<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 March 31, 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  May 5, 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 March 31, 1999............................      3

                    Condensed Consolidated Statements of Income -                    
                    Three Months Ended March 31, 1998 and 1999......................      4

                    Condensed Consolidated Statement of  Stockholders'               
                    Equity Three Months Ended March 31, 1999......................        5

                    Condensed Consolidated Statements of Cash Flows -                
                    Three Months Ended March 31, 1998 and 1999......................    6-7

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

           Item 2.  Management's Discussion and Analysis of                          
                    Financial Condition and Results of Operations...................  14-19

           Item 3.  Quantative and Qualitative Disclosures About Market Risk........     19

PART II.  OTHER INFORMATION                                                          

           Item 1.  Legal Proceedings...............................................     20

           Item 2.  Changes in Securities...........................................     20

           Item 3.  Defaults Upon Senior Securities and Use of Proceeds.............     20

           Item 4.  Submission of Matters to a Vote of Security Holders.............     20

           Item 5.  Other Information...............................................     20

           Item 6.  Exhibits and Reports on Form 8-K................................     20

SIGNATURES.......................................................................        21
</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,        MARCH 31,
                                  ASSETS                                         1998              1999
                                                                          -------------------------------------
                                                                                                (unaudited)
<S>                                                                          <C>                <C>
Real estate properties:                                                                       
   Operating properties, net of accumulated depreciation.................    $     23,117       $     22,078
   Properties under development..........................................          79,418             85,814
   Land held for future development or sale..............................           1,349              6,812
                                                                             ------------       ------------
     Total real estate properties........................................         103,884            114,704

Cash and cash equivalents................................................           1,331                863
Due from Tax Credit Partnerships.........................................          31,997             31,634
Construction contracts receivable, net of allowance for doubtful                              
   accounts of $403 at December 31, 1998 and March 31, 1999..............           8,773              8,657
Costs and estimated earnings in excess of billings on                                         
   uncompleted contracts.................................................           2,618              1,990
Notes receivable.........................................................           1,000              1,451
Investments in joint ventures............................................           3,577              3,622
Due from related parties.................................................             154                145
Prepaid expenses and other assets........................................          17,661             17,747
                                                                             ------------       ------------
         Total assets....................................................    $    170,995       $    180,813
                                                                             ------------       ------------
                                                                             ------------       ------------

                   LIABILITIES AND STOCKHOLDERS' EQUITY                                       

Accounts payable and accrued expenses....................................    $     24,892       $     25,505
Tenant deposits and other liabilities....................................           6,295              6,085
Billings in excess of costs and estimated earnings                                            
   on uncompleted contracts..............................................             181                888
Notes payable............................................................          88,306             96,057
Notes payable to related parties.........................................          12,016             11,111
Long-term capital lease obligations......................................           1,118              1,179
                                                                             ------------       ------------
         Total liabilities...............................................         132,808            140,825

Commitments and contingencies (note 9)

Stockholders' equity:                                                                         
Common stock, $.001 par value.  Authorized 50,000,000
   shares; issued and outstanding 7,732,922 at December 31, 1998
   and March 31, 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             18,498
                                                                             ------------       ------------
         Total stockholders' equity......................................          38,187             39,988
                                                                             ------------       ------------

         Total liabilities and stockholders' equity......................    $    170,995       $    180,813
                                                                             ------------       ------------
                                                                             ------------       ------------
</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
                                                                                         MARCH 31,
                                                                            -------------------------------------
                                                                                   1998              1999
                                                                            -------------------------------------
   <S>                                                                         <C>                <C>
   REVENUE:
      Construction revenue, including Tax Credit
        Partnership construction revenue of $4,230 and $3,913
        for the three months ended March 31, 1998 and 1999, respectively....   $      5,737       $      4,750
      Sales of homes........................................................          2,785             21,671
      Sales of commercial properties........................................          2,834              1,550
      Rental revenue........................................................            924              1,010
      Other revenue.........................................................            429                571
                                                                               ------------       ------------
            Total revenue...................................................         12,709             29,552
                                                                               ------------       ------------

   COST OF REVENUE:
      Cost of construction, including Tax Credit Partnership cost of
        construction of $3,012 and $2,698 for the three months ended
        March 31, 1998 and 1999, respectively...............................          4,503              3,888
      Cost of homes sold....................................................          2,344             19,074
      Cost of commercial properties sold....................................          2,580              1,006
      Rental operating cost.................................................            175                287
                                                                               ------------       ------------
            Total cost of revenue...........................................          9,602             24,255
                                                                               ------------       ------------

      Gross profit..........................................................          3,107              5,297
                                                                               ------------       ------------
      General and administrative expenses...................................            752              1,866
      Depreciation and amortization.........................................            391                531
                                                                               ------------       ------------
            Operating income................................................          1,964              2,900
                                                                               ------------       ------------

   OTHER EXPENSE:
      Interest expense, net of interest income of $293 and $245 for the
        three months ended March 31, 1998 and 1999, respectively............           (367 )             (295 )
      Joint venture loss....................................................             (2 )               (6 )
                                                                               -------------      ------------
            Total other expense.............................................           (369 )             (301 )
                                                                               -------------      ------------
   Income before provision for income taxes.................................          1,595              2,599
   Provision for income taxes...............................................            444                798
                                                                               ------------       ------------
            Net income......................................................   $      1,151       $      1,801
                                                                               ------------       ------------
                                                                               ------------       ------------

   EARNINGS PER COMMON SHARE:

   BASIC:
   Net income...............................................................   $       0.15       $       0.23
                                                                               ------------       ------------
                                                                               ------------       ------------
   Weighted-average number of common shares outstanding.....................      7,624,310          7,732,922
                                                                               ------------       ------------
                                                                               ------------       ------------

   DILUTED:
   Net income...............................................................   $       0.15       $       0.23
                                                                               ------------       ------------
                                                                               ------------       ------------
   Weighted-average number of common shares outstanding assuming
      dilution..............................................................      7,679,049          7,734,817
                                                                               ------------       ------------
                                                                               ------------       ------------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>

                         SAXTON INCORPORATED AND SUBSIDIARIES

             CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         THREE MONTHS ENDED MARCH 31, 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 three months
   ended March 31, 1999 (unaudited)........              -                -               -           1,801           1,801
                                               -----------      -----------     -----------     -----------     -----------

Balance at March 31, 1999 (unaudited)......          7,733      $         8     $    21,482     $    18,498     $    39,988
                                               -----------      -----------     -----------     -----------     -----------
                                               -----------      -----------     -----------     -----------     -----------
</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>
                                                                                     THREE MONTHS ENDED
                                                                                         MARCH 31,
                                                                            -------------------------------------
                                                                                  1998               1999
                                                                            -------------------------------------
  <S>                                                                          <C>               <C>
  Cash flows from operating activities:                                                        
  -------------------------------------
     Net income............................................................    $ 1,151             $  1,801
     Adjustments to reconcile net income to net cash used in
       operating activities:
         Depreciation and amortization.....................................        391                  531
         Gain on sales of commercial properties............................       (254)                (671)
         Joint venture loss................................................          2                    5
         Increase in investments in joint ventures.........................          -                  (50)
         Changes in operating assets and liabilities:                                     
           Decrease (increase) in due from Tax Credit Partnerships.........     (4,971)                 363
           Decrease (increase) in construction contracts receivable........       (846)                 116
           Decrease in costs and estimated earnings in excess of billings
             on uncompleted contracts......................................      2,704                  628
           Increase in properties under development........................     (3,590)             (10,541)
           Decrease (increase) in prepaid expenses and other assets........        587                  (93)
           Increase (decrease) in accounts payable and accrued expenses ...     (1,382)                 613
           Increase (decrease) in billings in excess of costs and
             estimated earnings on uncompleted contracts...................       (662)                 707
           Increase (decrease) in tenant deposits and other liabilities....        123                 (210)
                                                                               -------             ---------

                    Net cash used in operating activities..................     (6,747)              (6,801)
                                                                               -------             ---------

  Cash flows from investing activities:                                                   
  -------------------------------------
     Expenditures for property acquisitions and improvements...............     (3,394)              (1,313)
     Proceeds from sales of commercial properties..........................          -                1,550
     Increase in notes receivable from related parties ....................        (19)                 (28)
     Payments from notes receivable from related parties...................          2                   37
     Increase in notes receivable..........................................       (404)                (949)
     Payments from notes receivable........................................        120                  248
     Cash paid to acquire net assets of Maxim Homes, Inc...................       (785)                  -
                                                                               -------             ---------

                    Net cash used in investing activities..................     (4,480)                (455)
                                                                               -------             ---------

Cash flows from financing activities:                                                        
-------------------------------------         
   Proceeds from issuance of notes payable.................................     17,145               26,176
   Payments on notes payable and capital lease obligations.................     (5,286)             (18,483)
   Proceeds from issuance of notes payable to related parties .............        903                  300
   Payments on notes payable to related parties ...........................       (902)              (1,205)
                                                                               -------             ---------

                  Net cash provided by financing activities................     11,860                6,788
                                                                               -------             ---------

                  Net increase (decrease) in cash and cash equivalents.....        633                 (468)
    Cash and cash equivalents:                                                                
      Beginning of period..................................................      1,110                1,331
                                                                               -------             ---------

      End of period........................................................    $ 1,743             $    863
                                                                               -------             ---------
                                                                               -------             ---------
</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>
                                                                                   THREE MONTHS ENDED
                                                                                       MARCH 31,
                                                                          -------------------------------------
                                                                                 1998              1999
                                                                          -------------------------------------
 <S>                                                                         <C>               <C>
 Supplemental disclosure of cash flow information:                                           
 -------------------------------------------------
     Cash paid during the period for interest, net of amounts capitalized    $      1,303      $      1,194
                                                                             ------------      ------------
                                                                             ------------      ------------

     Cash paid during the period for income taxes........................    $      2,369      $          9
                                                                             ------------      ------------
                                                                             ------------      ------------

 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......................................................    $         18      $        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 or paid for 
the first quarter 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, with an 
additional amount of  $2.0 million to be paid 50% in cash and 50% in the 
Company's Common Stock one year from the date of closing.
   
   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.

  All revenue was generated from Nevada for the three months ended March 31, 
1998.  For the three months ended March 31, 1999, 44.5% of total revenue was 
from Nevada, 42.2% from Arizona and 13.3% from Utah.

                                       8
<PAGE>

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 months ended March 31, 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 months ended March 31, 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 June 1997, the Financial Accounting Standards Board ("FASB") issued 
Statement of Financial Accounting Standards ("SFAS") SFAS No. 130, REPORTING 
COMPREHENSIVE INCOME, ("SFAS 130") which is effective for fiscal years 
beginning after December 15, 1997.  SFAS 130 requires companies to classify 
items of other comprehensive income separately from retained earnings and 
additional paid-in capital in the equity section of the statement of 
financial position.  The adoption of SFAS 130, in 1998, did not affect the 
consolidated financial statements of the Company.
  
  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.  
  
  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.

                                       9
<PAGE>

NOTE 4.   REAL ESTATE OPERATING PROPERTIES 

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

<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1998       MARCH 31, 1999
                                                            -----------------------------------------------
                                                                                         (unaudited)
                <S>                                                  <C>                  <C>
                Cost:                                                               
                 Buildings.................................          $19,530              $18,830
                 Tenant improvements.......................              761                  510
                 Land......................................            6,122                5,867
                                                                     -------              -------
                Real estate operating properties at cost...           26,413               25,207

                   Less accumulated depreciation and
                     amortization..........................           (3,296)              (3,129)
                                                                     -------              -------
                Real estate operating properties, net......          $23,117              $22,078
                                                                     -------              -------
                                                                     -------              -------
</TABLE>

  Depreciation expense relating to real estate operating properties for the
three months ended March 31, 1998 and 1999 was $178,000 and $167,000,
respectively.
  
NOTE 5.   CONSTRUCTION CONTRACTS 

  Construction contracts receivable includes amounts retained pending contract
completion, aggregating approximately $155,000 at December 31, 1998 and March
31, 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 $3.3 million at March 31, 1999.
  
  Costs and estimated earnings in excess of billings, net, on uncompleted
contracts, are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1998       MARCH 31, 1999
                                                           -----------------------------------------------
                                                                                         (unaudited)
                <S>                                                  <C>                   <C>
                Costs incurred to date.....................          $  98,470             $ 101,655
                Estimated earnings to date.................             30,694                32,033
                                                                     ---------             ---------
                                                                       129,164               133,688
                Less billings to date......................           (126,727)             (132,586)
                                                                     ---------             ---------
                 Cost and estimated earnings in excess of
                   billings, net...........................          $   2,437             $   1,102
                                                                     ---------             ---------
                                                                     ---------             ---------
</TABLE>

  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       MARCH 31, 1999
                                                            -----------------------------------------------
                                                                                        (unaudited)
                <S>                                                  <C>                <C>
                Costs and estimated earnings in excess of                           
                   billings on uncompleted contracts.......          $2,618                $1,990
                Billings in excess of costs and estimated                  
                   earnings on uncompleted contracts.......            (181)                 (888)
                                                                     ------                ------
                Costs and estimated earnings in excess of
                   billings, net...........................          $2,437                $1,102
                                                                     ------                ------
                                                                     ------                ------
</TABLE>
  The asset "Costs and estimated earnigns 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.

                                      10
<PAGE>

NOTE 6.   PREPAID EXPENSES AND OTHER ASSETS
  
  Prepaid expenses and other assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 1998       MARCH 31, 1999
                                                                 ---------------------- ----------------------
                                                                                            (unaudited)
    <S>                                                                  <C>                   <C>
    Rental and other accounts receivable...................              $   575               $   650
    Goodwill...............................................                7,877                 7,770
    Development costs......................................                2,598                 2,531
    Deferred tax assets, net...............................                   74                    95
    Furniture and equipment, net...........................                1,379                 1,425
    Option and escrow deposits and impounds................                3,087                 3,301
    Inventories............................................                  101                   112
    Other assets, primarily prepaid expenses and loan fees.                1,970                 1,863
                                                                         -------               -------
                                                                         $17,661               $17,747
                                                                         -------               -------
                                                                         -------               -------
</TABLE>

NOTE 7.   NOTES PAYABLE 

    Notes payable consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,          MARCH 31,
                                                                                        1998                1999 
                                                                                   -------------      -------------
                                                                                                      (unaudited)
    <S>                                                                               <C>                 <C>
    Notes payable to various financial institutions, maturing at dates ranging
      between April 1999 and November 2027. The notes bear interest
      monthly at various rates ranging from 7.9% to 13.0%. (1)(2)(3).............     $72,328             $78,682

    Notes payable to various individuals, maturing at dates ranging between June
      1999 and March 2000. The notes bear interest at various rates
      ranging from 15.0% to 24.0%................................................      15,875              17,375

    Other........................................................................         103                  -
                                                                                      -------             -------
                                                                                      $88,306             $96,057
                                                                                      -------             -------
                                                                                      -------             -------
</TABLE>

   (1)  On February 9, 1998, the Company signed a definitive loan agreement 
for a $10.0 million revolving line of credit 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 May 1, 1999.  As of December 31, 1998 and March 31, 
1999, the Company had outstanding indebtedness of $5.0 million and $7.9 
million, respectively, and available borrowings of $5.0 million and $2.1 
million, respectively, under this agreement.
  
   (2)  On July 30, 1997, the Company entered into a $5.0 million revolving 
line of credit agreement (the "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 March 31, 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 March 31, 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 April 30, 1999, $3.2 million of notes payable maturing in 
April 1999 have been extended with new maturity dates ranging from June 1999 
to February 2000. For the remaining notes payable with maturity dates in 
1999, management is negotiating refinancing alternatives with the applicable 
lenders.

   During 1997, 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: $7.6 million at 20% maturing on 
September 23, 1999; $1.0 million at 20% maturing on November 20, 1999; $1.0 
million at 20% maturing on 

                                      11

<PAGE>

March 17, 2000; $500,000 at 24% maturing on July 9, 1999; $1.0 million at 24% 
maturing on September 3, 1999; $5.3 million at 15% maturing on August 1, 
1999; and $985,347 at 20% maturing on June 26, 1999.

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 fourth quarter of 1998, the Company's President and principal 
stockholder, James C. Saxton, pledged 3,111,560 shares of Common Stock, or 
approximately 40.6% of its outstanding shares, as collateral for two loans to 
Mr. Saxton.  Mr. Saxton reloaned the proceeds from such 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 August 1, 1999.  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 MARCH 31, 1998              THREE MONTHS ENDED MARCH 31, 1999
                           -----------------------------------------------------------------------------------------------
                                                             PER-SHARE                                       PER-SHARE
                               INCOME          SHARES         AMOUNT          INCOME          SHARES          AMOUNT
                           -----------------------------------------------------------------------------------------------
<S>                           <C>              <C>           <C>             <C>              <C>            <C>      
Net income.................   $     1,151                                    $     1,801

BASIC EPS
Income applicable to
  common stockholders......         1,151       7,624,310     $     0.15           1,801      7,732,922      $     0.23
                               ----------      ----------     ----------      ----------      ----------     ----------
                                                              ----------                                     ----------
Effect of dilutive
securities:
Stock options..............             -          54,739                              -          1,895
                               ----------      ----------                     -----------     ----------

DILUTED EPS
Income applicable to
  common stockholders
  and assumed conversions..   $     1,151      $7,679,049     $     0.15     $     1,801       7,734,817     $     0.23
                               ----------      ----------     ----------      ----------      ----------     ----------
                               ----------      ----------     ----------      ----------      ----------     ----------
</TABLE>

   The Company had options 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 outstanding for
March 31, 1998 and 1999 were 51,050 and 419,450, 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 is 
subject to majority ratification or approval, in accordance with Section 14 
of the Securities Exchange Act of 1934, by the stockholders not later than 
the next annual meeting of stockholders.  Any such additional options granted 
under the Plan will be subject to such stockholder approval.  As of March 31, 
1999, the Company had outstanding 441,100 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 March 31, 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. 

                                      12

<PAGE>

Employees holding 148,300 of stock options elected to reprice on January 2, 
1998.  As of March 31, 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 $43.1 million at December 31, 1998 and March 31, 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.  
  
  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 months ended March 31, 1998 
and 1999, respectively (in thousands):

<TABLE>
<CAPTION>
                                                                  MARCH 31, 1998
                           ----------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                           ----------------------------------------------------------------------------------------------
<S>                           <C>              <C>            <C>              <C>              <C>           <C>     
Revenue...................    $     5,737      $     2,785    $      2,834     $        924     $     429     $  12,709
Costs.....................          4,503            2,344           2,580              175             -         9,602
                              -----------      -----------    ------------     ------------     ---------     ---------
   Gross profit...........    $     1,234      $       441    $        254     $        749     $     429     $   3,107
                              -----------      -----------    ------------     ------------     ---------     ---------
                              -----------      -----------    ------------     ------------     ---------     ---------

Depreciation and                                                                                             
   amortization expense...    $         -      $         -    $          -     $        168     $     223     $     391

Interest expense..........    $         -      $         -    $          -     $       (501 )   $    (159)    $    (660)
Interest income...........    $         -      $         -    $          -     $        198     $      95     $     293

Total assets..............    $    27,851      $    20,380    $          -     $     39,803     $  10,852     $  98,886
</TABLE>

                                      13

<PAGE>

<TABLE>
<CAPTION>
                                                                  MARCH 31, 1999
                           ----------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                           ----------------------------------------------------------------------------------------------
<S>                           <C>              <C>            <C>              <C>              <C>           <C>  
Revenue...................    $     4,750      $    21,671    $      1,550     $      1,010     $     571     $  29,552
Costs.....................          3,888           19,074           1,006              287             -        24,255
                              -----------      -----------    ------------     ------------     ---------     ---------
   Gross profit...........    $       862      $     2,597    $        544     $        723     $     571     $   5,297
                              -----------      -----------    ------------     ------------     ---------     ---------
                              -----------      -----------    ------------     ------------     ---------     ---------
Depreciation and                                                                                             
   amortization expense...    $         -      $       126    $          -     $        158     $     247     $     531

Interest expense..........    $         -      $       (29)   $          -     $       (511)                  $    (540)
                                                                                                $       -
Interest income...........    $         -      $         -    $          -     $        223     $      22     $     245

Total assets..............    $    43,039      $    81,530    $          -     $     48,061     $   8,183     $ 180,813
</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 MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

  REVENUE.    Total revenue was $29.6 million for the three months ended 
March 31, 1999, representing a $16.8 million, or 132.5%, increase from $12.7 
million for the three months ended March 31, 1998. The increase was primarily 
due to an increase of $18.9 million, or 678.1%, in sales of homes to $21.7 
million in the first three months of 1999 compared to $2.8 million in the 
first three months of 1998. The 190 single-family home closings for the first 
three months of 1999 represented an increase of 476.0%, compared to the 33 
closings for the first three months of 1998.  Home closings for the three 
months ended March 31, 1999 included 60 in Nevada, 18 in Utah and 112 in 
Arizona.  In the first three months of 1998, all home closings were in 
Nevada.  Construction revenue for the first three months of 1999 was $4.8 
million, a decrease of $987,000, or 17.2%, from $5.7 million during the first 
three months of 1998.  The decrease was primarily due to the Company's 
increased focus on homebuilding operations.  Sale of commercial properties 
was $1.6 million for the three months ended March 31, 1999 compared to $2.8 
million for the three months ended March 31, 1998.  One commercial property 
was sold during each period.  Rental and other revenue increased to $1.6 
million for the three months ended March 31, 1999, a 16.9% increase over the  
$1.4 million in the comparable period of the prior year.  The increase was 
primarily due to loan related revenue from HomeBanc Mortgage Corporation, an 
affiliate of Diamond Key Homes, Inc. ("Diamond Key"), which was acquired in 
December 1998.  

  COST OF REVENUE.   Total cost of revenue was $24.3 million for the three 
months ended March 31, 1999, representing a $14.7 million, or 152.6%, 
increase from $9.6 million for the three months ended March 31, 1998. Cost of 
revenue for the three months ended March 31, 1999 as a percentage of revenue 
was 82.1%, compared to 75.6% for the three months ended March 31, 1998. The 
increase was primarily due to the higher cost basis of the commercial 
property sold in 1999 and an increase in overhead allocation due to the 
Company's increased homebuilding operations during 1999.
  
  GROSS PROFIT.   Gross profit as a percent of revenue decreased to 17.9% for 
the three months ended March 31, 1999 from 24.4% for the comparable period in 
1998. Gross margins on the sales of homes decreased to 12.0% in the first 
three months of 1999 compared to 15.8% in the first three months of 1998, due 
to an increased overhead allocation to the Company's homebuilding activities 
on a per unit basis.  Gross profit margin on home closings from Diamond Key 
in the first three months of 1999 was 13.9%.  Diamond Key was acquired in 
November 1998.  Gross margin on construction revenue decreased to 18.1% in 
the three months ended March 31, 1999, compared to 21.5% 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 three months ended March 31, 1999 increased to 35.1% from 9.0% in 
the three months ended March 31, 1998. In the first three months of 1999, one 
retail commercial property was sold, which yielded a higher gross profit 
margin than the one rental property that was sold in the same period of 1998.

                                      14

<PAGE>

  GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses 
were $1.9 million for the three months ended March 31, 1999, representing a 
$1.1 million, or 148.1%, increase from $752,000 for the three months ended 
March 31, 1998.  The increase was primarily due to increased activities 
related to the growth in the Company's revenue, including the acquisitions of 
Diamond Key and Maxim. Of this increase, $261,000 of marketing and 
advertising costs reflect the increased number of housing subdivisions in 
production during the three months ended March 31, 1999 compared to the same 
period in 1998.  The Company added 14 projects in Arizona and two in Utah 
during the first quarter of 1999. In addition, accounting, legal and other 
professional fees increased $259,000, vehicle, equipment and repairs and 
maintenance expense increased $145,000 and rent, utility, travel and other 
general office expenses increased $405,000. As a result, general and 
administrative expenses as a percentage of total revenue was 6.3% for the 
three months ended March 31, 1999 as compared to 5.9% for the three months 
ended March 31, 1998.

  DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense was 
$531,000 for the three months ended March 31, 1999, representing a $140,000, 
or 35.8%, increase from $391,000 for the three months ended March 31, 1998. 
The increase was primarily due to goodwill amortization expense of $145,000 
for the three months ended March 31, 1999 for Diamond Key,  Maxim and 
HomeBanc Mortgage Corporation, which were acquired in 1998 utilizing the 
purchase method of accounting. This increase was partially offset by a 
$29,000 decrease in depreciation expense due to a decrease in the cost basis 
of properties due to operating properties and equipment sold in prior periods.
  
  INTEREST EXPENSE, NET.   Interest expense, net, was $295,000 for the three 
months ended March 31, 1999, representing a $72,000 or 19.6%, decrease from 
$367,000 for the three months ended March 31, 1998. The decrease was 
primarily the result of a $120,000 decrease in interest expense due to 
increased interest capitalization, partially offset by a $52.0 million 
increase in debt, a portion of which was used in connection with the 1998 
acquisitions.  Interest income decreased $48,000, or 16.4%, for the three 
months ended March 31, 1999 compared to the same period in 1998, due to a 
decrease in notes receivable to $1.5 million at March 31, 1999 from $3.2 
million at March 31, 1998. 

  INCOME BEFORE PROVISION FOR INCOME TAXES.   As a result of the foregoing 
factors, income before provision for income taxes was $2.6 million for the 
three months ended March 31, 1999, representing a $1.0 million, or 62.9%, 
increase from $1.6 million for the three months ended March 31, 1998. Income 
before provision for income taxes as a percentage of total revenue was 8.8% 
for the three months ended March 31, 1999 as compared to 12.6% for the three 
months ended March 31, 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 March 31, 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 3,111,560 shares of Common Stock, or 
approximately 40.2% of the Company's outstanding shares at March 31, 1999, as 
collateral for two personal loans to Mr. Saxton.  Mr. Saxton reloaned the 
proceeds from such 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 August 1, 1999.  
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 signed a definitive loan agreement for a 
$10.0 million revolving line of credit 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 

                                      15

<PAGE>

$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 May 1, 1999.  As of 
December 31, 1998 and March 31, 1999, the Company had outstanding 
indebtedness of $5.0 million and $7.9 million, respectively, and available 
borrowings of $5.0 million and $2.1 million, respectively, under this 
agreement.
  
  On July 30, 1997, the Company entered into a $5.0 million revolving line of 
credit agreement (the "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 March 31, 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 
March 31, 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 $6.8 
million for the three months ended March 31, 1999 compared to $6.7 million 
for the three months ended March 31, 1998. The increase in net cash used in 
operating activities was primarily due to the increase in properties under 
development related to single-family homes. The number of home developments 
increased to 35 for $67.3 million at March 31, 1999 from 10 for $20.0 million 
at March 31, 1998.  This increase was partially offset by a $363,000 
collection of amounts Due from Tax Credit Partnerships during the three 
months ended March 31, 1999 compared to a $5.0 million increase in the 
receivable during the three months ended March 31, 1998. 

  INVESTING ACTIVITIES. Net cash used in investing activities was $455,000 
for the three months ended March 31, 1999 and $4.5 million for the three 
months ended March 31, 1998.  The decrease was primarily due to a reduction 
in expenditures for property and land acquisitions, improvements and proceeds 
received from the sale of a commerical property during the three months ended 
March 31, 1999 while no commercial properties were sold during the three 
months ended March 31, 1998.
  
  FINANCING ACTIVITIES. Net cash provided by financing activities was $6.8 
million for the three months ended March 31, 1999 compared to $11.9 million 
for the three months ended March 31, 1998. The decrease in cash provided by 
financing activities was primarily due to reduced net borrowings of $7.7 
million during the quarter ended March 31, 1999 compared to $11.9 million 
during the quarter ended March 31, 1998.
  
  Interest costs incurred, expensed and capitalized were as follows (in 
thousands):

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED MARCH 31,
                                                                  -----------------------------------------
                                                                          1998                1999
                                                                  -----------------------------------------
              <S>                                                    <C>                 <C>
              Interest incurred:
                 Residential......................................   $          515       $        2,169
                 Commercial.......................................              622                  601
                                                                     --------------       --------------
                   Total incurred.................................   $        1,137       $        2,770
                                                                     --------------       --------------
                                                                     --------------       --------------

              Interest expensed:
                 Residential......................................   $          133       $          29
                 Commercial                                                     527                  511
                                                                     --------------       --------------
                   Total expensed.................................   $          660       $          540
                                                                     --------------       --------------
                                                                     --------------       --------------

              Interest capitalized at end of period:                                    
                 Residential......................................   $          382       $        2,140
                 Commercial.......................................               95                   90
                                                                     --------------       --------------
                   Total interest capitalized.....................   $          477       $        2,230
                                                                     --------------       --------------
                                                                     --------------       --------------
</TABLE>

  Properties under development and land held for future development or sale 
increased $11.9 million from $80.7 million at December 31, 1998 to $92.6 
million at March 31, 1999.

                                      16

<PAGE>

   The Company anticipates that during the next twelve months portfolio 
projects in development will cost approximately $351,000 in the aggregate, 
substantially all of which the Company plans to finance through construction 
loans. The Company also anticipates that it will spend approximately $3.9 
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 $2.7 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 March 31, 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 legally transferred to the buyer. 
At March 31, 1999, the Company had 316 homes in backlog, representing an 
aggregate sales value of approximately $33.9 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 March 31, 1999, the Company had backlog under its design-build 
contracts of approximately $15.4 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

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<PAGE>

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 currently expects to complete all business critical internal hardware 
and software modification and testing by the end of the second quarter of 
1999.  

     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, will 
approximate $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 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.

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 $67.3 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 8.74% 
per annum at March 31, 1999. If the interest rates on the

                                      18

<PAGE>

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.

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.

                                      19

<PAGE>

PART II.  OTHER INFORMATION 

ITEM 1.  LEGAL PROCEEDINGS 

  None. 

ITEM 2.  CHANGES IN SECURITIES 

  None. 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES AND USE OF PROCEEDS

  None. 

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

  None. 

ITEM 5.  OTHER INFORMATION 

  None. 

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

  Exhibit 27 - Financial Data Schedule for the quarter ended March 31, 1999.

                                      20

<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 


May 14, 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)

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