plan in the
event the Company is not successful with its attempts to be fully Y2K
compliant; however, the Company believes that it will develop a more formal
contingency plan that may include the stockpiling of construction raw
materials, automated reports and the development of back-up systems as an
alternative to computers in the months prior to December 31, 1999.

                                      20

<PAGE>

RISKS AND RELATED FACTORS

    VARIABILITY OF RESULTS AND SEASONALITY. The Company historically has
experienced, and in the future expects to continue to experience, variability
in revenue on a quarterly basis. Factors expected to contribute to this
variability include, among others: (i) the timing of home and other property
sale closings; (ii) the Company's ability to continue to acquire land and
options thereon on acceptable terms; (iii) the timing of the receipt of
regulatory approvals for the construction of homes and other development
projects; (iv) the condition of the real estate market and the general
economic and environmental conditions in the greater Las Vegas, Phoenix, Salt
Lake City, Reno and Tucson, metropolitan areas; (v) the prevailing interest
rates and the availability of financing, both for the Company and for the
purchasers of the Company's homes and other properties; (vi) the timing of
the completion of construction of the Company's homes and other properties;
and (vii) the cost and availability of materials and labor. The Company's
historical financial performance is not necessarily a meaningful indicator of
future results and, in particular, the Company expects its financial results
to vary from project to project and from quarter to quarter. In addition,
although the Company has not previously experienced significant seasonality
in its business, management expects that the Company's increased focus on
homebuilding activities may cause it to experience seasonal variations in its
home sales as a result of the preference of home buyers to close their new
home purchase either prior to the start of a new school year or prior to the
end of year holiday season.

    EFFECTS OF CHANGING PRICES, INFLATION AND INTEREST RATES. Management
believes that inflation has not had a material impact on the Company's
operations. Substantial increases in labor costs, workers' compensation rates
and employee benefits, equipment costs, material or subcontractor costs could
adversely affect the operations of the Company for future periods to the
extent that the Company is unable to pass such increases on to its
construction clients or the purchasers of its properties. The Company had
outstanding approximately $71.6 million of floating rate debt (exclusive of
the indebtedness of unconsolidated partnerships of which the Company is a
general partner), currently bearing a weighted-average interest rate of 8.77%
per annum at June 30, 1999. If the interest rates on the floating rate debt
increase in accordance with changes to the indices upon which the rates are
based, debt service obligations of the Company will increase.

    Management believes that the Company's future homebuilding activities may
be affected by fluctuations in interest rates and changing prices. Higher
interest rates may decrease the demand for new homes by making it more
difficult for homebuyers to qualify for mortgages or to obtain mortgages at
interest rates that are acceptable to the potential buyers. In addition, the
Company, as well as the homebuilding industry in general, may be adversely
affected during periods of high inflation, primarily as a result of higher
land acquisition and land development costs, as well as higher costs of labor
and materials. The Company attempts to pass on to its customers any increase
in costs through higher sales prices. There can be no assurance that
inflation will not have a material impact on the Company's future results of
operations.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

    THE FOREGOING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND BUSINESS SECTIONS CONTAIN CERTAIN
FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO THE COMPANY THAT ARE
BASED ON THE BELIEFS OF MANAGEMENT AS WELL AS ASSUMPTIONS MADE BY AND
INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT. SUCH FORWARD-LOOKING
STATEMENTS INCLUDE, WITHOUT LIMITATION, THE COMPANY'S EXPECTATION AND
ESTIMATES AS TO THE COMPANY'S BUSINESS OPERATIONS, INCLUDING THE INTRODUCTION
OF NEW PRODUCTS AND FUTURE FINANCIAL PERFORMANCE, INCLUDING GROWTH IN
REVENUES AND NET INCOME AND CASH FLOWS. IN ADDITION, INCLUDED HEREIN THE
WORDS "ANTICIPATES," "BELIEVES," "ESTIMATES," "EXPECTS," "PLANS," "PROPOSES,"
"INTENDS" AND SIMILAR EXPRESSIONS, AS THEY RELATE TO THE COMPANY OR ITS
MANAGEMENT, ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS REFLECT THE CURRENT VIEWS OF THE COMPANY'S MANAGEMENT, WITH
RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS. IN ADDITION, THE COMPANY SPECIFICALLY WISHES TO ADVISE READERS
THAT THE FACTORS LISTED UNDER THE CAPTIONS "LIQUIDITY AND CAPITAL RESOURCES,"
"EFFECTS OF CHANGING PRICES, INFLATION AND INTEREST RATES" AND OTHER RISK
FACTORS INCLUDING BUT NOT LIMITED TO: THE PRIMARY DEPENDENCE ON THE GREATER
LAS VEGAS AND PHOENIX AREAS; INSUFFICIENT HISTORY IN GEOGRAPHIC AREAS OTHER
THAN LAS VEGAS; RISKS OF HOMEBUILDING AND OTHER REAL ESTATE DEVELOPMENT AND
INVESTMENTS; INDEBTEDNESS; POTENTIAL INABILITY TO OBTAIN FUTURE FINANCING;
VARIABILITY, ERRATIC WEATHER CONDITIONS AND SEASONALITY OF RESULTS;
DEPENDENCE ON KEY PERSONNEL; CONTROL BY CURRENT STOCKHOLDERS; REGULATORY AND
ENVIRONMENTAL RISKS; AND EXPANSION INTO NEW MARKETS COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENT. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR
SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY
MATERIALLY FROM THOSE DISCUSSED HEREIN AS ANTICIPATED, BELIEVED, ESTABLISHED
OR EXPECTED.

                                      21

<PAGE>

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Reference is made to Part II, Item 7A, "Quantitative and Qualitative
Disclosures About Market Risk," in the Company's Annual Report on Form 10-K/A
for the year ended December 31, 1998. There have been no significant changes
since the filing of the aforementioned report.

                                      22

<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    None.

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

    The Company's Annual Meeting of Stockholders was held on June 7, 1999. The
following individuals were elected as Directors at such annual meeting:

<TABLE>
<CAPTION>
                                                                                   Votes
                                                     -------------------------------------------------------------------
                                                                                                             Broker
                      Name                               For             Against           Abstain          Non-Votes
-------------------------------------------------    -------------     -------------    --------------    --------------
<S>                                                  <C>               <C>              <C>               <C>
James C. Saxton                                        7,494,913                 -           89,529                  -
Michele Saxton Pori                                    7,490,713                 -           93,729                  -
Douglas W. Hensley                                     7,498,213                 -           86,229                  -
Marc S. Hechter                                        7,497,213                 -           87,229                  -
Timothy J. Adams                                       7,497,213                 -           87,229                  -
Paul Eisenberg                                         7,494,913                 -           89,529                  -
Bernard J. Mikell, Jr.                                 7,497,213                 -           87,229                  -
Robert L. Seale                                        7,495,013                 -           89,429                  -
</TABLE>

    Each Director was elected for a one-year term and until their respective
successors are elected and qualified. In addition, the stockholders approved the
following proposals:

1.      An amendment to the Company's Management Stock Option Incentive Plan to
        increase from 500,000 to 750,000 the number of shares of common stock
        issuable upon exercise of options (7,181,511 votes for; 387,831 votes
        against; 15,100 abstentions; and 0 broker non-votes).
2.      Ratification of the change of auditors from KPMG LLP to Deloitte &
        Touche LLP as the Company's independent accountants (7,515,106 votes
        for; 49,800 votes against; 19,536 abstentions; and 0 broker non-votes).

ITEM 5.  OTHER INFORMATION

    None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

  Exhibit 27 - Financial Data Schedule for the quarter ended June 30, 1999.

                                      23

<PAGE>



                            SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                 SAXTON INCORPORATED

August 13, 1999                    By: /s/ Kirk Scherer
                                       ----------------------------------------
                                       Kirk Scherer
                                       Executive Vice President of Finance and
                                       Chief Financial Officer
                                       (Principal Financial Officer)


                                 By:   /s/ Melody J. Sullivan
                                       ----------------------------------------
                                       Melody J. Sullivan
                                       Vice President and Chief Accounting
                                       Officer
                                       (Principal Accounting Officer)


                                      24

<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
     EXHIBIT                                                                            NUMBERED
     NUMBER                                DESCRIPTION                                    PAGE
------------------                                                                  ------------------
       <S>           <C>                                                                   <C>
       27            Financial Data Schedule for the quarter ended June 30, 1999           26

</TABLE>


                                      25